Builders
utlook
www.elpasobuilders.com
2014: issue 2
IMPACT FEES: How do you justify more costs and how do you see El Paso’s future? By Ray Adauto, EPAB The issue of impact fees for water and wastewater resurfaced and this time around the Public Service Board (PSB) or El Paso Water Utilities as most of you know them, requested to nearly double the fees already in place. According to the utility the request is necessitated by the projected growth and needs for infrastructure to meet the growth projections provided to them by the City of El Paso. Impact fees are fees allowed under Texas Local Government Code 395 and are subject to the rules in that code. In El Paso City limits the fees are designated for water and wastewater, not for any other cause. Some states allow impact fees for things like schools, fire stations, police stations, roads and other things associated with new areas. In El Paso the PSB designed the boundaries of the impact fees on open or raw land primed for growth according to the information from the City of El Paso challenged the development industry by saying that growth did not pay for itself and made public comment espousing that view. The local news media was bombarded with what the city referred to as facts, but in fact the city commissioned study
done internally by John Neal and supported by an National Association of Home Builders study shows that new growth pays for itself in about seven years, then continues to pay for the maintenance of the infrastructure for decades more. In addition new residential development brings retail and commercial growth providing more sales tax and property tax benefits to the City. Additionally jobs are created and those people spend money enhancing the local economy. Proponents of zero growth chided the reports as more rhetoric from the building/development community and urged council to adopt impact fees. Under Chapter 395 a citizens committee on capital improvements must be formed and members of the affected industry must be represented. In El Paso that committee is comprised of one appointment by each of the city council representatives and one by the Mayor. By full disclosure to you I currently serve as Chair of the committee. I have been a member of the CIAC since it was established. Others in our industry have also been on the CIAC and one of the most knowledgeable is Bobby Bowling IV,
who chaired the committee as well. Mr. Bowling knows the law and the intent of the law and has taken issue with how the City of El Paso and PSB implemented the impact fees in the first place. “One thing that we have in Texas is Chapter 395, a rule book if you will on the definition and allowable rules of engagement for impact fees in Texas,” Bowling said to the Outlook. “Government subdivisions have use of an impact fee if they can prove that what they are using the impact fees falls under the rules in 395. We fought the original assumptions proposed by the PSB and its consultants because our industry is really the experts on growth and the expansion of proposed growth,” he said. “The industry told the city council at that time that the population numbers and proposed growth were too optimistic and that therefore the CIAC voted to recommend only 50% of the proposed impact fee be implemented at the time,” Bowling continued. “No one believed us and in that case Mayor John Cook and PSB President Archuleta worked to get a 75% fee approved and it was,” he continued. “Our five years down the road have proven that we were right and the city was wrong in
estimating the growth, and as a result the PSB is woefully short on recovery of costs they have made so far,” said Bowling. In fact the PSB reported over $20,000,000 was spent and only $1,900,000 was collected, or about a 10% collection rate. According to CIAC this is bad for the city, falling way short of the anticipated collection. The CIAC, in its report to the Mayor and Council as dictated by Chapter 395 reported a 9-0 vote to hold the line on the fees while looking for alternative methods of collection as allowed by the law. City Council will take public comment and may take action on the proposed fees presented by the PSB and consultants. Whatever the city council does will have significant impact on future growth, and they will ultimately decide if growth occurs inside the city limits or continues outside in the county and other communities surrounding El Paso. The impact fee issue will have a significant impact on the future taxpayer inside the city limits, since new homes and businesses will either pay taxes in the city or outside it.
Cold Weather Drives Housing Starts Down
permits, which are often a harbinger of future building activity, posted a modest 1.3 percent decline to a seasonally adjusted annual pace of 602,000 units. “Cold weather clearly put a chill on new home construction last month and this is also reflected in our latest builder confidence survey,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Del. “Further, builders continue to face other obstacles, including rising materials prices and a lack of buildable lots and labor.” “Though the decline in starts is largely
weather related, it is worth noting that on the upside housing production for the fourth quarter was above 1 million for the first time since 2008 while singlefamily permits held relatively steady,” said NAHB Chief Economist David Crowe. “The less weather sensitive permits data suggests that our forecast for solid growth in single-family housing production in 2014 remains on track, as pent-up housing demand is unleashed.” In January, single-family housing starts posted a 15.9 percent decline to 573,000 units while multifamily production fell 16.3 percent to 307,000 units.
Regionally, single-family starts activity rose 10.7 percent in the West and 2 percent in the Northeast and fell 13.8 percent in the South and 60.3 percent in the Midwest. Overall permit activity fell 5.4 percent to 937,000 units in January. The decline was due primarily to a pullback in buildings with five units or more, where permits fell 13 percent to 309,000 units. Regionally, overall permit issuance was down 10.3 percent in the Northeast and 26 percent in the West, but rose 8.6 percent in the Midwest and 3.4 percent in the South.
NAHB
Due largely to unusually severe weather, across much of the nation, housing starts fell 16 percent to a seasonally adjusted annual rate of 880,000 units in January, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Meanwhile, single-family
ATTENTION INVESTORS: GREEN COMMUNITIES BUILT IN ‘IN–FILL’ LOTS Exceptional investment metrics for mini-green communities built in in-fill lots in El Paso. Proven concept. Compare us to any other investment property. Call Dawco Builders. 915-587-5267 Read our articles at www.dawcobuilders.com