Newark City Council's Vote Leaves Money on the Table

The Newark City Council’s vote on February 26, 2016 in favor of Gateway West housing development (589 units) left significant money on the table. Newark city staff negotiated and the Newark City Council unanimously accepted a change to include an additional $1.5 million in unassigned fees to sweeten the deal.

It appears that upon receiving emails and phone calls from concerned constituents over research from the Newark Parks Foundation (see ”Newark’s Low Developer Impact Fees for Parks”) that highlighted Newark’s low park impact fees, the developer quickly (1-2 days) coughed up an additional 1.5M ($2,500 per house) in unassigned fees as evidence by the initial Gateway West contract (December 2015) and the final contract (February 2016), suggesting that 1.5M was way more attractive than the alternative price tag on the table. The city deserves credit, however, for negotiating its way out of a sliver of the hole it dug for itself; it's just so unfortunately that the city doesn't bargain as hard for the public as it does for developers (see "Newark waives affordable housing developer's fees for Mowry Avenue project").

The Newark City Council was hoping the community would be so swooned by the provide of a Bay trail segment, a 14,000 square foot private dog park, and the developer's toxic cleanup efforts to protest a deal that included low park impact fees due to an outdated calculation of park impact fees. (Some of us were watching and asked for an approval of the project pending a reassessment of the fees, which only required minimal due diligence, but it appeared that the Newark City Council’s minds were made up before the meeting began.) They voted to lock in the low impact fees.

The council tried to argue that toxic lands are deserving of lower park fees. A park fee is not a function of the developer’s specific property, which, by the way, can be acquired at a cheaper price from the onset; rather, it’s a function of the average cost of land in the city because the city needs to purchase and improve additional parklands for the new residents. If the city wants to build parks on toxic land, then it would most certainly need to include a much higher improvement cost in its fee calculation: currently Newark‘s improvement costs are set at $200,000 per acre (see ”Newark’s 2013 Park Impact Fee Study”), enough to build a playground, but not nearly enough money to clean up toxic land and build a park. Unlike the developer, the city doesn't have high density homes to sell off to recoup the cost of cleanup.

One council member praised the total impact fees (streets/traffic, aquatic center, library, civic center, etc) to be collected under this deal. The city doesn't yet have a current peer study of its own, so it's not clear how this claim has any merit. Many of our other fees appear to be low compared to our neighbors. For example, Union City is similar to Newark in many ways (home values, API, location, etc), yet Union City's fees are higher. If there's one comparison Newark cannot ignore, it's Union City.

Turning spent industrial land into a livable space is commendable. I congratulate Newark for navigating such a difficult project, and I look forward to our new neighbors. But, leaving money on the table is a failure. Impact fees are a source of revenue for all cities. All development projects take a long time. The takeaway for the city council is that they should fairly price the city's products at fair market price so that the public isn't stuck with potential bills.

It appears that all of the development projects underway are locked at low park impact fees. However, there might be opportunities for fee negotiation on these projects should those developers need to make changes to their plans or renegotiate the terms of their contracts. If you want the city to renegotiate a better deal should the opportunity present itself, email the Newark City Council at city.council@newark.org.

Angela Akridge
Volunteer, Newark Parks Foundation
www.newarkparks.org