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Lancaster cuts to build

Antelope Valley city reduces its development fees that industry experts say hinder construction

Posted: August 6, 2011 1:55 a.m.
Updated: August 6, 2011 1:57 a.m.

A Canyon Country building sat unframed and unfinished for years. Lancaster reduced fees to spur growth in the construction industry and create jobs.

 

Eager to regenerate growth in the building industry, the city of Lancaster moved to reduce and delay development fees to spur construction and urged other communities in the region to quickly follow suit.

A fee reduction for homebuilders is designed to spur construction, create jobs and increase revenue.

“We need jobs,” said Lancaster Mayor R. Rex Parris.

The state’s budget crisis has had a crippling effect. Cities have lost income through lower property and sales taxes, Parris said.

“The inclination for cities is to raise fees,” Parris said. “We disagree with that philosophy.”

Builders’ profit margins are so razor thin because of the economic collapse that the development fees can make a difference in making a profit or not, he said.

“Clearly, there isn’t any question that we are stirring housing development with this,” Parris said. “They’re doing more building here than elsewhere.”

The Building Industry Association of Southern California said the Lancaster City Council voted last week to 4-0 to waive 25 percent of its development fees in existing developments.

The reduction in fees is projected to save home builders nearly $2,800 per home. The savings are expected to be eventually passed on to homebuyers.

“Fees charged by local cities, counties and school districts that average $50,000 or more per home make it extremely difficult to make projects pencil out in today’s market,” said Holly Schroeder, CEO of the Los Angeles/Ventura Chapter of the Building Industry Association of Southern California.

The BIA also reported that the city of Lancaster is waiving requirements that builders landscape back and side yards, which will save about $10,000 per home.

In a roundtable discussion held at The Signal last month, local developers and builders cited steep impact fees in Santa Clarita as a factor hindering local building, particularly homes.

The average impact fee for a 1,800-square-foot home is $70,000, Lance K. Williams, president of Williams Homes told the Santa Clarita Valley Business Journal. Williams compared that fee with an average of $20,000 per home in the Los Angeles area.

“We believe Lancaster’s action will spur construction there and urge other cities, school districts and other government agencies to follow suit and reduce and defer their fees to help us build more and help get the state’s economy moving again,” Schroeder said.

The city is also delaying the collection of fees for commercial and industrial projects until the developments are completed.
Previously, fees were imposed prior to the start of construction.

A commercial developer from Tarzana, Sinan Sinanian, expressed shock over “prohibitively expensive” fees after he purchased a building that sat framed and unfinished in Canyon Country for years because the developer went bankrupt.

Water and sewer fees were almost $500,000, Sinanian told the SCV Business Journal.

“Lancaster expects a win-win by reducing its fees, because the expected increase in building is expected to actually increase revenues to the city and create more than 200 jobs,” Schroeder said.

“A similar stimulus plan in 2010 resulted in the construction of more than 100 homes, and we’re hopeful yesterday’s action will generate similar increases.”

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