Manteca’s elected leaders Tuesday moved to make it easier for developers to build apartments, condos, and townhouses without costing the city a dime.
The City Council adopted a deferral payment program for specific growth fees.
And in doing so, council members expressed the hope that it will lead to an increase in the supply of rental housing in Manteca to ease the shortage somewhat and hopefully slowdown future rent increases.
The first project that it will help move forward is a plan by Atherton Homes to build 157 apartments along Atherton Drive between the Juniper Apartments that offer workforce housing and Paseo Villas. It would be the first at-market apartment complex built in Manteca in 12 years. The city policy would effectively allow Atherton Homes to defer paying $2.6 million in fees.
Acting City Manager Greg Showerman said staff will present the council with a similar proposal next month to offer fee deferrals for single family home projects.
The move will help improve the ability of developers to secure financing for multiple family housing. Financing is difficult for such projects due to the long construction period as well as the fact larger complexes can take as long as 13 years for investments to be recovered.
Prior to the fee deferral program being approved, growth fees had to be paid when a building permit was issued. Since it can take upwards of 18 months before a major apartment complex is completed, millions of dollars would need to be spent on fees as well as the construction.
Most residential projects involved two loans — a construction loan allowing the developer to build a house and a mortgage to allow a buyer to purchase it when the city has issued an occupancy permit.
Apartment development works much the same way but with a longer construction period. Construction loans tend to carry a somewhat higher interest.
The deferral reduces the need for the developer to pay interest can pile up over the course of a year or so as well as having to secure a construction loan that covers the fees. A smaller loan would be viewed as a better risk by lenders making construction loans for apartments somewhat easier to obtain.
The developers would prefer to collapse the fees in a non-construction loan obtained after work is completed. The developer with provide an irrevocable line of credit. They also will cover city costs to process a deferral application that is pegged at $1,250. When they pay the fees it will include keeping the city whole on interest the fees would have generated if they had been paid when a building permit is issued.
The fee eligible for deferral include those for fire facilities, major equipment, government buildings, park acquisition and improvement, surface water capital fee and well as fees for sewer, storm drains, transportation and well water.
Fees collected by the school district, county or state cannot legally be deferred by the city.
Atherton Homes partner Mike Atherton has said he is also working on moving another apartment project forward with some 400 units along with possible two restaurants and a bar along with commercial on land immediately east of Bass Pro Shops.
The new fee deferral program would make obtaining financing for such an endeavor somewhat less challenging.
To contact Dennis Wyatt, email dwyatt@mantecabulletin.com