The Healdsburg City Council voted 4-1 to introduce new traffic and storm drain facilities development impact fees at 75% of what was proposed starting July 1, and then to implement the fees at 100% at the conclusion of the city’s COVID-19 emergency declaration.
Councilmember David Hagele was the dissenting voice on the vote.
“It would be a motion to approve the facility fee study as proposed at a 75% fee for both the storm drain facilities and 75% of the traffic impact fees to be implemented July 1, 2021 and that we would move automatically to 100% fees as proposed when it is declared that the COVID-19 emergency is no longer in effect per the city’s declaration of the emergency,” said Councilmember Ariel Kelley, who was the one to introduce the motion at the Jan. 19 Healdsburg City Council meeting.
A graphic of the maximum justified impact fee schedule can be seen below. The fees will at first be implemented at 75% of what’s proposed and will be implemented at 100% when the city lifts its COVID-19 emergency declaration.
New fees — The new traffic and storm drain development impact fees will at first be implemented at 75% and then will be implemented at 100% once the city has rescinded its COVID-19 emergency declaration.
Development impact fees are a one-time fee charged to a new development at the building permit stage that’s used to fund facilities — such as, streets, sewer and drainage — needed to serve the new development.
Revenue from development impact fees makes up a fair sized portion of the city’s revenue and budget for city projects like street improvement, however, some council members were hesitant to introduce a fee increase amid a pandemic and difficult economic times, and it took a lot of deep discussion and wordsmithing to reach a compromise that mostly all could agree on.
The new fee figures were calculated by Willdan consultant Carlos Villarreal.
“Our entire analysis is demonstrating the nexus of the relationship between the facilities and the development that creates demand for the facilities,” Villarreal explained during a December informational meeting on the impact fee topic. “In California it is the Mitigation Fee Act that lays out the guidelines for how impact fees are to be calculated and how they are to be implemented. In terms of the calculations we have to make several findings — and our report supports these findings — to show that the new development creates the need for these facilities, that new development will benefit from the use of the fee revenue and that the fees are proportional to the new development share study costs. We also need to document the purpose of the fee and how the city plans to use the fee revenue.”
The city has several projects in the works that would benefit from impact fee revenue. Some of these projects include the U.S. 101 Dry Creek interchange project, north Healdsburg Avenue improvements and Grove Street improvements among others.
“At the maximum justified level, a single family (home) development fee for traffic facilities would be $4,588 and for the storm drain facilities fee it would be $5,724. The city could always implement something less, but it cannot implement anything higher,” Villarreal had said at the public meeting.
During the council meeting Villarreal once again presented a report on the fee calculation process and said the council could implement something less than what was proposed, but nothing more, and some council members were interested in either implementing something less or phasing in the increases.
“No matter what, this discussion during a pandemic is not a good look for the city. I also really have an issue with the term ‘maximum justified fee,’ which seems to imply that we could charge more. When we’re trying to get the type of development that we want we really need to project the willingness to work with developers and that sort of thing,” Hagele said. “From earlier discussions it sounded like there is some flexibility (on the fees) … I think at one of the community meetings somebody brought up industrial space activity … where there’s clearly a different level of impact and it does sound like there’s been some flexibility on staff’s part in the past who kind of deviate from the written fees to make those accommodations and I want to make sure that something like that is documented.”
Councilmember Skylaer Palacios voiced that she wouldn’t want higher development impact fees to make it more difficult for developers, like affordable housing developers, who may be interested in starting a project.
During the public comment session Healdsburg Lumber Company owner Eric Ziedrich said the fees would be devastating.
Ziedrich is in the process of expanding his lumber business to a larger facility on Healdsburg Avenue south of Veteran’s Memorial Beach.
“I spent some time with one of the staff members of the city this morning assessing the traffic impact fees and currently the traffic impact fee for our project would amount to about $25,000. Depending on how you classify our project based upon a new fee, that impact fee could be between $170 and a quarter of a million. That’s a devastating impact to our project,” Ziedrich said. “How can you possibly consider this now with the pandemic and historically terrible times (when) small, local businesses struggling to stay alive.”
Healdsburg Mayor Evelyn Mitchell said it does feel a bit tone deaf to be considering this during a pandemic.
Mitchell asked city attorney Samantha Zutler if the fees could be phased in over time. Zutler said the council could adopt the fees but implement them later or adopt a lesser fee.
City Manager Jeff Kay also suggested that they could take off some of the projects from the city’s project list that the city needs to fully fund. Since impact fees also go toward funding streets, storm drains and city infrastructure of the like, this move would be a different method of phasing in the fees.
Mitchell threw out the idea of excluding the new fees for projects that are already in process, but then the city would have to determine what phase of project development work would be considered “in process.”
Kelley expressed that she wouldn’t be in favor of removing projects from the city’s project to-do list since some of them have been a long time in the making and are needed.
Ultimately the council decided to implement the new impact fees at 75% and then to later implement them at 100% of what was proposed once the COVID emergency is over.
The city’s sewer and water development impact fees will not be adjusted despite the changes to the other development fees.
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