A Turlock developer appeared before the Riverbank City Council at its recent meeting to ask for a waiver, or perhaps a deferral, of fees charged to new projects in town.
Tony Zaia, CEO of Zaia & Zaia LLC had submitted a written request to waive or defer for five years payments for System Development Fees, which will be assessed on the construction of his Del Rio Office Project. Since there is currently no administrative process to consider these requests at staff level, the request was brought to the City Council for consideration.
According to the staff report, the fees are collected for several reasons:
— To provide an adequate and constant method for the financing of the unfunded portion of need systems development costs throughout the city, reasonably related to projected community growth;
— To promote the orderly and efficient expansion of public improvements to adequately meet the domestic and economic needs of the community and to minimize adverse fiscal and environmental impacts of new development;
— To ensure the continuation of necessary services including, but not limited to, police and general administrative services; or
— To establish equitable methods for minimizing public facility and service costs to the city associated with new development.
Zaia told the council that construction costs had doubled since he first bought the properties a year and a half ago, so he was going to start with building a small office complex on the site of the former Reed’s Garage, at the corner of Third and Topeka streets. As that starts providing income, he said he plans to begin the renovation of the Del Rio buildings.
As defined within Riverbank’s municipal code, the report noted, System Development Fees are charged to new construction, including the expansion of and/or the addition to an existing, nonresidential structure, to mitigate the unfunded portion of the determined impact of the development on facilities and infrastructure in town.
The request for waiver totaled about $73,000, which includes permit fees, police/fire costs, and administrative fees. The report noted there are an estimated $20,000 in fees that the developer will have to pay to the county.
A Building Department analysis found that, by allowing a portion of the fees to be waived, financing of the project would be easier for the developer and he can focus his remaining resources on the Del Rio Theater building rehab. Also, as a small developer forced to use internal funding and private investors for construction, he will be able to use the project to gain revenue that can start working on and complete the Del Rio Theater building sooner and a faster build-out of the project is created, thus generating more and sooner tax revenue for the City.
Based on the analysis performed, staff has determined that due to the recovering economy and more strict bond regulations for the developer, they recommended that the City Council consider a waiver or deferral of System Development Fees to encourage construction and thereby, job growth, a public benefit.
In addition, staff found that the developer/property owner has been a good partner with the City, allowing his parking lots to be used free of charge for city events like the Cheese and Wine Festival, following up on transient trespasser complaints, and removing litter when notified. Staff has been discussing a possible electronic sign lease location with Mr. Zaia near the intersection of Third and Atchison streets.
Zaia was asking for a waiver of fees, similar to that given the Galaxy Theatres complex when it was built 10 years ago.
After some lengthy discussion, the council voted to approve a combination of waiver and deferral of the fees.
They chose to apply a credit to the project for what should have been paid by the original developer back when the service station was first built. During discussion, it was learned that the city’s policy for that relief of fees normally expires after a year. The council chose to reinstate the credit, totaling about half the city fee cost.
The rest they voted to defer for 10 years.
Zaia said he had materials on site, ready to begin the work of removing the old gas storage tank and get the project underway, but the recent rain showers may have hampered that schedule.
Zaia told the council he hoped to complete this first phase of the projects by the end of the first quarter of 2019. He said they were planning on beginning work on the remodel of the Del Rio immediately following the completion of the office project.