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Encinitas waits to vote on letting developer defer fee

ENCINITAS — During its meeting Feb. 25, City Council postponed a vote on a fee deferment request by a luxury condominium developer. The council instead directed staff to research the fee payment options and report back at a later date.
Gene Ybarra, senior planner, told the council that staff did not support a deferment. “Essentially there are carrying costs that all developers need to deal with,” Ybarra said.
Payment of city mitigation fees are to be obtained prior to granting the certificate of occupancy. However, Ybarra said that state code allows the deferment in the form of a lien, but the municipal code does not allow for a deferment.
After the planning department denied his request, developer Richard Sax turned to the council. He proposed a delay in fees to the park maintenance fund until after at least one unit was sold or leased at The Lofts at Moonlight Beach. Despite the possibility that sales would not meet expectations, Sax said the fees would be paid within two years.
The multi-use project, located at the northwest corner of Coast Highway 101 and Encinitas Boulevard, includes 18 residential units and 15 commercial spaces. The development impact fees apply only to the residential units.
Sax told the council that like many other real estate developments, the Lofts has faced financial difficulty. Its lender is about to be taken over by the federal government according to Sax.
Sax told the council that the $123,865 park maintenance fee was considerably higher than the $40,000 he had initially anticipated. Other required development fees, such as traffic mitigation, have all been paid.
According to the city’s municipal code, a certificate of occupancy is not issued until all required fees have been paid in full.
“Give us a little time,” Sax asked the council. He applauded the project and asked for lenience. “We certainly gave you a project to be proud of, give us a little time,” he said. “We’ll make it worth your while.”
Council members were hesitant to approve the request for fear of setting a dangerous precedent. “Once you do this, you will be negotiating these types of requests for the foreseeable future,” Mayor Maggie Houlihan said.
Councilman James Bond, who disclosed that he and his wife are friends with Sax, said he would like the city to do what it can to help the project succeed. “I think we are in some peculiar and rather difficult times right now,” he said.
Deputy Mayor Jerome Stocks expressed concern with the deferment. “I really do love the project,” he said. “While I really want to help, I’m having a little bit of heartburn.”
Councilman Dan Dalager asked whether prolonging the amount of time to pay the park fees would cause a “paperwork nightmare” for staff. Planning Director Patrick Murphy said that the department does not have a process in place to collect fees after issuing a certificate of occupancy.
Unlike other cities in the county, Encinitas does not collect the impact fees in their entirety at the time a building permit is issued. Evan Stone, a representative with the Lofts, said the company has already paid at least $1 million in fees to the city. “I’m not here asking for relief from this fee,” Stone told the council. “If we lease a unit, we’ll pay the fee,” he said.