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Growth fees & those who keep crying wolf

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POSTED May 21, 2010 2:43 a.m.
Should growth pay its own way?

It is a concept that is being shouted down as some in the development community are using The Great Recession as an excuse to promote wholesale slashing of growth fees.

Growth fees by definition are to cover the costs of adding additional housing. Before Proposition 13 and other tax initiatives, cities had other ways to pick up the tab. Now – with revenues shrinking – any move to slash growth fees to stimulate growth will only result in putting cities – and the people they serve - farther behind the eight ball.

That is why Manteca’s municipal staff proposed tossing storm drain maintenance and operations into the landscape maintenance district assessment for the proposed 93-home Silva Estates neighborhood southeast of Union Road and the Woodward Avenue intersection.

That is on top of assessments for common landscaping and sound walls, street lights, and neighborhood park maintenance.

Jim Rachels with the Manteca-based MCR Engineering firm got the City Council, though, not to impose the storm costs on the Silva Estates landscape maintenance district and for good reason.

As it was written, it was an open checkbook for escalating expenses. Unlike the park and landscape maintenance as well as street lights the city has no way of knowing the cost in the future.

The fee as proposed would have been $30 per year initially to essentially cover the storm basin filter maintenance and its eventual replacement.

The city, meanwhile, has close to a $1 million annual need for storm drains that is taking money out of the general fund. If there was some other funding source, the general fund right now would be just $2.8 million in the hole instead of $3.8 million. And when revenues are normal it would mean Manteca could have at least seven more cops working if the storm run-off system expenses were covered in another fashion.

It would be unfair to expose buyers of homes in one subdivision to untold future liability. Yet it is also unfair to make existing Manteca residents pick up the cost of basic storm system operations for a new neighborhood when those costs would be avoided if the subdivision simply wasn’t developed.

That is why the council should consider a middle ground that doesn’t exactly meet all of the costs those homes impose on the storm system yet at the same time doesn’t open them to unforeseen financial exposure.

The city should consider a policy that addresses the one constant they have control over - the cost of the filter system required by the state at the time a subdivision is approved.

In the case of Silva Estates, the cost would be $30 a year to start with future increases tied to the consumer price index and nothing else.

If down the road the state imposes a filter that is three times as expensive, as an example, the homeowners in the neighborhood would only be on hook for a yearly fee of $30 plus whatever point subsequent annual inflation adjustments to the fee.

That way you don’t expose the buyers of the new homes to unforeseen liability nor do you shift the cost of growth onto existing residents by essentially forcing a cutback in service levels.

As for the cry and hue over growth fees now that the economy has soured, the development community has to stop acting like they have a bad case of sticker shock.

The idea behind Proposition 13 and subsequent tax initiative passed by California voters was for fairness and transparency in how we pay for government services.

Before, all of the costs itemized on the list of growth fees as well as landscape maintenance districts were hidden. We now have a much clearer picture of what each home built costs the city to service.

Manteca’s existing leadership took a calculated risk at suspending the sewer allocation fees collected simply to assure capacity set aside at the wastewater treatment plant for specific projects. In the truest sense, they really are bonus bucks as they are not justified in the manner of traditional growth fees.

Manteca provided relief for the development community even though one could argue that they really didn’t need to since Manteca in 2009 built and sold 37 times the number of homes than Modesto despite being about a quarter of that city’s size.

It is time for more sensible heads to prevail in the development community such as the rationalization made by Rachels instead of having some going around crying wolf.
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