More Impact Fee Antics

We wrote in February about the City of Salinas trying to kill Monterey County’s long overdue regional development impact fee by linking it to the (highly unlikely) passage of a transportation sales tax measure. Since then, things have only gotten stranger as the Transportation Agency of Monterey County (TAMC) has attempted to buy off the City of Salinas by lowering the proposed fee in the city – and has then tried to make up the difference by massively increasing the fee in North County.

The regional development impact fee, remember, is needed to ensure that new development pays its fair share toward improving transportation infrastructure. Under the current system, fees are assessed on an ad hoc basis by the county and cities, and the result is that the fees collected don’t come close to covering the costs created by new development. As this is an important part of why our roads are so congested and in such bad shape, pretty much everyone agrees that a regional development impact fee is necessary.

Because the law does not allow developers to be charged more than what it takes to cover the impacts their projects create, careful “nexus” studies have been prepared to figure out exactly what the transportation impacts are of development in various parts of the county. These studies suggest that a fee of about $3,864 per new house is appropriate in Salinas and North Monterey County.

While its easy to see why developers don’t like the idea of transitioning from a free ride at taxpayer expense to paying more of their own way, understanding the opposition of the City of Salinas is a bit more difficult. Why wouldn’t the city want to collect the money they need to build the roads to serve the massive development they’re planning? Where else do they think the money is going to come from?

We asked some city employees these questions and they told us it’s all part of the new mayor’s effort to make the city more “business friendly.” Business friendly, they tell us, means keeping fees at a minimum and fast tracking projects through the permit process. Apparently it hasn’t occurred to the new mayor that a city in gridlock is unlikely to attract new business investment.

So Salinas tried to kill the impact fee by linking it to a sinking sales tax measure. Although they were narrowly defeated and the fee and the tax remain (for now) separate issues, Salinas still has the TAMC Board in a bind. Because meaningfully enacting the impact fee without the support of the largest city in the county probably isn’t possible, the TAMC Board is now bending over backwards to lure Salinas back into the realm of reality.

As part of this effort, TAMC agreed, at the end of March, to lower the fees to be charged in Salinas by around $220 per house (reducing the fee to about $3,644). The problem is that, due to the immense amount of development planned by the City of Salinas, this relatively small reduction in fees will result in a very large revenue shortfall. To make up this shortfall, the TAMC Board, in its wisdom, decided to raise the fees in North County. The problem is, because so much less development is planned outside the city, they had to raise the fees by a huge $1,600 per house (to a total of about $5,464 per house) to make up the gap they’d created by lowering fees inside the city by only $220!

How the TAMC Board thought they could get away with paying off the City of Salinas at the expense of landowners in North County we can’t imagine. And how they thought they could get away with charging people more than the amount indicated by the nexus studies is even harder to understand. Within a week the Board of Supervisors was already on record calling for the North County fee hike to be rescinded. And rescinded it surely will be.

So if the TAMC Board remains committed to allowing developers in Salinas to pay less than they should, they’ll now have to come up with a better idea for making up the difference – or just decide to let the roads around Salinas sink ever deeper into gridlock.

Stay tuned ….

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: