If developers who fought the
impact tax passed by Loudon County last year thought our tax was high,
wait till they find out how high the tax is proposed to be in Farragut.
I hope this doesn't run them our way.
Proposed impact fee draws criticism
Dan Barile - farragutpress.com
“They must be nuts,” one developer said in regard to Farragut’s proposed
impact fee.
“That will kill sales tax revenue for Farragut, it will just kill it,”
he added while requesting anonymity for fear of retribution.
Following two Town meetings hosted by assistant Town administrator Gary
Palmer — April 16, Aug. 1 — the Farragut Board of Mayor and Aldermen
ordered an impact fee ordinance drafted.
The ordinance under review (see town of Farragut Web site) basically
requires an upfront fee be paid in the amount of $3,670 per
single-family dwelling (regardless of square footage) and $2,614 per
1,000 square feet of commercial space. At this commercial rate a 5,000
square foot convenience store (not including pump area), such as a
Weigel’s Farm Store, would be levied about $14,000, a
100,000-square-foot JCPenney store would pay $261,000, a
140,000-square-foot Costco would front $365,400 and a
350,000-square-foot Kroger development would pay out nearly $1 million.
Alderman Tom Rosseel said via e-mail, “The fee was determined by Duncan
and Associates — a firm contracted by the Town to compete an impact fee
study — based on the existing level of service and the impact or cost
that new commercial development will have on the Town’s roads, [that
is], how much it would cost to maintain our existing level of service.
The Board, if it so chooses, may change the fee, or pay a portion of the
fee in a similar fashion to a cost share.
“I have not decided whether to support the ordinance as it is written. I
do, however, believe that with some improvements, the Town will be able
to develop an ordinance that creates a more fair approach to
implementing impact fees on new development rather than how we currently
implement them, which is in a negotiated and ad hoc basis. One of the
intents, then, of this ordinance should be to 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.”
Vice Mayor Michael “Mike” Haynes, also via e-mail, said in regard to his
position on the ordinance, “At this point I still remain undecided,
although I am pleased to say after several attempts to get some input
and feedback over the past few months, I have finally started to hear
from folks regarding the issue.”
Haynes added, “I don’t believe [the impact fee ordinance] will be on the
[FBMA] agenda until our meeting on Sept. 27 at the earliest.”
Mayor W. Edward “Eddy” Ford III cautioned the Board about the ordinance
at its Aug. 23 meeting, “Throughout the discussions we’ve had, the
public discussions, no one has taken the time to reflect on the impact
upon the family most directly involved, mainly the home buyer who will
have to pay this impact fee. Not only that, in the case of a homebuyer,
an individual family, who buys a home in the town of Farragut in the
future, once this goes into effect, should it go into effect, if you’re
carrying a 30-year note at some interest rate, you’re probably paying
some multiple of impact fee. … So this is a deep concern that we would
single out a segment of our community, that being the new-home buyer,
and impose upon this new-home buyer this additional fee. When those of
us who bought homes in Farragut in the past have enjoyed what the Town
has presented to our community and to the citizens of the town of
Farragut — roads, streets, parks — without them having to pay additional
fees above and beyond. I am deeply concerned about the town of Farragut
imposing an impact fee. I look forward to addressing that when any type
of ordinance is presented to us.
“Let me go a step further. Those that are involved in development have
seen that when a development takes place in an area where the
infrastructure relating to the major and minor arterial roads are
already in place that there is no justification for imposing an impact
fee. … Those cases were: Farm at Willow Creek, Evans Road needed
improvement. We worked with the developer, developed a program where we
cost-shared in the improvements to Evans Road. It worked out. Where the
development is taking place on Everett Road. We have worked with that
developer. We have reached an agreement for a segment of improvement to
Everett Road in a cost-sharing fashion. So where the need presents
itself, the developer upfront knows and is able to participate, and in
many cases with the Town, in improvements. Not only that, state law
says, as I understand it, as it has been presented in these public
hearings, impact fees that are imposed in a certain area must be used in
that certain area. Right now we don’t have a program where we can say
that within one year or two years or whatever to any community, that we
can take the money that you might be paying in addition to your home and
provide some type of improvement that would benefit you. Those are the
type things I want to discuss when we have an ordinance presented to us
for review.”
