As we noted in Part One, the Pagosa Springs community is currently upside-down in its implementation of impact fees.
Most everyone involved in government planning knows that suburban sprawl has an overall negative effect on collective community wealth, when we consider the added costs of infrastructure maintenance and delivery of services. The most cost-effective development, in any community, typically takes place within the urban core.
Since 2006, the Town government has been discouraging urban infill, by charging impact fees on new commercial and residential development — while the County government has been encouraging suburban sprawl by refusing to charge impact fees.
The schedule being discussed by the Town Council on April 2 minimized — almost completely eliminated — impact fees on commercial development. The main question left to answer, then, concerned residential impact fees. Repeal them entirely? Keep them roughly the same? Increase them, but give waivers to affordable housing?
Here, we are listening to Town Council member Mat deGraaf:
“As a fan of free-market economics, I don’t like the idea of [using impact fees] as bargaining chips. And I’ve certainly gone back and forth on the issue. However, some good points have been raised. In the time I’ve been in Pagosa, I’ve seen no commercial development in the downtown core. I’ve seen very little residential development in the downtown area. And the entire time, we’ve had impact fees.
“And I wonder if our lack of development is a byproduct of our impact fees?”
“… Per the Smart Growth recommendations, if something is high density, then we’re creating a positive benefit, without impact fees. As long as a residential development is high density, I don’t see any point in having a residential impact fee…”
I believe what Mr. deGraaf was here bringing to mind, is the concept that dense development contributes to the community, financially, in ways that make impact fees seem insignificant by comparison.
As the discussion turned to the topic of ‘linkage fees’ as a possible replacement for impact fees, we heard these comments from Council member Nicole DeMarco:
“I’m interested in discussing the ‘linkage fee’ idea. I’ve always felt uncomfortable about impact fees, because I’ve never been super clear about the demarcation between which projects can be funded with impact fees. And we’ve been talking about needing a funding stream for affordable housing, and linkage fees are an option. Maybe somebody would, in fact, build affordable units [instead of paying ‘in lieu’ fees.] And then we’d have more doors to open.”
We’ve never had a ‘linkage fee’ program in Archuleta County since I’ve lived here. Here’s a brief explanation, as included in the Town Council agenda packet:
Residential Linkage Fee
A residential affordable housing impact fee or “Residential Linkage Fee” was also calculated for Council consideration. This fee mitigates the impacts of jobs created by new residents in market rate housing. The analysis can also be used to support an inclusionary housing requirement and supports a maximum inclusionary housing set-aside of 24.9 percent of total units in a project for households earning up to 80 percent of AMI. The cash-in-lieu linkage fee tied to 100 percent mitigation (24.9 percent of units) is calculated at $13.95 per square foot…
Based on historical development levels, the fee may not generate enough revenue to fully fund an affordable housing development. However, it would be useful for incremental solutions such as providing local matching funds for State grants or assisting with infrastructure costs or tap fee reimbursements…
I didn’t find this explanation terribly helpful.
Once upon a time, ‘linkage fees’ were seen as a mechanism for mitigating the loss of housing in a community, caused by commercial development — or, alternately, for addressing the need for additional employee housing caused by commercial development. The loss or need for housing was ‘linked’ to the size of the business impact, and the developer was required to either build the housing himself or pay a fee to be used by the local government to support housing.
But over the years, governments got creative with the idea of ‘linkage’ and began charging linkage fees on the development of housing — ostensibly to be used to then promote the construction of low- and moderate-income housing. In other words, local governments made housing more expensive by charging ‘linkage fees’ — in an effort to make housing less expensive.
In 2017, the Texas legislature voted overwhelmingly to make linkage fees illegal in that state, after Austin and some other municipalities began to consider the use of linkage fees. The prohibition was supported by developers. business leaders, and academics who made the case that such fees ultimately drive up the cost of housing and generally discourage much-needed housing development.
The Town of Pagosa Springs put impact fees in place back in 2006, based on the claim that new commercial and residential development was going to put added stress on municipal infrastructure and facilities.
As Council member deGraaf noted, during the 13 years that fees were in place we’ve seen very little population growth within the Town limits, very little commercial development, and almost no low- and moderate-income housing. Whether the lack of development resulted in part from the imposition of impact fees, we have no way of knowing. But we know that very little stress was placed on Town amenities by new development — because there wasn’t any new development to speak of.
So the Town government used their impact fees — collected mainly from Walmart and Tractor Supply — to address some deferred street maintenance downtown that was not caused by Walmart or Tractor Supply. Legally, governments are prohibited from using impact fees to address deferred maintenance.
The general tone of the Council discussion on April 2 suggested that the Town will be eliminating impact fees this year — and imposing linkage fees instead.
Whether the imposition of linkage fees would have the same — possibly negative — impact on commercial and housing development within the downtown core, we again would have no way of knowing.
But at least the Town would have more money to grow its bureaucracy.