Reader's View, ACHD: Mayor Bieter misrepresents how impact fees work

June 15, 2013 

In his State of the City speech this week, Mayor Dave Bieter decried Ada County Highway District's impact fees as a "disincentive" to economic progress in Boise, which would obviously be a terrible thing.

Except that it isn't true.

More disturbing than the misstatement was the example in the speech, which appears to show an alarming misunderstanding of how fees ensure growth pays for its burden. The mayor told of a "real situation" wherein a businessman was going to open a restaurant, but was scared off by the potential fee.

"In Boise, a building valued at about $350,000, there was a deal to purchase and renovate that building," Bieter said, adding that the would-be restaurateur then approached ACHD. "The quote came back at $125,000. It killed the deal."

Except that the quote request never happened, based on ACHD records and the recollections of our staff. And we know the target property on Warm Springs Avenue because a staffer for the mayor asked about it a few days before the speech, obtaining the $125,000 figure as a worst-case example. (By the way, most restaurants are about a third of the size of the 15,000-square-foot building in question, an old furniture store, so the mayor's figure is about triple what a fee would actually be.)

The mayor seemed to link the value of the building with a possible fee, finding the charge outrageously out of whack.

Except that's not how impact fees work. And he's been around long enough to know it.

The fees are based on what ACHD, Boise City, the five other cities and Ada County believe will happen in the future. These educated guesses create the county's long-range growth plan, which tells us how many people will live here, where they will be, and, by extension, how much infrastructure will be needed. Impact fees are popular with the public, who tell us they want developers to pay their way, and also with Boise City, which has them for parks, police and fire services.

Following state law, ACHD plans for the roads, intersections and bridges required in the next 20 years, a hefty $856 million in projects. When you subtract today's needs - roads to expand, intersections and bridges to improve - you have $514 million in growth-related needs.

Once you know how many vehicle trips a new or repurposed structure will generate, you can assign the developer their rightful slice of the $514 million infrastructure pie. That's how you can conceivably come up with a $125,000 fee for a gigantic proposed restaurant on Warm Springs in Boise.

Except that a restaurant going into an existing building would only pay a fee if it would produce more traffic than what was previously there.

The one in the mayor's example would pay a maximum of $54,135 based on the difference between the new and old uses of the building. But it seems unusual that a restaurant would inhabit such a cavernous space.

Boise has asked ACHD to look at fees for Downtown, arguing that since it is mostly built out, there should be a lower fee. We're studying the issue, but the reality is most people who work and play Downtown live somewhere else and drive in.

A recent media report noted a steady increase in building permits for new and renovated structures in Boise. We compared a list of new businesses - including Trader Joe's, the tower at Main and 8th streets, and the JUMP project - and found that only five of 13 needed to pay a fee.

Jennifer Gilliland, Boise's Building Division manager, told KTVB Channel 7 that the city's level of commercial construction was "healthy" in May.

Except that doesn't square with what her boss is saying.

Sara M. Baker is president of the Ada County Highway District Commission.

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