Valley Voice Newspaper

By Steve Pastis

Visalia - Transportation impact fees in Visalia have been a sore point among local developers, especially since the fee structure was revised about five years ago.

Impact fees are collected for developments, such as single family homes, shopping centers, office buildings and industrial projects, in order to pay for infrastructure, such as roads and sewers. The main issue of contention for local developers is the higher amount that a developer must pay in transportation impact fees for a project in Visalia, compared to other Valley cities, even though the city issues reimbursements when other developments are built along the street.

“The transportation impact fees were established in the early 1990s,” said Visalia City Manager Steve Salomon. “Visalia was the first city in the county to establish them.”

Visalia City Council Member Greg Collins explained that development impact fees were established to cover “basic infrastructure,” such as sewers and storm drainage.

“From there, development impact fees have evolved to become more encompassing,” he said, noting the addition of fees such as the Quimby Act fee that is used to develop public parks. “From those fees, each city has branched out to collect additional fees. Some cities collect public facilities fees which go into libraries or city halls. In the 1990s, Visalia implemented a circulation (transportation) impact fee for road widening, signals and to purchase right-of way.”

“When they raised the fee, they also raised the cost of reimbursement development,” Salomon said, noting developments along Caldwell Street. “What the council was trying to do was get the full width of the street built. They were trying to get the whole road built before the development.”

“Caldwell had been owned by many developers,” said Visalia City Council Member Don Landers. “Those who didn't want to develop were a 'roadblock' to those who did. Not having those roads developed would have caused us a great deal of consternation, affecting a significant part of our circulatory infrastructure. Whatever it took to get it done I was going to support – and I'd do it again tomorrow.

“In essence, we tripled the transportation impact fee,” he added. “But if they built roads in conjunction with the project, they were reimbursed.”
The math behind the fees seems simple enough, at least initially.

“A house generates so many trips and a gas station generates so many trips,” Salomon said. “So the fee is the trip rate times the number that comes from these engineering studies.

“For the number of years we have been implementing it, we haven't collected the right amount,” he added.

“We are not the only community that has fees structured this way,” said Andrew Benelli, Visalia public works director, but he added, “We don't easily compare with Tulare, Exeter or any other community in Tulare County.

“We negotiate a reimbursement agreement before they begin construction,” he said. “We consider their costs widening the street, doing the paving, the curbs and gutters, power pole relocating, sometimes traffic signals, striping, storm drain improvements. We also reimburse them for right-of-way based on a citywide rate.”
“On a practical basis, to the extent it's different than what other places do, it causes problems,” Salomon said. “When it's different, the developer community isn't comfortable with it.”

“Things are sort of screwed up right now,” said Robert Keenan, president/CEO of the Home Builders Association of Tulare & Kings Counties, about the fees. “Ours are in excess of normal costs because the city wants to build roads out in advance of developments. That's what makes it different than a lot of other cities, and a lot more expensive.”

“The reason our numbers are higher is that often times, the land value is higher, and one of the factors is the price of land,” Collins explained. “And Visalia swells during the daytime because this is the employment center. There are a lot of folks on our roadways.”

For commercial developments, the fees are based on square footage. They begin at $19,208 for every 1,000 square feet, but Benelli said the fees are negotiable.
Some developers see the city's fees as making it too expensive to compete, according to Keenan. Harvey May of Paloma Development was more critical.

“They took a fairly simple, traditional, fairly understandable formula and created a system that's not working,” May said. “The system is unlike any other in the Valley.
“The system that's in place today was ill-founded from the outset,” he added. “It tried to be a cure-all for all ills. It started from a noble premise. We were to build all roads to their capacity as quickly as possible.”

May said that the city was trying to avoid the “sawtooth effect,” streets that are built as needed, resulting in roads such as Caldwell going from two lanes to four to three and back to two again.

“(The city council) said, 'We don't want to see that anymore,'” May said. “So staff came back with a system so comprehensive that nobody could understand it.
“You can't get ahead of growth with a pay-as-you-go system,” he added. “You need other money or to limit the scope. You can't collect fees for something that growth doesn't generate.”

“The cost of the project's transportation impact fees have made this development economically unfeasible,” said Mike Singelyn, senior director of development for the Highland Development Company, following the company's decision to pull out of a major shopping center project at Court and Caldwell. “They are 50% higher than anywhere else in the Valley. The transportation fees are completely out of line for making a development viable.”

“I would suggest to you that's not the only reason he pulled out,” said Landers. “To say the city fees are the only reason, that's a little self-serving and not based on all the issues.”

Traffic Fee Task Force

Darlene Mata, a private consultant, helped organize a group of local builders to study traffic fees and propose improvements. Soon after, city officials created a task force to work with local developers to revise the city's transportation fee system.
“We've been meeting with them for a year,” Salomon said. “We also hired a consultant to look at where to make some changes.”

Both groups have been studying how traffic fees are calculated.

“There are legal requirements that the city has to meet in charging that fee,” said Mata, who is also on the task force. “Not enough information has been provided in the past to see if they met those legal requirements.”

The issue of transportation impact fees will be a work session item at the Visalia City Council's September meeting, according to Salomon.

“The staff report will contain some of the task force recommendations,” said Benelli, who was asked what kinds of recommendations are being made. “The task force suggested that more of the improvements be done without reimbursements. The trade out is that they'd be paying less in fees.”

“On Sept. 2, the city council will be presenting something,” Mata said, although she wasn't sure exactly what would be presented.

“We haven't made any recommendations yet,” she said, adding that the task force is still gathering information. “We continue to work on getting answers to questions and to getting to a group of numbers where everyone can say those are the right numbers. We haven't gotten there in my opinion.”

Consensus is developing on the task force to reduce the fees for at least entry level, single family homes. These rates were raised with the last changes when the housing market was strong. Now that the market is weak, the city wants to encourage the building of more new entry-level homes. The transportation impact fee is $6,367 per new home.

The city is being advised not to raise traffic impact fees for industrial development, such as new industrial warehouses. The task force has been told that if these rates are raised, the prospects – with the jobs they offer – will go elsewhere.

Any proposed changes made by the task force would first go to the city council.
“If they like the recommendations of the task force, we go fairly quickly into a public hearing,” Benelli said. “I would hope we would have the new program in place by the end of the year.”

The city council is also considering using Measure R sales tax monies to do road work – something also being studied in Tulare. Indications are that Measure R proceeds may be more than originally anticipated.
John Lindt contributed to this article.

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