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Bonus bucks in abeyance? Only with some strings

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POSTED January 24, 2010 1:56 a.m.
It is pretty sobering to think that without the bonus bucks collected over the years Manteca today would have either 46 less police officers and firefighters or 75 less parks, streets, and general staff workers.

Some  $6 million of bonus bucks paid by home developers in past years for sewer allocation was married with cuts and spending down reserves to cover the $14 million deficit that existed in this year’s municipal budget that came in at $32.6 million. Bonus bucks are propping up just over a fifth of the current municipal budget.

Altogether, $12.2 million in bonus bucks have been used since 2002 to avoid general fund cuts or the need for new taxes. That should put to rest the argument that growth – at least initially – doesn’t pay its way.

How we got here is interesting. First, it was the development community that came up with the idea. Then previous councils did some interesting moves including dropping a $2.35 monthly household utility tax which would have generated $6 million – if not more – in the past eight years for the general fund. Previous city administrations failed to collect some fees and acted extremely slow to make sure other fees kept up with current costs. One example is the government facilities fee paid by growth that was kept at $350 per home from 1989 to 2008 until the current council raised it to $4,702 to reflect the actual cost of needed municipal facilities such as a new police station and library.

To the city’s credit, they finally started facing the music about 18 months ago – a full year ahead of everyone else. They have reorganized, made cuts, obtained contractual concessions and have put the city on what appears now to be a course to live within its means. Of it wasn’t for bonus bucks, though, the city would have hemorrhaged forcing major cutbacks in services.

While the city definitely got nicked it dodged what could have been a fatal bullet. And, as bizarre as it may sound, developers – and ultimately buyers of new homes -  via bonus bucks provided the means for the city to finally find the right track for fiscal responsibility by rethinking how services are delivered. Manteca still has a ways to go and can still be derailed by thievery of local revenue by the state, but an argument could be made that Manteca is in somewhat of a better position that a lot of other cities.

Now for the political hot potato: Should the City Council put bonus bucks in abeyance for a few years in a bid to rev up housing to create more private sector jobs and strengthen the overall economy?

The city projects they will have $887,135 in bonus bucks left when the fiscal year ends June 30.

Since bonus bucks are paid on a sliding scale from $7,350 and $13,340 per home depending upon the number of sewer allocations a developer is guaranteed to receive in a given year, assume that the average buck fee per home is $10,000.

There are 957 finished lots out there. Some already have had bonus bucks paid for them. Assume that at least 600 haven’t. That represents $6 million in bonus bucks.

There are another 10 subdivisions that have completed the entitlement process which means they can start turning dirt. Those 10 projects have 3,252 lots between them. That represents $32.5 million in future bonus bucks.

If homes aren’t built, Manteca doesn’t collect bonus bucks. Manteca also needs some level of home building to cover water and sewer bonds.
That said, there could be justification for a temporary lifting of bonus bucks but only if certain things happen.

•The city in future fiscal years swears off bonus bucks – except for perhaps the $887,000 they expect to still have on June 30 – to balance the general fund.

•Instead of phasing in cost recovery for all development-related work city hall does in connection with processing subdivisions and issuing building permits, the city goes to 100 percent recovery upon temporarily suspending bonus bucks. To avoid delaying builders or shortchanging the city, $2,000 in bonus bucks would still be paid per house until such time the cost recovery fees are in place. Then whatever the actual cost is the city will refund the developer the difference.

•Any new subdivision that breaks ground while bonus bucks are in abeyance, must agree that for every 15 at-market single family homes built they must build two at-market half-plex where units can be sold separately. The city would allow them to be placed on corner lots and require the design look like those in Ripon that were done so they blend in seamless with surrounding single family homes. Halfplexes would represent more affordable housing options.

•While the bonus bucks are in abeyance, the city would work with developers to come up with an automatic adjustment on bonus bucks based on the median price of new homes selling in a particular year in Manteca. If the values of homes go up, the bonus bucks go up. If they go down, the bonus bucks go down. It would eliminate complaints that bonus bucks are out of whack in a retreating market and therefore making homes more unaffordable.

Such moves would not have the appearance – right or wrong – of the city rolling over for developers nor would it put Manteca’s municipal  financial stability in jeopardy.
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