Why this matters
National City has not updated its development impact fees since 2005, potentially losing out on collecting more revenue for its services and projects.
National City officials have increased the amount they charge developers in an effort to collect more funds for walking paths, public safety equipment, library services and other infrastructure projects.
The City Council last month unanimously voted to increase development impact fees. The cap for constructing an average-sized single-family home will now be about $15,700. That’s more than triple the city’s current $4,100 fee.
The city hasn’t updated most of the fees in more than two decades, while overall costs for programming and equipment have increased. Right now, the city charges a flat rate for any single-family home, no matter the size.
Officials say it’s time for developers to pay their “fair share” to fund city services.
From the Documenters
This story came in part from notes taken by Jennifer Hua, a San Diego Documenter, at a City Council of National City meeting last month. The Documenters program trains and pays community members to document what happens at public meetings.
Councilmember Ditas Yamane said going without a fee update for this long was an “oversight.”
“We need to recover those costs,” she said during the council meeting.
By comparison: On the higher end, Chula Vista charges nearly $39,000 per average-sized dwelling unit to build single-family homes. On the lower end, La Mesa charges about $4,300 per average-sized unit — though officials say the East County city is in the process of updating its fees as well.
In addition to single-family homes, the fee increase applies to apartments, mobile homes, condominiums and similar residential developments. The city also collects fees for other developments such as hotels, commercial and retail space, offices, industrial and medical facilities, schools and churches.
Accessory dwelling units — such as a granny flat or guest house — that are 750 square feet or smaller are exempt from the fees.
Whenever a developer wants to build a new project, they must pay a one-time impact fee to offset any negative impacts of building. For example, if multiple developers build apartment complexes in a low-populated neighborhood, the city can use impact fees collected from those projects to build, say, a park to accommodate the increase in residents.
The city wants the fee revenue to help fund six categories: police, fire, library, parks, city administration and multi-modal transportation, according to a study by consulting firm David Taussig and Associates, which the city hired to assess fee increases.
Councilmember Jose Rodriguez said the city will need to find a “delicate balance” between developer incentives and the city’s goal to boost homeownership.
Rodriguez and other leaders floated the idea of delaying the fee onto developers so that developers don’t have to pay so much upfront.
“The biggest obstacle is capital, and that means money, and so the more money they need to put down at the beginning, the more difficult it is for the development to pencil out,” he said.
As it stands now, the city collects the fees before developers receive permits to build, city staff said.
Resident Edward Nieto, a frequent attender of council meetings, told the council that he’s worried whether the increase is enough to cover the impact of projects.
“My concern is if the fees aren’t at the appropriate level, who pays for that? Citizens pay for it,” Nieto said.
The state mandates cities to conduct fee studies every eight years. But Leni Zarate, a consultant from the firm, recommended evaluating the fee again in the next three to five years, depending on the city’s rate of development. The city is also implementing the firm’s recommendation that it “include a provision for an annual inflationary adjustment” based on the state’s everchanging construction costs.
“I can’t buy a police vehicle for $152,000, completely loaded, today on 22-year-old data,” Zarate told the council.
The new fees will take effect on April 20.
The fee increase comes after National City dipped into its reserves to cover its budget this fiscal year. The city has sought other ways to increase revenue, such as requiring permits and hotel taxes for short-term rentals.
Over the last 20 years, the city has collected more than $4.4 million in development impact fees. About $3 million has been spent.
Type of Content
News: Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.
