Archives for November 2013

Supporters billed it as a sure way to boost construction activity and tax revenue for Rio Rancho. Top city staffers had their doubts, predicting that the city would lose hundreds of thousands of dollars — money used for roads, water lines and other infrastructure and services to support new development.
The two-year moratorium on impact fees took effect in September 2012, eliminating entirely the fees the city charges to developers for commercial building and slashing them in half for residential projects. A year later, opinions vary on whether the measure or simply more favorable economic conditions overall — or both — are behind increased development activity that has surfaced since.
Councilor Tim Crum has asked city staff to do a study to gauge the effects of the moratorium, but here’s what city-provided figures show so far: City staff calculated that $2.7 million more in impact fees in the form of cash or credit toward future city-wide infrastructure could have been due, based on actual activity in fiscal year 2013, if the moratorium had not been in effect. Fiscal year 2013 ran from July 1, 2012, through June 30, 2013.
“However, we can’t say how much would have been in cash. Impact fees are typically in the form of cash and credits,” city spokesman Peter Wells said. He said the city awards credits when a developer agrees to build infrastructure and dedicate it to the city in lieu of paying impact fees. What is clear from the city figures is that in the fiscal year that ended June 30, Rio Rancho received slightly more impact fees in cash than the level projected without the moratorium, $732,955 versus $730,515, city-provided figures show. That’s more than twice what city staffers forecast it would be if councilors passed the measure. Staff predicted impact fee revenue would plunge to $291,536 if councilors passed the moratorium; staffers revised that to $340,135 in the mid-year budget review.
Housing starts and gross receipts taxes from residential and commercial construction-related activity, and fees the city receives from things like plan checks and inspections have also increased. Single-family home starts were up 38 percent in the first six months of 2013 at 293, compared with 212 in the same period in 2012. Construction-related gross receipts tax for the July to September period was 6 percent higher in 2013 at $1,247,697, compared with $1,179,718 in the same period last year.
Clear message.
Councilors Chuck Wilkins, Mark Scott, Lonnie Clayton and Crum voted for the moratorium a year ago. Patty Thomas and Tamara Gutierrez were opposed. Scott said the numbers show how successful the moratorium has been. “It’s sent a clear message to the business community that Rio Rancho is very serious about attracting new business,” Scott said in a recent interview.
He pointed to Del Taco and Menchie’s Frozen Yogurt, which opened this year in a new 6,723-square-foot strip development near the Premiere movie theater at Unser and Southern. “All of them are producing gross receipts tax (for Rio Rancho) so it’s a win-win,” he said.
Commercial builder Steve Nakamura of Rachel Matthew Homes praised the moratorium, saying it was a critical factor in swaying clients to move ahead with projects. Nakamura spoke at council meetings last year urging adoption of the measure. He’s now building a new 5,329-square-foot corporate headquarters at 4500 Sundt Road and two projects for clients. “I sold the idea of the impact fee (moratorium) to clients,” Nakamura said in an interview recently. “It was too good of a deal to pass up. ”One client, Bill Stanage, owner of financial advisory firm Wealth Management, agrees. “It (the moratorium) was a key deciding factor. The money we saved helped us come within budget on construction,” said Stanage, who estimated he saved between $40,000 and $50,000 on the 6,077-square-foot office Nakamura is building for him at NM 528 and Quantum. Nakamura’s other client, Roxanne Baltz, co-owner of air-monitoring equipment manufacturer Bladewerx, said low-interest rates were the key factor in the decision to build a 10,394-square-foot facility at 4529 Arrowhead Ridge.
Too many factors
Rio Rancho Financial Services Director Olivia Padilla-Jackson cautioned against drawing a direct cause-and-effect relationship between the moratorium and the better-than-forecast figures. “Yes, we can say it’s (impact fee revenue) above the original projection — but we can’t say why,” she said. Wells added, “There are too many other factors out there like demand, pricing, lending practices. We can’t definitively conclude whether the impact fee moratorium did or did not lead to the construction over the last year.”
Commercial and residential real estate experts concur.
“Any incentive you can provide developers is going to help,” said Ken Schaefer, director of brokerage services at commercial real estate broker firm Colliers International. He said low interest rates, financing decisions and availability of land also influence where developers build. New product lines, pricing, low interest rates and robust marketing programs also affect when and where homes are built, said Jim Folkman, executive director of HBA, formerly the Home Builders Association of Central New Mexico. “It’s almost impossible to determine direct correlation — but it (the moratorium) certainly didn’t hurt Rio Rancho,” Folkman said.
PulteGroup’s New Mexico Division vice president of land Garret Price said the moratorium didn’t influence its robust building program at Loma Colorado in Rio Rancho because there was a long-term development agreement in place. Nevertheless, the company believes the decision to reduce impact fees was a good move to make the city competitive with Albuquerque and Los Lunas, which have also lowered impact fees, Price said in an emailed statement. (Rio Rancho Observer)
By Rosalie Rayburn (Rio Rancho Observer)
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