A foolish new law for Wisconsin - in a nutshell:
Until the measure was approved by the Legislature in the waning days of the last session - with little public discussion or input, by the way - developers paid an upfront impact fee to a particular community for, as an example, the lots planned in a new subdivision. The municipality then used that money to pay for whatever it was going to build, and the developer passed on the cost when it sold the lot or home.
Under the new law, there would be no upfront payment by a developer, and the impact fee on a particular lot would not be paid to the municipality until an occupancy or building permit was issued for the lot. Which means the money would be collected on a piecemeal basis, often over a period of years as lots get sold.
Problem? To attempt any measure of proper planning, the municipality needs to build the subdivision-serving park (and other supporting infrastructure) before they see the developer's payment - - so the money comes from general revenue rather than from developer-paid impact fees. That means the distinct possibility of increased property taxes, and the municipality will likely forego building the park (or other amenity) rather than pass the charge on to homeowners.
One of the few constraints on developers at this point is the fact that they have to pay up-front impact fees before constructing subdivisions. If you think new subdivisions sprawled all over the place before, wait until those developers no longer have to factor in an immediate impact fee into their plans!
From the editorial:
J. Scott Mathie of the Metropolitan Builders Association told us that the current practice inflates costs for developers and, thus, for consumers, driving up the costs of housing and making it more difficult to provide housing that average workers can afford. He also points out that "an empty lot is not going to use a park" so there is no substantive public impact until the lot is sold.
Those might be fair points, but I personally find it easier to believe (and history bears me out) that those developers will get out their Excel spreadsheets and do the math on building bigger subdivisions and bigger (less affordable) houses with the savings they experience under the new "build now - pay later" scheme. Let's face it - - cost increases almost universally trickle down to consumers in the form of higher prices, but cost decreases most often do not. Bottom line: The developer will feel free to sprawl out more empty lots, because he/she need not pay impact fees for them.
How do you sell that empty lot to a homeowner when there is no municipal park or other amenity nearby? It may just stay empty until the price comes down, and then you have another neighborhood with no public space - - this is what people who require reasonably-priced homes deserve, I guess.
This new law is just another blow against a municipality's ability to plan in a smart manner. And smart communities are striking back:
Given those financial difficulties, "Why would any community allow a new subdivision?" [Mike Miller, former West Bend mayor] asked. The answer is they probably won't, as the Cedarburg Common Council demonstrated shortly after the bill became law when it declined to give preliminary approval to a 54-lot subdivision. "A community can't plan to make those improvements if they don't know when the cash is coming in," said Mayor Greg Myers in a statement blasting the new law. Forget more affordable housing; now, there may be no new housing.
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