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Rio Blanco County is planning to increase fees on new home,
construction and development
MEEKER — “We need to secure a revenue stream,” said Jeff Madison, director of natural resources for Rio Blanco County, about the proposed impact fees.
Madison will present the proposed impact fees at public meetings in Rangely May 19 and Meeker May 27 before a resolution is presented to the county commissioners.
Madison said the county has been looking into dealing with the impacts since 2005 and it was concluded that the impact fees offered the best solution to have growth pay for the needed infrastructure needs.
The county has identified capital projects, which is all the fees can be used for, such as upgrading county roads, a new justice center and administrative facilities, at a cost of more than $300 million. The upgrade to County Road 5 is a priority, requiring about one-third of the funds the new impact fees expect to generate.
“We have had engineers tell us County Road 5 will begin to breakdown within the next two years under the current use,” Madison said.
Madison gave copies of letters from two energy companies asking the commissioners to postpone their decision to look at other alternatives.
“Every month we wait, the county loses out on $500,000,” Madison said. “We have met with the energy companies several times, and if they come up with a plan to pay for the costs, the county will credit their fees dollar-for-dollar.”
RBC is required to include residential and commercial impact fee components for development in the county but not in the towns of Rangely and Meeker.
The RBC staff submitted the following summary of the proposed fees and answered frequently asked questions:
Studies conducted by the Associated Governments of Northwest Colorado (AGNC) and by the Bureau of Land Management indicate the growth the county has seen during the last few years is just the “tip of the iceberg.”
According to the Rio Blanco County planning department, the projections and forecasts are startling and staggering with projected population in Rio Blanco County tripling to 19,000 and the number of gas wells increasing by 19,000. These projections do not include the possibility of a commercial oil shale industry which would more than double the population projections. The resulting impacts and challenges facing northwest Colorado, particularly Rio Blanco County, are enormous.
The AGNC study reports an estimated need in Rio Blanco County for $15 million in new infrastructure annually contrasted with a current total annual budget for new infrastructure of $2.7 million. The impact fee study completed specifically for the county by Rural Planning Institute (RPI) identifies $343 million in infrastructure needs during the next 15 years.
These needs include upgrading existing roads, construction of new roads, construction of criminal justice facilities and updates and increases in county office facilities.
How are the increased needs to be paid for and by whom?
The county commissioners are currently considering the adoption of an impact fee on new development in unincorporated Rio Blanco County.
This process was initiated in 2005 with an analysis of options which would require the expected growth to help pay for its impacts to the county’s infrastructure. The analysis resulted in the conclusion that impact fees offered the most workable and equitable method.
RPI was contracted in early 2006 to do the impact fee studies. In April 2006, an emergency impact fee resolution was adopted imposing an impact fee of $5,000 on shallow oil or gas wells and $6,000 on deep oil or gas wells.
To date more than $1.3 million in impact fees have been collected.
The new proposal would increase the amount of the impact fees and broaden their scope to include all new development within the county but outside of the towns of Meeker and Rangely.
RBC staff answered the following questions in advance of the public meetings scheduled for Meeker and Rangely later this month.
How will the impact fee work?
The proposed impact fee is a one time fee, not an ongoing fee or tax. It is imposed on new construction or development occurring in the unincorporated area of Rio Blanco County. The fee will be assessed at the permitting stage of a project. Impact fees collected must be held in a special account and can only be used to pay for capital facilities made necessary by the new development. The impact fees cannot be used for maintenance and repair of existing capital facilities. For example, impact fees cannot be used to patch a road, but they can be used to build a new road or upgrade a road from county specifications to state specifications so it can withstand the heavy truck traffic.
What will be subject to the impact fee?
Any new development, residential, non-residential commercial or industrial, that creates additional demand in these areas defined by the RPI studies will be assessed the impact fee, based on the values determined in the studies. For example, a new house would incur an impact fee of $2,043. (See the summary of all the proposed impact fees).
What will not be subject to the impact fee?
Reconstruction, expansion, alteration or replacement of an existing residential unit. Unoccupied accessory buildings to a residential unit. Construction of residences valued under the $250,000 affordable housing limit. Any development activities within the town limits of Meeker or Rangely. Any development that can demonstrate it will not create additional impacts.
Why is the road and bridge portion of the fee so high?
In recent years, approximately $1 million per year has been spent from county funds to maintain and repair County Road 5 (the Piceance Creek Road) due to damage caused by heavy vehicle traffic. These expenses can be expected to increase because County Road 5 was not designed or built to withstand the impact caused by new energy related development. Engineers have estimated large sections of County Road 5 will break down within the next two years. The estimated cost to rebuild the road to heavy haul standards is about $100 million. If the road is not rebuilt within the next 3-5 years the cost could climb to $200 million. This situation is repeated in numerous roads across the county with a total estimated cost for the required upgrades of $330 million.
