If all the other cities were jumping off a bridge, would you?

Let’s see: The metro Atlanta housing and commercial real-estate markets are still in the dumps and helping to keep the rest of the economy down with them. What to do?

I know! Let’s raise the cost of new construction!

From the AJC:

Looking to increase revenue and keep up with regional and national trends, Atlanta is considering increasing the fees that developers pay to build houses and commercial properties.

The so-called impact fees, which are used to offset the cost of building new roads, parks and public safety needs created by growth, have remained the same in Atlanta since they were adopted in 1994.

But an independent study, presented to several members of the City Council last week, suggested more than doubling the fees by 2012.

“The impact fees we haven’t updated in years,” said Councilwoman Joyce Sheperd, who chairs the community development committee. “And when they did the comparisons, we are kind of behind. So, the recommendations are being made to increase the cost of our impact fees.”

(snip)

In Atlanta, to build a single-family home, the one-time impact fee is $1,544. Of that fee, $987 goes to roads in that area, $410 to parks, $114 to fire and $33 to police.

On the higher end, a single-family home in San Diego costs $17,598. The national average, minus California, is $5,895.

The study suggests raising Atlanta’s single-family fee to $3,652.

Yes, let’s more than double the impact fee. Because, you know, all the cool cities are doing it.

Ugh.

Actually, this may be good news — but only for the parts of metro Atlanta outside Atlanta’s city limits.

– By Kyle Wingfield

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53 comments Add your comment

DeborahinAthens

August 2nd, 2011
6:13 am

And who do you recommend paying for the roads, the sewers, the street lights, the police, the firemen….? After all, Kyle, you don’t think people should pay taxes.

Will

August 2nd, 2011
7:01 am

Kyle:

Do you remember when republican newspaper writers and republican politicians complained about, among other things, their concern that the health care legislation was pushed upon them without time to read the legislation? The concern was noted that few, if anyone, had actually read the legislation.

Yesterday’s 70+ page debt legislation was introduced and passed within a few short hours.

How many of the republicans who voted for this nonsense do you think actually read the legislation?

Bill

August 2nd, 2011
7:17 am

Remember, Kyle is a “do as I say”, not a “do as I do” reporter – the best type from UGA.

NoDummy

August 2nd, 2011
7:18 am

70+ pages is a joke. The health care bill was 2000 pages!!!!

NoDummy

August 2nd, 2011
7:18 am

Thats 9 inches tall if you actually print it out!

Ayn Rant

August 2nd, 2011
7:25 am

Kyle, you penny-pinching tax, fee, and debt whiners fit the proverbial description of one who knows the price of everything and the value of nothing. You’d be surprised how few developers consider low fees, rather than return on investment, as a motivator.

Spend some of that money, brother! Don’t turn down an investment opportunity because of cost, or refuse on principle to borrow for capital improvements. Give gladly to the state and federal governments to support the worthwhile causes that we cannot accomplish as individuals. Take pride in the accomplishments of yourself and your society.

Live big and stop whining!

Van Jones

August 2nd, 2011
7:26 am

This is just a typical case of monkey see, monkey do. Let’s not find out what things really cost, let’s just raise the price because others charge more. Excellent leadership!

Lil' Barry Bailout (Revised Downward)

August 2nd, 2011
7:33 am

Long story short, Democrats want more money to spend. The future homeowners will already be paying property taxes–politicians see these so-called “impact fees” as a way to raise taxes without anyone noticing.

Jimmy62

August 2nd, 2011
7:33 am

Will: Not many people, including Kyle according to his column yesterday, love the deal. And there are some major differences between this and health care bill. One is that health care was over 2,000 pages, not quite the same as 79. And health care only got rushed because Obama wanted it done as soon as possible to help his poll numbers, there was no actual good reason to rush it except to help the Dems politically. In the case of the debt deal, there were good reasons to get it out as soon as possible.
But hey, it’s so obvious that if you didn’t understand it already, my explanation ain’t gonna help with your limited thinking.

Ken

August 2nd, 2011
7:36 am

NoDummy, do you have a point?

