Brace for Impact

What impact do impact fees have?

I read where Commissioner Lutz called for a moratorium on impact fees.   After looking at some of the comments on the Times, it looks like there is a lot of uncertainty as to what are impact fees and what do they do.

Probably the most common definition for impact fees would be, “A fee imposed on property developers by municipalities for the new infrastructure that must be built or increased due to new property development. These fees are designed to offset the impact of additional development and residents on the municipality’s infrastructure and services, which include the city’s water and sewer network, police and fire protection services, schools and libraries.”  Georgia allows for these fees to be collected, O.C.G.A. 36-71-1 through 13, indicating that the intent of the fees is to create “an equitable program for planning and financing public facilities needed to serve new growth and development is necessary in order to promote and accommodate orderly growth and development and to protect the public health, safety, and general welfare of the citizens of the State of Georgia.”

There are a few problems with the impact fees at this point in time: there is no real growth, the fees can only be used on new capital projects, the new projects have operational costs and there is a limit to how long you can keep the fees. 

We all know that there is no real growth in Hall County.  I don’t know the numbers for 2010, but single family homes (based on U.S. Census Bureau information) here is the last few years:

Single Family Homes

Construction Cost

2009

237

$37,996,365

2008

416

$73,366,415

2007

1,283

$222,580,658

2006

1,702

$335,490,205

2005

2,094

$335,416,349

 

The key to the impact fees are that they have to be used for capital projects.  Hall County has a program on file where they collect fees for 3 specific purposes: 1- Parks and Rec, 2- Public Safety, and 3- Libraries.  Like SPLOST projects, the monies can’t be used for payroll, or lights, or air.  The money, when spent, creates a new thing that needs to be cared for. 

Like SPLOST, most of these projects have a long term impact.  Take a look at the 2 new parks that Hall County intends to bring online next year.  The impact to the budget will be close to $1m per year.  The political cost of building empty buildings is bad enough, but building when we can’t afford to turn on the lights is even worse. 

Finally, the developer is entitled to a refund if the funds are not encumbered within 6 years.  It’s funny, when the fee is charged, ultimately the consumer pays for it in the price of the house, but it is the developer that is entitled to any refund.  At the present growth of our economy, we wouldn’t be able to collect enough fees to build anything.  Let’s say that the impact fee is $1600 for a new house and that parks receive $500 from each house; at our present building rate, we could build out a park like Cherokee Bluffs (~1.8m) in 15 years.  But since we can only keep the money for 6 years, it will never happen. 

There are other political issues to take into consideration as well.  Take for example our most recent park, Cool Springs.  The park has impact fees earmarked to it.  These fees were most likely earned in the south part of the county, but snatched by the commission to build out in an area that hasn’t, as of yet, seen the impact of development.  The purpose of the fee is to mitigate development, not to spur it on. 

I believe that the commission should stop the fee.  If the development accelerator hits the floor, then we can look to reinstate the fees. 

Hugh Hall County Akston

  3 comments for “Brace for Impact

  1. George T
    April 18, 2011 at 4:30 pm

    I am tired of taxes. It just goes to show that they never go away. I hope our commission does away with this one. It would be a start.

  2. HallWatchDog
    April 18, 2011 at 7:18 pm

    So does this mean Commisioner Lutz gets a that a boy?

    • Hugh Akston
      April 28, 2011 at 11:37 pm

      We can’t give him too much credit because in the end, it didn’t pass.

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