Acting at the request of the politically powerful real estate development industry, Orange County has agreed to postpone collecting fees for housing construction projects, without any analysis or discussion about the effect it will have on the county's finances.
County officials and building industry representatives characterized the measure as an effort to help builders hit by the credit crunch and the real estate downturn to get projects off the ground. One supervisor, however, questioned whether it would stimulate growth and another critic dismissed it as a favor to the building business.
Orange County is the largest government agency in the state to adopt the change, which is being pushed by the Building Industry Assn., a trade group that lobbies local and state government on behalf of builders, engineers and other industries involved in housing construction.
The group is asking cities and counties throughout California for a similar break as part of a package of measures to ease up-front costs for developers amid an economic downturn that has hit the housing sector hard, particularly in Orange County. More than a dozen cities and counties have adopted the measure.
Developers of large-scale projects pay millions of dollars in up-front fees to cover the increased use of roads, parks, libraries and other services that more residents will generate. Governments put those funds in long-term, interest-bearing accounts and use the money to pay for infrastructure improvements and other services.
A rough industry estimate is that a developer will pay about $4.5 million in fees for a 100-home development.
Under the new order, Orange County and other agencies that have agreed to it will not collect those fees until construction has been completed and certificates of occupancy have been issued.
Industry representatives said the move would lower the amount builders have to borrow to get projects started and leave more cash to invest in their developments. They also say it makes more sense to pay the fees when new residents begin using government services rather than years in advance.
"Doing something about the fees will stimulate building activity," Kristine Thalman, chief executive of the Orange County chapter of the Building Industry Assn., told supervisors during the board hearing Tuesday. "This will put funds into the economy and put our builders back to work."
