Impact fee update

Impact fees are touted as being the big fix to "growth paying its own way". However, that is just not true. Impact fees make a difference in revenue, but only when buildings are actually built - not something that's been going on too much lately.

Anyway, the 3rd quarter (Apr-June) numbers are out and the impact fee collections continue to be sparse. And the loan balance continues to rise.

At the end of FY2008, the impact fee loan balance was $23.6 million. (The loan balance comprises spending money on projects that should be funded by impact fees but since impact fees are disappearing they are funded out of places like the property tax. This needs to be accounted for and theoretically someday the general fund will be paid back. Why this accounting? The only good explanation is - it's the rule.) Nine months later, the loan balance is over $26.3 million - a 11% plus increase.

What's really going the wrong way is the collection of impact fees period. We are now seeing a number of requests for refunds, almost $400,000 this year so far. Let the handwringing begin.

Where has all the traffic gone?

Traffic counts are declining in our area. I had heard recently that the traffic on I84 between Caldwell and Boise has declined by 9% in April 2009. So I thought I would see if our ACHD traffic guru, Terry Little, had any numbers for Ada County. It would make sense that if less people were coming in from Canyon County, then the traffic in Ada County would be less as well.

And it turns out this is the case.

All of these locations show the decrease from March 2006 to March 2009. These figures are from the State website.

Capitol Bridge down 2.1%
Veteran's Bridge down 8.68%
Eagle Rd down 7.45%
Broadway at I84 down 13.75%
Linder Rd down 16.15%
Cole Rd at I84 down 10.12%

Just on these 6 roads, there were 15815 less cars in 2009 than in 2006. I think this has some pretty big policy implications for the building of huge new roads. They may not be needed, instead we need to improve intersections and just time the lights to keep the traffic flowing.

8th St Redux Redux

So the additional 4 spaces on the NW corner of 6th and State Sts are out. The vote was 3-2. Huber, McKee and Arnold voted to allow the State to prevail. Myself and Franden voted with the merchants, office tenants, and citizens.

What I found most unappealing of the State's arguments was their lack of understanding of the need for these spaces. They had no interest in allowing the City of Boise a little extra time to meet with the full Capitol Commission to make their case.

They did say that anyone could use the State's nearby parking lot on nights and weekends and that they were very generous to do so. Generous? The State is us! We are the State! Apparently they have forgotten that, if they even ever knew. I guess they just think of the citizens as the poor saps/cash cows that stuff the maw of government with our hard earned money.

Budget Questions

The ACHD Commission met for our "budget overview" yesterday and I'm pleased to say that even Commissioner Rebecca Arnold could be there.

As I was the only commissioner to ask any questions regarding the proposed $78.7 million budget, I thought I would just reprise my questions and what the outcome was.

Our overtime budget is $272,000, a good portion of which could be alleviated by changing our work week from Sunday - Saturday to Friday at 5pm to Friday at 4:59pm. This way any call outs on the weekend can be adjusted with comp time during the week. Outcome - maybe.

Since our lobbyist, who costs $68,000 per year, has not provided the commission with any reports per the contract, I think we should do away with them particularly since we also pay for lobbying through COMPASS and the Highway District Association. Well, apparently our attorney took it upon himself to be the gatekeeper and keep all those reports to himself but that's ok because the commission really doesn't want to be bothered with knowing that stuff. I've asked for a copy of their final report from the 2008 session. Commissioner Arnold was beneficent enough as to allow that to happen. Outcome - way too valuable a service even though we don't get reports to know exactly what we received in value.

We subsidize Commuterride with $250,000 of taxpayer funds. I think we should do away with that subsidy. Well. How stupid was I? However we will be reducing their travel and meeting budget by about $8000 and well get some update on their statistics and how they advertise. Outcome - not much happening on this front.

We did remove the Kuna Mora Road study from the budget saving $25,000 and about $4000 in other study placeholder funds. Outcome - something.

We are going to look into cheaper vendors for credit card payments.

