Gilroy
– Commercial and industrial developers in this city might have
to pay considerably higher fees in the future to plant businesses
here, and that has a few city officials fearing for Gilroy’s
economic forecast.
Gilroy – Commercial and industrial developers in this city might have to pay considerably higher fees in the future to plant businesses here, and that has a few city officials fearing for Gilroy’s economic forecast.
Under a proposed impact fee system, commercial and industrial developers next year would see a 150 percent increase in traffic impact fees, and that’s on top of additional increases to help pay for improvements to utilities and public facilities, according to a study done by Oakland-based MuniFinancial.
Gary Kruger, a representative from TJKM Transportation Consultants, hired by the Home Builders Association to study Gilroy’s traffic impact fees, said Gilroy’s proposed traffic impact fees are extraordinarily high in comparison to 25 surrounding jurisdictions, including Hollister, Salinas and Watsonville.
The highest increase would go to a commercial developer of a 10,000-square-foot development on one acre, whose traffic impact fee would increase from $124,300 to $309,000 under the proposed system.
Part of the problem, Kruger said at Monday’s City Council meeting, is that the proposed impact fees consider growth projections in Gilroy over 34 years, and that may be thinking too far in advance to fairly assign the fees.
“The (U.S.) 101 (near Gilroy) may or may not congest in the next 20 years. We just don’t know that yet,” Kruger said. “The 2038 projection is founded on incomplete assumptions.”
City Administrator Jay Baksa said it’s unclear at this point why the proposed traffic impact fees are so high, especially when reasons for increases in the other proposed fees – such as utilities and public facilities – are more clearly understood.
Baksa said a nexus study engineer and a traffic engineer are taking a harder look at the traffic impact fees, and council will review their conclusions at a Sept. 27 meeting.
Bill Lindsteadt, executive director of Gilroy’s Economic Development Corp., said the proposed traffic impact fee is the sore thumb of “the big seven” impact fees, which also require developers to help pay for storm, water and sewer infrastructure, as well as improvements to police, fire and public facilities. Although the other proposed increases are understandable, Lindsteadt said, the proposed hike in the traffic impact fee is not.
“I will not argue that when you build industrial and commercial buildings, you’ll have an impact on the police station, the fire station, parks and the library, because new businesses will use those facilities,” Lindsteadt said.
Developers already pay to install roads and infrastructure on their properties, Lindsteadt said. And while regional shoppers who travel to Gilroy to shop might cause traffic, the impact is not enough to force developers to pay an additional sky-high fee, Lindsteadt said.
Lindsteadt acknowledged that industrial development is responsible for some of Gilroy’s traffic, but that consideration should be balanced with the role industrial businesses have played in pulling Gilroy through the recent economic downturn. If Gilroy expects to continue to strengthen its industrial base, he said, the city should think twice about the proposed traffic impact fees.
Jeff Barnes, a commercial real estate consultant from Colliers International Partnership’s Gilroy branch, said that although industrial developers provide Gilroy with a solid economic foundation, they most likely won’t even consider coming here if the proposed traffic impact fees are approved.
Instead, Barnes said, developers will glance a few short miles over to cities such as Milpitas that have lower fees, and Gilroy simply won’t hold up in competition.
Lindsteadt especially questioned why commercial infill developments – such as a roughly seven-acre, commercially zoned parcel on the southeast corner of First Street and Wren Avenue – should incur such high traffic impact fees, when those developments are not primarily responsible for cross-town traffic.
“I hate to fly gray birds around, but we’re working on several projects now. If (the proposed impact fees) go through, this’ll kill ’em,” Lindsteadt said.
Craig Filice, developer with the Glen Loma Group, said the city should reconsider how fair it is to charge developers for impacts they’re not responsible for. A proposed 15,000-square-foot drugstore for the First and Wren property would incur $450,000 in impact fees in Gilroy, Filice said, but $95,000 in Morgan Hill.
The goal of all impact fees, Baksa said, is to equally distribute among developers the costs of infrastructure and improvements. That way, he said, the last developer to come in and build in any given area isn’t stuck with paying for traffic controls, just because that developer tipped the area’s environmental impact threshold. The state determines how much development can occur in an area before traffic controls must be put in place.
Gilroy Mayor Al Pinheiro assured Lindsteadt that the goal is not to drive business away from Gilroy, especially considering the considerable progress the city’s economy has made over the past few years.
“The last thing I want to do is put ourselves in a position where we’re not in competition. There are plenty of other cities trying to do the same things as this city: to increase business and create new jobs,” Pinheiro said.
Councilman Bob Dillon said that although Gilroy has succeeded in attracting new businesses, the questionable impact fees threaten to stagnate that progress.
Pinheiro raised the idea of establishing an interim fee to serve until the final proposal is approved.
“We can’t delay these impact fees forever,” he said. “It’s been two years.”
Fees
Retail development per thousand square feet:
Gilroy: $24,239 to $30,960
Salinas: $574
Hollister: $2,040
Los Banos: $930 to $3,820
Watsonville: $98
Industrial development per thousand square feet:
Gilroy: $4,680 to $5,980
Salinas: $150
Hollister: unavailable
Los Banos: $200 to $2,400
Watsonville: $98
