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Bonus bucks: It is time to stop crying wolf

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POSTED February 28, 2010 1:59 a.m.
Manteca built 304 homes last year while Modesto built eight homes and Tracy even less.

Yet the Chicken Littles led by the Building Industry Association of the Delta are using The Great Recession to launch a full-scale attack on building fees in Manteca on the premise that somehow they are responsible for people not buying homes in Manteca and therefore putting a lot of people out of work. Excuse me? Some may claim I’m a little dense but how does building – and selling – 38 times more homes in a year than Modesto and almost three times more than in Stockton – two nearby cities that are four times larger than Manteca – constitute justification to toss out Manteca’s game plan for development?

Much has been said about how efficiently Manteca runs or doesn’t the city and whether some of the fees assessed have too much cost factored into them for financing. That may be true. But in no way is an arbitrarily discounting of growth fees justified. Instead, there should be a deliberate re-examination of all fees to reflect real costs.

Yes, there are a lot of jobs connected with housing. There are also a lot of good jobs connected with trucking and retail. NUMMI’s closure is going to hit some local trucking firms hard. Does this mean the city should suspend their business licenses and find ways to give trucking firms a break so they can be more competitive for less business? What if Tipton’s, the Bedquarters or some other retailer that has provided steady jobs for years suddenly hits the skids due to the economy? Should the city rush to bail them out as well? Redevelopment agency projects are one thing. Cutting into the muscle of government by discounting fees to save the housing sector from simply not matching the pace of the past housing boom is another.

It may be true that Manteca housing starts are down compared to the salad days so therefore employment opportunities are too. But compare Manteca to any other Northern San Joaquin Valley community in 2009 and 2010 and we look like the promised land for home builders.

Developers are trying to use an economic crisis to make an end run around fees that they’ve never liked. But they are fees that have kept this city afloat even though that wasn’t the intent. Some $12.2 million in the unique Manteca creation known as bonus bucks was spent to balance the general fund over the years.

Yes, it is clear that the city could have been leaner and meaner. City Hall has gone on a diet and now needs to find ways to build strength as it can’t count on piling on the pounds in the future as revenue streams have changed for good. But to bludgeon Manteca now for past sins at the same time when developers were able to jack up home prices $10,000 a month for a long stretch of time borders on obscenity.

To make it clear, it was fine for developers to pocket big profits just as it was for existing homeowners to rake in large equity gains when they sold their homes. That’s the market. No one asked developers or home sellers to share their small fortunes created by the housing bubble pumped up in large by liar loans and such. Now that the things have changed, they shouldn’t be asking others to bail them out.

It is a new world.  If developers with the 957 finished lots who have bonus bucks in their agreement can’t afford to pay them, then let them ride out the storm and default on their agreements with the city. They can then apply like everyone else on Jan. 1 of each year for sewer allocations. At the same time, the clock can start ticking on their approved subdivision maps. It’s much cleaner that way.

As for the bonus bucks, you may want to know a number of projects have $5,000 per home that goes into the public safety endowment fund. There is now just over $8 million in the account generating enough interest to pay for two police officers. For every 800 homes built, that generates enough interest off principal even at today’s depressed interest rates to hire one officer. As it stands now, Manteca has one sworn officer for roughly every 430 housing units. That endowment fee portion of the bonus bucks goes a long way to having growth pay its own way for police services. Toss in $400 per home in sales and property tax and growth will cover the cost of police protection it needs – at least in manpower – and then some.

Is anyone giving that consideration or are they just listening to developers running around screaming the sky is falling down?

Instead of suspending the bonus bucks, Manteca should offer to index them based on 2000 home prices when they first went into effect.  Then at least half of the bonus bucks collected should go to the public safety endowment fund.

Making growth fees payable at escrow doesn’t hurt anyone. It simply shifts the payment to when the home is occupied and services are needed. What it does is save the developer from financing the fees. Instead they are funded directly at the time the mortgage loan is made. That does help the builder without hurting anyone including the buyer and the people of Manteca.

Despite legitimate concerns and criticisms, Manteca has done a lot of right things over the years to position itself.

It is a safe bet to say other cities would love to be in our position whether it is Modesto, Tracy, Stockton, or Lodi.

It’s time to stop crying wolf.
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