Homebuilders get break on Fresno's fees

Published online on Saturday, Aug. 08, 2009

In an effort to spur the construction industry and put people to work, the city of Fresno is giving some homebuilders a multimillion-dollar break on fees for parks and firehouses.

City Hall perhaps has no choice. Officials apparently already had promised developers a special deal on fees in exchange for some quick cash in 2006, and the construction industry rebelled when City Hall decided to break the promise in 2008.

The City Council on July 30 gave about a dozen developers a nearly unlimited extension on the amount of time they have to build houses under a now-discarded system of developer fees. These fees are much lower than the fees now in place.

The extension applies only to 970 residential lots scattered throughout the city, and only to parks and fire fees.

But the council's decision could cost the city as much as $3.4 million in lost fees -- $3 million to parks and $400,000 to fire. City officials say this would translate into about 10 acres of unbuilt parks and force the cash-strapped city to find other sources of money for construction of new firehouses.

Fresnans for years have complained about the lack of public green space and the woeful condition of many firehouses.

But, city officials say, the severe recession is forcing them to trade a modest concession for a potential jolt to the local economy. They say a rejuvenated construction industry will generate a self-sustaining wave of jobs, paychecks and spending.

"The best thing this does is keep a number of people in jobs, and that's important in these very critical times," Council President Cynthia Sterling said July 30.

Michael Prandini, president and chief executive of the Building Industry Association of Fresno/Madera Counties, says many people don't realize how money generated by the homebuilding industry makes its way into every nook and cranny of the local economy: "But when that revenue doesn't get to your business, it suffers and they have to cut you off the payroll."

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This tone of crisis and hope characterized the nearly eight-month-long public discussion on how to help Fresno's developers. The issue surfaced in mid-December when a sharply divided council passed a four-part stimulus package.

Council Member Brian Calhoun, on the verge of being termed-out, led the opposition. He and others worried: Will it set an expensive precedent? Will parks and fire suffer? Will the new council and mayor, coming on board in a few weeks, overturn the old council's actions?

But supporters led by two-term Council Member Jerry Duncan, who warned that the housing industry was in crisis, carried the day.

Then-Mayor Alan Autry supported the idea but vetoed the fee-extension provision, saying it needed more work. It all got kicked forward to new Mayor Ashley Swearengin, who quickly joined forces with the council to form an economic stimulus subcommittee that helped draft the fee extension approved July 30.

Fresno is far from alone in its desire to give the construction industry a break for the greater community good. Sacramento, Modesto, Turlock and Visalia have moved down the same path.

Some have waived automatic increases. And where once they asked homebuilders to pay fees when construction began, they now usually defer payment until the house is sold and occupied.

Fresno, too, now defers payment of developer fees until the house is ready for the new homeowner's welcome mat.

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But there's a twist to Fresno's stimulus plan.

For more than 30 years, hardly any other city had such a convoluted way of paying for the streets, sewers, sidewalks, parks and public safety facilities that go hand in hand with suburban growth.