County Doesn't Want to Hike Development Impact Fees... Just Yet

The Board of Supervisors decided at their last meeting to defer voting on a proposal to hike fees imposed on developers in Riverside County to create revenue streams in support of public projects.

"I know we've got to fix this. But what we're doing at this point doesn't look right," said Supervisor Kevin Jeffries before joining his colleagues in a unanimous vote to resume a public hearing on proposed revisions to the county's development impact fee -- or DIF -- schedule to July 29.

The board spent close to 90 minutes last Tuesday weighing its options on the DIFs, ultimately deciding that further study was needed before any of the five supervisors would be comfortable casting a vote.

The paramount concerns were over how the revised fees would be applied and whether they would be fair.

Development impact fees are imposed for construction of homes, office buildings, apartment complexes and other facilities. Fees have been capped at the same rate for five years. In August 2009, after a crash in regional homebuilding, the board slashed development impact fees by 50 percent in the hope of enticing builders to come back.

Critics complained that the board was giving financial interests too big a break while gaining little in return. County officials countered that without the reductions, the area stood to lose out on potential revenue altogether.

Between fiscal years 2001-02 and 2011-12, the DIF program generated just over $200 million, according to county figures. That money, which under state law cannot be mixed with general fund revenue for discretionary use, was allocated to infrastructure projects in unincorporated areas countywide.

Cities have their own DIF programs.

Under the county's proposed new DIF schedule, an estimated $367.4 million would be generated through 2020, or what Executive Office researcher Serena Chow referred to as the county's current "planning horizon."

Future impact fee revenue will go toward jail expansions, roadway grade separations, fire stations, a youth correctional facility expansion, library books, interchange improvement projects, parks and the Interstate 10 "Life- Line" Bypass, which entails building frontage roads paralleling the east-west artery between Banning and Palm Springs so that motorists aren't stranded in the event of a massive traffic jam.

Revenue collected within one of 20 county-designated areas must be applied to plans or projects in those specific locations.

Disagreement arose Tuesday over two issues -- whether the impact fees imposed on commercial developers should include an assessment to help pay for establishing, maintaining or expanding parks, and whether the portion of the DIF that goes toward jail expenses was too high.

California Apartment Association/Inland Empire Division Executive Director Tim Johnson told the board that the criminal justice DIF component needed more evaluation. The argument won sympathy from several board members, who expressed concern that developers in the unincorporated communities would be paying -- and passing on to consumers -- the costs of jail projects that benefit the entire county population -- not just people and businesses in the unincorporated areas.

"I feel we're being punitive to unincorporated developers," said board Chairman Jeff Stone. "We're putting an undue burden on these homebuilders."

The public safety portion of the DIF averages close to $1,000.

Jeffries did not like the fact that the proposed new fee schedule excluded commercial developers, such as builders of wineries and malls, from paying something toward regional parks.

"We're essentially telling commercial and industrial developers -- 'no worries,"' the supervisor said. "I don't understand that mentality."

According to Chow, the parks component of the DIF is only proposed for residential developers because a nexus study showed a clear connection between residents and parks use.

The Executive Office will be returning to the board with a list of options based on the comments and complaints received Tuesday.

The proposed revised DIF program ordinance, which will likely be tabled during the board's July 29 meeting, recommended gradually increasing fees over the next year until they reset at elevated rates -- though still well below pre- recession levels.

Using the phased-in approach, rates would start out at 40 percent below their new proposed base levels. Then, in January 2015, rates would climb to within 20 percent of the proposed base, and in July 2015, DIF rates would normalize, according to county documents.

A spreadsheet included in the 130-page nexus study showed that, in the San Gorgonio Pass, the DIF assessment for construction of a single-family dwelling is currently $2,478. It would rise to$2,631 in September, to $3,508 in early 2015, and then reach its proposed base level of $4,385 by July 1 of next year.

The pre-2009 fee was $4,956 per dwelling.

DIF charges would vary by location and according to the size of a project, with some fees applied per acre, or per housing unit or per certain number of square feet.

In the Coachella Valley, for instance, the total DIF assessment for an office building would be $26,592 under the proposed fee schedule. The charges apply when a "certificate of occupancy" is issued to a developer by county officials.

– City News Service.