SACRAMENTO, CA – In an effort to reduce housing costs, encourage sustainable growth, and support California’s climate goals, Senator Josh Becker (D-Menlo Park) has introduced SB 358, legislation that will incentivize transit-oriented development by reducing vehicular traffic impact fees for housing near public transit.
“With California’s housing supply still falling drastically short of demand, we need to remove unnecessary barriers that make development more expensive,” said Senator Becker. “Impact fees can add nearly 20% to the cost of construction, making new housing more expensive to build and to rent. SB 358 helps lower these costs and ensures that transit-friendly housing is more financially feasible.”
“The Sheetz v. County of El Dorado (April 2024) US Supreme Court opinion affirmed that legislatively-adopted monetary exactions that are a condition of issuance of a building permit are also subject to the Nollan/Dolan test of ‘essential nexus’ and ‘rough proportionality,’ said Michael Lane, State Policy Director at SPUR. “While new developments must mitigate their impacts, the fee, such as a vehicular traffic impact fee, must have a rational relationship to the actual impacts of the project. SB 358 will ensure that infill housing developments near transit are charged fees that reflect the location efficiency of these sites and their reduced vehicle trips.”
"SB 358 is a smart, evidence-based reform that aligns traffic mitigation fees with actual traffic impact," said Brian Hanlon, CEO at California YIMBY. "This bill rewards cities and developers for building the kinds of homes that support walking, biking, and transit—and helps lower the cost of housing and reduce greenhouse gas emissions."
"People who live in housing developments near transit walk more often, take transit more often, and drive less. The impact fees charged to such housing developments should reflect that,” said Kirsten Bladh, Associate Director of State Policy at Streets for All.
California cities impose development impact fees to cover the cost of public infrastructure and services. However, these fees often make projects financially infeasible—particularly affordable housing developments, which may be forced to pay for transportation, parks, and capital improvements, working against the very goal of increasing affordability.
Research shows that high development fees increase overall housing costs, making new homes less affordable for renters and buyers, suppresses housing supply, making it harder to meet California’s growing demand, and discourages transit-oriented development, despite the state's commitment to reducing vehicle emissions.
SB 358 requires local agencies to reduce vehicular traffic impact fees by at least 50% for developments within designated transit priority areas, ensuring that projects near public transit are not burdened by excessive fees. By doing so, this bill encourages housing development near public transit, reducing car dependency and emissions. It makes new housing more financially feasible, particularly in high-demand urban areas. Finally it strengthens the fiscal health of local governments, increasing property tax revenues by incentivizing new development.
SB 358 is sponsored by the San Francisco Planning and Urban Research Association (SPUR) and Streets for All. It will be heard in the Senate Local Government Committee in the coming weeks.