For years in El Paso, there has been an ongoing struggle between City Hall and developers over how much they should be paying the city to cover the public costs of their developments.
That’s everything from streets and waterlines to fire stations, libraries and water towers.
This issue has come up publicly or behind the scenes in every city election since 2001. It is what has driven City Council to be less accommodating to developers and to approve new impact-type fees, annexation fees and higher construction and inspection fees.
The fights with the development community have been less stormy lately than they were a few years ago. But the on-going differences have hardened some sore feelings on both sides that aren’t going away.
The latest skirmish was over higher annexation fees that developers will have to pay up-front on every home and business lot brought into the city. Those fees are intended to cover the city’s future costs for building, police and fire stations and the like.
City Council recently set a new $830 fee on each residential lot or equivalent property that is annexed to cover the city’s costs.
The official aim of such charges is to relieve the city’s taxpayers of having to subsidize or share those costs and to discourage the outward sprawl at the edges of the city limits.
In El Paso and other growing cities, especially in the West, that is a relatively new philosophy. But is it really a good philosophy?
Yes, having taxpayers subsidize the costs of a growing city does benefit developers and homebuilders by allowing them to sell property for businesses and homes for a little less. It lets them sell more and make more because tens of thousands of property taxpayers in the rest of the city are each sharing part of the cost of development.
That’s why business people and the chambers of commerce that speak for them like the policy of shared development costs. What’s good for business is good for El Paso, they say.
What we haven’t seen at City Council meetings are any ordinary property owners rallying to the side of the developers and insisting on being a taxed a little more so more people can buy less expensive homes on the east and northwest sides of town.
The city has had a pretty good system of sharing costs with developers, who are now required to build the streets, install the water and sewer lines and to actually build or pay money for the parks to serve the new areas.
Parks have always been a fight, starting with the simple requirement in the 1990s that developers set aside raw acreage so the city could build the new parks, which the city often didn’t do. Then came the next requirement that they also put in grass and sprinklers and the latest one in the last year for completed playgrounds.
But this City Council is continuing to raise the bar on voluntary annexations. Earlier this year, the council required developers – and thus, new homebuyers – to begin paying a share of off-site water service costs, such as water towers to serve new areas.
The $830 per residence annexation fee that council just approved will have developers pay the upfront costs for future fire and police stations and libraries. Again, upon the sale of lots or houses, those fees will be passed directly to the home and property buyer, increasing their monthly mortgage payments.
The City Council votes are often 5-3 on these matters. The “progressive” majority is articulate in saying taxpayers shouldn’t have to share developers’ costs of doing business. Their opponents on council haven’t found a convincing argument and have given up trying to make one. They just quietly vote no.
This policy clearly doesn’t go against the grain of most people’s opinions because everyday taxpayers aren’t complaining and we haven’t really seen any ill affects of it yet.
Traditional notions of community are gone
In these tough economic times, there is a hard-edged, every-man-for-himself attitude out there that cuts across lines of class, economic status, faith and moral ethics. Old notions of community, of established residents shouldering some of the burden for newcomers seem to have faded away.
The strongest argument so far against these increases comes from John Neal, a staff consultant with the city on development issues. In 2005, he studied the city’s last big annexation in 1999 and found that over time, taxes from that annexed property more than paid the city’s costs of providing services and facilities to the area.
“If you bring an area into the city, the city is the beneficiary over time,” Neal told City Council at a special meeting with developers on the issue of new annexation fees in August.
He also found that the city typically waits five to 20 years before building libraries and fire stations in newly annexed areas.
“With the up-front fees, it means the property owner pays the city twice,” John Berkelbach, the lawyer for Doug Schwartz and Southwest Development, said in the hall outside that August meeting.
That is, the homebuyer will pay the up-front, add-on costs for, say, a future library and then share in paying taxes on the bonds that financed it.
Berkelbach also noted that the city will tax those new home owners for bonds sold years before to pay for improvements made in older parts of the city years earlier.
So now, new homebuyers will be treated differently than the city’s 150,000 or so existing homeowners. Rather than existing property owners subsidizing new ones, the new homeowners and businesses will subsidize the old ones. Call it punishment for being the new kids in town.
It wasn’t always this way.
Traditionally, American cities viewed growth as desirable because not growing meant stagnation and decline. And new industry doesn’t tend to come to cities that are unfriendly to new people and businesses.
So, we all shared the price of new schools, new streets, new fire and police stations, libraries, parks and businesses and homes. It is, or used to be the whole point of establishing cities, because more people and more jobs literally made it possible to have those things.
It was all about sharing costs to improve the community.
Where would El Paso and other U.S. cities be today if home and business owners in new neighborhoods had been required to pay for their own roads, water and sewer lines, schools, libraries, police and fire stations and, say, hospitals to serve them?
The upfront costs for those amenities and services to each new homeowner would have been unbearably high, and people would have avoided establishing new cities precisely to avoid having to pay for someone else’s school, waterline or road.
But look around and compare the quality of life and services between communities that have chosen to band together by forming cities to those that have not.
What’s next? Impact fees for new schools too?
Look at, say, Canutillo, the biggest unincorporated community in El Paso County, or at Chaparral, just across the Texas line in New Mexico.
They are great places to live if you don’t want to pay city taxes and don’t mind not having a local police force to protect you, paid firefighters to keep your house from burning to the ground or well-maintained streets and parks for you and your kids.
What would happen if the state and federal government adopted the pay-your-own-way policy and required local school districts and their taxpayers to pay all of the costs of running schools?
El Paso City Manager Joyce Wilson said there are cities where developers and, thus, new homebuyers pay up-front impact fees not only for streets, water, police, libraries and parks but also for the schools to serve new areas.
We can go a long way – and, indeed, we have – with this idea of making everyone who wants to live in town pay his and her own way. We can have it so no Westsider pays a nickel for a new libraries, schools or police stations to serve young families buying homes on the far Eastside.
We could even arrange for there to be fewer police in dangerous parts of town because the people there are poor and pay fewer taxes than people in wealthier neighborhoods, which would, of course, have more police. And a lot of taxpayers would be OK with that.
If you have read this far, do I have to ask you if that place is really a community in which you want to live?
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David Crowder is the assistant editor of Newspaper Tree. To reach him, write to dcrowder@epmediagroup.com or call (915) 351-0605, ext. 30, or 630-6622.
