In an attempt to spur growth, the Lodi City Council is pondering whether to delay collecting developer fees, which pay for city infrastructure, until the construction projects are complete.
Currently, Lodi collects the fees around when the building permit is pulled to begin construction.
Developers and the Building Industry Association of the Delta support the idea because deferring the fees will make the upfront costs of doing a project less expensive.
Because most developers finance projects with loans, they have to add the fees to the cost of the project, and then are paying interest on those fees during the construction process, said John Beckman, the chief executive officer for the BIA.
"It's a lot less money you will have to borrow initially from the bank, and getting loans from banks is hard with the economy," he said.
One of the main benefits to tying the fees with the certificate of occupancy is that developers will be able to invest in projects even if they do not have tenants locked in, Beckman said. Then, once the property is sold, the developer can get the cost of the fees through the sale price.
Beckman said associations similar to his have been working throughout California to get city's and county's to change when they collect the fees.
At the Jan. 20 council meeting, Beckman gave the council a list of more than 90 cities, counties, water districts, school districts and other agencies that have deferred or reduced fees for developers. The council voted to have staff draft changes to the city's ordinance that will allow Lodi to try deferring the fees for three years.
The council will still have to approve the ordinance. City staff supported the change because the city collects the fees to ensure infrastructure is available for when the building is occupied. The effect on services the fees pay for does not happen until someone moves into a home or business. At the meeting, Community Development Director Rad Bartlam said he does have some concerns with ensuring that the city actually collects the fees.
Beckman said he has never heard of other communities having a problem with collecting the fees because a building cannot be occupied without the certificate of occupation, which guarantees payment.
He also said the three-year trial period will allow the city to work out any kinks, and he hopes the city will then adopt it permanently.
Developer Dennis Bennett said most builders support efforts throughout the state to defer, reduce or eliminate impact fees. He said some cities have done this for years, and it is not unusual.
"Anything that helps create activity in that area helps," he said. "It's not going to fix our economy, but in the state housing is in, anything will help," he said.
Because the true effect of development is not felt until residents start using sewer, water, police and fire services when they move in, Jeffrey Kirst said it makes sense for agencies to charge the development fees when people move into the building.
"It is a small way the city is helping the builder community during this time," he said.
When Geweke Real Estate Management, also known as G-Rem, did a project in Yuba City, the fees were delayed until the end of the job, said John Farris, the director of development.
"It helps out because you are not as cash-strapped up front," he said. "It's always helpful knowing you can delay costs until later, because sometimes, you can find different options for financing."