(C) El Paso Matters.org This story was originally published by El Paso Matters.org and is unaltered. . . . . . . . . . . El Paso City Council approves impact fee hike for developers [1] ['Diego Mendoza-Moyers', 'More Diego Mendoza-Moyers', 'El Paso Matters', '.Wp-Block-Co-Authors-Plus-Coauthors.Is-Layout-Flow', 'Class', 'Wp-Block-Co-Authors-Plus', 'Display Inline', '.Wp-Block-Co-Authors-Plus-Avatar', 'Where Img', 'Height Auto Max-Width'] Date: 2024-05-07 After months of debate, a majority of El Paso City Council on Tuesday offered an answer about who should pay the cost of new growth in the city: El Paso Water ratepayers, largely. The council voted 5-3 to increase the fees that home builders – and, effectively, new home buyers – pay to cover the cost of providing water and sewer service to new neighborhoods. The 28% increase was half what El Paso Water sought. That means much of the cost of new infrastructure will continue to be spread among ratepayers citywide. With the increased impact fee for developers, ratepayers will be charged a few cents less on their monthly bills in the coming years, the utility’s finance chief said. City Reps. Art Fierro, Brian Kennedy, Joe Molinar, Isabel Salcido, Henry Rivera and Mayor Oscar Leeser voted to approve the increase. City Reps. Chris Canales, Cassandra Hernandez and Josh Acevedo voted against it and argued in favor of charging home builders far more. Home builders in El Paso pay an impact fee to El Paso Water every time they receive a permit to build a home in one of three high-growth areas: Northwest, far Northeast and parts of the Far East Side. The idea behind El Paso Water’s impact fees is to have builders pay for new infrastructure that serve new neighborhoods – a cost they generally add on to the sales price of a home. Starting Wednesday, home builders will have to pay about $400 more per home they build under the new fee. The impact fees haven’t changed since 2009, but El Paso Water’s construction costs have increased. Under those fees, the water utility’s customers were paying 88% of the cost of new infrastructure in the form of higher bills – a percentage that will decline some after the impact fee increase approved Tuesday. “The compromise allows us to move forward,” Ray Adauto, executive vice president of the El Paso Association of Builders, told El Paso Matters, noting the organization was opposed to any fee increase. “We want to build inside the city limits. So finding a way to do that and a compromise of some sort is welcomed,” he said. “It’s not what everybody wanted on one side, it’s not what everybody wanted on the other.” El Paso Water’s consultants have suggested builders should be paying thousands of extra dollars per home so that the utility’s existing customers pay less of the cost of new growth. Instead of a 28% increase, the utility’s consultants calculated that impact fees should have grown by 105% on the Westside, 287% on the Northeast and by 1,012% on the Eastside. “Despite our best efforts to shift and share new water development costs equitably between home builders and water ratepayers, it has been unsuccessful,” Hernandez said in a statement. “This will inevitably lead to irresponsible growth on the outskirts of the city.” What are the new impact fees? El Paso Water charges impact fees to firms building homes only in three high-growth areas: the Westside around Transmountain Road and Interstate 10; the Northeast, mostly north of U.S. Highway 54 around Painted Dunes Golf Course; and portions of the Far Eastside, east of Joe Battle Boulevard and south of Zaragoza Road. In the Northeast, the fees builders pay would rise to $1,880 per home, from $1,469 currently. On the Westside, the fee would go to about $2,030 per home, a $444 increase. And the fee for homes in parts of the Eastside will rise to about $2,070 from $1,617 per home currently. Homes under construction in the Campo Del Sol housing development in far Northeast El Paso. Home builders in the development may have to pay increased impact fees for future houses built in the area. (Daniel Perez / El Paso Matters) What do impact fees pay for? Impact fees are allowed by state law, and they’re a one-time fee used to pay for new infrastructure. Across the city’s three impact fee zones, El Paso Water identified $900 million in projects it has to fund and build over the next five years to meet water demand from new customers. The vast majority of that spending over that time will go toward a $776 million expansion project at the Bustamante Wastewater Treatment Plant on Pan American Drive, and to building a $162 million water purification plant that will serve the Eastside with drinking water. That’s why El Paso Water wanted to lift impact fees on the Eastside by much more than in the other two areas. Other projects in new areas include things such as new piping, water storage tanks and lift stations to pump sewage out of new areas. What does the impact fee increase mean for my monthly water bill? The vote Tuesday will lower household water bills by a few cents, El Paso Water CEO John Balliew said in an interview. Art Duran, El Paso Water’s chief financial officer, said even if City Council had raised impact fees to the highest allowable level, it would probably have reduced customers’ bills on average by only about $1 per month in the years ahead. That’s because El Paso Water has increased the amount it spends to renovate the city’s aging water and sewer systems; over the next three years it plans to spend $2.3 billion on capital improvements compared with $1.3 billion over the prior three years. So the extra $500,000 in annual revenue that El Paso Water will receive from the higher impact fee is not significant enough to make a difference in customers’ bills, Duran said. Balliew has said previously that El Paso Water ratepayers pay $2 to $3 extra on their monthly bills to subsidize the cost of providing service to new developments. Why did City Council approve the smaller impact fee increase over other options? There are a mix of “risks” that Leeser and others on council emphasize when it comes to having growth pay for new growth. First, towns outside El Paso’s city limits – such as Horizon, Socorro or Sunland Park – don’t charge impact fees. So home builders said they would stop building homes or they would build outside the city limits if impact fees became too costly, and take with them new property tax revenue. Even with lower impact fees, the number of people living in the city limits — about 677,000 in 2022, the most recent year available — is the same as in 2014. Meanwhile, outlying communities such as Socorro and Horizon have seen relatively strong population growth in recent years. Fierro and industry advocates argue that lifting impact fees would increase the price of newly-built homes and potentially price out first-time buyers. Excessively high impact fees “will push the growth to more affordable surrounding areas, causing little or no growth to the city’s assessed value on the tax rolls,” Douglas Schwartz, CEO of Southwest Land Development, told City Council on Tuesday. “If you think that (raising impact fees) is going to save the city taxpayers money, you all are mistaken.” Why did some people favor raising impact fees? Canales, Hernandez and Acevedo said they sought to lift impact fees to the highest allowable level in order for El Paso Water to recoup more money from new development and less from existing ratepayers. They also argued raising the fees would encourage firms to develop properties inside the city limits and limit urban sprawl. Hernandez said there’s plenty of land inside the city still available for development. And home builders in recent years have built almost the same number of homes inside impact fee areas as they have outside of those areas, she said. Canales said that increasing impact fees would decrease the burden on customer bills by ensuring new development pays for itself. “Growth brings new tax revenue to the city government, yes. But also new responsibilities,” he said. “And when that growth is into new areas and not in-fill within the city’s core, those responsibilities can grow to a massive scale.” [END] --- [1] Url: https://elpasomatters.org/2024/05/07/el-paso-city-council-impact-fee-increase-el-paso-water/ Published and (C) by El Paso Matters.org Content appears here under this condition or license: Creative Commons CC BY-ND 4.0 International. via Magical.Fish Gopher News Feeds: gopher://magical.fish/1/feeds/news/elpasomatters/