Growth can cut many ways

Kai Hagen

February 7, 2003

A study released last month and reported in this paper, informed us that Frederick County levied the highest impact fees on new homes built in Maryland during the previous fiscal year.

Impact fees are one-time charges assessed to newly-developing properties. They are established to recover a portion of the cost to local government of providing the basics required to serve the new development such as roads, sewers, water, electricity, schools, parks, police, fire protection, and other services not provided by the developer.

No doubt, the report will serve as ammunition for those builders and others who have complained about the fees and campaigned to have them reduced or eliminated, saying they hurt homebuyers.

But faced with rapid growth and the loss of a significant amount of federal and state funding, local governments everywhere have struggled to find ways to pay for infrastructure needs associated with new development without
raising taxes.

One way or another, someone is going to pay. When new development doesn't cover these costs, those of us who are already here end up subsidizing additional growth. More of our current tax base — my money, your money — has to be diverted from existing services and amenities to help finance the new public infrastructure.

Although it isn't inevitable, it is easy to understand why larger communities and cities almost always have higher per capita taxes.

At least, Frederick County's impact fees place some of the costs of new development directly on developers and indirectly on those who buy new homes, instead of on Frederick County residents and taxpayers who do not directly benefit from the costly new public services.

Too often, we commit sizable investments of public resources to support growth, yet fail to fully account for these costs in terms of the impact on existing residents and taxpayers, or on public facilities and natural resources.

The primary beneficiaries are the developers, bankers, Realtors, and construction companies who influence local elections and government to support growth and direct public resources into growth-stimulating investments. A few profit, while the costs are distributed across the broader community — you and me.

For years, we have been told that the new growth expands the local tax base, creates jobs and reduces unemployment.

Repeated over and over again by development interests and some politicians, these assertions have become articles of faith, fundamental "truths" in the public discussion and debate about our future. In fact, they are just a few of the well-entrenched myths associated with growth and development.

Fortunately, these assumptions are being critically examined. There have been dozens of studies completed, and more are underway. And they all come to the same conclusions.

The most common patterns of growth during the last few decades, especially land-intensive sprawl, have consistently cost more in public services than they generated in taxes. The local tax base may grow larger. And tax revenues may increase. But when the growth is not well managed and properly balanced, it generates substantially more costs than new revenues to pay for them.

If we consider the evidence, even with impact fees, rapid residential growth is very likely to increase our tax burdens. And that doesn't even account for other indirect costs, such as increased traffic and crime, crowded schools, water restrictions and the like.And yet, impact fees on new development are met with howls of protest.

Next time you hear the complaints, however, take notice of who is protesting. Then consider if you would rather have higher property taxes, other new taxes, or declining levels of service as existing roads, schools, sewage plants and police and fire departments become overburdened.

You may already consider them "overburdened" when you sit in traffic, when your child has 30 classmates or attends classes in portables, when you can't water your lawn or garden, or when there aren't enough soccer fields for all the kids in town.

When we do account for the actual economic, social and environmental costs of growth, it should be clear that there are major advantages to controlling growth. Not stopping it. But ensuring that it occurs in a manner and at a pace that is a genuine benefit to the quality of life of those who already live here, as well as those who are coming.

Growth and development can cut many ways. Intelligent planned growth can and should improve the local economy, and enhance our community in other ways. Well-planned growth can improve services, create opportunities and new amenities, even contribute to the expansion of parks. Or it can have a significant negative impact on our quality of life, decreasing our share of public services and facilities, while reducing investment and competitiveness and seriously degrading our environment and landscape.

The future of our community is too important to be primarily shaped by the creation of short-term construction jobs and profits, or the desire of some existing business owners to have more customers more quickly.

Expanding the tax base isn't a good deal if it means rising taxes and decreasing services, and trading our landscape for cookie-cutter malls and subdivisions and traffic jams and...

It wouldn't be very smart.

To get in touch, e-mail Kai Hagen at