Developers argued higher "impact fees" for new homes would raise housing costs and hurt low-income people.
A plan to levy higher fees for extending water and sewer service to sprawling new developments in Lawrence went down in defeat Tuesday night after developers and business leaders argued the fees would hurt low-income people.
Instead, Lawrence city commissioners voted 3-2 to raise the so-called "system development charges" by 6 percent a year for the next five years, the same rate of increase already approved for basic sewer rates.
The vote came after more than an hour of public comment.
The original plan would have raised the cost of hooking up water and sewer service for a typical single-family new home by $275 next year, bringing the total to $1,010. Additional increases over the next five years would have brought the total to $1,395 by 2004, compared to $735 the city charges now for new hookups.
John Immel, a local attorney and chairman of the chamber's board of directors, said the proposal would have a negative impact on affordable housing in Lawrence.
Immel also argued the proposal was meant to discriminate against new residents and businesses moving into the city -- or those that wanted to relocate to better environs.
"It gives the impression that Lawrence is an elitist community," Immel said.
Known in the development industry as "impact fees," the charges are meant to recover the cost of building, operating and maintaining larger water and sewer utilities that are needed to serve the growing areas.
The plan was developed by engineers at Black and Veatch, a firm hired by the city to study its utility rate structure.
It was based on the idea that people who build new homes and businesses on the city's fringes should not only pay the cost of extending service to those areas, but also should pay to "buy into" the equity already accrued in the system.
Mike McGrew, a Lawrence resident and president of the Kansas Association of Realtors, argued that raising the impact fees on new homes would have a ripple effect throughout the market and eventually would raise the cost of housing for low-income buyers and renters.
But others, like David Burris, a research economist at Kansas University, said any ripple effect in the cost of housing would be offset by lower utility rates.
Without raising impact fees, Burris argued, the city would eventually have to raise basic rates to generate revenue for future improvements to the water and sewer system.
A majority of city commissioners disagreed.
Mayor Erv Hodges and Commissioner Jim Henry said they were not opposed to raising impact fees, but they said the plan called for too much of an increase too soon.
Commissioner Marty Kennedy, meanwhile, said he saw no need for any increase, suggesting instead that the cost of growth should be paid by the community as a whole.
"We're all in this together," he said.
But Kennedy did join Hodges and Henry in supporting a compromise plan to raise the fees 6 percent each year for five years. That would raise the impact fees to about $779.10 next year, and about $929.18 by 2004.
Commissioners Mike Rundle and David Dunfield opposed that plan.
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