May 16, 2008

Everyone gets a get out of jail free card!

From the Los Angeles Times’ article “Orange County gives developers a break on building fees“, it looks like everyone these days is getting a “Get out of jail free” card. According to the article, Orange County is postponing the collection of fees for housing construction projects. This decision was reached without any thought to the consequences on Orange County’s revenue and finances… brilliant.

Is it a get out of jail free card to the developers? Depends who you ask. On the one hand, the measure was passed as an economic stimulus. On the other hand, there’s no analysis to back up the idea that this postponement will really help our economy. Per the article:

County officials and building industry representatives characterized the measure as an effort to help builders hit by the credit crunch and the real estate downturn to get projects off the ground. One supervisor, however, questioned whether it would stimulate growth and another critic dismissed it as a favor to the building business.

Orange County is the largest government agency in the state to adopt the change, which is being pushed by the Building Industry Assn., a trade group that lobbies local and state government on behalf of builders, engineers and other industries involved in housing construction.

The group is asking cities and counties throughout California for a similar break as part of a package of measures to ease up-front costs for developers amid an economic downturn that has hit the housing sector hard, particularly in Orange County. More than a dozen cities and counties have adopted the measure. . .

A rough industry estimate is that a developer will pay about $4.5 million in fees for a 100-home development. . .

“Doing something about the fees will stimulate building activity,” Kristine Thalman, chief executive of the Orange County chapter of the Building Industry Assn., told supervisors during the board hearing Tuesday. “This will put funds into the economy and put our builders back to work.”

The article makes the Orange County officials look like a silly circus act, at best. Unfortunately for Orange County, it’s not an unnecessary harsh depiction, but rather deserved. How can you pass a measure that you have no idea the effect it will have? My favorite is the guy that says they weren’t asked to look at the financial effect… say what?! Should you have to be asked?

Officials said Tuesday that they did not know how much the county has collected for such fees in previous years and could not calculate how much interest income would be lost, but maintained the amount was not substantial. . .

Asked why there was no financial study, which is a common facet of virtually every proposal that could affect county finances, Tim Neely, director of planning and development services, said: “We weren’t asked to analyze the fiscal impact.”

Appropriately so, the unanimously passed measure has been met with some harsh criticism. According to the Los Angeles Times:

Darrell Nolta, a close observer of county government, criticized the move as a favor for developers.

“There are many, many people who need to be helped” because of the economic downturn, Nolta said. “Not the builders.”

In a time when it seems like everyone is getting a “Get out of jail free” card, I have to ask… where’s mine and where’s yours?!