The Kyle Report

The Kyle Report
Showing posts with label Impact Fees. Show all posts
Showing posts with label Impact Fees. Show all posts

Tuesday, November 8, 2016

P&Z recommends whopping 46.9 percent impact fee increase

In a comedy of errors that would have made the Kyle Planning & Zoning Commission the laughing stock of parliamentarians the world over (had parliamentarians the world over had even a scintilla of interest in how badly the commission mangled accepted procedures during its regular bi-monthly meeting last night), the commissioners tossed some red meat at no-growth advocates in the form of a recommended 46.9 percent impact fee increase that would make Kyle’s fees among the highest in Central Texas.

If approved by the City Council, only Austin and New Braunfels would have higher combined water/wastewater impact fees than Kyle, although Austin’s wastewater impact fees alone would actually be significantly lower than Kyle’s.

In the other significant action during last night’s meeting, the commissioners disregarded their own landscape ordinance changes they recently completed after two whole years of discussions, agreeing to something that wasn't even on the agenda that allows BioLife Plasma Services to plant 20.7 percent fewer trees than the ordinance calls for.

Impact fees are payments required by local governments of new development for the purpose of providing new or expanded public capital facilities required to serve that development. The impact fees discussed by the Planning & Zoning Commission are supposed to be strictly for capital water and wastewater improvements and would nominally be paid by developers prior to the platting of a new subdivision. However, in calculating the new rates, the costs of the wastewater treatment plant expansion and the HCPUA water supply — items that affect all city residents, not just those in planned new developments — were factored into the equation.

Realistically, however, these costs are not borne by the developers; they are simply passed along to home buyers, meaning the cost of a new home in Kyle would be, in all likelihood, greater than the cost of that same home in Buda, San Marcos, Round Rock, Plugerville, Cedar Park or just about anywhere else in Central Texas.

Those increased housing costs, however, would also naturally lead to increased property values which means the city of Kyle could conceivably accompany these massive impact fee increases with a lower property tax rates. We’ll just have to wait and see if that ever happens.

There is a related argument that says if the higher property values that result from the increase in impact fees are not accompanied by a corresponding increase in government services provided, that will depress the market, resulting in lower housing costs. These assumptions are all based, however, on the proposition homebuilders are willing to throw the dice and build in Kyle with those higher impact fees in place.

Local governments throughout the country are increasingly using impact fees to shift more of the costs of financing public facilities from the general taxpayer to the beneficiaries of those new facilities. These fees have been criticized, however, as being an inequitable means to finance public facilities. By requiring new development to pay for new facilities without benefitting from existing facility capacity, local governments may be bypassing the traditional practice of intergenerational contribution toward public facilities. Some commentators have argued that, when set at high levels such as those proposed last night by the Planning and Zoning Commission, impact fees may also tend to be regressive. Certain public facilities may be considered "public goods" that should be financed by the entire community. It’s equivalent to the school board passing a tax rate increase to cover the cost of a new school that only applies to properties belonging to those who will send their children to that particular school.

None of this was discussed at Tuesday’s P&Z Commission meeting, because it appears the commission has been rendered rudderless with former Chair Mike Rubsam’s departure from the commission and absolutely clueless from the members’ apparent reluctance to conduct any valid independent research. The discussion was limited, for all practical purposes, to acting chair Timothy Kay making the outlandish statement that the proposed 46.9 percent increase of the rates set in 2008 mirrored the rate of inflation during that same period. (The actual total rate of inflation between 2008 and 2016 is 13.5 percent,)

The only hint at an on-point discussion of the increases came when commissioner Allison Wilson noted Kyle’s proposed fee was, according to her tabulations, $1,200 higher than the average impact fee imposed by other Central Texas municipalities and wondered whether that was because "all the other cities already have infrastructure that wouldn’t require such a huge cost."

Grady Reed of HDR, Inc., the hired gun sent to convince the commissioners to recommend these increases replied "That’s a hard question to answer," which, for him, was the truth because if he answered it honestly it would destroy his entire argument. He finally said "It’s like comparing your various utility rates and wondering why they are different." Huh?

Reed went on to say, however, "If I’m another city and, even if I’m growing rapidly, if I’ve secured my water supply for the next 50 years then I’m likely to have lower impact fees," which is an amazing statement considering how loudly Kyle officials have bragged about how they, unlike officials in surrounding communities, have secured not only an adequate water supply for the city but have enough water available so that they can sell some to their neighbors to the north. Wilson, however, allowed Reed’s gibberish to pass without additional comment or questioning and the commission wound up unanimously recommending the rate increase.

But that was nowhere close to the heights of ridiculousness reached during last night’s meeting. That came when the commissioners voted to amend something that didn’t even exist. I’m not making this up. It was like building an addition to your house before you build the house.

It came during the discussion over the amount of trees BioLife was going to be excused from planting when Kay made a motion to amend something that wasn’t going to be voted on until after they held the vote to amend it.

To put it bluntly, the Planning & Zoning Commission is a mess right now which would be funny were it not for the fact that, after the City Council, P&Z is the most powerful and influential legislative body in the city. Last night the commissioners:
  • Could not even figure out how to correctly handle the consent agenda.
  • Left a public hearing in some form of netherworld limbo even though Planning Director Howard Koontz clearly, understandably and forcefully instructed the commissioners ahead of time they must officially leave the hearing open until the commission’s next meeting.
  • Appeared to be absolutely clueless about how to act on a number of items, asking the staff, in effect, to instruct the commissioners on what decisions they should make.