For some reason the commissioners, including those who don't get the Statesman, think the Road Wizard in the Statesman (which they don't see of course) is the greatest thing since sliced bread and refuse to get rid of it which would save around $60,000 per year particularly if we wrote it in house. I did get some agreement on looking at their circulation figures over the last years because personally, I don't think they have a very high readership. Outcome - we'll see.

I believe we can cut the property tax budget by $1 million which would return some real taxes to the property tax payer. (Note I think this could be done without sacrificing any road maintenance, planning or construction of new roads.) Yet, I don't think I'm going to get any support for that. Right now that discussion has been put off until August 2009 at the public hearing. If no one shows, then the commission will assume there is no support for reductions in taxes.

Now's a good time to raise taxes?

In August, every taxing agency in Ada County is going to set their budgets for next year. Many of those will increase the property tax in the face of falling assessments and home equity. Smart? I don't think so.

This is the litany of economic indicators I gave to the ACHD Commission at our Wednesday work session on the budget. (BTW we were only going to spend ONE hour discussing an $80 million budget- unbelievable. We'll reconvene on Tuesday.)

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In Ada County, unemployment went from 5.1% in November 2008 to 9.4% in June 2009, an 84% increase.

The average workweek on nonfarm payrolls fell to 33 hrs/week.

When you add up the total unemployed and marginally attached workers plus forced part time, the national unemployment rate is actually 16.5%.

Third quarter hiring plans nationally for 2009 are at a record low. 67% of employers said they anticipate no change in hiring. A jobless recovery is now being talked about.

Idaho ranks 18th in days spent working to pay state/local taxes at 102 days.

Idaho's state/local tax burden puts us at #13 with #1 being the highest.

Income in Idaho fell in the 1st quarter of 2009 by .8%, worse than in all but 8 states. In the last quarter of 2008, income in Idaho fell .7% while nationally the decrease was .4%.

In Ada County, the Idaho Foodbank Warehouse distributed 31% more food June over June. The St Mark's Foodbank saw an increase of 33% more recipients in June over June. The Meridian Food Bank showed an increase of 51% in May over May with an average 79 new families per month that had never used a food bank before.

It will be at least 1 year before commercial construction comes back. In Ada County there are no land sales, no investment sales and no financing.

In Ada County we have the following: Office vacancies are 14% (up 17% over 2008) with Eagle office vacancies approaching 25%. Industrial vacancies are at 11.6% (up 55% over 2008) with central Boise vacancies approaching 16%. Retail vacancies are at 12.4% (up 29% over 2008) with the Boise airport area approaching 25%.

There are 227,000 sf of office space to be absorbed in the county, 336,000 sf of retail and a whopping 616,000 sf of industrial space.

Home sales are dismal. Of the homes for sale in Boise, 53% are vacant - in Eagle 38% are vacant and in Meridian 50% are vacant. Last year the vacancy rate in homes for sale was 20%.

Many pending sales in Ada County are short sales which may not go through.

Fannie Mae is holding off on foreclosing 765 homes so as to not further affect the downward trajectory on prices.

This is a great article that recently appeared in the Wall St Journal. I don't know how long the link will hold.

So with all that, isn't it a great time to raise property taxes?

Impact fees may have no impact

ACHD was recently asked by the City of Meridian to defer the collection of impact fees on commercial projects. Meridian has deferred the collection of their impact fees for police and fire in an attempt to spur commercial development in their city. They feel that impact fee payment at the time of the building permit is an impediment to development.

I don't agree that ACHD should defer the collection of impact fees to a time, uncertain, in the future when the projects may become occupied. All you have to do is look around Ada County to see all the retail, office and industrial buildings that are vacant. In fact, office vacancies range from around 14% in Meridian to over 24% in Eagle. Industrial vacancies went from 7.2% a year ago to over 11% in May 2009. Total retail vacancy is 12.4% but unanchored retail is a whopping 23.5%

The worst news however, is the absorption of these vacant buildings. It's in the negative range and exceeds -250,000 square feet for office and -619,000 for industrial. We'll need that much new business or business expansion just to take care of what's already available, much less any new.

