City Council live – economic incentives debated

The council is considering a proposed development fee incentive, which would slash some fees charged for growth in half and also delay their collection. It’s a major proposal, so read on if you’d like to know more.

City Councilwoman Susan Eggman asked: Did the city consider that when the fee deferral is due, could the developer phase his or her total payment? Is that something we could consider?

Mike Niblock, the city’s planning and building chief, said that has not been considered, but “that’s certainly an option if the council wants to consider.”

Vice Mayor Kathy Miller expressed some concern with that concept: If the deferred fees are collected at close of escrow (that’s what’s proposed), and payment of fees are secured by a note to deed of trust before that, then there could be security issues if the city further phased collections after close of escrow, she said.

As for cutting development fees, city staff and a city development oversight panel agree on the entire proposal except one point: the developers wants many single-family homebuilding fees to be part of the program, while the city cautions against cutting some of those fees charged to new homes. That’s because they worry they won’t collect enough fee revenue to pay 2009 bond debt backed by some of the fees. That could leave taxpayers on the hook, officials said.

City staff aren’t confident there would be enough homes built to generate sufficient fee revenue to cover the debt. The city would need to see 2,756 new housing units if some of their development fees are cut in half.

In 2009-10, a total of 152 single-family home building permits were issued. If fees were cut in half, builders argue they could double that, officials said.

If the council doesn’t cut some of those fees, “you ensure the ability of the city to repay its loans,” said Deputy Economic Development Director Greg Folsom.

Mike Locke, chief executive of the San Joaquin Partnership, said this economic incentive package is essential to keep Stockton competitive with prospective employers, and Stockton has recently lost out on new businesses partly due to its development impact fees.

He gave one example: One of the companies considering Stockton, without cutting fees, would be on the hook for $5.7 million in fees. If those fees are cut, their bill would be reduced by $611,000.

Despite the aforementioned disagreement over single-family home development fees, John Beckman, head of the local building lobby and chairman of the city’s development oversight panel, asked the council to adopt the staff recommendation with one minor change – include multifamily housing.

Affordable housing developers want that. John Shores, president of the local Habitat for Humanity chapter, said his organization can’t afford to do an upcoming project without a reduction in fees. Council members said they’d like city staff to analyze the impact of including multifamily housing for fee reductions and to bring information back to them for consideration.

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