June 11, 1999
By Tracey Vackar
To state the most obvious —and most ig-nored— fact of life in California today is to say that too many people cannot afford to buy a home. But a recent court decision in a little known part of the state may change that for the better.
Most would agree that homes cost too much —or at least more than an increasingly large part of our population afford. But many homes cost more than they should, not because of some greedy landowner, but because local governments load them down with so many extra costs that some homebuyers pay up to $55,000 above the cost of their homes in fees to local governments.
And let's dispose of the fiction that builders pay the fees that city councils and school boards love to load on new houses. Builders don't pay fees, they just collect from homebuyers.
But if high fees contributing to higher costs have shattered the dreams of many in the middle class who hope for home ownership, a recent court case in Murrieta is an important first step to lowering fees — and restoring hope.
The facts of the case are this: City officials in Murrieta were charging homebuilders up to $1800 to process plans and inspect a new home. State law says the city may charge for these services, but only what these services cost. No more.
That way, a city has no incentive to skimp on these services by skimming part of the money for its general fund.
Over the last twenty years, this has been the most ignored law in the state of California —until earlier this year, when a coalition of property owners, trade groups, and others convinced a Riverside judge that the real cost of these services was a fraction of what the city was charging. The rest ended up in the city's general fund.
It wasn't a hard case to make: The city's own experts agreed it charged too much because it followed a code that just about every other city in California followed. A code that a judge found —and the city agreed— was in violation of the law.
Result: Instead of $1800 per home for plan check and inspection fees, the new fees will probably be below $500 per home.
As a side benefit, everyone who bought a Home in Murrieta during the period of the lawsuit will receive a refund; some $100, others $675. That has never happened before, either.
It's worth nothing that the city did everything it could to protect its ability to raise home prices through higher fees, but it did not prevail.
The big benefit of this case is to new homebuyers throughout the state. This decision puts cities on notice: Fees are too high, and they often cannot be justified just because a city council decides to raise them.
Even as this message reverberates throughout the state, people who believe in the benefits of middle class homeownership are preparing for a new battle. A fight against fees that are even higher; that puts even more homes out of reach. These are the so-called housing impact fees.
The idea behind these fees is that people who live in new homes create a new demand for services, i.e. police, fire and the like. And it is best for the people who create this demand to actually pay for these services. This way, growth pays for itself.
Sounds good in theory. But in practice, some local governments have been charging as much as $55,000 in fees for a new house. And then, instead of spending this money to provide parks and police and other services for new residents as the law requires— the cities spend the money on projects that have no special benefits to the people who paid the special fees.
That's not just illegal. It's bad public policy, raising home prices and making an entire generation of homeowners beholded to landlords. Taking away what they would have saved and invested in the future of their own family.
Do the match: Potential homebuyers in California have lost trillions of dollars in equity because criminally exorbitant fees have artificially forced them out of the market. If we do not fix this today, we will rue this tomorrow.
The Murrieta decision was an important first shot in the battle to restore sanity to home prices in California.
We who know the importance of home ownership must demand it not be the last.
(Tracey Vackar is a member of the Planning Commission in Moreno Valley and just retired after 8 years on the "Local School Board").
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