Meeting the growing demand for infrastructure and services in Los Angeles will cost billions of dollars. The city needs more money to maintain the streets and sidewalks, sewer system and libraries, as well as to make sure there are enough police and fire stations to serve the expanding population. Yet a recent report suggests L.A. is missing out on tens of millions of dollars a year in fees that could help pay for city infrastructure.
An audit by City Controller Ron Galperin found that Los Angeles levies fewer so-called development impact fees on new projects than other cities such as San Francisco and San Diego. These are fees collected to help defray the cost of the public facilities needed to serve new development. As a result, the city is forgoing as much as $91 million a year that could help pay for fire stations, libraries, affordable housing and other public improvements.
Unlike other cities, L.A. does not have a comprehensive development impact fee program with clear rules for developers and a dedicated funding stream for specific public improvements. Instead, projects are evaluated and infrastructure investments required (or negotiated) case by case. In the few instances in which the city does impose impact fees — to pay for public art or traffic relief, for example — the money often sits for years because of outdated plans or rules that dictate how the funds can be used. Nor do city agencies do a good job keeping track of emerging needs for new infrastructure and expanded services, and no one is in charge of assessing whether new projects are, in fact, paying their share of the cost of any necessary improvements in public amenities. The overall approach is ad-hoc and subject to political influence, which means it typifies what's wrong with L.A.'s development system.
Mayor Eric Garcetti recently called for a new development impact fee on commercial and residential construction to help fund affordable housing projects, and that's still in the early stage of discussion. What the city really needs, though, is wholesale reform of its planning and land-use policies, starting with updated community plans that address local infrastructure and housing needs. Garcetti and the City Council should ensure that part of that reform effort looks at development impact fees as a new revenue stream. L.A. is a city that is constantly short on cash and behind the curve in maintaining the public infrastructure, and it's unconscionable to leave money on the table.