By Sandy Mazza Staff Writer
Posted: 09/12/2009 03:38:48 PM PDT
A Hawthorne City Council majority is rushing to clear the way for new development in the city by
suspending development impact fees on new homes and stores for the next six months. The city called a special council meeting for Monday to vote on covering the costs of development impact
fees for commercial and housing projects through April. The measure could cost the city's general fund up to $2.2 million in the near future, and possibly strain an already strapped budget that was
only balanced in July with employee pay cuts and one-time funds.
Mayor Larry Guidi spearheaded the effort at a council meeting on Tuesday. He argued that the cost
to the city could be balanced by the generation of jobs. "When you have no vision, a community will perish," Guidi said. "What we're trying to do now is our own stimulus, just like the president of
the United States did by giving money to the banks."(We're) going to create local jobs. We have an opportunity to get materials brought into our city."
Guidi was supported by Councilwoman Ginny Lambert and Councilman Pablo Catano. But Councilmen Gary Parsons and Danny Juarez said the plan is too costly and doesn't provide enough
benefit to the city."It's giving the developers a free ride," Parsons said. "These are legitimate fees that we can charge the developer. So, to me, I can't see waiving the fees."
The city charges commercial developers a development impact fee of $17.86 per square foot. Homebuilders pay nearly $8,500 per unit in fees. Those costs go directly to offset the drain on city
services - parks, roads, storm drains, public safety and traffic - caused by new development. If the measure passes, the city will pay those fees for private developers. The initiative would
immediately affect two strip malls and a small retail center, City Manager Jag Pathirana said. Developers of those projects said they would secure construction loans more quickly and finish
building faster with the cost reduction. Ebrahim Soltani, president of E&S Prime Builders Inc. of Redondo Beach, which is building a 20,000-square-foot strip mall on Imperial Highway near
Inglewood Avenue, could save $357,000 if this measure is passed.
"Waiving that fee would give a push to get started early," Soltani said. "If I finish it now, I'm going
to have most of the store empty because of the economy. If I would have the fee waived, I could build the store in a month or so. But I'm sure in 2010 the market is going to rebound and, by then,
we should be able to rent some of the units."
Another retail strip planned at Hawthorne Boulevard and 113th Street could receive a discount of
about $300,000. The developer of that center, Paul Rahimian, told the council last week that he will not complete the project unless the fee is waived. "It's going to end up being a lot of dirt just sitting
there," Rahimian said. "We've taken three years developing this project, removing contamination from the area - we took out old cars and trucks. We're ready to go. If we had any idea the
development impact fees would be $303,000, we wouldn't have even started this project." Another project that is far enough along in its development to possibly benefit from the proposed plan is the
Central Park housing development at 120th Street and Van Ness Avenue. Its developer, Lee Homes, could save $1.4 million in fees on the 176-unit project.
Many cities across the state have considered lowering their development impact fees to spur new construction during the slowed economy, but it is rare for anyone to waive them altogether, said
California Building Industry Association President Robert Rivinius. "This might be what would trigger a builder (to build)," Rivinius said of Hawthorne's proposal. "In homebuilding, (development
impact fees) are a critical factor because, in many cases, they've gotten so large and so high. We have communities around the state that are over $100,000 per home, and that makes it extremely difficult."
El Segundo and Manhattan Beach recently raised their development impact fees, but Gardena does not impose any of these fees on commercial developers - only residential developers. Kelly
McDowell, mayor of El Segundo and chairman of the South Bay Cities Council of Governments, said he would not waive the fees.
"To go into reserves in order to support a development proposal, that would be - to put it diplomatically - an exceedingly difficult position to take," McDowell said. "It would have to be a
very attractive business proposition for the city in order for us to be able to justify it.
"To roll the dice and hope that the benefits from the development are going to exceed the cost of
service (to the community) is a brave move on the part of Hawthorne
.
