For months the City of Loveland has been collecting input about capital expansion fees (CEFs), otherwise known as impact fees. Since 1984, the City has collected over $107 million from developers through this funding mechanism.
The revenues have been used to build or expand a variety of public facilities, including law enforcement facilities and equipment, fire stations, streets, parks, recreation facilities, cultural services facilities, the library expansion and other highly visible projects. Currently the CEF program is generating less money because development has slowed and the City is having difficulty raising the operations and maintenance funding to match the infrastructure dollars brought in by the CEFs.
The City convened two very different groups to discuss CEFs at City Council’s request. Unsurprisingly, the perspective of members of the City’s various boards and commissions is quite different from the opinions expressed by representatives from the development community and no consensus was reached.
Builders and developers have seen their livelihood come to a halt. Their message to City staff was that reduced levels of service could lead to lower CEFs, which would encourage more development. However, those in the opposing camp argued that the fees should not be reduced at all. A variety of ideas were proposed, from real estate transfer fees to additional taxes in the form of property taxes or user fees, which the developers strongly opposed.
Mayor Cecil Gutierrez stated that voters would be angry if they are asked to allow the City to continue to keep revenues above TABOR limits (which is known as de-Brucing and is a common practice all over Colorado) if the development community is allowed to pay lower CEFs. That argument does not really hold water but could reveal the arguments he will use to oppose any easing of the financial burden on developers. The Mayor and several of his colleagues (Kent Solt and Joan Shaffer) also argued that reducing CEFs or not implementing the 8.62 percent cost of living increase to the fees is tantamount offering incentives, which they did not support. After a lengthy discussion, it was clear the Council was deeply divided on the issue. Staff was directed to continue gathering data, as the issue will come up again in the 2012 budget process.