What are impact fees?
Newly built homes in Nampa will soon get more expensive.
The Nampa City Council this week approved increasing fees on new development that will raise the cost of building a new house by $3,678 and a new apartment by $2,629, starting in July.
The costs, known as impact fees, are paid by developers on new construction, both residential and commercial. The fees vary based on the size and type of new construction. Revenue from them goes toward capital expenses, like new parks or fire stations, and to maintain the city’s current levels of services as it grows.
Over the next decade, Nampa is expected to spend $256 million on capital investments. The city is expected to absorb 20,000 more residents, 10,000 new residential units and 4 million square feet of new commercial and industrial development.
The increases to impact fees are meant to force those who bring the growth — developers — to shoulder more of the cost of their effects on city services. But developers say that the fees are just passed onto buyers.
Bryan Wright, owner of Intermountain West Homes, a Nampa homebuilder, previously told the Statesman that impact fees unfairly place a burden on new residents. “We’re working hard to get affordable housing,” Wright said. “The impact fees affect that in the long run.”
Impact fees are just one factor into rising home prices in the Treasure Valley. As more people move to the area, the housing stock has not kept up with demand, and home prices have climbed fast.
New homes sold in Canyon County remain cheaper than those in Ada County. The median price of a new home in Ada County was $373,898 in 2018 versus $262,881 in Canyon County.
Although cities could improve public services using new property tax money that it collects when development finishes, impact fees allow citiesto take a proactive approach by collecting funds as soon as a builder files a permit to begin construction.
Idaho law regulates how much cities can charge developers for impact fees. The cities must first show the extent of capital improvements they expect in the next several years, and set impact fees that fall in line with those projections.
With Nampa’s new impact fees, the biggest changes will be for developers working on industrial projects. The cost of their impact fees will increase almost 10 times, from $0.21 to $2.01 per square foot.
Home builders will also see the price of their impact fees more than double.
Impact fees will also now go to cover new roads and improvements. Currently, just general revenue and grants go to road improvements like widening, and developers pay outright for any new streets they build.
A consultant’s report from October highlighted Nampa’s funding need for street improvements. To make the capital improvements necessary over the next decade, the city will need nearly $20 million per year, the report said. Currently, Nampa funds the streets with just $3.5 million per year from city property taxes.
The new impact fees won’t be implemented until July.