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Alderman Tom Rosseel
It’s your future and your choice


Impact fees have suddenly generated a lot of heat and smoke.

To help shed some light on the subject and what it means for you, let’s ask some straightforward questions. Ask yourself, do you think that traffic through the Town has gotten lighter or heavier in the last five years? And do you think that the Town has adequate parks, greenways and recreation opportunities to meet your needs? All right, those are easy ones. Now ask yourself, what will it be like in 5, 10 or 20 years when the Town population grows from 20,000 to 30,000 or even 35,000 people and the surrounding communities grow just as fast?

What exactly are impact fees? Impact fees are all about how we as a community pay for the cost of maintaining what we have — what experts call our level of service — as we continue to grow rapidly. They are nothing more than a method to ensure that new residential and commercial development help pay for the cost of making improvements to the Town’s infrastructure required by that new

development.

What infrastructure will it cover? The Town of Farragut invests your tax dollars principally in roads, parks and greenways.

How much does this cost us? The best way to understand the cost is to look at some recent examples and planned improvements. The Town spent nearly $5 million of your tax dollars to build the Campbell Station Road extension, and over $600,000 to rebuild the Turkey Creek Bridge at Virtue Road. We will spend over $2.5 million to complete the McFee Road improvements, over $1.5 million to improve Everett Road, and plan to spend over $5 million to build the McFee Road Park.

Don’t we already have some type of impact fee? Yes, but it currently only applies to residential development. Moreover, it doesn’t support the impact on our parks and greenways, involves only the nearest collector road on which the property fronts, depends upon the type of residential zoning being developed, and is negotiated in an ad hoc fashion with the Board of Mayor and Aldermen.

How is it paid for? The residential developer folds the cost into the price of the improved land that he sells to the homebuilder, who folds that into the cost of the new home. Market forces, or what the buyer is willing to pay for the size, quality and location determines the cost of the home.

Why change this approach? It’s not a level playing field and some don’t pay at all. Typically, the “first-in” residential developer pays more to ensure that his development has an adequate collector road to attract homebuyers. The residential-formula impact fee is based on the number of homes built and will provide the developer with the ability to calculate the full cost of the project before making a financial decision rather than negotiating the cost twice — once with the landowner and the second time with the Town and Board.

How would that change for the buyer of a new home? It won’t significantly change other than to more equitably distribute the cost to all new residential development rather than to just some. The cost of the proposed formula-impact fee, like the existing ad hoc, negotiated impact fee, is folded into the cost of the new home. The market determines the price of the transactions. That’s simply

good-old-fashioned American

capitalism.

Do other communities in Tennessee have impact fees and do they have a fee for new commercial development? Yes, currently eight other Tennessee cities and towns have enacted these fees for residential and commercial development.

Wouldn’t this fee, as some commercial developers have cried, cause businesses not to come to Farragut? Ask yourself if this really makes sense. Has commercial development taken hold in the Knoxville portion of Turkey Creek where they pay both a Knox County and a City of Knoxville property tax? Of course it has. Without a separate Farragut property tax, it’s cheaper to do business here than in Knoxville. A one-time only impact fee is not a recurring annual business or property tax. Furthermore, by helping to maintain the Town’s infrastructure, commercial developers, like residential developers, will help us maintain the quality environment that attracted them to our community in the first place.

What do they get from an impact fee? New commercial development will benefit from impact fees the same way residential development does, by having a major road system that functions at an acceptable level of service. Better yet, the road impact fees are not limited to the road in which the development fronts, but can be used to improve the entire road system. For example, new retail development on Kingston Pike will benefit if their customers can drive around all of Farragut freely and get to their store even if no improvements are made to Kingston Pike. Not surprisingly, commercial development would not pay for park improvements.

Who determines how much these fees should be? The fee structure was determined by Duncan and Associates, our consultants and the leading U.S. experts, based on how much we have already invested — the existing level of service, and the impact, or cost, that new residential and commercial development will have on the Town’s roads and parks, that is, how much it would cost to maintain that level of service for you. The Board, if it so chooses, may change the fee, or pay a portion of the fee as, for example, an inducement to develop or redevelop properties that might be considered blighted.

Are impact fees a tax? No, they are closer to a permit fee. Unlike some communities that enact a development tax, which raises revenue for general government use, these one-time fees are user charges and must, by laws upheld by the courts, be reasonably related to the actual additional costs of servicing a new development.

Are they the only way to pay for infrastructure costs? No, but now you must ask yourself the most important and toughest questions. Should infrastructure improvements wait until we generate enough sales tax dollars to pay for the improvements years afterwards as we learn to live with the worsening congestion and inadequate facilities — thereby possibly reducing our property values, or should we plan and build as we grow? If we do it as we grow, should we consider impact fees, raising money through bonds, a property tax, or some combination of these options? It’s your Town and future. Call or e-mail your Board of Mayor and Aldermen or the Town offices, and come to Town Hall Thursday evening, Sept. 27 and tell us how you, as a resident of Farragut, want the Board to plan for our future.

 

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