Using impact fees to rebuild these roads to heavy haul specifications will enable them to withstand the current and projected traffic loads without having to spend millions in maintenance and repairs. If the impact fee is adopted, almost all of the money to pay for road and bridge upgrades would be paid by the energy companies causing the impacts.
How will the fees collected be used?
All impact fees collected must by law be kept in a fund separate from other county monies and can only be spent on new capital facilities made necessary by new developments in the county. They cannot be used to pay for operations or for past deficiencies. The capital items identified by the RPI study were impacted roads ($330 million), justice center ($7.8 million) and administrative facilities ($5.7 million). There are additional capital items, such as schools, hospitals and items for each municipality which are not included in the RPI study or the impact fees but which are very real needs. The impact fee cannot be expected to pay 100 percent of the cost of the impacts on county infrastructure. By law the county will have to pay for a portion of the impact through existing sources, such as property taxes, severance taxes and mineral leasing funds.
Why is the county rushing into this?
It is not. As was stated earlier, the county has been looking into methods for dealing with the costs of growth since 2005. The required study for impact fee took RPI nearly a year to complete, with the initial draft delivered in December 2006. The early drafts of the study were revised during the first half of 2007. Since that time there have been six planning commission public meetings starting in August 2007, six monthly meetings with oil and gas industry representatives, and one general public meeting dedicated to discussion of the impact fee. The commissioners will hold public hearings May 19 in Rangely and May 27 in Meeker. At this point, the impact fee resolution is a draft. As a draft, it has been modified following every public meeting and is still subject to change based on input received at the upcoming public hearings.
Doesn’t the increasing tax revenue pay for the growth?
While tax revenues are increasing each year due to the increase in assessed values of properties which in large part is due to increases in oil and gas activities, the amounts represent only about a third of the costs for additional infrastructure spending. Rio Blanco County’s average property tax levy ranks it 62nd out of 64 Colorado counties, 9.5 mills less than Garfield, 17.5 mills less than Moffat and 33 mills less than Mesa. The mill levy in the county produces only $627 per well per year. In contrast, Garfield County currently collects $4,668 per well per year, $3,108 is collected in Moffat County and Mesa County takes in $1,695 with its mill levies.
Additionally, relying on mill levy revenues would result in all of the property owners in Rio Blanco County continuing to subsidize the new development. The funds are needed now, waiting on mill levy revenues to deal with the current impacts will double already huge costs.
What alternatives were considered?
One of the alternatives considered was making County Road 5 (Piceance Creek Road) a toll road. Because of numerous access points and the logistics around collecting a toll, this idea is unworkable. Also, County Road 5 amounts to only a third of the total cost for roads in need of upgrade.
A special tax district has been suggested. This is impractical for a number of reasons. Much of the land on which the impacts are occurring is BLM which is not taxable. It would require an unlikely majority vote of the landowners many of whom are energy companies. Also, a special district would place an equal burden on the energy companies and those few remaining ranches in the western portions of the county, resulting in the ranchers subsidizing the new development.
We have heard that the energy companies may drastically cut back operations or leave the county if the impact fee is enacted. Will that happen?
The fees proposed on a typical gas well represent 0.3 of 1 percent of the average cost of developing a well in the county. The fee represents an even smaller portion of the profits from the production of the gas from that well. In the numerous meetings held with the energy companies to work through specifics of the fee resolution, it was clear the companies would rather not pay the impact fees. However, only one company indicated they may have to adjust their level of activity in the county. The energy companies have, within the last three years, spent upwards of $2 billion on gas treatment plants with about that much more in the planning stages. Given that and the other spending on pipelines and associated facilities it is difficult to give the idea much credence. The energy companies are spending large amounts of their own capital to develop known gas reserves. This is not the oil shale boom of the early ‘80s where the companies were largely subsidized by the federal government.
How would this work for a new industrial facility, for example a gravel pit?
Again, there is a lot of misinformation circulating on how the impact fees would be calculated and who would have to pay them. For a new gravel pit, the fees would be applied to the structures and road impacts for the opening of the pit. The fees on the gravel hauled from the pit would be captured with each new project, paid by the project developers, not by the gravel pit or the individual truckers. Also, materials hauled for projects not requiring development permits would not be subject to the fee, such as graveling the road to an existing house.
How was the affordable housing level determined?
The state statute allows for an affordable housing exemption. The level of the exemption was calculated using the average mortgage buying power of the median household income in Rio Blanco County.