Hollister
– The City Council will soon vote on a development impact fee
adjustment that could increase the cost of a single-family home by
nearly $20,000.
Hollister – The City Council will soon vote on a development impact fee adjustment that could increase the cost of a single-family home by nearly $20,000.
MuniFinancial, a Temecula-based firm hired by the city, released a study on Oct. 6 proposing fee adjustments to cover infrastructure and services for new residents through the year 2023. Based on a projection that Hollister’s population will grow in the next 17 years from 37,100 to 56,100 residents and from 13,200 to 20,900 workers, the study suggests increasing police, fire, water, storm drain, sewer treatment and facilities fees while lowering water fees.
The biggest proposed increase for single-family residences would be sewer treatment fees, which could jump from $1,800 to $13,502.
Impact fees are supposed to offset the additional costs to infrastructure caused by new development; the fees are paid by developers. Councilman Doug Emerson estimated that with the proposed increase, the city’s impact fees for a single-family home would be about $50,000. He said increasing the fees would make it harder for developers to offer homes at reasonable prices.
“It creates a problem for the developer,” Emerson said. “If they pay, say, $55,000 in fees, they’re not going to take it out of their profit; they’re going to add $55,000 to the price of a home.”
Emerson also noted that raising fees would make it more expensive for developers, as required by law, to include affordable units in their projects.
“The developers sell the affordable homes at a loss, and they add that loss to the price of more expensive homes,” he said. “This makes it more difficult for the developer to come up with affordable housing.”
City Manager Clint Quilter said that although raising impact fees would likely increase home prices, he didn’t know if the full fee increase would get passed on to consumers.
“Prices are determined by two things: what it costs, and what people can get for them,” he said. “(Raising impact fees) certainly reduces the margin and it might increase the cost (to buyers), but I’m not sure they’re directly correlated.”
The study noted that a fee increase would not cover the total cost of new infrastructure; the sewer would have the largest deficit – around $180 million. Quilter said the city will pay the sewer deficit through the increased sewer rates.
The Council held a public hearing at its last meeting to discuss the study; the hearing will continue at meetings on Oct. 23 and 30. Quilter said the Council is expected to take action regarding the fees on Oct. 30.
Beverly Bryant, executive director of the Home Builders Association of Northern California, southern division, said she would provide a formal response at a later date, but she had some initial concerns about how this would affect the price of housing. She warned that the costs of building a home “have gone up exponentially” in recent years.
Anthony Ha covers local government for the Free Lance. Reach him at 831-637-5566, ext. 330 or [email protected].
