Fees Collected on New Housing are Substantial


Let’s take a quick visit to the 1970s. During that time we saw the last of the Apollo missions. Television presented us with “All in the Family”, “M*A*S*H”, and “Monday Night Football”. The economy was awful with 12% inflation, 12% unemployment and interest rates for car loans averaged about 22%.  The “Energy Crisis” became a catch phrase, car owners found themselves waiting in gas lines and station owners battled one another in gas wars while the price per gallon for the elusive fuel climbed from 30 cents a gallon to over a dollar.

Triggered by the same inflation, California saw a dramatic rise in property values. Between 1974 and 1978 the combined assessed value of the average home increased by 111%. Unfortunately for homeowners property taxes were based on the assessed value of the home. This giant leap in the paper wealth of homeowners merely translated into higher and higher property taxes. From 1975 to 1978, disgruntled homeowners became increasingly unhappy by a staggering jump of 92% in newly levied property taxes. The nations second revolution against high taxes was about to take place.

In California on June 6, 1978, not a shot was fired, there was no midnight ride of Paul Revere and there were no minutemen. Californians simply went to the ballot box and by an overwhelming two-thirds majority voted for Proposition 13, reducing property taxes by about 57%. Virtually overnight cities and counties felt the loss of nearly $6.9 billion in property tax revenues.

Historically cities and counties had used property taxes to finance infrastructure – roads, schools and parks. In the wake of Proposition 13 cities and counties now had to seek alternate methods of providing this financing. Unless state or federal funds are provided, local governments have only two alternatives – bonds and exactions.

Webster’s Dictionary defines an exaction as; an act of demanding or levying by force or authority. An exaction is a condition or finance obligation imposed on developers to help local government pay for public services. The Subdivision Map Act gives cities and counties statutory authority to impose fees or dedications of land for specific uses as conditions of subdivision map approval. The purpose of the fee or exaction must directly relate to the need created by the development. Exactions generally include direct charges (fees) or dedications (land) collected on a one-time basis as a condition of an approval being granted by the city.

 The Subdivision Map Act provides for certain types of dedications including; dedication of streets and alleys within the subdivision, dedication of bike paths in conjunction with streets and alley dedications. When a subdivision has the potential for 200 or more dwelling units, covers 100 or more acres or when transit services are or will be available to it, the city may require dedication of land for local transit facilities. The Quimby Act allows for the dedication of land or payment of an in-lieu fee to provide park and recreation facilities to serve the subdivision. Additional land may be set aside for dedication of school sites to serve the subdivision. Such a dedication must be requested by the affected school district. Areas within the subdivision may be reserved for parks, recreational facilities, fire stations, libraries, and other public uses based upon the policies and standards of an adopted general plan. Local jurisdictions must assure that subdivisions provide public access to public waterways. Subdividers can be required to dedicate this access. Inclusionary housing or the payment of an in-lieu fee may be used to encourage the development of affordable housing.

The battle on whether or not new development is paying their fair share to lessen the impact that they are imposing on the city will always be there. The city will always be looking to ensure that new development is carrying its weight and developers always looking for ways to cut costs. In this battle the courts have generally sided with local government in the implementation of exactions. The one caveat handed down in each court decision is that there must be a nexus between the exaction and development. The U.S. Supreme Court has added the concept of “rough proportionality” to limit the how much a city can require as a condition of a subdivision approval. From a city’s perspective a new development will almost always increase the burden on public services, and the developer should be willing to pay their fair share. 
 

Fees

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About Kevin

Mayor - City of Oakley, Data Center Manager of Mainframe Operations and Optimization – USS-POSCO INDUSTRIES, Co-Founder and Board Member - Friends of Oakley A Community Foundation, Advisory Board – Opportunity Junction, Commissioner - Contra Costa Transportation Authority, Board Member - Tri Delta Transit and Transplan
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2 Responses to Fees Collected on New Housing are Substantial

  1. Kevin says:

    This one time impact fee is not the major source of funding. As of 2005,the Contra Costa County Fire Protection District which provides fire protection services to the Cities of Antioch, Clayton, Concord, Lafayette, Martinez, Pittsburg, Pleasant Hill, San Pablo, Walnut Creek and other unincorporated areas of Contra Costa County, imposes an impact fee of $235 per single-family dwelling unit. I think this has been raised recently to over $500.

    Unfortunately, fire services are primarily funded with property taxes, the 1% of the assessed value that we all pay. If you live in Oakley $0.06 of every dollar in property taxes is spent on fire. In Brentwood the amount increases to $0.07. However, if you in live in Antioch its $0.15, in Pittsburg its $0.16, in Concord its $0.13, Walnut Creek is $0.14 and in San Ramon its $0.13. These amounts vary across communities as a result of an archaic allocation scheme developed in 1978 with the passage of Prop 13. With recent decline in property values this revenue stream has diminished significantly.

  2. Robert Ruddick says:

    I think the fire department fees are 5 times less than what they should be. This is part of the reason that they are so underfunded.

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