Increased impact fees 'stifle' business, according to apartment developer

By Rose Hooper

Manager of Wade Properties, St. John purchased 4 acres off Long Branch Road in Cullowhee in March with intentions to build 30 rental units. The project would include 10 units in three buildings, with the first building to be built in 2003.

"The increase on my impact fees amounted to a whopping 323 percent," St. John told the TWSA board Tuesday and the Economic Development Commission of Jackson County on Monday. "That will increase my building cost by 4.5 percent."

St. John requested relief from either, or both, boards.

Before the increase, she projected $7,700 for tap on fees. With the July 1 increase in effect, that amount is now be $25,000, she said.

"It was suggested that I pass that cost on down, but I don't have a facility to pass it on down to," she said. "I can't pass it on down to the students who rent from me."

In Cullowhee, students are willing to pay around $375 to $425 for a two-bedroom apartment, according to St. John, whose current rental rate for new units is $500.

"If I have to up that $500, I have priced myself out of the market," she said. "This 323 percent is a sudden increase. I had no warning it was coming."

"Anytime you have a utility that increases fees, the customer should given the courtesy of a notice," said EDC board member Jay Coward.

"An increase of that proportion should be phased in," said Herb Nolan, another EDC board member.

One of the barriers to workforce development in Jackson County, according to EDC board member Mark Leonard, is the availability of affordable housing. "I feel like these increased fees don't help our housing situation," Leonard said.

"I am suffering," said St. John, who believes others are, too. "It is just that other developers may not be aware of the increase yet."

Coward called the increase a "recessionary blow against economic development." He requested, and the board approved, that EDC Chairman Tom McClure write TWSA Executive Director Jerry King a letter requesting the two work together in economic development.

After appearing before the EDC board, St. John repeated her appeal at the TWSA meeting the following night. King told his board he had granted St. John relief on her rental units off Hampton Street in Sylva because they were under construction before July 1.

As far as the Long Branch property, King said it could not be grandfathered in under the lower rate structure since construction was not expected to begin until 2003.

Impact fees are used to pay for improvement, expansion or repair of existing facilities, King said.

"The board is looking at $10 to $12 million to expand the Sylva sewer plant number 1 and the water plant in Sylva," King said prior to the meeting.

Capacity at the Sylva water plant, built in 1996, is 1.5 million gallons per day.

"When it was built, we were pumping 600,000 gallons a day, but we are up to 1.2 million gallons now," King said.

The sewer plant, built in 1970, treats 950,000 gallons per day.

"When we close plant number 2, which takes care of Sylva and Dillsboro, that will add an extra 80,000 to 100,000 gallons per day," King said. "Even if we told our engineers to start designing our new plants today, it would be two-and-a-half to three years before we could begin construction."

St. John said she realized TWSA has financial needs, but she suggested that to "build support," the authority should rescind the July 1 cut-off date and implement the increases in stages.

"Publicizing tap-on fee increases for some time before they take effect, the increase being staged over a three-year period, with grandfathering for those who will pay the fees up front, would be one way to increase cash in the coffers now and build community support for the future," she said.

"How can you expect TWSA to expand if you stifle small business development in Jackson County?" St. John asked.

Back to Archive: 07/18/02.