Council votes to slash housing, DIF fees
The Town of Mammoth Lakes signaled its desire to become “developer ready” by greatly reducing both its housing mitigation and Development Impact Fees (DIF) on Wednesday, July 1.
Housing mitigation fees are currently charged to developers in lieu of providing on-site workforce housing to mitigate the impact of new development in Town. Fees then go towards creating housing for residents who might not otherwise be able to afford it.
DIF is a bundle of Town fees charged to developers to mitigate a project’s environmental and service impacts. DIF revenues go towards augmenting law enforcement, streets and traffic signals, transit and trails, storm drainage, parkland and recreation and general facilities.
Both housing mitigation fees and DIF have come under scrutiny as the Town has struggled to climb out of the recession as well as deal with impacts of the airport litigation settlement of 2013. Opponents of the current fees argue that the Town is driving away new development essential to its economy.
Earlier this year, the Town contracted with consultant AECOM Technical Services, Inc. to complete a Workforce Housing Nexus Fee study. After completing the study, AECOM recommended reducing most of the current housing fees by about 70 percent.
Proposed changes include dropping the Town’s current housing mitigation fee for hotels of 19 or fewer rooms from $11,611 to $3,700 per room; the fee for commercial developments from $14.99 per square foot to $2 per square foot; and the fee for industrial developments from $3.93 per square foot to $1 per square foot.
The Town’s current housing impact fee for residential projects of nine or fewer units is $23,222; the new fee would be $7,300 per unit.
AECOM’s recommendation in this case was more complex, as single-family homes of less than 2,500 square feet are currently exempt from housing fees, while single-family homes greater than 2,500 square feet pay $2.68 per square foot for the area above 2,500 square feet.
AECOM recommended an across-the-board fee of $7,300 per unit, regardless of square footage. Councilmembers protested the number at the June 17 Town Council meeting, and staff came back on July 1 with a recommendation for the lowest possible fee under the Nexus Study of $5,700 per unit.
This would amount to about 1.47 percent of the cost of a single family home with a sales price of $400,000, according to staff.
To further mitigate the impact of that residential fee, staff also proposed assessing only 50 percent of the fee in the first year and complete payment after year three.
At the June 17 Council meeting, several public comments focused on a need to cut housing mitigation fees still further. Attorney Mark Carney, representing several developers, argued that the fees should be suspended altogether for longer than just one to two years.
Mammoth Mountain Ski Area VP of Development Tom Hodges agreed, arguing that Council should “consider a five year term for suspension,” as larger projects take more than two years to design, permit, and construct. He also wondered whether the Town could pursue an Enhanced Infrastructure Finance District (EIFD) as a long-term means to create funding for housing, to take some of the burden off developers.
But Mammoth Lakes Housing (MLH) Executive Director Jennifer Halferty argued that “a five year suspension is a long time, given we just spent $60,000 on a Nexus Fee study. It seems like a real waste of in-lieu fees [which funded the Study], and that’s disheartening.”
She also told Council that if the Town was thinking about relying less on Town funds and more on grants to support housing, one major federal source of funding that has given $3.5 million in grants to the Town in recent years may lose 93 percent of its budget this year.
“Reliance on grant funding is very uncertain,” she said.
Meanwhile Council member Jo Bacon noted that if the Town reduces housing mitigation fees further than proposed, housing would become more reliant on a 1 percent Transient Occupancy Tax allocation that “is already used in other ways.”
She and Councilmember John Wentworth agreed the proposed fees were reasonable.
Mayor Pro-Tem Shields Richardson disagreed. He suggested a further reduction in fees to incentivize development and put Mammoth’s workforce to work. “If we don’t start anything, it’s a moot point; no fees are going to be collected for anybody,” he said.
But Councilmember Wentworth wondered what would happen if new development did arrive, and the Town couldn’t go back to collect fees to mitigate that development’s impact to housing. “How do we adjust [to backfill those fees]?” he asked. And how would the Town then provide workforce housing to a growing workforce without the fees to help?
“Put people to work so they can afford to live in places,” Richardson replied. “… The best-paying jobs are construction jobs.”
Wentworth remained unconvinced. He noted that it’s not just the Town’s fees, but also the drought, the threat of climate change to the ski industry, and the Town’s reputation after declaring bankruptcy, that is keeping development away. Simply slashing fees might not be the solution.
Councilmember Colin Fernie agreed that the housing mitigation fees weren’t the only culprits, and that the proposed fees still represent a significant change.
Councilmembers ultimately voted to approve the proposed fees, without using a phased approach for the residential fee, with Mayor Michael Raimondo and Mayor Pro-Tem Shields Richardson dissenting. The new fees will go into effect on August 31. Councilmembers unanimously approved bringing back further proposed reductions with backfill options.
DIF also decreases
The Town also contracted with TischlerBise, Inc. to provide an update of the Town’s DIF Study. Like housing mitigation fees, DIF has come under attack as driving away developers with exorbitant fees.
Carson Bise of TischlerBise explained that his company’s DIF study shifted DIF from a revenue-raising mechanism to a mechanism helping meet growth-related infrastructure needs. To that effect, he scrapped certain projects on the Town’s DIF wish list of public facilities and equipment. One such project is a new terminal at the Mammoth Yosemite Airport, which Bise said he did not consider “growth-related.”
Reducing the number of projects the Town hopes to fund with DIF allowed Bise to propose cutting DIF across the board. The DIF for single family residential would drop from $15,000-$19,000, depending on if the home is non-transient or transient, to one fee of $3,881. The DIF for mobile homes would drop from $11,616 to $2,539, and for multi-unit residential the fee would drop from $10,000-$14,000, depending on transiency, to $3,224.
Meanwhile non-residential DIF would drop for lodging from $14,363 to $2,613; for commercial from $9.41 to $5.11, for office and other services from $9.41 to $2.43, for industrial from $4.35 to $1.61, and for institutional from $9.41 to $3.06.
The new DIF schedule will be in place until 2019.
“This is a seismic change in what we’re doing with DIF,” said Councilmember John Wentworth in response to Bise’s presentation. “… I think it’s about time.”
Mayor Michael Raimondo commended Bise for whittling down “that monster wish list.”
“This is a much more realistic list than the previous one,” agreed Council member Jo Bacon. “… It’s nice to see one that recognizes the capabilities [of the Town].”
Council approved the proposed reductions to DIF unanimously. The new DIF will go into effect on August
