Mammoth Lakes Town Council delays vote on development fee hike

The Multi-Use Facility, er, Wreck Zone, was not the only contentious issue discussed by Mammoth Lakes Town Council at its December 5 meeting. A hike in development impact mitigation fees was considered and hotly debated by council and members of the public.

Councilman Kirk Stapp led off with an explanation of what impact mitigation fees are all about. In 1978 California passed Proposition 13 limiting the amount that property taxes could increase annually.

In order to compensate for this tax revenue loss, the town of Mammoth Lakes created impact mitigation fees, which are imposed on new development so that the town can afford to fund the additional police, road repair, housing for employees, and all the other impacts that new development would create.

Three and a half years ago the town performed a “Nexus Study,” which audited the impacts that development would create and put a price tag on it. The town then passed an ordinance instituting fees based on these “nexus” recommendations. 

At the time, the town was hurting from the recession, and so set fees well below the recommended maximum price in an attempt to avoid disincentivizing development. 

Now, Council is thinking about raising the fees substantially. 

Council is contemplating a 40% fee increase for single family home construction (from $5,700 to $8,200 per unit), and the lodging fee (for hotel and motel construction) is proposed to increase 250% from $3,700 to $9,300 per room.

Both of these contemplated new fees are within the range recommended by the Nexus Study, with the lodging fee being the maximum recommended amount. 

“Anchoring” is a principle of negotiation that says the initial number presented sets an anchor which influences the rest of the negotiation. It is a logical fallacy, and the anchor set by council years ago is not as important as the recommendation which the town paid professionals to calculate.

Tom Hodges, Vice President of Development for Mammoth Mountain Ski Area, spoke on the effect that such a fee hike would have on development.

“This is going to affect a developer’s decision to build,” Hodges said, “and I don’t see much strategic justification.”

Hodges said that Laurie Best, Senior Planner for Breckenridge Colorado, who came to the Housing Summit a few weeks ago, told him that Breck has no mitigation fees, and they are leading the way in mountain town development.

He also asked council to think about how much a lodging room makes in TOT (room tax) each year, and how that will dwarf any tax revenue from mitigation fees. 

“Let’s not cut off our nose to spite our face,” he said.

Councilmen Wentworth and Stapp pleaded for the community to disassociate mitigation fees from development incentives.

“This is the cost of doing business,” Wentworth said. “This isn’t a way to incentivize or disincentnivize development. It is to mitigate the effects of development.”

Stapp said, “This is responsible governance.” 

“A new hotel means more costs… New development isn’t paying its fair share.”

Councilman Bill Sauser disagreed.

“Right now this [the mitigation fee] is about 10% of building fees. It is almost prohibitive already,” he said.

County Supervisor Jennifer Halferty spoke to the council in support of raising fees. 

“This recommendation is not willy-nilly, we made a Nexus Study,” she said.

“People want development to mitigate its impact.” Halferty presented this problem: “When they build, they create the need for more jobs.”

*And job creation is apparently a negative thing … 

“We should impose maximum fees across the board,” she said.

Citizen Sandy Hogan said that the current low fees represent missed opportunities for impact mitigation.

Ken Brengle of the Chamber of Commerce said, “we already haven’t seen a lot of development [since the fees were enacted].”

“Is $3,700 to $9,300 going to be a deterrent to building a hotel?” Brengle asked, rhetorically.

Councilwoman Lynda Salcido said that if the town is to raise mitigation fees, she would rather see it done incrementally year-after-year, and evenly across building types.

“I want it to be fair, and not favor one type of build,” she said.

Hodges stood up again to say that the town has not given the development community enough time to respond to these proposed fee increases, and Councilman Wentworth presented a motion in reply.

The council unanimously approved a motion to push the decision on these fees until the January 16th meeting.

Click here for the rest of the paper.