Merced eyes development fees cut

Can low rates maintain infrastructure, some ask

jsmith@mercedsunstar.comSeptember 27, 2012 

— The city of Merced is taking steps to reduce its impact fees to try to lure more development to the area, but local officials insist their plan will not compromise city infrastructure, which the fees are intended to help pay for.

"At the lower rates we can still deal with what we think we have to have as far as public facilities," said Mayor Stan Thurston. "The main thing was to make Merced competitive with surrounding cities -- Madera, Turlock, Chowchilla."

Over recent years, the city has taken steps to temporarily reduce different impact fees. Those reductions expire in November. Now city officials have a plan to lower impact fees further and make the reductions permanent.

The reductions would amount to an average of about 55 percent to 57 percent to all public facilities impact fees.

"Low fees don't guarantee we will have a rush of business coming here," said Mike Conway, city spokesman. "The economy is stagnant throughout the state and county. What this does is when the recovery starts hitting more, we're in a better position to attract business and industry."

Under the proposal, Merced would still have higher fees than Atwater, which has some of the lowest fees in the region. But the changes would, in many cases, lower Merced's fees below those of Turlock, a city with some of the highest regional impact fees.

At the same time, according to a city planning department analysis, the reduced impact fees would continue to adequately pay for city infrastructure, such as roadways, fire and police department buildings, parks and bike paths.

"We still need to be able to keep up with our infrastructure needs," said Kim Espinosa, Merced City planning manager. "The goal was to reduce the fees so we're competitive, but at the same time we need to collect the fees to pay for the infrastructure we need."

Officials claim that the impact fees can be safely lowered because past calculations overestimated the amount of growth the city would experience over the next two decades.

"When we had a high growth rate, they predicted how many fire stations, police stations, parks we would need," Thurston said. "Now that growth has slowed considerably, staff relooked at those aspects and determined we didn't need as many of those as we predicted a few years ago."

The city plans to maintain but scale back several of its infrastructure projects.

The new police station is still scheduled to be built some time in the next 20 years. But the number of fire stations to be built has been reduced from six to four. Several road repair projects will also be scaled back as well.

Thurston said city streets need rehabilitation, but that fees alone would not be able to address the problem.

"There's a lot of roads that need repairing that we don't have the money to fix," he said. "Impact fees aren't going help that situation. We just need more revenue. The economy has to get better. We need sales and property tax."

The City Council unanimously supported the plan at a recent meeting, sending the proposal to a public meeting Nov. 5, the date of the council's regularly scheduled meeting.

After the public hearing, the City Council is scheduled to vote on the plan Nov. 19. If approved, the fee reductions will go into effect in January.

Reporter Joshua Emerson Smith can be reached at (209) 385-2486 or jsmith@mercedsunstar.com.

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