Impact Fee Committee's Modest Proposal

According to today's Capital, the Impact Fee Committee appointed by the County Council, has arrived at a proposal. Unfortunately, for the residents of the County, it both waters down the basis on which the impacts were estimated by Dr. Nicholas, it also only recommends taking them up to 80% of that basis......over 5 years.

Should the Council follow the recommendations of the Committee, the impact fee that would have been levied upon a three-bedroom will drop from Dr. Nicholas' recommendation of $18,669 to $12,800, about the place Dr. Nicholas recommended the fee be placed 7 years ago.

The only measure by which this recommendation could be considered a success is when one compares it to the recommendations of the Impact Fee Committee appointed in 2001.

Once the Council decided defer this decision downward, it was clear that the development community was going march the impact fee number downward. Now, we're left having to hope that the Council disregards the recommendations of the Committee that it appointed.

One curious fact about the article is that the Capital writer went out of her way to repeat Ed Middlebrooks canard: "At one point, a councilman accused County Executive John R. Leopold of rushing through a proposal with huge hikes to distance himself from the development community, which had made large campaign contributions."

As someone who is concerned deeply about quality of life issues in Anne Arundel County, I will gladly take a County Executive who makes a habit of raising millions in campaign funds from the development community, if these sorts of policies are the way he chooses to pay them back.

Council Appoints Advisory Committee

This evening, the County Council appointed an impact fee advisory committee to help them sort out the issue. Thankfully, there are no representatives from the homebuilders association on the committee. The committee is being headed up by former County Executive, Robert Neall, and will include, among others:

• Bob Burdon, Head of the Annapolis and Anne Arundel County Chamber of Commerce
  
• Al Johnston, a former planner and member of the the Greater Severna Park Council
  
• Ann Fligsten, a local attorney
  
• Bob Gallagher, West/Rhode Riverkeeper
  

The full list of appointees can be found here.

A "Work Group"? Uh oh.

Apparently overwhelmed by having to make a decision where the facts are lining up against their impulses, the County Council last night announced that, rather than hire another expert to study the impact fee issue, they will form a "work group."

What's wrong with a "work group", you might ask? Well, according to Cathy Vitale, Council Chair, the group will be comprised of approximately 10 people representing "a broad spectrum of interests." That "broad spectrum" will no doubt include individuals from the construction, development, and business communities. In other words, the Council is inviting the foxes to take up guard of the henhouse.

A sham "work group" was set up when the impact fees were last revised in 2000, and not surprisingly, the group's recommendation was well below where the County consultant had pegged a full cost recovery fee.

By taking this step, the Council is passing the buck, making what is essentially a science based decision (i.e., what is the real cost of new development?) into a political one (i.e., how much is the development community going to allow us to raise this fee?).

Examiner Laments Poor Public Turnout on Impact Fees

By all accounts the last Council hearing on impact fee increases was packed with shills for the development industry. Housebuilders, realtors, and business interests enumerated the reasons why it's a "bad idea" to make new growth pay its own way. Testimony was so one-sided, it began to concern the press.

There is a second hearing this evening, 7pm in the Council chambers. It's important for the public to turn out in force in support of the County Executive's proposed impact fee increase, so that the discussion isn't driven by those who have a financial stake in forcing existing taxpayers to shoulder the burden for new development.

Council Flinches on Impact

Yesterday, the County Council had their work session on the County Executive's impact fee proposal. The bold plan, predictably, drew quite a bit of heat from the Council, for reasons ranging from the disingenuous (see Ed Middlebrooks feigning concern about "affordable housing"), to bad-faith misdirection (see Cathy Vitale: "The numbers that were produced were not based on one specific methodology"), to being insulted that the Executive gave the Council the legislation rather than vice versa (see Jamie Benoit's request to have the Council hire its own consultant).

From the start, there was never a question that a significant hike in impact fees was going to be an uphill battle, despite the fact that several members of the sitting Council blamed the Owens' administration for a failure to appropriately hike the fees.

Now, I certainly won't begrudge the Council its due diligence, but to question the consultant, James Nicholas' credentials or his "methodology" strikes me as a bit desperate. After all, Nicholas literally wrote the book ("A Practitioner’s Guide to Development Impact Fees" (1991)) on impact fees, is an urban & regional planning professor at the University of Florida, and has been a consultant on the issue to at least 5 states, 28 counties, 22 cities, and the US government. His resume can be found here [pdf].

