Some Thoughts on Growth, Impact Fees, a Stronger Economy, Lower Taxes, Scalability, and Sustainability

I want to provide a more comprehensive explanation on impact fees related to new development, whether new growth is paying for itself, and affordable housing. I support expanding the tax base through managed growth. It’s a win-win proposition for taxpayers and services if we do it right. We have a window of opportunity to scale up in a sustainable fashion. Let me explain. 

I oppose higher impact fees because it actually inflates the cost of housing. We want fair impact fees. They shouldn’t be so low that existing taxpayers are essentially paying for the new growth, nor is it fair to have excessive impact fees that forces new developers to subsisidize the existing tax base. It needs to be fair. The other factor that needs to be considered is the long-term assessment of the new growth. Not all development is worth the same. Most of the homes currently being built are worth more than the median home value in Nampa. What that means long-term, is that everyone below the value is benefiting from the new growth, not by intentionally transferring money or fees from the new growth but rather because the market forces are creating the climate we’re currently experiencing. This is a good thing.

While the market is growing, the new concern is affordable housing. Again, the market is dictating this. Here’s the thing: You can’t do affordable housing by inflating the cost of development. A legitimate concern is whether the new growth is being subsidized by the existing tax base. I think we all want an equitable and fair system, but trying to quantify what’s fair is honestly pretty challenging. Impact fees are a complex animal. The GRUM (G = growth; R = repair and replacement; U = upgrade; M = mixed) analysis used in reference to the Capital Improvement Plan is a complex formula. Add to that the statutory guidelines, and it gets even more complex. All of this being said, the only way we’re going to get more affordable housing is if we have the higher end growth in the overall portfolio. There’s also a myth that affordable housing is only a drain; not necessarily true. High-density housing in duplexes and more, built to rent out, actually generate good revenue. If a property is being rented, it doesn’t qualify for a homeowner’s tax exemption. A duplex generates more revenue than a single home worth slightly more than the duplex. 

Back to impact fees; I actually support more comprehensive reform in how impact fees are collected, held, and appropriated. I believe we can increase efficiencies with some prudential reforms, but this will require some work form the state legislature. In the meantime, we have some impact fee funds that probably exceed what will be spent. One can make the case that other funds are underfunded. Again, ongoing reforms and adjustments are needed. 

As for funding new schools, I believe we might need to build 1-2 more schools. Rather than fund new schools through impact fees, I believe that there are other options that are better. Land-secured financing and municipal bonds might be a better way to fund this than impose higher impact fees. Why is this a concern for me? I want to see infill development and redevelopment on our existing grid in order to support our local economy, improve the aesthetics of our properties, increase units like duplexes to allow for more housing, and see empty building become vibrant places of goods and commerce. The long-term return on investment from expanding the tax base AND development for more affordable housing can both occur, all the while supporting the local economy that depends on construction and rehab and materials, not to mention the reviving of vacant buildings. 

I believe we absolutely need this kind of growth in an all-of-the-above strategy for long-term sustainability. 

Another thing is that while we’ve grown, enrollment hasn’t grown proportionately. Much of our growth is found in retirees relocating here, often buying higher-end homes and building new homes. This is a somewhat odd phenomenon in experiencing growth overall but not proportionately in enrollment of students. As such, we’re benefiting from this growth, but we need to spread the growth around and take advantage of this opportunity to expand our tax base and economy. Good, managed growth will set us up for long-term sustainability. This is not a time to increase the barriers to development. Why? Because we already are funding infrastructure than can handle more. In other words, we’re subsidizing non-growth right now. Some growth will ultimately require a new school or two and possibly another fire station, but right now, there are certain areas on our grid that can actually efficiently handle more growth. 

What I’m discussing here is scalability. And I’m convinced that our scalability is set up quite nicely. I believe our growth will fuel the local economy, expand the tax base more than our liabilities, and allow for more affordable housing development, which can only be sustained by the other growth. We can scale up with incremental growth in services based on increased value in our community and be in a position to handle the larger scale items. Once those larger scale items are paid for, we’ll be set up quite nicely in maintaining our obligations with a strong tax base. 

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