You Pay For Development
California continues its growth. Cities that were nothing more than a gas stop a few years ago are becoming full fledged communities.
There are a number of cities and counties that have yet to experience significant growth. They have, however, realized that their property values are riding the tide created by their more affluent neighbors.
Development is coming to a city or county near you. Is your city and county prepared? Probably not! Developers flash their cash and politicians and staff lose touch with reality. I have seen it happen.
The Sacramento Bee has even realized that there is a cost to development. In an October 3, 2005 editorial “Who pays for roads?” we find that there is a significant burden to local government related to development. After all of these years of growth the Bee has finally made a tentative move to the “controlled growth” side of the equation.
It has always been my opinion that owners of property have a right to develop their property in compliance with the community’s general plan. I also believe that such development should pay for their impact on the existing community services. This is a simple and realistic approach. Apparently, government agrees as they impose development fees.
The problem rests with government’s desire to grow the community with the unrealistic fee structure. These fees are not necessarily based upon the real cost of services but are discounted to what government believes that developers are willing to pay.
The Bee states “[El Dorado] County supervisors have dramatically increased the fee on new construction, the wider roads and new interchanges that help to deal with the increased traffic. This fee is $28,384 for a new single-family home in Cameron Park. For a new home in El Dorado Hills, the fee is $22,686.”
Apparently this fee structure is unacceptable. The Bee reports “Builders are outraged at the size of this fee. Slow-growth advocates, meanwhile, are just as livid that the proceeds from this fee don't come close to paying for the road improvements needed to prevent traffic from worsening to an urban crawl, the so-called service level ‘F.’”
The developers complain about the fee in an effort to establish a cap on the fee. The developers are good business people who know what their product should sell for and what the expected profit should be. An increase in fees either changes the selling price, which may become too high, or reduces profit.
Community advocates complain that charging less than the true cost results in a reduction in community services.
Now that I have praised the Bee for seeing the light I find that they actually haven’t. “Supervisors can't approve more equitable financing solutions absent the approval of voters. So they stick it to the residents who aren't even there yet.” Yep, the old “everyone” must pay creeps into the story. Whatever happened to the “I like my community the way it is so if you want to make changes you will have to pay?”
“The numbers tell a staggering story. If new development were paying the full cost of these projects, the road fee on a new foothills home could easily top $40,000 and even approach $50,000. Remember, this is just the road fee” according to the Bee.
The plight of El Dorado County is based upon a court decision that the old general plan “was grossly deficient in analyzing the real costs and impacts of growth. So the county had to true up its financial numbers. The county had to quantify just how much money it would take to keep traffic from sliding to the dreaded "F" category.” The Bee continues with its government needs to get bigger assault on the tax system, “The state's taxation system, from Proposition 13 to these fees, is grossly unfair. And El Dorado County is going to be wrestling with its growth/transportation mess for years to come.”
Is growth good or bad? That simply depends upon the perspective of the citizens of each community. Personally I believe that planned, organized, and properly funded growth can be an asset to the community. I am a strong proponent of “financial impact” studies. Such studies are prepared by the developer and reviewed by the government for accuracy. These studies, when compiled with all studies for the development area, provide government and its citizens with a better picture of the impact of proposed development.
Let the citizens vote if they want development! Great idea but often we find that the development concepts at the time of the vote are not what is found when the development is completed. Too often government is willing to give more than they get for the sake of the property tax increment. Unfortunately, the decision makers fail to realize that government services may be taken care of today but their costs will continue to grow in the future. The offset to these costs are only realized by a small increment (Prop 13) or when property is sold. This creates catch-up financing.
What happens when your community is in a major development phase and the economy goes south? Property needed to pay for the impacted services is not sold. Revenue to government stagnates. Services are strained. Roads don’t get repaired. Traffic becomes an issue.
Look at your utilities. If your community is going to experience major development, utilities must gear up for that development. Sometimes they expend millions of dollars with the idea that such expenditures will be recouped when development matures. What happens if only half of the development is completed in the time projected? Somebody has to pay for infrastructure that was built based upon full build out. That somebody is the community.
Government needs to be reminded that growth is not a game of monopoly. This is real life and not a game. Elected officials must carefully manage their staff so that policies are followed.
Citizens must watch the flow of campaign dollars. Developers supporting incumbents does not mean that there is a problem. However, when developers only support incumbents against opponents who believe in planned growth your antenna should go up. Money represents power and that does not necessarily provide any benefit to the citizens.
I speak from experience. I watched a sleeping gas stop grow from 11,000 to over 100,000 in a decade. I watched the strip malls be built and then abandoned. I watched the crime rate move from reporting each crime each day to reporting crime per 1,000 and then per 10,000 people.
The community belongs to its citizens, not government. Get involved and know the facts. Ask questions.
