Where have all the planned communities gone?
This time last year, local and national developers were assembling large tracts of land with visions of creating new mini-cities across the Treasure Valley.
Elected officials and city and county planners were touring planned communities in other states to get a taste of what could happen here.
Ada County received nine development applications for planned communities in 2006. So far this year, the county has received just one.
"The initial rush has cooled considerably," said Rich Wright, Ada County public information director.
The Valley's housing surplus, which has brought the market to a screeching halt, is only partly to blame for the stall in planned communities planning, said John Starr, a land specialist with Colliers International Boise office. Out-of-state developers are used to more development-friendly tax laws.
"There's been a series of reality checks," Starr said. "Everybody got excited about planned communities, but somewhere along the way somebody missed a key element, and that key element is infrastructure."
That means things like roads, sewer and transit. And not only does the Valley lack these in developable rural areas, but the state lacks a mechanism for developers to easily finance infrastructure improvements.
"Other regions with planned communities also have tax increment financing of some kind available to developers to do infrastructure improvements," Starr said. "Sadly, Idaho does not."
At least 30 states use some type of special district financing, said Dan Richter with SunCor, the developer of Avimor planned community northeast of Eagle and planned communities in Arizona, New Mexico and Utah.
SunCor, which has used special district financing extensively in Arizona, spearheaded an effort in 2004
to pass a bill in Idaho that would let developers borrow money to build roads, parks and other needs with tax-exempt bonds, which would be repaid with a new layer of property taxes paid by anyone who bought into the subdivision.
The bill, called the Public Infrastructure Improvements District Act, failed. Subsequent attempts to pass similar bills also failed.
Sen. Stan Bastian, R-Eagle, voted against the legislation in 2005 and 2006 when he was in the House.
He opposed the bill because it allowed a developer to get special financing for infrastructure that is ordinarily the responsibility of the developer, such as sidewalks, local streets, sewer and water.
"Those things should be included in the price of the lot," he said. "Developers who used PID had a windfall advantage over developers who did not."
Bastian is not completely opposed to changing state tax law to provide some type of infrastructure-financing mechanism for developers.
"I am encouraging legislation that would allow extraordinary types of costs to be placed in a property tax formula," he said. Examples of extraordinary costs include such off-site improvements as highway interchanges or fire stations.
"I think that the development community has come a bit my way, and I have recognized there needs to be a mechanism that planned community developers and other large developers have to generate funds to put into community improvements without having other citizens of the community pay for something they did not cause," Bastian said.
TWO REASONS FOR DELAY
Lack of infrastructure has forced one local developer to go back to the drawing board, while the deteriorating market has stalled an out-of-state developer.
Eagle-based Kastera Homes has scaled back its 664-acre Shadow Valley golf course proposal from 883 homes in mixed price ranges to 121 high-end homes because the area's infrastructure could not accommodate such a large development, according to Wayne Forrey, Kastera's head of development.
East Canyon, a 1,466-home, 507-acre development approved by the city of Star in November 2006, is on hold "until market conditions change," said Justin Blackstock, a consultant for the project.
The developer, California-based Corinthian Homes, has closed its Idaho office. The remaining lots of another Corinthian project in Star, Rockbridge subdivision, are in the process of foreclosure.
Starr, the Colliers International land specialist, is working with two proposed planned communities: Dry Creek Ranch at Idaho 55 and Dry Creek Road, and Southern Crossroads at Pleasant Valley and Kuna-Mora roads. The applications were submitted in 2006, but the county still is processing those applications.
Of the 10 applications filed with the county since 2006, so far one has made it to the public hearing stage - The Cliffs, which was approved by Ada County commissioners in December 2006.
The complex applications for planned communities are several hundred pages long and take county planners several months to process, a service for which Ada County charges upwards of $150,000.
Some of the applications have been in the county's hopper for more than 18 months.
"Applications are purely developer-driven, so it is completely up to the developer to determine how quickly the process goes," said Jay Gibbons, Ada County planning and zoning administrator. "The faster they provide the required data, reports and plans to the county, the quicker their application is processed."
Gibbons said the slowdown cannot be attributed to a single cause.
"I believe there are several factors that have impacted the speed at which current planned community applications have been processed. Those factors are responsiveness of the developer, current market conditions, and the complexity of the application," he said.
"The planned community application process is a very expensive undertaking for a developer, with even more at stake if the proposed project fails to meet current market demands," he said.
SLOWED, BUT NOT STALLED
Most developers are choosing to hunker down and ride out the housing slump instead of abandoning their projects, Starr said.
"Market conditions will be alleviated by the passage of time. Developers with capital investments made in land and entitlements simply have to be patient and wait for the appropriate time frame," Starr said.
Grant Allan keeps tabs on the "temperature" of the housing market. "I check the reports monthly," said Allan, who is developing Idaho Studios, a 43-acre movie and television production studio facility within the proposed Bryan's Run planned community at Black Creek Road and Interstate 84.
"We plan to start coming into the market the end of 2009," about the time the housing slump is anticipated to break.
He said the market slowdown has taken some of the pressure off working at a breakneck speed to get the application processed.
"We were happy to have the extra time," Allan said. "We were pushing a little too fast; these (large developments) just take time."
Planned communities are a unique type of development that can take a decade or more to build out, he said. "They may not be as sensitive to market changes" as other kinds of developments, such as small subdivisions that can go from concept to construction in less than a year.
The market will bounce back, Starr said, but state law will not fix itself.
"This downturn is a good time for developers to work on other issues that need to be fixed," he said. "Hopefully they are turning their attention to the Legislature."
Attorney Jeremy Pisca, a lobbyist for M3 Cos., has been working with the Idaho Association of Cities to identify a suitable special district-financing plan for Idaho.
He said they are looking at a model used in 15 high-growth states in the West and the South that can be used only for large community or regional infrastructure such as bridges or major roads.
Pisca is not sure whether the legislation will be introduced this session.
Once the market rebounds, the Valley could be facing another flood of homes.
Two approved but unbuilt planned communities, Avimor and The Cliffs, together could bring 2,000 more homes. Add another 7,000 homes from M3 Eagle, approved this month by the city of Eagle. The nine planned community applications pending before the county collectively are proposing more than 25,000 homes.
Starr said the different lifestyles proposed by planned communities, such as equestrian or golf, will appeal to some, but whether the project succeeds will come down to affordability.
"Those projects planning on putting product on the ground that will directly address median household income will do well," Starr said. "No matter what you do or what you build, if you've got a project that directly addresses the $56,000 household, you will sell it."
Cynthia Sewell: 377-6428
