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The Effects of Reducing Impact FeesWRCOG Transportation Uniform Mitigation Fee (TUMF)WRCOG Transportation Uniform Mitigation Fee (TUMF)
Growth and Infrastructure Consortium, November 14, 2014
1
About the WRCOG subregion:
• Western Riverside Council of Governments represents the western third of Riverside County, California
• Riverside County is located in the Inland Empire of Southern California extending from approximately 40 miles east of Los California extending from approximately 40 miles east of Los Angeles to the Arizona state line
• Riverside County is the Riverside County is the 11th most populated county in the U.S.
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About the WRCOG subregion:
• Western Riverside County is comprised of 18 cities and the unincorporated County;– WRCOG Executive Committee includes one elected official from each city plus all
County Supervisors within subregiony p g
• The current population of 1.7 million is forecast to reach almost 2.5 million by 2035;
• Vehicle Miles Traveled are estimated to increase by 55% between now and 2035.
3
About the TUMF program:
h f ( )• The Transportation Uniform Mitigation Fee (TUMF) program was established in 2002 to address the indirect cumulative regional; transportation impacts of new development;
A if f t t d t d b ll iti d th C t f • A uniform fee structure was adopted by all cities and the County of Riverside
• WRCOG administers the f ilit ti program facilitating
coordination between the participant jurisdictions
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About the TUMF program:• The fee is levied on all new single family multi family industrial • The fee is levied on all new single-family, multi-family, industrial,
retail commercial and service commercial development
• To date the program has generated over $600 million in revenues
$600
$700
WRCOG TUMF Cumulative Revenues
$400
$500
n m
illio
ns)
$200
$300
Reve
nue
(in
$0
$100
02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14
Fiscal Year
5
About the TUMF program:T d t $560 illi i TUMF h b di d • To date, over $560 million in TUMF revenues has been dispersed on projects and other associated costs.
• The TUMF program includes provision for:– 1 229 new lane miles of arterials;1,229 new lane miles of arterials;– Construct or improvements to 58 interchanges;– Construct or widen 56 bridges;– Provide more than $61 million in transit improvements;– Provide more than $60 million for sensitive habitat acquisition;– Construct 17 railroad grade separations.
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About the Housing Crisis:• Between 2000 and 2006 Western Riverside County was one of • Between 2000 and 2006, Western Riverside County was one of
the fastest growing regions in the country with population growing at a rate of 3.4% per year
• Between 2007 and 2010 the growth rate fell to 1 6% per year• Between 2007 and 2010 the growth rate fell to 1.6% per year
• New housing salesfell from about 26 000 in 2005 30 000
35,000
Building Permit and New Home Sales Activity in Riverside County
26,000 in 2005 to about4,000 in 2010
• Unemployment20,000
25,000
30,000
• Unemploymentrate increased frombelow 5% in 2006 to over 14%b 20 0
5,000
10,000
15,000
by 20100
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Building Permits in Riverside County New Single‐Family Units Sold in Riverside County
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About the Housing Crisis:• Home prices in Riverside County tripled in value from 1997 to • Home prices in Riverside County tripled in value from 1997 to
2006 exemplifying the effects of the housing bubble
• Between 2006 and 2009 home prices more than halved
• Almost half of all mortgages in Riverside County was upside down by 2010; about one in ten homes went into foreclosure
Existing Single Family Home Price in Riverside County
300
350
400
450
e (in
thou
sand
s)
Existing Single Family Home Price in Riverside County
100
150
200
250
Existing Single Fam
ily Hom
e Price
0
50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
E
Image source: HUD, July 2011Data source: National Association of Realtors
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About Lowering the Fees:• The relationship between TUMF and development activity made it • The relationship between TUMF and development activity made it
an immediate target for the BIA during the housing crisis
• The BIA argued the TUMF was excessively burdening the ability for developers to sell new housingfor developers to sell new housing
