Council-approved impact fee increase may prove challenging for builders, buyers and renters in St. George

A construction worker walks along the top of an apartment complex under construction in Washington City, Utah, Feb. 18, 2020 | Photo by Mori Kessler, St. George News

ST. GEORGE — After much discussion, spanning several meetings, the St. George City Council voted Jan. 21 to increase impact fees to help pay for infrastructure that will support new residents and homes.

L-R: St. George City Council incumbent Jimmie Hughes and challengers Dannielle Larkin and Gregg McArthur during a candidate forum held at Dixie State University, Oct 2, 2019 | Photo by Mori Kessler, St. George News

But Southern Utah Home Builders Association Executive Officer Mari Krashowetz said that they’re disappointed in the vote.

“The home building industry is not against impact fees and recognize they are necessary to maintain our quality of life and support new growth,” Krashowetz told St. George News. “However, we are very concerned with the impact fee increases, as recently adopted, and the impact on attainable housing in our area.”

While Councilman Gregg McArthur said that new growth should pay for itself, others, like Councilwoman Dannielle Larkin, wonder whether increasing impact fees will be enough to offset expenses associated with maintaining a city.

“Impact fees are tricky,” Larkin told St. George News Tuesday. “They appear to be useful in the short-term, but they can also offer false assurance. We may be able to pay to build a road, but that doesn’t necessarily mean we can afford to maintain it into perpetuity.”

The Red Cliffs Desert Reserve as seen from the Pioneer Hills Trailhead, St. George, Utah, Dec. 12, 2019 | Photo by Mori Kessler, St. George News

The impact fees are meant to pay for what Councilman Jimmie Hughes called “needs,” like building and maintaining roads, police and fire service, sewers and storm drains. The fees also pay for amenities, which Hughes deemed “wants,” like parks and trails.

Larkin said that collecting an impact fee from a builder happens only once.

“That fee pays for the first lifetime of a road, for instance,” Larkin said. “But that road will have multiple lifetimes as the city grows and people continue to use it. Beyond the road’s first lifetime, the city uses tax dollars to maintain the road.”

This applies to parks and trails too. After they’re built, they must be maintained. Accordingly, the council discussed what qualifies as a need as opposed to what qualifies as a want before voting on increasing impact fees.

“Parks and trails are what make St. George special,” McArthur told St. George News. “I think it’s really important that we preserve those, because they ensure that we maintain a high quality of life.”

While the council ultimately voted to increase impact fees for storm drains at 100% of the amount recommended by Lewis, Young, Robertson and Burningham Inc., they voted to increase the fees for parks and trails at only 95% of the recommended amount. Hughes said that current residents would have to pay for the remaining 5% via taxes.

“That’s why I think it’s important to be conservative,” Hughes told St. George News. “Everything we build will require maintenance. So we’ve got to ask ourselves whether we’re going to build so much that we’re going to have to raise taxes in the long-term.”

Larkin said St. George may need to consider higher density to make the most of available land, and the housing and roads that may be built upon it.

“We have to wonder whether we’re creating a fragile system,” Larkin said. “We’re in the desert. We’re comfortable with endless sprawl but it’s just not sustainable. We’re putting miles and miles of road and sewer in, and we just can’t afford to support that kind of growth into perpetuity.”

This ties into affordable housing in two ways. First, as building expenses increase, impact fees rise, too.

For storm drains, the impact fee will be $781 for a single-family home and $502 for multi-family and mobile homes – a 53% rise. The parks and recreation fee will be $4,525 for a single-family home (up from $2,182) and $3,420 for a multi-family home.

Southern Utah Home Builders Association Executive Officer Mari Krashowetz speaks at the 2017 St. George Area Economic Summit, St. George, Utah, Jan. 13, 2017 | Photo by Joseph Witham, St. George News

“The combined city impact fees for a single-family home will now be approximately $16,230,” Krashowetz said. “When combined with the Washington County Water Conservancy District impact fee of $11,417, the total fee is approximately $27,647 per home.”

That may explain why the median price for a new home in St. George in 2020 was $452,726, compared with $390,054 statewide, Krashowetz said.

“Most housing costs, including land, materials, labor, etc., cannot be controlled,” Krashowetz said. “When purchasing a lot for $150,000, then adding an impact fee of $27,647, homebuyers are spending nearly $180,000 before any home construction begins. Who does this impact?”

Summary of impact fee changes | Provided by Southern Utah Home Builders Association, for St. George News

It will be first-time homebuyers, seniors on a fixed income, police officers, teachers and service workers, Krashowetz said.

Then, if low-wage workers can’t afford to live in St. George, they will have to commute to work.

“Which leads to nightmarish traffic and poor air quality,” Larkin said. “We’re a young city. We’ve got time to get this under control. If we don’t, we can look at any number of crumbling cities back east to see what happens when you can’t afford to maintain your infrastructure.”

McArthur, a realtor who specializes in commercial realty, said that impact fees could potentially discourage builders who intend on building multi-family housing.

“It all comes down to whether or not a project pencils,” McArthur said. “That means: Will the rent cover the cost of development, and still turn a profit. So, that’s what we’re trying to figure out. How can we keep costs down, while still maintaining our quality of life as the city grows.”

Larkin said she understands the Southern Utah Home Builders Association’s perspective.

“We want to work with builders,” Larkin said. “We get that, when you’re trying to build attainable housing, impact fees can be discouraging. If a builder brings an attainable housing project, we will work with them.”


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