The majority of the Jacksonville City Council is on board with implementing a mobility fee moratorium (Ordinance 2011-617) that would result in Jacksonville taxpayers subsidizing the private development's negative impacts on public infrastructure 100%.
The council's "hope" is that this will encourage development in a community where over 50% of residential properties are currently underwater and office vacancy rates hover at 21%. To date, there is little to no evidence for such an action significantly stimulating private sector development in market conditions that can't support it.
If a moratorium is approved and ends up in successful, it may be the first success on a policy position where many public entities have failed. With this in mind, here is a brief editorial by, California based fiscal, economic and planning firm, TischlerBise on why a mobility fee moratorium may not be in Jacksonville's best interest.
5 Reasons Not to Reduce or Waive Impact Fees in an Economic Downturn
by TischlerBise Fiscal & Economic Newsletter
Many elected officials are considering or being pressured by outside groups (e.g., home builders) to either waive, reduce or enact moratoriums related to impact fees, claiming that it will act as a means of stimulating new development and new economic activity. Some local governments around the country have already suspended or eliminated their impact fees in an attempt to encourage development. To date there is no evidence of the efficacy of this action.
When considering the multitude of factors that comprise the cost of development, impact fees are a relatively minor cost component (usually 1 to 5%). The ability to obtain favorable financing, depressed market conditions, excess inventories of existing developments, and the cost of labor and materials have a much greater influence on the total cost of development. Another point to consider is the impact local government spending has on the economy.
According to a recent publication prepared for ICMA by the Alliance for Innovation entitled Navigating the Fiscal Crisis: Tested Strategies for Local Leaders, nearly all the economics literature reviewed estimates that cutting local government expenditures hurts local economic recovery more than raising taxes. The positive effect of local government spending is particularly strong for facilities and services that have a direct relationship to business and industry (i.e., roads, bridges, water, sewer and other basic infrastructure).
There are five reasons not to reduce, waive or eliminate impact fees:
1. A suspension or elimination of impact fees raises a general question of fairness and equal treatment between those who recently paid the full fee amounts and those who will now not pay the fees. Case law requires that impact fee payers receive a benefit. An important consideration is how the previous payers of the full fee amount receive their benefit if a community is not able to fully fund the growth-related capital improvements upon which the fees are based. Communities could face the choice of having to subsidize new development with General Fund dollars or refunding millions of dollars to previous fee payers in order to avoid equal protection challenges.
2. Impact fees are an important component of economic stimulus. Investments in infrastructure are being touted in both Washington, DC and State capitals around the country as stimulating the economy and creating much needed jobs. Since impact fees can only be used for growth-related infrastructure, the suspension or elimination of development fees and the loss of subsequent infrastructure investments by local governments would appear to be contradictory to this effort to restore the economy.
3. The demand for additional infrastructure capacity from new development does not disappear if impact fees are reduced. Suspending or eliminating fees will require communities to subsidize the impacts of new development with other revenues (most likely from the General Fund). The alternative is declining levels-of-service as existing infrastructure networks become more burdened with additional demand.
4. Having sufficient infrastructure capacity is a competitive advantage that enhances the economic development potential of a community.
5. Finally, as stated previously, there is little evidence that suggests eliminating or suspending impact fees encourages new development activity.
a. TischlerBise Fiscal & Economic Newsletter - http://www.tischlerbise.com/site/downloads/Newsletter-No.51-FINAL.pdf
What Is An Impact Fee?
An impact fee is a fee that is implemented by a local government on a new or proposed development to help assist or pay for a portion of the costs that the new development may cause with public services to the new development within the United States. They are considered to be a charge on new development to help fund and pay for the construction or needed expansion of offsite capital improvements. These fees are usually implemented to help reduce the economic burden on local jurisdictions that are trying to deal with population growth within the area.
What Is A Mobility Fee?
The 2030 Mobility Plan & Fee is designed to fund infrastructure improvements in Jacksonville that will give our community a viable list of quality-of-life enhancing mobility options.
