ABQ Councilor Rey Garduño Moves Deferral of Impact Fee Reduction Bills to Get Economic Impact Analyses

At the August 3rd Albuquerque City Council Meeting, City Councilor Rey Garduño moved a deferral of the four Impact Fee reduction bills (O-09-69, O-09-70, O-09-71, and O-09-72). Councilor Garduño cited a memo from Council President Isaac Benton, Councilor Debbie O’Malley, and himself for justification of the deferral, according to a statement released by Garduño's office.

The memo requests an Economic Impact Analysis for the Impact Fee Reduction Bills in accordance with F/S R-09-176, which requires a fiscal impact analysis for Ordinances, Resolutions, Executive Communications and Other Communications considered by the City Council. That Resolution also provides that a more detailed Economic Impact Analysis (EIA) must be prepared for ordinances and resolutions that that have a regulatory impact on persons or businesses or an economic impact on members of the community.

The Councilors requested a rewrite of the Fiscal Impact Analysis for each of these bills that addresses, at a minimum, the following:

• An estimate of the increase in the number of residential building permits that will be issued by the City month by month during the term of the reductions based solely on the proposed reductions in impact fees. This estimate should break out the number of Green Path (100% waiver) building permits and non-Green Path (50% waiver) building permits. The estimate should be at least partially based on the experience of other communities similar in nature to Albuquerque that have reduced impact fees.

• An estimate of the increase in the number of commercial building permits that will be issued by the City month by month during the term of the reductions based solely on the proposed reductions in impact fees. This estimate should break out the number of Green Path (100% waiver) building permits and non-Green Path (50% waiver) building permits. The estimate should be at least partially based on the experience of other communities similar in nature to Albuquerque that have reduced impact fees.

• An estimate of the fiscal impact to the City based on the gross receipt and property tax revenue gains solely from the increased number of residential and commercial permits issued as a result of the proposed reductions versus impact fee revenue lost as a result of the proposed reductions. Please include an estimate of the number of reduced fee permits that must be issued to reach breakeven.

• A table showing impact fee waivers to date and estimated additional impact fee waivers as a result of the proposed impact fee reduction bills.

• A plan, including the estimated amounts required and funding sources, necessary to offset the loss of impact fee revenues as a result of the proposed reductions.

• An estimate of additional administrative costs to operate the reduced fee program.

A Fiscal Impact Analysis was submitted to the City Council along with each of the bills referenced above; however, those analyses contained mathematical errors, were unclear on the potential fiscal impact to the City in terms of lost impact fee revenue, incorrectly assumed that the total number of building permits issued by the City represented the number of building permits that would be generated as a result of the reduction in impact fees, did not provide an estimate of the number of building permits issued as a result of the incentive created by the impact fee reduction, and did not address the potential economic impact to builders and homebuyers.

As the initial Fiscal Impact Analyses were prepared by the Administration, the memo formally requests that the responsible party, in this case the Planning Department, prepare a revised Fiscal Impact Analyses for O-09-69, O-09-70, O-09-71, and O-09-72, as required in F/S R-08-176.

The City Council voted unanimously for a two-week deferral and expects the analyses to be done before the next City Council Meeting on August 17, 2009.