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Impact fee moratorium may be helping city budget

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Posted: Sunday, April 14, 2013 12:00 am

The City of Rio Rancho is well ahead of budget in development-related areas despite projected losses from the impact fee moratorium.

However, Mayor Tom Swisstack has questioned whether the moratorium is the reason.

Last fall, a majority of the Rio Rancho Governing Body voted to remove commercial impact fees and halve residential impact fees for the next two years. Developers had been required to pay the fees to support large-scale infrastructure improvements to handle the increased need from the development.

At the governing body meeting Wednesday, Councilor Chuck Wilkins said as of March 31, the city has brought in $299,500 more than budgeted in impact fees and $303,500 more in planning and inspection fees for development this fiscal year, which began in July. That’s a total of about $603,000 above budget.

Staff had projected that the city would lose $580,000 in impact fees from the moratorium.

Under the moratorium from October through April 5, Wilkins said, the city has issued 243 single-family home permits, more than double the 117 permits issued during the same time the previous year.

Wilkins thought the increase was a combination of an improving economy, the moratorium, sign and zoning ordinance changes and the attitude of the current governing body.

Swisstack asked how many of the projects that contributed to the above-budget revenues were already in the planning and application process and had paid impact fees before the moratorium took effect.

Development Services Director John Castillo had already left the meeting, but Financial Services Director Olivia Padilla-Jackson said her staff would have reports relevant to the question at the end of this month.

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2 comments:

  • highlander posted at 11:06 am on Mon, Apr 15, 2013.

    highlander Posts: 65

    Stating my confusion and play devil’s advocate; first of all there are probably a multitude of reasons and combinations of reasons nationally and locally for the increase of permits, and the increase of revenue, all well and good. Recent action by the city council removing the impact fees the first beneficiary of this action is a imaging company relocating from Raton to Vista Hills (near SR 550). The Council also immediately took just under a half million dollars from the general operating fund to put in the required infrastructure for the company. In keeping the math simple, using the articles figures the city has regain the projected loss and head by $23,000. I suspect the projected impact fees loss was for the entire year, did it include the half million taken from the general fund for infrastructure for the imaging company relocating from Raton?
    Several developers stopped their projects when the economy went south in 08 but they had the infrastructure in the development already, meaning, they don’t have to buy impact fees again to state construction again in their project area just get building permits and inspections. So if you deduct the inspection fees $303,500 and only use the collected impact fees $299.500 for new development the City is still out $280,500 of impact fees without including the half million from the general fund for the infrastructure in Vista Hills. If one infrastructure job cost a half million did the city staff under estimate the total loss from the impact fees?
    With all that said, I don’t know why impact fees exist. Why don’t the city just give the developer the specifications for the infrastructure element and the developer divides the cost between the numbers of house/buildings in the area and add it to the sale price. As I’m sure they do anyway. Cut the impact fee middle man out, the city, and the city only has to deal with the inspections and collecting those fees. Wouldn’t that be easier? Is a city a ‘for profit or non-profit organization/entity?

     
  • CleanUpGovernment posted at 11:55 am on Sun, Apr 14, 2013.

    CleanUpGovernment Posts: 95

    The economy is a little better lately, but it's still a difficult choice in how one allocates their sparse resources. Before the new Council took the bold step of reducing impact fees, there was very little building going on. At that time, impact fees could be as high at fourteen thousand dollars. They are still high at seven thousand dollars, but they seem to be less of a hurdle. I hope that the Council will reduce them in half again and extend the moratorium for five more years. Then we can truly put the issue to rest as building permits skyrocket finally.
    Every economic variable change has an effect down the line. The previous Council wanted 100 percent of a very small level of activity. The new council is content to take 50% on a greater than doubling of activity. The net result is more revenue due to the multiplier effect. Let's push that equation to see what happens.

     

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