Gilroy
– The city’s economic development director is challenging the
city council to seriously reconsider how doubling traffic impact
fees would affect Gilroy’s future by scaring away potential
development.
If council approves the proposed traffic impact fees, developers
in Gilroy would be forced to pay a substantial increase from what
they are now.
Gilroy – The city’s economic development director is challenging the city council to seriously reconsider how doubling traffic impact fees would affect Gilroy’s future by scaring away potential development.
If council approves the proposed traffic impact fees, developers in Gilroy would be forced to pay a substantial increase from what they are now.
That cost likely would be passed on to consumers.
Impact fees are the up-front fees that residential, commercial and industrial developers pay for new buildings. The money goes into different funds that helps pay for future capital improvements including traffic, sewer, water, police, fire, storm drain and public facilities.
“The point is, this will raise impact fees to the point of no development,” said economic development director Bill Lindsteadt. “It will shut down tax revenues, and that affects essentially everything else: police, fire, city services, parks, street cleaning – you name it. Everything.”
The city gets 1 percent of all sales tax revenue, which is roughly $800 million a year. That money goes into the general fund, which helps pay for improvements in city services and other city programs. If impact fees are too high, developers most likely will look to other cities with lower fees to build their developments, thus slowing economic growth in Gilroy.
The current cost for a 10,000-square-foot, high-impact commercial development is $181,000 in traffic impact fees. Under the proposal, the same-sized development would pay $359,000.
If approved, the new fees would go into effect Jan. 1.
The city’s traffic impact fees would help pay for traffic improvements through 2038. A total of $277 million is slated for improvements to the city’s roads, intersections and other traffic-related projects in the traffic master plan that is good through 2020.
Lindsteadt said he wonders how many of those projects – some considerably expensive – are truly necessary.
Take Sixth Street and Wren Avenue, for example, which is scheduled for $275,000 in improvements.
“We all know Sixth and Wren. Most of you probably drive it quite frequently,” Lindsteadt told council earlier this week. “What are you going to do there? There’s houses on all four corners. There’s not much you can do. Where is that figure coming from?”
Lindsteadt, who served on the committee that wrote the city’s general plan a few years ago, said he never even saw the traffic master plan. If he had, he would have questioned the expensive road improvements then, he said. But he doesn’t see every project on the list as unwarranted.
“I agree with (City Administrator Jay Baksa) that some of those changes and improvements are needed,” he said. “But some are not, in my opinion.”
Council seems to be approaching the proposed fees with skepticism and eyes wide open for other alternatives. Lindsteadt said he has been working on ideas that are a compromise to the proposed fees, and he’ll present his thoughts to council later this month.
Councilman Bob Dillon said he doesn’t take Lindsteadt’s words of warning lightly.
“When Bill Lindsteadt talks, I listen,” Dillon said. “I’d be leaning towards giving heavy credence to anything he had to say about this. He knows what he’s doing.”
Dillon added that reassessing the traffic master plan would be difficult and time consuming. But some of the projects probably deserve a second look, he said, such as “the $10 million flyover” – referring to a proposed railroad overcrossing at Southside Drive and Monterey Street.
“Council has some real doubts about the new fees,” Dillon said. “Most likely, we’ll be doing some considerable tweaking.”
Councilman Craig Gartman said the effect the proposed traffic impact fees could have on Gilroy’s economy is “the $64,000 question” – but he doesn’t want to find out how bad it could be.
Mayor Al Pinheiro said his high hopes for industrial and commercial growth in Gilroy are peppered with a healthy dose of realism.
“We must be sensitive and realistic and look at what our projects and our standards are,” he said. “Nobody wants to spend more than they have to. But we need to be realistic that we have the funds to pay for construction.”
The city council learned Monday that it could reduce the proposed traffic impact fees by 25 percent. That conclusion came from a collaborative study done by a traffic engineer and a nexus study engineer who are examining the city’s traffic impact fees.
Council will continue its discussion this month, determining if the 25-percent decrease should be used on an interim basis until more studies are conducted and reviewed.
“Council is right in doing what they’re doing: taking their time to really look at this,” Gartman said. “Because this will have a big impact on how this city is going to grow in the future.”
