Developer fees are a relatively painless way for cities and counties to raise money for big-ticket items like parks, libraries, new roads and police and fire stations.
All told, though, such fees can add tens of thousands of dollars to the cost of a new home or business. For that reason, waiving fees seems like a smart way for government to encourage construction in a rotten economy, which is why the Paso Robles City Council decided to greatly reduce fees in February 2011.
While it still collects sewer and water connection fees and transportation impact fees, the city has been letting builders off the hook when it comes to other charges. As a result, the builder of a single-family home on the city’s east side, for example, saves around $11,000.
We understand the city’s motivation — by encouraging construction, it’s hoping to help create jobs and generate tax revenue. But given that Paso Robles already has forgiven approximately $1 million in fees over the past couple of years, we’re concerned about the council’s recent decision to extend the waiver another six months.
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The city could regret that $1 million loss when it comes time to build parks or make expensive repairs or additions to public buildings.
On top of that, forgiving fees is intrinsically unfair to builders who have paid the full fees (and to homebuyers, since fees are typically passed on to consumers), as well as to city residents who may have to wait longer for needed facilities.
Consider, too, that Paso Robles residents were generous enough to approve a half-cent sales tax increase in the last election. We wouldn’t blame them for wondering why ordinary citizens are asked to pay more, while the development community is paying less.
And finally, we’re concerned that there’s no direct evidence that the fee waiver has resulted in more jobs for local workers or additional sales tax revenue for the city. According to city staff, there’s no way to track such information.
What’s more, the city can’t require builders who benefit from the waiver to hire local workers or to purchase a percentage of building materials within the city. According to Paso Robles City Manager Jim App, the city is legally prohibited from doing so.
What we’re left with, then, is an arbitrary decision to continue the program for another six months, on the assumption that it somehow helps the economy.
We don’t like it.
While we understand and support the city’s desire to spur economic recovery, we’re not convinced that the fee waiver is in the city’s best long-term interests. Absent more information, we urge the council to vote against any future extensions of the developer fee waiver.