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QCVillager
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Posted: Thu Jun 11th, 2009 02:45 am |
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[size= ]Media contact: Ken Strobeck League Executive Director kstrobeck@azleague.org (602) 258-5786 [size= ] FOR IMMEDIATE RELEASE
Budget Bills Shift State Burdens to Cities and Towns
PHOENIX (June 5, 2009) – The League of Arizona Cities and Towns strongly opposes the recently-approved legislative budget package because of its harmful hits to municipal finances and the local authority of cities and towns.
Cities Lose $42 million From Local Budgets
The budget package removes $42 million of Vehicle License Tax (VLT) proceeds from city and town budgets by requiring those funds to be shifted to local school districts.
“This is a shocking shift of state responsibility onto local elected officials and local taxpayers,” said Ken Strobeck, League executive director. “Cities and towns have no responsibility for funding or operating local schools. That is a state responsibility. In addition to its questionable legality, this fund shift will have to come out of the pockets of local taxpayers who had nothing to do with creating the state budget shortfall.”
In an attempt to get around the constitutional provision that requires a two-thirds vote of the Legislature to increase taxes or change revenue allocations in order benefit the general fund, the legislative proposal earmarks Vehicle License Tax (VLT) proceeds as the source of this $42 million. However, for more than 50 years, VLT has been distributed to cities and counties without any strings attached. The requirement to distribute VLT funds to local governments is found in the state constitution. This provision is highly likely to trigger a lawsuit challenging its constitutionality, which would throw the approved budget out of balance.
Impact Fees Banned
In addition, the legislative budget contains a major new provision that has nothing to do with balancing the state budget, but again hits local taxpayers. This is a provision inserted at the last minute that completely eliminates the ability of cities and towns to collect development impact fees for a period of three years.
Development impact fees are paid by builders and developers to pay for the construction of necessary infrastructure such as streets, sewers, police & fire stations, parks and other items that serve new developments. This practice, which already has many statutory limits and rules for implementation, is based on the principle of “growth pays for itself.” Impact fees cannot be used for salaries or general operations, only to install infrastructure for new development.
“The elimination of impact fees means that local taxpayers will be required to subsidize the building of new subdivisions while the developers get a free ride,” Strobeck said. “This home builder bailout is completely inappropriate in a budget bill and benefits a narrow special interest at the expense of the public.”
Lobbyists for the home builders have been trying to restrict impact fees for years, but this is the first time such a massive policy change has been passed by the Legislature. It is believed this is their attempt to have development impact fees permanently eliminated.
“Cities and towns are being told they have to make up tens of millions of dollars of the state shortfall at the same time they have been seeing dramatic reductions in local tax revenue and have been making responsible budget decisions since the recession began,” he said. “These budget bills expect cities and towns to literally ‘pass the bucks’ to the state government at the expense of local taxpayers.”
About the League
The League of Arizona Cities and Towns is a voluntary association of all the 90 incorporated cities and towns in the State of Arizona. It provides policy and legislative advocacy, information and inquiry services, along with publications and educational programs to strengthen the quality and efficiency of municipal government. It was founded in 1937 to serve the interests of cities and towns and to preserve the principles of home rule and local determination. For more information, visit http://www.azleague.org.
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tigershark
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Posted: Wed Jun 10th, 2009 07:57 pm |
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| You're absolutely correct. That was in the article. I think I was thinking of Yarbrough.
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QCVillager
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Posted: Wed Jun 10th, 2009 05:14 pm |
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tigershark wrote: So the Home Builder's Association apparently made some argument that if they had to pay impact fees that that would somehow curb or negatively effect the number of new homes built? Please, these sales starved builders will jump at the chance to get back to business as usual, and we all know that just as soon as that starts to happen those selling prices will magically start to rise again. Oh wait, because they won't have impact fees to pay I'm sure they will pass that savings on to the consumer. You know, just like how they increased prices $10k a month back in 2005 just to cover the increasing costs of construction and not simply to increase their profits.
I wonder if, looking back, voters in Queen Creek and Gilbert now regret their voting patterns. I mean they did give both Tibshraeny and Vershcoor unopposed paths to their current terms. There are a few other districts in Arizona that are as charitable, republican and democratic; I wonder how those senators voted?
Tibshraeny OPPOSES the bill. he is fighting for Cities/Towns.
