Developer impact fees beefed-up

It’s a battle that flares every few years, pitting the developer-friendly city councilmembers against the more-progressive members (who don’t receive campaign contributions from the building industry).

This time around it was no contest because two councilmembers who fight for developer rights had to conflict out of the skirmish due to their real estate related jobs. As a result, developer impact fees—the money the city tacks onto new development to help pay for things like police and fire protection, traffic impact and other strains new residents bring—will take a jump.

The cost to developers for building a new single-family house will go up $2,176. Of course, in a free market system, those increases are passed onto the new home buyers and are really just a drop in the bucket considering the average price of a three-bedroom, two-bath home in Chico is now an astounding $339,242.

Mayor Scott Gruendl joined Councilmembers Andy Holcombe, Ann Schwab and Maureen Kirk in approving the increases. Councilmember Larry Wahl was the lone no vote; Councilmembers Steve Bertagna, a mortgage broker, and Dan Herbert, who works for Sheraton Real Estate, did not discuss or vote on the issue.

The greatest part of the jump comes from street improvement costs associated with increased traffic that comes from new housing developments. Highways 99 and 32, both state routes, are the most impacted by proposed new development, some of which is in limbo until the funding for those street improvements, estimated to cost $30 million, are put in place.

Past council majorities, which tended to be of the developer-friendly type, have argued that the state should pay for those improvements. But the state has countered—not to mention passed laws to that end—that it is not solely responsible for street improvements in urban areas because local government’s actions increase the traffic on those roads.

Wahl argued that the state should pay for the state highway improvements and accused it of “performing extortion upon the city.”

“If we start feeding the beast, the beast gets hungrier,” Wahl warned.

Mayor Gruendl noted that the state had passed legislation saying that local municipalities are responsible for increased local impacts on state highways.

Wayne Lewis of CalTrans told the council that until recently his agency had been somewhat of a pushover when it came to tolerating the city’s thirst for development without fiscal responsibility.

“You have to take responsibility for your future actions,” he said.

He called the increases an “important first step.”

And in the end the council took that step, which will also increase the cost of commercial and industrial development by about $13 per square foot. The new fees go into effect in 60 days.