ACHD really cannot afford to defer impact fees on any new projects that may occur. These often range into the 100s of thousands of dollars. Deferral could mean the fees are not collected for 1-2-3 years and the risk is always there that the developer goes under prior to paying. We are seeing projects today under construction stalled because the financing has been pulled.

However, the ACHD commission gave the go-ahead (yep on a 3-1 vote) to spend a lot of staff time putting together an agreement for impact fee deferral. At the end of the day, I suspect it won't go anywhere, but I guess the commission felt the legal staff needed busy work.

Nampa to raise taxes in a recession

So we see today that Nampa is going to not only raise the property tax rate by collecting the same amount of property tax dollars as last year - they are also going to increase that by 3%.

Nampa's assessed values have fallen an average of 20%. Industrial vacancies in Nampa are 17%, office vacancies are at 18% and retail vacancies are over 18%. That many vacancies means a lot of businesses have gone away which leads to loss of jobs.

And we see that:

Canyon County unemployment in May was 10.9%, in June it went to 12.2%. 1 in 8 unemployed Idahoans reside in Canyon County.

And the reason for this increase in property tax? "Nampa traditionally has taken that 3%," Mayor Tom Dale said. Oh well, if it's tradition. A 2.5% decrease in the general fund has led to a "bare bones budget" said Finance Director Vikki Chandler.

I'm sure glad I don't live or own property in Nampa.

Property Taxes

I've been doing a lot of thinking lately about the economy, ACHD's budget and property taxes. Most people would obviously think that all three are related. They should be and they kind of are, but not really.

You see, there is no link between the value of someone's home as fixed by the assessor and the property tax that is levied by government. Presently home prices are falling because of the economy. The housing bubble has burst, many homes are in foreclosure, houses are not selling all that well and the assessor takes all this into account (theoretically) when setting the assessments. We know in Ada County that assessed values have fallen an average of 12%.

Do you think that your property tax will fall by 12%? If so, you probably will be wrong, actually, not probably - you would be wrong.

Local governments can set their budgets based on what the budget was last year and then can add another 3% on top of that. If say, you paid $1000 in property tax last year, you could theoretically pay $1030 this year even as your home has fallen in value, assuming the taxing government doesn't set their budgets to meet reality. Doesn't seem fair does it?

Doesn't it seem as though if unemployment is at almost 10%, if home prices (and the attendant equity) have fallen 12%, if the stock market and one's 401k has fallen precipitously in the last year, and if businesses are collapsing and those that aren't are really not hiring that government should not be looking to keep going along as if everything is still ok? I think so.

I think that it would be outrageous to not lower ACHD's expectations for property tax collections. I want to see ACHD tighten it's belt just like everyone else in Ada County. It doesn't matter if we are talking about saving someone $1.00 or $100.00. If every one of the taxing entities cut their expectations and their mill levy, the taxpayers of Ada County would have more money in their pockets, money that for many is sorely needed.

I'm going to be posting a lot on this topic in the weeks to come. I'm going to share statistics with you that might surprise you. I can't really affect any change at any place other than ACHD, but you can expect that I'll be vocal about the budget and the property tax at ACHD and I hope that the taxpayers will be as well. The economy is too bad for ACHD's budget to just be business as usual.

8th St Parking Redux

The issue of restoring 4 parking spaces to State St at the NW corner of State and 6th (behind the State Capitol) is back on the agenda. You will recall last week, the Commission voted 3-2 to not allow these spaces.

We were asked to reconsider the vote this week, which we did. Rebecca Arnold moved to reconsider the action of denial, I seconded and the motion passed on a 3-2 vote with Huber and McKee voting against bringing the issue back for more discussion.

We will be revisiting this issue on July 22, 2009 starting at 6pm. If you have some input on this, be there to be heard.