Posts Tagged ‘Impact Fee’

11th February
2009
written by JHiggins

Yesterday, I had the opportunity to have a front row seat at the problem facing the City of Tucson.   Along with 150+ supporters, I attended the Mayor and Council study session on a proposal to waiving impact fees. Under the plan new commercial and residential  construction projects would be waived in city limits for one year. The goal of the proposal is to take a small step to get people back to work and get the local economy moving again. 

The entire circus focused around who proposed the idea, how the idea was proposed (in the media) and how it needed to go through the meat grinder of a community panel before it could merit consideration. 

Glassman had a fully orchestrated event starting with a good old fashioned  construction worker rally out front. Inside the saga got even better, speakers from the city departments and industry were paraded up to explain the budget effects of  waived impact fees on the general fund.  

The drama started with a few protesters out front with their own signs calling for ‘Casas Por La Pobre’ – and ‘Don’t Waive Impact Fees’. The events carried into the chambers with a handful of ‘tax the rich to give low income housing options to the poor’ activist to remind the council members how they got elected and that if they wish to get reelected they had better squash this idea. The remaining Council members gave the activists all the sweet buzz words that they could handle. 

When the other council members got their chance to speak each one of them proceeded to dress down Glassman for breaking the code. The code is ‘play nice and get things done, deviate from the herd and we’ll eat you!’  

This proposal to waive impact fees was clearly  a departure from the norm. It was one council members nod to the business community, we’ve been asking for support and one person listened.  The idea was admittedly brought to the council by the growth industry (SAHBA apparently gave the idea to all the council members, Glassman ran with it), but it was an idea that has merit.   

Romero called for a panel made up of Chicanos Por La Causa, Habitat For Humanity, Casa Maria (the soup kitchen for the homeless), Sonoran Institute (environmental lobby), a historic neighborhood representative, low income housing representatives, city staff and anyone else that may oppose anything remotely related to the big bad growth lobby. I guess the Council hasn’t put the pieces together to realize that the workers that supposedly will start bringing home a pay check are the people that live and raise families in the City of Tucson.  Those pay checks allow families to buy homes and the cycle continues.

Scott called for a affordable housing trust fund that developers would pay into to build housing for the poor. Her other option was to mandate a set aside from each housing development for low income housing. Sounds strangely close to the County mandating developers buy open space miles away from their projects to get the zoning they are looking for. We will all end up paying for these quid pro quo deals in increased housing prices and less inner city development taking place. 

Right or wrong this community lives and dies with the growth industry. Unless or until we diversify our economic base we will be dependent on people moving in and buying new houses.  The idea to waive impact fees was not the end all to be all. It would have an economic incentive to get things moving but more importantly it would send a message to the citizens that our leaders are trying something. Now more than ever the message need to come back  that ‘we feel your pain and want to help.’

Glassman took and idea and ran with it. There were holes in the program but as our new president said on Monday,

“The plan is not perfect,” the president told reporters. “No plan is. I can’t tell you for sure that everything in this plan will work exactly as we hope, but I can tell you with complete confidence that a failure to act will only deepen this crisis as well as the pain felt by millions of Americans.”

 

What this council needs now more than ever is a leader. A member who is willing to step outside the pack and shake things up.  This ‘go along to get along’ mentality from the group continues to hurt the City of Tucson. We are loosing opportunities, jobs and creating a permanent lower class. It’s a good learning experience for Glassman. Let’s see if these events bring him back into line or if he steps up for what is best for the community as a whole, not just a vocal minority.

 

February 11, 2009, 12:27 a.m.
CARLI BROSSEAU
Tucson Citizen

After a protest, a counterprotest and an emotional volley of political barbs, the City Council voted unanimously Tuesday to form a committee to study local economic stimulus strategies.

The debate was ignited a week ago when Councilman Rodney Glassman put forward a proposal to suspend most fees levied on developers to cover the infrastructure costs of growth, commonly known as impact fees.

The idea, he said, was to create jobs and jump-start the ailing economy.

Glassman submitted letters of support from builders and environmentalists, about 150 of whom rallied for the proposal in the hour before Tuesday’s study session.

But the proposal was sidestepped by Glassman’s colleagues who were angry, saying he took credit for an idea other ward offices were exploring and put a divisive debate center stage.

Councilwoman Regina Romero called the proposal a “political gimmick” that forced a “win-lose situation” in which developers benefited at the cost of affordable housing and neighborhood goals.

Councilwoman Nina Trasoff described Glassman’s presentation as misleading, saying that his “lawyerly asking of questions” led to “half truths.”

