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Reducing housing fees will do harm
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Editor Manteca Bulletin,
In the last several weeks the Bulletin has featured front page articles outlining the Building Industry Association of the Delta’s demands for a 50% reduction in the city’s building and growth fees and a 5-year moratorium on paying “bonus bucks.” Fleener Richards covered this topic extensively on the Bulletin’s online forum, with hard-hitting, insightful observations. I’ll bring the issue to the “Letters to the Editor” format to underscore some of his points and encourage more discussion.

The concept of “bonus bucks” was introduced by developers as a means of paying upfront for guaranteed sewer allocations for a set number of years. This gave developers “insurance” that, when they were ready to build (usually in phases), valuable sewer capacity would be available for their projects. They wouldn’t face yearly competition with other developers to secure the needed sewer allotment. The “bonus bucks” suggestion was embraced by city leaders who used about $12 million of these funds to bridge the city’s past budget deficits ($6 million for last year, alone.) But with the current financial slowdown, including a sluggish housing market and dwindling number of developers who see it as economically feasible to build right now, the “bonus bucks” arrangement no longer gives developers a needed edge. Naturally, this program has lost their support. But if city leadership abandons “bonus bucks,” there should be conditions. First, if developers no longer pay to reserve sewer allocations, these guaranteed reservations should also disappear. So, if a builder says that he will build 200 houses in a certain year, but only builds 100, the remaining unused sewer allocations go back into the next year’s sewer allotment and are up-for-grabs by any other developer. Second, the city council should reject the 5-year time frame for the suspension of “bonus bucks” and instead use the wording, “temporary suspension.” This allows the city council flexibility to react to the economic climate and housing market fluctuations. If the city commits itself to a 5-year deal and the housing market heats up within the next 3 years, then the city loses the opportunity for 2 more years to re-establish the “bonus bucks” arrangement which flourishes in highly competitive conditions.

I’m amazed that, even temporarily, the city would seriously consider reducing needed building and growth fees by 50%. What happened to common sense? Manteca is at the forefront of local area home building, so obviously the developers recognize the advantages of building here. Further concessions are unnecessary. Manteca contains 957 improved lots. Even factoring in a supposed loss of $1,000 per house, it makes more economic sense for developers to build houses on these lots, rather than to continue to let their investment in lot development, infrastructure, planning, etc. go unrecovered. Developers of unimproved lots present a different story. The Bulletin stated that representatives “noted that it is highly unlikely expensive infrastructure improvements that can run into millions of dollars will take place in the next two years given the market.” (2-8-10) Are we now expected to believe that if building and growth fees were slashed from $48,000 to $24,000 per house, these developers would then invest millions of dollars into infrastructure within these two years?

It’s wrong for city leadership to single out housing development for concessions that are only guaranteed to boost private developer profits. The Bulletin’s assertion about jump-starting “the overall economy by the impact that adding 1,000 new residents a year will have on increased demand for retail and services” (2-10-10) is pure conjecture. Demands aren’t always met in a timely manner. The desire for more sit-down restaurants exists, yet progress towards that goal moves at a glacial pace. Manteca reached the “magic number” of 50,000 residents, enough to attract businesses and restaurants, years ago. The push for more growth and housing is often tied to promises of high-paying jobs and prosperity. But reality seldom measures up to exaggerated projections.

Building and growth fees are intended to offset new development’s impact on current city services and quality of life issues for existing residents. Remember the government facilities fee of $300 that remained artificially low for over 20 years? When studies properly adjusted the figure to over $4,000, some developers chose to sue Manteca, rather than pay. They lost in court. How many other fees might need an upward re-evaluation?

Fees are assessed and collected to benefit Manteca’s citizens. We have inadequate space at the public library and animal shelter, no performing arts center, and, especially worrisome, a police force soon to plummet to 55 officers. This city can’t afford to cut building and growth fees in half, even for a short time, when current fees don’t seem sufficient to cover the expense (financially and in terms of quality of life) to Manteca’s residents. Reduction of these fees would do more harm than good.
Karen Pearsall
Feb. 11, 2010