It's true.
Sure, there's an Impact Fee statute, but it has a catch that works against you, the county taxpayer. Please allow me to explain...
You see, Impact Fees can only be levied for what is termed, "Capital Improvements." Capital Improvements are defined as having a useful life of 10 years or more. Okay, that sounds good, so what's the problem?
The monies collected must be spent on capital improvements within eight years. If you don't spend the money, then you have to give it back to -- of all people -- the developer. See the problem?
We Collect Hundreds While Capital Projects Cost Millions
Capital projects cost millions. Our jail completion project, which is only completing the empty shells that were constructed five years ago, is expected to cost between $7 to $9 million. You cannot "order" $100,000 worth of jail construction.
These kinds of projects occur once every 10-15 years, but the statute was written such that all taxing jurisdictions must spend the money within 8 years or return it to the developer. Even our County building was built about 25 years ago.
Where Are We With Collecting Impact Fees
This is something I've been working on since taking office. For the first time in years we re-instituted a mayors meeting. I wanted to have this meeting because we need the cities to help us collect the county impact fees from their residents. Without their help we cannot collect enough fees to spend on any capital improvement. I also wanted to start meeting again so we could engage in dialogue about issues affecting our community. It's just good politics to build relationships.
The county hired a consultant to identify the areas and amounts where we could charge an impact fee. The three areas identified within the county included: jail radios, parks & waterways (i.e, boat ramps and other capital improvements under that department), and the jail.
The cities initially objected to levying an impact fee on radios used in the jail because they felt it didn't meet the definition of a "capital improvement," despite us being able to demonstrate those radios last greater than 10 years. We removed that fee. The cities also did not want to collect a Parks & Waterways impact fee because they were imposing their own parks impact fee and felt like their citizens were being charged twice. We removed that to keep things moving, so we are now down to just a jail impact fee.
From my perspective, we need to implement an impact fee sooner, rather than later, so we can at least collect money that has a chance at being used. It will save you money on taxes if we can collect something sooner rather than later. And -- upon initial implementation -- we can look at adding other impact fees that are satisfactory to the cities.
The Truth is We Only Collect $551
You read that right. For every new "residential dwelling unit," we can expect to collect only $551. For commercial buildings, which includes apartments, the impact fee is only 24 cents per square foot. In order to cover a future expansion of the jail, we will likely need to collect about $15 million in the next 10-15 years, depending on population growth (with inflation probably more like $20 to $25 million but that's debatable).
At $551 impact fee per residence (and assuming a distribution of 2/3 residential to 1/3 commercial), we will need to construct about 18,000 new homes to cover $10 million of the total. In order to use that money within eight years, that means we need to add 2,250 homes per year, or 7,875 people per year (assuming 3.5 people per household). On its surface that doesn't seem like much in any given year, but multiply that by eight and it adds up to another 63,000 people. Who here wants 18,000 more residential homes? But that's just residential.
New commercial space construction will need to be close to 21 million additional square feet to cover the remaining $5 million needed for a $15 million jail expansion. Did you know the average super center Wal-Mart is about 182,000 square feet, so imagine another 115 "Wal-Marts" in Kootenai County. As you can imagine, the odds of ever collecting sufficient funds for new jail expansion are stacked against the taxpayer. And, remember, the Impact Fees we're collecting are ONLY for a jail.
Adding 63,000 more people here (with a current population estimate of 184,510) will increase the population to 247,510, or a whopping 34% increase. That kind of population increase hits the tipping point of wreaking havoc on existing infrastructure, like roads, schools and even some businesses. If you want growth to really pay for itself, then you need an impact fee for all infrastructure, including: roads, schools, boat launches, water districts, cities, etc.
The only way to do that is for ALL of the local taxing jurisdictions to impose an impact fee for their respective Capital Improvement projects. And these jurisdictions all have to pass a fee that can withstand legal scrutiny, because if any of these fees are incorrectly calculated or collected, there's a strong incentive for developers to sue and get that money back.
There is Another Option, But You Probably Won't Like It
The only other way to use these Impact Fee dollars (and not have to refund them back to the developer within the eight-year limit) is to incur debt. Oh, and by the way, that requires 2/3 vote from you, the taxpayer, which is very, VERY hard to do.
So, for all intents and purposes, the Impact Fee is all "sizzle" and no "steak." You, the taxpayer, is left getting a bigger tax bill and a rusty old can of SPAM meat to pay for growth.
So, How Do We REALLY Keep Property Taxes Lower?
Simple. Start managing growth more effectively.
The reality is that growth will never pay for itself, as long as we have an Impact Fee statute like the one we have today. I agree with the concept that your taxes should ONLY be used to cover existing operations and normal capital improvement / maintenance costs. New residents should pay for new infrastructure, but our poorly written Impact Fee statute suggests you will ultimately pay for that growth.
I will continue to explain in future blog posts how responsibly managing growth will keep your property taxes from growing faster than they should and allow for county (and other) services to keep pace with the service levels you deserve. My hope is that my growth "dashboard" will be a tool that both the county and cities will utilize in their growth decisions. Initial feedback suggests it will (I will keep you posted on its launch in the coming weeks).
For those of you interested, here's the statute. If you really want to keep your taxes low over the long term, please tell your legislators to amend this statute by adding a one in front of the eight, so we don't have to return the money until 18 (better yet 28) years. It's a small amendment to relieve you of a big tax burden.
If you like what you see, please consider sharing this post and contributing to my campaign. It still costs money every month to maintain this website, so I can have a direct communication channel with you about your county government.
Thank you for your support!