Councilwoman Shirley Scott presented the compromise task force plan that outlined a dozen groups to participate and set a 30-day time frame.

The task force will consider proposals to delay or suspend impact fees and to allocate some developer fees to affordable housing or mandate that developers build affordable housing into plans. It is also free to weigh other options.

The group’s discussions will be coordinated by the Metropolitan-Pima Alliance, whose members are largely in the building industry.

Among the proposed task force participants are the Southern Arizona Home Builders Association, Tucson Association of Realtors, Habitat for Humanity, Sustainable Tucson, the local plumbers and pipefitters union, the Neighborhood Infill Coalition and a historic neighborhood representative.

Also at Tuesday’s study session, the council announced plans to buy part of the West Side hiking mecca Tumamoc Hill and to accept liability for an old landfill there. The decision was key in years-long wrangling between the city and Pima County aimed at designating the hill as open space.

In another announcement, the council appointed Deputy Finance Director Silvia Amparano to be interim finance director. The former director, Frank Abeyta, resigned two weeks ago after holding the position for less than two months.

A decision on how to proceed with selling about a third of city’s yearly allocation of Central Arizona Project water was delayed until next week.

28th January
2009
written by Mike

Builder says fee hike comes at worst possible time

By Patrick McNamara, The Explorer

Published:

January-28-2009

The cost of a new home in Oro Valley just got higher.

Last Wednesday, Jan. 21, the Oro Valley Town Council voted 6-1 to raise residential and commercial development review fees.

Councilman Al Kunisch voted against the increase.

“I think this is the wrong time,” Kunisch said about the increase.

The councilman noted the lagging economy nationwide and the nearly stagnant home-building sector of the local economy.

Last October, for example, the town approved four single-house building permits, as opposed to 18 approved the previous October.

Other town officials, though, said the increases are necessary to cover personnel costs.

“We need to get back every penny and dime that’s spent out,” Councilwoman Paula Abbott said at last week’s meeting.

The new price structure would increase the costs for development review of a 100-unit subdivision from $19,945 to $73,310. The fees have not been changed since 2003.

In fiscal 2008, development review services generated more than $2.7 million, but the department’s total expenses topped $3.2 million.

At least one Oro Valley homebuilder, however, questions that rationale.

Why have they randomly chosen that development services should be self-sustaining when no other departments are?” asked Steve Solomon, owner of Cañada Vistas Homes.

Solomon said the town should use money generated through its 4-percent construction-materials sales tax to make up the shortfall.

Currently, construction sales taxes go into the town’s general fund.

At Solomon’s 128-lot Vistoso Town Center housing development, under construction in Rancho Vistoso, he’s already paid more than $250,000 in construction sales taxes.

“That more than covers development services for that project,” Solomon said. “It’s ludicrous to say that developers aren’t paying enough to the town to cover expenses.”

But it’s not just how the new fees and recently increased impact fees, which made it more expensive to build in Oro Valley, that have him concerned. He thinks the policies will have unintended consequences.

He thinks the ever-increasing prices will force out small builders like him and leave room only for national builders.

“I’m afraid that what it’s going to result in is that the large national builders who have deep pockets will be the only ones left building in Oro Valley,” Solomon said.

He speculates that if that happens, the town would lose its unique qualities and begin to resemble many other communities around the West, where most of the houses look the same and are built on smaller lots.

Others question the timing of the new fees when the construction industry across the country has come to a near standstill.

“I would advocate for any type of fees to be postponed until the industry gets back on its feet,” said David Godlewski of the Southern Arizona Home Builders Association.

Last December, Godlewski and SAHBA sent a letter to town officials requesting they seek alternatives to the then-proposed fee increases.

The group calculated that the change would amount to a four-fold increase in development review fees and would disproportionately affect local builders.

They proposed phasing-in the new fees over two years or, like Solomon suggested, using construction sales tax money to supplement development review departments’ budgets.

The council did not discuss any of those options at last Wednesday’s meeting.

Solomon also questioned the timing of the increases, noting the difficulty of securing funding in the midst of the current banking difficulties.

“Right now, it’s nearly impossible to get any kind of funding for construction,” Solomon said. “The financing is totally dried up.”

Putting new fees on building now, Solomon argued, would only further harm a struggling industry that, until now, had been a major part of the regional economy.

“That $2 billion economic engine is completely gone,” Solomon said.

Cost of building in Oro Valley

The Oro Valley Town Council voted in September to raise water impact fees and launch additional fees for new home construction. These prices don’t reflect the costs of development review services.

