Wicomico Council Debates Eliminating Impact Fees

SALISBURY — In the hopes of stimulating a sluggish building industry and creating or restoring jobs, the Wicomico County Council this week entertained the notion of eliminating impact fees on new construction, but it appears the concept has little traction.

Councilman Bob Culver on Tuesday broached the subject of eliminating the county’s $5,200 impact fee on new residential construction in the hopes of luring back contractors who have taken their business elsewhere and stimulating the construction business and creating jobs. Wicomico implemented fees on new construction in 2006 in the interest of offsetting the impact of enrollment growth in the county’s public school system.

“I feel we should look at our impact fees and consider doing away with them,” said Culver on Tuesday. “I think we might encourage some builders that went to Sussex County to come back to Wicomico.”

Culver said the anticipated enrollment spike never materialized and urged his colleagues to reconsider impact fees.

“I know why we did it. We did it to offset the impact on enrollment at our public schools,” he said. “But it now looks like school enrollment has gone down.”

Culver explained how property taxes on a flurry of new construction could offset the losses from eliminating the impact fees. He said the property tax on an average $150,000 new home would return around $1,200 to the county in each of the first few years and in the future.

“In the first two years, we will have made more than the $5,200 we charge for the impact fee,” he said. “I see nothing but a win-win situation if we do away with it. I’d like to do away with it completely, but I’m willing to listen to any ideas.”

Wicomico County currently has an inventory of around 850 homes, which is clearly high but not off the charts. During the discussion, it was determined a healthy housing inventory should average around 500 per year. Culver argued a stimulated building industry would create potential buyers, those currently with little or no work, for the excess inventory.

Councilman Joe Holloway said he could support at least reviewing the county’s impact fee policy, but not a complete elimination.

“I know we need money for schools, but I don’t agree with doing away with it completely,” he said. “I would like to see a moratorium put on it though.”

Councilwoman Stevie Prettyman, who served on the body when the impact fees were adopted in 2006, essentially said if it isn’t broken, there is no reason to fix it.

“Years ago, when we implemented impact fees, we hired a consultant and went over all of these issues,” she said. “In the end, we came up with a viable solution. I think we even came down on the low side and didn’t charge what we could have charged.”

The discussion waivered briefly into a debate about whether the impact fee was indeed a fee or a tax, an issue that got a lot of play during the election season last fall, touching off a spirited, but cordial exchange between some council members.

Culver said the impact fees were adopted during a time when the real estate market was booming in Wicomico County. In the years since, the bottom has fallen out and the building industry has stalled, taking down a lot of jobs with it.

“2006 was an entirely different era,” he said. “We’d all like to go back to that, but it’s just not going to happen.”

In the end, the council agreed to have county staffers look into how much the fees have contributed to the schools and what their elimination would mean to county coffers.

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