Governor Newsom Signs SB 937 Restricting Funding for Local Infrastructure Needed for Growing Communities

By Vanessa Gonzales posted 09-24-2024 08:35 AM

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On Thursday, September 19, Governor Gavin Newsom signed several measures into law that the Governor’s office presented would “…strengthen California’s laws addressing the housing and homelessness crisis. The laws represent a comprehensive effort to streamline housing production, and hold localities accountable to state housing law…”

Included in the slate of measures signed in to law was Senate Bill 937 (Wiener), a measure that among other things, for certain residential developments dubbed “high priority”, generally prohibits the collection of development related impact fees until the completion of the development.

Additionally, it locks those fees in at the point where the development has been approved and is eligible to pull a building permit. It furthermore prohibits the collection of interest on deferred fees, creating challenges for local agencies to keep up with inflation.

In response to advocacy efforts led by CSDA, amendments were taken during the legislative process to narrow the measure and include a five-year cap on the deferral of fees if a permitted project has not broken ground.

However, late amendments created an exclusive list of the service types that are allowed to be an exception to the collection of fees at certificate of occupancy in order to collect them at the beginning of a project. This leaves some services at a disadvantage to keep up with inflation or build facilities and infrastructure in tandem with a new development.

Additionally, the late amendments created a new and conflicting legal standard for the collection of water and sewer connection and capacity charges and place this new standard in a different, inappropriate section of the Government Code.

CSDA and its coalition of partners across all local agency types worked with stakeholders and the Legislature to oppose the measure in its various incarnations throughout the process.

This measure will become law on January 1, 2025. Stay tuned to CSDA eNews for our upcoming New Laws of 2025 Series, which will include more information on SB 937.