Builder - December 2008 - (Page 24) INSIDE STORY started rethinking the Golden Triangle’s redevelopment in 2003, five years before the township’s 30-year lease would expire. At the time, the site was being used by a 60-vendor flea market that had been a local institution for three decades; a furniture store; and a Sam’s Club, which pays the township just under $500,000 per year in rent, “well below market rate,” laments Neary. (The flea market closed on Nov. 2; Toll extended the leases for the furniture store and Sam’s through 2010.) Originally, Toll offered to build a transit village with 500,000 square feet of commercial and retail space in 15 buildings. The village would have included between 210 and 230 age-restricted homes and three parking garages. When completed, the redeveloped property was projected to yield $3 million in annual tax revenue. But market forces changed all that. A glut of office space in the area forced Toll to reconfigure Cornerstone. The proposal that East Brunswick’s planning board approved last April now includes 185,765 square feet of retail and restaurant space, no office space, and 402 condos without age restrictions. (On top of the $30.4 million it is paying for the land and $5 million to build a community center, Toll agreed to pay the township a one-time $20,000 fee for every schoolaged child who moves into Cornerstone.) PROMISES, PROMISES Opponents of the Golden Triangle redevelopment have long accused the township of striking a hasty deal with Toll Brothers to close a $4 million budget gap. Toll has been paying down its land purchase in $4 million per year increments. It should be fully paid up by 2011. But the township earlier this year extended the builder’s schedule for completing Cornerstone to 2015. That means tax ratables might not be in place for several years, leaving the township with a revenue shortfall. And if Toll decides to walk away from this deal, it gets back its money plus 8 percent interest. Critics chafe as (see page 26) IMPACT FEES Making Do How one city is coping with losses in revenue from housing. T he city of Riverside, Calif., has been feeling the pinch from the housing downturn for more than two years. And if demand doesn’t pick up measurably, it expects housingrelated fees it collects monthly to drop off by nearly 30 percent next year. Riverside is like many municipalities that are facing revenue shortfalls because of sharp declines in new-home construction and home sales, which in Riverside’s case are exacerbated by plummeting home prices and an avalanche of foreclosures. iverIn the fi rst quarter of 2008, Riverding side’s taxable sales from building and construction, at $959.7 million, were DWINDLING DOLLARS 26.56 percent below Annual housing-related fees collected by the city of Riverside* the same period the Fiscal Year 04/05 05/06 06/07 07/08 08/09 previous year. Paul Sundeen, the city’s Building permits $2,435 $2,815 $2,088 $1,213 $967 CFO and treasurer, Design review board $406 $232 $229 $226 $139 provided Builder Plan check $2,203 $1,617 $1,334 $1,341 $777 with a breakdown of Plan review $723 $1,067 $1,059 $372 $372 housing-related fees Inspection fees $495 $770 $634 $526 $322 the city collects, in which he projects General plan surcharge $785 $650 $635 $449 $318 that collections in TOTAL $7,047 $7,151 $5,979 $4,127 $2,895 the 2008–2009 fi scal Increase/decrease +1.48% -16.39% -30.98% -29.85% year could be nearly note: figures are in thousands of dollars Source: City of Riverside, Calif. 60 percent lower than they were in 2004–2005, when PULLING BACK: As construction and sales have fallen, Riverside, Calif., has made cuts in community development. But the city’s CFO isn’t con- Riverside was one of vinced that lowering impact fees would spur more home purchases. the country’s hottest housing markets (see *Not specifically mentioned but included in housing-related fees are an “Dwindling Dollars,” issuance fee, storm drain fee, local park fee, street tree fee, regional park fee, aquatic fee, trails fee, signal fee, traffic fee, building fee, permit imaging above, left). In 2008, Riverside fee, general plan fee, strong motion instrumentation fee (i.e., earthquake reduced its general monitoring fee), and species habitat conservation plan fee. fund budget by 5 percent. And Sundeen says that reductions in building-related revenue have led to targeted cuts for the city’s Community Development Department. The sales-tax shortfall also has had an impact on Riverside County’s Measure A transportation program. Sundeen says that the Transportation Uniform Mitigation Fee program administered by the Western Riverside Council of Governments might yield less grant funding if housing doesn’t turn around. Recently, local economist John Husing called on Riverside to temporarily cut impact fees to allow builders to build more affordable homes. But Sundeen didn’t think that would alter the playing field. He explains that impact fees average about 8 percent of a home’s selling price. “If the city cut developer fees by, say, 10 percent, the likely benefit per home would be only a few thousand dollars,” he says. “Such a small cost savings is not likely to induce significant additional construction activity.”—J.C. 24 ■ B U I LD E R de ce m ber 2008 W W W.BUILDERONLINE.COM http://WWW.BUILDERONLINE.COM
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