OAKLEY -- Builders take note: A sanitary district's discount on developer fees remains in place for now, but that home construction incentive could disappear this fall.
Ironhouse Sanitary District held its annual public hearing Tuesday on whether to change the trunk line capacity fee it charges developers for installing sewer lines large enough to accommodate multiple housing developments. The agency also revisited its plant capacity fee, the revenue from which goes toward repaying the loan on its 18-month-old wastewater treatment plant.
The special district, which serves Oakley and Bethel Island, decided to keep its two fees the same this time around because the Bay Area construction costs they're based on haven't changed over the past year.
The fees reflect a temporary 25 percent discount that Ironhouse Sanitary adopted in September 2011 to encourage Shea, Pulte and Meritage homes to finish projects that had stalled when the housing market collapsed.
Scattered around Oakley were about 500 graded dirt lots for single-family homes that developers had shelved, preferring to wait until housing prices began climbing again and the business became more profitable before they started pouring foundations.
And without new development, ratepayers would have to pick up a larger share of the district's debt on its new plant, something that Ironhouse Sanitary's board of directors wanted to avoid.
"The sole effect was to try to keep development active," said General Manager Tom Williams of the board's decision to lower fees either until September 2013 or 350 homes were built, whichever occurred first.
The discounts reduced the annual trunk line capacity fee from $854 to $640.50, and the plant capacity fee from $4,442 per home to $3,331.50.
The plant capacity fee is applied to the $2.9 million that Ironhouse Sanitary must pay each year for the next 19 years on its construction loan, Williams said.
Now the question is whether agency directors will return to the higher fees in September, a step that Don Hofer of Shea Homes' Northern California division says would have a significant effect on the company's plans.
The builder has 257 undeveloped lots in Oakley, and though home prices are increasing, they haven't reached the point where it makes financial sense to sink money into new projects right now, Hofer said.
However, if the market continues to improve -- and Ironhouse Sanitary's developer fees remain as is -- Shea Homes might plan additional residential units once it has sold its existing Oakley inventory, he said.
Should the district's fees go back up, however, the other government agencies that also charge developer fees -- the school district, water districts, the city of Oakley -- might follow suit, Hofer said, noting that the reductions they collectively agreed to two years ago amounted to an approximately 27 percent drop.
Contact Rowena Coetsee at 925-779-7141. Follow her at Twitter.com/RowenaCoetsee.