If the Council can find a more qualified consultant, I would certainly welcome his or her assessment of the County's situation. If, however, the Council is just chafed to learn that every time a new home goes in, the taxpayers of Anne Arundel County get rogered in the pocketbook, they should do the right thing and make new development pay its own way.

This is, arguably, the most important issue that will come before this Council. Thousands of new homes are slated to come to the County as a result of BRAC, and if we don't have serious impact fees in place when they do, taxpayers will be subsidizing each new home to the tune of something like $20,000 apiece. That's the way business has been done in the past, and it's why, despite adding 60,000 people from 1990 to 2000, our tax burden continues to increase.

UPDATE: Sun coverage.

Leopold Proposes Bold Hike in Impact Fees

According to today's Capital, last night the County Executive unveiled a sweeping proposal to raise impact fees on new development to make it cover its full cost, as recommended by a consultant to the County. The impact fees would be raised for both residential and commercial projects, with residential development having to pay for increased school, road, and public safety infrastructure costs, and commercial having to pay for roads and public safety.

In practical terms, that means the impact fee for an average home will increase from about $4,500 to $20,500. The fees on commercial development will be significantly more, likely weighted towards meeting traffic needs. The money collected through these fees is used to provide additional infrastructure to accommodate growth.

Predictably, the Homebuilders' lobbyist, and vice president of Ribera Development, Eric DeVito cried wolf, saying, "the new fees are so high that it may shut down building in Anne Arundel." We should all be so lucky to see such a day.

Once introduced, the future of the bill is in the hands of the County Council. Let's hope they don't gut this important piece of legislation in favor of pandering to the development community. It's about time that new development started to pay its own way, rather than relying on subsidies from the public-at-large.

Upcoming Hearing on Impact Fees

The Planning Advisory Board will meet on Thursday, January 3, 2008, at 6:00 p.m. in the Chesapeake Room, Second Floor, Heritage Office Complex, 2664 Riva Road, Annapolis, MD.

The Board’s agenda is:

6:00 - Call to Order; Public Hearing on Legislation regarding Impact Fees

Speakers that have signed up will be invited to speak. Public Officials, Documented representative of civic, neighborhood, business or professional associations will be given five (5) minutes to speak; Individuals will be given three (3) minutes to speak

Written testimony will be accepted until January 10, 2008. Please mail to:

Office of Planning and Zoning
PAB, Attention: Sharon Faulkner
2664 Riva Road, MS 6403
Annapolis, MD 21401

Requests for more information can be addressed to Sharon Faulkner, Office of Planning and Zoning, at (410) 222-7432. Assistance for persons with disabilities will be provided upon request at least one week prior to the meeting. Call Sharon Faulkner, Office of Planning and Zoning, at (410) 222-7432 or the Americans with Disabilities Act Office TDD/TTY at 410-222-4355.

Leopold Vows Firm Stand on Impact Fees

Today's Sun has an article on decreasing home sales in the County, dovetailing that finding with Executive Leopold's increasingly firm stand in favor of a significant increase in impact fees. Predictably, the homebuilders got on the record mewling that "higher impact fees would limit their opportunities to provide affordable housing." Leopold responded, with all that really needs to be said about that laugher, "the enormous success of the homebuilding industry in the previous few years has not produced a significant increase in work-force housing units." In fact, I'm pretty hard pressed to identify any "work-force" housing units that have been produced in the County, outside the few theoretically mandated by the City of Annapolis.

It's a wonder these people can sleep at night. Put an inclusionary zoning bill in front of them for their endorsement and they send their top shill to the County Council to fight it tooth and nail. Tell them you are going to make new development pay its own way, and they try to paint you as an "opponent of workforce housing." "Shameless" doesn't even begin to describe these folks.

Let us hope that the County Executive can stand firm, and that the Council can stand behind him, in his effort to expand impact fees to include at least 100% of road and school related impacts. We can be assured that the development community will be bankrolling the opposition.

Impact Fee Suit to Continue

The failures of the Owens' Administration continue to haunt the County as the latest twist in the unspent impact fee saga unfolds. Circuit Court Judge Paul Harris ruled earlier this week that two former County officials can remain in their case charging that Anne Arundel County misspent (or failed to spend appropriately) impact fees collected during the Owens' Administration. The suit revolved around an argument, made by the Ethics Commission, that the two officials, former County Attorney Phillip F. Scheibe and Robert J. Dvorak, a former top administrator, had used inside knowledge of the impact fee program to try to make money by suing the County after leaving their jobs in the late 1990s.

