More Opinion

OPINION: Historical development rates don’t matter, only today and tomorrow

This is the second in a series of articles about residential development in the City of Hollister

The Hollister City Council’s discussions on development always seem to wander away from the key issue – management. Future impacts do not change based on historical residential development rates; they act on whatever is going to be here when they hit which can be a very long time into the future. That’s why extreme peaks and valleys as so problematic.

Historically, we’ve had both high and low residential development rates caused by macro influences such as the housing market and the overall economy, and micro issues such as the growth control ordinance and the failure of the wastewater plant.

The historical average is a poor measure because when you stretch or compress the time factor, the impacts have different effects.

The best answer for the city is a planned future development rate applied in a relatively steady manner, not averaged from huge swings. That gives us time to adjust to the new situations. By failing to regulate this critical factor we leave it all to outside influences, which is the worst possible answer.

The housing market is key to any management equation. We can offer incentives or remove disincentives to stimulate a slow market and manage the rate of development in phases so we are not flooded in a good market. However, if we wait to implement a management plan until we notice the swings, we’ll always be too late; we need to have a plan in place because the market can move a lot faster than our administrative process.

Related issues are the associated mitigations such as road connections; we should not wait decades for a road improvement or essential connection just because a developer is not building right now. Why not let the developer finish the roads in advance in exchange for time extensions on the use of allocations? That requires a well thought-out development agreement.

Allocations are valuable public assets, we should not let someone sit on them for 20 years until times are just right for them, even if, collectively, it’s not right for us.

Unfortunately, there is nothing we can do about the mistakes we made two decades ago, but we should not make those same mistakes again.

About:
Marty Richman (Marty Richman)

Born and raised in Brooklyn, NY, Marty (Martin G.) spent his teen years in northern New Jersey. He served more than 22 years on active military duty, mostly in Europe, and is a retired U.S. Army Chief Warrant Officer 4, Nuclear Weapons Technical Officer.Marty then worked 25 years in various engineering and management positions in the electronics and energetic materials industries supporting the communications, computer, aerospace, defense and automotive sectors. He is a graduate, summa cum laude, from The College of Hard Knocks, among his numerous awards and accomplishments. He was a regular weekly Op/Ed columnist and feature writer for The Hollister Free Lance for seven years and a member of its editorial board for five years. Marty is a frequent commentator and contributor to BenitoLink on a wide variety of local, state, national and international subjects. You can follow Marty Richman on twitter @Marty_Richman. Marty and his wife, Joyce, have been residents of Hollister since 1996.

Comments

Submitted by (Bill) on

Marty:

Trying slow down the housing development within Hollister is like trying to slow down a leak in the dam wall. The reality is we in San Benito County currently have the lowest prices for a NEW home in the surrounding 11 counties (which include the nine counties in the Bay Area that touch the Bay as well as Santa Cruz, Monterey).
This will drive demand for additional new homes, and until their prices go higher, we will see more homes being built as the farmers sell their lands for some high per acre prices. This is not a comment against the farmers who are selling but an economic fact. People are deciding to want a home and are willing to commit to commuting to their job.

This means we will have double or triple the commuters going out of town and spending money as well as traveling home. Instead of slowing down growth and spending all of these efforts by the City Council, we should be working on how to improve our infrastructural, our roads and our access to Highway 101. What are we doing, infighting about the 400 block, working out how to sue the city by the mayor. What leadership is looking forward to was Hollisteer would be in 2 to 5 years. WE ARE STUCK IN YESTERDAY AND TODAY. That mentiality will not move us forward.

These comments are addressed to our Board of Supervisors who need to look to the future and not be stuck in TODAY AS WELL.

