Government Fees & Taxes on New Homes
As of January 2007
Pima County |
Town of Sahuarita |
City of Tucson |
Town of Oro Valley |
Town Of Marana |
|
| Building Permit | $2,019 |
$2,265 |
$2,311 |
$6,205 |
$2,392 |
| Water Meter | $1,606 |
$ 342 | $1,606 |
$1,606 |
$1,606 |
Wastewater Fee |
$5,367 |
$5,063 |
$5,367 |
$5,367 |
$5,367 |
| CAP Replenish | $62 |
$62 |
$62 |
$62 |
$62 |
| Impact Fee: Roads | $4,450 |
-- |
$3,932 |
$2,920 |
$6,238 |
| Impact Fee: Parks | -- |
$1,500 |
$1,553 |
$1,412 |
$3,028 |
| City/State Sales Tax | $7,391 |
$13,516 |
$10,092 |
$13,516 |
$14,260 |
| Total Fees | $20,895 |
$22,748 |
$24,923 |
$31,088 |
$32,953 |
Finance Charge in Mortgage to pay fees |
+$26,650 |
+$29,015 |
+$31,787 |
+$39,648 |
+$42,026 |
Total Cost |
$47,545 |
$51,763 |
$56,710 |
$70,736 |
$74,979 |
In the Pima County area, government-imposed building fees, taxes and surcharges on new homes now average $26,521, based on an updated study by SAHBA for January 2007 data that analyzed statistics for a typical $258,407 median-priced, 1,941 square-foot, new-built home.
Government's average surcharge per new home was $16,166 in 2005; and $25,758 in 2006.
“We're now in an adjustment period where the construction of new homes has slowed dramatically. As building-related revenues have fallen, government officials finally realize that impact fees are an unreliable, undependable source of income,” said SAHBA President Ed Taczanowsky. “Over the past 10 years, municipalities have become addicted to impact fees on new homes. That is a funding source that governments need to re-evaluate.”
Government Fees and Restrictions Accelerate Sprawl
As regulatory fees and building restrictions have increased, more homebuilders are leaving the metro Tucson-Pima County urban area for lower-priced land and/or lower municipal fees. In short, these government actions have accelerated sprawl and made housing more unaffordable.
In Oro Valley, for example, recent actions by the Town Council have cooled most builders' interests in doing further business there. In September, Alternative Water Resource fees will increase from $300 to $1,300 for the typical residential water meter. In five years, the fee increases to $5,182 per new home.
Also in September, the Potable Water impact fee jumps $700 from $1,867 to $2,567 per new home.
“Because of the onset of these new water fees, their existing high impact fees, and the overall difficulty of doing business in Oro Valley, I won't even look for land there for future developments,” said John Shorbe, President of Canoa Homes.
“For the benefit of my home-buying customers, it is more economical for them to buy a home in the outlying areas instead of in Oro Valley,” he said.
Since 2004, new home construction in Oro Valley has fallen 28% from 482 units to 349 units in 2006.
Likewise within the City of Tucson, the prevalence of neighborhood-driven ordinances and other land use restrictions, coupled with high impact fees, also is pushing builders outside the urban core.
“I used to do a lot of infill work within the City limits, buying smaller parcels and doing projects as small as 25 lots in a subdivision,” said Shorbe. “But now, many of the City's new land use ordinances and building restrictions are being pushed by neighborhood groups that don't want to see any vacant lots developed.”
“Infill produces millions of dollars in new revenue from existing infrastructure for the City, and that is something City leaders are turning their backs on,” he said. “There are still some parcels available that would be great infill sites, but builders like myself won't do infill with the City because their policies and ordinances have become too restrictive.”
Fees Exceed Annual Median Incomes
Based on the study's updated statistics, when buyers roll the government fees into their mortgages (6.5%, 30-year fixed), their total costs exceed the Annual Median Household Income for Pima County-area residents of $41,521 (according to the 2005 Census Bureau American Communities Survey).
“This creates an unacceptable, significant obstacle to providing affordable housing,” said Taczanowsky. “In unincorporated Pima County, for example, new home buyers could spend an entire year's wages on government fees and taxes and still be $6,000 short.”
To pay the government fees in their mortgages, residents pay an additional:
$132.07 per month in Pima County
$143.79 per month Sahuarita
$157.53 per month in Tucson
$196.49 per month in Oro Valley
$208.28 per month in Marana
SAHBA to Pursue Financing Alternatives for Metro Governments
To address this issue, SAHBA has approached the National Association of Home Builders (NAHB) to bring its “Infrastructure Solutions Program” to the region in 2008. This alternative financing program helps governments partner with builders to create innovative growth strategies that identify other funding sources.
Regional governments are unwilling to raise taxes. The result is aging infrastructure, traffic congestion, overcrowded schools, inadequate water and sewer capacity, and other urban problems. The NAHB program introduces best practices from progressive governments that enable municipalities to leverage their limited resources more effectively.
The 2007 Government Fees & Surcharges Study Update was conducted independent of SAHBA by Bright Future Business Consultants and Nathanson Consulting. All surcharges apply to single-family new homes and represent the standard fee, defined as the “most common occurrence” in each municipality, as actual costs can vary within a jurisdiction depending on various ordinances and policies. SAHBA represents 750 member businesses and 40,000 jobs serving the residential construction industry in Pima, Cochise and Santa Cruz counties.