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Town to Consider Waiving Development Fees |
Glenn Walsh | 7/3/09
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The Town of Pagosa Springs approved a set of impact fees in 2006. Then, growth in Archuleta County was considered inevitable. The Town and County had issued an average of three hundred residential building permits per year since 2000. Restrictions against 200,000 square foot retailers were thought necessary. Through mid-June this year, the Town and County have issued ten residential building permits.
The basic impact fees recommended by the Town’s consultant EPS totaled nearly $5,000 for a new home. Commercial developments were subject to a multiple of that basic fee. Large motel and restaurant projects could be assessed fees in excess of $100,000. The impact fees were dedicated to construction of roads, parks, trails, fire stations and a community recreation center. The impact fee program approved in 2006 also collected a legally dubious impact fee for the local school district — the school district has the statutory right to independently assess a much larger fee — and a modest fee for the long-term planning and construction of a large reservoir.
 The impact fee study was funded by both the Town and County. However, the County decided against imposing the full schedule of fees, and adopted a roads impact fee for new subdivisions only, exempting lots within existing Pagosa Lakes subdivisions.
To date, the Town has collected over $600,000 in impact fees. The County has not approved a new subdivision since mid-2006.
Coincident with passage of the Town’s modest $1129 fee per home for a new reservoir, the Pagosa Area Water and Sanitation District began to impose a new Water Resource Fee which exceeded $7,000 for a single family home and $50,000 for modest restaurant. When combined with pre-existing impact fees for basic water service imposed by PAWSD and sewer service imposed by PAWSD and the Town (also assessed in multiples against new business start-ups), total impact fees for a new hotel with a restaurant could easily exceed $400,000.
Last summer, the Town and County attempted to convince PAWSD to lower its impact fees and cooperate in the creation of a consolidated impact fee program. PAWSD did alter its fee structure, significantly reducing commercial water and sewer fees for commercial startups, but raising impact fees for large homes by 150 percent. Impact fees for water and sewer service for a four-bathroom home within the PAWSD district now total over $33,000. For new subdivisions outside the present PAWSD district, total PAWSD impact fees can exceed $50,000 per home.
Prospects for cooperation in a consolidated fee program ended when PAWSD announced a $357 million plan for a new reservoir and expanded water and sewer treatment facilities four months ago.
Next Tuesday, it appears the Town of Pagosa Springs is ready to begin the end of its mis-timed, and perhaps misconceived, impact fee program. While a case can be made for modest residential impact fees dedicated to immediate capital improvements, no economically cogent rationale was ever advanced for multiplying the start-up costs of the hotels, restaurants and retail shops which provide over 90 percent of Town revenue. As of last summer, the total impact fees for construction of a small taqueria in downtown Pagosa Springs exceeded $100,000.
David Mitchem was hired as Town Manager eight months ago. Mitchem was, in one sense, the Town’s third choice. Mitchem was not a candidate during the first two rounds of the selection circus, which focused on applicants with traditional municipal administrative bona fides. Mitchem, a very genial and very underrated fellow, was recruited owing to his background in economic development, most recently as the head of the Castle Rock Economic Development Association.
That background is clearly reflected in proposals Mitchem is putting before the Town Council Tuesday evening. The proposals are introduced and supported by a memorandum which is decidedly pro-growth, and by turns regulatory and libertarian.
Specific proposals request the Council to extend impact fee waivers, currently limited to affordable housing projects, to any project which provides “important economic benefits” to the Town. One hundred percent fee waivers are recommended for projects completed by year-end. Fifty percent fee waivers are proposed for projects completed by year-end 2010. Building permit fees are similarly eliminated or discounted. Added to a sales tax rebate of 25 percent for locally purchased building materials is an additional 25 percent rebate for the hiring of local workers, effectively cutting sales taxes on many projects in half.
Surprisingly, the Town will consider extending the same short-term elimination of fees to new hook-ups to its wastewater treatment plant. Currently, new commercial projects are assessed a plant investment fee of $4400 per equivalent unit, based on an outdated American Water Works Association worksheet which overassesses restaurant and hotel developments by 300-400 percent when compared with the Uniform Plumbing Code sheet which is now the standard industry assessment tool.
The $4400 plant investment fee — though not the AWWA worksheet — was mandated by state lending agencies last summer as a condition for financing the Town new wastewater facility. Now the Town has shelved plans for a new facility and will consider extending the life of its sewage treatment lagoons by the construction of a pre-treatment fermentation pit and installation of biological films.
Which, apparently, will permit the Town to extend further discounts for downtown development. |
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