HomeMy WebLinkAbout08-07-2012 ac B2 quaglino b2Ouag'in o
'PRPERTiES
RECEIVE D
AUG '.O 1201 2
SLO CITYCLER K
•
August 1, 201 2
Mayor Jan Howell Mar x
Council Members ; Dan Carpenter, John Ashbaugh, Kathy Smith, Andrew Carte r
990 Palm Street
San Luis Obispo, CA 93401-324 9
Dear Mayor Marx and Members of the Council :
I am writing to request your consideration and support with respect to the current development fe e
structure as well as the timing of fee payments . I was recently asked to meet with staff and consultant s
to provide my insight and personal opinion regarding the barriers to the cities successful economi c
development and what I felt the barriers were to that success . l was more than happy to give my inpu t
as I have in years past . Unfortunately over the years I have only seen an increase in fees with no relief i n
sight .
I can speak from experience gained from completing numerous development projects both within cit y
and county jurisdictions . As you are all without a doubt aware development fees in the county ar e
significantly less than that of the city As an example we are working on the entitlements for a 42,000/s f
office building on the corner of Aerovista and Broad Street in the airport area . The typical impact an d
permit fees for this type of project in the airport area runs approximately $1,050,000 or $2500/sf for a
42,000/sf office building . By comparison if you cross the street to the east airport development locate d
in the county the cost of permits and fees would run approximately $190,000 or a mere $452/sf Th e
disparity is overwhelming and has been a definite barrier of past projects and will continue to be a
barrier for future projects .
Another example of the high cost of fees is a small mixed-use project we are starting in August .Ther e
are two identical buildings each consisting of two 700/sf one bedroom apartments on a second floor an d
1,254/sf of commercial space on the ground floor . The cost of the permits and tees without credits fo r
existing structures is a shocking $203,810 that equates to over $38 .00 per square toot,or approximatel y
23% of the total cost of construction .
Yes, I understand the current mandate that development must pay their fair share and I have listened t o
the cities rationale that city services are superior, more reliable and worth the extra costs, however tr y
justifying to a tenant that same rationale behind why the rents on the west side of Broad located in th e
city are so much more than the rents on the east side located in the county . This is an argument no on e
can win . As far as the tenant is concerned they are going to be provided inclusive utility services as wel l
as police and fire protection on either side of Broad Street regardless of city or county jurisdiction, tha t
is a given . As far as the tenant is concerned there is not a single difference .
www.quaglino.com 815 Fiero Lane San Luis Obispo California 93401 P : 805.543 .0560 F : 805 .543 .0679
i think it is safe to say that we would all agree the cost to develop in the city is high and getting highe r
and that developing on adjacent county property is a fraction of comparable city costs with a muc h
shorter entitlement process . It actually makes the other side of the fence look much greener and in thi s
case not as a metaphor but as a fact .
If I were asked and could choose my solution to the fee issue I would suggest the following ;
1.A meaningful reduction in the cost of the fees .
2.Cost sharing through recognizing the whole community benefits from improved infrastructure .
3.Have the city finance the fees over time .
4 Defer the payment of fees into the future or at the completion of the project .
Since I do not hold out much hope that the first three will change anytime soon, if ever, I would like t o
propose at the very least the city seriously consider offsetting the payment of fees into the future, at a
minimum at the completion of a project . Deferring fees to the end of a project should not create a
burden to the city or impact services since the actual impact does not begin until a project is occupie d
and services are in use . There is no valid reason that I am aware of why the city should hold impact fee s
for over a year while a project is being constructed . The reality is, there is no impact until a project i s
completed and occupied .
Something must be done and it needs to be done soon . It is my opinion the city is missing the greate r
good that new development brings to the city in many ways that are under looked and not being take n
seriously . Lack of development is one of the largest barriers to creating jobs . Look around at all of th e
past development and the businesses that now occupy those developments, businesses that offer jobs ,
support other businesses and yes tax revenue to the city . One odd way to look at the problem is to sa y
the city impact fees are acting as one of the largest barriers to the cities own mandate of creating job s
and encouraging economic growth .
In the not to distant past our philosophy was "Build it and they will come" and that was very true, w e
would build and the business would come,some from local expansion but many relocating from out o f
the area . The circumstances of our world have changed in the past five years and to be fair you can n o
longer expect development to carry 100% of this burden . Everyone benefits from most impact fees no t
just the development paying those fees .
I do not claim to have all of the answers and I accept the fact there is not a simple answer l just know we
need to change the status quo if we are to reach our goals . San Luis Obispo and local development nee d
to act as one, as partners with vested interest . Everyone involved has something to gain by changing ou r
current system . The opportunity is now we just need to act .
Feel free to contact me with any questions and thank you for your time and consideration .
Sincerely ,
Matt Quaglin o
H:\Matt's Files\SLO city fee structure.doc