City has given enough fee waivers for laundry business
The subject of today’s column is a near-perfect example of the law of unintended consequences. The frequent result of the law of unintended consequences, at least in the arena of municipal government, is that “no good deed goes unpunished.”
As we all remember from that first semester of Economics 101 back in the day, governments tax those things they wish to discourage, and subsidize those things they wish to happen. A case in point: since October, 2003, at the direction of the City Council, the City of Gilroy has waived processing fees and impact fees in the downtown area to the tune of about $2.26 million.
I approved that plan. For the 22 years I’ve lived in Gilroy, complaints about the dilapidated downtown were high on list I heard about what was wrong with our city. It was a fair complaint, it was contemplated, and the downtown fee waiver program resulted.
One need only take a drive through the downtown core on Monterey Street to see the effect. In concert with the renovation, which was paid for in large part by grant money, we have achieved in a relatively short time (yes, merchants, I know it seemed to take forever) a startling revitalization.
Municipal governments, like the residents they serve, tend to act in their own self-interest. First of all, the waived impact fees did not just disappear into thin air. The city is legally required to pay them. The City Council has only one source of discretionary funds, the General Fund. That’s where the money came from. One can see the effect of this decision in the current budget, which is running a small, but anticipated, deficit.
The self-interest on the city’s part comes in by anticipating tax revenue. Many of the new buildings downtown have residential features. The idea is for people who live in the area to also shop there, partaking of the goods and services offered, which garners tax revenue for the city.
Pontificating done and premise set, let’s look at a request for an additional waiver of fees requested of the city by a proposed laundromat at 7777 Monterey Street. To date, judging by the City Council’s staff report, the city has waived about $382K in impact fees for this business.
Yes, we all understand that new residents downtown will need somewhere to wash their clothes. We all understand that the impact fee waivers embraced all businesses in the designated area. The business applied for, and received, that waiver.
However, this is a very water- and sewer-intensive business. Water and sewer impact fees in our area are rather high.
The fly in the ointment is that the business now wants to add excess capacity – about an additional half a million dollars – and wants those fees waived as well, and has applied to the City Council for the waiver. This will soon be on the City Council agenda for a vote. It was on a short time ago, and sent back to staff for review, no decision made. It appears a previous city employee authored a letter that is the subject of some debate about whether it approves the current request for a waiver.
To put the request in perspective, granting this request for a fee waiver would put total fee waivers to date at right around $3 million. Out of that amount, just short of ONE million would go to one single business that, as the staff report mentions, garners exactly zero to the city in tax revenue. Is that fair, not to mention an efficient allocation of funds? And although needed, this proposed business has three competitors currently operating within about two miles.
As to the initial fee waiver, no problem. The city set the parameters, and the waiver was made. At that time, the project apparently penciled. If the owners want to now add excess capacity I think paying for that added capacity is the only fiscally prudent decision the city can make.
So, I think our Council’s response to this request when it comes up for a vote should be somewhere between “no!” and “HELL no!”
In a previous column, I mentioned that the city-owned buildings at the proposed Art Center site at 7th and Monterey were an eyesore, and should be demolished. I had lunch with Mayor Al Pinheiro this week, and he mentioned that the buildings are slated for demolition this July. The delay is due to the fact that, like many old buildings, they contain asbestos, and remediation is needed before demolition. This resulted in the delay.
Thanks for the input, Mr. Mayor, and glad to hear it.
Editor’s Note: Bob Dillon’s column will be suspended pending the outcome of the November election. The former Gilroy city councilman and longtime scribe has decided to run for City Council. Reach him at rt******@****ic.com
