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HomeMy WebLinkAboutCosts of Growth 2016 - Blanche BrickCosts of Growth - 2016 College Station has grown by 58% since 2000. 2016 Taxable assessed property values increased by 11.89% over 2015 - $7,990,467,263 Total value - $283,708,667 due to new value added to tax roles - existing values increased by 7.9% over 2015 - property tax is 27% of General Fund Revenues 2016 Sales taxes projected to increase by 1% over 2015 and by 2% by 2017 - sales tax is 41% of General Fund Revenue 2016 Budget proposes property taxes to increase by .02 from 2015 - from 47.25 to 47.27 cents per $100 of assessed value 2016 Budget proposes an increase of 8% in the wastewater rate - to meet upcoming capital project expenditures in FY 17 and beyond 2015 – Council cancelled bond election - Council agreed to fund $50M in CO’s to fund transportation infrastructure needs created by growth College Station now has 5 Water/Waste Water Impact Areas that were created at the request of developers to facilitate development by contributing toward the costs of growth in new areas. Wellborn Water now charges impact fee of $2,500 for areas served in College Station In 1995 the city conducted an Impact Feasibility Study that evaluated Drainage, Water/Sewer, and Transportation. At that time, they did not recommend pursuing transportation impact fees primarily because “the cost of upgrading state and federal roads could not be included and developers were already paying most of the cost of (capacity-expanding) road improvements. In 2001, however, changes to the Texas Local Government Code 395.01 allowed costs on state and federal street projects to be eligible. In 2008, in a memo to the Impact Fee Advisory Committee, the City Engineer summarized the pros and cons of implementing Roadway Impact Fees and concluded the following: The implementation of impact fees is a viable method of financing roadways in cities experiencing significant growth. The equity under- lying impact fees is that it shifts a portion of the attributable burden for associated infrastructure costs from the existing rate payer to the development which is creating the demand. Development appears to be outpacing the transportation system needed to serve it causing the City to evaluate new funding methods. Finally, note that should the City choose to pursue implementing Roadway Impact Fees, there is an approximated two-year period from commencing to collecting impact fees. In 2011, city staff recommended creating city wide impact areas to contribute to the costs of growth in College Station. The recommendation was to charge new development $400 fees for both Water and Wastewater for a total of $800. It also recommended zeroing out the existing 5 impact fee lines. The City Impact Advisory Committee made up of the Planning and Zoning Commission recommended that City Council implement Impact Fees at Zero, leave the existing 5 impact fees in place and review situation in one year. The City Council voted to keep the 5 impact fees in place and to reject the recommendation to adopt city wide impact fees. The strongest opposition to establishing city wide impact fees came from the Home Builder’s Association. They stated the following reasons for opposing these fees: Economy is too weak right now to implement impact fees Will drive new development to Bryan and ETJ New home construction already pays for itself in 2 years Disproportionately harms entry level housing market It is clear now that the economy is stronger. It is clear that areas in College Station that had impact fees developed as quickly as other areas. Even areas in College Station that had impact fees from Wellborn water saw no decline in development. If new home construction paid for itself in 2 years, we would not be committed to financing transportation infrastructure for the new growth areas with most of the $50M in certificates of obligation now. Entry level housing has continued to develop in some of the existing 5 impact areas Thus, it seems critical to ask the staff to reconsider whether establishing impact fees for water, wastewater and transportation might not be one way to help meet the costs of growth we are experiencing. No one now believes that this new growth will pay for itself. Nor will it be possible to cover all of the costs of this new growth with impact fees. It may, however, help bear some of the costs and allow the city to address other needs while supporting a sustainable rate of growth. Impact fees were created by the State of Texas to allow municipalities to recover up to 50% of the costs incurred with new growth. These fees will never recover 100% of the costs of new growth. The other 50% will be covered by existing residents through property taxes and sales taxes. Had the city enacted city wide impact fees of approximately $3,000 per LUE on water/wastewater facilities in 2011, it has been estimated that approximately $7,739,798 or ($2.1 million dollars per year) would have been collected since 2012 from these new developments. It has also been estimated that if the city had adopted transportation impact fees in 2010 to be effective in 2012, the city could have collected $7,017,000 (or approximately $1.9 million dollars per year) from new developments. Obviously these amounts would not have covered the costs of growth we have experienced and are now seeking to address by funding $50 million in certificates of obligation. But it would have made a significant contribution to these costs. It is not a matter of asking new growth areas to bear all of the costs associated with this growth. It is a matter of asking these developments to pay their fair share of the cost. A means of determining what that fair share should be has been provided by the State of Texas with a formula that gives credit to new developments for the increased property taxes and sales taxes this new growth will bring to the city. This law also states that no more than 50% of the cost of growth can be recovered by impact fees. That ensures that everyone bears a fair and reasonable part of the funding required for growth to take place in an acceptable and sustainable manner. Even if these impact fees are enacted, the city of College Station is considering an increase in property taxes as well as finding other ways of obtaining the revenue now required by the extraordinary growth it is experiencing. Thus, it is important that we consider all means possible to ensure that this growth will be done in a way that allows for sustainable growth with the costs shared by all, rather than allowing quick profits for some to dictate an unfair and unstainable growth to drive current development decisions. As I have stated in earlier discussions of the budget, we are facing greater demands to fund infrastructure than at any time in the history of this city. I do not believe that we can tax ourselves out of this demand for more infrastructure, nor do I believe that we can spend our way out by attempting to attract more economic development. I believe that we must grow our way out of this current issue by asking all areas of our city to contribute a fair share to this cost. SUMMARY Impact Fees have existed in College Station since 1992 in specific areas due to the foresight of responsible developers and city staff. Wellborn Water charges a $2,100 impact fee to College Station residents it serves. The Transportation Subcommittee of the Citizens Advisory Committee in 2015 found $140 million in transportation infrastructure needs but recommended $50 million. The City Council voted to increase the property taxes in 2015 by 2.65 cents to cover transportation infrastructure needs along with needs of fire and police departments and is considering raising taxes by 2 cents more in 2016. The City Council also voted in 2015 to increase the ROI on electric utility fund to 6.99% to cover pay increases for police along with other city workers. In 2016, the City Council is considering an 8% increase in the wastewater rate In 2016, the City Council is considering adopting a roadway maintenance fee which will include $2,585,000 to funding road maintenance. The City Council cancelled the Bond election for 2015 in favor of funding $50 million in transportation infrastructure with certificates of obligation. It is estimated that the city could have collected over $7M in impact fees on water/wastewater had these fees been adopted in 2011, and it could have collected over $7M in roadway impact fees had transportation impact fees been adopted in 2010. It is time to face the fact that College Station needs more money to meet the costs of growth it is experiencing. Impact fees will not provide all that is needed but they can contribute to meeting these needs. Everyone in the community needs to pay their fair share.