Contentious Napa Housing Fee Still Faces Opposition

NAPA VALLEY, CA — Napa County supervisors this week approved a new set of fees intended to create more affordable housing that could be a model for the wider region.

The fee differs from the approach of providing breaks to developers who agree to build affordable housing, which can still be beyond the means of many Bay Area residents.

In this case, homes over 2,500 square feet would be taxed $43 per square foot, with the fee starting at 50 percent in 2026 and escalating to the full rate over the next three years. The current fee is $9 per square foot.

The fee for projects submitted after Jan. 15 would apply only to the rural unincorporated areas of the county.

The tax was proposed after a housing bond failed to make it on a recent ballot.

The $ 1-per-square-foot fee is within the recommended range for affordable housing and an effective approach to incentivizing its development, according to analysts like Jon White, the chief real estate officer for ABODE Services, a Bay Area homeless housing and services provider whose development arm operates in Napa.

However, striking a balance among stakeholders' conflicting demands and needs was difficult.

Supporters argued that the tax is essential to making housing affordable, especially to residents who work in agriculture and hospitality, as well as senior citizens, college-age adults, and people with disabilities.

The median income in Napa County is about $70,000, while the median home price is $977,000.

The strongest objections came from real estate, builders, and developers who argued that the permit process and the cost would drive away people who want to build homes that would be subject to the tax.

"There's alarm about such a massive hike," said Hillary Ryan, a Napa realtor. Excessive impact fees could shrink the local tax base and have the opposite effect of what is intended, she said.

Developers opposed the fee, arguing that construction of high-end homes would stop if the fees made building too expensive.

Building a 3,000 square-foot home will generate $258,000 in fees. That makes it unbuildable for many developers, a realtor, Gary Rose, told supervisors.

"You're going to hurt people who lost their homes in the fire," he said.

Supervisor Liz Allesio called for more analysis to understand how the fee would play out, particularly for building trades, which are also a significant economic driver. "We're starting too high and ending too high."

"We have to look at what we are incentivizing?" Supervisor Belia Ramos said, according to reports. "Mandating doesn't work, incentivizing does."

Supervisors voted to change the threshold, phase in the fees incrementally, and develop a deferral program.

The final, adopted resolution will be made available on the Napa County website.