The construction industry provides sanctuary and equity wealth to homeowners, shelter to renters, comfortable places to conduct business and shop, good salaries to workers, and revenues that help fund local government and pay for public improvements.
Yet we often hear people question if the construction industry is paying its fair share.
State law, known as AB (Assembly Bill) 1600, allows local government to collect impact fees from new developments. The fees are used to fund the construction of such necessary public improvements as schools, streets, parks, and roads. SB (Senate Bill) 50 establishes a formula so that new construction is charged a per-square-foot fee for the schools needed to educate new students those homes and businesses generate. The laws require each government agency to conduct a study to show that there is a clear link between the fee being charged and the impact the new development is creating, and that the fee is roughly proportional to the impact being created.
Members of the Home Builders Association know that governments charge our industry to ensure that we are paying our fair share. Sometimes they ask us to exceed our share when they do not have enough revenue from existing residents to fix a problem. We also know that public perception does not match the reality that exists regarding paying the fees. So the association decided to find out how much new construction paid in impact and school fees between fiscal years 2002-03 and 2006-07. The information in the study was collected from the cities, school districts, special districts, San Luis Obispo County, and Santa Barbara County.
Our recently completed study, “New Construction: Adding Value to our Communities,” determined that residential and commercial construction in Santa Barbara County and San Luis Obispo County contributed more than one-quarter of a billion dollars in the five years toward new schools, roads, parks, and other public improvements.
The study found that new construction paid a total of $262 million in development impact and school fees during the study period, including $180.7 million in San Luis Obispo County and $81.3 million in Santa Barbara County, with $187 million of the total going for general public improvements and $75 million toward school construction.
The association chose the 2002-2007 time period because it included both a residential construction boom and a slump, allowing the industry’s normal up and down cycles to even out and make the data more reliable and representative. We only surveyed communities that had substantial residential and commercial construction during the study period. In addition, we did not tally the user/project processing fees we pay to bring a proposal to and through a public hearing and to get a building permit. The actual total fees we pay would more than double if every city and school district in the two counties and the processing fees were all counted.
The association deliberately did not use the study or our research to analyze or imply anything about whether the fees are too high or too low. That is a topic for another day and in a different context. We simply wanted to see how much the fees were.
We were surprised by the outcome since the total was significantly more than we expected. Any way you count it, paying more than one-quarter of a billion dollars in five years adds up to paying a lot of money in a short time period.
Jerry Bunin is government affairs director for the Home Builders Association of the Central Coast, a nonprofit trade association representing about 250 homebuilders, subcontractors, architects, engineers, designers, and other industry professionals working in San Luis Obispo and Santa Barbara counties.
Send comments to rmiller@santamariasun.com.
This article appears in Oct 30 – Nov 5, 2008.