TOWN OF EASTON, MARYLAND
Impact Fee Workshop
May 31, 2005
Councilmember Maureen Scott-Taylor Councilmember Moonyene Jackson-Amis
Mr. Mike Menzies, facilitator and Mr. Al Bond, Economic Development Coordinator were also present.
CONVENING
At 6:30 p.m., the President of the Council called the meeting to order.
WORKSHOP
Mr. Menzies discussed the purpose of the meeting. Mr. Menzies stated that the purpose of this meeting is to discuss with the Town Council alternative structures to the impact fee that has been proposed by Tischer & Associates and is already law in the Town of Easton. He stated that specific strategies and specific alternatives will be a lot more helpful than simply pointing out the areas of weakness or the areas that represent a disproportionate burden. Mr. Menzies discussed passing the Nexus test and going back to Tischler and requesting an alternative structure. Mr. Menzies stated that there are areas of disproportionate burden within the current impact fee structure; with the real challenge altering that situation.
Mr. Ford stated that the fee schedule is attached to our ordinance. He stated that the fee is the maximum legal defensible and we don’t have to go back to Tischler if we decide on a reduction. Mr. Ford stated that the only way to increase the fee is to change the capital improvement plan or add to the list of projects that are currently in the ordinance.
Mr. Dan Bell, Champion LLD Commercial asked why the Tischler and Associates study was used. It was his understanding that Tischler and Associates do not do their comparisons very well with rural town settings; they are mostly larger municipalities and cities. He stated that it is late to change this but the best thing to do would be to come up with an alternative to this. Mr. Bell stated that the impact fee has obviously decreased the value of commercial real estate. He stated that impact fees in Baltimore and Annapolis are not as high as Easton. Mr. Bell stated that an alternative would be a bonding for impact fees or tax incentive financing. He stated that businesses will be driven away and without growth, there will be a decline in Easton’s tax base. He stated that the Mid Shore Board of Realtors would be happy to work with the Town Council and help them find the financing
Ms. Scott-Taylor asked if Mr. Bell is suggesting that the TIF be used for all commercial real estate or if there is a qualifier.
Mr. Bell stated that there are different kinds of TIFs that can support infrastructure and is done over a period of years.
Mr. Jensen stated that these impact fees represent between 12 and 15 percent of the cost of the capital projects included in the capital project ordinance.
Mr. Al Silverstein, Government Regulatory Committee, Chamber of Commerce, discussed Mr. Chris Sadler’s illustration of three scenarios, three different types of buildings; a small commercial office project, a 50,000 square foot project and a warehouse project and their impact fees. Mr. Silverstein stated that you also have to look at the county fee and then the town fee and the fact that there are now two fees. He stated that people in the commercial shops are set up to pay a disproportionate fee for a small shop than you would for a larger shop. He wondered how to get the playing field level.
TIF financing was discussed. Mr. Bond stated that there are a number of projects that could line up with TIF and special taxing districts.
Mr. Ford stated that everyone should agree that TIF financing is potentially a very helpful economic development tool. Mr. Ford questioned how we could get commercial development to pay a share of our impending infrastructure costs without disensentivizing that kind of development.
Mr. Larry Davis, Champion LLD questioned what the criterion is to qualify a project for a lower impact fee than the maximum as outlined in the schedule.
Mr. Ford stated that he would like to focus on alternatives to this schedule where there is a revenue source for these projects but we don’t kill future projects at the same time.
Mr. Menzies encouraged the Council to figure out how a small business can have incentive to grow in the Easton area. He stated that small businesses are the core of the nation’s economy.
Mr. John Hurt, Champion LLD Commercial stated that commercial should not be exempt from impact fees but questioned the disparity between residential construction and commercial construction. He stated that if we keep the structure as adopted, we will diminish the new commercial development in Easton. He stated that it is to the Town’s advantage to increase the tax base.
Mr. Silverstein stated that you have to look at the total picture; acquisitions of land, impact fees and taxes over ten years then compare locations.
Mr. Jensen questioned if there is an impact fee, that would it clearly get passed on to the tenant.
Mr. Menzies stated that consumers and businesses will seek in the free market identification of a competitive advantage, it is logical in setting these fees, we need to understand where we stand relative to surrounding counties in terms of competitive advantage and that may mean getting the Board of Realtors to help.
Ms. Scott-Taylor asked for examples of a client that may have been looking at Easton and is no longer looking due to an advantage in another locale.
Mr. Silverstein stated that he knows of one warehousing project and because Caroline and Dorchester are Maryland One communities, Easton cannot compete although that person lives in this county.
City of Frederick commercial taxes were discussed.
Mr. Bond discussed the Affordable Housing Nexus Study. He stated that many of those studies included studies that measure feasibility and absorbability among businesses and it sounds like that component is what is missing from the Tischler study.
Mr. Bond discussed conducting a feasibility study and setting fees that would actually meet the revenue.
Mr. Menzies stated that the town and county have a choice where they go strategically. It can go towards residential and react by default to residential development or it can proactively grow commercial by making a strategic objective which in fact has occurred in towns throughout the country. He stated that not having all our eggs in one basket is a healthy business practice for a municipality and having only 10% of our revenue coming from a commercial tax base may carry with it risks that we don’t want in future years.
Mr. Silverstein questioned how do we encourage small business development and make sure what they are paying in impact fees is not onerous and is more in proportion to what is proposed for large commercial projects. He suggested coming back to the Mayor and Council with suggestions.
Tax incentives and alternatives were discussed.
Mr. Jensen discussed the scenario if the Town of Easton were to waive an impact fee for a particular project. He stated that the Town would have to contribute what the business would pay.
Mr. Ford discussed the schedule of fees that exist in the Impact Fee Ordinance now. He stated that it is in everyone’s interest to adjust this to a fair schedule and any assistance from any entities in Town would be beneficial.
Mr. Bond stated that the impact fees are set at the maximum and can only go down. He stated that there are ways to bridge the income shortfall such as TIFs.
Infrastructure needs for incumbent property owners were discussed.
Mr. Bell stated that we have tripled the sewer hook-up, we’ve imposed county impact fees, we’ve imposed town impact fees and an affordable housing fund was not set up without the expectations of contributions which are going to be on top of what is being talked about. He stated that it is on their minds to what extent we are going to continue to add fees.
ADJOURNMENT
There being no further business, Mr. Ford adjourned the workshop.
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Town Clerk