Merced's development forecast this fiscal year is particularly bleak.
No office space is expected to be built. No commercial centers are in the works. No industrial parks will break ground. A meager 25 homes will be added, city leaders think.
So in an effort to jolt the year's flat-lined development projection, Merced leaders have lowered impact fees for commercial projects and for all projects that fall within the city's core.
Merced's not alone in cutting fees to grease the wheels of construction.
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Santa Maria cut impact fees by 7 percent. Menifee in Riverside County and a handful of Bay Area cities have also cut their fees, according to the Building Industry Association, which has a task force to lobby for reductions.
There's debate about whether the move will result in more swinging hammers now or later on. It does provide some incentive, but with a deep recession and a glut of available space, there may be little need for development to begin soon.
"You could cut the fees to zero and it's not going to cause development," Councilman Bill Spriggs said Wednesday.
Normally opposed to fee cuts, Spriggs voted in favor of the reduction because the city won't need to build the Nevada Street-Old Lake Road connection on the extreme north end of town within the next 20 years after all.
If the city takes major projects off its to-build list, the fees can be reduced. The two-mile road, estimated to cost $15 million, will be added back later.
He dismisses the notion that the city's fees are too high because they're driven by the list of road projects needed to accommodate growth.
"You can't compare Merced to other cities," Spriggs said. "(Fees) are directed by geography. We have creeks and railroads."
The move is a precursor to City Hall's full-scale review of impact fees, which are what developers pay to account for the stress put on services, such as roads and emergency responses.
Mayor Pro Tem John Carlisle cast the sole vote against the cuts, calling them "situational economics" with "smoke and mirror financing."
He wondered if the city was veering away from its growth-pays-for-growth mantra.
Commercial projects, which bring business and jobs, will be charged 25 percent less in impact fees.
Assistant City Manager Bill Cahill argued that because roughly a third of the shoppers come from nearby cities and don't use Merced's services, the city could safely cut fees by a quarter.
All development in the city's core -- roughly bounded by Childs and Glen avenues, Bear Creek Drive and V Street -- will see a 28 percent decrease to encourage in-fill development and redevelopment of old buildings.
The in-fill cut was higher because the area's already established and isn't in need of infrastructure upgrades, Cahill told the council during the May meeting when the changes were approved.
The city staff plans to study the fee rates during the next year as it updates Merced's general plan. The largest project on the city's horizon -- the proposed Wal-Mart distribution center -- isn't eligible for the reduced rates. The development has its own slate of road improvements to make if it's approved.
Councilman Jim Sanders said the city needs to market the lower fees, along with its airport and UC Merced, to lure more business.
"We're always in competition with every other city and county in the nation," Sanders said. "We're using this to help jump-start our economic engine."
Reporter Scott Jason can be reached at (209) 385-2453 or firstname.lastname@example.org.