elpasospeak

This from Jerry Kurtkya:

EL PASO – AFFORDABLE STEPS TO RENEWAL

# 1 – Privatize the Costs of Growth

We have seen that the city’s approach to remaking El Paso from its current image as a corrupt border town has focused mostly on downtown vanity projects (I do not count the MCA as one of these) that are money losers except, maybe, for property investors. I have also identified one of the major benefits of El Paso in comparison to other similar size American cities as its genuine growth. It is almost as if the downtown focus is a political “red herring” to distract citizens from the larger game that has been played out for years which is to privatize the benefits of this growth while socializing its costs onto the tax base. Otherwise, why do we need a QoL bond issue every ten years to catch up with the projects that the growth should have funded all along? Where has the money gone?

So, if Brutus permits, I want to lay out a series of initiatives that mostly are not very expensive and that I believe could be transformative here because they aim at not playing the game given to us by the local elite and their surrogates on city council. Rather, I hope these ideas are the start of a different kind of El Paso.

Privatize the Costs of Growth

El Paso currently assesses impact fees on new development for water and sewer purposes. The fees are modest (typically under $3,000 for a residential unit), partially rebated depending on the affordability of the housing with various other credits, and are intended to reimburse EPWU for the cost of extending new service to new development in a Fee Service Area. Builders will not be issued a building permit until the required impact fees have been collected by the city. As far as I can discern, there are three such Fee Service Areas (Northeast, Westside, East) each having a different impact fee as determined by a detailed Land Use Assumptions Plan that calculates and assigns “service units” to the Fee Areas. Service Units are a standardized measure of consumption of city infrastructure services by the new development, currently limited to water and sewer extension. All of this is governed under the Texas Local Government Code Chapter 395. It is a very complex arrangement.

Historically, these costs were passed onto EPWU and not included in the builder’s cost of development but have been since (I think) 2009 when the ordinance was passed. So, this is a good thing as far as the city being reimbursed by the builders for the cost of new residential and commercial growth. The problem is that there is a lot more infrastructure demand created by growth that isn’t reimbursed. That is one reason why we have a bond issue to play “catch up” with parks, libraries, roads, not to mention police and fire stations and other city facilities that can be identified to serve the new areas. It is how the costs of incremental growth are “socialized” and passed onto the general tax base.

I could write all day about the intricacies of how impact fees are calculated and assigned to Fee Service Areas if I fully understood the process, which I do not. What is a service unit for a library branch such that so many new homes equals one new branch? Ditto parks, police, fire facilities? Because we have not done this, we have situations like District #5 that is, effectively, a “city” of 100,000 people without a park! So we have a bond issue every ten years to pay for the capital cost (not operating cost that comes from subsequent property tax revenues) of infrastructure that wasn’t paid for by the new development itself. To reiterate, the builders have “socialized” part of their development costs by offloading it onto the general tax base and they want to keep it that way. Why do you suppose that the city reps in whose districts this game is most actively being played out are the recipients of such generous campaign largess? Well, I propose that we privatize the incremental cost of new growth through higher and more inclusive impact fees.

When I say that a key strategy for El Paso is to “privatize” the cost of new development, this is what I mean – to require builders to pay the full cost of the new infrastructure demand that their development entails, not just water and sewer. Clearly, too, this cost will be loaded onto the price of new homes and buildings that will make them less affordable. Good, because for too long El Paso has been too “affordable” and the sprawl of low cost homes is proof of this, as are the generally low values of these homes and the taxes that they pay to the city. I don’t mean to be hard-hearted, because El Paso is still relatively a very affordable housing market and will continue to be so. But we have to ask the question: For whom are we building the city?

In my first post, I argued that the city leaders made a decision in the 1970s to build the city for the class of unskilled immigrant labor that manned the garment industry. We got what we ordered and are still paying the price in massive welfare, public housing, citizen apathy and the city’s “border town” reputation nationally. I propose for the future that we build the city for those who will contribute to make it a vibrant place to live and work, those who will educate themselves enough to participate as home owners, taxpayers and voters. How many unemployed plumbers, electricians, nurses, engineers, etc. do you know here? These are the kind of people I want as my neighbors going forward and who will live in more expensive, but still relatively affordable homes.

That fateful choice 40 years ago has resulted in the El Paso we have today with all the accumulated deficit of quality of life facilities, now converted into massive public debt. It has created a “trickle up” economy that subsidizes a builder/developer/investor class at the expense of the average taxpayer. It is time to flip the equation so that the money circulates around us, not just upward. I will have more to say about this in future posts.

NEXT: #2 – Save the Land