Impact fees divide council

Every two years the Chico City Council grapples with the unpleasant reality that it costs a lot of money for the city to accommodate new growth. And every two years the council splits on who should bear the brunt of those costs.

City staff and liberal councilmembers say fees to cover most of the expenses should be added to the construction of new homes because new homes translate to an expanded population and a greater demand on streets and public services. Conservatives say developer fees get passed onto home buyers, including people already here, and push already skyrocketing housing prices up even higher.

For the past year and a half, the council’s Finance Committee has studied the issue and, with city staff’s help, put together a Nexus Study based on assumptions about growth through the next 10 years and where the money should come from to accommodate that growth.

This week the council approved some projects that will increase developer fees—including $3 million to improve the Highway 99/Eaton Road intersection, which will service the ambitious Northwest Specific Plan residential and commercial development—and voted to adjust a list of projects that were of concern to the local Building Industry Association by lowering existing allocations from $7.9 million to $1.2 million.

The council couldn’t agree on how to purchase three new street sweepers ($375,000) anticipated for use in future neighborhoods, nor whether to allocate $10 million for improvements on Highway 32 from Fir Street to Yosemite Drive.

Councilmember Dan Herbert argued that it is unfair to ask new homeowners to foot the entire cost for street improvements. City Manager Tom Lando pointed out that the fees would account for only about 25 percent of the total cost of improvements. Since 32 is a state highway, Caltrans will kick in about $30 million for improvements.

Lando said that, if the city is to continue approving development, it must also raise revenue to build and improve the infrastructure that services that new development. He said the only other viable funding source, beyond developer fees, would be a sales tax increase for transportation development. That idea went nowhere.

When the council couldn’t agree on the $10 million allocation nor the $375,000 for three new street sweepers, it voted 5-1 to send the matter to the Internal Affairs Committee for further study. That committee includes Herbert and Steve Bertagna, two councilmen resistant to increased developer fees.