Who pays for development? You do!
There are a number of cities and counties that have yet to experience significant growth. They have, however, realized that their property values are riding the tide created by their more affluent neighbors.
Development is coming to a city or county near you. Is your city and county prepared? Probably not! Developers flash their cash and politicians and staff lose touch with reality. I have seen it happen.
The Sacramento Bee has even realized that there is a cost to development. In an October 3, 2005 editorial “Who pays for roads?” we find that there is a significant burden to local government related to development. After all of these years of growth the Bee has finally made a tentative move to the “controlled growth” side of the equation.
It has always been my opinion that owners of property have a right to develop their property in compliance with the community’s general plan. I also believe that such development should pay for their impact on the existing community services. This is a simple and realistic approach. Apparently, government agrees as they impose development fees.
The problem rests with government’s desire to grow the community with the unrealistic fee structure. These fees are not necessarily based upon the real cost of services but are discounted to what government believes that developers are willing to pay.
The Bee states “[El Dorado] County supervisors have dramatically increased the fee on new construction, the wider roads and new interchanges that help to deal with the increased traffic. This fee is $28,384 for a new single-family home in Cameron Park. For a new home in El Dorado Hills, the fee is $22,686.”
Apparently this fee structure is unacceptable. The Bee reports “Builders are outraged at the size of this fee. Slow-growth advocates, meanwhile, are just as livid that the proceeds from this fee don't come close to paying for the road improvements needed to prevent traffic from worsening to an urban crawl, the so-called service level ‘F.’”
The developers complain about the fee in an effort to establish a cap on the fee. The developers are good business people who know what their product should sell for and what the expected profit should be. An increase in fees either changes the selling price, which may become too high, or reduces profit.
Community advocates complain that charging less than the true cost results in a reduction in community services.
Now that I have praised the Bee for seeing the light I find that they actually haven’t. “Supervisors can't approve more equitable financing solutions absent the approval of voters. So they stick it to the residents who aren't even there yet.” Yep, the old “everyone” must pay creeps into the story. Whatever happened to the “I like my community the way it is so if you want to make changes you will have to pay?”
“The numbers tell a staggering story. If new development were paying the full cost of these projects, the road fee on a new foothills home could easily top $40,000 and even approach $50,000. Remember, this is just the road fee” according to the Bee.
The plight of El Dorado County is based upon a court decision that the old general plan “was grossly deficient in analyzing the real costs and impacts of growth. So the county had to true up its financial numbers. The county had to quantify just how much money it would take to keep traffic from sliding to the dreaded "F" category.” The Bee continues with its government needs to get bigger assault on the tax system, “The state's taxation system, from Proposition 13 to these fees, is grossly unfair. And El Dorado County is going to be wrestling with its growth/transportation mess for years to come.”
Is growth good or bad? That simply depends upon the perspective of the citizens of each community. Personally I believe that planned, organized, and properly funded growth can be an asset to the community. I am a strong proponent of “financial impact” studies. Such studies are prepared by the developer and reviewed by the government for accuracy. These studies, when compiled with all studies for the development area, provide government and its citizens with a better picture of the impact of proposed development.
Let the citizens vote if they want development! Great idea but often we find that the development concepts at the time of the vote are not what is found when the development is completed. Too often government is willing to give more than they get for the sake of the property tax increment. Unfortunately, the decision makers fail to realize that government services may be taken care of today but their costs will continue to grow in the future. The offset to these costs are only realized by a small increment (Prop 13) or when property is sold. This creates catch-up financing.
What happens when your community is in a major development phase and the economy goes south? Property needed to pay for the impacted services is not sold. Revenue to government stagnates. Services are strained. Roads don’t get repaired. Traffic becomes an issue.
Look at your utilities. If your community is going to experience major development, utilities must gear up for that development. Sometimes they expend millions of dollars with the idea that such expenditures will be recouped when development matures. What happens if only half of the development is completed in the time projected? Somebody has to pay for infrastructure that was built based upon full build out. That somebody is the community.
Government needs to be reminded that growth is not a game of monopoly. This is real life and not a game. Elected officials must carefully manage their staff so that policies are followed.
Citizens must watch the flow of campaign dollars. Developers supporting incumbents does not mean that there is a problem. However, when developers only support incumbents against opponents who believe in planned growth your antenna should go up. Money represents power and that does not necessarily provide any benefit to the citizens.
I speak from experience. I watched a sleeping gas stop grow from 11,000 to over 100,000 in a decade. I watched the strip malls be built and then abandoned. I watched the crime rate move from reporting each crime each day to reporting crime per 1,000 and then per 10,000 people.
The community belongs to its citizens, not government. Get involved and know the facts. Ask questions.
Who pays for development? You do!
<< Home