As the number of housing development applications increase in Santa Barbara and as adequate funding for infrastructure continues to be scarce, the City Council scrutinized on Tuesday the possibility of assessing impact fees on new developments within the city.
The rationale behind development impact fees is that new housing, commercial and other projects have various impacts on the city, such as increased vehicle traffic or new wastewater lines, for which developers should have to help mitigate.
The council members expressed widely varying opinions on whether the fees ultimately would help or hinder the city’s financial and housing objectives. They ultimately voted 4-3 to bring back the idea as a “pending” project at next spring’s joint City Council-Planning Commission meeting, where the council can determine where it falls with its policy priorities.
Council members Frank Hotchkiss, Cathy Murillo and Gregg Hart dissented.
If approved, the impact fees would be charged to development applicants to cover part or all of the associated public improvements, services and amenities. The fees could go toward a variety of facilities, including sewer and water infrastructure, police and fire services, parks, libraries and schools.
They would be charged based on “the facility demand of the proposed use as measured by its type, size and location,” according to city staff.
Eighty-five cities and counties in California charge such fees, according to city staff, including Goleta, Carpinteria and Santa Barbara County.
Opponents of the fees, however, argue that they disincentivize development.
“We are in a situation in this city — and I’ve heard this from a couple of people already — where we have, generally, a very long and cumbersome process that costs a lot of money for people to develop,” Ken Oplinger, president and CEO of the Santa Barbara Region Chamber of Commerce, told the council.
“If we move down this road, we are going the opposite direction of affordability,” said Jeff Eckles, executive director of the Home Builders Association of the Central Coast.
Councilman Jason Dominguez argued that, even if impact fees aren’t in the best interest of developers, many of whom come from out of town, they represent a commitment by the council to help residents affected by developments in their neighborhoods.
“When we have a development impact fee, this is taking the seniors on the Eastside, the downtown and Westside and saying, ‘You know what, we’ve jammed all these (average-unit density program) projects into your neighborhood; we’re going to fix the impacts,’” he said.
If the council doesn’t consider the fees, he added, “we’re taking the priorities and the concerns of people who aren’t even potentially current Santa Barbara residents and elevating them above our residents who have been here for 10, 20, 40 years.”
Given the scope of the city’s infrastructure funding needs, Councilman Hart said, the money generated by the fees would make a negligible impact.
“The incremental additional revenue that would come from this significant effort is very, very small in relation to our needs,” he said. “In the Finance Committee, we have spent a lot of time — and the council is obviously very interested — in a long-term, sustainable solution to our infrastructure backlog. This is not relevant to that conversation.”
Councilman Bendy White, who was the driving force behind the proposal, took a different perspective.
“We need to be looking everywhere for additional funding,” he said. “I know there’s not going to be a silver bullet out there; there’s going to be a variety of smaller-caliber changes to our funding in order to make real progress on our unfunded liability.
“But development impact fees are one way to take one small bite out of this unfunded liability, out of this deficit.”
Money moved from certain capital improvement projects to street maintenance during the fiscal year 2017 budget process, White said, could have remained with those projects had money from impact fees been available to help plug those gaps.
Councilwoman Murillo argued that the city’s affordable housing stock should be the top priority, and even though any new source of revenue is important, she said couldn’t get behind a potential disincentive for developers looking to construct affordable housing.
Murillo, Hotchkiss and Mayor Helene Schneider expressed concern over the fairness of assessing the fee in the middle of the application process, after developers already have completed much of their other cost calculations.
A primary concern of the council was the extra workload that analyzing an impact fee program would add to city staff’s already-full plate. Unless it was deemed a top priority, City Administrator Paul Casey said, it could be most of a year before staff could begin working on it.
“We’re not ready to pull the trigger on this now, clearly, because this is our first bite of the apple,” Councilman Randy Rowse said. “Nobody really has a clear picture of any kind of results or what the potential could be for a yield. But I think we have to leave all the tools in the toolbox going forward.”
— Noozhawk staff writer Sam Goldman can be reached at sgoldman@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.