Interest rates for a 30-year fixed rate mortgage have climbed from 3.95% in the first week of January up to 4.61% last week, which marks a 7-year high according to Freddie Mac. The
Developers Oppose Increase In Building Costs
Nobody likes paying extra fees and taxes, but local governments are obligated to keep up public facilities such as schools, parks and roadways. That’s why the city of Chico requires developers to pay impact fees when they build new housing: The growing population strains public infrastructure, city officials say, so developers should help pay for maintenance.
As City Manager Mark Orme told the Chico City Council on Tuesday (Feb. 20), the key is getting an acknowledgment of necessity from both sides. In general, local builders agree they should bear some of the cost. But as city staff continues amending Chico’s development impact fee schedule, they don’t agree on the details. Namely, street facilities fees on a single-family home are poised to jump from $3,330 to $11,425.
“We know fee increases are coming,” local developer Bill Webb told the council. “But they need to be fair, they need to be reasonable, and they need to be legal.”
The builders are serious about that last part. Earlier that day, the city received three letters threatening litigation over the fee increases from Webb, the Walnut Creek-based legal firm Miller Starr Regalia (representing Bay Area-based Discovery Builders) and Chico Builders Association, which was represented by Darlene Giampaoli during the meeting.
“I know this has been a long, arduous process,” said Giampaoli, the group’s president, “but unfortunately this final report really takes a step in the wrong direction and increases fees dramatically.”
City staff began amending 14 categories of development impact fees 13 months ago and has spent some $500,000 on an outside consultant to help. But the need is pressing, according to Brendan Ottoboni, the city’s director of public works-engineering. Chico’s list of infrastructure needs is only getting longer, he said. Clearly, the city needs to open greater streams of funding.
“I can speak from professional experience,” Ottoboni told the council. “If this is not addressed, the results will be significant. We will see major traffic congestion all over town.”
As amended, the street facilities fee would generate an estimated $45 million over the next 10 years for roadway repair and construction. (The fees currently generate $18 million.)
Ottoboni said the fee update is also a potential opportunity to alleviate the community’s affordable housing shortage. Currently, developers are charged the same whether they build single-family or multi-family housing, regardless of unit size. Since developers don’t have an incentive to build small, affordable units when they can make more money by building bigger homes, Ottoboni’s staff is considering changes to the municipal code that would reduce fees for high-density housing by 30 percent to 40 percent.
The proposed fee schedule didn’t go over well, though. Ottoboni was grilled throughout the meeting by developers as well as some members of the council. In Councilman Karl Ory’s eyes, for example, the changes wouldn’t do enough to promote affordable housing. And Councilman Andrew Coolidge thought the fees would suppress retail development and discourage businesses from choosing Chico.
“We’re starving for jobs,” Coolidge said, “and that’s the pathway to economic success, in my opinion.”
Basically, nobody was on the same page. Developer Dan Gonzales proposed forming a committee composed of city staff and local builders to iron out the details within 90 days. However, Orme advised against directly involving the business people who would be most impacted by the fees.
Councilman Mark Sorensen made a motion to continue the discussion at a future meeting, giving Ewing more time to review potential lawsuits and adjust the fee schedule as necessary. His motion passed by a 5-to-2 vote, with Coolidge and Councilman Randall Stone voting “no.”
The council also received an update on the city’s Sustainability Task Force from Mark Stemen, chair of the working group. His report included information on the anticipated long-term effects of global climate change on Chico.
Stemen outlined the best- and worst-case scenarios. In the worst case, humanity does nothing to curb greenhouse gas emissions in coming decades and Chico sees a jump in the number of extreme heat days (over 104 degrees), increased flooding and more wildfires in the foothills.
“What we do today will affect whether people living in Chico will have high or low impacts,” he said.
Mayor Sean Morgan expressed a seemingly flippant attitude toward the report. “This is cool,” he said, holding up the document.
“Well, it’s actually not really all that cool if you start to look at it,” Stemen responded.
And finally, the council voted 4-3 down party lines to place a proposal on the November ballot to limit council members to three terms in office. The matter was considered at Sorensen’s request.
Ory characterized the move as a “power play” by the conservative council members—an attempt to get progressive members such as Councilwoman Ann Schwab (who is in the middle of her fourth term) off the panel. However, Ewing had clarified beforehand that, under state law, term limits cannot go into effect retroactively.
The conservative bloc voted for Sorensen’s proposal despite protest from the left side of the dais. The liberals’ main argument was that experience is beneficial.
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According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 4.61%, which is still near record lows in