"Don't tax you. Don't tax me. Tax the fellow buying a new house in Raleigh with an impact fee."
The late Russell Long of Louisiana put it a little differently (" ... tax the fellow behind that tree"), but the point is the same: Everybody prefers that taxes be paid by somebody else, especially when the need for them is caused by that same somebody.
Such is the logic of the impact fee (or "facility fee," as state law defines it), which is a charge tacked onto the price of new houses to help pay for the new sewer and water mains, roads, schools, etc. that their construction will necessitate.
That's one way to look at it. Another way--the view of the Home Builders Association and allied real-estate industry folk--is that impact fees drive up the cost of housing, which reduces the demand for them and costs construction and sales jobs. Oh, and it puts housing a little farther out of reach for less-affluent families.
Here's the way Raleigh Mayor Charles Meeker looks at it: Raleigh has the lowest impact fees around by far, and hasn't increased them in 17 years. City fees add $1,447 to the cost of the typical new house (they vary a bit by zone, but not much), according to charts supplied by City Manager Russell Allen. Charlotte, to which Raleigh often compares itself, adds $3,645. Cary, which recently cut its fees by 30 percent, had been charging $9,900.
Meanwhile, a long list of Raleigh projects are stalled for lack of money and with the budget season about to begin--the new fiscal year starts July 1--a bit of extra cash would certainly come in handy if, say, you're anxious for the Hillsborough Street project to start, or the new Falls of the Neuse Road bridge, or--well, start your own list.
Times are so parlous in Raleigh, it seems, that although the voters overwhelmingly approved a $47.2 million bond issue for parks and recreation projects in October, the city council is gun-shy about issuing the bonds, fearful that it couldn't foot the interest on them without raising Raleigh's low-low property tax rate. (That's another chart: Raleigh's 38.5-cent rate--$385 per $100,000--is also the lowest around, and it hasn't changed since a conservative council slashed it 8 cents in 1993.)
So Meeker, at a meeting of the council's budget committee recently, floated the idea of raising the city's open-space facilities fee--the impact fee for parks--and using the money to start issuing the parks bonds. Raise it how much? He didn't say, but did note that $200 more per new house would finance about one-fourth of the interest on the bonds, which for complicated reasons is the most allowed by state law.
So, how many hands do we see in favor of higher fees? That would be three: Councilors Janet Cowell, Thomas Crowder and Meeker himself.
On the eight-member Raleigh council, however, progress requires five votes. And while we never say never, the three Republican members--Neal Hunt, Philip Isley and Mike Regan--are never eager to raise taxes or buck the development industry. Democrat James West is usually a Meeker ally, even though at the first mention of impact fees he was only willing to go as far as supporting "a holistic approach," whatever that means.
We are quoting now from the minutes of the meeting. A long dissertation follows thereafter of the evils of impact fees, delivered by home builders' lobbyists Jim Wahlbrink and Ken Kirby.
All eyes then turned--we imagine--to newly elected Councilor Jessie Taliaferro, the fifth Democrat who, though not a member of the budget committee, was there to join the debate. Taliaferro, strongly backed by development interests in the election, is quoted as saying that impact fees are "regressive" and "all revenue streams" should be examined.
All revenue streams?
We caught up with Taliaferro at a community meeting a few days ago to ask whether she was saying property taxes should be increased, not impact fees. "I think we should be looking at everything," she confirmed.
But Raleigh just added to the cost of development with new tree-preservation requirements, Taliaferro added. And if serious money is needed to get things done--and she doesn't doubt that it is, although she reserved final judgment since the upcoming budget will be her first--then Taliaferro would choose a small hike in the broad-based property tax to higher impact fees on a few new houses. "There's not enough juice in that lemon," she said.
Kick-starting the new Falls of the Neuse bridge, which is in her district, is a $13 million item, she noted. A $200 impact-fee hike would bring in about $1 million.
Taliaferro's view that impact fees are regressive stems from the fact that they are flat assessments per house, regardless of the value of the place or the income of the buyer. Yes, Cowell counters, but the buyer is always free to purchase an existing house, which is already served by water, sewer, etc., and avoid impact fees altogether. The buyer saves and so does the city. "So they are inherently progressive," Cowell says.
Moreover, adds Crowder, there's no reason the city can't waive impact fees on new housing built, say, in Southeast Raleigh, where the city is trying to create jobs and has lots of vacant land that fronts on existing roads and other infrastructure. Raleigh could also exempt lower-price "affordable housing" projects.
So, impact fees needn't be so regressive, but Taliaferro's point about property taxes being where the money is holds, too. And as she points out, while others (read: Meeker) may have told the voters higher taxes weren't needed, she never said that.
A combination of the two, then, we asked? "Well, maybe that is what we need to do," Taliaferro answered.
This attempt at compromise brought to you by the Independent Weekly, at no additional charge for the issue you're reading.