Rising permitting fees driving up home prices in East County
According to local developers and permitting professionals, the costs associated with permitting have become so arduous that it is driving up the cost of living for consumers. Residential experts report that the cost of building a new home may be as high as $85,000 in East County communities such as Santee, representing 20 percent of the cost of an average middle-class home.
Greg Brown, the owner of New West Investment Groups, says there are two phases of permitting that take place for his multi-lot projects. The first step is the entitlement process for commercial and residential projects.
“The regulators get to decide what you do — or don’t do — on your own property,” explained Brown. “This sort of thing takes $50,000 (per house) and two years in San Diego.
Brown attributes the fees and delays to the bureaucracy. With his new Lake Jennings project near the intersection of Lake Jennings Road and Highway 8, the permit fees alone cost $36,000 per house. Environmental fees will likely cost an additional $17,000.
“This only covers fees for schools, water, traffic, sewer connection and fire,” says Brown.
Add in the permitting fees and the cost per home at the Lake Jennings project rises to $45,000, according to Brown. In Santee, he estimates the costs at $85,000 because of the additional park fees.
Melissa McChesney, communications officer for the Padre Dam Municipal Water District, confirmed that the average water and sewer fees for a new single family home (under 0.5 acres) are $32,059. The fees are based on a 2009 water capacity study reviewing Padre Dam’s Integrated Facilities Plan, which indicated that revenues needed to be increased.
Brown says the real problem is that major improvements to infrastructure like the water system aren’t passed on to everyone. Instead, the utilities focus the costs on new development and major remodeling projects, which drives up the cost.
Additionally, Brown argues that a second cost driver is the Multiple Species Conservation Plan (MSCP), a local plan created by the public agencies dealing with issues relating to endangered species. Most of the undeveloped land in San Diego is in the Diegan sage altitude that harbors a certain ecosystem, and in that altitude are threatened species protected by federal and state law regardless of the fact they are often surrounded by urban development.
According to Brown, MSCP mitigation adds tremendous expenses in addition to permitting fees. To develop a five acre parcel of land such as his, he says he is required to buy 10 additional acres and pay an endowment to an environmentalist nonprofit organization to monitor it for eternity. This adds $250,000 to $300,000 to mitigate the land, which is equivalent to $17,000 per house or more.
“Then you have the engineering fees come out to about $200,000 and you haven’t put a spade in the ground,” said Brown.
Marshall Giles, a professional building permit processor, concurs with Brown’s estimates for multi-home projects. However, Giles still sees major fees involved with building or remodeling single homes.
“If you have grading, the permit process will cost anywhere between $45,000 and $75,000 before the first tractor shows up on your property. That’s one house,” Giles explained. “From the day a house plan is drawn until it’s permitted with the county takes three to five months.”
Giles said that it is worse when a family has a large lot which they want to subdivide into two or three lots. He’s seen projects take six years or longer in Crest and claims the city of El Cajon is worse.
By comparison, Giles said he’s seen one home plan that was built in San Diego and then submitted for permit in Arizona and approved within 24 hours for $450.
“All of the rules and laws are in place for [San Diego] regulators to do it quickly, so it shouldn’t take months and months for them to do it,” said Giles. “If a project takes a long time, you’re paying interest on the loan you used to pay for the land,” he concluded.