On Nov. 3, the city's planning commission will consider a proposal to eliminate (technically, "reduce by 100 percent") residential development impact fees for two years. The plan's sponsors, City Councilors Rebecca Wurzburger and Matt Ortiz, tout it as a way to bolster Santa Fe's faltering construction industry.
Though the proposal's intention is admirable, its effectiveness appears dubious at best. Construction employment in Santa Fe County—as well as in New Mexico as a whole—has been declining since 2006. The number of new building permits issued for residential development, according to the US Bureau of Labor Statistics, peaked back in 2005.
Those figures are particularly depressing when examined in light of the city's last action on impact fees: In 2008, city officials raised impact fees for homes smaller than 2,500 square feet, but lowered them for larger homes, in one case by close to $1,000. Thus, not only has the city missed out on impact fee revenues—which fund roads, parks, and fire and police services—but it has also failed to enjoy the increase in construction that was undoubtedly a selling point for the 2008 change.
We're used to the potholes by now. But as long as the city's giving out tax breaks, maybe it's time to put our eggs in other baskets.
