Gwinnett Impact Fees

Newspapers serve an important, and often critical, purpose in society, especially when it comes to keeping an eye on government and politicians. But newspaper reporters aren’t all-knowing and they’re not infallible. They also have limited space to fill and other considerations which may prevent them from telling the whole story, or from adequately analyzing the information on which they are reporting.

Over the coming months, the activities of the Impact Fee Study and Advisory Committee will be in the news; hopefully, quite often. But the information will not always be complete and unbiased. Over the coming months, I plan to expose the “bunk” published about impact fees and adequately “de-bunk” it.

Keep in mind– I have a bias. I favor the adoption of an impact fee program– and the sooner the better– although my opinion on some of the specifics may surprise you. Be sure to weigh my opinion against the opinions and experience of others, or against your own knowledge and experience.

“The Cherokee County Example”

You are going to hear a lot over the coming months about Cherokee County and its impact fee program. When it adopted its program on 5/1/2000, Cherokee became the first Georgia county to impose impact fees for comprehensive improvements, initially charging $1,832 per house.

Immediately after the program went into effect, the Greater Atlanta Homebuilders Association filed suit challenging the validity of the Cherokee County ordinance. The county ultimately won the lawsuit and continues to charge impact fees, although the fee was reduced slightly on residential units a couple of years ago.

The Gwinnett Daily Post reported on 2/22 on the formation of the impact fee committee. The article includes this:

Several years ago, the Supreme Court ruled in a Cherokee County case that developer impact fees are allowed, but the funds must be used to directly benefit the area where the fees are paid.

The reporter’s characterization of the Cherokee County lawsuit is, for the most part, inaccurate. The home builders didn’t challenge the Georgia Development Impact Fee Act (DIFA) itself, nor whether or not “developer impact fees are allowed….” Instead, the lawsuit alleged that the county’s ordinance did not meet the requirements of DIFA.

Specifically, the Home Builders Association complained that Cherokee’s program was unreasonable because it didn’t require infrastructure improvements be built close to the new developments. DIFA requires jurisdictions to set up “service districts” based on various criteria. Fees charged on development within a certain service district must be spent on infrastructure in that service district.

When Cherokee set up its program, it established a single service district encompassing the entire county. Fees collected on development in the north part of the county, for example, could be spent to build roads, sidewalks or public facilities in the south and still be within the same service district.

A judge ruled that Cherokee’s program was fair and met the requirements of DIFA. The judge didn’t rule, as the GDP reported, that “the funds must be used to directly benefit the area where the fees are paid.” The judge agreed with Cherokee that a single service district met the requirements of the law, even when the impact fee revenue wasn’t spent in the immediate proximity of the development on which the fee was collected.

Finally, the Supreme Court never made any ruling on this case. In 2003, it refused to hear the case, thereby affirming the lower court’s decision.

It seems that the professionals agree with Cherokee County and the courts. Georgia State law professor Julian Juergensmeyer says that public services are part of a network, so new infrastructure doesn’t necessarily have to be built close to the development that generated the fees. Juergensmeyer has been writing impact fee ordinances since 1975.

“The whole system is so interconnected that building anything anywhere relieves demand on existing facilities,” Juergensmeyer told the AJC in 2003.

Chris Nelson, a senior fellow at Virginia Tech’s Metropolitan Institute, is well known as an expert in the field. A couple of years ago, he conducted DeKalb’s study of impact fees. According to Nelson, certain infrastructure can serve a particular development even though the infrastructure may not physically be located nearby.

The GDP article continues:

District 4 Commissioner Kevin Kenerly… said he doesn’t look at Cherokee County as a shining example. Since the fees began, the county has lost about 5,000 acres to annexation into cities without such fees and for two new developments recently OK’d, the county waived the fees, Kenerly said. With Gwinnett working to try to draw businesses to the area and a constant schedule of annexations to local cities already, Kenerly said he’s not sure how impact fees will work.