Vershcoor supported the bill just prior to his leaving for a Cruise. ( Budget vote won't delay Sen. Verschoor's trip )
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Bambi2
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Posted: Wed Jun 10th, 2009 04:27 pm |
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We have a home in Gilbert we listed that is under contract with 4 contracts behind it. It is not a short sale nor is it a foreclosure. It's just a nice desirable home in a nice desirable location. The "desires" and the "needs" for nice homes are already starting to come back now, so the short sales and foreclosures will hopefully start to subside, being replaced with more well constructed, new unique homes that "create" desire. That's the normal "market' beginning to show itself imo.
Stop this bill in it's tracks. It will prove only a win win situation with the homebuilders and the Homebuilders Assoc. which collects their dues, which they need to charge and collect in order to continue functioning.
Last edited on Wed Jun 10th, 2009 04:30 pm by Bambi2
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tigershark
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Posted: Wed Jun 10th, 2009 04:19 pm |
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So the Home Builder's Association apparently made some argument that if they had to pay impact fees that that would somehow curb or negatively effect the number of new homes built? Please, these sales starved builders will jump at the chance to get back to business as usual, and we all know that just as soon as that starts to happen those selling prices will magically start to rise again. Oh wait, because they won't have impact fees to pay I'm sure they will pass that savings on to the consumer. You know, just like how they increased prices $10k a month back in 2005 just to cover the increasing costs of construction and not simply to increase their profits.
I wonder if, looking back, voters in Queen Creek and Gilbert now regret their voting patterns. I mean they did give both Tibshraeny and Vershcoor unopposed paths to their current terms. There are a few other districts in Arizona that are as charitable, republican and democratic; I wonder how those senators voted?
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Bambi2
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Posted: Wed Jun 10th, 2009 02:37 pm |
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If you do some research on this, you will discover that just about every city in the State, is objecting to this greedy idea of giving the builders a free ride for the next 3 years. It's all about lobbying this Republican Legislature, by the Homebuilders assoc., and getting what they asked for. You/ we MUST prevent this from happening. They won't use the reduction of those impact fees to keep prices down. They will "absorb" that fee, right into their treasury, as pure profit. I think the Citys and Towns should contact one another and lobby the Governor to veto that bill. Also, contact your Reps. and voice your discust. It's disasterous. These builders can cut their profit margins and their exective pays to make ends meet......not borrow or in this case "take" from the current residents, who are carrying enough financial burdens as it is. They need to start building again anyway, so "giving" them something to allow them to start up again is frivilous thinking. The demand will create the need for them to build.....not the absence of impact fees.
http://www.yumasun.com/news/fees-50515-city-new.html
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QCVillager
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Posted: Wed Jun 10th, 2009 05:56 am |
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our Town staff and Council already began making changes as early as 2006. we have cut staff, hours, amenities, expenditures etc.. as we went along.
again... the part that was unexpected and completely threw the proverbial monkey wrench into the works is that even as we factored in fewer housing permit pulls... we didn't factor in going from 1200 permits pulled in 2005/2006 to 130 this year.
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QCVillager
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Posted: Wed Jun 10th, 2009 05:49 am |
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CrimeFighter wrote: If Queen Creek jacks up taxes in the town center I will start shopping at the Wal-Mart in Pinal. They are apparently looking to kill the golden goose by taxing it to death. Nobody is building anything right now, and if the town is projecting that they will collect $20M over the next 3 years they are fooling themselves anyway.
the only reason this is even a discussion is because of the State's budget that could leave us Millions short. maybe you would consider buying some of the Town's vehicles to go to that Wal*Mart. perhaps you could buy up some of the Town's park land so you could finally build CrimeFigher Aquatic Center.
not sure where you came up with the $20m number for Impact Fee collections. our projections were less than $14m. while you are right that no one is building much right now... that isn't expected to last indefinitely. this is the desert southwest and people continue to move here and eventually the current stock of homes for sale would be gone. we are seeing it already. have you tracked real estate sales recently. now... i will say that this too is subject to change since we are in extraordinary times. it seems now that inflation is likely to take hold in a wicked way and that will make home loans unaffordable again.
bottom line is that market forces are not being given a chance in this administration and so it is ever so much more difficult to make predictions at this point.
