BUSINESS WATCH:

Newport-Mesa housing developers had mixed reactions to the county’s decision to postpone the collection of housing fees this week, with some saying the move would help pull the industry out of its slump and others criticizing it as a superficial gesture.

The policy was the result of a unanimous vote by the Board of Supervisors on Tuesday, which said it hoped collecting county fees on development at the end of the project would lower upfront costs and accelerate housing development in the flagging market.

Depending on the cost of the home, county fees can be as high as $45,000 a door, developers said — a serious cost that can amount to about 10% of a new housing tract.

“I think that anything that defers costs to builders until the end of the project helps, especially with upfront loans,” said Newport Beach-based developer Garrett Calacci. “If you can defer even $10,000 or $15,000 to the back end, you don’t have to pay interest on the loan. That can help your bottom line.”

But Kerry Vandell, who heads UCI’s Center for Real Estate, said that while the move could solve some problems, it ignores the market’s larger problem — namely, a general decline in demand for new housing, as high-end buyers either wait for the market to bottom out, or lower-end buyers wait for a safer economic climate.

“There are certain areas that have vacancy rates much higher than the national average, and that suggests an overbuilding situation,” Vandell said.

“I don’t know why we’d want to encourage more product; that just means it’s a longer time before the market gets back into balance and home builders can make a profit again.”

Patrick Young, an independent real estate investor who has worked in the Newport-Mesa area, said he appreciated criticisms that the move favors the supply-side, but said he expected the market to pick up within the next 12 months, meaning a commiserate rise in demand would be able to meet increase in home building.

“I would say the housing market will probably have a different character to it a year out, and I think people standing on the sidelines will come out [and buy homes],” he said.

“[The fees] aren’t insignificant; it’s something that would be added to the list of things we consider before we start building homes,” he added. “Any time you could defer a cost from the front end to something closer to the rear end of the cycle, it has a positive effect on your profitability.”

“The real problem is, right now, nobody’s buying,” said Costa Mesa-based developer Bill Fancher. “Even if you have the money, you’re taking a wait to see, that’s the way everyone I know in the industry is behaving.”

CHRIS CAESAR may be reached at (714) 966-4626 or at [email protected].