Toby

August 2nd, 2011
7:40 am

Do the cons ever listen to themselves, jimmy makes his case that there is good reason not to read it. Nothing stops the blind charge over the cliff.

JDW

August 2nd, 2011
7:46 am

Ah yes, back to the normal tax whining…WAHHHHHHHHHHHHH Lower Taxes.

Why don’t you try a solution Kyle. If not through impact fees, which are ridiculously low even after the increases, how do you think cities should fund the additional infrastructure requirements that come with development?

WillieRae

August 2nd, 2011
7:47 am

Do you believe for a nano second that the money from the “impact fees” goes to support the increased services required by development. I don’t.
It seems that Atlanta is bound and determined to shoot itself in the.foot by creating obstacles to growth. Not that there is going to be a lot of growth inside the city limits again for a generation.

ByteMe

August 2nd, 2011
7:50 am

Given that we still have a surplus of supply (lots of empty homes and buildings) at the same time that cities are having trouble paying for infrastructure, I’ll go out on a limb and say that it’s a market-based solution to an already skewed market.

Alecia

August 2nd, 2011
8:17 am

The impact fees are not going to really make that much of a difference. It would be baked in once the incentive to construct returns. The prices will be passed on to the buyer. The lack of construction is not caused by impact fees. If Atlanta had jobs, decent schools, an educated work force, lower barriers to business entry, less crime, and managed dilapidated properties better, we would see construction return wheter or not the impact fee is $2108 more. Right now we are the Detroit of the south. Companies have to want to move here in the first place. How can we prove that Atlanta has an educated workforce when the overpaid school system makes national headlines for a cheating scandal and is having its accreditation questioned? The $2108 difference in impact fees is not what will hinder a company that wants to build a commercial building.

carlosgvv

August 2nd, 2011
8:46 am

Kyle, it must be clear to you by now that the incompetence level of our politicians is at an all time high. The main reason for this is that only incompetent people seem to be on the ballot. I wonder if there is anything we can do to get good, competent people to start running for office again?

ViewFromMidtown

August 2nd, 2011
8:54 am

Kyle, a huge part of the reason Atlanta’s current real estate and housing construction market is terrible right now was the rampant unfettered building boom (i.e suburban sprawl) that preceded the recession. Developers overbuilt because local governments (particularly in the suburbs and exurbs), all wanting their slice of the growth pie, did nothing to restrain them. Each new subdivision also stretched and strained infrastructures in those communities. Additionally, the unrestrained growth in far-flung communities increased commute distances and took people further from what little mass transit the region did have, thus exacerbating the traffic problem as well.

The fact is that even before the recession hit, there were far too many new single-family homes on the market and a ridiculous number of zoned and prepped lots ready for more. This is what is a called a bubble and developers are paying the price for it now since it will take quite some time, particularly given the new mortgage qualification environment, to burn off that excess inventory.

You want the free market? This is the free market, baby.

brad

August 2nd, 2011
8:56 am

And you paid how much for that journalism degree?

Question Man

August 2nd, 2011
8:59 am

What’s wrong with the increase if it’s designed to cover costs that will occur as more people/businesses move in? Otherwise, aren’t taxpayers subsidizing developers, and why does that make sense (especially in an overbuilt situation)? Kyle, can you give a better explanation for your opposition?

Check these stats

August 2nd, 2011
9:04 am

Kyle would rather have regular citizens, instead of developers pay to build roads, school,and pay police for their new developments. Were you for personal responsibilty before you were against it? Atlanta residents already pay to keep the roads up and emergency services for the suburbanites that come into the city and use all the services at discounted rates. Business licenses and sales taxes don’t cover the cost of supporting 600K people from 9-5. Even with increasing the impact fees, Atlanta will will not touch similar fees of comparable cities.

Maybe you should write something about how Cobb and other counties raising their property taxes while Atlanta stood pat. I doubt you will since republicans increased the taxes, fees, or whatever they like to call them.

Moderate Line

August 2nd, 2011
9:25 am

Yes, let’s more than double the impact fee. Because, you know, all the cool cities are doing it.

Ugh.

