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HomeMy WebLinkAboutEmergency Item - Building Fees �� CITY OF PALM DESERT OFFICE OF THE CITY MANAGER INTEROFFICE MEMORANDUM To: Honorable Mayor and Members of the City Council From: Carlos Ortega, City Manager Date: July 10, 2008 Subject: Building Fees At tonighYs meeting, Fred Bell, Building Industry Association, will be asking the Council to clarify its motion of December 13, 2007, with regards to delaying the implementation of the building fees for six months. Initially, the increase in building fees was to be effective at the beginning of 2008. On December 13, 2007, the City Council adopted the Resolution implementing the new fees, but delayed its implementation for six months. There was discussion in the Minutes that indicates that the Council would review this matter and could delay implementation of the new fees further; however, the motion does not indicate that. Mr. Bell and I have had a telephone conversation, and his interpretation of the Minutes is that the Council automatically intended for further delay of the fee implementation. I am submitting this to request Council clarification. Otherwise, the fees become effective on July 1, 2008. ;;ITY COUNCIL�CTION: APPROVED �'�` DENIED RECEIVED OTHER �, �' �ETIN DATE � a� L �en / AYES• � CARLOS OR GA NOES: City Manager kssENT: ---.- AIISTAIN• -..-.��-.-• CLO:kr VERIFIED BY: __��._-�------ �xiginal on File .�th C;.ty Clerk ' � Of'{i��F. Attachment: Portion of Minutes from December 13, 2007 * Councilman Ferguson moved to, by Minute Motion, defer implementation of the increased building fees included in Resolution No. 07-80 for another six months, �rith negt review for possible implementation to occur during the Mid-Year 2008-2009 Budget Review Process. Motion was seconded by Spiegel and carried by 5-0 vote. ._ � . ri) i T r C����.I� '; ;)FFfCE P� Lf-i ;>E�ERT, C:: 1��� � , _ BI A U_ 9 PM 4� 06 Dese�•t Chapter I;uihliu_Ln1�i-u� \-.�,�i,ui�m City of Palm Desert July 7, 2008 "' `" ,'�;,•," ` ""'"'""` Carlos Ortega, City Manager -1 - � ��" 73-510 Fred Waring Drive ;,' ' Palm Desert, CA 92260 - . , ,_;-. , , i„ . , :� �, �� Dear Mr. Ortega, � ��.,,, r���,;�i�,._,�,�� ,,,.,,,. . ,�� It was a pleasure speaking with you last week, ho���ever as I stated, it came as a complete surprise to the Building Industr} Association Uesert Chapter and our members ��•l�en the �1r�nual ndjusiment to Develo�mci�t Sen�ices �vas applied ol� .1u1�� ly`. Per our conversations this la�t No��ember and I)ecember «�e had a clear understanding that the City would adopt, but delay implementation of the City's Annual Adjustment to llevelopment Service Fee Proposal with a future review of economic conditions to detennine i£implementation should continue to be delayed. This proposal was further discussed at the llecember 13, 2007 City Council meeting with clear direction from Mayor Benson and Councilman Ferguson. As stated in the minutes for that meeting, "Councilman Fe�guson ��equested the motion specify Council will consider this matter at the next fiscal yecrr's btrdget, r��hich took placc� in six months. " "Mayor 13enson called for the vvle to adopt Resolution No.07-80, as amended to condilion its implementation to six months crs part of the F}'08-09 budget proces•s. �Llotion carried on a -�-0 vote, ti��ith Finei�ty��1I3SL1�'7: " We regularly check City Council agendas and never saw an agenda item for the discussion as mentioned in the December 13`�' motion. We would appreciate the City �lacing this topic on a Cily Council Agenda for discussion prior to implementing the increased fcc. We value thc relationship we have ��ith the City of Palm llescrt, and the City's commitment to the welfare of the residents of their City and the community at large. Sincerelv. `�/��i v��%�'� Fred I3e11 Executive Officer cc: Mayor and Ciry Council \u \flili�ur u( �lii•\.ui��u��l \.,,,�i;�li��n uC 11���nr i;iiil�l.