SACRAMENTO, CA – In a major step forward for affordable housing and sustainable growth, the California State Senate today passed SB 358, a bold bill that reduces costly development fees for housing built near public transit. The legislation aims to make it easier and cheaper to build the kind of walkable, climate-smart communities California desperately needs.
“We are in a housing crisis—and it’s time we stopped punishing the types of development that help solve it,” said Senator Josh Becker (D-Menlo Park). “SB 358 removes a key barrier to building housing near transit—high traffic impact fees—and ensures fees are based on actual impact, not outdated assumptions.”
SB 358 tackles a long-standing problem: local traffic impact fees that add up to 20% of a project's total construction cost, even in areas where residents are more likely to walk, bike, or take transit. By requiring at least a 50% reduction in vehicular traffic impact fees for housing near transit, the bill promotes infill development and helps lower the cost of building and renting homes.
"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."
“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.”
"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.
The bill also strengthens transparency and accountability: if a city or county refuses to apply the reduced fee, they must publicly explain why the development doesn’t qualify—based on concrete evidence.
Experts say this reform is not only timely, it’s constitutionally sound. The 2024 U.S. Supreme Court decision in Sheetz v. County of El Dorado reaffirmed that development fees must be proportionate to the actual impacts of a project. SB 358 aligns state law with that precedent while advancing California’s climate and equity goals.
California cities have long imposed high development impact fees to cover infrastructure—but too often, these fees are applied without regard for location, leading to higher housing costs and fewer homes where they’re needed most.
SB 358 now heads to the Assembly, where momentum is building among lawmakers and housing advocates seeking to modernize how California grows.