Homebuilders get a big break in Morro Bay 

Anyone considering a construction project in Morro Bay might want to act quickly. For the next 18 months, many impact fees for residential construction will be cut considerably, thanks to an incentive plan approved 4-1 by the City Council Oct. 23.

The temporary fee schedule only applies to projects with three units or less, and it slashes general government, traffic, park, water, and wastewater fees by 50 percent. The rate for police, fire, and storm drain fees will stay the same, but the amount paid for all fees will be determined by the square footage of hospitable space only. Garages and storage sheds won’t be counted.

Councilwoman Carla Borchard presented the plan to her colleagues and said a builder pays $22,000 in fees to build an 1,800-square-foot home. According to her estimates, the fee reductions would shave roughly $7,000 off the cost of construction.

“Maybe that’s enough to spur some of these people to make the leap,” Borchard said.

The dissenting vote came from Councilmember Noah Smukler, who worried that the move would hurt the city’s budget during tough economic times. He noted that the city recently spent large sums on road reconstruction and will need to do further maintenance in the future. Also, an expensive overhaul of the wastewater treatment plant looms on the horizon.

“We’re giving a lot away and undercutting the quality of life features that these fees support,” Smukler said.

He said he’d be willing to support the fee reductions if they were tied to demands for higher efficiency, such as a dual plumbing requirement that would allow new homes to recycle “gray water” from sink and bath drains.

His proposal was quickly squashed.

“You’re just reducing a fee and adding a cost,” Councilmember Nancy Johnson said.

Mayor Bill Yates said the city is hardly collecting impact fees at all, since few people are currently building. He hoped the fee reduction would invigorate the construction community and create more revenue through property and sales taxes.

This new reduction of residential impact fees will coincide with an existing, three-year moratorium on collecting any such fees from commercial projects. Both deals expire in July of 2014.