Schiebe and Dvorak have contended that the Ethics Commission suit, brought in 2004, was politically motivated, and they're probably right. They embarrassed the Owens' Administration pretty badly. Of course, they weren't content to use their inside knowledge of the mis-administration of impact fee funds to try to correct the program. They've instead seized on a golden opportunity to try to make a buck and raid the funds collected through the program.

And we, the taxpayers of Anne Arundel County, get to continue reaping the consequences of people like Janet Owens, Phillip Scheibe, and Robert Dvorak "serving the public."

County Executive to Take Up Impact Fees

It's no secret that the last County Administration acted irresponsibly, bending to the will of the development community, and refusing to raise impact fees to the level recommended by the County's consultant. In fact, the fee was levied at about 40% of the recommended level. County Executive Leopold has decided to re-examine the fee structure, and it looks like we may finally get the fee hike we need.

The most recent consultant report puts the current fee for a single-family residence ($4,500) at about one quarter of where it should be ($20,000) according to the County Executive in the Capital report. The two examples given in the article are that builders currently pay $969 and $3,810 for road and school impacts respectively, when their actual costs to us, the taxpayers are $11,000 and $18,000+.

I would like to implore the County Executive to follow Montgomery County's lead (they just bumped up their fees to cover 90% of the actual cost of new development), and do them one better. Our new fees should cover 100% of the costs of new development, and be tied to inflation, so this issue need not be revisited anew every couple of years.

The current situation can't persist. It is a sick, downward spiral where existing residents shoulder the financial burden for development that most of us don't want.

Leopold Looks to Tweak Impact Fees

An article in today's Sun suggests that the County Administration is seeking to change the way impact fees can be spent on new infrastructure as well as increase the amount assessed for each new home. Both changes are long overdue.

Green Fund Bill Proposed

What do you call a fee, levied on new development, that disincentives sprawl and raises $130 million per year to clean up the Bay? A good start.

County Squanders $4.7 Million, Revisited

The latest chapter in the saga of the allegedly misspent impacts fees has taken an unfortunate turn. A Circuit Court Judge has ordered that the County refund more than $4.7 million (now, with interest, over $11 million) in improperly spent impact fees to homeowners who paid the fees between 1988 and 1995.

The crux of the dispute focuses on the requirements of the 1987 impact fee law passed by the County:

The law provided that impact fee money had to be spent within six years, though extensions were possible; required the county to spend money on schools only if it increased student capacity; and laid out how money could be spent on roads.

Among the instances of improper expenditures, according to the Judge:

"The county improperly spent more than $2.8 million in impact fees to expand Park Elementary School in Brooklyn Park and South Shore Elementary School outside Annapolis without adding any more seats."

"The county spent money on trailers, called relocatable classrooms, which the court ruled wasn't allowed under the law."

"Sections of East West Boulevard in Severna Park were paid for with money collected in other districts."

To add additional drama to the case, the County has already spent about $500,000 in legal fees defending itself and, the one of the homeowners' lead attorneys, Phillip Scheibe, is a former County Councilman and former County Attorney who advised John Gary (County Executive 1994-1998) on impact fees.

One wonders if Mr. Scheibe, in his work for the County under Mr. Gary, didn't stumble onto spending "irregularities" and think that he had come upon a cash cow. After all, he and his partner were seeking $1.3 million (over $100k apiece per year) for their work on the case since 2000.

Both sides say they will appeal, the homeowners' attorneys, because they think they should be receiving more money (over $30 million), and the County, because it lost.

Given the fact that impact fees in the County desperately need to be raised to help offset some of the costs on new growth, much more oversight has to be given to the manner in which these dollars are spent, both to lessen the blow of development as well as avoid these costly imbroglios in the future.

Trying to Get a Handle on Growth, Across the Region

Yesterday's Sun had a very interesting piece, where they interviewed the planning departments from five suburban Baltimore counties (Anne Arundel, Baltimore, Carroll, Harford, and Howard) on a number of vital statistics.