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QCVillager
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Posted: Wed Jun 10th, 2009 05:38 am |
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the other way to do it Bill is to simply not charge development fees and just jack up the property taxes. of course, that puts the costs of the newly needed infrastructure on the existing residents. this happened all over the place in Wisc when i was there and has happened lots of other places too. and those places weren't even growing near as fast as we were. what would happen is you've got a mature town that has was on average... past the kids in the house stage. then there was a pretty big influx of new home building and families in child bearing years. new schools, new roads, etc.. had to be built and that meant HUGE tax increases on the existing residents.
think about the DSB (design services bldg) or library for a moment. when the DSB was decided on... the growth was imminent and we had far outgrown the old digs. so, gotta build a new bldg. at the time we were doing 100 permits a month or so and (just like every other municipality that i know of) recognized that that level wouldn't sustain forever... but that it would level at some point. what was NOT seen far enough in advance (again, by nearly anyone) was that home permits pulled didn't just level off... they instead FELL OFF A CLIFF ! literally. but back to building those... what size would you have built given the conditions and outlooks ? i honestly think we did a great job on the Library since it is all under roof... but left about half of the space open to a temporary use rather than build it all as a library. the thought was that later, when we hit the benchmark of another however many thousands of residents, you knock down the temporary wall and build out the library to it's full square footage.
Last edited on Wed Jun 10th, 2009 05:50 am by
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CrimeFighter
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Posted: Wed Jun 10th, 2009 04:42 am |
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| If Queen Creek jacks up taxes in the town center I will start shopping at the Wal-Mart in Pinal. They are apparently looking to kill the golden goose by taxing it to death. Nobody is building anything right now, and if the town is projecting that they will collect $20M over the next 3 years they are fooling themselves anyway.
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DavidB
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Posted: Wed Jun 10th, 2009 02:37 am |
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I'm no expert by any means and someone chime in if I missed the mark, but I think it works like this:
The city sells bonds in order to build infrastructure. These bonds are secured by impact fees. Once the building reaches saturation, the need for the additional infrastructure is significantly reduced if not eliminated. At that point the maintenance of that infrastructure should come from recurring revenue sources for the town such as sales and property taxes.
This is a huge punch in the nose for TOQC that is already in duress. I was looking to refi my house and got a very rude awakening when I started checking comps. In fact, I think I need a drink. Ugh. I'm sure I'm not alone. The only thing to do now is ride it out.
What I don't understand why the state can legislate impact fees. Shouldn't this be a local policy?
Other than writing our Reps, what else can we do as residents to fight this?
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GSBill
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Posted: Wed Jun 10th, 2009 02:10 am |
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Due to the economic slowdown taking place on a local and national scale, Queen Creek is already struggling with a drastic loss in the development fees it collects that are used to pay its debt.
So we borrow on anticipated income from fees? WTF?
I dont understand. Development fees are used for what? I thought they were used to add needed items like public safety and infrastructure as the town grew. Sort of pay as you go. When the last home or what ever is built, the town should be able to sustain itself indefinitely w/o any new impact/development fees. Same thing when there is a slow down.
What happened? All we hear is that we have no $$$$ because of the housing slow down. Following that line of thought do we look forward to being broke and out of business after build out when there will be no more fees coming in.
Please help me understand how we need Peter's money to pay Paul and how on earth thats a good, solid, properly laid out way to operate a business. In this case the business is Queen Creek.
Queen Creek spent so much time and $$$ and planned so hard to capitalize on Pinal's pass thru traffic that we are now screwed it appears. Show me different. I am listening.
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QCVillager
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Posted: Wed Jun 10th, 2009 01:57 am |
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State Budget Impact on Local Government
June 11, 2009
• Queen Creek was incorporated in 1989 as a community with no infrastructure. Despite our efforts to manage our own growth responsibly during the last 20 years, growth around us as required us to build an entire community from scratch.
• The Town of Queen Creek, just like cities and towns across Arizona, has utilized a long-standing state mandated tool that allows municipalities to levy development impact fees to finance infrastructure. Queen Creek has used this resource as a method of developing the infrastructure of a fast-growing community.
• As developers build homes, they pay a development impact fee of $15,981 per building permit to pay for infrastructure including items such as transportation, water lines, sewer, libraries, parks and public safety. These fees ensure that development pays for itself, and the costs for infrastructure that is needed by new residents is not paid for by existing residents who already live in the community.
