CEDAR CITY – For the next six months, Parowan City is waving all impact fees on new commercial construction projects.
City Manager Shayne Scott said the City Council recently made the decision as a way to stimulate growth by giving businesses an incentive to make the move into the rural community.
“We want to try and bring in new businesses that will make the quality of life better and will improve our community,” Scott said. “This is a way to attract those businesses that might otherwise look to Cedar City as a place to locate. The council hopes by waving these fees for the next six months businesses will give Parowan a serious look and consider us as a place to move.”
Officials took the same action a few years ago, attracting several commercial projects inside the city’s borders. Councilwoman Vickie Hicks the additional tax revenue generated by those new businesses more than compensated for the loss of impact fees.
“We did an analysis that showed the gain in tax revenue from those businesses far outweighed the loss of impact fees we didn’t get,” she said.
The council’s decision to wave the impact fees came in part after the city’s previous decision to sell the Rufus Building on Main Street for $1 after inheriting it from the previous owner. Those interested in buying and remodeling the old building submitted essays to the council outlining their plans for it. Elected leaders then chose the winning essay.
The process generated more applicants than expected, prompting city officials to think about ways they could bring those potential businesses to town.
“There were so many good business proposals the council had a hard time picking just one,” Scott said, “but they didn’t want to let those businesses go either. They were good business ideas, so the council wanted to find another way to let them come in anyway, even if it wasn’t in (the Rufus) building.”
Initially, the council considered waving the impact fees for only those applicants who submitted essays for the Rufus Building, but they later decided to open it up for all businesses.
“The sale of the Rufus Building is really what sparked all of this because we really had some good applicants,” Hicks said, “but we felt like it wasn’t fair to just open it to those businesses who applied for the Rufus Building.”
Impact fees help pay for maintaining the city’s existing infrastructure including power, sewer, police services and roads when a new business moves in.
The fees for each business differ and depend on how much a project may affect the community. The city conducts a study to calculate the impact fees a business will pay that takes in various factors such as how much water the entity will use and dump into the sewer system.
Scott said that as an example, impact fees on a new 100-room hotel could run as high as $100,000, while a smaller business might pay only $10,000.
“That’s a lot of money, so waving those fees can be a huge incentive,” he added.
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