Builders Say New Fees Will Hurt Industry, Push Prices Higher : Lancaster: The City Council increased levies to pay for services strained by growth. But adverse real estate conditions already have developers worried.

Stung by new fees, Antelope Valley home builders Thursday said their already ailing industry faces further decline and predicted that new home prices in Lancaster could jump by as much as $7,000.

“I question the wisdom of adopting, given the economic straits we are in now, an increase in developer fees,” said Pete Peterson, vice president of engineering development for Kaufman & Broad’s Antelope Valley division.

Peterson said the affordability of new homes, once key to the Antelope Valley’s growth, is in jeopardy.

The Lancaster City Council, feeling the strain of new development on city services, passed a new fee structure Monday that officials estimate will raise the price of the average new home by $6,286 as builders pass the costs on to buyers. Fees were also imposed on developers of commercial property.

Builders were confident enough in 1989 to take out permits to build 3,354 new homes. Last year, the pace had dropped to 929 permits.

The figures are based on statistics compiled by the Construction Industry Research Board in Burbank.

Peterson said that some smaller developers, after increasing home prices to compensate for the thousands of dollars in city fees, may not be able to attract buyers.

“It’s a scenario a lot of home builders are concerned about,” Peterson said. “Small developers may not be able to keep up, and will ultimately lose money because people cannot afford homes.”

The fees are designed to offset the cost of new services, including streets, drainage, flood control, sewers, public parks and traffic signals.

Councilman Arnie Rodio said that if developers want to build in Lancaster, they will have to support the city’s infrastructure financially.

“They feel they’re providing us with revenue,” he said. “But what they don’t realize is that when they put up a new development, we will have to keep maintaining services 10, 20 years from now.”

The plan, said Robert Millspaw, a Lancaster assistant planner, was organized to assess the impact of a development by type, size and land use.

“We have calculated how much we need to collect annually to provide public works maintenance for existing as well as new property owners,” Millspaw said.

For instance, the city figured that the charge for the cost of citywide streets needed to serve new developments would be $1,044.16 for a single-family dwelling.

If a developer builds 40 such housing units, the company would pay the city $41,766.40.

For commercial property, the developer would pay 98 cents per square foot. For drainage and flood control, the developer’s fee would be $2,185 per single-family dwelling. Commercial and industrial use fees would be $2.10 per square foot. Overall fees come out to $6,286.26 per single-family dwelling, according to the city’s calculations.

When the plan was conceived, Millspaw said, the city community development agency discussed the idea with the Antelope Valley Building Industry Assn.

The developers bought into the plan, he said, but later expressed concerns about the feasibility of the proposal, given the adverse conditions in the housing industry.

Developers asked the City Council to modify the plan to allow credit for the sales tax generated by residential development, arguing that more people would bring higher revenue to the city. The council denied the request.