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Revised TIF charges take effect April 28


Last updated 3/6/2008 at Noon

Concerns about the revised Transportation Impact Fee (TIF) ordinance are slated for review during March, but the new ordinance reducing commercial and industrial fees and adding new exemptions will take effect April 28.

The San Diego County Board of Supervisors voted 3-2 February 27 to approve the second reading and adoption of the revised TIF ordinance, making the new charges effective 60 days after adoption. The supervisors had approved the introduction of the ordinance and first reading on January 30 by an identical 3-2 vote.

“The changes to the ordinance with the cost savings are significant,” said Rich Crompton, the assistant director of the county’s Department of Public Works.

Supervisors Greg Cox, Dianne Jacob, and Pam Slater-Price voted for the revisions while Ron Roberts and Bill Horn expressed support for the TIF reductions but voted against a revision which eliminated credits for frontage improvements.

The frontage improvement issue, along with a spending plan and a potential oversight committee, will be reviewed by Department of Public Works staff and submitted to the supervisors as a report.

“We should be able to get you that report within the next 30 days,” said Department of Public Works director John Snyder.

In April 2005 the San Diego County Board of Supervisors adopted a Transportation Impact Fee ordinance in order to comply with state law and provide funding for the construction of transportation facilities needed to support the increased traffic generated by new development.

The Transportation Impact Fee is actually an option rather than a requirement; developers may still perform an individual cumulative impact traffic study and make the appropriate mitigation.

The TIF ordinance was expected to help small developers who could address their projects’ impacts easier with a single check rather than with a comprehensive cumulative impact study.

Prior to a 2002 court case, the California Environmental Quality Act (CEQA) allowed exemptions for relatively small “de minimus” cumulative traffic impacts, but after the exemptions were declared invalid CEQA was changed to require all traffic impacts, no matter how minimal, to be addressed and mitigated.

That eliminated the county’s ability to make “de minimus” findings, so all new projects now require mitigation for cumulative traffic impacts.

The change in the CEQA law held up approximately 300 projects in the county’s unincorporated area due to the difficulty of the smaller projects’ developers being able to fund the required traffic studies as well as the road improvements.

In some cases the road improvements on a project by project basis would have exceeded the actual cost of the project, and the TIF program was intended to allow the applicants to pay the fee as a “one-stop” process.

Since the adoption of the TIF ordinance, citizens and local community groups as well as applicants and developers have expressed concern that the industrial and commercial fees are too high, producing a heavy strain on economic growth and development in unincorporated communities.

In November 2007 the supervisors requested that county staff address specific issues and return to the board in 60 days with recommendations to change the TIF program to encourage commercial and industrial development in unincorporated San Diego County.

The update added freeway ramps into the cost to address cumulative impacts. It also sought to simplify the determination of fees for non-residential development by multiplying the project’s gross floor area by a cost per square foot and by reducing the types of non-residential land uses from approximately 100 to six.

Uses which cannot be classified into one of the six classifications will pay the general commercial fee.

(Although government/institutional was one of the classes, churches were not included as a defined use; Crompton indicated that churches will be charged under the general industrial rate.)

The TIF assessment itself will be reduced by an average of 40 percent for commercial and industrial projects and in some cases by up to 96 percent, although the elimination of frontage credits offsets that savings for many projects.

The adjustment for residential projects will range from a reduction of 28 percent to an increase of 3.5 percent.

The new TIF for a single-family detached residential unit in Fallbrook will be $12,067, which covers $6,084 for local improvements, $5,942 for regional impacts, and $41 for freeway ramps.

The TIF charges will be $12,295 for a Bonsall house, $10,447 for a home in Rainbow, $7,159 for a residence in the Pala-Pauma planning area, and $5,991 for a single-family dwelling in the Pendleton-De Luz planning area.

The $5,942 regional charge and $41 freeway ramp charges also apply to Bonsall, Rainbow, Pala-Pauma, and Pendleton-De Luz; the local costs are $6,312 for Bonsall, $4,464 for Rainbow, $1,176 for Pala-Pauma, and $8 for Pendleton-De Luz.

Multi-family attached homes, condominiums and apartments, lodging including hotel rooms and timeshare units, and accessory apartments (“granny flats”) will be charged at 67 percent of the single-family dwelling fee for each unit.

Mobile homes, agricultural labor housing, and retirement communities will be assessed at 33 percent of the single-family dwelling rate for each unit, and congregate care facilities for residents unable to care for themselves will pay 20 percent of the single-family dwelling cost for each unit.

Fallbrook’s general commercial rate will be $21,559 per 1,000 square feet which covers $18,217 in local costs, $3,234 in regional impacts, and $108 for freeway ramps.

The $108 freeway ramp fee also applies to Bonsall, Rainbow, Pala-Pauma, and Pendleton-De Luz.

Bonsall’s $21,955 fee per 1,000 square feet also includes $18,901 of local and $2,946 of regional costs, Rainbow’s $18,649 rate incorporates $13,367 of local and $5,174 of regional assessments, Pala-Pauma’s $12,792 cost per 1,000 square feet includes $3,521 of local and $9,163 of regional charges, and the $18,649 rate for Pendleton-De Luz is based on $36 of local and $10,564 of regional impacts.

Office space (including banks) will be charged at 56 percent of the general commercial fee, general industrial will pay 37 percent of the commercial rate, schools and government/institutional will pay 32 percent of the commercial assessment, and furniture stores will be charged 14 percent of the general commercial rate as will storage, warehousing, wineries, and non-residential agricultural.

