That's a nice fiction. This is a bit old (1999) [1], but California's own housing policy administration at one point sifted through the data and found it averaged something like $15k/unit for apartments, and worse for other forms of housing. I'm not sure there's any evidence it's gotten an order of magnitude better since then.
I can't possibly understand how you can be debating in good faith when someone shows your optimism is likely off by a factor of 10x and you try to spin that into some sort of "doesn't explain it away" non-issue. When you set the bar at $1000 a unit and it is $15k+ (in 1999 dollars) per unit, that's kind of a big deal which you disingenuously brush away because it was fantasy. Development fees are just one piece of the regulatory barrier, these expenses add up, and they absolutely help explain the problem.
A house is made up of individual pieces of wood, drywall, bricks that are "under 10% of the cost" individually by the single piece but when stacked up they absolutely help explain the (much greater) cost of the house. It's going to be difficult to point to a single smoking gun; with housing it's death by a thousand cuts (in California development fees are one of the bigger ones).
[1] https://www.hcd.ca.gov/policy-research/plans-reports/docs/pa...