Impact fees: The question is simply 'how much'

Mike Burns

October 18, 1998

IMPACT FEES. Too little? Too much? Too late?

Impact fees. Yawn. Don't affect me. What are they?

Fact is, building impact fees seriously influence two primary concerns of Carroll County residents and government: taxes and growth.

The fees are charged to builders for each new house (apartment, townhouse) constructed; that cost is, naturally, passed on to the homebuyer. The money is to pay for the county's existing public infrastructure costs -- schools, roads, parks, public safety -- that are apportioned to the new dwelling.

Since 1995, the fee has been $4,487 for any new single-family home, regardless of the value or cost of the building.

This month, a majority of the county commissioners said they would raise the fee by a nominal 6 percent, to $4,744. Not surprisingly, the two men in favor are not running for re-election -- Nov. 3.

Slow-growth advocates say the fee is well below the cost of providing a new homeowner with community facilities, perhaps only 75 percent of the true cost.

It has created a significant backlog of needed public works and school projects that can't be financed from current revenues. A home costing less than $200,000 does not pay its full share of facilities and services; the average home (new and used) sells for about $160,000 in Carroll.

Pro-growth spokesmen say that the fee is too high and it defeats the public goal of more affordable housing in the county. All residents should share the burden of public facilities and services.

Let's concede that there's no precise way to apportion the public's cost of a new home. It depends on the type and number of people who live in that structure: single persons, large families, retirees, home-business operators, job commuters, etc.

The impact fee is an effort to quantify an average cost of public services and facilities, regardless of the cost of the property and structure. Instead of worrying about the exact cost and fees, discussion should focus on the magnitude, and the underlying belief, of that county fee.

A losing proposition

There's an oft-heard generalization that the average house creates $1.10 or so in demand for public services for each $1 the household pays in fees and taxes. So housing is, on average, a losing proposition for government. But that's not always the case.

The broader question is whether a community chooses to be residential, and pay for the public costs in higher resident-based taxes and fees, or whether the community chooses to be committed to expanding business growth, where the services demanded is said to be much less than the taxes paid.

Most politicians argue for a proper balance of the two, even as they oppose higher resident taxes and acknowledge the uncertainties in economic development. Some suggest that homebuilding is such a powerful economic engine ($80 million a year) that it should be encouraged to grow, despite long-term consequences for occupants of those houses.

The debate over the validity of impact fees in general, has faded from the political scene. Especially in Carroll County, amid a boom in residential development and a projected 50,000 population increase by 2020, the overwhelming feeling is that newcomers should pay upfront a share of the cost of public facilities.

But the controversial county Master Plan for land use, three years in the making, sets conflicting goals for Carroll's future. That's one reason it was tabled until after the election.

The plan envisions a one-third increase in county population, along with the paid-for preservation of 100,000 acres of farmland and an increase in the industrial-commercial tax base (now 12 percent). It proposes affordable housing, while lamenting the rising costs associated with sustained residential growth, and a reduction in traffic volume.

Impact fees can direct those developments, but only to a limited extent. Whether the fee should be $4,000 or $6,000 is a matter of only $2,000 for a new single-family home that frequently costs more than $200,000.

Hardest hit are less-expensive new houses for first-time buyers, which leads to the argument for affordable housing.

No entitlement to new home

But there is no entitlement, no right to "affordable" newly built housing. Other generations have struggled and saved to buy a home, typically a used one.

Federal and state programs can help first-time buyers to clear the hurdle. But impact fees are a part of community participation. You pay it in rent ($1,784 per new apartment) or home price -- if you want to live here.

Some worry that longtime Carroll residents will pay the fee every time they move to a newly built home. That's not very often and not very common.

The bottom line is that Carroll must raise the level of impact fees if it wishes to catch up on a list of existing, basic public needs from new schools to traffic improvements. Given the size of that wish list, it's also going to require higher property and/or income taxes to make a serious impact.

Mike Burns is The Sun's editorial writer in Carroll County.

Pub Date: 10/18/98

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