The City Council is looking at reducing or suspending transportation impact fees in an effort to kick-start economic development.
Councilman Scott Silveira, who voted yes, said he wasn't ready to throw the fee out altogether, but thought the council needed to do something new to attract business.
"I'm not ready to get rid of any fees; I'm ready to try something different," Silveira said.
Wednesday's 3-2 vote called for a study on changing the Regional Transportation Impact Fee, which goes into a pool earmarked for the construction of the Highway 152 bypass, a priority for Los Banos, among other projects.
Two months ago, the Merced County Association of Governments committed $1.2 million to two parcels of land for the first phase of the Highway 152 bypass. MCAG also committed to getting the right of way before spending that money on any other project, said MCAG executive director Jesse Brown.
"It's my understanding that probably within 90 days, given that we have reasonable negotiations with the property owners, that those properties will be acquired," Brown said.
The 152 bypass has been a top priority for MCAG since 1991, Brown said. If Los Banos were to suspend collecting the transportation fee, he said, the bypass could lose priority.
"It perhaps could lose some priority, but it's still part of our regional transportation plan, it's still part of the county's general plan, it's part of [Los Banos'] general plan," Brown said.
Councilman Joe Sousa, who voted no, said the transportation fee is not to blame for the lack of new businesses in Los Banos, but rather the state of the economy. Councilwoman Elizabeth Stone cast the other no vote.
Sousa said businesses go where they can make money.
"Not one business that I know of has not come to Los Banos because of this RTIF fee," Sousa said. "If you're not coming to Los Banos or you're not establishing business because of the RTIF fee, you have a dubious business to begin with."
Sousa pointed to the county's economy. The median income in Merced County is $39,922, lower than the state median of $58,925. Unemployment in the county is hovering around 20 percent.
In May, the City Council voted to give MCAG control of the $2.3 million designated for the first two phases of the bypass, which was applied toward the engineering phase of the Merced-Atwater Expressway project.
Mayor Mike Villalta said MCAG's decision to commit $1.2 million to the two parcels and say there could be adverse reactions for not charging the transportation fee is tantamount to "blackmail."
"I feel like I'm in a situation where I'm being threatened," Villalta said.
He said putting a one-year suspension on the transportation fee would allow the council to see if businesses come to town. "The current course of action we are taking is not working," Villalta said.
Villalta voted in May to give MCAG control of the $2.3 million, but contends he did not support it.
City Manager Steve Rath said the city already has a policy in place to negotiate startup fees with desirable new businesses.
Los Banos, after a resolution in 2009, set transportation fees on commercial buildings between $2,780 and $12,082 per 1,000 square feet. The rate is dependent on the building's size and turnover rate.
Staff will come up with some fee reduction and suspension options for the council to vote on in the future, and will present an update at the next meeting.