Despite pleas from landowners, the Menifee Chamber of Commerce and Business Industry Association representatives will phase in new Development Impact Fees equally over a two- to four-year period, the Menifee City Council approved new DIF collection schedule Tuesday, Dec. 6, as recommended by staff.
Initially, the city staff prepared the new DIF schedule to begin July 1, 2018, with both nonresidential and residential developers paying 100 percent of the new fees. The increased fee schedule recommendation was made in a Willdan Financial Services DIF Nexus study looking ahead to 2040.
Cities, including Menifee, are permitted to collect DIF fees from any new developments, from housing to industrial interests to help pay for or mitigate the added cost of public facilities and improvements brought on by the increase in population, business and industry.
In Menifee’s case, residential, commercial and industrial development fees have not increased significantly since it became a city in 2008. When it became a city, the new council adopted the Riverside County DIF schedule, but in 2009 because of the Great Recession, it reduced those fees until 2011. Currently, new costs for infrastructure have come to the city including a major storm drain project along Encanto Drive in the southeast portion of the city. A substantial increase in the DIF was warranted according to the Willdan study, which was seen as questionable by Menifee developers of both commercial and residential properties.
The proposed DIF schedule showed a huge increase in fees for single-family homes, jumping from the current $3,598 to $7,803 for single-residential units; the rate is DIF 16 in the storm drain area of the city – a $3,905 increase per unit. In DIF 17, outside of the storm drain area, the residential unit fees went from $5,185 to the $7,803 per unit cost – a $2,618 price jump. The amended rates are still below the maximum rates recommended by the Wilder study.
The city first introduced the new DIF fee schedule in its Nov. 15 city council meeting, and on the request of developers and the Building Industry Association, the city manager met with them Nov. 17 and Nov. 27 to discuss the DIF schedule. Different options were requested by the developers including a freeze on the fees and a new study. The city manager and staff, following the meetings, amended the DIF schedule that was introduced at the Tuesday, Dec. 6, meeting.
Under the amended DIF schedule, the nonresidential developer would be required to pay 50 percent or half of the fees for their project, July 1, 2018, with the remainder to be paid July 1, 2019. The residential developer still would have to pay 100 percent of the DIF fee July 1, 2018. There was no freeze or longer delay in the amended schedule; however, the fees might change if the assessor determines a change in the cost of living and market value.
The council opened the discussion for public comment that brought a number of residential and commercial developers affected by the increased DIF to the podium. While most noted they had no objection to an increase in DIF fees since they are needed to meet the infrastructure needs regarding law enforcement, fire protection, flood control, streets and highways, etc. in the city, but they saw the collection time element in the Nexus study still as a detriment to their already planned projects. Those project costs in a large part were based on the current lower DIF schedules. They urged the council to approve the amended DIF time schedule as recommended by staff.
Several developers and landowners during the public hearing asked the council to consider extending the fee collection time even longer to three to four years equally for both commercial and noncommercial developments and even to freeze the new DIF schedule until a new Nexus study could be made.
Councilman John Denver made a motion to modify the proposed DIF fee ordinance to give the landowners and developers of both nonresidential and residential the same 50 percent fee collection in the first year, due July 1, 2018, and the remainder one year later and to give the new city manager, who had not taken part in the earlier discussions with developers, time to review the DIF rate schedule in April to determine if a fair rate was being charged for the homes and facilities.
Denver’s motion failed following a statement by Mayor Neil Winters that the council would be making a tough decision and it would determine the future of the city.
“This is a tough decision we have to make,” Winters said.
He said the city had to find ways to get enough money to make sure all its residents have the infrastructure they need to assure their safety and well-being far into the future. He said the decisions the council make are always a “give and take” proposition which the city had done with the development community.
Following the first motion’s failure, the council voted to approve the new DIF payment schedule and to approve an ordinance, amending the previous DIF schedule as recommended by the Nexus study and staff.