Boomtowns Still Rockin? Despite Impact Fees

Although it might be too early to tell for sure, officials in Bentonville and Fayetteville said the introduction of impact fees last summer did virtually nothing to deter businesses from moving to or building in the market.

Bill Ramsey, president and CEO of the Fayetteville Chamber of Commerce, said companies scouting the area always want to know about tax and fee structures, utility costs and incentives. But those differences for Northwest Arkansas’ five major cities, he said, are nominal on the whole.

“When we talk to potential manufacturers and vendors looking at the area, I’ll tell you as much as anything else education is a big concern,” Ramsey said. “We do have some favorable things such as electric rates by having both AEP and Ozarks Electric in the area. But people really want to know about the quality of our schools.

“Fayetteville for instance, has been a gold medal-rated school for three years in a row.”

Paul Justus, Regional Planner Commision with the Northwest Arkansas, said transportation costs and infrastructure are other common considerations. But he doesn’t think the new impact fees, or even the sales tax structures in the area’s cities, are weighed as heavy as things such as competitor product mix and foot traffic.

When Fayetteville introduced its impact fees in June, and Bentonville followed a month later, the moves drew loud criticism from contractors and many citizens. A new nonresidential building with a one-inch water meter, for example, would owe $2,858 in Fayetteville or $4,112 in Bentonville.

Linda Oestreich, administrative assistant/building safety division in Fayetteville, said the added cost didn’t stop her city’s total building permit valuations from rising 26 percent from $137 million in November 2002 to $172 million through November 2003. Through the first half of December alone, Fayetteville had issued 561 single-family dwelling-unit permits compared to 239 last December.

Lance Blasi, chief building inspector for Bentonville, had a similar story. He said total building permits (residential and commercial) valuations for 2003 are expected to reach about $212 million. That’s up 7.6 percent from $197 million in 2002 and 49.3 percent from $142 million in 2001.

“Every year for the last three has been a record breaker,” Blasi said. “I don’t see that impact fees slowed anything down at all or ran any people off. I still have seven new commercial projects waiting to be issued in December, and we just got about 15 new house plans in a three-day stretch.

“I can’t give you any rhyme or reason. They just keep coming.”

Tab Chart:

Local Tax Profile

Here’s a glimpse at some of the tax differences among the largest cities and Benton and Washington counties.ttt

Notes: HMR — Hotel, Motel, Restaurant Tax. NA — Non applicable. * Designated Sales Taxes are used for various purposes such as debt service on bonds, capital improvements and parks and recreation.

Source: Northwest Arkansas Regional Planning Commission