County	APF*	Taxes**	Build Out
Anne Arundel	If schools are over capacity, developer must wait until more space is available. APF includes roads, fire suppression, sewage disposal, storm drainage and water supply.	$2,346/$4,617	40,000-50,000 more units
Baltimore	If schools are over 15% over capacity, hearing officer can deny project or place it in a queue. APF includes roads, sewage disposal, and water supply.	None.	????
Carroll	If schools are over 20% over capacity, developer must wait until more space is available. APF includes roads, fire and emergency services, police, water and sewerage.	$2,787/$7,610	28,000-37,000 more units
Harford	If schools are over 5% over capacity, developer must wait until more space is available. APF includes roads, and water and sewer service.	$1,473/$7,442	30,000 more units
Howard	The county caps homebuilding at 1,850 units a year. f schools are over 15% over capacity, developer must wait until more space is available. APF includes roads.	$1.80/sqft	25,000 more units

So what's the summary? Our adequacy of public facilities laws seem to be the tightest in the region, covering the widest range of infrastructure impacts (though I've never seen any of the constraints, beside schools, stop a project). Our impact fees are woefully inadequate, even by local standards. An accurate assessment probably puts them at about 1/3 of where they should be. Build-out. If 40,000-50,000 new homes in the County (the most in the region, aside from Baltimore County, which is apparently clueless on the matter) doesn't scare you, nothing will. At current rates, and with our existing impact fees in place, we would be $360 million additional dollars in the red as a result of that new build-out. That's to say nothing of the additional traffic, pollution, sewer and water problems caused by adding another 100,000-150,000 residents.


* Adequate public facilities ordinances
** Multifamily unit/Larger unit impact fees

Insult to Injury

Many people have come to know that one of the ironies of residential growth in the County is that the more you have of it, the more the County's tax base is drained. There are a couple of reasons for that, but foremost among them is simply the fact that when it comes to new development, it doesn't pay its own way. Sure, the County has some meager impact fees in place, but they cover only a fraction of the real cost of accomodating new development.

Did you know that in 1999, the County Executive brought in an impact fee expert from Florida, and appointed a Committee to study raising impact fees? Did you know that he recommended that the County raise its impact fees to $10,518 to cover the real costs of new roads, school space, libraries, parks, and public safety service increases (his recommendation made no mention of increased stormwater costs)? What did the Owens' administration choose to do? It chose to set it at less than half that much, $4,069. Translated, that means that in 2000, roughly, for every new home built in the County, existing residents were subsidizing it to the tune of about $6,000. The failure of this Administration to take leadership on this issue has cost the County millions of dollars, and promises to cost it tens of millions more in the future.

Just imagine, as 5 to 10 thousand more homes are built in west county, what sort of unpaid bills that saddles existing Anne Arundel County residents with. Which of our candidates running for Executive and County Council, will make this important issue a keystone of their campaign?

[Wednesday's Sun reported that Director of Planning & Zoning, Joe Rutter is concerned about the costs of new west county development, and has recommended going to the feds for help. Perhaps he should approach his boss about the shortfall on the County's end to assist the process.]

County Incompetence Costs Big Money

The failure of the Owens' administration to properly spend $40 million in collected impact fees has cost county taxpayers nearly $500,000 in court, and could potentially costs millions more.

By not spending the money quickly enough, and in the appropriate locations, the County has opened itself to several costly lawsuits where developers and residents are seeking the return of their funds. In addition, funds that have been available for badly needed infrastructure upgrades have gone unspent.

Mismanaging Impact

Those hoping to see new development pay its way and the County use its funds appropriately suffered a setback on Tuesday when a circuit court judge denied the county's request to put an end to the $25 million class action lawsuit by citizens and a developer. Yesterday's Capital reports that county officials may have broken the law by spending more than $6.4 million in impact fees collected from new homebuyers on inappropriate expenditures. County Code requires that funds be spent in the district in which they are collected, on projects that add capacity to infrastructure (e.g., more classrooms, additional sewer and water), within 6 years of being collected. Some of the fees were apparently spent to add space to several schools without adding any additional seats, and in another case, county planners failed to follow the proper procedures to get a three-year extension to use the fees. Fees for a current single-family home stand at $4,069, and the County has a balance of $38 million in impact fees banked. These fees are critical for upgrading infrastructure for the influx of new residents and offsetting some of the costs of new growth, it's imperative that the County doesn't squander them or jeopardize their legitimacy by managing them incompetently.