Actually, this may be good news — but only for the parts of metro Atlanta outside Atlanta’s city limits.
+++++
Your article would seem to indicate that you are for subsidizing the construction industry. Why would the people in area which already have roads, parks, fire and police have to pay for people who are moving to new construction.

Moderate Line

August 2nd, 2011
9:33 am

7 days of the FAA not collecting taxes on passengers who fly. For those who might not realize this means that a greater percentage of the funding for the FAA will come from general taxation or in other words people who pay income taxes. The Trust Fund tax is in essence a tax on user of the system.

Based on Kyle article what Republicans are really for and what they have done with the FAA seems to be subsidizing industry such as the airlines and construction.

The FAA collects $30 million in tax a day. They have already lost over $200 million.

What this seems to indicate is the Republicans really don’t care about the deficit as long as it is going towards lower taxes for the rich and industry.

Kyle Wingfield

August 2nd, 2011
9:34 am

Look, I have no problem with government charging a fee to users to cover the cost of a service it provides them. But given that housing starts in metro Atlanta — I haven’t found data more granular than that — are still bouncing around near record lows, and at just a fraction of their boom-time highs, now seems like a curious time for the city to decide it can’t keep up with the new demand coming on line from developers.

See this AJC story from a few weeks ago: http://www.ajc.com/news/housing-starts-pick-up-1027143.html

The key bits are here:

“Smart Numbers, a Marietta firm that tracks every phase of home building, showed that housing permits issued in metro Atlanta have fallen at disturbing levels since August of 2005, when they peaked at more than 6,500. Housing permits hit a low in December 2008 with fewer than 500. The number has rarely made it above 1,000 per month for the region since. ‘New construction can’t compete with distressed sales on the market,’ said Steve Palm, Smart Numbers CEO. ‘It’s just not going to come back this year and probably not next year. And when you are down 90 percent in construction, that means 90 percent of those small businesses associated with construction are out of work or out of business.’ ”

So, it sounds far more like the city is looking anywhere it can for new revenue, is justifying it (in this case) solely based on what’s charged elsewhere — rather than comparing what Atlanta charges for the service to Atlanta’s cost of providing the service — and may be considering this source without regard to how much it might prolong the housing slump.

Does anyone have any information to the contrary?

Moderate Line

August 2nd, 2011
9:36 am

Also, note under Bush the defict didn’t matter so much because it was primarily due to wars and tax cuts. As long as the deficit is funding their two favorite activities the deficit didn’t seem to matter.

Granny Godzilla

August 2nd, 2011
9:37 am

Yes, ViewFromMidtown is right.

We should never have free choice in how and where we live. Centralized planning is the one way and the only way. We all must surely realize that our elected leadership should dictate to us. Live too far from work? Never happen if our leaders would just plan our lives. For instance, we should all live in little pods in a tightly-focused area where we can bike or walk to work. It’s the only solution and if you don’t like it, we’ll shoot you in the back of the head and throw you into the pit.

And anybody else who defends the vile, dog eat dog, careless, unfeeling “free market” is a capitalist dog who should be fed to the dogs. We need totalitarian control, tax rates approaching 100%, and martial law, or else this country is doomed to be too free with unfettered choice and individualism.

All hail ViewFromMidtown. Seig Heil! Seig Heil! Seig Heil!

quick work break

August 2nd, 2011
9:41 am

Ugh–why are people building new homes anyway, when there’s a glut of empty ones on the market they could probably customize for less. Recycle.

Junior Samples

August 2nd, 2011
9:42 am

Mo’ money. that’s the liberal way.

Want to see the future of Atlanta?? Look at Detroit….the model for liberal cities.

Moderate Line

August 2nd, 2011
9:45 am

Kyle Wingfield

August 2nd, 2011
9:34 am
Look, I have no problem with government charging a fee to users to cover the cost of a service it provides them. But given that housing starts in metro Atlanta —
+++++
So if other cities are subsidizing construction more than Atlanta that is justification not increase the impact(user) fee. Your argument should be that the impact fees are more than the cost of establishing these services in the area of new construction.

Unless you can show that these impact fees are more than the cost of setting up these services then you arguing for subsidies.

