Builders could get fee break

County considers bill to delay increase to help counter economic slump

April 11, 2010|By Nicole Fuller | nicole.fuller@baltsun.com

Developers in Anne Arundel County might soon catch a break as the County Council considers legislation that would delay a scheduled increase on impact fees in order to encourage development during the current economic downturn.

Councilman Ronald C. Dillon Jr. said the bill, co-sponsored by three colleagues, would maintain the 2009 rates for this year and shift future rate increases back for a year. The bill would be retroactive for developers who already paid the fees this year. The council is set to vote on the bill later this month.

"It's bad economic policy to increase taxes on an industry that's already in crisis," said Dillon, vice chairman of the council and a Republican. "Small businesses in Anne Arundel County - carpenters, plumbers, and electricians - they're really struggling."

County Executive John R. Leopold, who pushed in 2008 for the successful passage of an increase on impact fees, said he agreed to a compromise after a yearlong process that provided discounted fees to builders and developers. Delaying an increase now, he said, would be "unfair to taxpayers."

"The legislation is ill-advised and a slap in the face of taxpayers," said Leopold, also a Republican. "We spent almost a year drafting a fair compromise that had already discounted the fees to builders and developers. These fees have been artificially low for decades."

Continuing the discounted fees could cost the county up to $17 million in revenue as it faces a $93 million budget shortfall, officials said. The county now recoups 22 percent of the cost of infrastructure from developers, putting the fees in Anne Arundel among the lowest in the state.

Bob Burton, president of the Annapolis and Anne Arundel County Chamber of Commerce, said the county needs to stimulate commercial redevelopment and rebuild the commercial tax base, and that raising the impact fees "could potentially put that at risk."

"The economy, even though it's showing some signs of life, some sparks, this would not be the appropriate time to raise the rates, to the extent that it could potentially snuff out those sparks," Burton said. "We need to have the economy in a sounder footing. Why risk snuffing out what may appear to be a recovery taking place?"

About 30 people asked the council to reject the plan at a recent hearing on the bill. Developers, many of whom are struggling during the economic downturn, voiced support for the proposal, Dillon said.

Ted Weber, a member of the county's Green Party, said the current plan makes "perfect fiscal sense," adding that "development should not be subsidized by taxpayers.

"This has alarmed people for environmental reasons, for fiscal responsibly reasons," Weber said. "With the county being in a debt crisis, and we have this huge backlog of school and road maintenance and this is just going to make the problem worse."

Dillon said because the revenue gained by impact fees is narrowly tailored for construction infrastructure and cannot be used for teacher or police salaries, raising recordation and income taxes would make more sense.

Ann Fligsten, who served on the council's special advisory committee on impact fees and is a member of the Growth Action Network of Anne Arundel County, said the council already compromised on the bill to help the building industry.

"The real question I have is how do we know this would create one job?" asked Fligsten. "I'm very sensitive to unemployment. I have a lot of friends and family that are going through tough times, but to give away tax money to the building industry without any proof that it would create one job, seems like not a very responsible thing to do when we have such a big deficit."

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