Archive for Thursday, September 9, 1999

IMPACT VIEWS TAX RUNDLE

September 9, 1999

Advertisement

One commissioner is skeptical of arguments put forth by developers.

Few people left satisfied Tuesday night after Lawrence city commissioners approved modest increases in the fees developers are charged for hooking up new properties to city utilities.

At least two commissioners had hoped for a much larger increase than the 6 percent hike that was approved on a 3-2 vote, while many developers had hoped to convince the city not to raise the fees at all.

Commissioners Mike Rundle and David Dunfield, both of whom voted against the 6 percent increase, said "impact fees" were a significant issue in the last city election and they favored the larger increase that had been recommended by consultants hired to re-examine the city's utility rates.

But Bobbie Flory, executive director of the Lawrence Home Builders Assn., said members of her group would have preferred no increase at all. In fact, Flory said, the home builders group generally opposes the very idea of impact fees, although she said the group was satisfied with the compromise that was struck Tuesday night.

The issue of impact fees -- or "system development charges," as the city calls them -- cuts to the heart of the question about whether continued growth is good for the city, and who should pay the costs associated with that growth.

People like Rundle and Dunfield argue that a certain pace of growth is good, as long as it is controlled and organized, but that rapid "suburban sprawl" can stretch resources too thin and lead to neglect of the city's urban core.

Developers, on the other hand, argue that growth is good, and that it pays for itself in the long run by increased economic activity that flows from construction jobs and attracting of new residents.

What struck many people, both on the commission and in the audience, Tuesday night were the arguments used by developers against higher impact fees.

Essentially, developers argued that even though the impact fees only affect newly constructed homes, raising those fees would have a devastating effect on low-income people and those in search of "affordable housing."

According to figures presented by developers themselves, the average cost of a new home in Lawrence is about $150,000. The original proposal on the table Tuesday night would have raised the impact fees by $275 next year. By 2004, the fees would have gone up $1,395 from their current level.

"It was going to make affordable housing harder to afford," Flory said in a telephone interview afterward. "Affordable housing would have been the hardest hit, because (the fee structure) doesn't take into account the size of the home, only the size of the meter."

At the same time, developers also argued that little "starter" housing is being built in Lawrence, and that the vast majority of new homes being built here are beyond the reach of most first-time homebuyers.

That prompted this response from Jerry Nyhoff, who said he has been homeless for three years and had attended numerous public meetings about affordable housing:

"This is the first time I've seen the chamber and developers leading the charge on affordable housing," he said.

Rundle said he, too, was surprised by the developers' argument.

"This is one of the clever political strategies that's often used in Lawrence," Rundle said. "Find an issue like affordable housing, which is a genuine issue in Lawrence, and try to draw some correlation. If you repeat it loudly and frequently enough, you can wear down the decision-makers to the point where they acquiesce."

Dunfield said he took the developers' arguments in stride.

"When people come to present their views to the city commission, they want to persuade them as forcefully as they can," he said. "Sometimes that leads to exaggeration."

Flory insisted it was true that low-income people eventually would feel the brunt of higher impact fees on new homes.

Much new housing already is beyond the reach of many first-time homebuyers, she said, and every increase in city fees lengthens that reach. That means instead of buying new homes, people on more modest incomes are forced to shop for existing homes, which tends to drive up the value of homes in older neighborhoods.

Eventually, she said, that translates into higher prices and higher rents throughout the housing market.

Shortly after Tuesday's meeting, Rundle said he would consider rounding up support to put the issue of impact fees before the voters in the form of a ballot question.

By Wednesday, Rundle said he had reconsidered that idea and was thinking instead about trying to overhaul the fee structure by levying a straight tax on new development instead of assessing fees for utility hookups.

That's the same approach used by some cities in Johnson County that levy an excise tax on new development based on the square footage of floor space.

Dunfield, meanwhile, said even though a majority on the commission voted for a more modest increase, there was at least a unanimous agreement that the fees would remain.

"The decision (Tuesday) night reaffirmed that we are going to charge impact fees on water and wastewater hookups," Dunfield said. "The disagreement was over the amount of those fees, not the principle of the thing."

-- Peter Hancock's phone message number is 832-7144. His e-mail address is phancock@ljworld.com.

Commenting has been disabled for this item.