Fountain Valley : City Considers Changes in Builder Fee Policy

Controversy over a contract that would have saved a former city councilman’s company about $200,000 on an affordable housing project has prompted the city to consider changing its policy on development fees at its meeting tonight.

The controversy arose over a proposal by former Councilman Bernie Svalstad’s development firm, I. S. Properties Inc., to build a 57-unit project at Brookhurst Street and Slater Avenue.

The firm would have been assessed a $269,000 city parks fee, but under a 10-month-old city policy, developers such as I. S. Properties had an alternative: Instead of the parks fee, based on land value, they could pay a “mitigation fee,” based on the assessed value of the project.

The contract between the city and I. S. Properties Inc. levied the second fee, only about $60,000.

Councilwoman Barbara Brown raised objections at a Nov. 19 meeting because of the large savings to I. S. Properties. The parks fee was substantially higher because the firm’s project was a high-density one that was to be built on expensive land, said City Manager Judy Kelsey.

The council voted to approve the project’s tract map, but the contract has been tabled.

Tonight, the council will consider reducing the parks fee for residential developers, Kelsey said. Alternatives include limiting the fee to $2,000 or $2,500 per unit, or eliminating it altogether in favor of the “mitigation” fee.

A report from the Planning Department staff also proposes to exclude charities and projects of less than 10,000 square feet from mitigation fees.

Svalstad, a city councilman in the early 1970s, was not available for comment, but Kelsey said I. S. Properties has agreed to pay either a parks fee or development mitigation fee, depending on the council’s decision.