From rural counties experiencing modest urbanization to California’s fastest growing areas, regional transportation impact fees are being levied on new development. Nearly unheard of five years ago, the fees are bringing in hundreds of millions a year across the state for road work.
The fees vary widely from area to area, ranging from a few hundred dollars for a house in one community to nearly $1 million for a large retail building elsewhere. Local transportation officials say they need the money to pay for arterial road projects, freeway interchanges and other improvements of a regional nature that are not funded by local impact fees, the state or the federal government.
It is no coincidence that regional transportation fees have become prominent at the same time that the state has reduced funding for transportation, said Max Neiman, Governance and Public Finance program director at the Public Policy Institute of California.
“Since about 2000, the state has sent transportation back to the counties,” Neiman said. “The state has literally walked away from statewide transportation improvement finance.”
In a number of areas, the fees complement revenue derived from a local transportation sales tax. But some counties have implemented regional impact fees even before voters have approved a sales tax.
The fee programs typically are overseen by a council of governments or county transportation commission. They put together a nexus study that projects growth, identifies transportation needs, estimates expenses and then divvies up the total cost.
Western Riverside County is a leader. Two years ago, Riverside County and 14 cities in the western end of the county began implementing the Transportation Uniform Mitigation Fee (TUMF) program. The fees, set by the Western Riverside Council of Governments (WRCOG), were originally pegged to raise about $2.5 billion over 20 years to help fund about $3.2 billion worth of improvements to arterial roads and intersections, freeway interchanges, bridges, rail grade separations and transit. A number of cities resisted imposing the fees at first, but WRCOG threatened to withhold revenue from a transportation sales tax if a city did not participate in the TUMF program. Consequently, every jurisdiction complied.
Fees started off at $6,650 per house and $4,600 per multi-family unit, with varying per-square-foot amounts for nonresidential construction. Those fees increased by about 9% earlier this year, and builders have already paid more than $200 million in TUMF fees; however, program managers now say fees need to rise significantly.
Rick Bishop, WRCOG executive director, said new growth forecasts generated locally and by the Southern California Association of Governments indicate an even greater need than originally projected. More growth combined with rapidly escalating construction costs mean that the $3.2 billion transportation program could actually cost more than $5 billion.
“We have validated our existing network. But that same network costs about $1.5 billion more than we estimated three years ago,” Bishop said. His agency is recommending that the fee increase to $9,300 per house. A final decision by the WRCOG board is due this fall.
The fee revisions have stirred up the development community, partly because builders say they have seen few benefits from the $200 million already paid.
“Until such time that they can show that they can do more than just collect fees, we are wary of giving more fees to such an organization,” Borre Winckel, executive director of the Riverside County Chapter of the Building Industry Association of Southern California, told the North County Times.
Next door, the San Bernardino Associated Governments (SANBAG) is moving forward with regional fees, but in a very different manner. The fees would be collected by 19 cities and the county, but the amount of the fee would be up to each jurisdiction. SANBAG went through the typical process of estimating growth, needs and costs, but then the agency divided up the total cost among each jurisdiction based on localized growth and the benefits received from the transportation program. The agency then assigned a number to the jurisdiction, ranging from $151.6 million for Ontario down to $2.9 million for Chino Hills.
“We’ve come up with the overall amount they would have to raise. How they do that is up to them,” SANBAG spokeswoman Cheryl Donahue said. “They know their cities the best.”
The SANBAG board was expected to give final approval to the program November 2. The $1.5 billion program would fund arterial road improvements, freeway interchanges and railroad grade separations. Cities have one year to start collecting revenue. Those that refuse to participate could lose other transportation monies, including revenue from a countywide half-cent sales tax, Donahue said.
At the same time that SANBAG is advancing its “congestion management program,” the San Joaquin Council of Governments (SJCOG) is pushing a more standard regional traffic impact fee plan. It calls for fees of $2,500 per single-family house, $1,500 for a multi-family residence and levies ranging from 75-cents- to $1.25-per-square foot for nonresidential construction. Officials with SJCOG expect to make presentations to the county’s seven cities and the Board of Supervisors this month and during December in hopes that all jurisdictions will start collecting fees as early as January, said Michael Swearingen, SJCOG senior regional planner.
“San Joaquin County is a region that is experiencing significant growth, and the regional transportation system is failing,” Swearingen said. Still, it has taken years to reach the point where a regional fee may be levied. SJCOG worked on the program for two years before abandoning it in 2003. Work restarted early this year and was successful this time because everyone who was interested had a say on fees, projects, implementation and administration, Swearingen said.
“The elected officials, the development community, the Sierra Club — all the stakeholders — are on board from our perspective,” Swearingen said. “It’s been a gigantic consensus-building effort.”
Although urban regions are at the forefront of regional transportation impact fees, rural regions also are charging developers for regional improvements. Merced County approved a regional fee program earlier this year, and even more rural western Nevada County has been collecting regional fees for four years. Neither county has a sales tax for transportation.
The Nevada County Transportation Commission (NCTC) bases fees on peak p.m. hour trip generation, and then sets the amount per-trip based on the location of the development. Projects in and right around Grass Valley and Nevada City pay the most — $630 per trip. The agency is now considering revisions that would raise the per-trip amount and hike fees on outlying development, which appears to have a greater impact on Grass Valley and Nevada City traffic than expected, said NCTC Executive Director Dan Landon.
“The community is increasingly agitated about congestion,” Landon said. “There is a little bit of unrest right now because people want to see things happen faster.”
In other words, there is support for higher fees if they result in projects getting built quickly.
However, regional transportation fees do not get universal acceptance. The Solano Transportation Authority, for example, considered a regional fee before dropping the idea earlier this year.
“We felt the timing wasn’t good right now to look at impact fees,” said Dan Christians, assistant executive director of the Solano County agency. “We’re really focused on our sales tax measure.”
A Solano County half-cent sales tax received 64% of the vote in 2004, and supporters plan to try again for two-thirds approval in 2006. The sales tax “doesn’t solve everything, but it would implement a lot of projects along the I-80/I-680/I-780 corridor. It would implement commuter rail along the Capital Corridor,” Christians said.
Neiman, of the PPIC, said he understands the position of the COGs and county transportation agencies, but he lamented the lack of broader transportation planning efforts. “The longer-term, larger questions of tying transportation into other issues, like air quality and goods movement, sort of drift along unanswered,” Neiman said. “What you get is a near-term focus on congestion relief.”
Max Neiman, Public Policy Institute of California, (415) 291-4400.
Rick Bishop, Western Riverside Council of Governments, (951) 955-7985.
Dan Landon, Nevada County Transportation Commission, (530) 265-3202.
Michael Swearingen, San Joaquin Council of Governments, (209) 468-3913.
Dan Christians, Solano Transportation Authority, (707) 424-6075.
San Bernardino Associated Governments: www.sanbag.ca.gov