Friday, December 16, 2005

Impact Fees, Chapter 2: Nothing Is Simple

If you’ve checked the comments on my Dec. 9 post "The Hottest Story Going," you’ll see a lot of pro-con about impact fees. Jonathan Marshall, commerce director for Cabarrus County, shares this:
"Statements like this one from your blog – 'Usually, though not always, the cost of the fee is included in the price of the house you buy or apartment you rent' – are too often made without challenge. There is considerable research on the subject and it is not that simple. Ironically, one of the best summaries of that research is a document prepared for the Charlotte-Mecklenburg Planning Commission in 1990 by Duncan & Associates. ... The section that addresses it most directly is Chapter VI."
What the report says is that researchers differ on whether impact fees and impact taxes end up being passed on to homebuyers or passed backward to whoever sells land to the developer, and that other factors come into play, too, such as whether neighboring jurisdictions have impact fees, and whether the market is booming or sluggish. In other words, financing is complex.
That 15-year-old report, "Infrastructure Financing Techniques" is one I wrote about a year ago: "A 14-year-late debate," Oct. 2, 2004."
I described how it was quietly decided by someone in city government in 1990 to instruct the consultants, Duncan & Associates, not to actually make any recommendations about how to finance infrastructure.
I guess city staff types (or politicians?) were worried they’d recommend impact fees or land transfer taxes, both of which the local developers’ lobby treat with the affection they’d show Karl Marx. (Publicly. Privately it’s not hard to find developers who think impact fees might be better than the current unpredictable system of what they dub "extractions.")
Impact fees obviously wouldn't be a silver bullet to kill all growth and funding problems. After all, Wake County has them and they're still looking at some painfully expensive school-building needs. But notice: Impact fees don't seem to have slowed Wake County development, or Chatham County's either, the way developers here – and their politician mouthpieces
– would have you believe.


Anonymous said...

In North Carolina, it seems that the term "impact fees is a dirty phrase or is taboo. Why is that? Almost every other fast growth state uses impact fees to help "balance" the costs of accommodating new growth. Do you think these places would have implemented these impact fees if it would have chased growth away? Did growth stop in places like Florida which has used impact fees for 20 years? Did you know that over 60% of all communities in the nation with more than 25,000 residents use impact fees? I mean even Georgia has impact fees. In a day and age when we profess "fiscal responsibility", I cannot think of anything that is more fiscally responsible than using impact fees to help pay for growth so existing residents do not have to subsidize new residents. North Carolina is a fast growth state that is falling behind on roads, schools, and parks because they won't implement impact fees. That is shortsighted and fiscally irresponsible.

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