The city of Los Angeles is failing to charge developers tens of millions of dollars in impact fees, and appears in some cases to have left millions of dollars in fees it has collected unspent, according to an audit released Thursday.
“Development impact fees are some of the most important tools the state has given us to make the infrastructure improvements our city so desperately needs,” City Controller Ron Galperin said. “These fees should be applied fairly and consistently, and should be spent wisely in the public interest.”
According to the audit, Los Angeles had $5.3 billion in permitted construction projects in the 2013-14 fiscal year, but collected less than $5 million in impact fees. By comparison, during that same fiscal year, San Francisco had $3.6 billion on construction and collected $96 million. Portland had just $1.5 billion in construction but collected $31 million, according to the audit.
Cities are permitted under state law to charge developers fees to the impacts of their projects — such as increased police and fire protection, traffic mitigation and public facilities such as libraries, parks, public art, child care and affordable housing.
Galperin said the city has a “haphazard” approach to applying and collecting the fees, causing confusion for developers and costing the city millions.
The audit also identified $54 million in impact fees that had been collected, but the money has been sitting various accounts with balances that haven’t changed substantially in three years, indicating the city wasn’t spending the money. Leaving the money unspent could open the city to legal challenges that could require the funds to be refunded, according to Galperin’s office.
“The city’s haphazard application of the fees Thursday is unfair to communities and to developers,” Galperin said. “Both have every expectation that the city will apply fees consistently and spend them to mitigate the impacts of development on our neighborhoods.”
The audit recommends that the city establish a comprehensive impact fee program and designate one department to take responsibility for ensuring the funds are properly used.
— Wire reports