Just a few weeks ago, the Building and Industry Association of the Delta proposed cutting permitting for fees for single family homes in order to jump start construction on the outskirts of Stockton. On Monday, The Record also had an article musing on the possibility of a housing shortage given an increasing population and lack of home construction. The Mayor seems to be on board and has gone on record saying he would like to slash fees for 1,000 homes. Intuitively, this makes sense. We should encourage investment and building homes of all types, putting people to work and generating economic activity. However, it’s important to remember why we have fees in the first place, and what the effect of reducing these fees would be on city finances.
It’s true that Stockton actually does have some of the highest fees in the region when it comes to building single family homes. In order to build one home, you’d have to fork over about $56,000 to the city in fees to do so. This may seem like an exorbitant amount, but keep in mind that these fees aren’t just being sucked into the general fund. They go to things like roads, public safety, and schools that serve these new neighborhoods. The idea is that when you build a new home and expand the city’s footprint, the city has to provide new services, so these fees are supposed to help the city provide said services.
The problem is, it’s not clear that the fees charged by the city of Stockton for single family homes match the costs to the city to provide services to these homes. It could be more, it might be less. No one knows for sure.
It’s hard to know exactly what the city should be charging for suburban style development without delving deep into what it costs Stockton to supply newly annexed land with public services and amenities. However, research on a broad scale indicates that these types of development patterns are incredibly costly not just to cities, but to the country as a whole, and fees that cities are charging to mitigate against these effects are probably not nearly enough. One study published earlier this year puts the total economic impact of sprawl on the United States at around $1 trillion total. The report also concludes that sprawl development increases infrastructure and amenity costs by 10 to 40%. And this staggering $1 trillion price tag doesn’t take into account other problems sprawl inflicts on cities, such as increased transportation emissions, poor health outcomes, greater storm water runoff pollution, lack of mobility and disinvestment in established neighborhoods. Does a $56,000 fee per each new home cover all of this?
And it’s also worth noting that different types of development have different costs to a city. A sprawling subdivision of single family homes on farmland is more costly to a city than a single family home built in an area that already has infrastructure. Is it fair to charge the same fee across all areas of the city? If someone wanted to build a home on an empty lot in midtown or south Stockton, where roads and services already exist, it doesn’t make sense to levy the same permit fees as a developer building 10,000 homes on farmland, where new roads, schools, sewers and fire stations must be built to accommodate that new growth.
Thankfully, it sounds like city officials are not interested in cutting fees for development simply for the sake of spurring construction.
“Rooftops don’t pay for the long-term costs of the infrastructure that’s tied to them. Our focus really is on the economic strategic plan and developing a strong economy in Stockton.” Those are the words from Deputy City Manager Scott Carney, quoted in The Record earlier this month when asked about cutting fees for homebuilders. It’s refreshing to see that city officials understand the dynamic between building single family homes on farmland and providing services to these new neighborhoods. It’s a welcome change from past situations where greenfield developers got whatever they wanted from a pro-growth Stockton.
Instead of slashing fees across the board, a comprehensive evaluation of the city’s fee structure should be conducted. Projects that cost the city money over the long haul—while also damaging the environment and draining resources from existing neighborhoods—should be charged accordingly. It would be foolish to lower fees without knowing the true impacts that this decision would have on the city as a whole, not just temporary construction jobs.