Ten to 15 O.C. cities are being asked to to give small homebuilders a breather during the current market slump by deferring fees and extending expiration dates on building permits and plan approvals.
The Orange City Council expressed support for one proposal last week, asking the city attorney to draft a measure to defer development impact fees until buildings are ready for occupancy. Bryan Starr, deputy executive officer for the Building Industry Association of Orange County , said nine to 14 other cities will be asked to do the same.
Developers pay impact fees to compensate local governments for the additional burden their development creates for sewers, water facilities, roads and other infrastructure. The fees amount to about $40,000 per housing unit, Starr said.
Under the BIA/OC’s proposal, developers still will pay the fees, but only when they’re much closer to selling or renting their units, reducing the amount of cash they have to lay out in advance. The plan won’t affect large housing developments, which often are subject to separate development agreements with cities. But smaller developments and “infill” housing in already developed areas will benefit.
Starr made a pitch to the Orange City Council last Tuesday, and Mayor Carolyn Cavecche asked the city attorney to come up with wording needed to amend the current ordinance. The council likely will vote on the measure within a month after language is drafted. Cavecche said none of her fellow council members expressed opposition to the plan.
“Usually those fees are associated with the impacts of occupancy,” Cavecche said. “We’re entering a shaky time in our economy now. Anything we can do to help businesses in Orange I think is important.”
In addition, Irvine, Tustin and the county have agreed to a one-year extension of expiration dates on approved building permits and plans since developers are postponing construction until sagging home sales improve, according to the OC-BIA. Other cities are being asked to do the same.
“Each of these steps taken at the local level have a positive impact on the economic health of Orange County,” said Kristine Thalman, BIA/OC CEO. “We encourage all jurisdictions in the county to partner with us to ensure the long term viability and economic stability of our local communities.”
were those builders sharing their profits during the good times?
nvest80,
No. But neither have the large corporations that moved there business’ abroad!
I doubt that Bill.
nvest80,
Spoken like a true Republican!!!
“were those builders sharing their profits during the good times?”
Yes, they certainly were, through those same fees, which are exorbitant, not to mention the time it takes to get through the exceeedingly difficult entitlement process in CA. This is one of the factors that has driven up pricing in CA in addition to the commonly mentioned loose underwriting standards. There is an enormous difference in the valueof raw land and entitled land here, especially compared with other states and regions.
This seems like a good temporary solution. All the developers are asking is that they pay the fees when the home is sold, rather than up front.
Much of this would depend on how much money the city has in its general fund to pay for what ever improvements that are needed throughout the city.
Otherwise this may delay some projects in cities depending on the impacts. Basically the city will get its money either way.
Builders need bail out:
I have posted many times on this blogg:
Builders are going down in 2008/09
Many of them will find the housing downturn has caught them,
Many of them have projects that they are stuck in,
huge inventories and no buyers.
It will be BK for builders for the next two years,
Huge discounts to move inventory,
Why buy used from a flipper?
When the builders will be throwing in every upgrade
With huge dicounts, landscaping allowences, Etc.
Good article, John. Anyone who doesn’t have empathy for the home building industry hasn’t yet experienced the trickle down effect it will have on our local economy. Unemployment will continue to rise, affecting services and product. At the end of the day, it won’t just be the home building industry that’s impacted.
Good article, John. Anyone who doesn’t have empathy for the home building industry hasn’t yet experienced the trickle down effect it will have on our local economy. Unemployment will continue to rise, affecting services and product. At the end of the day, it won’t just be the home building industry that’s impacted.
I like this kind of thinking. I’d rather a city do this than just throw developers subsidies for affordable housing. This is a win-win for both cities and developers/business - and there’s no further tax burden on the citizen.