Supervisors Lower Fees to Spare Developers Unexpected Costs

Concerned that some developers were caught off guard by recent rate increases, Riverside County supervisors voted today to halve the fees paid by small and large interests to build or expand commercial and residential structures.

"We need to have these fees phased in over time for the benefit of the small developer -- the mom-and-pop operation," said Supervisor John Tavaglione, whose Second District includes Riverside, Corona, Eastvale and Norco. "There needs to be a system in place so that we can notify them that higher fees are coming."

Tavaglione worried that because the Board of Supervisors allowed development impact fees to revert to normal levels on July 1 -- after years of keeping fees cut in half -- projects would be threatened as developers scrambled to reconfigure their budgets to account for the steeper costs to obtain permits.

"Although we are seeing some signs of an economic recovery in our local housing and business climate, the recovery is still slow and uncertain," the supervisor said.

In 2009, the board chopped fees by 50 percent to spur development amid a sputtering economy. The fee reductions were extended every year, but the last "temporary" reductions expired June 30. The board had expected to have a revised fee structure in place by that time. But, according to Tavaglione, there's more research to do before revisions can be implemented.

In the meantime, he said, builders are being charged rates enacted during the region's last boom times.

According to the DIF program ordinance, fees can range from a few hundred dollars per dwelling unit to $35,000 per acre, depending on the size of the project and where it's located.

The board implemented the development impact fees program in 2001 to mitigate the effects of growth in the region. Fees underwrite a variety of public improvements, including street widening, jail expansion, library renovations and the construction of fire stations.

"These fees pay for needed infrastructure," said Temecula resident Paul Jacobs, who urged the board not to re-institute the 50 percent cuts. "Developers are not going to want to go into areas with poor roads, are they?"

Supervisor Kevin Jeffries expressed similar concerns about continuing to narrow a revenue stream that pays for better access to communities, but he supported another temporary reduction in DIFs anyway.

Supervisors John Benoit and Jeff Stone also voted in support of the reductions. Supervisor Marion Ashley was away on personal business.

The board additionally authorized refunding half the fee amounts paid by developers since July 1. Tavaglione argued that the reimbursements were essential "in the spirit of fairness and to create a level playing field" because the fee reversion on July 1 came without advanced warning to developers with projects already in the pipeline.

The Department of Transportation and Land Management estimated that reimbursements would be less than $12,000.

The current fee reductions are likely to remain in place until early 2014, when TLMA Director Juan Perez and his staff are expected to bring forward proposed revisions to the DIF program ordinance.

Perez told the board today that objectives include establishing an email alert system for developers that would enable the county to contact them immediately when any sort of change is in the works that may affect them, as well as establishing "funding mechanisms" under which developers could arrange financing to pay off permit fees over time.

According to the Executive Office, DIF revenue peaked at $36.2 million in the 2005-06 fiscal year but has steadily declined, falling to just over $1 million in fiscal year 2011-12.