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Report challenges impact fee value

Sat., Sept. 20, 2008

Builders contend new homes pay off

Every 100 homes built in Spokane County generate an estimated $50.1 million in local income, nearly $8 million in taxes and 77 permanent jobs over the first 10 years of their lifespan.

That’s one conclusion of an economic impact report by the National Association of Home Builders presented to local homebuilders and public officials this week. In another report, the association asserts the economic impact of new homes outweighs the costs to local governments of increasing public services to accommodate them.

A senior economist for the association uses those calculations to make what he calls an economic argument against impact fees – a method of funding infrastructure the Spokane City Council is scheduled to take up in coming weeks.

Officials have proposed the fees – which would charge developers thousands of dollars per house or commercial project – to pay for upgrades to Spokane’s traffic system. A group of residents, developers and businesspeople spent months formulating the proposed fees, which would generate up to $18.1 million in transportation-related projects over the first six years. Advocates say the fees are needed to keep pace with growth.

But developers and the Spokane Home Builders Association have adamantly opposed the fees, calling them an unfair tax that could drive growth outside city lines.

Senior Economist Elliot Eisenberg, who addressed the local association’s annual dinner Thursday night, claims builders will incorporate fees into new home prices, deterring would-be buyers and driving up demand and prices for older homes, ultimately hurting affordability.

“I don’t think there’s economic rationale for raising impact fees,” Eisenberg said. “Politically there may be some very valid reasons to do it, but economically I don’t find that.”

Randy Barcus, chief economist for Avista Corp., called the report “credible,” saying, “The results are about where I would have expected; that housing is a net positive contributor to the community.” Eisenberg calculates that each single-family home built in this market costs local governments $2,816 a year for services such as education, police and sewers. Each home also requires a one-time $18,431 expense toward capital projects, such as schools, hospitals and water systems.

But every 100 single-family and 60 multifamily homes built generates about $15.9 million in revenue for governments over 15 years, compared to only $8.4 million in costs, the report claims.

The model assumes the average new single-family home costs $306,647, far more than the average selling price of $208,300 recorded for sales closed countywide so far this year.

Joel White, executive officer of the local association, said, “The conventional wisdom always is that housing doesn’t pay for itself, and we wanted to really look at that and maybe factor in some things that weren’t considered in the other studies.”

Reach Parker Howell at (509) 459-5491 or parkerh@

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