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Friday, July 30, 2010
Impact Fees Essential Tools for Funding Good Infrastructure
By Isaac Benton And Debbie O'Malley
Albuquerque City Councilors
Last week, our colleague, West Side Councilor Dan Lewis, authored an op-ed that criticized Albuquerque's impact fees as a regressive and discriminatory tax. We disagree with his characterization and we feel it's important to offer the public an alternative view.
First, an important correction: An impact fee is not a tax.
A tax pays for general government services and the general public gets the primary benefit. A fee pays for a specific service and the individual payer gets the primary benefit. The fee covers only the cost of the service received.
With impact fees, the service is infrastructure — roads, storm drains, parks, trails and public safety facilities — that will serve the area where development occurs.
Second, some history: Albuquerque adopted impact fees because new development was outpacing the ability of our budget to fund the necessary infrastructure. Developers were building short stretches of roads and drainage structures along their property lines, but this patchwork did not serve as a complete system.
Third, Lewis makes several sweeping assertions and generalizations for which he provides no evidence.
"Most local government officials now recognize that impact fees are having a very negative impact on local economies." In fact, the National Impact Fee Survey reveals that there are more than 250 local governments that, as of late 2009, have impact fees in place, suggesting that they are a widely accepted tool.
Lewis blames impact fees for empty commercial buildings and stores on the West Side. It is simplistic to suggest that businesses will succeed or fail based solely on the payment of impact fees.
Other factors, such as the worst economic recession since the Great Depression, likely played a role.
Impact fees are a convenient target, but according to a recent report from Albuquerque's chief economist, removing or reducing them since September 2009 has done virtually nothing to stimulate commercial development.
Lewis writes, "There is no doubt that residential and commercial construction generates more city revenues than what it costs the city." He does not substantiate this, and one could reasonably conclude that the council's recent approval of transportation tax funds to complete Unser Boulevard is proof that new development is not paying for itself.
Fourth, Lewis seems to be suggesting that we do away with impact fees but offers no suggestion of how to fund the infrastructure and facilities required.
We are curious to know how he would propose to fund $69 million in road, storm drainage and park projects that are currently identified as necessary to serve new development.
Would he suggest using more of the city's general obligation bond for new development at the expense of established areas, which has decreased by more than 22 percent in the last year? Or would he suggest imposing an additional gross receipts tax? Since he clearly does not feel that developers should have to pay for new infrastructure, we are left to believe that he wants taxpayers to foot the bill.
The simple fact— and it is a fact — is that the city is not flush with funds to build new infrastructure to serve new development and, conversely, cannot even maintain all of the existing infrastructure and facilities that we have.
If the choice is going to be between subsidizing new development or maintaining, updating and repairing infrastructure in our existing community, we choose the latter. Impact fees are rational and useful tools for funding the construction of infrastructure that accommodates new development.
We look forward to open and thoughtful discussions with all of our colleagues on the council and the general public about the current and future needs of Albuquerque and its residents and how best to meet them.
Councilors have been made aware of most of the concerns about impact fees. Council staff has been in the process of contracting with a consultant to review and update the assumptions used in the original analysis, identify implementation issues and investigate alternative methods of implementing impact fees.
We are confident that a reasoned, independent analysis will lead to answers for many of the concerns that have been expressed.
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