ARIZONA DAILY STAR: Tues., March 20, 2007
New housing fee means less revenue for city
Guest Opinion: Edward Taczanowsky
What are our elected officials thinking? Overall, local governments are collecting less money from new housing permit and impact fees because of fewer homes being built.
So what do they want to do? They want to increase the cost for the remaining number of new homes.
This action is poor public policy and will have the exact opposite economic effect that city and town officials want.
As the Southern Arizona Home Builders Association has been warning for quite some time, an alarming number of people in our community cannot afford to live where they work. The problem extends far beyond service workers, teachers, firefighters and police. It includes people in other professions who simply cannot afford the price of the American dream.
Tucson Vice Mayor Carol West's answer is to put a new affordable-housing fee on all new homes.
Now I am no economist, but doesn't raising the cost of something make it less affordable? Someone please explain West's strategy to me.
Our association has provided study after study to Tucson's mayor and City Council that show the economic benefits of new-home construction. It is a fact that new-built housing provides excess revenue to local municipalities that could be used to fund police, fire and other associated impacts.
Per a study we did in 2006, builders typically generate $2,604 in building permit fees, $4,826 in road impact fees, $1,910 in parks impact fees, and $2,300 in property taxes per new house. This will be even higher when reassessments and new fees are implemented.
Yet city officials continue to ignore the inconvenient truth: Growth pays for itself by the end of five years, and after that, growth is a revenue-generator for the city. Revenue that can be used to fund police and fire.
The city of Tucson's response has been to put an additional $1,700 impact fee on new homes to fund public safety. Through the end of February 2007, the city had issued only 174 single-family residential home permits. That's a decrease of 68%, or 365 fewer permits, compared with the same period a year ago.
Surely that is not going to go a long way toward funding police and fire services. And West's new tax, along with new impact fees, will depress housing starts even further.
Not only will the city not get its rooftop fee and impact fees by depressing further the number of permits pulled, but Tucson will lose the other economic benefits that new housing brings.
The time for single-family construction — the goose that lays the golden egg that funds everything from parks to roads — is over. Instead of raising impact fees or forming new ones, it's time for an impact fee attitude adjustment.
It's time to look at a global approach to the real reasons that homes in the city and this region are becoming unaffordable. Government overregulation, environmental restrictions and unsound financial policies are stifling business from producing.
Edward Taczanowsky is president of the Southern Arizona Home Builders Association, which represents some 735 local businesses and 40,000 construction-related jobs in Southern Arizona. Write to him at info@sahba.org.