•i-�inJ ilu ( n!il�n uin liuililiii_lii�lu-�r, \>���ri;ui��u MINUTES REGULAR PALM DESERT CITY COUNCIL MEETING DECEMBER 13, 2007 B. REQUEST FOR APPROVAL AND ACCEPTANCE OF THE DEVELOPMENT � REVIEW AND INSPECTION SERVICE FEES ADJUSTMENT AND APPROVING THE DEVELOPMENT SERVICES FEES FOR SERVICE TABLES WITHIN THE COMPREHENSIVE COST OF SERVICES STUDY. Mr. Ortega stated the City adopted a policy requiring it to comply with regulations and recoup its cost when services were provided. The policy required the City to review fees and make adjustments. In this case, the adjustments will require an increase in fees. He said the City received a letter from Mr. Fred Bell with the Building Industry Association (BIA) requesting a delay of the increase for a year. MR. FRED BELL, Building Industry Association (BIA), stated the BIA had never requested the City defer fees, at least not while he's been with the BIA or in the past by his predecessor. He said it was an extraordinary period in construction, and he had not seen this type of slowdown in the market. The statistics from the Construction Industry Research Board showed the numbers were off almost 90% from the peak in 2005. He said the BIA agreed with the nexus study and had actually signed off on all past studies, even though there were some philosophical differences on a couple of fees. This time, the BIA was asking the Council to accept the report and the nexus and defer enactment of the fee for 12 months. (t will allow the market to settle and give the BIA time to figure out what was happening. He said a number of builders were trapped in the market slowdown and were trying to work their way through it. Some builders had maps but had not put anything up yet; the BIA had people working on this. If the fees are deferred, it will lighten the load a bit, and at the end of 12 months, the City could move forward. He said he was available to answer any questions. Mayor Benson declared the public hearing open and invited testimony in FAVOR of or OPPOSITION to this matter. With no testimony offered, she declared the public hearing closed. Mayor Pro Tem Spiegel stated a year was a long time. He suggested reviewing the matter in six months and revisit it in July. If things improved dramatically, the City could make a new list. It things didn't improve, the fees remained as is. Mayor Pro Tem Spiegel moved to, waive further reading and adopt Resolution No. 07-80, approving the Development Services fees for service tables within the Comprehensive Cost of Services Study, as amended to condition its implementation for six months. Councilman Ferguson stated there was a critical distinction that Mr. Bell touched upon, which was important to him. He said Councilmembers were 21 MINUTES REGULAR PALM DESERT CITY COUNCIL MEETING DECEMBER 13, 2007 constantly approached by developers asking for fees to be waived. To his knowledge, it had never been done, maybe with a rare exception; it was an unstated policy that everyone understood. He said the BIA was an association not representing any one developer or development, agreeing with the new fee schedule, but simply asking the City to make the Resolution proactive at some specified time in the future, whether it be six months or twelve months. He said given the economy and where the building industry was at, it was not an unreasonable request. He made the distinction for those wanting the City to waive their fees, saying, "the City did it for the BIA," but it wasn't; it was merely delaying the implementation of fee increases. Councilman Kelly stated he wasn't sure he agreed with continuing this matter. He recognized the housing market slowed down, but he also felt there was a lot of overbuilding, and prices were still high. He believed homes sold for what the market would bear. If a developer built a house that cost $200,000 to build and could sell for$400,000, he will. He would do the same thing—sell his home for what the market would bear. He said something had to happen to make him more comfortable about delaying the fees and that it would benefit the person purchasing a home. Mayor Benson stated the fees were for new buildings coming in. Councilman Kelly said he understood, but houses would still be sold because that's what they're built for. Councilman Ferguson stated he would offer an analogy that probably wasn't perfect, but it resonated with him. Using tourism as an example, he said the City was known throughout the tourism industry as having the lowest Tourism Occupancy Tax (T.O.T.) in the Coachella Valley. He said the City could easily raise the T.O.T. one or two points and no one would bat an eye, because the City would be commensurate with other cities. The City kept that option open in case it ever needed the money. Palm Desert was known as a tourist friendly City, and by the same token, also known as a builder friendly City. The City worked with developers, their projects, and looked for ways to make them work. He believed the building industry was currently going through a tough time, and the amount of money being considered was very