Reduction in Impact Fees Could Pave Way for New Construction

Published on Jul 26, 2009

Builders of new commercial and residential buildings typically pay impact fees to help fund critical infrastructure in the Albuquerque community. Bernalillo County approved a six-month reduction in impact fees by 75 percent for homeowners and businesses effective July 1, 2009. The City of Albuquerque is hoping to pass a similar plan of its own to pave the way for new construction and encourage more local development.

County leaders said they hope the reduction in fees will create new jobs. "People aren't building things, they're not adding onto their homes and so we need to do something to put people to work," County Commissioner Art De La Cruz said during a recent interview with KOAT. Commissioner De La Cruz says if you’re building in the county, the larger the square footage, the bigger the savings you will see as a result of this reduction. "If you're building a house, it could be anywhere from $4,000 to $8,000 to $10,000 on a house that you want to build," De La Cruz said. Bernalillo may consider extending the fee reduction to a year, depending on its success.

Albuquerque Mayor Martin J. Chávez also has a plan to cut impact fees. His plan is to cut fees by 50 percent. Green building projects would get a 100 percent reduction during the mayor’s proposed moratorium on impact fees. Impact Fee Administrator for the City of Albuquerque, Jack Cloud told the Greater Albuquerque Association of REALTORS® that the revision to O-09-69 is scheduled to be heard by the Council during its August 3rd meeting.

By slashing impact fees to 50 percent, Chávez hopes builders will take the opportunity to build more with lower costs. He expects the city will recoup the lost revenue in increased gross receipts taxes that come from job creation and business-to-business spending related to the projects.

Mayor Chávez told the New Mexico Business Weekly, “Impact fee collections have dropped from $1.2 million a month in early 2007 to just $350,000 per month now. The biggest drop is in residential building permits. They have declined from 300 to 400 a month to 25.”

Chávez said. “We have vetted this idea with councilors and the business community and many see this as a win-win."

For more information on impact fees:
Impact Fees Information
Impact Fees FAQ
View the City's proposed legislation, O-09-69