Kyle Wingfield

August 2nd, 2011
9:47 am

View @ 8:54: And do you think increasing impact fees will make it more or less likely that development will occur in the city rather than the suburbs?

Kyle Wingfield

August 2nd, 2011
9:49 am

Moderate @ 9:45: Don’t you think the city and its consultants would be arguing that the fees don’t cover the costs if that were the case, rather than resorting to comparisons to other cities? Or do you think they really believe citizens care more about what Denver charges for impact fees than about whether the fees match the cost of providing the service?

Moderate Line

August 2nd, 2011
9:51 am

So suddenly Kyle is for subsidies. Have we not learned our lesson from subsidizing? The government is not good at picking winners but here is Kyle arguing for them. This is the same as cash for clunkers or the first time home buyers tax credit. If the fee should cover the cost of new roads, parks, police and fire if not you forcing the cost on to other people.

JDW

August 2nd, 2011
9:51 am

Kyle, fact is the problem with the housing market is that it is overbuilt. In this environment why would we want to encourage more of the same? From a government perspective my recommendation would be to do everything possible to clear out the over built inventory. This has a couple of advantages. First it helps maintain valuations and thus tax revenues. Second it creates liquidity which almost always leads to growth. One great way to do this is to make the purchase of existing homes more attractive than building new ones.

Kyle Wingfield

August 2nd, 2011
10:01 am

Moderate @ 9:51: I have no idea how you get from my statement, “I have no problem with government charging a fee to users to cover the cost of a service it provides them,” to your statement, “So suddenly Kyle is for subsidies,” with no new information about the cost of providing these services vs. the fees charged for them. I’d guess you don’t know, either.

JDW @ 9:51: That’s an entirely different argument from the city’s justification about other cities charging higher fees. But let’s explore it: Why, instead, wouldn’t we just bulldoze those houses that are in poor shape and have been sitting empty for months or years? After all, if the problem is a glut of unwanted supply — and I do think that’s part of the problem — why not address that rather than making a policy judgment favoring the existing unwanted homes rather than new construction?

Tax n Spend

August 2nd, 2011
10:01 am

You know them Dems. They loves they taxes. Loves em.

Moderate Line

August 2nd, 2011
10:20 am

Kyle Wingfield

August 2nd, 2011
9:49 am
Moderate @ 9:45: Don’t you think the city and its consultants would be arguing that the fees don’t cover the costs if that were the case, rather than resorting to comparisons to other cities? Or do you think they really believe citizens care more about what Denver charges for impact fees than about whether the fees match the cost of providing the service?
++++
No. Without asking or researching I would not jump to such a conclusion to base my opinion. They may not make the argument because it is assumed that the impact fees do not cover the full cost of new development. I believe by law the local government can not charge impact fees that exceed the cost of establishing these new facilities in Georgia.

Impact fees must be based on the actual, or reasonable estimates of, cost of providing services to the area and must take into account the present value of any future funding sources.

The ordinance must require that impact fee funds be spent on the service and in the service area from which the fees were collected.
http://www.uga.edu/coastalnemo/Documents/Literature/Impact_fees_GA_2007.pdf

Based on reading the attached document impact fees rarely if ever cover the true cost of development.

tar and feathers party

August 2nd, 2011
10:24 am

Kyle is the idiot mouth piece for the fat cat republican developer scum, the one’s who went bankrupt and destroyed the banks, and are now back looking for another free ride. Just say NO to everything Kyle advocates for, you can’t go wrong!

JDW

August 2nd, 2011
10:24 am

Kyle wrote,

“Why, instead, wouldn’t we just bulldoze those houses that are in poor shape and have been sitting empty for months or years?”

Actually some banks are doing just that and I think that makes sense as well.

But to your original point, that increased fees raise the cost of new construction…I really don’t think it is a bad thing in this case. We have fees that are lower than benchmark rates (which by the way is a very common way of setting prices for “commodity type items and services”) and if you really did an analysis probably much lower than the costs involved in providing the services required.

Why doesn’t it make sense to have builders and purchasers of new homes pay the actual costs involved?

