FRANKLIN COUNTY REPUBLICAN PARTY
101 WEST NASH STREET
LOUISBURG, NORTH CAROLINA 27549
(919) 496-1469
www.FranklinNCGOP.com

March 7, 2006
Updated: March 8, 2006


Impact Fees
 NEW: Two letters disagree with impact fees being harmful.
Two letters to the editor in the News and Observer explain how impact fees are "harmful" and affect everyone. These two letters are from Raleigh, but you may agree or disagree with the sentiments expressed, so if you want  to sound off send your letter to FranklinNCGOP@aol.com and include your phone number (it will not be published) for verification.

 

NEW
(March 7, 2006 News and Observer)
Spread the burden fairly

Regarding "Raleigh's fees are high enough as is" (March 4 letter from Raleigh City Council member Tommy Craven), two facts are undisputed: First, Raleigh's impact fees -- charged to new development to help offset the costs of growth -- are less than one-fourth what Cary and Apex charge and less than one-third of the state average. Second, because Raleigh's fees are so low, taxpayer dollars end up contributing almost 90 percent of the cost for new roads and other infrastructure that new growth requires.

Taxpayers can't -- and shouldn't be asked to -- carry the whole load. Raleigh should bring its impact fees into line with other Wake municipalities. The increase can be phased in over several years to minimize market disruptions.

For the long run, the escalating costs of land, roads, schools and gasoline will necessitate greater cooperation between the development community and the city if housing is to remain affordable. Meanwhile, for Raleigh and Wake County to catch up with the tremendous backlog of school, road and other needs that confronts us, we as public officials must make a solid case to the taxpayers that the burden will be borne fairly by all parties and that we'll plan our future growth more efficiently and sustainably.

Russ Stephenson
City Council, At Large
Raleigh

NEW
(March 7, 2006 News and Observer)
The real hidden tax

The March 4 letters from Tim Minton of the home builders association and Raleigh City Council member Tommy Craven characterized impact fees as taxes. That's very clever.

Misleading and disingenuous, but clever. Impact fees are assessed on new development to help pay for the community infrastructure that is required to support the new development, things like roads, parks, schools, water and sewer.

Impact fees are not taxes, hidden or otherwise. Indeed, the alternative to impact fees is to increase taxes to pay for this infrastructure.

In Cary, where developers successfully lobbied to slash impact fees, the garbage fees for ordinary citizens have nearly doubled. Cary citizens will end up paying, on average, $264 more per year in water/sewer fees to fund a new treatment plant necessitated by growth.

In Wake County, where we have no schools impact fee (because the powerful development lobby opposes it), we are facing a $5 billion shortfall in school construction funds. To fund those new schools, necessitated by growth, our property taxes are almost certain to increase.

The roads are clogged and the schools are bursting, yet the developers still resist impact fees. The only "hidden tax" here is the one we all pay to subsidize development.

Brent A. Miller
Cary

(March 4, 2006 News and Observer)
Higher impact fee would be harmful

Your Feb. 25 editorial "Fees fall short" once again misunderstands the nature of impact fees -- hidden taxes -- and how they affect the marketplace. Any increase in the cost of housing is a detriment to the opportunity for all to participate in home ownership. This summer, members of the home builders association will join to build 30 homes during the Habitat for Humanity Builder Blitz. If Raleigh's impact fees are raised to the recommended amount, we could build only 29 homes. Which Builder Blitz family should not have a home because of the higher fees?

You like to compare the Raleigh fees to the fees in Cary. Cary has continued to lower its fees as it has realized that new development would no longer continue as the building community was "fee'd" to death. I hope Raleigh officials soon realize that higher fees mean fewer homes -- which generates fewer jobs and provides less additional taxes, including property and sales taxes.

Furthermore, why haven't we seen a news story on how the City of Raleigh has ignored its own ordinance in taking millions of impact fee dollars. The ordinance states that the city shall report where the dollars collected are spent every two years. The city has chosen not to do so since 2000. The total collected since that time is over $17 million. What would happen to any taxpayer if they had ignored a city ordinance for five years and/or could not immediately tell their bosses (the public) how the city spent $17 million?

Tim Minton
Executive Officer, Home Builders Association of Raleigh-Wake County
Raleigh

(March 4, 2006 News and Observer)
Raleigh's fees are high enough as is

Regarding your Feb. 25 editorial on impact fees, don't forget Economics 101. Taxes -- and impact fees are indeed taxes -- shift the supply curve, raising prices, decreasing supply and weakening discretionary income.

Some contend that impact fees primarily affect people who haven't moved here yet. However, a significant percentage of new homes are purchased by people who already live here. These fees raise the price of existing homes as well, since existing home prices track new home prices.

Compare impact fees to our property tax rate, which has dropped considerably since 1988. It's not the rate that matters, it's the revenue. Raleigh's general fund revenues have risen at an annual rate of about 5 percent. Thoroughfare and open space fee revenues have risen 6 percent annually. As a percentage of total general revenue, these fees have risen from 1.2 percent to 1.5 percent.

Note: just 1.5 percent of total general revenue. Increase the fees until you completely stop new construction and you still won't have a significant percentage of total revenues.

In 1998, the city added another fee exclusively to new construction. The "nutrient charge" covers the cost of improved treatment at the wastewater plant. Including the nutrient fee, our impact fee rates have risen 50 percent, and revenue has risen 9 percent annually, nearly double the rate of the more broadly based revenues.

The consultant on impact fees was apparently brought on board to deliver the message of a forgone conclusion that fees must rise. It is the only plausible explanation for the lack of factual analysis. Their report consists of two main themes, "everybody else is doing it" and "we haven't raised the rate." Neither is sufficient justification for the increase.

The economic reality is that impact fees are outperforming our other general revenue sources, are contributing substantially more today than when originally implemented and will never be a significant percentage of our total general revenues.

If the City Council raises impact fee rates, it will be because we are unwilling or unable to control our spending. We have simply found a politically vulnerable target that will suffer a disproportional financial burden. The next time it may be a group that hits closer to home for you. The concept of taxing the other guy is terribly flawed. The consistent reality of economics is clear: the cost of governmental extractions is ultimately borne by all consumers.

What is it about the combination of low fees, low taxes and a high quality of life that some just can't seem to understand?

Tommy Craven
City Council, District A
Raleigh

(The length limit on letters was waived to permit a fuller response.)