The Piercing Truth

This is right from the dictionary and seems to describe Albuquerque, Berry and Schultz. Fascism (f ash ,izem) noun An authoritarian right wing system of government and/or social organization. (in general use) extreme right wing, authoritarian, chauvinistic and/or intolerant views or practices. Fascism tends to include a belief in the supremacy of one group over another, national, ethnic, especially social strata or monetarily; a contempt for democracy, an insistence on obedience to a powerful leader, and a strong demagogic approach. Compliments of one of our Eyes

Aug 17, 2009

Impact Tax

The imposition of an Impact Tax began July 1, 2005. The tax was part of the Planned Growth Strategy - a scheme primarily designed to promote in-fill development on Albuquerque's Eastside rather than promote growth in the city as a whole.

Impact Taxes - or Impact Fees as they are more inaccurately labeled - were sold to the public as a way of making developers pay their "fair share" of infrastructure costs associated with extending infrastructure to undeveloped areas of the city and discourage "sprall" among other things. Never mind that developers were already paying for their development's internal infrastructure. Never mind that developers were also paying for external infrastructure through a system of exactions.
"[E]xactions" — [required] that developers build roads, intersections, drainage works and other facilities off-site to support their subdivisions. The improvements eventually become city property.
Developers at the time felt that the exaction system was often arbitrary and inequitable. As a result, they actually supported the idea of imposing Impact Taxes on themselves (and consumers) believing that Impact Fees would correct the arbitrary nature of exactions and make development costs more predictable.

What developers got was a system of expansion fees, arbitrary exactions, and onerous Impact Taxes designed to social-engineer development. The cost of a new home went up by $10,000 overnight. Many commercial developments were simply made too expensive to build. With the stroke of a pen and the imposition of a tax, homes - the places where people live - moved to Rio Rancho, Los Lunas, and the unincorporated areas of Bernalillo County, and commercial development - the places where jobs live - followed suit.

Tonight, citing the current economic crisis and the dramatic drop in new development in Albuquerque the City Council will readdress Impact Taxes, uh... Fees through a series of 1 year reductions (O-09-70, O-09-71, O-09-72). The idea is to reduce the Impact Taxes for roadways, drainage, and parks by at least 50% and 100% for "green path" developments. Bernalillo County has already reduced their impact fees recognizing the need for development and growth.

We have never approved of regressive taxation for the purposes of social engineering. We'd much rather see the complete abolition of the current Impact Tax scheme. But, we'll take a 50% reduction in any tax even if it's just for a year.

Understand, the kind of taxes imposed by Impact Fees punish those seeking to get better value for their dollar by making the areas where their dollar goes farther less affordable. In addition, Impact Taxes make nearby jobs less available by making the developments that house said jobs less likely to be built. In short, Impact Fees raise the price of housing, reduce the number of nearby jobs, and move needed goods and services out of the area.

More importantly, developers do not pay these taxes - consumers do. If consumers are unwilling to pay the additional amount artificially added by government, then developers stop developing. But make no mistake, developers are businessmen and women. They must make money here or they will take their developments where they can make money. Wouldn't you?

At a time of high unemployment, we need to encourage growth not impede it. Many arguing against the temporary moratorium on Impact Taxes believe that doing so is some kind of gift to developers. Nothing could be further from the truth.

Developers provide jobs, buildings for jobs, and homes for those who have jobs. When we stop developing, we stop creating new jobs. When we stop creating new jobs, we start to lose people. When we lose people, we lose tax revenue. When we lose enough tax revenue, we lose city services. Eventually, tax revenue will drop to the point where the basic city services of police, fire, sanitation, and infrastructure are threatened.

The monies collected through Impact Fees aren't collected from developers, rather they are fees collected by developers from consumers. We need lower taxes across the board not just temporary relief from Impact Fees. But even temporary relief is better than no relief at all. And who knows? Maybe we'll create a few jobs in the process.

----- Update -----
The very first question asked an important question:
"what am I missing here? someone has to pay for roads and sewers and water and ...

why not the people who create the need by sprawling instead of infilling?"
To borrow an Obamaism, let's be clear. Every development whether commercial or residential does pay for itself and more even without Impact Taxes. It has always been in the interests of municipalities to encourage growth not only within its boundaries, but to annex developable land and adjacent developed areas whenever possible.

Growing the city likewise grows the tax base. Each home, each retail center, each office complex, each factory, is like a tax revenue generator that not only pays for itself but pays for needed infrastructure projects in other parts of the city.

Traditionally, the existing tax base has paid for the relatively small additional costs not covered by the developer. That's how the Eastside grew from a small group of businesses and homes along Central Avenue to the distant boundary of the Sandia reservation.

The imposition of additional "fees" - particularly the way the City of Albuquerque imposed them - is simply another way for the city to put more money in its coffers.

But like many such tax schemes, Impact Taxes didn't achieve their objective. Surrounding communities benefited from our onerous tax policy because developers simply move their developments to their more profitable environments. Those communities now benefit from their small initial investment through the taxes paid by these businesses and residents who now reside in their communities.

Impact "Fees" are another example of governmental short-term thinking that create negative consequences in the long run. Couple bad policy with an economic downturn and you've a formula for drastic drops in revenue collected by the city.

It is absolutely in the city's best interests to pass a moratorium on Impact Fees - even considering the silly green enhancement. More importantly, it's in all of our best interests for the city to encourage growth and economic activity.


Anonymous said...

what am I missing here? someone has to pay for roads and sewers and water and ...

why not the people who create the need by sprawling instead of infilling?

Anonymous said...

Does the Impact Tax come out of already existing kickbacks or is it considered new money?

Anonymous said...

Impact fees were designed to stop sprall and reduce the need for roads. This reduces the need for oil.

This might work if we could control the surrounding towns. We do not control Belen, Rio Rancho... Developers move to these towns when costs are too high in Alb. This creates demands for roads connecting Alb to these towns (new lanes on 25 south).

Now people drive longer distances, thus increasing the use of oil and gas (more carbon in the air).

Anonymous said...

Change the zoning at the edge of the city to SU-1 Special Use for an Equestrian Center and would not have to worry about impact fees.

I think Cadigan will carry the legislation.