Rising construction costs and rapid growth have prompted Roseville elected officials to increase two developer fees and establish a new one, despite the sluggish housing market.
The City Council also voted Dec. 5 to reinstate Roseville Electric's "backbone recovery" fee to cover costs of ramping up to bring power to new areas.
City Manager W. Craig Robinson said cost pressures are affecting the city's ability to build promised facilities, many of which are needed to serve new development.
"We recognize that timing is everything," Robinson said. "We are sensitive to the impact that fees have on new development."
While development elsewhere in the region has slowed, Robinson told the council that Roseville's building activity remains steady.
In the past year, nonresidential development has more than doubled the average for the prior four years. The number of building permits pulled for single-family homes so far this year is also on track to surpass 2005 and 2006 figures, according to city staff.
Building industry representatives, however, say the fee increases come at a bad time.
"During this downturn, and probably for the foreseeable 18 months ahead of us, we think the market will continue to decline," said K. Hovnanian Homes' Frances Knight. "We suspect that the projections on building permits are going to be worse than estimated currently."
K. Hovnanian Homes is building three-story attached houses in Roseville's Paseo Del Norte development. Knight said her company currently pays more than $42,000 in fees for every residential unit.
The new and increased fees combine to add about $2,500 per home, according to Knight.
"That's a significant hit for a residential unit right now," she said.
The fee increases and new fees, which will go into effect in July, include:
• Public facilities fee – A fee increase to fund projects to serve the city's population through 2025, including construction of libraries and police buildings.
Charged per square foot of new building space, the fee will rise from 99 cents to $1.13 for residential units, from 48 cents to 54 cents for commercial development, from 64 cents to 71 cents for offices, and from 31 cents to 36 cents for industrial space.
• Water connection fee – A fee increase earmarked to pay for construction of water conveyance, storage and treatment, as well as groundwater facilities.
The planned two-year increase will raise the connection fee from $4,675 per dwelling unit to $5,425 in 2008, followed by another $650 increase in July 2009.
• Animal control facility fee – A new fee created to raise $2.6 million to build a $10 million animal shelter, replacing the one on Corporation Yard Road near the Placer County Fairgrounds.
The fee will apply only to residential construction. Beginning in July, developers will be charged $182 for a single-family unit and $44 for each multifamily unit.
• Backbone recovery fee – A reinstated fee that Roseville Electric charges developers to fund construction of necessary infrastructure, such as substations and high-voltage power lines in new areas.
Darin Gale, legislative advocate for the North State Building Industry Association, said after the meeting that builders pass the cost of the increased fees to the homebuyer.
"Just because builders are pulling permits doesn't mean they can actually sell the homes," he said. "They're having a very tough time selling homes in this current market.
"We work very closely with local developers, and all of them tell us there's no way they're going to be pulling the same amount of permits next year as they are this year."
Wendy Gerig, Roseville Chamber of Commerce's chief executive officer, asked the council to delay the fee increases until the economy picks up.
This year, a record number of businesses dropped their chamber membership because they folded or had financial constraints, Gerig told the council.
"It isn't business as usual in Roseville, and I think we're going to continue to see that," she said. "… To impose these fees now might prolong whatever cycle we're in."
Delaying the fee adjustments, however, would result in a $5.4 million revenue loss in one year's time and could not be recouped, city staff members said.
Instead, council members agreed to revisit the issue in May when they plan the budget for the upcoming fiscal year.
"Will these fees hurt the cycle?" Councilwoman Gina Garbolino asked. "I'd like some objective answers to these kinds of questions."
Call The Bee's Jennifer K. Morita, (916) 773-7388.
