The City of Lancaster’s innovative Building Incentive Stimulus Program, launched in 2010, continues to meet and surpass goals to generate home and commercial growth throughout the city. The successful program has generated numerous jobs, stimulated business growth, and increased fee revenues to the city. At the core of the program has been Lancaster’s decision to reduce and defer development impact fees up to 30 percent in select parts of the city.
At a time when new home construction has remained stubbornly low throughout most of the Southern California region, Lancaster has seen 634 new single-family homes permitted, along with 38new commercial/industrial buildings since the program’s inception in February 2010. Total valuation of these permits is $147.2 million. In addition the program has generated more than $7.8 million in fee revenues for the City.
“The Building Incentive Stimulus Program continues to encourage development, create jobs, and stimulate our local economy. As with some of our other innovative programs, this program can be replicated throughout the nation,” said Mayor R. Rex Parris.
A number of homebuilders have taken advantage of Lancaster’s incentive program, which provided 20 percent discounts on development impact fees throughout the city, and 30 percent reductions within the downtown corridor within the first year it was offered. When the City extended the program in 2011, a 25 percent discount was offered on development impact fees for new homes within existing tracts which had been abandoned by the original developers before construction had been completed; as well as a deferral on impact fees related to commercial projects. In mid-2012 the City extended the program for an additional year.
“Recovery of construction jobs and new housing is vital to sustaining the nation’s economic recovery. Cities will recover faster once they take a hard look at the fees they are assessing to determine if construction is economically viable. When fees are 25-35% of the price of a home, it seems out of step with the current economy. Lancaster took a dramatic step with their program several years ago, and has seen an increase in housing production in the past few years. The City of Lancaster’s Building Stimulus Program has become a model for cities throughout the region,” said Holly Schroeder, CEO of the Los Angeles Ventura Chapter of the Building Industry Association.
One of the most notable participants has been KB Home, which has built 12 tracts in Lancaster as part of the program. In all, 22 previously abandoned tracts have been positively affected by this program, of which 14 have been completed.
In many cases homebuilders have purchased finished lots in subdivisions that had once been abandoned. This has allowed builders to complete these communities, creating new jobs for area residents. According to the Building Industry Association of Southern California, the average fees charged on a new single-family house are approximately $60,000, between local and county fees, with some communities still demanding upwards of $100,000 or more per home.
“The city’s decision to reduce development impact fees has allowed us to build more homes and move more aggressively into developing sustainable communities throughout Lancaster,” said Tom Di Prima, executive vice president of KB Home’s Southern California division. “As a national homebuilder, we laud initiatives that simplify the building process for us, create jobs, and encourage commerce for the community. Hopefully this program can serve as a model for other cities in California as they consider ways to promote further growth and development.”
Nationwide, it is estimated that each new home built results in three new construction jobs and one new long-term job.