One measure that would add thousands of dollars to the price of new homes or commercial buildings in Fresno to cover the costs of infrastructure was approved Thursday by the Fresno City Council.
But a second measure to cover the cost of expanding water service to new development projects has been pushed off for two months to resolve complaints from the building industry.
On a 5-2 vote, the City Council approved development-impact fees paid by developers to offset the demand that their projects would place on streets, traffic signals, police and fire services and parks. Councilmen Clint Olivier and Steve Brandau voted against the fees.
The city’s fees for fire, police and parks have been static since they were adopted in 2005, according to a report to the council from City Engineer Andrew Benelli, while impact fees for major streets were last adjusted in mid-2015.
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“The impact fees charged to any new development represent the development’s proportionate share of the capital cost for new infrastructure and facilities, which in turn provide capacity to serve growth in population and employment,” Benelli wrote in his report. “Impact fees do not pay for any ongoing operational or maintenance costs.”
Some of the component fees for residential, retail, office commercial and industrial are actually proposed for reduction, including those charged for streets in already-developed “infill” areas of the city, as well as police facilities fees. Others are going up across the board, including an increase of about 6 percent for traffic signal fees and a hike of as much as 41 percent for fire facilities fees.
The fees are charged to developers for each dwelling unit in the case of residential projects, or per 1,000 square feet of building space for retail, office and industrial projects.
In “new growth areas” of Fresno, the combined effects of the impact fees would be about $17,700.
We’re very sensitive to the cost of development. We’ve worked very hard to keep these fees as low as possible.
Scott Mosier, Fresno’s director of public works
“We’re very sensitive to the cost of development,” said Scott Mosier, the city’s public works director. “We’ve worked very hard to keep these fees as low as possible.”
Olivier had proposed delaying the implementation of the impact fees, particularly in infill areas, because he was concerned that the costs would put Fresno at a disadvantage with neighboring Clovis. “To do infill, our fees are too high,” Olivier said. “It’s worth it to better compete with Clovis to have lower fees.”
“How much of a hit would it be if … if we just say we match Clovis in an effort to steal their business?” Olivier added.
After developer representatives including Building Industry Association CEO Michael Prandini and attorney Jeff Reid said they were concerned about the parks component of the fee, Olivier asked for more time to study that issue as well.
But Olivier withdrew his motion after City Manager Bruce Rudd and other council members noted that the city offers a range of fee waivers and discounts to reduce the impact fees in infill areas as well as other credits to offset some of the proposed increase in the parks fees.
In reality, Rudd said, impact fees will still be “about $3,000 less per door” in Fresno’s infill areas than in the developed core area of Clovis that is south of Herndon Avenue and west of Fowler Avenue.
While the council was divided on the first set of fees, members unanimously agreed to a 60-day delay in voting on an increase in water fees. That measure proposed to do away with a tangle of more than two dozen different fees now charged for water connections, water pipelines and well treatment.
In their place would be one uniform “water capacity fee” intended to fully recover the city’s costs to provide water infrastructure to new residential and commercial projects.
The change in the water-fee structure is necessary, according to the city’s Public Utilities Department, because the current system of charges – set up about 10 years ago – cannot keep up with what it takes for the city to provide the pipeline and infrastructure capacity to deliver water to new developments, or for the necessary water supplies to keep up with demand. The city also faces problems with the underground water table as well as new regulations from the state to reduce its reliance on pumping groundwater.
We are sitting on a contaminated and overdrafted aquifer. The groundwater system is broken; we’ve hit the wall, and we need to fix the damage.
Thomas Esqueda, Fresno’s director of public utilities
“We are sitting on a contaminated and overdrafted aquifer,” Public Utilities Director Thomas Esqueda told the council. “The groundwater system is broken; we’ve hit the wall, and we need to fix the damage.”
The city’s current water fees vary depending on the area of the city in which a developer builds a residential or commercial project. “The proposed fees represent a transition from the city’s current method of calculating and applying water connection charges,” consultants Alex Handlers and Michael Degroot, with the public finance advisory firm Bartle Wells Associates, reported in their water capacity fee study earlier this year. “A key recommendation … is to transition to a single, consistent system of water capacity fees that can be applied uniformly to all future development within the city’s service area, regardless of where development occurs.”
For a typical single-family home with a 1-inch water meter connection, the proposed capacity fee would be $6,373. For commercial and industrial properties with larger water meter connections, the proposed fees would range from almost $16,000 for a 2-inch meter to more than $382,000 for an 8-inch meter connection.
But the development community isn’t happy about the prospect of paying more for projects.
In a pair of letters to the council earlier this week, the construction industry – which would bear the brunt of the fees before likely passing them along to customers in the final lease or purchase cost – expressed concerns about the additional costs.
Prandini and Reid implored the City Council to postpone a decision. “We need additional time to sit with the administration,” Prandini told the council, adding that his organization has only had a month to review the proposal. “We have not gotten answers to our questions. There are outstanding issues that have not been resolved.”