Moderate Line

August 2nd, 2011
10:25 am

Kyle Wingfield

August 2nd, 2011
10:01 am
Moderate @ 9:51: I have no idea how you get from my statement, “I have no problem with government charging a fee to users to cover the cost of a service it provides them,” to your statement, “So suddenly Kyle is for subsidies,” with no new information about the cost of providing these services vs. the fees charged for them. I’d guess you don’t know, either.
++++
The impact fee does not cover the cost of the development of new roads, parks, police and fire. That cost has to be born by someone other than the developer or the new homeowner. That is a subsidy.

“Facts do not cease to exist because they are ignored.”
-Aldous Huxley

Lil' Barry Bailout (Revised Downward)

August 2nd, 2011
10:30 am

Eeeeevil developers don’t pay impact fees, haters. Homebuyers do.

Lil' Barry Bailout (Revised Downward)

August 2nd, 2011
10:35 am

Why don’t the lazy Atlanta politicians find out what the real impact is of building a new home and charge THAT amount, instead of justifying the increase based on what everyone else is doing? Oh, and while they’re calculating the impact, don’t forget to account for the new sales, property, and income tax the new homeowners will be paying.

Hillbilly D

August 2nd, 2011
10:38 am

Let’s say somebody comes in and builds a 1000 lot development. That’s going to require another school, more than likely. Who is going to pay for that school? The majority of it will be paid by the taxpayers, who were already here. And in many cases, the developer isn’t even from Georgia. They’ve got their money and gone.

Atlanta/North GA has been trying to live on an economy based on unrestricted development for about 40 years. This has led to repeated boom and bust cycles, although this current one is the worst one that I remember. 1974 was pretty bad too but it was mostly due to overbuilding of apartments and office parks. Along with all this development has come traffic problems and water problems. What the movers and shakers need to do is to base the economy on something besides development. Nearly every county commission and city government is made up of real estate people and developers, though, so the chance of change is probably remote.

Moderate Line

August 2nd, 2011
10:43 am

Kyle Wingfield

August 2nd, 2011
10:01 am
“I have no problem with government charging a fee to users to cover the cost of a service it provides them,”
++++
You never made such a statement in this blog prior to this point but yet you present as if you had. Interesting.

Moderate Line

August 2nd, 2011
10:46 am

Kyle Wingfield

August 2nd, 2011
10:01 am
Moderate @ 9:51: I have no idea how you get from my statement, “I have no problem with government charging a fee to users to cover the cost of a service it provides them,” to your statement, “So suddenly Kyle is for subsidies,” with no new information about the cost of providing these services vs. the fees charged for them. I’d guess you don’t know, either.
++++
No I don’t consisidering I did not see you make such a comment before this post.

Jefferson

August 2nd, 2011
10:46 am

Maybe selling real estate should not be a high paying job, not to mention many buyers DID pay too much for their home simply because they payment shop. Either way, the impact fee is no bigger rippoff than a water tap fee, or building permit. Sounds like wages don’t support the housing market otherwise.

Lil' Barry Bailout (Revised Downward)

August 2nd, 2011
11:04 am

“Let’s say somebody comes in and builds a 1000 lot development. That’s going to require another school, more than likely. Who is going to pay for that school?”
——-

Isn’t that what property taxes are for?

Lil' Barry Bailout (Revised Downward)

August 2nd, 2011
11:06 am

I applaud the Atlanta Democrats for “walking the walk” of higher taxes that they’re always begging for. Let’s see how it works out for them. Seriously.

JDW

August 2nd, 2011
12:23 pm

“Isn’t that what property taxes are for?

In a word…no. Property taxes pay for the operation of schools and don’t even cover those costs.

Construction comes from alternative funding like impact fees.

Lil' Barry Bailout (Revised Downward)

August 2nd, 2011
12:34 pm

Schools used to be built with property tax revenues. Democrats need the impact fees since they’re giving union thug teachers outrageous pay and benefits.

yuzeyurbrane

August 2nd, 2011
12:35 pm

No more Federal road money equals no local roads. You are getting what you wished for. “If you break it, you own it.”

Question Man

August 2nd, 2011
1:16 pm

Will you post the “independent study” mentioned in the AJC quote? What does that say about the basis for the cost increase proposal?