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What the Devil won't tell you

Impact fees are a 'no-growth' relic worth keeping

Charging developers to cover expenses paid by the public was the 'Medicare for All' of Tucson politics

The Tucson City Council is considering a new formula for impact fees, which on its face seems about as interesting as ... well, a reconstituted formula on impact fees.

It ain’t sexy.

At least, not for you. For me …. Rrrrreowwww.

For me, talking about growth is like going back to Euclid Terrace (Arizona Commons) and explaining how water balloon launchers can terrorize the neighborhood. Growth management is intertwined in my journalistic formation. So impact fees are just crystal, water-colored memories. 

The Council’s ongoing discussion is one of those great moments in the life of a columnist when I get to say “everyone is full of it,” except, perhaps, for Councilmembers Paul Cunningham and Lane Santa Cruz.

Impact fees are how communities charge new construction (and the people who will live there, and the businesses that will operate there) for the services that new construction will inevitably require. It’s how "growth pays for itself," so other people don't have to subsidize it. New people mean bigger water lines, widening streets to accommodate the traffic, more police to patrol new neighborhoods and more square footage for firefighters to watch over. You pull a permit for a new subdivision and you ante up a roof tax to pay the cost additional costs to streets, parks, police and firefighters needed to serve that growth.

There was long an argument about whether growth did actually pay for itself. Imagine if you wanted to rent a room to bring in more money but didn't have a spare room. So you build an add-on for a few thousand dollars and rent the room out. The rent you charge now must include the cost of the building the damned room, so you could put a few more bucks in your pockets. Likewise, growth tends to pay for its maintenance but not necessarily the capital investments required to absorb the changes required with a new population.

The city staff, after a pretty involved public process, is recommending the Council lower most impact fees, with a couple of exceptions. 

Cunningham and Santa Cruz say the Council prematurely closed down a public hearing on a measure that is set to reduce those fees. So the Democratic councilman says further discussion in upcoming meetings will be done without the benefit of the more public participation.

It seems like impact fee fever is breaking, or is just now a vague memory.

That's kind of a shame but it shows how political sensibilities have shifted since the go-go '90s saw the "growth management" crowd rise to control local politics. Though the impact fee was established in 2004, its existence is testimony to the days when "no-growth" was shorthand for "we gotta do something about all this sprawl."

This was when candidates ran for City Council or Board of Supervisors, they would be asked “would you support impact fees.” It was the “Medicare for All” of Tucson politics for a good long time. Say “yes,” and you seem anti-business. Say “no,” and look like you're in the back pocket of developers. 

A housing crash and Great Recession later and suddenly who pays for growth suddenly matters less than "How much growth can we get?"

That's a shame. If you move to a community, odds are you like it there and if you like it there, odds are you appreciate the investments made ahead of your arrival. Might as well ante up. 

On the surface, the argument for fees somewhat disingenuously suggested that it was developers who paid. Down deep, it was largely understood that the costs would be largely passed on to new residents. We filed it under the “why-should-I-pay-for-someone-else?” category of cost shifting. 

It's not always smart, but not always stupid.

Where we are

The city's machinations come as a result of a state-mandated five-year review of impact fees.

In 2015, the City Council chose not to raise rates on commercial property because while there was a recovery going on across the country, it wasn’t happening here. The city established cut-rate, phased-in impact fees to try to nurse a soft construction market back to life.

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The new plan proposed by city staff would cut rates further below the discount rate in 15 of 25 categories of construction. The new proposed rate would be lower than what was established originally in 21 of 25 categories.

Cunningham laments the loss of this revenue because it has real-world effects, even if they aren't dramatic investments. The smaller investments matter.  

"You can’t tell me that a walking bridge doesn’t matter," Cunningham says. "You can’t tell me that a right turn lane (here and there) doesn’t matter. We cut our road and park impact fees to the point where it doesn’t matter." 

The Dubious Chill

At the same time, the few fees that are set to increase have provoked the typical bitching from the usual sources. 

Developers of "stand-alone" retail outlets will pay an especially steep $4,792 per project more in impact fees.

The Tucson Metropolitan Chamber of Commerce told Gabby Rico at the Arizona Daily Star that they were concerned and wished the burden on business were eased. 