• For the 2009-2010 state budget, the Arizona Legislature has approved a plan that takes away the Town’s ability to charge these development fees. This three-year moratorium, which was proposed by the Home Builders Association, would take $13.9 million out of the Town of Queen Creek’s general fund, effectively “bailing out” the housing industry on the backs of cities and towns.
• Queen Creek has not relied soley on development fees, but has sold bonds that are secured by development fees. Without collecting development fees, we will still need to meet the debt service payments which impacts the Town’s general fund.
• Due to the economic slowdown taking place on a local and national scale, Queen Creek is already struggling with a drastic loss in the development fees it collects that are used to pay its debt. The state budget that has been approved by the Legislature compounds this problem by further reducing revenues that the Town needs to make its debt payments.
• If the Legislature’s approved budget goes into effect and includes a three-year moritorium on commercial and residental development fees, the effect on the Town of Queen Creek would be:
o In FY2009-10, the Town would lose $2.5 million
o In FY2010-11, the Town would lose $4.2 million
o In FY2011-12, the Town would lose $7.2 million
• Queen Creek’s general fund is $20 million for the next fiscal year. The loss of an average of $4.6 million per year in development fees would mean a 23% hit to our general fund meaning the following impacts on services:
o Reducing the number of beats on our MCSO contract from five to four.
o Reduced fire and utilities services.
o Closing community parks.
o Eliminating departments and services such as: parks and recreation programs; neighborhood preservation services; road and park maintenance; customer service at Town Hall; and community outreach programs and events.
o Library hours would be reduced because of the Town’s need to reduce utility and maintenance costs.
o Re-evaluating the Town’s ability to educate the public and enforce programs such as water conservation, PM-10 dust control and others.
o The Town would consider the sale of assets such as vacant park land, public buildings and vehicles.
• Queen Creek has not just relied on development impact fees to build infrastructure. The Town also has local retail and construction sales taxes that provide revenue for Town needs. There is a 4.25% sales tax on construction, with nearly half of that going directly to new roads and intersection construction.
• At its June 17 meeting, the Town Council will be asked to consider a proposal to increase local retail sales tax by 1% for a total of 3.25% and increase local construction sales tax by 2% for a total of 6.25%. Local retail sales tax in the Town Center area is also proposed to increase by 1% for a total of 3.5%.
• Also at its June 17 meeting, the Town Council will be asked to consider increases in plan review, building permit and cost of service fees to help replace revenue that will be lost if the Legislature’s approved budget goes into effect. Should the moritorium on development fees be removed from the state budget, the Town would not pursue these fee increases.
• Queen Creek also adopted its first ever primary property tax to pay for public safety. In May 2007 voters approved the property tax.
• Although the state mandates that cities and towns provide essential services such as water, sewer treatment, building safety, fire and police protection, they are limiting municipalites’ ability to pay for these costs.
• The Town of Queen Creek has played by the rules, but is now faced with the prospect of making drastic cuts that will directly affect the health, safety and quality of life of our residents.
Governor Jan Brewer
(602) 542-4331
Senator Bob Burns, Senate President
(602) 926-5993
rburns@azleg.gov
Representative Kirk Adams,
Speaker of the House
(602) 926-5495
kadams@azleg.gov
District 21 Senator Jay Tibshraeny
(602) 926-4481
jtibshraeny@azleg.gov
District 21 Representative Warde Nichols
(602) 926-5168
wnichols@azleg.gov
District 21 Representative Steven B. Yarbrough
(602) 926-5863
syarbrough@azleg.gov
District 23 Senator Rebecca Rios
(602) 926-5685
rrios@azleg.gov
District 23 Representative Barbara McGuire
(602) 926-3012
bmcguire@azleg.gov
District 23 Representative Frank Pratt
(602) 926-5761
fpratt@azleg.gov
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QCVillager
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Posted: Wed Jun 10th, 2009 01:53 am |
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State budget plan could cost Gilbert, QC dearly
[url=http://www.azcentral.com/news/articles/2009/06/09/20090609gr-impactfees0610.html#comments][/url]
by Alia Beard Rau - Jun. 9, 2009 12:01 PM
The Arizona Republic
A proposed three-year moratorium on development impact fees would cost Gilbert $134 million in lost revenue and Queen Creek $13.9 million, and also put an end to a long-held philosophy that growth should pay for itself, city officials and others warn.
