Dispute over developer fees gets heated

Three developers, lawyers bring cases to Lodi City Council

A nearly year-long dispute over who should be responsible for millions of dollars in development fees and whether or not the fees have been properly assessed led to a heated debate during Wednesday’s Lodi City Council meeting.

Since April of 2018 representatives of FCB Homes, Browman Development Company (BDC) and Elliot Homes have met to try and reach an agreement over fees that Browman and Elliot say FCB agreed to pay but has yet to do so. FCB says that they are willing to pay improvement fees totaling $744,834 but they feel that they are unfairly being asked to pay millions in construction fees that they shouldn’t be responsible for.

Unable to settle their differences, the developers brought their beef before the city council, including an attorney representing FCB, hoping to find a resolution.

Lodi Public Works Director Charles Swimley gave a presentation to council members that included background on the contentious agreement reached by the developers years ago.

In 2014, the three development firms mutually agreed to pursue a cost-sharing development pact over property located west of Lower Sacramento and south of Kettleman Lane.

The 303-acre property was split into 25 parcels to be used for a housing development by FCB, the Sunwest Village shopping Center by BDC and the Villa Fiore subdivision by Elliot Homes.

Through the cost sharing agreement, FCB obtained 181.78 acres of the property that was split into two developments, BDC acquired 32.36 acres and Elliot 68.73 acres.

With the three parties agreeing to move forward with the cost sharing agreement for reimbursement fees, the City of Lodi stepped away and allowed the developers to negotiate a contract that would asses the cost for each project. Browman fronted the money to get the project going with the understandng that Elliot and FCB would pay back their share of the fees.

But before any fees are imposed on a developer, the city must asses the project and the property and compose a list of improvements that will be required to develop the property and a cost estimate for the work. Once a developer agrees with the findings, they are responsible for paying the fees before breaking ground on the project.

The contract between the city and the developer is known as a developer reimbursement agreement, which is a written contract between the city, as approved and executed by the city engineer, and one or more property owners. The agreement provides for construction of municipal improvements and for partial reimbursement to the party responsible for improvements such as streets, storm drains, sewage lines, industrial waste and water lines.

City ordinance also requires developers to pay construction fees, which are costs associated with land easements, labor, materials and installation as needed to make sure that a project complies with city standards and codes.

In this case, the city’s report concluded that the total reimbursement amount for the project was $6,171,648, with BDC responsible for $1,917,150 in fees, Elliot responsible for $1,060,624 and FCB responsible for $2,659,908.

However, Tom Doucette, president of FCB Homes, did not agree with the findings in the engineer's report and contested the reimbursement agreement, stating that he believed he was being charged for indirect fees that were not associated with his development project.

Doucette, one of Lodi’s most prolific developers in recent decades, says that he should only be responsible for the improvements associated with his project, not the construction costs. He argues that the Walmart shopping center developed by Browman adjacent to his housing subdivision was responsible for most of the construction costs related to the overall development.

During Wednesday’s meeting Steven Herum, an attorney representing Doucette, became heated in questioning the city’s report and argued that the city is not properly enforcing its codes.

The city council was asked to evaluate the definitions of Improvement and construction costs via government code set by the state of California, not the City of Lodi.

Darryl Browman, the president of the Browman Development Company based in Walnut Creek, angrily addressed the council, requesting they Doucette be held accountable for his share of the reimbursement fees.

“We have done business in this community for 30 years, we have had a good respectable relationship with the city,” Browman said.

Despite Wednesday’s heated exchanges, Doucette believes that he is justified in questioning the city’s ordinances and notes that he has never encountered difficulty in developing a property or paying reimbursement fees.

“This is about setting a precedent on this project and future projects,” Doucette said.

The city council will revisit this topic in a shirtsleeve meeting scheduled for 7 a.m. on March 12.