Mixed-use buildings with distinct storefronts, such as a strip mall with retail stores and offices, will be charged based on the square footage of their respective storefronts, but ancillary uses such as management offices in retail stores or in industrial facilities and storage space in an office building will not be charged at a separate rate.

The TIF for a 100,000-square-foot shopping center will be reduced by 77 percent, from $9,425,520 to $2,125,900 in Fallbrook and from $9,603,360 to $2,195,500 in Bonsall.

The fee for a 50,000-square-foot supermarket will see an 83-percent reduction, from $6,419,600 in Fallbrook and $6,540,800 in Bonsall to $1,078,000 in Fallbrook and $1,097,000 in Bonsall.

A pair of 96-percent reductions will lower the charge for a 10,000-square-foot convenience store from $5,991,700 to $215,600 in Fallbrook and from $6,140,700 to $219,000 in Bonsall and the TIF cost for a 2,500-square-foot fast food restaurant with a drive-through from $1,440,000 to $53,000 in Fallbrook and from $1,467,200 to $54,900 in Bonsall. (In the event a convenience store is built in Rainbow, the fee drops from $5,182,000 to $186,500.)

The 37-percent reduction for a 50,000-square-foot retail strip mall lowers the Fallbrook fee from $1,711,900 to $1,078,000 and the Bonsall assessment from $1,744,000 to $1,097,000.

The fee for a 6,000-square-foot dine-in restaurant will be reduced 76 percent from $531,700 to $129,400 in Fallbrook and from $541,700 to $131,700 in Bonsall.

The 41-percent reduction for warehouse, storage, and winery uses drops the fee for an 80,000-square-foot building from $402,800 to $236,100 in Fallbrook, $410,000 to $240,500 in Bonsall, and $348,900 to $204,300 in Rainbow.

A pair of 40-percent reductions decrease charges for a 50,000-square-foot office building from $1,007,000 to $607,000 in Fallbrook and from $1,026,000 to $618,800 in Bonsall and for a 30,000-square-foot furniture store from $184,000 to $92,000 in Fallbrook and from $157,000 to $94,100 in Bonsall.

The 21-percent decrease for a 100,000-square-foot general industrial building translates to a change from $1,007,000 to $794,700 in Fallbrook and from $1,026,000 to $809,200 in Bonsall.

The cost for a 35,000-square-foot school (public schools are not subject to county land use ordinances, but the TIF applies to private schools including vocational colleges) drops 35 percent from $372,200 to $241,000 in Fallbrook, $379,000 to $245,000 in Bonsall, and $321,900 to $208,500 in Rainbow.

The select industrial category covers industrial uses which generate traffic but do not construct facilities of a size which would provide an adequate TIF payment to mitigate that traffic.

Those uses include quarries and other mining operations, landfills, borrow pits, and concrete and asphalt production facilities including batch plants.

The TIF charges for those projects will be calculated by multiplying the TIF area base cost by the number of average daily trips, with heavy vehicle trips being converted to passenger vehicle equivalent trips.

The Fallbrook fee will be $598 per trip, the Pala-Pauma charge will be $355 per trip, the Bonsall assessment will be $610 per trip, the Rainbow payment will be $518 per trip, and the Pendleton-De Luz cost will be $298 per trip.

If a project’s building plan check fees were paid on or before February 29, regardless of whether the building permit has been obtained prior to the effective date of the ordinance update, the builder has the option of paying the existing TIF rate or the new rate.

The exemptions to the TIF charges were also expanded to specify conversions from apartments to condominiums, tenant improvements to an existing facility including changes of occupancy or use, minor expansions of up to 1,000 square feet, uncovered outdoor restaurant seating, fuel tanks and gas pumps, and permitted home businesses such as child care.

“It’s not the perfect solution, but it is a solution that’s in the works,” said attorney William Schwartz, who represented Granite Construction.

“We’re almost there,” said East County Construction Council chair Ron Pennock. “We’re getting closer.”

Pennock repeated the concerns he expressed January 30 which not only requested the return of frontage credits but also cited California Government Code Section 6600.

That code section requires that a nexus exist between the fee collection and expenditure, that specific improvements are constructed from the fee revenue, and that the improvements be constructed within a certain period of time.

Pennock also indicated his desire for an oversight committee.

The Department of Public Works has a meeting with San Diego Association of Governments (SANDAG) and California Department of Transportation staff tentatively planned for mid-March.

That meeting will include Pennock and other stakeholders and will involve coordination of state gas tax money, SANDAG TransNet sales tax revenue, and county TIF assessments being collected for the same roads.

“I think we got a lot closer today in our discussion,” Crompton said. “I think we’re about there.”

The supervisors who supported the change acknowledged the problems Pennock cited but also acknowledged that the existing fees needed change.

“If we don’t approve it today, then the TIF fee reverts to the old TIF fee,” Slater-Price said.

“It would defeat the direction we’re heading in,” Jacob said.

The two supervisors in opposition to the motion noted that they supported the fee reduction.

“I think we can kind of bring this back into reality,” said Supervisor Bill Horn. “I’d like to see them be reduced.”

Horn cited the elimination of frontage credits as his reason for opposition. “I think we ought to give these developers credit,” he said.

“This ordinance is something that needs fine-tuning,” Roberts said. “We need to replace this. The ordinance flies in the face of any logical and sensible development.”


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