A lot happened last legislative session and I totally missed a recent law that could have huge impacts on property owners. A new Colorado law that went into effect in May allows fire districts to levy “impact fees” on any property without a vote. What does this mean for property owners? What does this look like in one town that recently proposed impact fees?
Colorado’s new law on impact fees without a vote
The last session was crazy with the number of laws, and I totally missed this one until now. Here are the details on the new law:
A fire protection district (fire district) has been authorized to receive and spend an impact fee, or other similar development charge, only in connection with a local government’s imposition of such fee or charge to fund expenditures by a fire and emergency services provider. The act repeals this limitation and authorizes a fire district to impose its own impact fee on the construction of new buildings, structures, facilities, or improvements on real property within the fire district’s jurisdictional boundaries so long as the fee is imposed pursuant to a legislatively adopted schedule that is:
- Generally applicable to a broad class of property; and
- Intended to defray the projected impacts on capital facilities caused by the proposed construction.
Why is this new impact fee law so monumental in Colorado?
No vote is required to implement the impact fees, and it doesn’t look like there is a limitation on the amount of impact fees that can be charged. This law could blow the door wide open for various impact fees especially in the Colorado mountain communities.
What is one town proposing on impact fees?
Oak Creek, just South of Steamboat Springs, is one of the first I have seen to use the new law. They are proposing:
Builders of new residential units would be required to pay $5,695 per unit. New nonresidential floor area, or commercial area, would be taxed at $10,442 per 1,000 square feet of floor area. The proposed assessment structure from the district is possible after a state law was passed and signed by Gov. Jared Polis in May.
The impact fees that Oak creek is proposing are interesting. First, I would think residential development would use a sliding scale similar to commercial as from a fire perspective a 1500-foot house takes substantially less resources than a twelve thousand square foot house so why are they not charged differently? On the commercial side, the fees are crazy. For example, if you wanted to build a 5k foot metal warehouse the impact fee would be 52k. This seems a bit steep for a warehouse as opposed to a twelve thousand square foot house. Long and short the fees could radically alter building in a town/county without approval of voters.
Summary
We are just at the beginning of the impact fee assessments. You will see other towns levying varying fees without rhyme or reason. I’m not opposed to fees, but I think voters should have a say in what the fees are and there should be caps on the fees. The way the law is written it will be easy for towns to game the system and impose high fees to discourage development, which was not the intent of the law. Stay tuned to see how this plays out in the various mountain communities and suburban towns throughout the front range.
Additional Reading/Resources
- https://leg.colorado.gov/bills/sb24-194
- https://www.steamboatpilot.com/news/oak-creek-fire-district-pushes-for-impact-fees-with-projected-growth-on-the-horizon/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. He is the owner of Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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