Council backs revised DIF

With Mammoth Lakes’ economy still caught in a tug-of-war between recession and recovery, Mammoth’s Town Council is grappling with how to best stimulate the local economy without giving away the farm.

Much of the debate centers around Capital Improvement Projects, which are partly funded through Development Impact Fees (DIF). With many big development projects still trying to line up funding in the largely frozen, though thawing, capital markets, DIF revenue has all but dried up. Not too many years ago, Mammoth was a hotbed of building, “boasting” arguably some of the highest DIF fees in the state. Lately, however, Council has been forced to cut fees to keep any prospective development ready to put hammer to nail interested in hammering here.

The tricky part: not cutting fees so much that you don’t collect enough fees now to mitigate impacts and end up having to pay out of pocket later to make up for it.

To that end, the independent, multi-partisan Capital Facilities Funding Committee (CFFC) has been working for months outlining what it thinks is the best combination of funding sources to pay for capital projects (i.e. DIF, General Fund and Measure A, grants, partnerships and general obligation bonds), how much can be realistically expected from each and how to best prioritize projects.

In November 2009, Council reduced DIF fees 30-40 percent across the board and on Wednesday night, Council considered approving CFFC’s recommendations for a revised DIF schedule. For starters, the new lineup does modestly raise certain fees on Single-family transient (+6 percent), Mobile home (+3 percent), Multi-unit Non-transient (+2 percent) and Multi-unit Transient (+9 percent). Even after those hikes, though, fees in those categories still are 52-54 percent of what they were in 2008-2009.

The focus was on Single-family Non-transient, which went down another 3 percent, and Commercial/Office and Industrial, down 21 percent and 22 percent respectively. Commercial/Office showed the biggest drop overall, now at 49 percent of 2008-09 fees, or less than half what it was two years ago.

During public testimony and Council comments, opinions varied as to not only the state of DIF, but also the bank-ability of other funding sources.

“On paper it all looks great, but reality is that grant funding as proposed is $100 million. A general obligation bond is going to be very difficult and we should be looking at shifting more dollars to marketing,” Stapp observed. The DMO, he said, is woefully underfunded. Stapp also opined that making DIF decisions now could mean trading away opportunity to route those dollars to another source, leaving a donut hole to backfill in other funding sources.

One source Stapp said the “whole town could get behind” would be a more “incremental approach” to how much property tax revenue the Town forwards to Mono County. He also suggested there may be “negotiation room” with the Ski Area over funding the airport.

Council member Jo Bacon was wary of Staff’s plan to boost the non-committed amount of General Fund Measure A dollars to capital projects in the next 7-8 years. “You have to realize your decisions now affect future councils. It’s great to say we’ll increase .5 percent to 2 percent, but I think that’s questionable.” She also was cautious when it came to Staff’s grant funding source expectations. “With the state the way it is, and the fed writing rubber checks, even grants may be getting questionable.”

According to the staff report the grant-funding goal is set at $115 million, of which the Town has reportedly been awarded $50 million. Deputy Town Manager Karen Johnston agreed that grant funding is not assumed, but qualified that with her assessment that the Town is good at discerning what grants to apply for and has had considerable historical good fortune in securing them.

“We can’t run a town by saying we’ll find the money somewhere, and if we don’t we’ll start chopping,” remarked Council member Skip Harvey.

Council member Wendy Sugimura wondered whether all possible funding sources were identified and considered. “The original matrix for sources came from the consultant [Walter Kieser] and examined category by category, item by item,” said CFFC member and Chadmar developer Chuck Lande. “Most of our meetings were at least three hours long … no options were discarded.” Mayor Neil McCarroll, who was at numerous CFFC meetings, agreed, adding that nothing was left out of consideration. “The background materials book created by the committee is probably 8 inches thick.”

Lande suggested lower fees are part of keeping the town moving forward. “If we don’t lower DIF fees, all we’ll have left is good old Mammoth, still stuck in the past,” he said. “Our fees are out of balance; things can change, but we have to get out of the past.” McCarroll echoed that point. “We need to get off of [capital financing’s] radar screen. Right now, they think we’re nuts, and won’t even consider doing anything in Mammoth.”

Harvey wasn’t opposed to the new DIF schedule, but was somewhat apprehensive of lowering fees too much and later running into problems getting grants. That scenario, he suggested could essentially place on Town Council in the difficult position of weighing whether it should shoulder the burden of getting a project to pencil out.

Eastman supported the new schedule. “I can’t name another community that has had higher DIF,” he said. High DIF means no development and therefore no fees and now tax revenue, Eastman indicated. “You can keep your fees high if you want to, but a million, a billion, a trillion times zero is still zero.”

[Keeping DIF lower] places us on level playing field with other communities,” said McCarroll, setting stage for a pro forma to take to lenders. “In the ‘new world order,’ and that’s what we’re talking about, you won’t get any financing for a project unless you’ve pre-sold it.” Chadmar’s Chad Lande told The Sheet he agrees with McCarroll in large part. “Presale percentages will likely increase from where they are now, though probably not to 100 percent,” he posited.

In terms of the CFFC’s Workplan Priorities list, Council members were skeptical that Town staff could clear all of the remaining 12 major and 15 minor items by June 2011. Town Manager Rob Clark agreed, saying the list was indeed overly optimistic and that it would almost invariably be revised several times as funding sources and budget priorities are reshaped during the next couple of months.

DIF, meanwhile, can be readjusted at any point. Council plans to review them annually, sooner if needed, and update the 5-year Capital Improvements Plan annually as needed.

Council approved the new schedule 5-0. Held for re-evaluation, however, were two discounts: one for projects that generate higher than expected Transient Occupancy Tax or Sales Tax that receive permits and pay DIF by June 30 (the date was pushed back to Aug. 15) and a discounted fee for Single-family homes.