5:25am

Thu July 11, 2013
Business Report

When It Comes To Building Fees, Loveland Tops No. Colorado Cities

As the building boom returns to northern Colorado, some cities are re-examining how much they charge developers to build.

Erin O'Toole discusses building fees for new construction with NCBR editor Jerd Smith for Morning Edition on KUNC

The fees are designed to ensure that when new homes and commercial projects are built, cities have enough money to pay for things like new schools, roads and parks – as well as police, fire, sewer and water service.

The Northern Colorado Business Report analyzed regional building fees charged in Loveland, Greeley and Fort Collins. The results were a bit surprising, says NCBR editor Jerd Smith.

“Of the three cities we examined, Loveland had the highest fees,” says Smith. “It charges just over $20,000 in development fees for a single family home. Greeley came in just behind Loveland at $19,920 and Fort Collins came in a distant third, charging $9,102 per home.

Smith says although fees aren’t popular with most developers -- who typically pass them on to customers -- there is a benefit for communities. The money pays for infrastructure needs and helps provide for quality-of-life enhancements such as parks, trails and roads. 

Interview highlights:

Why do the charges vary so widely among cities?

"Cities would tell you that their fees are based on their costs. Greeley, for example, says that it charges more for a water tap because it has to transport its water much farther than Loveland and Fort Collins do. And it also depends on what a community wants to see occur. This summer, for instance, Fort Collins is debating whether it should add a special trails fee to its development charges. And Loveland, which is working hard to develop its arts community, has a special museum fee that it charges."

Are there any builders or realtors planning to oppose any of the fees?

"Since the housing crash, there hasn’t been much focus on growth and its associated costs. With the resurgence in building, however, realtors and others are starting to monitor the issue. Realtors said they want to make sure the fees make sense and that the cities are looking at the whole fee package, not just how much it will cost to add one new fee, for instance.

Greeley revamped its fee structure in 2011. Fort Collins is finalizing its new fee structure later this year. And Loveland plans to finish its evaluation at the end of this year and spend most of next determining which fees will increase by how much, with implementation slated for 2015."

Don’t these fees cause housing costs to rise?

"They do… and developers pass these costs onto consumers. But cities across Colorado have spent a lot of time studying how much new growth costs. There was a time, say 50 years ago, when cities added new subdivisions in the middle of nowhere without calculating how much it would cost to build roads and sewer systems and provide police and fire protection.

Today cities try to get in front of that process, ensuring that communities are better planned and not only have the basic services financed, but also the parks and schools that make communities desirable places to live."

Why does Fort Collins charge so much less than Greeley or Loveland?

"It’s probably because it hasn’t done a serious evaluation of its building fees since 1996, other than adding costs to keep up with inflation. And it’s being very careful about the way it adopts new fees. For instance, the city has determined that residential developments heavily utilize parks, which makes sense. So the parks fee in Fort Collins is only charged to residential projects, not commercial developments."

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