Council Approves Small Increase to Developer Impact Fees That Keeps Davis on the Low End of the Spectrum

Last week ago, the issue of developer impact fees came up on the Vanguard in reference to a Tsakapolous project.

From the December 11, 2007 Sacramento Bee:

"A developer's willingness to purchase water services in advance of home construction will help the El Dorado Irrigation District weather the downturn in the housing market.

The district board Monday approved an agreement with AKT Carson Creek Investors LLC that calls for the firm to pay nearly $4.34 million in facility capacity charges for water, wastewater and recycled water service in 2008 as an advance deposit on the fees that will be levied when the residential units are built. The company owns the Carson Creek properties in the El Dorado Hills area.

District counsel Tom Cumpston said the pact is similar to contracts the district entered into in the past through assessment districts and other advance funding agreements."

This article in turn spawned a discussion as to whether Davis got its fair share of developer impact fees.

In that article I suggested:

"In short, the real question is are we asking developers to do enough in the city of Davis when we approve their plans?

I am not advocating more development here. Nor am I suggesting that developers need to take a loss on their project.

What I am suggesting is that we ask our developers to do more than we presently do. If they want to develop land adjacent to Davis, and we think these are good projects for the future, maybe, just maybe, we should ask for things in return, so that these developments do not negatively impact the city as much as they presently do."

This issue came up to council on Tuesday of this week. City Staffer Paul Navazio proposed a new method for assessing developer impact fees. The proposal would raise the fees from a range of 12.19% to 38.38%.

The biggest of these increases would be single family dwellings which would increase by over 33%.

Nevertheless, in relative terms, as the chart demonstrates, Davis is getting among the lowest amount of developer impact fees of the jurisdictions that were sampled in the chart that is posted next to the article--particularly for single family dwellings, which make up a large percentage of new developments.

Mayor Sue Greenwald spoke passionately on this issue, at one point somewhat parodied Councilmember Saylor's demeanor and delivery style.

"Year after year, our impact fees have been among the lowest of all cities we've looked at. Year after year, we always say in measured reasonable voices that we need more details, we're making progress, we need more studies, more data, more plans, and year after year after year our developer fees are the lowest.

Right now I'm going to repeat, our water fee is the lowest of nine cities we looked at. It's $2740, the water fee for Livermore which is a slow growth city is $22,775, ten times the size of our developer fee.

There's no excuse for this. Every year since I've been on the council, at least the last six years I've been saying, there's no excuse for this. And every year in measured voices, the council answers, well we have to study more, work on our methodology, get more details."

Mayor Greenwald said she would "have to vote for this, otherwise we will get even lower developer fees." However she did make a motion to get an independent, outside consultant to examine the fees, and see what we could legitimately and more reasonably charge developers, in an attempt to get a higher but more fair share for the city of Davis.

While the council passed the new impact fees as proposed, the Mayor lost in a 2-2 vote on the issue of an outside consultant examining whether the fee could be increased.

The bottom line for me is that there are very real costs that occur as the result of development, costs that actually make it not cost-effective for the city. A good illustrator of this point is the impact of West Village. Both the city and UC Davis would lose money on cost of services versus what they would recoup in one-time developer fees and property taxes.

This would seem a no-brainer issue for both sides. For those in favor of development, higher development impact fees might make the public and the council more willing to approve future housing projects. For those in favor of lower development, higher development impact fees means that the city can recoup more of its costs for water, public safety, and traffic impact. The cost of these services generally means that development is a losing prospect for the community.

Meanwhile Davis is going to grapple with increased water and sewer costs in the near future, allowing developers to pay more of their fair-share seems the only realistic way to go here. But again, the council majority does not seem to see it that way.

---Doug Paul Davis reporting