Sonoma County changes building fees to spur economic recovery
Published: Sunday, July 18, 2010 at 3:10 p.m.
Last Modified: Sunday, July 18, 2010 at 3:10 p.m.
Government officials and builders are hoping that a change in the way Sonoma County collects development impact fees will help jump start the moribund local construction industry.
The fees supporting road upgrades, park planning and affordable housing construction are typically paid by developers when permits are issued at the beginning of a project.
For a 2,000-square-foot single-family home, they can run up to $20,000 and top $100,000 for a commercial project. Builders typically pay the fees through construction loans which they carry, with interest, until a project is complete.
Sonoma County supervisors last week responded to a long-standing request from the building industry and voted unanimously to have the fee payment postponed to the completion stage.
Santa Rosa's City Council tentatively made the same move, with a final vote set for this week.
Builders cheered the county's decision, saying it will reduce cash outlays and help support a rebound in jobs and construction activity.
“This isn't the total answer, but it sure will help,” said Keith Woods, chief executive of the North Coast Builders Exchange, a group of 1,500 contractors. “Anything that can defer some of the upfront payments makes it easier to get financing and helps the project pencil out from the beginning.”
The county building sector has experienced an historic slump in the past two years. The number of permits for single-family homes issued to throughout Sonoma County last year was 356, a four-decade low. The county has shed 1,300 construction jobs since last June, even with a slight one-month uptick of 200 jobs in June this year.
“It's largely unprecedented,” said Ben Stone, the county's Economic Development Board director, of the slump.
Local builders have long sought deferral of impact fees as a way to grease the skids for construction. A handful of other California counties and cities have made the switch in recent years.
Sonoma County will experiment with the change for 18 months, then re-evaluate. That decision likely will hinge on whether the deferral ends up impacting the roads, parks and affordable housing projects the fees help pay for.
In the 1990s, several fast-growing Central Valley cities and others in Southern California drained their coffers trying to keep up with the backlog of such public improvements after instituting fee deferrals for developers.
“We're not really in that position,” said Pete Parkinson, the county Permit and Resources Management Department director. “We're a slow-growing area and we're not like a city where new development calls for expansive new roads, sewer or water systems.”
At least one fee-supported fund, for parks, however, is expected to go into the red because of the delay in incoming fees caused by the deferral, officials said.
The fund's balance is currently $721,000.
Without some help from other county funding sources, park planning efforts such as those for Tolay Lake and other grant-writing efforts supported by the fund could be stalled, said Mary Burns, the county Regional Parks director.
County Auditor Rod Dole said the county will shift money to parks, with interest, from the larger $11.2 million fee-supported road fund to make sure a shortfall doesn't occur.
“It's a pretty common practice,” he said, referring to the shuffling of money between different fee or tax-supported funds.
The balance in the road fund is expected to be adequate for all regular maintenance activities, the main destination for impact fees, said Parkinson, the PRMD director.
Officials said loans for affordable housing projects, which the fees also support, are not expected to be impacted.
The county has about $2.4 million in that fund and could use redevelopment or other monies to cover for any temporary shortfall caused by deferral, said Kathleen Kane, executive director of the Sonoma County Community Development Commission.
Supervisors approved the fee deferral program to take effect immediately.
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