Please welcome Diane Brossart, president of Valley Forward Association, and guest blogger to the AZ Green Scene. This is the first blog of our exclusive monthly blog partnership series, where Diane will share her experience and insight regarding the state’s sustainable industry.
Freezing impact fees to stimulate economic development runs counter to the principles of smart growth.
There is no evidence that placing a moratorium on impact fees results in any increase in residential or non-residential construction, according to a number of authoritative studies, including the Brookings Institution. Yet with the hope of establishing momentum in the development industry our legislature recently imposed a freeze on acquisitions and increases until June 2010.
Not only won’t this stimulate growth but it places a huge burden on Valley cities when they can least afford it. Most communities are struggling with severe budget cuts, reductions in personnel and impending tax hikes. Now they’re facing yet another economic hit in the form of lost revenue from impact fees.
New development should pay for itself, period end of story. Impact fees implemented by local governments on new or proposed developments assist or pay for costs caused by growth and expansion. These fees help fund the construction of offsite capital improvements including infrastructure and public services such as road expansion and maintenance, expanded police and fire services and increased demand on schools.
In short, impact fees effectively eliminate the financial encumbrance on local jurisdictions that are trying to deal with population growth within the area. The capital required to fund new growth is simply the cost of doing business.
The widely held perception that development results in economic growth is not always the case, however. Badly planned growth creates vast burdens that are often subsidized with tax dollars.
The financial crisis our state is now facing has little to do with impact fees. It’s the result of poor and unscrupulous lending and borrowing decisions that led to a nationwide credit freeze.
Legislation should work to promote livable and sustainable communities by creating viable incentives for developers to undertake projects within urban areas rather than in greenfields on city edges. Our policies should facilitate a balance between economic growth and environmental quality.
The moratorium on impact fees undermines smart growth while shifting the cost of development from one sector to another.
Diane BrossartPresidentValley Forward Associationwww.valleyforward.org