ESCONDIDO – The Escondido City Council met on Wednesday, Oct. 28 and approved a 2% fee increase for development impact fees to keep up with inflation. The increase will raise the development fees charged for new single-family homes, multi-family homes and commercial and industrial buildings.
Developers of new residential and nonresidential projects must pay development impact fees to offset the costs of public facilities that are necessary to serve the new development.
These facilities include parks, fire and medical emergencies, police, a public library, a senior citizen center, public works, drainage and traffic improvements.
In September, the council had originally considered a plan to raise development fees by $9,300 per new single-family home, along with increases for multi-family, commercial and industrial buildings, but the proposal drew objections from developers and realtors.
According to the city staff report, The Building Industry Association of San Diego even said it would file a legal challenge if the council went forward with the proposal.
The new plan will raise the development fees charged for new single-family homes by about $340, as well as an increase in fees for multi-family homes and commercial and industrial buildings.
The new fees will take effect in February.
Escondido currently charges $32,374 per new home in development impact fees, which, according to a city staff report, are among the lowest development impact fees when compared to neighboring cities.
Currently, the development fees charged by the city only cover about 82% of infrastructure costs, with grants and other one-time revenues typically offsetting the shortfall, according to the report.
The 2% increase still won’t be enough to cover the estimated infrastructure costs but will cover the costs of inflation for building materials needed for infrastructure projects.
A September staff report said that, between now and 2035, the city will have an estimated $247.2 million in anticipated infrastructure costs for new development. The current development fees would leave the city short of that total by $64.7 million.
This shortfall only further exacerbates the city’s projected general fund budget deficit of $176 million over the next 18 years.
Until the city significantly raises development fees, Escondido still faces a gap of tens of millions of dollars to pay for the infrastructure needed to serve new development.
The council said they will revisit the issue in 2021 with the possibility of raising fees again to fully cover the costs for the city’s infrastructure projects.
The council also approved a budget adjustment of $100,000 to fund a financial analysis of its projected infrastructure needs.