Submitted by (Franz Schneider) on

Marty, I'm not making excuses, but two decades ago we thought we were doing pretty much what you think we should do. We had a growth management plan pretty much like what people are talking about now, and we thought we had found ways to smooth out the highs and lows. Some of us tried conditioning actual buildout on completion of infrastructure, though we didn't always succeed. We had a target growth rate, roughly 300 homes per year, and unused permits were cancelled after 18 to 36 months. But those unused permits didn't go away; they were put into a pool to be added to projects already underway but not completed. (If we had just cancelled them completely, then in effect our growth rate would have been well below the annual target because permits would not have been (were not) pulled when the market was down.) So when the market went up in 1998-200 and in the last few years, the accumulated backlog of unused permits were suddenly worth using. So despite the attempts at smoothing things out, we were still at the mercy of the regional market's booms and busts. How do you avoid that?

Submitted by Tod DuBois (John Galt) on

The solution was clear and we overwhelming supported it - raise taxes and promote the community development director to the city manager. In other words, reward the past behavior because we want it to be our future. The past is prolog, fully supported by the people. 

Thanks for the responses,  Just to be clear is it not my intention to either  slow down or speed up development, just smooth it AND I want to both improve the quality of the future developments (those not already vested) and use the highly valuable "permission to develop" - allocation for want of a better term - to get more of the infrastructure we need.

I do not demonize developers and I do not want to take them to the cleaners, as they said in the Godfather, It's not personal, it's business.

My take is that the City of Hollister has not been asking for, specifying or getting the proper value (value is not merely money) in return for the developments that, in some cases, are extraordinarily profitable.

Follow this closely - the primary costs for development are the land, the costs related to construction (materials and labor) and the costs related to government-regulation Impact fees (planning, environment, etc.). 

Those same costs help determine the price the developer must charge, but the price is also determined, in great part, by supply and demand.  In fact the LAO in their 2015 report said that was the primary reason housing was so expensive in the costal areas of California (we are a "costal county", rememberer?).

Rather than waiting for a whole bunch of developers to put in 200 feet of main road at a time and not getting any use out of it for decades, we should be doing Development Agreements to the high bidder to do it all in exchange for extensions of their allotments, etc.

If we get the infrastructure, it mitigates the impacts.  Impact fees get you even at best, there is no net gain.  Development agreements and high standards can get you a net gain.

Marty Richman

Good series of articles, Marty. This one in particular elicited some well-thought out responses. I agree with you 100% so far. But what do our elected officials feel about better development agreements? Do they understand the pit of inadequacy we have been trapped in? You would think every one of them we be on board with getting better agreements, smoother growth. Making the changes you suggest going forward should be as easy as falling off a log for them. But is it? Are they getting competent advice from staff?

On another note, your pun was great! We are definitely a "costal" county, especially since we are considered part of the Central Coast.

--William McCarey

Lol, Bill, thanks for bailing me out - I'm not going to fix my error now that you have supplied the excuse I needed.

We could do these system improvements if we had the right objective.  Frankly, I do not see the support yet, all I see is pushback.  "Oh, everyone will stop building" is the threat, my reaction is, "not as long as there is a market and a fair profit to be made."  We do not control the market, and I have no interest in killing the profit in private investment.

In any negotiation knowledge is power.  Do we have a good idea about what a development will cost the developer?

Private entities can often build infrastructure at a much lower cost than the government, so taking impact fees in dollars to be spent later (when infrastructure is even more expensive) can be a real fools' game; we can take infrastructure instead and get a lot more of it in exchange and early access..

I have not had the time to check the details of the new traffic impact fee report presented last night at the City Council meeting, but the single family home fee went up about $4,000 per unit while commercial and multi-family fees went down primarily because the latter two are more associated with public transportation.

But impact fees, even if they are perfect, are the "get even" numbers, that's all they are - there is no "get ahead" in any impact fees and it is illegal to inflate them (a comment for those who do not follow these things).  Besides, the improvement timelines stretch out forever and a day.

Marty Richman

Submitted by Tod DuBois (John Galt) on

Marty, Development Agreements are good tools. The issue with them is the staff that negotiates them...skilled staff means quality agreements. Unskilled staff means crappy agreements, regardless of who is in the elected positions.

Since you know everyone and are a skilled retired respected manager, who on city and county staff would you consider skilled and experienced enough to negotiate these agreements such that your (our) objectives are met?

 

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