Menifee To Seek Economic Stimulus Plan

The Menifee City Council yesterday voted unanimously to let sunset the 50% reduction in developer fees, in favor of seeking new ways to gene...

The Menifee City Council yesterday voted unanimously to let sunset the 50% reduction in developer fees, in favor of seeking new ways to generate economic stimulus for developers.

A year ago the city council voted to take part in an special offer by the Western Riverside Council of Governments (WRCOG) whereby cities could suspend its TUMF payments to WRCOG. Transportation Uniform Mitigated Fees (TUMF) are fees that builders pay to cities to compensate them for the additional population and traffic they bring in. Cities then pay those fees on to WRCOG.

WRCOG is the body that administers the TUMF fund. WRCOG disperses that money back to the cities to pay for transportation projects, namely roads and bridges. It's a form of "wealth redistribution" whereby the cities with the largest growth pay for projects in cities that can't afford their own improvements.

But last year, when development was stymied by the bad economy, WRCOG offered to waive its own fees, meaning cities didn't have to pay TUMF to WRCOG. But this was presented to cities as an option. The cities that took it, including Menifee, allowed them to drastically reduce fees they pass on to developers.

But what the Menifee City Council didn't know at the time is that WRCOG didn't actually waive those fees. They only postponed them, meaning Menifee was still on the hook to pay it back.

Mayor Edgerton's estimates came to $2.4 million in fees it would have to pay to WRCOG. Mark Knorringa, who's with the Building Industry Association of Riverside County, felt that figure was actually much lower, around $1.67 million. Currently, the City of Menifee doesn't have either of those amounts of cash available.

"The question now is who knew what, and when did they know it?" the Mayor spoke in an emotional tone, accusing the previous City Manager, previous City Works Director, and even former city councilman Scott Mann, as knowing that WRCOG's fee waiver was actually a fee postponement, but didn't explain that to other councilmembers. "The City Manager was at those WRCOG meetings, the former city councilman that is no longer here was at those meetings. What I'm very angry of is that this council accepted a reduction in fees without knowing that reduction was going to cost the taxpayers."

City councilmember Darcy Kuenzi countered the Mayor's comments. "The TUMF money collected is not paid by taxpayers, but by developers. These are developers fees!" Her comments along with the Mayor's seemed indicative of two competing philosophies on the council of how TUMF fees are paid, and how WRCOG operates. "Do we want to stimulate growth in this city? We have a gentleman that's trying to open a new steakhouse here. It's not even clear that the City is on the hook for this shortfall." (the $2.4 million that Edgerton estimates)

Edgerton responded by asking Don Allison, the City Engineer, whether or not Menifee owes about $2.4 million in fees to WRCOG, to which Allison responded, "About that much". Edgerton then asked Allison if Menifee owes that money to WRCOG, to which Allison responded, "Yes, in some form."

The debate dragged on, and through it all it seemed clear that Darcy Kuenzi and John Denver took the philosophy that reduced fees help bring in development which ultimately increases sales tax revenue which negates any kind of shortfall that Edgerton spoke of. Meanwhile, it seemed clear that Edgerton and councilmember Fred Twyman were to going to vote for allowing the reduced fees to sunset.

But when John Denver made a motion to adopt a three month extension of the reduced fees, the City Attorney stepped in and clarified that the item on the agenda was to allow the fees to sunset, not to adopt an extension. Therefore, Darcy Kuenzi motioned to let the reduced fees sunset and instead appoint an ad hoc committee that will assist the City Manager in crafting some kind of economic stimulus plan to attract new development.

The motion passed unanimously. Mayor Edgerton appointed himself and Kuenzi to the ad hoc committee, which will be named "Economic Incentive Ad Hoc Committee".

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  1. TYPICAL POLITICIANS LOOKING OUT FOR THEMSELVES AND NOT FOR THE CITIZENS.

    ReplyDelete
  2. Will any type of investigation be launched as to how this has come about? Will the former city manager and former councilmember be questioned about this, or was this aspect even addressed?
    If developers pay these fees, and the City did not collect those fees because their was a "pass" on the fees at the time, (be that a reduction or postponement), can the City go back to the developers and invoice them for the balance due? Was that addressed? If Kuenzi seems to think that the developers owe the money, then there should be a plan in place to invoice those developers for those funds. If not, then it comes from the taxpayeres. It seems pretty simple to me, but then again, I am no politician.

    ReplyDelete
  3. The city has building contracts in place that specify exactly how much the developer is to pay in fees, per house. So I think the position is that we cannot bill developers for the $2.4 million.

    I have another article on this particular subject that will go into yet a different twist on TUMF fees and the city's $2.4 million debt to WRCOG, something else that was voted on by the council, and I think will answer your question. I just need to research the details more.

    As for an investigation, I'm sure there will be one. I doubt however, anything will be done about it. The fault ultimately lies with the councilmembers.

    ReplyDelete
  4. What does it mean "sunset"? Does it mean the program will expire?

    ReplyDelete
  5. I get that if we discount TUMF fees in order to attract developers and the equivalent of those fees are collected in additional sales and property taxes then the math needs to include the time frames. When are the fees due to WRCOG. When will the additional sales and property taxes be collected?
    If all TUMF developer fees collected are in fact owed to WRCOG, then the city council can't call foul for not "knowing" what math was used to justify the discounts.
    If reduced fees result in increased sales and property tax revenue in a timely manner then it's not necessarily a bad choice, but I find it amusing that it was an uninformed choice.
    Did the other councilmembers think that the WRCOG was reducing their fees as well.

    ReplyDelete
  6. According Twyman, adding more homes doesn't really add more revenue to the city. Any additional sales and property taxes coming from new residents is offset by the additional costs the city incurs to service those residents. It's the commercial that adds revenue to the city. The sentiment of the council is that you need more residents to attract more commercial.

    And because we were in a down economy, the council felt encouraged to offer reduced TUMF fees to home builders.

    But you're right, the council can't really call "foul" on anyone but themselves. If you take Edgerton's testimony, he'll have you believe the council was duped by Wentz and Mann into believing the city would not be on the hook. From what I can see, Edgerton is the only person publicly calling out names.

    ReplyDelete
  7. Is the WRCOG a voluntary association? If so then it seems to me we could just withdraw our membership and not have to pay these ridiculous fees.

    ReplyDelete

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