Leader Blues

Wednesday, November 28, 2007

TOP STORY >>Impact fees haven’t caught on

By JOAN MCCOY AND
JOHN HOFHEIMER
Leader staff writers

In response to developers, who have cited a decline in new single-family housing permits since the city began charging and collecting impact fees about a year ago, the Cabot City Council has suspended those fees for at least six months.

Metroplan executive director Jim McKenzie said Monday that the impact fees—which developers generally pass along to home buyers—probably had little effect on the Cabot-area’s new-home construction decline in the midst of a large-scale national downturn.

Councilwoman Teri Miessner will chair a committee to determine the extent to which impact fees are slowing development, but no criteria have been established yet for making that determination.

Cabot Mayor Eddie Joe Williams said the committee would have to look at data and perhaps interview developers in neighboring communities to determine the part impact fees have on declining new- home starts.

In the first half of 2007, Cabot issued only 122 new single-family permits, compared to 145 in the first half of 2006. But in the first half of 2006, before impact fees were imposed, new housing starts already were down 102 from the first half of 2005, according to Jonathan Lupton, a Metroplan city planner.

Since data are available for only the first six months of 2007, Lupton used figures for the first six months of previous years as a means of comparison.

McKenzie said that when gas prices rise people want to cut gas taxes and when housing starts decline, people want to end impact fees, but that roads still need building and repairing and city services and infrastructure still need construction and maintenance, and that’s what those fees go toward.

In Cabot, of the money collected so far, $36,023 is for wastewater; $24,269 for roads; $1,736 for the library, $10,693 for parks and $25,389 toward fire protection, totaling roughly $100,000.

In central Arkansas, only Cabot and Conway have real impact fees.

Conway first imposed impact fees in 2003 and since then, first- half housing starts declined from 287 in 2003 to 248 in 2004, increased to 266 in 2005, and fell to 236 in 2006 and 170 in the first six months of this year, Lupton said.
He said impact fees probably were among the factors.

In Jacksonville, Mayor Tommy Swaim said there had been no serious talk about instituting impact fees.

Both Mayor Art Brooke of Ward and Mayor Wayne McGee of Lonoke say there has been no move to institute impact fees there.
Neither Little Rock nor North Little Rock have impact fees, according to McKenzie.

“What we have seen over the past couple of decades in the Metroplan area is that building activity runs hot for a while, cools off, and moves to another community,” McKenzie said. “I’m not sure if that’s what’s happening in Cabot. But nothing that happens in building can be separated from the situation nationally.

“Given the national situation, Cabot impact fees having significant impact—I’d be doubtful,” said McKenzie. “But I’m not an expert.”

He said there still needed to be some way to fund municipal services. If the Cabot council hadn’t called for the moratorium or a freeze on the amount collected, the impact fee would have doubled this month from $1,272 to $2,196 on a 3,000 to 3,900 square-foot house.

The fee is also scheduled to increase in 2008 and 2009. By the third increase, the impact fee on a house that size would be $4,037.

Overall, the number of single family permits issued in central Arkansas towns of 50,000 or more increased from 1,867 in 1996 to 2,899 in 2006, but that 2006 figure represented a decline of about 500 permits from 2005.

Between 2005 and 2006, new starts in Cabot nudged up 29, but decreased in Benton, Bryant, Conway, Jacksonville, Little Rock, Maumelle, North Little Rock and Sherwood—in other words, in every other large city or town in the area.

The previous year, Cabot single-family permits declined by more than 100.