The governor and Legislature have weaponized impact fees against housing affordability.
As background, impact fees are one-time charges on new development to pay for an equitable share of its impact on facilities based on its type and size, among other factors. In Arizona, impact fees are used to help pay for roads and streets, public safety, parks and recreation and utilities.
For instance, a 100,000-square-foot store has more impact on facilities than a 50,000-square-foot store. Under Arizona law, the larger store pays proportionately more in impact fees than the smaller store. However, because of recent actions by the governor and Legislature, this is no longer the case with homes.
Consider that large single-family homes of 4,000 square feet
or more average about 50 percent greater impact on facilities than small homes under 1,000 square feet. The reason is that large homes average about 50 percent more people than small homes, according to U.S. census data.
Also consider that two-bedroom apartments have twice the impact on facilities as studios because census data show that two-bedroom apartments average twice the number of people.
For simplicity, suppose large single-family homes impose $18,000 in facility costs on the community, while small single-family homes impose proportionately less, or $12,000. Equitable impact fees would be $18,000 and $12,000, respectively.
Also, suppose that two-bedroom apartment units impose $12,000 in facility costs, while studio apartments impose $6,000. Equitable impact fees would be $12,000 and $6,000, respectively.
What the governor and Legislature have done is outlaw equitable residential impact fees based on size or number of bedrooms. In this example, Arizona law now requires that impact fees be $15,000 for single-family homes regardless of size and $9,000 for apartments regardless of bedrooms.
The result is that small homes and studios subsidize the impact fees of large homes and multibedroom apartments. This is unfair. Moreover, based on economics, fewer small, affordable homes and studios would be built because their costs would increase beyond their equitable share. Affordable-home builders' margins would be squeezed, perhaps to the breaking point.
This is how the governor and the Legislature have weaponized impact fees against housing affordability.
It is not only unfair but may raise constitutional concerns. Recent federal court cases have established that such exactions as impact fees must be proportionate to impact. It may be unconstitutional to charge impact fees on small homes that exceed their equitable share of impact. But this is what the governor and the Legislature have done.
The governor and Legislature should not wait for courts to tell them they are wrong. Instead, they should make good on their commitment to housing affordability by ensuring that impact fees are equitable based on the type and size of homes. Doing so advances equitable impact fees rather than weaponizing them against housing affordability.
Arthur C. Nelson of Tucson is a professor emeritus of urban planning and real estate development at the University of Arizona. He has written extensively on impact fees and advises federal, state and local governments and think tanks on the subject. Nelson also frequently serves as an expert witness in impact-fee cases in federal and state courts.
This article originally appeared on Arizona Republic: Arizona's affordable housing problem starts with impact fees | Opinion
