COLUMN ONE : Desperate Cities Court Developers : Cash-strapped local governments are scrapping policies and slashing fees in hopes of gaining tax revenues. Slow-growth advocates say services will be overburdened.

The pink and aqua coupon makes it clear.

Come, developers, to Moreno Valley and the city will give you a personalized tour, buy you a fancy lunch and--if you decide to build--cut certain fees by up to 15%, a discount that could save thousands of dollars even on small projects.

The coupon is part of an aggressive campaign that the cash-starved city, once the fastest-growing in the state, is using to coax development into the neighborhoods of sagebrush and sand in west Riverside County.

“Before, we were closing doors,” Councilman Richard A. Stewart said. “Now, we’re opening them. Before we were rolling up the carpets. Now, we’re rolling them out.”

As construction in California dwindles to a quarter of what it was at the end of the 1980s, careful urban planning is taking a back seat to survival economics. Impoverished local governments are making it easier and cheaper for developers to build--often reversing longtime practices that sought to soften the impact of rapid growth.

Faced with a lingering statewide recession, they are competing with one another for retail stores and job-rich factories that eventually can generate millions of dollars in annual taxes.

Yet there is a risk in trying to prime the economic pump by rolling back taxes and fees. Cities and counties may end up short of money to build roads, schools and parks--or to pay planners who are supposed to ensure that projects are sensible, manageable and compatible. Shortening the time it takes to obtain development permits could allow projects that are inconsistent with city plans to slip through the regulatory cracks.

Slow-growth advocates, who steadily gained political clout during the building boom of the 1980s, view the trend toward tax and fee concessions as a threat.

“I see developers using the recession as an excuse and trying to get their way more often,” said Encino homeowner and activist Gerald A. Silver, comparing the phenomenon to a supermarket with financial problems demanding that all food and drug laws be taken off the books.

“We can’t subsidize growth,” said Daniel Marsh, a slow-growth activist who has criticized concessions in Modesto and worries that the tax burden will be shifted to residents. “We are getting stiffed. We need more developer fees, not less. Why should it hit our pocketbooks?”

Without adequate fees, critics charge, the result will be congested streets, overloaded sewers and crowded schools--diminishing, rather than enhancing, communities’ attractiveness to developers, home buyers and businesses.

“I think they are going to find that it doesn’t prime the pump, but backs it up,” Marsh said.

Nor are there any guarantees that cities can attract development by selling themselves cheap. It is beyond the power of local governments to remedy much of what ails California’s building industry. It is difficult for developers to get financing when office and industrial complexes built in the boom of the 1980s remain vacant.

“You could lower your fees 50% but I don’t think you’ll see people running to, like, a blue light special,” said Aaron Knox, president of the Moreno Valley Chamber of Commerce.

Still, many cities are doing anything they can to court developers:

* In Burbank, city officials are preparing to gut a growth-control ordinance passed by more than 70% of the voters three years ago. The action comes just weeks after the City Council greased the way for developers by reducing the number of steps needed to get permits. The reasons for such leniency are obvious: House and apartment construction in the city has dropped from a high of about three units per day in 1990 to fewer than three units per month this year.

At the same time, Burbank officials are clamoring to lure 20th Century Fox studios out of west Los Angeles. Some Westside residents have launched their own campaign to stop the studio from leaving, posting “Keep Fox” signs on front lawns and street corners.

* In Los Angeles last year, the Planning Commission slashed nearly 70% from the amount of money developers in Woodland Hills’ glass-towered Warner Center would be required to pay to build street improvements to handle increased traffic. The city hopes to make up the difference with state and federal transportation funds--prompting some to question as to whether the improvements will be made. Developers had complained that the original fees made it too expensive to build in the center.

* In the west Ventura County community of Oxnard, leaders are trying to speed up the development approval process by having different city departments review building plans at the same time. The method is quicker than the old process of each department looking at the blueprints one after the other. “There’s an attitude now of ‘How do we make it work?’ rather than an attitude of regulation,” City Manager Vern Hazen said.

* In Orange County, the Board of Supervisors recently shifted much of the Planning Commission’s responsibility to a single administrator with the hope that it would speed projects through the system.

* In Stanislaus County, where fertile farmland has been overrun by cookie-cutter houses built for Bay Area commuters, planners lowered the fees for building a single-family home from $4,911 to $3,171. Within weeks, Modesto, the county seat, also cut certain fees by 30%. “We can’t continue business as usual,” Mayor David Cogdill said.

* On the state level, Gov. Pete Wilson’s task force on competitiveness is looking for ways to make building cheaper and less complicated by simplifying the cumbersome permit process.

California’s reliance on developer fees has its roots in the 1978 passage of Proposition 13, which slapped severe limits on property taxes. Cities and counties turned to fees to cover their costs, placing an ever-increasing financial burden on the backs of newcomers.

The result is that California has become a far more expensive place to build than other states that are marketing themselves as cheap alternatives. States such as Arizona and Nevada have aggressive programs to steal development from California with promises of low or no fees, quick approvals and few restrictions. At least eight states have business recruitment offices in Los Angeles.

“We have a game of musical chairs in which localities are merely bleeding one another in a competition to attract growth and development,” said Harvey Molotch, a UC Santa Barbara sociology professor who has studied the effects of growth control on economic health. “In the long haul, it lowers the quality of life for the country as a whole.”

Even so, buzzwords like expediting and streamlining lace the conversations of California city planners, while the talk at city council meetings turns toward “treating developers as customers.”

