Fees for development in Margarita area of SLO to be reduced

The San Luis Obispo City Council has agreed to reduce the fees for development in the Margarita area by nearly $2.3 million to help stimulate home building there.

The reduced fees are part of a settlement agreement reached last week between the city and Rescal, the owner of two residential subdivisions in that area.

The Camarillo-based developer MD2 Communities is building 177 homes in the Margarita area in the southeast part of town.

The council voted 4-0 in favor of the plan that will lessen the park fees that were intended to help fund the Damon-Garcia Sports Complex on Broad Street. Councilwoman Kathy Smith recused herself from the discussion because she lives close to the area.

Scott Dinovitz of MD2 Communities said the reduced fees will allow the company to build the project as planned. The park fees, as outlined in the specific plan overseeing the area, would have hindered full development, he said.

The change in fees equals a $5,000 reduction in development costs per home planned for the area.

The Margarita Area Specific Plan, adopted in 2004, sets parameters for development in an area within South Higuera, South and Broad streets. The area has long been envisioned by the city as a key place for residential expansion.

The city built the $9 million Damon-Garcia Sports Complex in anticipation of the Margarita development. City policy requires 10 acres of park land per 1,000 people.

Payments for construction of the park came from the city’s general fund, including about $5 million in bond money used to buy the land and fund part of the development. The impact fees could have been used to pay some of that cost.

However, development in the area did not happen as quickly as planned because of the recession. The first development in the area is under way, and the park has been open to the public for more than seven years.

The specific plan required that developers in the Margarita area pay impact fees for 11.66 acres of the 15.1-acre sports complex. The change in the fee structure now makes developers responsible for funding 3 acres of the facility.

“The park is now used widely by the community,” said Derek Johnson, community development director. “It seemed the wise thing to do was to have the general fund pick up a large portion of the cost because really the park is providing enjoyment communitywide.”

The reduction in fees is consistent with a recommendation made in the city’s Economic Strategic Plan, to be adopted by the City Council on Aug. 7, to reduce infrastructure costs to stimulate development.

Council members cutting the fees supported their goal of economic development.

“We need to examine fees,” Councilman John Ashbaugh said. “We know very well from the developer that these fees are a barrier.”

Reach AnnMarie Cornejo at 781-7939. Stay updated by following @a_cornejo on Twitter.