As was predicted, this year has been an extremely challenging one for our industry. The challenges are highlighted by proposed increases in school fees, water/sewer fees and developer impact fees (DIFs).
School Fees: Without question, the most significant event that has impacted our industry thus far this year is the action taken by the State Allocations Board (SAB). On May 25th they voted to authorize school districts to implement Level 3 fees as provided by Government Code. This could have catastrophic effects on homebuilding throughout the state, possibly tripling fees in certain areas. The CBIA has obtained a temporary restraining order preventing the SAB from implementing Level 3 fees or sending notice to the Legislature that state funds for new school construction are not available. If the CBIA fails in the effort, some school districts may implement Level 3 fee almost immediately. BIA staff continues to track every school district and scrutinize every School Facilities Needs Analysis (SFNA) as they are presented to us. We also continue to collaborate with our consulting partner, Jeanette C. Justus Associates in an effort to prevent Level 1 schools from adopting an SFNA that could potentially allow them to immediately trigger Level 3 if so authorized.
Water/Sewer Connection Fees and New Charges: Last month, the State Water Resources Control Board surprisingly lifted the statewide conservation mandate and eased regulations. Local water agencies now have some autonomy when determining the levels of conservation. Upon learning of the board’s actions, some of the local water agencies immediately recommended lowering their drought status and eliminating certain surcharges. This bodes well for our industry, but not all agencies are taking responsible actions. Some water districts are still trying to justify the increasing of water/sewer connection fees and other are taking even more drastic measures that can harm homebuilding.
Developer Impact Fees/User Fees: As was the case at the time of the last Government Affairs Brief, many of the cities within Riverside County, also under the false impression that our industry has recovered, are considering raising their DIFs and/or User Fees. Many use the excuse that because they have not raised their fees in years, that now is the right time. The BIA has been heavily engaged with these cities and has already had success in either maintaining current fee levels or keeping any proposed increase to an absolute minimum.
Considering all the challenges our industry is facing, it cannot be overstated how important the Political Action Committee and the School Bond Initiative are. The Primary Election has just concluded and some of the political allies of the industry are on the ropes. Locally, it will be crucial to elect officials who understand the economic impact of overcharging homebuilders. Without having allies at the local level, fees will skyrocket. Lastly, considering the actions of the SAB, if our School Bond measure fails in November, Level 3 School Fees may become the new norm. It is imperative that everyone does all they can to support and promote this initiative.