Merced has suspended its collection of developer fees that pay for regional transportation projects, leaving just two Merced County cities paying into the project money pot.
The City Council voted 4-2 for a two-year suspension of those developer fees. Most of the cities in the county have stopped asking developers to pay into the regional projects fund at least temporarily. At the same time, voters will be asked in November if they want a half-cent sales tax to fund such work.
Mayor Stan Thurston and Councilman Michael Belluomini cast the dissenting votes Tuesday, and Councilman Noah Lor was absent. City staffers said the city charges a number of fees to developers and they can add up, becoming a roadblock to some.
Thurston said developers set to make money in Merced should pay for the increased traffic in the region that leads to wear and tear on roads. “If new builders don’t want to contribute to impact fees, maybe we don’t want them,” he said.
Since 2005, the developer fee has generated $13 million, according to numbers from Merced County Association of Governments. The regional dollars are meant for work on projects such as Campus Parkway, the Atwater-Merced Expressway and Highway 59.
If new builders don’t want to contribute to impact fees, maybe we don’t want them.
Mayor Stan Thurston
Thurston said the work done in the past decade on those regional roads is thanks to the pool of money collected from developers.
After Tuesday’s vote, only Atwater, Gustine and unincorporated parts of Merced County require developers to pay into the regional transportation pool of dollars.
The total amount of fees charged in Merced can leave developers scratching their heads, according to Vishnu “Vic” Patel, whose family-owned company develops hotels in the Central Valley. Patel and his family are looking to build an 87-room Marriott hotel on an empty lot near where Parsons Avenue meets Highway 99.
He estimates that the regional fee would have cost him $123,000, for a total of $800,000 in fees on the $11 million project. “(I) kind of start questioning – me as a developer – does it make sense to do it here?” Patel said.
Supporters of the suspension said Merced could benefit by making it easier to build in town. Councilman Kevin Blake said Merced did well to suspend fees, an extra effort to remain competitive with other towns looking for developers.
It creates local jobs and helps local small businesses. It’s very important.
Councilman Kevin Blake
“It creates local jobs and helps local small businesses,” he said. “It’s very important.”
The Merced County Association of Governments last week approved a measure that will ask the county to put a proposed tax on the November ballot. It would raise the county’s sales tax by a half-cent to pay for local and regional road projects, generating an estimated $15 million a year, and $450 million over the tax’s 30-year lifespan.
Supporters of the proposed tax say it is needed to compete for state and federal funding that typically is awarded to “self-help” counties that contribute toward transportation costs. Developer fees can be used the same way.
Marjie Kirn, the executive director of the association, said the developer fees and the half-cent measure were thought up in the past decade as a way for all interested parties to pay to maintain roads.
“Really, they go hand in hand,” she said. “The measure and the regional transportation impact fee are tools in the toolbox.”