High property taxes? Growth may be to blame. Idaho’s local governments are trying to fix that
Across the Treasure Valley, cities and counties are coming to the same conclusion about growth: It’s expensive.
In Ada and Canyon counties, homeowners are feeling strained by increasing property taxes. In the face of an increasingly tax-averse electorate, some jurisdictions are starting to charge developers impact fees, one-time rates that are meant to make growth pay for itself.
The move is intended to help relieve a growing pressure on taxpayers by getting developers to fund some of the new construction projects that growth necessitates.
“Impact fees are one of the ways we can take some of the burden off the property taxes,” said Canyon County Commissioner Tom Dale, who is pushing for Canyon County to adopt impact fees to help pay for new sheriff’s offices and a jail.
But, he warns, don’t expect these new impact fees to pay the costs entirely.
“It’s one part of the equation that helps growth to pay for itself,” he said in a phone interview.
That’s because impact fees can only pay the cost to build new infrastructure, such as new roads or fire stations. They can’t pay for the day-to-day costs of operating local government, things such as salaries or maintenance.
Impact fees are not new — the state gave local governments the ability to charge impact fees starting in 1992. Boise and Meridian did not begin to use them related to fire and police until around 2007, during the pre-recession housing bubble.
The counties, meanwhile, lag further behind.
“I was shocked to see that we didn’t have any impact fees,” said Democratic Ada County Commissioner Diana Lachiondo.
That’s something that she’s hoping to change. This year, the county began the slow, data-intensive process required by state mandate that eventually will allow it to collect impact fees — perhaps as soon as next year.
Ada County planners estimate that if growth continues at its current pace, by 2040 it will face a $690 million deficit in capital costs needed for the jail, sheriff’s office and courthouse — all functions the county is required to provide by state mandate.
“We’re digging ourselves out of a hole in terms of some major capital costs,” said Lachiondo, who is in her first year as a commissioner. “The level of planning in the past is (not) what we would have hoped for.”
If Dale and Lachiondo are successful, Canyon County and Ada County would be the first counties in Idaho to collect impact fees.
Fire districts levy impact fees
Beyond Ada County, several other jurisdictions have also started to adopt impact fees. That includes fire districts, which have struggled to raise funds for new stations the usual way: by asking voters to authorize a bond paid back with property taxes.
“In the past that may have been more successful,” said Anne Wescott, an impact fee consultant for the Boise-based firm Galena Consulting. But in recent years, voters have turned down nearly every fire bond that’s come before them.
“Existing taxpayers realize they’re being asking to increase their property taxes to pay for something that’s needed — in part — because of growth,” Wescott said.
In Star, Fire Chief Greg Timinsky has struggled to keep response times to their standard of four minutes as more homes are built in the northern part of his district, farther away from his only fire station on State Street in downtown.
“With the urban sprawl that’s going on, and increased traffic and subdivisions, we won’t be able to get to the northern fire station in four minutes without adding another fire station,” he said.
In November, voters passed a $4 million bond to help the fire district move from its current headquarters to a larger, 37,000-square-foot building, but Timinsky expects they’ll soon need a second station in the northern district — and he’s hoping that he can use impact fees to pay a majority of that cost, rather than asking taxpayers to pony up.
“It’ll help keep response times at a standard that we’re all striving for,” he said.
While the fire districts and counties are late to implementing impact fees, local leaders say they are still worth pursuing.
“They’ve left a lot of money on the table, but better late than not at all,” said Wescott.
Getting developers on board
In the past, developers have balked at impact fees, arguing that they raise housing prices or stifle economic development. During the recession, cities like Boise and Meridian lowered their impact fees and even stopped collecting them entirely in an effort to motivate fee-weary developers to keep building.
But in more recent years, developers have become more amenable to the fees, said Bill Rauer, executive officer of the Building Contractors Association of Southwestern Idaho.
“It’s a fair approach for enabling responsible development of communities,” he said.
Developers have an incentive to help fund those new capital projects, Wescott noted: “If they’re going to be developing long-term, they probably know it’s going to be hard to sell homes if there’s no fire station or there are no parks.”
The average sale price of a new home in Ada County is $359,900, which includes about $6,000 in impact fees split among the city and the Ada County Highway District. In most cities, that fee is imposed on every new single-family house regardless of its size or location — except in Boise, where the city has chosen to lower the impact fees for smaller houses, as well as those built near existing infrastructure.
That’s similar to what Salt Lake City charges — about $5,700 for a new single-family house — but far less than major metropoles. On the high end, San Francisco’s fees add nearly $165,000 to the cost of a new unit, and Oakland adds close to $65,000 per unit, according to the San Francisco Chronicle.
State controls how much localities can collect
Idaho cities and counties can’t charge an arbitrary amount to developers. The state requires municipal agencies charging impact fees to first create a capital improvement plan — which outlines the projects they expect to build in the coming years — and conduct an analysis to determine what percentage of the need for those projects can be attributed to growth.
The state also controls which types of jurisdictions can collect impact fees.
Unlike some other states, Idaho school districts can’t collect impact fees. That’s to the chagrin of the West Ada School District, where enrollment increases 2% every year.
Rather, the school district must ask voters to pass a levy every two years to pay for new school buildings. School district administrators worry of levy fatigue, and that soon voters will stop authorizing new funds to pay for new buildings.
That’s already happening in more conservative areas throughout the Treasure Valley, like Canyon County, where voters have four times rejected a bond to build a new $187 million jail.
The impact fees won’t pay for that jail, Dale said. They accumulate too slowly, and Canyon County commissioners want to start construction sooner. But, he said, “the impact fees can make the difference in being able to complete the project.”
Increasing impact fees doesn’t mean that taxpayers will be off the hook. The fees are a one-time charge to developers in exchange for agreeing to take on growth permanently. The costs to maintain those new areas are long-term and paid for by property taxes.
Boise, for example, is expected to collect $4.1 million in impact fees in 2019, which covers just 5% of the $83.2 million is has planned for capital projects. Nearly $16.8 million of that cost will still be paid from the general fund, or property taxes. And in 2018, the Ada County Highway District budgeted $60.7 million in capital improvements, but brought in $20.5 million in impact fees.
The way in which the Treasure Valley grows will determine whether growth pays for itself, Lachiondo said.
“If growth is more constrained to existing city limits, it will cost us less to provide some services,” she said.
This story was originally published December 19, 2019 at 5:15 AM.
