More Jurisdictions in California Slash Housing Impact Fees
More jurisdictions in California are joining the bandwagon of those who are reducing or deferring impact fees to help revive home building and their stalled-out local economies.
On June 1, the California Building Industry Association reported that the city of Menifee in Riverside County had voted five to zero to lower its development impact fee by $2,585.70 per single-family home, down from a previous fee of $5,185.
The council also reduced its staff hourly billing rates by 20% and said it would formalize a new streamlined entitlement process for development applications.
In an effort to further boost new home construction and sales, the city is working to establish a Menifee Money Program that will provide a gift card for buyers of new homes to be used at local businesses. The amount of the card will equal 50% of the home buyer’s first year’s property taxes.
The city’s fee reduction will go into place on July 1 and end on June 30, 2010, or upon the issuance of 500 permits, whichever occurs first.
The California home builders also reported that the Scotts Valley school district, which had the highest school district impact fees in Santa Cruz County, had recently slashed the amount charged from $6.31 per square foot to $3.27. On a typical 2,000-square-foot home, this reduction of nearly 50% will reduce fees from $12,620 per home to $6,540.
On June 4, the BIA added Santa Maria to its list of jurisdictions in the state deciding to reduce their development impact fees on home building.
The city council of Santa Maria voted unanimously to lower its fees by about 7%, which would reduce the cost of building a single-family home in the city, located in northern Santa Barbara County, by about $2,250. The reductions will remain in effect for the next two years.
The council also gave builders an additional five years to begin construction on previously approved projects.
“During the housing boom, many jurisdictions sharply raised the fees they charge new-home builders — and thus new-home buyers — by tens of thousands of dollars per home,” said Mick Pattinson, a San Diego-based home builder and chair of CBIA’s Impact Fee Task Force. “The average total impact fee today for each new home is about $50,000 statewide, and there are many jurisdictions where the fees total more than $100,000 — nearly as much as it costs to actually build many homes,” he said.
“With home prices today half of what they were three or four years ago and builders struggling to compete against repossessed homes being sold well below the cost it took to build them in the first place, it’s welcome news to hear that more jurisdictions recognize market realities. Reducing these fees help make projects financially feasible, and in many cases should lead to increased home building activity.”
In addition to reducing impact fees, more than 50 jurisdictions across the state have deferred their fees from the time the building permit is pulled until the home is sold, which reduces the up-front costs to builders and helps make more projects pencil out financially.
“I believe that when the housing recovery comes, it will be the cities with the lowest fees that will benefit first,” said Pattinson. “Builders (and financiers) are closely watching the fee burdens and those jurisdictions that substantially lower fees will get the early recovery in new-home construction.”