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Impact fees considered again

July 27, 1997

By STEVEN T. DENNIS

Staff Writer

Seven years after the Washington County Commissioners last seriously considered the controversial measure of impact fees, a projected $27 million gap in capital budget funding over the next five years has rekindled the issue.

A $100,000 study of the costs of development is in the works, though not yet approved by the commissioners, said County Planning Director Robert Arch. The study would include ways to pay for development costs, including impact fees or special taxing districts, Arch said.

Impact fees, which are already being used in 10 Maryland counties, including neighboring Frederick and Carroll counties, require new development to pay for the costs of new roads, schools and services required to serve that development.

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The Washington County Planning Commission has been advising the County Commissioners to take a hard look at impact fees for as long as Chairman Bertrand Iseminger can remember.

Iseminger said studies have repeatedly shown that residential development doesn't pay for itself.

"There's no question that something's got to be done," Iseminger said. "These developments have got to pay their own way... . I don't think it's fair for the existing residents to pick up that tab."

The Maryland General Assembly voted in 1990 to give the county the authority to impose impact fees after a three-year fight led by then-Commissioners President Ronald L. Bowers. Housing developers lobbied hard against impact fees, including taking out a full-page ad in The Herald-Mail.

The commissioners, however, never adopted impact fees, although they did pass an Adequate Public Facilities Ordinance.

The ordinance requires a developer to provide information showing adequate road, water, sewage and schools capacity before a project can be approved, according to Arch.

The developer is required to make a contribution toward any needed upgrades, with the amount depending on the circumstances of the project, Arch said.

Iseminger said a $4,000 impact fee would be manageable when spread over a 30-year mortgage.

"It's just a cost of doing business," Iseminger said.

"It's the right way to do development. We've got a lot of retired folks ... . You start asking them to pay for new schools, it's not really fair to them."

County home builders say they haven't changed in their opposition to impact fees. David L. Corey, the vice president of the Washington County Home Builders Association, said the fees wouldn't generate much because there isn't much building going on in the county.

"It could be a bitter pill to swallow, but then again we may not have a choice," he said.

Corey, who has moved to Falling Waters, W.Va., said charging thousands of dollars in impact fees would make the lower cost advantage of living in West Virginia or Pennsylvania even more attractive.

Corey said he can build a new home in the Martinsburg, W.Va., area for about $15,000 less than in the Hagerstown area because fees and regulations are more burdensome in Maryland and the income tax is lower.

In addition, it only costs $250 to hook up to water and nothing to hook up to sewer in Berkeley County, compared to $2,750 each on Washington County's systems. West Virginia also has lower income taxes, he said.

Corey said higher fees would put clamps on the growth in Washington County at a time when the county needs all the customers it can get for its underutilized and financially troubled sewer treatment plants which are operating at annual deficits.

He also said it wasn't fair for new homes to be the only ones subject to an impact fee. Corey asked why one family moving into the county buying a three-year old house wouldn't have to pay any impact fee but one moving into a new house would.

"If we've got a problem with schools then I think that needs to be looked into," Corey said.

But there are other ways, such as a real estate transfer tax, that would be more equitable, he said.

Ten of 23 counties in Maryland have enacted some form of development fees or taxes, according to the Maryland Office of Planning.

According to the Maryland Association of Counties, the counties' fees were expected to bring in more than $30 million in the fiscal year that ended June 30.

Fast-growing Frederick County, which charges $2,000 for a single family home and less for townhouses and apartments, makes about $2.8 million a year off the fees, according to Frederick County Planning Director James Shaw. Shaw said the fees, started in July 1993, covered only about half the cost of new schools required by additional development.

The number of housing permits dropped after impact fees were enacted in Frederick County, according to the Planning Department. In 1992, 2,185 permits were issued. In 1993, the number jumped to 2,562, before dropping to 1,789 in 1994 and 1,504 in 1995.

Carroll County impact fees top out at $4,487 for a single-family home, generating about $3.5 million a year, said Comptroller Eugene Curfman. The money helps pay for school construction costs and parks, he said. That county has been charging a fee since 1989.

"It's become pretty much a known fact and accepted at this stage," he said.

The company that is preparing Washington County's study proposal, Tischler and Associates of Bethesda, Md., has done studies for several other counties, including Frederick and Carroll, before impact fees were imposed.

Paul Tischler said the impact fees would need to be related to projects that would specifically benefit new homeowners. Tischler also said development can be directed to areas where public facilities already exist by providing discounts on impact fees in those areas.

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