Fees for single-family homes are:

• $2,699 for parks and recreation

• $694 for libraries

• $513 for police

• $389 for other government needs

• $1,908 for transportation projects

• $7,749 for water*

• Total: $13,952

*Includes two categories of water-related fees. The figures represent the cost for a single-family home with a 5/8-inch water meter. More than 80 percent of Oro Valley Water Utility customers have that size meter. The existing water fees totaled $4,283 for a single-family home.

14th December
2008
written by Arizona Kid

Oro Valley is looking to increase impact fees considerably. An impact fee levied on new construction is a tool that governments use to allow ‘growth to pay for itself’. An impact fee assessment is politically popular with current residents (voters) but always lobbied against by the growth industry.  Most regions have found a healthy balance between the two. Oro Valley’s impending increase more than triples current jurisdictions fees.  Below is a discussion about impact fees and housing affordability.  Long story short, the current residents of northern Pima County and Oro Valley are going to get a HUGE bump in their home values.

 

From AntiPlanner.com

Impact Fees Are the Wrong Tool for Any Job

posted in Regional planning |

In The Vanishing Automobile and Other Urban Myths, I suggested that impact fees might sometimes be a good way for cities to pay for the costs of growth. I have since changed my mind. Impact fees are bad under any circumstances.

I was persuaded of this when I reviewed housing affordability in urban areas across the country. I realized that the cost of existing homes closely tracks the cost of new homes. So when government regulations or fees increase the cost of new homes, the price of existing homes also rises.

 

 

Will the taxes paid on this new home pay for the services its residents consume?

Impact fees may add to municipal revenues. But they also create windfall profits for sellers of existing homes. Since existing homeowners tend to be wealthier than first-time homebuyers, these windfall profits turn out to steal from the poor and give to the rich.

Studies show that the demand for new housing is inelastic, an economic term meaning that a small change in the supply leads to a large change in the price. One way of looking at this is that people need a place to live and will pay what it takes to get one.

Let’s say a city imposes a $25,000 impact fee on the cost of new homes. The price of housing may not immediately grow by $25,000. Instead, builders may slow the rate of construction a bit because they fear some homes won’t sell at a $25,000 higher price. This contraction in supply leads to a large increase in price. Pretty soon, home buyers are paying pretty close to $25,000 more for all homes in the market.

Of course, if people have an alternative, such as buying homes in an adjacent city that hasn’t imposed an impact fee, they may do so. But as one city in a region imposes impact fees, others see the revenue possibilities and soon follow suit. Pretty soon all housing in the region is less affordable.

Impact fees are often based on claims that growth, particularly low-density development, doesn’t pay for itself. But the studies that reach this conclusion are faulty. They typically find that the cost of providing schools and other services to a new residential area is greater than the taxes those residents can be expected to pay.

If this same method were applied to existing neighborhoods, however, it would produce the same result. What they miss is that retail, commercial, and industrial areas also pay taxes, and those taxes are generally much greater than the services they consume. Why? Because all of them pay taxes for schools, yet only residential areas “consume” school services.

Even if it were true in some area that growth does not pay for itself, impact fees are the wrong solution because there is no guarantee that the buyers of new homes are newcomers or that newcomers will buy new homes. Thus, the impact fees fail to target growth.

The other problem with impact fees is that there is no guarantee that the collected fees will actually be used to provide transportation facilities for the people paying the fees. A true user fee gives both the users and the producers signals about where new facilities are needed and how much they cost. Impact fees do not provide such signals.

For example, many cities use impact fees for transportation. But there is no assurance that the people who use the facilities built with those fees will be the ones who paid the fees.

User fees — fees for actually using a good or service — are the best way to pay for things. This means water fees for water actually consumed, road tolls for actual driving on the roads, and so forth. Impact fees are not really a fee; they are a tax because the people paying the fee are not necessarily getting something in return.

If true user fees cannot be used to pay for something, the next-best choice is a property tax or some other tax that pays for things over time. Say a city needs to install new sewage facilities to handle new residences recently built in the city. There is no particular reason why those facilities will cost any more than the facilities serving existing residences, and the same sorts of taxes that existing residents pay can be used to pay for the new facilities. Paying for them over time will not inflate the cost of the new homes and thus will have no impact on the general affordability of the region.

In general, growth does pay for itself. In particular, impact fees do far more harm to a community or region than good. Cities should replace such fees with other forms of revenue or, better yet, cut the fat out of their budgets so that they can live on existing revenues.

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