Suspension of Development Fees Considered in Chula Vista

An ordinance to suspend development-impact fees in redevelopment-project areas for a period of five years was before the Chula Vista City Council on Tuesday, January 11. Impact fees, often paid by the new developer, assist with infrastructure needs created by the project. At issue was whether the suspension should apply to both residential and retail impact fees.

Many residents and entrepreneurs spoke in favor of the full suspension, emphasizing the need for retail revenues and the need for creating incentives for business.

Mayor Cheryl Cox and councilmember Pamela Bensoussan also favored suspending both fees. Bensoussan worried that Chula Vista had priced itself out of the market. She referred to a consultant study that showed “We’re more expensive in our residential component [fees] than Del Mar; we’re right up there with the most expensive city in the county.”

However, newly elected councilmember Patricia Aguilar said she could not support the suspension of retail impact fees. Aguilar asked, “Is it a good thing to use taxpayer money to subsidize private development?” If impact fees are suspended, redevelopment-tax-increment monies are used for infrastructure. She argued that tax-increment money comes from property tax.

Assistant city manager Gary Halpert responded, “It’s not a subsidy because the reality is you don’t have to build the infrastructure at all.”

Aguilar pointed out that tables in the same consultant study referred to by Bensoussan showed that Chula Vista’s retail impact fees are comparable to county averages. She also said Chula Vista’s west side, the redevelopment area in question, already had a glut of retail space.

After the proposed ordinance went down to a defeat, the council passed a substitute ordinance that suspends the collection of fees charged for market-rate residential, excluding the bayfront area — but not retail. However, the ordinance did suspend fees for retail, office, and industrial space in the Otay Valley Road redevelopment area and suspended the fees for industrial in the southwest redevelopment area.

Aguilar also raised the larger question that is haunting California at this time: does redevelopment revenue really come back to the City over time? Cox has asked the staff to study this question.