Former County Chairman Wayne Hill used to employ the “let’s see what happens to the Cherokee lawsuit first” excuse to excess when asked about charging the fees in Gwinnett. Now, it seems, Kenerly is willing to mischaracterize Cherokee’s post-lawsuit situation in continued opposition to the idea.

To quote a 2004 assessment by another impact fee professional familiar with Cherokee’s program:

“The common lore that impact fees drive annexation does not seem to be the case in practice. Cherokee County is the most obvious example. None of Cherokee’s cities are in the county’s impact fee program, but the developers will tell you in a heartbeat that impact fees have nothing to do with their requests for annexation. The first reason stated by them is that they can get annexxed [sic] and rezone for twice the density than the county would approve– doubling… and trippling [sic] their net income. Second, many view the cities as being more accessible and responsive during the plan review and building permitting process (i.e., a ‘friendlier’ development environment).”

He also noted that, even with the fees, growth in unincorporated Cherokee County continues to increase.

The same has been true in Gwinnett for years. Where possible, developers will seek annexation to take advantage of a city’s lax development standards and a faster development approval and permitting process.

In my opinion, it is a misrepresentation of the facts to argue that a county impact fee program will drive development into the cities; it is happening already, even without the fees. In fact, if you ask Kenerly or any of the Commissioners, they will tell you that annexation is one of the major concerns facing the Commission today.

Interestingly, these two articles also appeared in the GDP on the same day as the article cited above:

      “Board praises legislation to give county more say in city annexations”
      “Legislature likely to punt annexation issue”

The Politics of Cherokee Impact Fees

According to Commissioner Kenerly, Cherokee is not his “shining example” of a successful impact fee program. Kenerly reportedly told the GDP that the Cherokee Commission has recently started waiving the fees on new development which, I can only assume, is his evidence that the metro Atlanta county is rethinking its fee program.

Kenerly would rather you and I not know– and the GDP did not report– that there is more to the story than he relates.

In 1998, a petite, yet hard-nosed blonde named Emily Lemcke was elected Cherokee County Commission Chairman. She ran on a platform of slow, managed growth and maintaining the rural character of the county. A local paper described Lemcke as “a pioneer, a kick-ass populist who came to symbolize a reasonable approach to balancing growth with quality of life.”

The article continues: “Lemcke even had the audacity to suggest that developers help pay for the financial costs they dump on the community. For that heresy, the developers could tolerate nothing less than a regime change. The building Bubbas poured tons of money into her opponent’s campaign, and last month (September, 2002) she lost a runoff election.”

The current Lemcke-less Commission appears to be much less enamored with impact fees. Fee opponents would like for you to believe that Cherokee is poised to abandon a failing program when, in reality, the Commission may simply be bowing to the pressures from developers and their money.

An Impact Fee “Straw Man”

The GDP article on impact fees concludes with:

While District 2’s Bert Nasuti said he doesn’t believe the fees would raise enough money to replace county sales taxes and property taxes, he said the fees could help raise government revenues.

I mention this item not because I disagree with it or because I allege any nefarious intent or lack of understanding on Commissioner Nasuti’s part. But his comment (or, at least, how the GDP reporter characterized it) brings to mind a common tactic of the anti-fee folks, a “straw man fallacy.”

A “straw man fallacy” occurs when someone ignores the facts and substitutes a distorted, exaggerated or misrepresented version of that position or fact, and then argues against the misrepresented version.

A common argument of the anti-fee crowd is that “impact fees will never generate as much money as the penny sales tax (SPLOST) or property taxes, so we shouldn’t even bother with trying” (see Myth #4 for more).

I have never heard any fee advocate make the argument that impact fee revenue should totally replace property taxes and/or sales taxes, or that it even could. However, every dollar that is collected via impact fees on new development is a dollar that need not be collected from existing homeowners, for the same purpose, through property taxes.

There are several “straw man fallacies” that are part of the argument against impact fees. I am sure that we will have the opportunity to talk about the others soon.

(Originally published February 22, 2006)