The proposed moratorium is part of a fiscal 2010 budget that was approved by the Legislature but has not yet been signed by Gov. Jan Brewer.
Ken Strobeck, executive director for the League of Arizona Cities and Towns, called the idea "disastrous.
"It would essentially shift the responsibility of paying for infrastructure necessary to new development to existing taxpayers rather than have growth pay for itself," he said.
Development fees are one-time payments made by the builder to a municipality, usually at the time a building permit is issued. They pay for infrastructure needed to accommodate new growth, such as new parks or water treatment plants. The fees vary by city. Gilbert recently raised their rates to $19,726 for most single-family homes. Queen Creek's are $10,973.
Strobeck said Queen Creek would be one of the Arizona cities hit the worst.
"They have bonded to pay for the huge increase in growth they had in the early part of the 2000s," he said. "If impact fees were to go away, that would come close to taking all the money away from the town of Queen Creek just to service bonds."
Queen Creek Town Manager John Kross called the proposals "devastating."
"I'd have to close two parks . . . go from five beats to four beats in police services for the community . . . the entire parks department would be gone," he said. "By year three, it's so devastating that we literally may have just a handful of General Fund employees. We're back to where we were in 1994, with about 20,000 more residents."
Kross said the town has told the governor and its state legislators of the impact.
"We hope cooler heads and rational thought prevails here," he said. "This is extremely serious for our community and other communities."
He said he wants to make it clear that communities don't use these funds frivolously. He said Queen Creek has installed about $150 million in infrastructure since incorporating 20 years ago, mostly for wastewater treatment facilities, new roads and two new parks.
"We feel like the rug's being pulled out beneath us," he said.
Gilbert Town Manager George Pettit said the town needs the fees to repay bonds already spent to build new infrastructure. They also pay for new infrastructure needed to support continued growth over the next three years.
The Gilbert Town Council this month already decided to raise water, sewer and wastewater rates, hike program fees and increase the sales tax rate to cover budget shortfalls for next fiscal year.
A moratorium on development fees would likely put an $86-million hole in the water and wastewater budgets and $48-million hole in the General Fund, Pettit said.
"We'd have to increase water and sewer rates and either cut services in the General Fund or increase the tax rate," he said. "If growth no longer pays its own way, everybody who lives in Gilbert gets to pay for it."
Rep. Laurin Hendrix, R-Gilbert, said that while he did support the overall budget bill, he doesn't like the moratorium.
"I'm not in favor of tampering with local issues," he said. "But when you vote on the budget, it's a package. You vote on the good with the bad and you're not going to get everything you want."
He said the moratorium was an attempt by the state to deter anything that would detract from construction when the economy begins to turn around.
"It has zero impact on the state budget. There is no benefit to the General Fund to do this," he said. "All this does is prevent cities from doing anything that would deter a recovery."
Rep. Steve Yarbrough, R-Chandler, whose district includes represents Queen Creek, said he supported the budget bills and doesn't believe the moratorium will have a big impact in the short-term.
"The last that I read there aren't a whole lot of housing starts," he said. "I hope the consequences of the moratorium would be as great as some are suggesting because that would mean our economy is roaring back and that would be wonderful."
He said he would like the state to consider shortening the three-year time period.
Sen. Jay Tibshraeny, A Republican whose district includes Queen Creek and who is a former Chandler mayor, said he opposed the budget bill.
"I think it will have a real adverse effect on the local communities," he said. "They need that money to build critical infrastructure for development."
He said he hopes the moratorium is removed as the governor and legislature work to finalize the budget. He said growth should pay for itself.
"It could end up throwing that burden back on the taxpayers who have already paid their fair share of paying for that critical infrastructure," he said.
Tibshraeny said he doesn't buy the argument that eliminating the impact fees will boost new home construction.
"The issue's not the impact fees," he said. "What's affecting the market is the foreclosures that are now worth 60 percent of what they were a couple of years ago. As soon as they are off the market, and they are moving rather rapidly, we'll get back to more of a market-driven housing market."
Queen Creek Rep. Warde Nichols and Gilbert legislators Sen. Thayer Verschoor and Rep. Andy Biggs did not return The Republic's calls for comment.
Last edited on Wed Jun 10th, 2009 01:55 am by
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