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Proposed impact fee increases questioned

Local home builders have questioned the proposed new residential impact fee rates, following the Rio Rancho governing body’s recent initial approval.

Last month, Mayor Gregg Hull presented the final report and recommendation from the city’s impact fee committee to city councilors during a regular governing body meeting. Hull, who was the special committee’s chairman, recommended decreasing the city’s commercial, industrial and business impact fees, and increasing the city’s residential impact fees.

Impact fees are charges developers pay to the city to cover the cost of major system-level improvements to handle the growth their developments will bring. Rio Rancho has seven impact fee categories: public safety, parks, bikeways and trails, drainage, water, wastewater and roadways.

The governing body approved the committee’s recommended rate changes, prompting city staff to present the impact fee changes as an ordinance at a future meeting.

John Garcia, vice president of the Home Builders Association of Central New Mexico, said he was surprised by the proposed rate increase for commercial development.

“The impact fees in this particular submarket are higher than the rest of the region,” Garcia said.

According to the proposed changes presented last month by Hull, impact fees for a single-family residential unit would increase from its current rate of $9,882 to $10,718.25 by 2021. If approved by the governing body, the new rates would begin July 1.

At first, the new rates would decrease to $9,427 in its first year and $9,714.30 by 2018, before increasing past $10,000 in 2019. The current impact fee rate for a single-family residential unit in Albuquerque is $7,901 and $10,252 in Bernalillo County.

Garcia said although he understands the role of impact fees on funding the city’s infrastructure, the proposed new rate would put too much of a burden on residential impact fees.

“We support the need for building out (Rio Rancho’s) infrastructure,” Garcia said. “In my opinion, one way is through these impact fees, but they need to be complemented by other things than just these fees. You’re not going to get everything to build this place out with an impact fee only.”

Brian McCarthy, co-owner of Abrazo Homes, said although he understood the city’s want to increase residential impact fee rates, he was worried the change could impact potential homebuyers.

“As costs increase, for every thousand dollars of a cost increase, there’s another 700 people across the city who can no longer qualify for that home in question,” McCarthy said.

Garcia and McCarthy said the new rates only incentivize commercial developments to consider building in the city.

“In that regard, which kinds do you like best: commercial or residential? You need them both in the community,” Garcia said. “Just like they want to use it to attract commercial development, that will probably work and you’re going to price out certain people in the market because the price is going to go up on a house and there’s people that won’t qualify for financing. The market will respond to this.”