• WRCOG adopted a policy that would give local
$12,000
TUMF Single Family Residential Fee Level
would give local jurisdictions the option to discounttheir fees by 50% $6,000
$8,000
$10,000
Full Fee
Discounted Fee
– Local jurisdictionsare responsiblefor coveringthe TUMF lost
$2,000
$4,000
Fee discountcommences
October 2009
Fee discountphased out
January 2013$0
y
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About Lowering the Fees:• Ten out of 17 local jurisdictions initially adopted the discount • Ten out of 17 local jurisdictions initially adopted the discount,
including unincorporated Riverside County
• After the first year, many jurisdictions discontinued the discount– Four jurisdictions
including County continued discount through 2011 and 2012and 2012
• Participatingjurisdictions weredistributed acrossthe WRCOG region– Provides useful
basis for comparingeffects of fee discounteffects of fee discount
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About Lowering the Fees:• Permit activity showed no statistical change in the rate of • Permit activity showed no statistical change in the rate of
development between full and discount fee jurisdictions
i i i i i
1200
Total Single FamilyBuilding PermitsWestern Riverside County
800
900
1000
1100Total All Jurisdictions
Total 50% Jurisdictions
Total 100% Jurisdictions
Linear (Total All Jurisdictions)
400
500
600
700
Linear (Total All Jurisdictions)
Linear (Total 50% Jurisdictions)
Linear (Total 100% Jurisdictions)
100
200
300
400
11
0
About Lowering the Fees:• Trend lines show permit activity was actually slightly lower for • Trend lines show permit activity was actually slightly lower for
jurisdictions with reduced fees
i i i i i
1200
Total Single FamilyBuilding PermitsWestern Riverside County
800
900
1000
1100Total All Jurisdictions
Total 50% Jurisdictions
Total 100% Jurisdictions
Linear (Total All Jurisdictions)
400
500
600
700
Linear (Total All Jurisdictions)
Linear (Total 50% Jurisdictions)
Linear (Total 100% Jurisdictions)
100
200
300
400
12
0
About Lowering the Fees:• The most noticeable impact was an increase in permit activity in • The most noticeable impact was an increase in permit activity in
affected jurisdictions immediately after the initial discount implementation and in anticipation of fee changes
i i i i i
1200
Total Single FamilyBuilding PermitsWestern Riverside County
Fee discountFee discount
800
900
1000
1100Total All Jurisdictions
Total 50% Jurisdictions
Total 100% Jurisdictions
Linear (Total All Jurisdictions)
Fee discountcommences
October 2009
phased outstarting
January 2013
ends in eight cities
December 2010
400
500
600
700
Linear (Total All Jurisdictions)
Linear (Total 50% Jurisdictions)
Linear (Total 100% Jurisdictions)
100
200
300
400
13
0
About Lowering the Fees:• Findings are consistent with other research on factors affecting • Findings are consistent with other research on factors affecting
housing development– Impact fees have a negligible, if any, impact on the rate of development activity
D l t ti it • Development activity is affect by economic factors such as the price of housing, $450,000
$500,000
Major Housing Price Components in Riverside County
p g,housing stock,interest rates, employment, etc.
$250,000
$300,000
$350,000
$400,000
• TUMF represents about 2% to 3%of the typical monthly mortgage $50,000
$100,000
$150,000
$200,000
monthly mortgagepayment
$‐
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
New Single‐Family Home Price in Riverside County Finshed Lot Values TUMF
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About Lowering the Fees:• No measurable benefit to the rate of housing development was • No measurable benefit to the rate of housing development was
observed as a result of the TUMF discount– Opportunistic permit activity was the only noticeable trend observed
O $29 illi i TUMF t ll t d b l l • Over $29 million in TUMF revenue was not collected by local jurisdictions as a result the fee discount– Equates to a loss of over 1,200 jobs related to construction of TUMF projects
Res lts in a loss of o e $160 million in economic benefit to the WRCOG egion – Results in a loss of over $160 million in economic benefit to the WRCOG region
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Thank youy• Darren Henderson, AICP
Parsons BrinckerhoffParsons Brinckerhoff [email protected]
+1-480-449-4623
• Daniel Ramirez-Cornejo Western Riverside Council of GovernmentsWestern Riverside Council of Governments
[email protected]+1-951-955-8307
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