At its February 6 meeting, the Rogersville Board of Aldermen approved a proposal to cut the city’s water and sewer impact fees by 75% through August 31. Water and sewer impact fees in Rogersville range from $1,500 to $2,600 per house, depending on location. The vote was taken following comments by HBA President Matt Bailey, who both resides in and has his business located in Rogersville.
[KOLR-10 Coverage of Rogersville City Council Action Here]
“We believe this short-term reduction is far more than just a good will gesture on your part,” said Bailey. “Your community will be well-positioned as families and builders consider where to build and purchase new homes. Saving up to $2200 per home will make a difference – especially when considering that paying that amount in impact fees did not add any actual value to the home for purchaser.” Bailey went on to point out that every time the average priced home here increases by a $1,000 approximately 350 families are no longer able to qualify for traditional financing.
Rogersville had only about five new homes built last year and while the cut in fees does reduce revenue received from impact fees through August 31, Mayor Cole made comment to the media that he believes revenue will be made up in new property taxes and sales tax from new residents. Cole said the city’s infrastructure is ready for growth and they are willing to think outside the box to attract that new development and construction.
“While many communities seem to be waiting for decision-makers at the federal level to solve economic woes and get housing back on track, Rogersville is making a proactive move to do whatever they can to stimulate residential and commercial construction in locally,” said HBA CEO Matt Morrow. “We are very impressed with their leadership on this issue. It was their idea and we certainly applaud them for following through on it because we believe it will make a difference. They will likely see what we have already documented in our recent local impact of housing study – growth and development already pays for itself. Removing regulatory costs is a better strategy to job creation and growing revenue than impact fees.”
The HBA of Greater Springfield sent a letter of support to Rogersville Mayor Jack Cole last week (click here to see the letter). In the letter, Morrow made clear that a substantial reduction in impact fees can only help stimulate the local economy:
“It is the position of the Home Builders Association of Greater Springfield that most impact fees, on balance, inhibit a local economy’s ability to grow. Not everyone agrees with us on this point, and we understand that. On the broader point, however, most can agree: The bigger impact fees get, the more harmful they become to a local economy.
Impact fees don’t just raise the price of a house. They raise the price without adding value to the house. These non-market costs add to the already considerable cost associated with buying a new home. The buyer of a new home in Rogersville receives nothing “extra” for the $1,500 to $2,600 in impact fee expense that is included in the cost of their home. They receive the same water and sewer service that everyone else in Rogersville receives, and at the same monthly rates. The only difference is that they also pay the additional upfront charges in the inflated price of the house. The larger the impact fee is, the greater the disincentive is to build or buy a new home in a community.”
Rogersville is the second area city to evaluate its impact fee policy in recent months. Recently, after considering increasing impact fees by as much as $2,500, the city of Republic was persuaded by HBA arguments to reconsider its impact fee & connection fee schedule associated with building a new home. The newly adopted schedule, which was also approved by voters in last Tuesday’s election, results in a net decrease of $190 per new home.