Friday, July 10, 2009

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.


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