I've had about enough of that kind of talk. Business has been pocketing all their gains and seeking to socialize all their costs whenever they can, so smart business taxes are usually fine by me.

So when business leaders worry a $10,000 impact fee will have a chilling effect on big box retailers being "attracted" to Tucson ... I'm sorry. No it won't.

The formula of X number of rooftops equals Y number of QuiKieY Marts is what will determine whether commercial development happens. It's a growth issue. They'll move if enough shoppers living under enough rooftops will patronize their establishment. 

I have no idea what a big box store makes in an hour, but couple Rokus, a few Gameboys and a sufficient gross of cheap plastic crap will get you to $10,000 in a single afternoon. Any captain of industry scared out of a market over a half-day of sales during a 10-year time horizon is just demanding to have their ring kissed for the sake of having it kissed. 

Scottsdale has some hefty business fees. We’re talking up to six figures for each project just to deal with water and sewer. Who’s going to tell me no business is going to want into Scottsdale. Allow me to amend: What retailer isn’t going to want into Scottsdale, when 50 percent more people are moving into than out of it? And (psst) Scottsdale has money....

In fact, according to the same study that put Scottsdale leading the nation in net migration, also has Tucson near the top. For every 10 people leaving Tucson, 11 are moving here. That puts Tucson among the national leaders in in-migration. Hence, commercial development is as certain a bet as you can make.

If they come, they will build it so long as Amazon doesn't destroy the entire industry first.

I spent time up in the San Tan Valley in the wake of the recession. That's a community of 80,000 that grew right up until the start of the Great Housing Bubble. The bubble burst and financing dried up. Commercial developers were dying to service all those people but couldn't get financing. So a city bigger than Flagstaff had one gas station and a Basha's in Queen Creek.

Market bubbles and online shopping threatens retail. If the project pencils out in the long term, a $10,000 impact fee won't kill it.

Except... 

B.S. confession

Even my instinctive rant is full of shit (told you everyone was) because the purpose of impact fees has been lost.

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Impact fees were supposed to be tools for growth to pay for itself. Growth means new people and not new construction. If I move into a community that charges impact fees, it means I pay up-front for the new costs associated with me being there.

That's the whole point. A business coming to serve newcomers is a symptom of growth and not a cause. Show me a person who moved Tucson out of love for a particular McDonald's or a Walmart and I'll show you a newcomer Sheriff Mark Napier needs to escort to the Pinal County line. Phoenix is that way, mofo.

On the other hand... 

Reducing impact fees might make sense if it's coordinated with the Pima County. 

Impact fees are a great example of a wasted opportunity for regional government that recognizes de facto Tucsonans don't just live within the city limits.

Pima County's per-house impact fee stands at $3,500. The city charges more than that for any home bigger than 750 square feet and tops out now at just under $10,000 per rooftop. 

Call me crazy but a community impact fee program would be best done regionally, where higher fees are charged for wider sprawl and infill projects closer in to the urban core are cheaper to build.

See what I did there? I created a financial incentive against sprawl. 

Again, I hear you libertarians. Maybe we'll set you up with a special set of plates and a special business license that cuts you off from Tucson and its shoppers. In the meantime, growth management goes back to ancient Egypt. Welcome to civilization. Sometimes, it's just not fair.

The city and county seem to have the impact fee formula backwards, or at least not maximizing their effect. I've complained about this for years and no one listens. I broached it with Cunningham, who started barking about all sorts of gripes about Pima County "not staying in its lane," before sighing "that's a whole 'nother column."

Yes, it is. Some stuff from the 1990s are worth jettisoning: Overalls with one shoulder undone, Crystal Pepsi and the Great Siege of Irony. 

Stuff from the Soup Nazi era are worth keeping: Futons,  Nivana's "In Utero," and impact fees to protect existing residents from paying the whole bill for the cost of their neighbor just in from Chicago.

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Blake Morlock is an award-winning columnist who worked in daily journalism for 20 years and also worked in Democratic political communications. Now he’s telling you things that the Devil won’t.


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Kyle O'Donnell/Cronkite News

Impact fees are a way newcomers to Tucson pay an entry fee for the costs of growth they spur. The City Council is considering lowering those charges and that would cost us all.