NWAnews.com :: Northwest Arkansas Northwest Arkansas Times

Sides debate fee pros, cons

BY MARSHA L. MELNICHAK Northwest Arkansas Times

Posted on Thursday, April 5, 2007

URL: http://www.nwanews.com/nwat/News/51794/

Both sides in the debate about road impact fees agree on at least one thing: If the other side wins taxes will go up for Fayetteville citizens.

A panel of eight Fayetteville residents debated Wednesday the merits of a proposed road impact fee during a live call-in forum televised on the city’s Government Channel.

“ And what will happen if this proposal passes ? ” asked Jeff Koenig, a chamber of commerce member who opposes the measure.

He answered himself, “ We will continue our relentless march to a ‘ bedroom community. ’ With declining sales tax revenues as we have already experienced, city government and the school district will have no choice but to increase your taxes. It will happen. ”

On the other side, Ward 4 Alderman Lioneld Jordan answered the question of what would happen if the impact fee failed in the April 10 election.

“ Probably more taxes, ” he said. “ Either citizens are going to continue to subsidize the new developments being put into this city or they’re going to make them pay their fair share. ”

Siding with Jordan on the panel were Ward 2 Alderman Kyle Cook; Kevin Santos, a university planner; and Stephen Smith, a communications professor.

Agreeing with Koenig that citizens should vote against the proposed fee were Ward 3 Alderman Bobby Ferrell; Mike Henry, Metro Board of Realtors president-elect; and Ben Israel, chairman and CEO of Dixie Development.

Not in attendance were Don Marr, HR Factor president, and Bobby New, Fayetteville Public Schools superintendent.

If the road impact fee is approved by voters, a fee will be charged at the time the certificate of occupancy is issued by the developer, builder or owner at that time. The fee would be used by the city to increase the capacity of its arterial and collector streets.

A chart of the proposed fees is part of the ballot question. It includes fees of $ 2, 363 for each residential house or apartment and $ 2, 701 per 1, 000 square feet of commercial / office space.

The fundamental question is, “ Who’s going to pay ? ” Jordan said in both his introductory and closing remarks.

Jordan said Fayetteville citizens had already agreed to pay their fair share for road improvements when they approved a sales tax increase for that purpose last year.

But opponents argued the road impact solution is a bad prescription for a healthy city.

Henry gave as an example a business choosing to raise prices to cover a manufacturing cost problem.

Customers then do a very predictable thing: They buy a similar product for less price from a competitor and sales go down, he said.

Road impact fees are similar, he said, in that they drive the city’s customers, new business, away.

“ Investment dollars gravitate to where they’re treated best, ” Henry said.

If the city continues to discourage new business, “ the only thing that will happen is residential households will have to step up and pay more tax, ” he said.

Israel said what makes economic sense is that people coming to town will buy more things, which increases the sales tax, so no one has to pay more taxes.

Opponents and proponents of the proposed road impact fee both argued for fairness; they just didn’t agree about what that was.

“ The whole idea is if you create a need you should pay for it. It’s inherently unfair to have people who are not creating the need pay for it, ” Santos said.

Israel argued “ it’s not fair to punish a portion of the community” for the roadways used by all of the community.

“ Let’s talk about fairness, ” said Jordan. “ I don’t understand why it’s fair that folks creating the new development and buying into the development have to be subsidized by everybody in town. That doesn’t seem very fair to me. ”

Double taxation was also an issue argued by both sides.

Opponents argue that the proposed impact fee is actually an additional tax and burden on the developers.

The impact fee is “ a form of exaction, ” said Ferrell, “ so, it’s a tax is what it is. ”

In addition to it being a tax, he said, developers would have to build roads, as they do now, and then pay the impact fee.

Cook, using Rupple Road as an example, countered that the impact fees let the city complete the roads and intersections that join to the streets the developers build.

Smith said, “ If we’re not doing impact fees, it’s going to be double taxation on the citizens who are already paying sales tax to pay off (the street bonds ). ”

He said those adding traffic should pay for the streets.

Opponents also argued that imposing impact fees will drive retail and commercial business away.

Koenig said the owners of Marshalltown Co., which recently built a new facility in Fayetteville, would have gone outside the city limits if the road impact fee had been in place.

He argued that the fee, if approved, will lead to higher rents and prices as it is passed on to customers. In addition, he said it would “ flow ” through appraised property values.

Santos countered that cities around the country show no negative impact from impact fees.

Jordan added that here in Fayetteville, building permits reached record highs even after earlier impact fees were begun.

Fayetteville Special Election

ROAD IMPACT FEES

Election


• An election about whether the city should or should not establish road impact fees is scheduled for April 10. • Early voting is under way from 8 a. m. to 4: 30 p. m. Monday through Friday at the Washington County Courthouse. • A vote for the ordinance indicates approval / adoption of the fees and the fee collection system. • A vote against the ordinance would reject the fee program entirely. Uses • Road impact fees must be used: — To increase capacity on arterial and collector streets within the city — On public streets • Road impact fees can be used: — For street projects already identified as needed but are unfunded — For planning, design or construction of new collector or arterial streets — To cost share with developers to add capacity beyond what is needed to serve the new development — Anywhere in the city, not just in the area where the development for which the fee is paid will be • Road impact fees cannot be used: — To fix potholes — To maintain existing streets — To pay off bonds for the street improvement sales tax approved by voters last year — On privately owned property — For anything except streets and related infrastructure such as bridges and culverts — For operations

The fees


Residential — per dwelling — $ 2, 363 (A duplex, for example, would be charged 2 x $ 2, 363, and a 12-unit apartment building would be charged 12 x $ 2, 363. ) Nursing home — per 1, 000 square feet — $ 1, 495 Manufactured Home Park — per pad — $ 1, 779 Hotel / Motel — per room — $ 1, 319 Commercial / Office — per 1, 000 square feet — $ 2, 701 Industrial / Warehouse — per 1, 000 square feet — $ 1, 676 Industrial / Mini-Warehouse — per 1, 000 square feet — $ 587

About the fees


• Fees are intended to generate revenue to fund or recoup city expenditures that are reasonably attributable to the use and occupancy of the new development. • Estimates are that road impact fees will raise $ 3. 4 million each year, depending on actual amount of development. • The fees would apply to all new development or redevelopment in the city. • Fees would be paid only once, at the time the Certificate of Occupancy is issued. They would be paid by the developer, builder or owner at that time. • If approved, fees would apply to building permits issued beginning July 1. Per- mits issues before that date would not be subject to the impact fee. • Road impact fees would not apply to churches. • Funds raised would have to be kept separately, not in the general fund; would have to be used for capacity improvements; cannot be co-mingled with other funds; cannot be used for operations, maintenance or correcting deficiencies; must be collected and spent within seven years. • Road impact fees are based on calculations about the number of trips generated by the type of new development and how the development is expected to affect traffic. • State legislation requires that the fees be used to increase capacity. • A copy of the ballot and related information can be acquired at the city’s planning office, 125 W. Mountain St., or from the city Web site, www. accessfayetteville. org.