Windsor to ease development fees

To encourage economy-boosting hotels to bed down in Windsor, the Town will implement a loan program to help hotel projects mitigate burdensome development fees.
At a meeting held on Dec. 3, Town Council authorized the creation of a development impact fee program, which would allow hotel projects to pay development fees over a period of five years, rather than upfront. Payments would begin the month after a certificate of occupancy is issued for the project.
As they stand, development fees can significantly increase the cost of a development project, Town Administrative Services Director Heather Ippoliti said in a report given to Town Council on Dec. 3. “In light of the economic downturn, the construction of hotels and other similar projects has become economically challenging when impact fees are factored into the cost of construction,” she said.
Ippoliti referenced a similar financing program that had been adopted in 2002 for water reclamation fees in the downtown area, which was geared toward encouraging economic development in Old Downtown Windsor. The program reduced upfront costs for restaurants, hotels and other visitor-serving businesses in the area.
In a subsequent email, Ippoliti said that staff looked to a development fee deferral program run through the city of Healdsburg as a model for the Town’s program.
“Through absence of redevelopment funding or other public funding assistance, having some fee relief is one incentive the Town can possibly offer,” Ippoliti said in her report, adding that hotels’ overnight visitors generate gas tax and support aspects of Windsor’s business economy, such as local restaurants and retail stores. She anticipates that deferral of fees would have marginal negative impacts on the Town’s resources.
The program would allow participating developers to pay fees over a 60-month period, with the loan accruing interest at a fixed rate equal to the Wall Street Journal Prime rate. Fees that can be financed through the program include water and sewer capacity charges; drainage, park and traffic impact fees; and public facilities fees. Fees ineligible for financing include building permit fees and plan check fees.
Nick Desai of Windsor’s Holiday Inn Express and an upcoming Holiday Inn project located off of Old Redwood Highway requested that the Town look into the program. Ippoliti said that Desai is the only developer who, as of yet, has shown interest in the program.
Town councilmembers all expressed support for the program at their Dec. 3 meeting and voted unanimously for its approval. “It’s something that we need to do to… not only help the Holiday Inn, but also to attract a boutique hotel on the Town Green and any other hotels that we can get, Town Councilmember Deb Fudge said. “We’re a secondary market to all of the high-dollar tourism that’s coming into Healdsburg and we’ve got a definite niche where we can serve the tourists that can afford something less than a 5-star.”
“It’s an investment,” said Town Councilmember Sam Salmon. “All our investments have a certain risk, even the most solid ones. The economy is the driver, but this is an investment in things that I would like us to really promote: visitation, tourism and that sort of thing.”
According to Ippoliti, the Town plans to use the limited program to inform whether or not it may be expanded beyond hotels in the future. “As far as financing impact fees for other types of development, we would like to implement this limited program and gain experience on the impact of the program before considering expansion,” she said. “In the end, expansion will be a decision for Council.”
While Ippoliti is not aware of any additional hotel projects “in the pipe,” she said there is hope that the program will increase interest among developers.
Staff would review each application and weigh the risk of default based on the applicant’s credit-worthiness to inform their recommendation to Town Council. All applications and loan agreements would return to Town Council for final approval.