A Mobility fee is an impact fee that covers the cost of building public infrastructure needed to support the impacts caused by new development. Jacksonville's award winning 2030 Mobility Plan and Fee would tie transportation and land use strategies together and generate funding for road, mass transit, pedestrian and bicycle network improvements throughout the city through 2030. If there's no fee for new development, that means Jacksonville won't generate the funding needed to construct public infrastructure projects that will produce job creation, curb the proliferation of sprawl, create the type of urban environment and quality of life that results in the economic benefits we claim we want.
With little fanfare, this bill has swiftly moved through Council and under the nose of the local media. Ordinance 2011-617 will have its final City Council hearing on Tuesday, October 11, 2011 at 5 PM.
Ordinance 2011-617 could result in delayed economic, job creation, and revitalization opportunities for several Jacksonville neighborhoods, including Downtown, the Northside and Arlington by delaying priority infrastructure projects partially designed to stimulate sustainable redevelopment in distressed areas. For example, Milwaukee's current streetcar project is expected to create 9,000 new housing units, 13,500 new residents, 20,500 new jobs and $3.35 billion in new tax base over the next 20 years. This is the type of economic opportunity that would be delayed in Jacksonville by enacting a moratorium on mobility fees.
What A Mobility Fee Moratorium Means For Jacksonville
Ultimately, Jacksonville has the natural setting, cultural assets and physical amenities to become anything it wants to be. However, to become a destination and not a pass through, we've got to overcome the one entity that has held our community back.
That entity is ourselves and our inability to take a holistic approach with each issue that fronts our community. Abruptly adopting an ordinance that will result in the public subsidizing private development without viable proof that such a concept will work could be devastating to Jacksonville competing in the 21st century marketplace.
Although their intentions are good, the Council should not rush to implement a mobility fee moratorium that could hamper Jacksonville economically without thoroughly vetting such a concept with the public.
How You Can Get Involved
The decision at hand could burden taxpayers millions of dollars and indefinitely delay infrastructure projects that will place Jacksonville in a position to compete against peer communities such as Charlotte, Raleigh, Nashville and Norfolk.
Until the Council officially approves this subsidy and the Mayor signs on, perhaps there is a chance to defer the final decision until statistical data can be publicly submitted that compares the pros and cons of having a moratorium verses keeping the mobility fee.
You can help encourage council and the mayor's office to do the right thing by giving them a call or brief email explaining your position on this important issue for Jacksonville future.
Mayor Alvin Brown's Office 630-1776 firstname.lastname@example.org
District 1 Clay Yarborough 630-1389 Clay@coj.net
District 2 William Bishop 630-1392 WBishop@coj.net
District 3 Richard Clark 630-1386 RClark@coj.net
District 10 Don Redman 630-1394 Redman@coj.net
District 5 Lori N. Boyer 630-1382 LBoyer@coj.net
District 6 Matt Schellenberg 630-1388 MattS@coj.net
District 7 Dr. Johnny Gaffney 630-1384 Gaffney@coj.net
District 8 E. Denise Lee 630-1385 EDLee@coj.net
District 9 Warren Jones 630-1395 WAJones@coj.net
District 10 Reggie Brown 630-1684 RBrown@coj.net
District 11 Ray Holt 630-1383 Holt@coj.net
District 12 Doyle Carter 630-1380 email@example.com
District 13 Bill Guilliford 630-1397 Gulliford@coj.net
District 14 Jim Love 630-1390 JimLove@coj.net
At Large 1 Kimberly Daniels 630-1393 KimDaniels@coj.net
At Large 2 John R. Crescimbeni 630-1381 JRC@coj.net
At Large 3 Stephen Joost 630-1396 Joost@coj.net
At Large 4 Greg Anderson 630-1398 GAnderson@coj.net
At Large 5 Robin Lumb 630-1387 RLumb@coj.net
Editorial by Ennis Davis