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Manteca starts 29 new homes in last 18 days

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POSTED March 23, 2010 3:00 a.m.
Manteca’s decision to suspend the bonus bucks charge of up to $17,000 for each new home built for the next five years has touched of a mini-building boom.

Developers in the past 18 days have been issued 29 permits to build single family homes. If the pace holds, that reflects an annual rate of 588 new housing starts in a year’s time. There were 304 new housing starts in Manteca during 2009. That compared with eight for Modesto and 120 for Stockton.

The City Council effective March 3 lifted the bonus bucks - a shorthand for sewer allocation certainty payments - until June of 2015 in a bid to stimulate the new housing market in the hopes of putting more trades people back to work. Home construction has been one of Manteca’s biggest sources of well paying jobs after health care and education.

At the same time the council deferred collecting growth fees they have control over - upwards of $40,000 for a typical 2,000-square-foot new house - until such time as a house closes escrow. That frees up working capital for developers. The city doesn’t need the money for amenities and infrastructure until such time people are occupying the houses. The suspension of the bonus bucks could either spur more housing sales by lowering the price or enable a developer to improve their financial well being at a time when they are simply building in a bid to get their investment out of the ground on finished lots.

There were 957 finished residential lots as of Feb. 1 ready for homes to be built that could generate $633,000 annually to reduce municipal budget gaps.

How those lots could work to Manteca’s advantage when combined with other moves to prevent further erosion in municipal services paid for with general fund receipts depends on several things occurring.
•An average of 300 homes would need to be built in 2010, 2011, and 2012.
•Manteca would not add additional staffing to serve those additional residents.
And such a move could also take pressure off short-term sewer and water costs to put off the need for additional rate hikes in each of those enterprise accounts.

Manteca currently is wrestling with a projected $3.8 million deficit for the fiscal year starting June 1. Building 500 homes a year would reduce the deficit by $1.2 million providing no additional municipal personnel are hired.

The city foresaw a drop-off in building and projected no growth when budgeting for the sewer operation and maintenance costs and just a one percent gain in growth or 210 homes when setting up the water operations budget.

The possible scenarios to ease Manteca budget woes triggered by The Great Recession and the foreclosure meltdown were examined during a council subcommittee meeting with developers to determine if there is a way to get housing starts to pick up in a bid to put more people back to work.

Manteca now has a 16.1 percent unemployment rate with San Joaquin County’s jobless rate at 18.4 percent.

Calculations show that it costs the city $1,457.37 in general fund dollars to provide municipal services to existing property that is within a subdivision that have infrastructure in place but are not built out. The typical household generates $209.01 in property tax, $226.50 in vehicle license in lieu taxes, and $98.83 in sales tax revenue for total revenue of $534.34.

That would represent a net deficit per house of $923.03 based on how the city was operated before budget cuts where instituted.

Unlike new subdivisions that are on the perimeters of existing development and are being processed but haven’t broken ground, the 957 finished lots for all practical purposes are being served already as the streets and parks are already in place that has to be maintained. Police and fire coverage is also partially based on geographic concerns involving response times. Both departments are already responding to the seven neighborhoods where the finished lots are located.

The scenario assumes no increase to city costs which may not be 100 percent practical. At some point it may trigger a need for an additional police officer or parks/street worker as they lots – once all are completed – have the potential of adding 2,880 residents. Under the city’s projection, they would generate $46,893 in additional Measure M sales tax that could go toward covering almost half the salary of a second police officer.

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