For Whom the Fees Toll : Higher Assessments Sought on New Homes to Meet Soaring Cost of Road Projects

With home prices already sky-high, officials planning Orange County’s three new tollways are considering dramatic increases in fees paid by developers from the current $967 to $1,372 per single-family house to as much as $3,905.

The proposed fee increases are intended to offset tollway construction costs that have surpassed $2 billion, more than double the $868-million price tag first used to calculate the developers’ 48.5% share of tollway construction costs more than four years ago.

Construction expenses have escalated because of inflation, increased right-of-way acquisition costs, environmental problems and major design changes, according to tollway officials.

In addition to building costs, long-term financing could add $1 billion or more to the price tag, pushing the total 30-year cost to more than $3 billion. Any shortfall would be made up with higher tolls.

Without increased fees, developer contributions could drop from the target of 48.5% of total tollway costs to around 20%, according to officials.

The fee-hike issue has pitted some developers against others, and slow-growth advocates against landowners and politicians, with motorists and home buyers caught in the middle. The fees have been collected on new construction since 1985, with the proceeds bankrolling tollway planning.

Developers are split on the proposals, according to tollway board member Gary L. Hausdorfer, mayor of San Juan Capistrano.

“Some have expressed support. . . . Others are opposed,” Hausdorfer said. “There hasn’t been a campaign against any of the fee-hike options, but if there was, it wouldn’t do any good anyway. Our job is not to make the landowners happy all of the time but to make the most prudent decisions possible.”

Hausdorfer and other tollway officials said that most developers oppose fee-hike proposals that factor in to tollway costs the interest expense on money to be borrowed to begin pouring concrete.

“We haven’t yet agreed that financing costs should be included in calculating the corridor fees,” said Irvine Co. Vice President Hugh Fitzpatrick. “When the fee program was originally created, there was quite a process that went on.” Rights of way for the tollways were granted at no charge in many cases, yet developers received no credits against future fees in return. “Now they’re talking about financing costs, and we have not yet been convinced that those costs should be included.”

Officials with another leading developer, the Mission Viejo Co., said they have not been officially notified of the fee-hike proposals but are aware that copies were delivered to the Building Industry Assn. office in Santa Ana late Friday.

“We’ll join the BIA in urging the tollway boards to delay any action until this can be thoroughly studied,” said company spokeswoman Wendy Wetzel.

Diane Gaynor, spokeswoman for Santa Margarita Co., developers of the Rancho Santa Margarita planned community, said that her firm is still awaiting details from tollway officials and from consultants about the proposed fee increases and about revised cost estimates for the Foothill toll project.

“We still feel we need time to examine all of the factors used to justify a fee increase,” Gaynor said.

Without adding at least some of the interest debt to tollway costs, tollway Executive Director John Meyer said this week, the developers’ actual contribution could sink to little more than 20%, with higher tolls needed to make up the difference.

Meyer spotlighted the problem with an observation: This year the tollway agencies will award so many contracts for final design work that the $20 million in developer fees bankrolled for the San Joaquin Hills tollway could be totally consumed.

Meyer acknowledged this week that slow-growth advocates may have been correct when they argued last year that the developers are contributing less than 48% of the costs of the tollways--if the 30-year accumulated interest charges are considered.

The issue of developer fees was raised by slow-growth advocates in last year’s unsuccessful campaign on behalf of Measure A, a growth management and traffic control ballot initiative defeated 56% to 44%. They accused developers and tollway officials of deliberately misleading the public by using the 48.5% figure for the developers’ contribution towards tollway costs in literature aimed at defusing anti-developer sentiment among voters.

Meyer said this week that he expects members of the San Joaquin Hills and Foothill/Eastern Transportation Corridor agencies, which oversee the tollway projects, to choose among eight fee-hike options at their regular meeting on Thursday, and ask for additional details on one or two specific proposals for consideration at next month’s board meeting.

“Of course, this will be done with the understanding that there will be a lot of debate, because there are sharply different views,” Meyer said.

One of the proposals considered a front-runner, said Meyer, would increase developer fees from a current minimum of $1,062 for a single-family residence in an area served by the planned San Joaquin Hills tollway to a new minimum of $1,720.

Areas along tollways are divided into two zones. The minimum rates are charged for new houses built in the zone farthest from the tollway route. Homes in the zone closest to the new San Joaquin Hills tollway would see fees rise from $1,372 currently to $2,220.

A similar tollway fee system is used for the planned Foothill/Eastern tollways, where the current minimum fee of $967 would increase to $2,410 for each single-family residence under the leading proposal, and homes closer to the route would see fees go from $1,360 currently to $3,355.

Another option would send fees as high as $3,905 per house, if officials attempt to redefine developers’ so-called fair share of tollway costs, increasing it to 54.71% from the current 48.48%.

The different options were prepared for tollway officials by the accounting and management consulting firm of Deloitte, Haskins & Sells.

The tollway fees are collected at the time a developer is issued a building permit and are added to fees already levied on developers for new libraries, schools, and other public facilities--fees that typically total more than $12,000 per house.