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Manteca kisses $6.9M good-bye

Council worried developers may build homes elsewhere

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Manteca kisses $6.9M good-bye

More homes are being built in South Manteca.

HIME ROMERO/The Bulletin


POSTED August 21, 2014 12:43 a.m.

Manteca’s elected leaders are letting developers off the hook for $6.9 million they agreed to pay in exchange for the privilege of building more homes.

That means bonus bucks that in the past paid to help build two new fire stations, develop portions of Woodward Park, hire six additional police officers, paid part of the tab for aerial fireworks on the Fourth of July and covered $12.8 million in general fund shortfalls due to municipal services being expanded to accommodate the needs of new residents among other things won’t be collected until after Dec. 31, 2016.

The council in 2010 voted to hold the fees collected in exchange for sewer allocation certainty in abeyance until June 30, 2015. It was in response to the collapsing housing market that made building new homes unprofitable.

As such developers, who had more than $40 million in infrastructure stranded in the ground for 965 lots were ready to build new homes could not keep construction workers employed.

It also meant the city didn’t have growth it needed to help keep the general fund and enterprise accounts from retracting even more and in turn forcing municipal, layoffs beyond wage and benefit concession.

Now the city won’t receive a penny from such fees that were agreed upon as late as 2013 and 2014 that ranged from $5,000 to $19,960 per unit if homes under development agreements have a permit taken out before Jan. 1, 2017. The decision doesn’t impact growth-related fees for everything from parks and roads to fire facilities.

The City Council on a 4-0 vote Tuesday — with Councilman Steve DeBrum absent — directed staff to bring back the extension for a final vote at the next meeting. The council Tuesday reviewed several options including flattening all bonus buck fees to $5,000 per home before opting of keeping them suspended.

It was noted that some builders opted to not agree to pay bonus bucks in their development agreements since they felt the risk of securing sewer allocations was not that high. Bonus bucks were put in place initially at the request of developers who were worried they would start suing each other under Manteca’s growth cap since there were more sewer requests than allocations back in 1999.

City Manager Karen McLaughlin noted the 18-month extension of not collecting bonus bucks previously agreed upon by developers could cost the city as much as $6.9 million.

• • •

Council worried about soft housing market

Councilman Vince Hernandez argued the continued collection of the fees could hurt the housing recovery that he contended was still soft. If that were to happen, Hernandez feared building trades jobs in Manteca would be lost. He noted the higher fees — such as the $19,950 per unit some builders agreed to — were adopted when the housing market was sizzling prior to 2006.

Union Ranch resident Bruce Lownsbery disagreed with Hernandez, noting that new homes in his neighborhood were “selling like hotcakes.”

Hernandez likened bonus bucks to tips paid in a restaurant and growth-related fees for sewer, water, storm drains, parks, and such was still collecting as the food. In essence, he argued Manteca would still be paid for serving growth but would not be tipped in doing so.

After the meeting, Hernandez indicated he insisted on bringing the issue up now instead of after the Nov. 4 election even though the fees without additional action are in abeyance for another 10½ months.

Hernandez said he didn’t want to make it look like the council waited until after the election to make a decision that would look like it was favoring developers.

Hernandez emphasized that he voted to put the fees in abeyance for an additional 18 months as it was the best thing for the community as a whole.

Just over three months ago, council members seemed eager to return to the collection of bonus bucks.

• • •

In May council seemed eager to restore the collection of bonus bucks

In response during an early May to a query from Councilman Hernandez on what city staff could spend proposed bonus bucks being offered by Atherton Homes in exchange for assuring sewer allocations and water for 356 homes they’d like to build over the next five years in southeast Manteca, the following comments were made:

• Fire Chief Kirk Waters said he would buy a water tender to fight grass fires plus purchase a new fire engine.

• Mark Hall of the Parks & Recreation Department said he would build new picnic shelters for Lincoln and Northgate parks and toss in a new restroom facility at Northgate.

• Police Chief Nick Obligacion said he would purchase new patrol units and pay for additional officer training.

There was no concern at the time from Hernandez or anyone on the council about having Atherton Homes pay $1.8 million would prompt the builder to go elsewhere due to a “soft housing market.”

After he had several department heads share off-the-cuff wish list items, Hernandez thanked Peter Boyce and Mike Atherton — the principals of Atherton Homes — for helping reinstate bonus bucks. Hernandez at the time said he was hopeful the move on their part would set a precedent for developers.

Atherton and Boyce working in concert with planner Ron Cheek devised the original bonus buck concept back in 1999. 

The bonus bucks were on top of growth fees. Manteca collected almost $41.2 million over 11 years before they were suspended 38 months ago.

• • •

Bonus bucks were billed as way for growth to pay for Manteca amenities

The bonus bucks were ballyhooed in 1999 when they were adopted as a way to have growth provide amenities for all of Manteca to share. And they did to a degree. They paid to cover about 60 percent of the Union Road fire station’s cost, built the skate park, paid to install soccer lights at Woodward Park, and place traffic signals along the Tidewater Bikeway among other things.

But a large chunk of the money ended up covering multiple year general fund shortfalls as the city scrambled to find ways to broaden the retail base and bring in employers to fill private sector business parks that in turn pumped up property tax receipts. Property and sales tax account for the majority of the municipal general fund that pays for day-to-day services such as police, fire, parks, and streets.

Over $12.2 million in bonus bucks were used over multiple years to bridge general fund deficits while the city worked with employee bargaining units to get Manteca’s financial house in order.

Bonus bucks also were used to establish an $8 million public safety endowment fund that is now paying the salaries of six police officers including the four man gang unit that was resurrected in July of 2013. The endowment is also helping build the new fire station on Lathrop Road via a loan that will be repaid as fire facilities fees are collected on new growth.

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