Opinion: Taxing developers would be bad policy?

County commissioner candidate Wendy Ella May wants developers to pay a greater share of Johnston’s school-building burden.

That’s a familiar sentiment, one likely shared by many Johnstonians. But a development fee for school buildings would be bad policy, and here’s why: Developers wouldn’t pay the fee, their buyers would.

Any developer with sound business sense would simply add the fee to the price of every house, which would drive up the cost of home ownership in Johnston County.

Read the rest of the story here:
http://www.newsobserver.com/news/local/community/smithfield-herald/sh-opinion/article109421582.html

 

What he said. Simple economics - consumers pay for everything.

 

Only if you have that mindset. The people who pay wages to the consumer could be considered the final entity or their customers, or anything else one wishes to claim.

 

If the home buyers will be priced out of ownership, who exactly will be paying for the schools and infrastructure? Taxes are usually the means to pay for such things and those very same home owners would be charged an even higher property tax rate, along with the older home owners who paid for the previous schools, etc. with their tax dollars.

 

Huh? I starting to think that you just like to be disagreeable. I restate, consumers pay for everything. In addition to my common sense telling me this, my university professors and textbooks did also.

 

Where do consumers get this money? They get it from their employers who can just as easily be claimed to pay for everything. There is a huge circle of interconnected transactions and none of the entities have an income stream unrelated to the other entities. Some textbooks have been shown to be wildly inaccurate.

Common sense is often biased and not very accurate as a result.

 

Huh again. OK, I can see that you just want to argue so one final post. My employer does not buy my house or groceries, doesn't pay for my utilities, etc. But....if you feel a need to believe that you are smarter than me, and my professors, and the authors of the books we used then...OK. You have a wonderful day. I'm done (except I sure do wonder why you are so generally disagreeable).

 

Exactly!
Because consumers use the schools! They are the ones consuming the good or service that costs 'X' to produce. If you are buying a new house in an already crowded school district then you should absolutely bear part of the burden of funding a new school to fix that problem. Your position is short sighted at best.

The fee for the developer is going to be passed to the consumer, no one disputes that, but this is the most direct method for ensuring the impact is mitigated. There is a reason why these are called 'impact fees' and that is because of the impact the development has on the immediate or broad area. They can be straight up fees levied through the local government or they can come in the form of much more stringent development requirements such as road widening, sidewalks, parks, storm water ponds, etc. all of which mitigate the impact the increased development has on the area. Either way the consumer should pay. It is no different than anything else a consumer pays for in this economy.

I understand the concept of more growth means more tax revenue and it is true. However, this system has a significant lag time and is evident in daily life when you deal with traffic and schools with trailers. It is evident when your subdivision hasn't had it's roads paved in over 20 years because NCDOT doesn't have the money to keep up with the roads a county adds.

 

To go back to the initial claim this would price home buyers out of the market, this is not correct. The developer can set any price they want, but if that price is not competitive they will not sell nor will that affect the housing market prices. Thus, the costs would come mainly from the profit of the developers rather than some direct addition to the price of the home.

 

BS. Do you think the developer is gonna tote the cost?

 

Either that or he does not build. How are they going to sell a house for more than the market value for the same house in an older development? Either the market sets the price or business can pass on all costs to the consumer. There cannot be both situations at the same time.

 

he's gonna pass it to the buyer

 

How? If he cannot raise the price higher than the market, which is where he is going to set it no matter what, where exactly does he pass it onto the buyer?

To use round figures, if the market for a house of a certain size with certain size lot and amenities is $100,000.00 the developer will build if he can build everything sufficiently lower than $100,000.00 per house to make the profit he desires. Say that level is $30,000.00 per house. If he can build everything for $50,000.00 per house, he is not going to sell the houses for $80,000.00 and leave $20,000.00 per house on the table. He is going to sell them for $100,000.00 or near it if he wants to make a faster profit. The inverse is that if there are additional fees, they will be absorbed into the costs because he cannot raise the price per house over that the market sets. If that makes some developments less likely to be built now the market price may rise to the point they become viable, but the selling price is set by the market.

 

If the developer passes on the costs to the buyer how could a developer ever go bankrupt? They just increase the selling price to cover the costs, right?

There is a lot of money to be made in developments. Some of my friends made a lot of money in them. One small development was in the black after the third lot was sold and they had 22 lots. The closest thing to losing money was when one lake had to be drained and rebuilt due to a weak area in the dam. If it had been found later it would have been the HOA's responsibility, but the profit was still enough they continued with the developments.

 

They should tax development. It sure is slowing growth in wake county!

 

Johnston growth, slowed growth in Wake.

 

Developers pay taxes already, and the developments they build generate tax revenue year after year. Funny how so many people want others to pay more tax.

 

The cost differential between Wake and Johnston slowed the growth in Wake (along with the differential between Wake and Chatham)

 

If you want growth, then you have to pay for it. Period. Growth pays for itself, to a point, but just look around at schools, roads, fire departments, parks (or lack thereof) and you'll see it is out of whack. Don't get me wrong it isn't terrible around here, but it isn't great either. A great example is the new development near Cleveland Elementary. Someone decided to put in sidewalks (or someone made the developer do it) in order to make this development have as little impact on the area as possible. Still not a good idea IMO due to those schools already being at or above capacity, but at least the sidewalks mean kids can walk to school. However, now the schools probably need to pay for crossing guards. So somebody paid for those sidewalks. Developer likely passed it long to homeowners in a small increase built in per lot.

 

The fee or more tax is the only answer. If not, you're ignoring the 4042's area history and doubling down on crazy.

In lieu of solid stabilized growth Johnston County went for the quick buck when Hwy i40 first came through. The infusion of people with cash flowing from their pockets had developers and land owners selling and building thousands of homes with illegal labor and a blueprints on napkins growth mentality. They threw a fresh layer of pavement over those stone roads and thought they were doing great. The support network has never caught up to that mistake. And we still have people today thinking more selfishness will overcome that mistake.

I don't think we'll need to worry about growth? 40 is what gave us birth and it will be what kills us. The DOT is spending millions on new entrances to the toll road and fixing the 440 in Wake while we still live with the jam up at the 70/40 bypass. And still no "promised" 540 loop. The money in this area flows north and west folks.

Anyone past the bypass is a red headed step child to them and I have yet to hear anyone from this county fighting to get that fixed in the past 8 years? When all the morning TV Traffic reports everyday say, "And as usual, 70/40 bypass is jammed up" ... no one will want to move here and deal with that traffic if it keeps getting worse.