When the housing market soared in Sacramento a few years ago, many cities, counties and school districts hiked fees for a new house, with some soaring into the $80,000s and $90,000s.

Builders complained, but moved on. Times were so flush they just paid some and passed the rest to buyers. What did $90,000 matter if a house sold for $470,000 or more to a buyer using exotic financing?

It's sure different today. There are no exotic loans. And much of the new home market is back in the $200,000s. At those prices, builders say, the fees make it hard to break even.

So they're again pushing City Hall to rethink impact fees in light of a devalued housing market.

On Tuesday, Woodland became the first city in the region – and possibly first in the state, according to the California Building Industry Association – to do just that.

Typically, builders pay about $90,000 in city, county and school fees to build a house in Woodland. But with a 4-0 vote, the City Council cut its $69,000 fee to $54,000 – a 20 percent discount of $15,000 per house.

"In terms of the current economic conditions we believed our fees were too high," said City Manager Mark Deven.

Deven said the vote sends a signal to the business community that Woodland is serious about economic development "and very serious about working with development partners in this challenging financial period."

Home building giants Centex and KB Home remain the biggest players in Woodland's much-slowed growth scene.

Builders hope to see a wave of similar actions across the region next year.

"I think this sends a huge message. This is one of the first fee reductions in the state," said Dennis Rogers, a senior executive and government affairs chief of the North State Building Industry Association in Roseville.

Wednesday, Rogers drove to Galt City Hall for talks about the issue. He's also had discussions with Roseville officials.

Area builders have often voiced their biggest objections to impact fees in Elk Grove and Rancho Cordova. Both cities have room for thousands of new homes in years ahead.

But the cities maintain that their fees are fair, and necessary to ensure a quality of life that comes with new growth.

Fees to build in Rancho Cordova top out at almost $83,000, according to the city. About half are city fees; the rest are for the county, schools and special districts.

"Our feeling is our fees are at an appropriate level for the standards we're providing for the community," said Assistant City Manager Joe Chinn.

A struggling home building industry has already received breaks from several local governments in the region. Typically, builders pay their impact fees when applying for a permit. But Rogers said the cities of Elk Grove, Rancho Cordova, Roseville, Folsom and Woodland, along with Sacramento and Placer counties, now allow builders to pay the fees shortly before the house is occupied.

That allows builders to pay and recoup their fees quickly.

But many feel the amount of fees is the real battle. That could make it one of the bigger government stories of 2009.

How low can they go?

Is it really possible we'll see 3.5 percent mortgages, as predicted this week by CNBC's Jim Cramer on "Mad Money"?

Not so fast, say mortgage industry players like Fred Arnold, president of the California Association of Mortgage Brokers. While possible, Arnold said, "In my professional opinion, it would be historic in nature and a big surprise."

"I'd be happy to see it, but I don't know if it's realistic," added Bob Bader, owner of Sacramento's Arden Mortgage.

Dubious, too, is Joshua Bruno, general manager of JCL Mortgage in Sacramento. But he wouldn't be surprised by anything after 2008 in the mortgage industry, he said.

"I came home from the military in 2006," he said. "I traded one war for another."

Lower rates, meanwhile, are driving a rush to refinance said the Mortgage Bankers Association. It said 77 percent of mortgage applications last week were refinance requests. And on Thursday, mortgage giant Freddie Mac said rates were at a 37-year low.

A protest with a twist

Workers at a Fairfield real estate office thought it was a Christmas party Monday when a crowd came in the door with a tree and furniture. Instead, it was a foreclosure protest by a Santa Rosa family and backers from the housing advocacy group ACORN. It's believed to the state's first "move-in" protest.

ACORN spokeswoman Claire Haas said the Santa Rosa family was scheduled to be evicted. But instead of returning the keys to Fairfield agents representing the lender, the family asked for help in getting a loan modification. Without help it would just move into the real estate office.

As Haas tells it, the move-in lasted less than a hour. Agents quickly called the lender to discuss plans to keep the family in its house through the holidays. At last word, the family expected to spend one more Christmas at home, said Haas.

Call The Bee's Jim Wasserman, (916) 321-1102. Read his blog on real estate, Home Front, at www.sacbee.com/blogs.