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County says yes to rebates and waivers
Wednesday, July 22, 2009

In a meeting room packed to standing room capacity — largely with builders and Realtors — the Archuleta County Board of County Commissioners approved an economic development plan Tuesday focused almost exclusively on pumping dollars into new construction activities.

“This program is targeted toward builders and Realtors. We need to help and enable the construction and real estate industries,” said Archuleta County Commissioner Bob Moomaw.

And the plan does just that by providing blanket development fee waivers and construction-related sales tax rebates. However, it also fails to directly address the economic woes of existing businesses outside the building and real estate sectors, the glut of vacant commercial property listings and a real estate market saturated with single-family and vacant land inventory.

Local Realtor Lee Riley compiles sales and inventory data for the Pagosa Springs area, and as of June 30, 2009, his data shows 569 single family residential listings, 135 condominiums and 1,121 vacant parcels.

Many in the industry agree the Pagosa Springs area has up to a six-year inventory on residential property listings and a nine-year inventory on vacant land listings. With real estate tracking efforts showing sluggish sales, it is unclear how the plan will stimulate the real estate market by promoting new construction and adding more inventory to an already saturated market.

Archuleta Economic Development Association (AEDA) Executive Director Bart Mitchell said, “This is not the economic development plan for 2009. This is a very small first step.”

The AEDA was one of the plan’s key architects, in conjunction with key staff and elected officials from the town and county.

When asked why the rush to put out a plan that falls short of dealing with the area’s economic woes at a deeper more meaningful level, county officials said the waivers and rebates were designed to help builders and their customers capitalize on the window of opportunity provided by the summer building season. At the same time however, some members of the building community have said the window for 2009 has already closed, and a truly effective plan should have been launched in early spring, when builders obtain permits and lay plans for upcoming projects, giving rise to questions regarding the timing and content of the town, county and AEDA sponsored plan.

According to the unanimous board vote, the two-year plan provides a blanket fee waiver for all development-related fees, including the county’s building permit fee and any impact fees, beginning July 1, 2009. There is one caveat, however: In order for all fees to be waived, construction must be completed before the end of 2009. In 2010, the development fee waiver drops to 50 percent, given construction is completed before the end of the year.

In addition, the plan calls for a 25-percent sales tax rebate on locally purchased construction and building materials and a 25-percent rebate for the use of local labor.

The plan does not however, explain how the county will manage the administrative tasks associated with the rebate program.

Archuleta County Administrator Greg Schulte, in response, said he and planning director Rick Bellis will work out the administrative details in the coming weeks.

As written, the plan involves three key players: the county, which approved the plan Tuesday; the town, which will examine the plan in a work session at noon today; and the Pagosa Area Water and Sanitation District (PAWSD), which will hear the plan during a regular board meeting July 14.

While county officials admitted they had little to lose in waiving development fees and rebating sales tax, the plan asks PAWSD to pony up the lion’s share of waivers and the town could face challenges of its own.

According to estimates from PAWSD manager Carrie Weiss, the plan asks the agency to waive $7,536 in development-related fees for a one equivalent unit home using a standard 5/8-inch meter.

PAWSD board members have long argued that their fee structure is predicated on a 25- to 50-year capital improvement plan designed to meet the district’s potable water and wastewater treatment needs. By contrast, the town, despite much rhetoric in support of similar planning measures, is yet to adopt a capital improvement plan. Finally, the county’s five-year road capital improvement plan is nascent at best.

Moreover, while the county asserts it can comfortably waive development-related fees and sales tax, the town may not have such a buffer. For example, the town budget is built such that development-related fees should fund staffing expenses in the town’s planning department while sales tax makes up more than 70 percent of the town’s overall revenue stream.

That said, sales tax figures have continued a steady decline since January 2009, currently down about 8.6 percent over 2008.

Town Manager David Mitchem has said the planning department budget may require a General Fund subsidy should revenues dip beyond manageable levels.

In addition, the town planning department currently has no planners on its staff to review projects should the economic development plan spark new development. Further, the county fired their building inspector last week, and thus eliminated a key staffer should building enjoy a boom in connection with the new legislation.

Although PAWSD board members did not provide official comment during the commissioner’s meeting, many in the audience agreed that PAWSD fees had caused a mass exodus from Pagosa Springs.

In fact, the Pagosa Springs Area Association of Realtors has attributed the area’s decline in real property sales to PAWSD fees and town impact fees. One audience member asserted that “thousands of people have left this county because of these fees.”

Moomaw, a self-described impact fee supporter, said, “Although I am a believer in impact fees, we have to keep them in balance.”

Archuleta County Commissioner John Ranson said, “We can no longer fund projects that we cannot afford and ask the public to pay.”

While the waiving of development related fees is not without precedent, in many cases, such as in Fort Collins, Colo. Colorado Springs, Colo. and Bernalillo County, N.M., the county or municipality did so in exchange for developer commitments to affordable housing, green building or other water and energy conservation measures, infrastructure investment or long term verifiable job creation.

By contrast, the county’s adopted plan takes no such measures into consideration, yet Ranson defended the move, saying the county will get “jobs and dollars” in exchange for the waivers and rebates, and those dollars will trickle down to all sectors of the Archuleta County economy.

Although the town and PAWSD have yet to approve the plan, the commissioners said they are prepared to go forward alone, if necessary.

“People are hurting right now and I support anything we can do to stimulate the local economy,” Archuleta County Commissioner Clifford Lucero said.