Now that I have your attention, I wanted to circle back to the Neil Combee impact fee/job stimulus discussion from Tom’s blog. Assume, for the sake of argument, that no one has any ulterior motives for anything. I just want to analyze the positions for second.
First, a bit of history. Polk County, for various reasons, never adopted anything approaching a meaningful transportation impact fee until 1999. Combee was one of four commissioners to approve it. Over the years, that fee rose significantly, and subsequent commissions voted to add impact fees for schools, libraries, and parks. None of these fees appeared to slow the Polk growth machine in the early and mid 2000s. As Bill Rufty recently reported, Polk grew faster than the state as a whole, nationally famous for its prodigious growth, between 2000-2006. Land and housing was relatively cheap in Polk, and that had far more to do with growth and construction than any impact fee.
Of course, all of that has stopped – in Polk and the state. The housing boom spawned enormous speculative construction, which in turn led to massive overcapacity. The various studies I see show an 18-month or so excess of inventory. And I don’t think that includes the foreclosure homes continually coming on the market. Too many houses, too few buyers. Neil, on behalf of Polk’s building industry, seems to think that cutting impact fees will help solve that problem (Actually, I don’t really think he thinks that. I think it’s more like, “well, it can’t hurt.”)
My own feeling is that impact fees on residential construction are irrelevant in this market. Cut them to zero tomorrow, and nothing will happen. The cost of a typical home in Polk remains significantly lower than a comparable home in the counties with whom we compete – Hillsborough, Orange, etc. But even if it did work and the bubble reinflated, what then…? At some point, the excess capacity would catch up to us again, without the money generated by impact fees to help deal with it. We’d just be deeper in the hole. An impact fee cut, in this way, would act as a government subsidy to produce goods that lack buyers. That’s not sustainable. (I am more sympathetic to Neil’s commercial construction impact fee complaints. I would need to study the question more before having a clear take on it.)
Now, I’m not averse to government subsidies in this environment. But using government to restart the housing bubble seems an incredibly inefficient subsidy. Its seems likely from media reports that the Obama administration plans to funnel pretty big money down to states and local communities as part of its stimulus package. There’s talk of retrofitting schools and making other public buildings more energy efficient. These seem like better uses of public money than trying to create ever greater overcapacity.
I’d go further and suggest a “quality of life” stimulus. We build nothing new – with the possible exception of a rail line. Instead, pump stimulus money into existing non-profit groups – arts, charity, and otherwise. It keeps people employed and enhances our public sphere. Put landscaping and tree removal companies to work sprucing up and sustaining the appearance of rights of way and removing dead or dying trees that pose hurricane risks. While we’re at it, put construction companies to work through an expansion of the state’s hurricane retrofit program. Step up demolitions of derelict properties. Create a new program that provides construction and maintenance programs for elderly living at home. Get creative about preserving the quality of our communities and putting people to work in useful fashion. Of course, there are a million questions about how much this stuff would cost or how much stimulus the state or local government can expect, and what we can do legally. But thinking in this way, rather than, How can we restart speculation? holds more potential for getting us through the next five to 10 years.