New research shows the cost of fees impacting affordable housing in California.

The cost of building affordable housing in California is rising. According to a new brief from the Terner Center for Housing Innovation at UC Berkeley, the cost to develop a subsidized Low-Income Housing Tax Credit (LIHTC) unit in California was nearly 20% higher in 2023 than in 2019. The new report reviews almost 700 LIHTC projects awarded tax credits within 2020 and 2023 that will contribute more than 60,000 low-income units.

Among the key findings was that over 95% of the projects faced development impact fees, with an average of nearly $20,000 per unit added to the total development cost.

Despite impact fees contributing a relatively low portion toward the entire project cost—less than 5% of the total development cost—the total dollar amount reached $1.2 billion during the four-year period. If fees were removed, it could result in 1,250 units per year with a $200,000 per-unit subsidy.

Learn more about the hidden cost of regulations.