minimal. No doubt the City would lose money that could be extracted, in fact the City had a Study to support its findings; however, he felt the BIA's request was not presented as a right they deserved but as a discretionary request. In keeping with the City's relationship with the builders in the community, he would support a six- or twelve-month delay. Mayor Pro Tem Spiegel concurred. He said he drove around the northern sphere of the City and didn't see a lot going on; not many houses were being built. He didn't think raising or lowering the fees would help the industry but 22 MINUTES REGULAR PALM DESERT CITY COUNCIL MEETING DECEMBER 13, 2007 thought the City should give them six months. He said big homebuilders lost money in the past six months, hundreds and thousands of dollars all overthe United States. Councilman Ferguson seconded the motion. Mayor Benson stated she was in favor of six months. She said there were a lot of programs to help stimulate the economy; she read about them in the paper every day. Six months will show if anything was working, and if not, then it will be a clear decision. Councilman Ferguson requested the motion specify Council will considerthis matter at the next fiscal year's budget, which took place in six months. Mayor Benson called for the vote to adopt Resolution No. 07-80, as amended to condition its implementation for six months as part of the FY 08-09 budget process. Motion carried on a 4-0 vote, with Finerty ABSENT. XVIII. REPORTS AND REMARKS A. CITY MANAGER None B. CITY ATTORNEY None C. CITY CLERK None D. PUBLIC SAFETY o Fire Department Responding to question, Chief Rios explained the City of Cathedral City purchased a ladder utility truck and Palm Desert was providing assistance by offering cross-training. 23 Michelson, Wilma • �-' , � ; _ - ., � From: bia@desertchapter.com ' `;�_' j "�� �='� ` ' `"' Sent: Thursday, July 10, 2008 9:20 AM To: Michelson, Wilma ��Q� ,���I_ � � P'� 3� 4� Subject: Builder Alert- Fees Please on the link below for more information regarding Palm Desert's planning and service fees, Palo Verde School District fees, and La Quinta development impact fees. And, the second link for information regarding the collection of the Coachella Valley Multiple Species Habitat Conservation Plan http://biasc.com//ima�es/Site003/Alert%20Notice%207u1y%209%202008.pdf http://biasc.com//ima�es/Site003/IM%20Fee%20procedures%20June%2024%202008.ppt 1 �miarPa»�m • � BUlLE?�NGINDt1STRYASSOC6ATlQN �/��� � DESERT CltAPTER �(((/�r�J �. B�A Phone 760360-2476�Fax T60 772-3372 ��� � E-mail:bia�desertchaoter.corrt �� Alert Notice Nav All Citv of Palm Descrt I'tannin� ancl Service Fees "llnder Protest" The City of Palm Desert had agreed on December 13, 2007, to delay implementation of an annual fee adjustment to all planning and services fees. After a six month period the City Council would reconvene to discuss whether or not they should continue to delay increasing the fees for another six months. Only after having this discussion and a consensus of the council would the increased rate be implemented. However, on July 1", without prior notice to the Building Industry the City implemented the fee increase. The City has not returned our calls or responded to our letter, therefore in order to secure the possibility for refunds all builders paying these fees should state on the invoice and clearly on the check "Paid In 1'rotcst", then, contact us at BIA Desert Chapter (760)360- 2476. Pav Atl School lmpact Fees in the Palo Verde Unified School District "Under Protest" The Palo Verde Unified School District level II impact fees have expired as of December 2007. • Builders that have paid fees in excess of 2.63 per square foot for residential construction or$0.42 per square foot for commercial or industrial construction m:i� bc duc refunds. • The district is in the process of developing a new justification study to allow them to increase the level I fees to state statutory limits of$2.97 and 50.47 per square foot respectively. • They will also be drafting a school facilities needs analysis to support level II fees at a rate higher than the statutory level I rate of$2.97 per square foot. Citv of La Quinta Development Imnact Fecs The City of La Quinta is expected to adopt increased development impact fees in September. The nexus study appropriately supports the higher rates. Relu�� is the proposed fee schedule. We are still discussing implementation alternatives. 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