IRVINE : Council Scraps Plan for Developer Fee

Complaints from builders prompted the City Council this week to scrap its plan for a developer fee to raise money for affordable housing.

On a 4-1 vote late Tuesday, the council repealed the fee, saying it would prompt commercial developers to shun Irvine because of the higher costs of building here. The former City Council adopted the fee plan more than a year ago as part of an overall effort to increase housing for low-income residents.

The council was to consider modifying other aspects of the city’s affordable-housing plan Tuesday, but delayed action until Feb. 26 because of the late hour. The meeting ran until nearly midnight.

While the idea for the affordable-housing developer fee was adopted in October, 1989, the amount of the fee and uses for the money were still in the planning phase.

Councilwoman Paula Werner defended the fee program as a workable tool to enable more Irvine workers to live in the city.

“We’ve just, in essence, gave away a million or a million and a half dollars,” Werner said after the vote.

The fee, called a linkage fee because its purpose was to link the creation of jobs with the housing needs of new workers, would have been assessed against non-residential builders according to the size of their projects. Although the fee had not been put in place, developers since October, 1989, had had to promise to pay the fee in order to receive building permits.

Councilman Bill Vardoulis said the fee would harm free enterprise by saddling commercial builders with the cost of subsidizing low-income housing. It would raise the cost of establishing a business in Irvine, he said, and encourage businesses to set up elsewhere.

The retroactive nature of the fee was unfair, several builders said, because they had to agree to pay the fee without knowing its amount. With an unknown fee, profitability of projects was in doubt and financing was more difficult to obtain, said Roger Rhoades of Rhoades-Ewing Development in Newport Beach.