Several local developers also have concerns about the proposed ordinance
and spoke directly with farragutpress.
Knick Myers, a principal owner of Myers Brothers Holdings, said, “From a
commercial aspect, I’ve never heard of a community having an impact fee
for commercial. In fact I’ve seen communities attract business with tax
incentives, where they’ve actually waived taxes to have business come to
their town. This one is unique. When I’ve seen other communities have an
impact fee, their justification is, on the residential side, that they
need funding for schools, need funding for more police force, need
funding for the fire department, need funding for trash pickup and all
the other services a lot of communities provide, all of which the town
of Farragut provides none. So, my question has been and remains, what do
I get as a resident of the town of Farragut that I don’t get if I live,
say, in Montgomery Cove, which is not in the town of Farragut? Is there
anything I get they don’t get?
“On a commercial side, I’m just blown away. If a material portion of the
revenue that is generated to run the town of Farragut is derived from —
I think it is three-quarters of a percent —sales tax … would you turn
around and write an ordinance that would actually deter businesses from
coming into the town to create a sales tax? I’m a proponent for a sales
tax because I think it is a sustainable means to tax people based on
spending habits and it fluctuates by the amount of spending. So, if the
economy is good, people spend more, they collect more tax.
“The way I read the ordinance, if I want to build a 100,000-square-foot
retail store as a developer I’m going to get charged $261,000 to bring
in someone who is going to create more sales tax. It doesn’t make sense.
It’s biting the hand that feeds you.
“Those are my fundamental problems with it. From a principles
standpoint, why are we doing it? The town of Farragut doesn’t have any
debt, it’s not in a budget crisis, what percentage of the Town is
already built out? So, why is this being implemented today, why not 20
years ago? Why punish the last 20 or 30 percent who build out the Town?
“As a developer in a residential community, I’m already paying for
roads, utilities, sewer lines, but then I turn around and pay a tax,
which apparently goes toward roads. So, I’m paying a tax to maintain the
roads that somebody else built in the past? If they are past roads, why
are future people having to pay for them? Shouldn’t that be spread
equally? Not that I’m a proponent of a property tax, I’m not, but
wouldn’t it be a lot more just way to do it? Wouldn’t it be better to
have a sales tax in the town of Farragut that would increase to raise
the kind of funds they’re going to raise?”
Jim Nixon, a principal owner of Turkey Creek Land Partners, said, “This
would cost JCPenney $270,000 to $300,000. I have two-to-three other
projects that are going to be up before Farragut in the next
three-to-six months that, I understand, would fall under the same
category and I dare say that we will be hard-pressed to overcome that —
we may lose some of these over this if it’s enacted.
“How could the Town enact this type of tax when the very thing they’re
attempting to bring to the Town is what I’m trying to bring. The sales
tax is their only sources of [major] income and now they’re giving a
negative. They’re not inviting them to the Town, they’re trying to run
them off.
“I don’t like any part of it. … What about the Farragut homeowner who
wants to move down the street from a $300,000 house to a $400,000 house
that has two kids, three kids and his house just won’t [work for the
family]? They’re going to get caught in this.
“How about the guy who’s just retired who wants to go from a big house
to a condo? He’s going to get caught in this. It’s unclear where the
money is going to go. It’s for roads and parks, [Farragut] doesn’t build
any roads by themselves. [Knox] County and the City [of Knoxville] build
roads and Farragut just improves them. They do some roadwork. They’ve
got a bunch of parks already. I don’t know where they could put another
park.”
Alderwoman Dorothy “Dot” LaMarche declined to comment stating, “I would
rather hold my comments until the meeting where the ordinance will be
discussed again.”
Alderman John Williams did not respond to our query. |