It’s getting to the point where it seems necessary for the city to impose some more stringent pre-screening of candidates to the commission, perhaps going to far as to require those who wish to serve on P&Z to pass some form of a Planning & Zoning Scholastic Aptitude Test.

The 58-to-45 reduction of the number of trees BioLife was required by the recently amended landscape ordinance to plant on its soon-to-be under-construction campus on Seton Parkway, across from the new Goodwill, wasn’t even on last night’s agenda. This was an "Oh, by the way," addition the project’s engineer threw in at the last moment right before the commission was prepared to vote on Biolife’s landscape ordinance waiver request that was on the agenda. And that was the reason commissioner Irene Melendez told me she was the only member of the commission to vote against the idea.

"I just didn’t think he was prepared and he wanted to make these changes so quickly," Melendez said. "I didn’t feel comfortable making those changes just on the fly. He’s a business owner and all the other business owners are abiding by the ordinance, I think he should as well."

Sunday, October 23, 2016

How many times will Kyle force a homeowner to pay for the same infrastructure?



The above video tries to explain in wildly esoteric terms exactly what it is the company calling itself HDR, Inc., does. I’m not sure that I get it, but I also must admit subjects like engineering consulting are way above my head. My Hero will get it. She’s both an engineer and a consultant. Me? Not so much.

What I do know is that a representative from HDR is scheduled to make a presentation to a Planning & Zoning Commission workshop Tuesday evening on the subject of impact fees, which are the fees Kyle imposes on new or proposed developments to pay for, in this case, the costs of providing water and wastewater service infrastructure to that development.

Behind this presentation is the desire by the City Council to have the Planning & Zoning Commission double as a Impact Fee Advisory Committee. This committee will be assigned to verify that the maximum possible fee has been properly determined and to recommend to the council the actual impact fee to be levied against the developer. At least, that’s what I’m reading into this presentation.

It’s worth it to examine the actual impact of impact fees. The most important thing to note about these fees is that they are not paid by the developer of a new subdivision or even the individual homebuilders creating product within a subdivision. This from a National Association of Home Builders’ Handbook on Impact Fees: "Similar to any tax or other costs imposed on businesses, the ultimate burden of payment will, to varying degrees, be passed to new home buyers in the form of higher house prices (or, equivalently, smaller houses with fewer amenities), or come from suppliers of products and services utilized to build and deliver the home in the form of lower prices paid for those products and services."

Not only that, the Handbook goes on to say "NAHB research shows that, on average, regulations imposed by government at all levels account for 25 percent of the final price of a new single family home built for sale. Every time a local or regional government raises construction costs by, for example, increasing the price of construction permits or impact fees, the cost of building a house rises. In fact, the final price of the home to the buyers will usually go up by more than the increase in the government fee. This is because each time construction costs increase other costs such as commissions and financing charges automatically rise as well. As a result, most cost increases are passed on to the buyers with additional charges. … The bottom line is that a $1,000 impact fee imposed at the time of development approval will typically increase the costs to builders and developers to at least $1,390." According to this presentation, Kyle is looking at a maximum fee of $6,391 which, according to this formula would add, on the average, $8,883.49, to the purchase price of a new home in Kyle. According to a study conducted two years, a $1,000 impact fee that increased the price of a home $1,390 priced 282,588 potential households out of the market nationwide. That same study, found in Exhibit A of the NAHB Handbook, showed a $1,000 increase priced out 1,285 potential households in the Austin-Round Rock-San Marcos market. Imagine how many potential home buyers in Kyle would be adversely effected by an $8,800 hike!

"To the extent that impact fees raise the price of all homes in a given community, the affordability of housing in that area is reduced," the NAHB Handbook states. "A reduction in housing affordability will have a negative effect on attracting and retaining workers and will have a direct impact on local governments as police officers, firefighters, teachers, and other public sector workers are heavily impacted when home prices rise. In addition, the shortage of affordable housing will make it difficult for the community to retain its own sons and daughters as they leave their parents' homes and look for affordable first homes of their own."

It appears from this presentation, Kyle is raising its maximum allowable impact fees a whopping 47.56 percent to $6,391, as compared to Buda's, our neighbors to the north, of $4,718, and San Marcos's, our neighbors to the south, of $5,791. Of course, there could be another motive at work here. Kyle has earned the reputation as the affordable home market for those priced out of living in Austin. Maybe the city is deliberately trying to rid itself of this reputation.

There’s something else to consider here. What if the council has approved one of its nefarious PIDs for the developer that’s also being charged impact fees? These PIDs allow developers to sell interest bearing ponds, the proceeds of which are also supposed to pay for required infrastructure improvements. The developers then charge homeowners monthly PID fees to recoup these costs. So now it appears homeowners are being stuck paying for these infrastructure improvements both through the increased costs they impose on the price of their home as well as via the monthly PID fees. I hope I’m wrong about this and I hope to learn whether this form of double payment is possible during Tuesday’s workshop. In fact, I’m hoping one of the commissioners raise the question, but I don’t hold out much hope for that.

Now consider this as well: All those priced out of the Kyle homeowners market obviously aren’t going to be around here to spend money in local stores, which results in a depression of sales tax receipts. What is the city going to be forced to do to compensate for that? Raise property taxes? The new home buyers in Kyle are now paying for the cost of their infrastructure through higher home prices, PID assessments and increased property taxes.

Other items the Planning & Zoning Commission are expected to hash out during its workshop, scheduled to begin at 6:30 p.m., are design and construction standards for single family homes and how the city should regulate food trucks. You can find the complete agenda here.