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Council says ‘no’ to fee abatements

If not for information presented by Trustee Shari Pierce, a vote at last Thursday’s mid-month council meeting might have gone another way.

Reversing a policy first initiated in 2009 — the 50-percent abatement of planning, building, permitting and impact fees in order to encourage new development — council voted to return to its normal fee schedule.

Facing a packed room (arguably the best attended midmonth meeting in recent memory), with some audience members spilling out into the lobby, council was aware why area residents had come out in force to hear the disposition of what, on the surface, appeared to be the consideration of a policy that council had embraced for nearly three years.

First presented during their Dec. 6 meeting, Resolution 2011-16 — “A policy to enhance the town’s financial stability” — proposed a 50-percent abatement of town planning, building and impact fees for new development. At Thursday’s meeting, council was asked to extend that abatement and whether that abatement should be waived for new development exceeding 25,000 square feet.

It was the matter of size in consideration of those abatements that brought out the crowd last Thursday. In the minds of most everyone at the meeting, development “exceeding 25,000 square feet” was, plainly and simply, Wal-Mart, and most local residents attending were anxious to see if council would provide small town incentives to a large, multinational corporation.

After Pagosa Springs Mayor Ross Aragon announced Resolution 2011-16 as the next order of business, Pagosa Springs Town Manager David Mitchem provided some history on how the policy had first been drafted and accepted in 2009 (at that time, providing a 100-percent abatement of fees) and how, for 2010 and 2011, council had reauthorized those abatements at the 50-percent level.

Mitchem went to say that, while council had passed 2011-16 during the December midmonth meeting, council had deferred a decision on a portion of the policy, “That wording, similar to what council had passed last November, that wording would limit the application of the fee abatement to facilities of less than twenty-five thousand square feet.”

After Mitchem clarified for Trustee Stan Holt that council was being asked whether or not it would amend 2011-16 to exclude developments exceeding 25,000 square feet, Pierce said that she had been charged with doing research that would indicate the impact of the proposed abatements.

“I provided staff information,” Pierce said, “which you have in front of you, showing fee waivers on a twenty-five thousand square-foot facility at seventy-five thousand nine hundred seventy-six dollars. I feel that’s an extraordinary amount of money to give someone to come into town and to compete with existing businesses.”

Pierce continued, “And my recommendation is that we not extend the fee waivers for any size of building in our community.”

Mitchem stated in the e-mail distributing Pierce’s information to council members that, “A 50% waiver of fees on a 94,000 square foot big box store equals approximately $263,119 (based on the IBC standard of $107.38 per square foot). The Wal-Mart engineers believe actual construction cost will be approximately $80.00 per square foot, due to the economies of scale achieved by building many similar buildings. If this lower estimate is accurate, a 50% waiver results in a reduction of fees of approximately $190,000. In either case, the waiver is a substantial sum.”

Pierce’s information indicated that 50 percent of fees waived on a 100,000 square foot facility would amount to $298,439.

Explaining why she believed the fee waivers should be discontinued, Pierce said, “The information that Scott Pierce (building inspector with the town’s Planning and Building Department and no relation to Trustee Pierce) provided to us shows that those fee waivers have not really been successful in encouraging commercial growth in our community.”

In a brief presented to council, Pierce stated, “Several people who have done remodeling to move their business from one location to another were not even aware of the fee waiver program. Thus, the program was not instrumental in the decision to relocate a business.”

Pierce added in that brief that, “We have not had a permit application for a new commercial business since Sept. 30, 2008.” That was almost a year prior to the town’s fee-waiver policy.

In that brief, Pierce pointed out that other communities had attracted big box development without offering incentives.

“If a Big Box has determined to build in a community, they have made that as a business decision knowing that they can make a profit in that community,” Pierce wrote in her brief, adding that, in discussions with planning directors in those communities, “Both directors feel that they may ask for incentives, but they recommend not giving any.”

Finishing her presentation, Pierce added that, given the lack of success shown by the fee-waiver program, “Instead of continuing a program that is not working, that we might take a similar amount of money that we might be giving as fee waivers and put it into a downtown development district to work on enhancing our downtown,” and added, “to encourage growth where we already have a lot of vacant buildings.”

That suggestion reflected a point in her brief where Pierce asked, “We have so many vacant structures in our community, is it necessary to offer incentives to build new buildings?”

Holt reiterated a point he’d made last month during discussions on incentives, saying, “As you know, I don’t like the idea of picking winners and losers,” and adding, “either grant it to everybody or take it away from everybody.”

Trustees Darrell Cotton and Don Volger said that they agreed with Pierce’s recommendation.

“I would not be opposed to eliminating the incentives,” Volger said, adding, “I would support Trustee Cotton and Trustee Pierce on this one.”

Only Trustee Bob Hart dissented (ultimately voting in the minority), saying, “I think, in these trying economic times, it’s good to give incentives to people.”

Aragon broke with convention, opening the floor to public comment (usually done following a motion and a second). Chamber of Commerce Director Mary Jo Coulehan was the first to respond to the offer, citing results of a survey among area businesses.

Saying that 135 businesses responded to the Chamber’s three-question survey (out of 280 businesses that were attempted for contact — a 48.2 percent response rate), Coulehan noted that results indicated an exact 50-50 split among respondents wanting to see a big box in Pagosa Springs.

However, the matter of providing fee waivers or sales tax rebates to businesses over 25,000 square feet showed a majority opposing those incentives: 52 percent were against fee waivers (38 percent in favor) with 61 percent opposing sales tax rebates for businesses over 25,000 square feet and 34 percent in favor.

After presenting the data, Coulehan read several comments from local business owners, all of whom spoke in favor of a big box locating in town, but all opposed building and tax incentives.

“Just wanted to let you know that this is your business community speaking,” Coulehan concluded, “and I do hope that you will consider their opinions and concerns when you consider making your decision.”

It should be noted that council voted in November to extend sales tax rebates for hiring and business expansion, but limited those rebates to businesses under 25,000 square feet.

Several others followed Coulehan in addressing council, all opposed to extending incentives (one called it “corporate welfare,” bringing applause from the audience), saying that elimination of those incentives was only fair to existing businesses in the area.

Local businessman Morgan Murri summed up the focus of those comments when he said, “I strongly encourage you to level the playing field, regardless of the big box issue and where people stand on it. Require that new businesses that come here operate just like the rest of us that are here and existing, and pay their own way.”

After Aragon closed public comment, Pierce made a motion, saying, “That we do not amend the resolution 2011-16 ... and ask that at our next work session or retreat that we give serious consideration to what a downtown development district could do ... for our community.”

Asking for clarification that Pierce’s motion eliminated both portions of 2011-16 — essentially ending fee abatements for new development — Cotton seconded.

Council voted 4-1 to approve Pierce’s motion.

Following the meeting, Murri told SUN staff that, “I appreciated the fact that they took the time to look into it, to assess the data, for Shari to do the study that she did to determine what the cost of the impacts were, for council to recognize what they’ve done in the past has been ineffective.”

Indeed, given discussions on the policy during two December meetings, it was apparent that council was looking to reauthorize those incentives — for any size business — without considering the lack of impact that policy had over the past several years.

In fact, with those facts presented last Thursday, council showed it was willing to reflect on past policies and assess the effectiveness of those policies, rather than proceeding with assumptions and a knee-jerk response to the current economic mire.

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