“It used to be in the ‘80s if I came in to the Planning Commission and argued economics, they would say, ‘We’re just looking at planning issues. Don’t talk about jobs and the economy,’ ” said Benjamin M. Reznik, a Sherman Oaks land-use attorney. “Today the opposite is true.”

The downturn has been felt with particular severity in Moreno Valley, a bedroom community on the edge of the desert that exploded with almost 4,000 new homes a year in the late 1980s, making it the fastest-growing city in the state. Attracted by cheap and abundant land, developers rushed to do business in the city. Half the city’s general fund came from fees, including money for fire and police protection.

“This was a boom town, living off the revenue of fees,” city spokesman Clarence Brown said.

When the recession hit, the developers disappeared and so did a big chunk of the city’s budget. In 1989, the city had a $16-million cash reserve, city Finance Director Rick Teichert said. But that has dropped to $2 million as city officials have raided it in the last three years to balance budgets. At the same time, the city laid off employees, including almost half the 80-person building and planning staff.

“We’re scraping the bottom of the barrel looking for sources of revenue,” Councilman Stewart said.

In need of money to prevent even deeper cuts in the Planning and Building Department--cuts that could drive away developers by delaying permits and inspections--city leaders raised developer processing fees by an average of 20%.

Even with that increase, fees for commercial and industrial developers, already exempt from some major charges, remain lower in Moreno Valley than other competing communities. And for developers the city really wants, the fee increases are offset by the pink and aqua coupon.

The city targeted 500 industrial and research and development firms that it hopes to attract with the innovative vouchers. Under the offer, a business that creates up to 25 jobs within two years can use the coupon for a 5% discount on certain fees. A business that generates 50 or more jobs in the same amount of time could get a 15% break.

The city sent the mailers primarily to companies in Los Angeles and Orange counties that had at least 25 employees and had grown at least 25% a year for the last five years.

The coupon is not necessary for the deal. Any company that meets the criteria is entitled to the discount.

The purpose is to bring in jobs that would provide balance after the housing boom of the 1980s--the sort of development that puts pressure on police and fire protection without contributing much to city coffers.

The city also is trying to entice developers by making the complicated approval process, which can take several months, simpler and faster. The staff plans to recommend early this year that the City Council eliminate some public hearings “on minor things,” King said.

For instance, even as Economic Development Director Linda B. Guillis was negotiating conditions for a Price Club warehouse discount store, planners in the next building guided the project through the necessary steps to gain the required permits. And when construction began, building inspectors were made available around the clock to prevent delays.

“The Monday after the Friday we finished negotiations, we broke ground,” Guillis said. “We think that’s a real accomplishment. They were open in a little more than three months.”

Burbank is pursuing similar tactics.

When Lockheed Corp. announced that it was leaving the city that depended on the twin economic engines of aerospace and entertainment, local officials scrambled to slap together a vision for the company’s nearly 300 acres. Plans called for an office and research district that would bring high-paying, high-tech jobs to Burbank.

To that end, the city late last year agreed to sell a parcel of city-owned land from the former Lockheed site to a software company for $2.3 million less than it paid the aerospace company. To keep Cadam Inc. in the city, officials also agreed to give up about $1.25 million in property tax revenue.

The payoff is that the company, an IBM subsidiary, will bring 250 jobs to Burbank.

City officials also have loosened provisions of a 1990 ordinance meant to control residential development.

Critics charge that the city is shortchanging itself. “Developers should pay their own way and it should not be up to the community members to pay for new development,” said Mary Lou Howard, a former Burbank city councilwoman. “In the long run, the taxpayers will be picking up the tab. I don’t think that’s appropriate.”

In Los Angeles, the city Planning Commission approved a plan to guide growth at Warner Center that relies heavily on public money to finance improvements that are required as a result of construction.

When developers complained that fees charged for street improvements were too high, commissioners slashed them from $16,000 to $5,000 for each new daily car trip their projects would generate. Developers and their attorneys argued that state and federal transportation funds could pick up the slack.

They also said that plans to extend a rail line into the center made city traffic projections outdated. Yet it may take up to 30 years for rail projects to connect Warner Center with downtown. Critics fear that improvements needed to accommodate increased traffic will not be made.

Months after they approved the blueprint for Warner Center, planning commissioners rejected proposed fee increases that would cover the cost of routine inspections and reviews of project plans throughout the city. Commission President Theodore Stein said that raising fees now would send the message that Los Angeles is not eager to attract business.

Business people in Modesto likewise complained about how much it cost to develop property in the burgeoning San Joaquin Valley town.

In the 1980s, Modesto was one of the first cities in the region to start a comprehensive fee system to make developers pay their own way, funding roads, fire stations, parks and other facilities.

“We had the dubious distinction in the late ‘80s of having the highest fees,” City Manager J. Edward Tewes said.

When growth--which had been twice the state average--came to a standstill, the City Council slashed most fees by at least 30%.

Some traffic signal projects and interchange improvements were axed from the city’s list of long-range public improvements. Other projects, it was hoped, could be paid for by a proposed half-cent sales tax or by federal transportation funds.

Local leaders stress that cutting the fees, one of several recession-fighting measures, was a necessity in a county where the median income is 85% of the state average and where the unemployment rate reached 18% last summer.

“The issue isn’t developers and avarice and homeowners wanting to put up the drawbridge,” Tewes said. “It’s a legitimate concern about economic development and jobs for our people. We need to get new industry in here.”