Deep Impact

City Council passes first reading of 'impact fee' ordinance for new construction

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— It makes no difference whether it's a "starter castle" near the golf course, or a basic 1,400 square foot manufactured house near the cemetery, the price of a single-family home in Steamboat Springs is poised to go up by exactly $4,454.
Steamboat Springs City Council voted unanimously May 15 to pass the first reading of an ordinance that would create "impact fees" on new construction in Steamboat. A fee of $4,454 would be applied to all new single-family dwellings, regardless of their size.
The fees would be dedicated to addressing the impact that new buildings have on four categories of city services public parks, public buildings, public safety and transit. And the fees aren't limited to new residential construction they'll be applied to various forms of commercial construction as well. However, the fees being proposed for commercial buildings are lower than those for residential units, because the impact commercial projects have on parks, for example, are lower (for a sample of impact fees by category, see chart on page 12A).
The impact fees would become official if passed by City Council on second reading at its regularly scheduled meeting June 19.
More than a dozen members of the public, most of them from the construction or development industry, stood in front of City Council last week to express strong reservations or opposition to the impact fees.
"If you pass this, and it slows construction, it will put people out of work," said John Kerst, First National Bank president. "If you pass this together with housing linkage, I think you should consider letting the voters look at it, too."
Kerst was referring to a separate initiative council is considering that would require developers and businesses who create demand for new employees in Steamboat to pay a portion of the cost of building housing for those employees.
"Linkage," as it is commonly referred to, really doesn't have any connection to impact fees. But most of the dozen people who spoke out last week were concerned about the combined effect should both impact fees and linkage go into effect here.
City Council President Kevin Bennett said May 15 he was going on record as saying if he votes for impact fees on second reading, he will not be voting in favor of linkage in the future.
Councilman Jim Engelken said he's firmly in support of impact fees.
"The problem is, we subsidize growth and we always have," Engelken said. "We're finally trying to do something about it."
Engelken said without an excise tax or a real estate transfer tax, the existing residents of Steamboat are left having to pay for the cost of increased government infrastructure when growth takes place.
"New growth does not pay its way," he said. "All the infrastructure is in place and paid for by somebody else. It's time that changes. We can't afford that. The problems facing the city are enormous and getting worse."
Local Realtor Mitch Clementson asked City Council not to pass impact fees because of the potential impact on employment here.
"This will have a direct and negative impact on many local employers," Clementson said. "Be careful to preserve jobs in Steamboat, not eliminate them."
Attorney Bob Weiss, who often represents developers during city hearings, said one of the primary reasons cities resort to impact fees is to avoid going to the voters.
"Impact fees can be imposed without an election," Weiss said. "That's why cities do them. Otherwise, they'd just raise taxes (in the form of an excise tax)."
Weiss said the community is faced with a variety of issues that could result in increased taxes, and it would be wise to gauge the cumulative impact of those taxes before going forward.
"We've got, I'm not sure I can count, how many proposals for new taxes," Weiss said. "What impact is all this going to have on the construction industry and employment?"
Weiss speculated new tax proposals could hurt employment levels, reducing sales-tax recirculation in the community.
Architect Eric Smith said he's troubled by the fact that the flat impact fee on single-family homes would have the greatest impact on the smallest homes. A $4,500 fee, regardless of the size of the home, works out to $4.50 per square foot on a 1,000 square foot home and 45 cents per square foot on a 10,000 square foot home, Smith said.
City staffers explained that the impact fee on single-family homes is fixed, because the impact is caused not by the size of the home, but by the creation of each new home in the city.
Councilman Ken Brenner said he agrees that growth is costing the community money, but said he would feel better if the impact fees were subjected to a vote of the people.
Councilman Paul Strong said he believes impact fees are appropriate because they assign the cost of growth to new buildings in "increments of cost per unit."
"Who should pay (for growth)?" Strong asked rhetorically. "This is a rational exercise. I have to support this fee. Otherwise, all of the citizens will support the cost of incremental growth."

To reach Tom Ross call 871-4210
or e-mail tross@steamboatpilot.com

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