VISTA - The city will raise the traffic fee for developers for the first time in 14 years, but to soften the blow, the changes will be phased in over 12 months, City Council members said this week.

The first increase will take place in July, and by the summer of 2008, Vista's traffic fee will be almost 40 percent higher than they are now for residential projects, more than double for industrial projects, and even higher for commercial projects, a city report shows.

The council approved the fee increase in a 4-1 decision late Tuesday night. Money raised through the fee pays for road improvements and new traffic signals.

Before the vote, building industry officials and business advocates warned that a sudden fee hike could have a chilling effect on local development.

In the end, the city's decision to phase in the higher fee over one year, then review the fee every three years, was something of a compromise. The Building Industry Association of San Diego had suggested phasing in the increase over four years; city staff had recommended the increase take effect all at once.

Vista Chamber of Commerce's chief executive, Jim Baumann, said Wednesday that "only time will tell" whether the increase will scare developers away.

Jerry Livingston, staff counsel for the Building industry Association, was more pessimistic.

"On the commercial side, especially retail, the dollar numbers are almost cost-prohibitive," Livingston said Wednesday. "I'm not sure how much more commercial development they're going to get."

City staff members said that by choosing to increase the fee gradually, the city could lose out on some potential revenue. How much depends on how many developers pull permits in the next year.

"You can't predict what's going to come down the pipeline," Community Development Director Robin Putnam said.

Councilman Frank Lopez, who cast the dissenting vote Tuesday, said he wanted the increase phased in over a longer period. He said Vista is now on the road to creating an unfriendly business environment.

"We are going to be sorry that we did this," Lopez said.

But other council members said the hike was a necessary evil and long overdue.

"We continue to put this matter of increasing fees to a later date. … As a result, we never seem to get it done," Mayor Morris Vance said.

The city's traffic fee is based on the number of "vehicle trips" that a development is expected to generate on surrounding streets. Under the plan approved, the fee for a 6,000-square-foot restaurant will increase from $29,790 to $172,586, according to a city report. For a 40,000-square-foot strip mall, the fee will jump from $79,440 to $460,229.

The higher fee will put Vista closer to other cities along the Highway 78 corridor - lower than in San Marcos and higher than in Escondido, the city report states.

Developers who had submitted a planning application to the city by July of 2006 will be subject to the old fee, city staff said.

Years ago, city officials thought they could lure attractive projects to Vista by keeping fees artificially low, but instead, the city was stuck in a lose-lose situation, Putnam said.

"We haven't been able to keep up with our road improvements and we haven't attracted the type of quality development that we really were hoping to develop," Putnam said.

The traffic fee is the second in a series of development fees that city staffers plan to revise, officials have said. In summer 2005, the council increased the amount builders pay toward park improvements. Public facility and fire fees should appear on the agenda later this year.

"In some categories, the increase may be drastic, but that's the result of not increasing fees in over 14 years," Deputy City Manager Patrick Johnson said.

- Contact staff writer Craig TenBroeck at (760) 631-6621 or ctenbroeck@nctimes.com.