City Council deadlocks over development impact fees

Construction is booming in Chico, but not when it comes to affordable housing.

Construction is booming in Chico, but not when it comes to affordable housing.

Photo by Howard Hardee

Build more affordable homes—that’s the mantra many local homeless advocates, housing experts and policymakers have adopted. They say Chico’s tight housing market is a root cause of people living without shelter in this community, where nearly a quarter of households are below the poverty line.

But Mayor Sean Morgan outright dismissed the link between the housing shortage and homelessness on Tuesday (Dec. 19) during the Chico City Council’s discussion of development impact fees that help build and maintain schools, parks and roadways.

“We’re not causing homelessness in Chico with the cost of homes,” he said. “There’s a whole lot of other issues that make that happen.”

Morgan’s comment was part of a tense back-and-forth with Councilman Karl Ory, who favored levying a variable-rate fee on developers based on the size of homes. He said the fee would encourage building smaller, more affordable units and help alleviate Chico’s housing shortage.

“We’re favoring McMansions over workforce housing,” Ory said. “We have a housing crisis and we’re kicking the can down the road on the one issue that could make a difference.”

Updating the city’s development impact fee schedule has been a slog. Back in August, the council worked through 14 fee categories during a three-hour public hearing, which got local builders riled up because the fees stand to increase their cost of doing business. From the city’s perspective, however, the growing population strains public facilities and developers should help pay to maintain them.

On Tuesday, the council considered fees for the sewer trunk line, street facilities and urbanization, as well as the controversial variable-rate fee. Councilman Mark Sorensen made a motion to approve the sewer trunk line fee as recommended, which passed 5-to-2, with Ory and Councilman Andrew Coolidge voting “no.”

But the other fees proved more complicated—especially the variable-rate concept, which would essentially change the current flat-fee structure to a sliding scale based on size. For example, houses with one bedroom theoretically make less of an impact on roadways and other facilities than larger households, so they would be charged 40 percent to 50 percent less in transportation-related fees than they are now. A home with four or more bedrooms, on the other hand, would be charged 40 percent to 50 percent more.

But the Finance Committee determined the fee structure wouldn’t stand up in court without more data to prove the nexus, which prompted that body to reject the variable-rate concept by a 3-to-0 vote during its Nov. 29 meeting. It looked like the council might do the same, as Sorensen made a motion to drop the variable rate entirely, noting the Finance Committee hadn’t produced a “legally defensible fee structure.” Morgan seconded the motion, adding “it’s impossible to get this right.” It gained no further support, however, and failed by a 2-to-5 vote.

Ory made a motion to kick the matter back to the Finance Committee for more discussion, which died on the floor without a second. Eventually, the council directed city staff to analyze the variable-rate fee and return with more information this spring.

But the council wasn’t finished talking about fees. City Attorney Vince Ewing said he had received a letter from the Walnut Creek-based legal firm Miller Starr Regalia threatening litigation over the street facilities and urbanization fees, and requested a closed session discussion before the council took action on them.

Vice Mayor Reanette Fillmer made a motion to revisit the issue in closed session, which drew a second from Morgan but failed by a 3-to-4 vote, with Coolidge siding with the council’s liberal-leaning members.

“Why is it going to closed session?” Ory asked. “It seems to me that a helpful discussion of why we should or shouldn’t move forward can happen in open session.”

“I believe it’s because of the potential for litigation,” Morgan said.

“Everything we do has the potential for litigation,” Ory said, and then made a wisecrack about the city’s pending lawsuit against him related to Chico Scrap Metal: “I’m being sued.”

With the council deadlocked, Morgan said the matter was “tabled by default.” The development impact fee program update will come back to the council early next year.