Bill would give local authority to raise impact fees

April 03, 2006|by DON AINES


Pennsylvania state Rep. Stephen Maitland says his proposed legislation to allow municipalities in some counties to add thousands of dollars in impact fees for new construction could prompt "an epic clash between powerful interest groups."

Maitland, R-Adams/Franklin, has introduced a bill to allow municipalities and school districts in designated "growth counties" to enact impact fees and double the local share of the realty transfer tax to pay for new roads, utilities, schools, public services and farmland preservation and allow building moratoriums under limited circumstances. The legislation is modeled on steps taken by Washington County to rein in growth.

"Here in Franklin County I'm told there are about 10,000 (new homes) on the drawing board," Maitland told an audience of mostly municipal officials at the Franklin Fire Co. on Friday. Adams County could see 15,000 homes added in the next decade, he said.


A growth county would be one with a population increase of 0.75 percent for three consecutive years, according to the bill. Franklin County's population grew 1.8 percent in 2005, adding about 2,500 people, said county Senior Planner Sherri Clayton.

Joined by state Reps. Patrick Fleagle, R-Franklin, and Rob Kauffman, R-Franklin/Cumberland, Maitland said property taxes from new construction do not pay for the roads, utilities, schools and services they require, resulting in an increasing burden on other taxpayers.

Making the legislation applicable only to the fastest growing counties could stem opposition from state legislators in low- or slow-growth counties, but debate over the bill could pit local governments against developers, Realtors and contractors, Maitland said.

Fleagle, however, said there is room to compromise and "come to a solution that's acceptable to all parties."

"At this point, both the state Realtors association and local Realtors association are looking forward to discussion with the state legislators," said Steven Spray, president of Pen-Mar Regional Association of Realtors.

He said it is too early in the process to say whether the local association would favor the legislation.

The proposed legislation would raise the realty transfer tax from 2 percent to 3 percent, with the additional 1 percent to be split between the county for agriculture preservation and school districts for general funds.

Chambersburg Borough Council President William McLaughlin said he is concerned the hike on the realty transfer tax would make it difficult for first-time home buyers to purchase existing houses.

With a starter house selling for $150,000, McLaughlin feels the home buyers would be burdened by the additional money due at the time of purchase.

"It requires that first-time home buyers bring another $7,500 to the table. You cannot finance the real estate transfer tax. It's not legal," he said.

McLaughlin feels the fees and taxes "should all be put upon the cost of new construction."

"I think a reasonable impact fee would be healthy," Dominick Perini, president of Perini Services Inc., said Friday. "I think impact fees should have been required 30 years ago in the entire Tri-State area to keep the required funds that have to be raised reasonable," the Hagerstown developer said.

House Bill 2564 would allow a municipality and school district to adopt a combined impact fee of up to $13,000 for a single-family home and $26,000 for a home in developments of 25 or more units. Different fees would apply to multi-family dwellings and a formula would be used for commercial properties.

Perini said a $15,000 impact fee spread out over 30 years would add less than $100 to a monthly mortgage payment. Though small, that could have a beneficial impact by encouraging some first-time buyers to purchase existing houses, improve them and build equity before considering buying a new home, he said.

Local governments "have to find out where the threshold of pain is" in determining the difference between a fee that pays for growth and one that stops it, he said.

Washington Township Manager Mike Christopher said fees should be collected as building permits are issued, not at the subdivision stage. Otherwise, developers would have to come up with large sums of up-front money for projects that often take years to complete.

"We don't want massive opposition from the building community," Christopher said.

Staff writer Jennifer Fitch contributed to this story.

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