Town weighs higher building fees
Randy Metcalf/The Explorer, Steve Solomon walks through a portion of the ancient Hohokam Indian village at the center of his 87-acre residential and commercial development. He donated 13 acres for archeological research and a historic preserve.

When Steve Solomon bought 87 acres in Rancho Vistoso to build Vistoso Town Center, he knew what he was getting into.

The land held an important archeological site known as Honey Bee Village, a place that the ancient Hohokam Indian culture called home from 480 A.D. to about 1250 A.D.

He knew couldn’t build houses and a commercial center on the historically significant site, so he donated 13 acres for archeological research and a preserve.

Now that the research has run its course, Solomon has started the residential phase, selling off 128 lots for custom homes while leaving the 13-acre preserve walled off and free from development.

Even now, without a single home standing on the property, Solomon said he’s paid more than $250,000 in construction sales taxes to the town just to get the roads, sewers and other infrastructure built.

He’s also paid thousands to have town staffers review the plans.

Now he wonders how much more the town wants.

The town council recently discussed a proposal from town staffers to increase development review fees, which the town charges to review and approve engineering plans.

The proposed price structure would increase the costs for development review of a 100-unit subdivision from $19,945 to $73,310. The fees have not been raised since 2003.

Town leaders say the increase needs to go through to keep development review departments from racking up debt.

According to town financial figures, the departments that make up development review, including zoning, engineering and building safety, have not made ends meet since 2005.

Since then, development review services have accumulated more than $1.6 million in budget shortfalls.

Town financial leaders blame the deficit on the higher price of employee benefits, retirement and the increased salaries of town staffers.

Town Manager David Andrews added that the town bought laptops so that development review employees can work in the field and purchased new software for an online permitting system.

Andrews said the goal is to have review fees pay for 100 percent of the costs of the town’s development review services. “That’s the purpose of user fees,” he said.

Other factors that played into the deficit were not directly associated with the review process. Town zoning officials have been developing an environmentally sensitive lands ordinance, which has added to departmental expenses.

But Solomon thinks the town hasn’t been completely upfront about its finances.

“The town is presenting less than half the truth, and it’s very distressing,” Solomon said.

The town charges a 2 percent sales tax and an additional 2 percent tax for construction materials. Solomon wants the 4 percent construction tax to fund those departments that review development plans.

A portion of the tax funds roadway maintenance projects and the remainder goes into the general fund.

“That’s a bit of voodoo bookkeeping,” Solomon said.

Added to the potential of a nearly four-fold increase to development review fees, the town council recently raised residential impact fees to nearly $14,000 for every new home built in Oro Valley.

With the local homebuilding and real estate markets in near freefall, fueled by the mortgage collapse, Solomon doesn’t understand why town leaders seem to want to make it harder for people to build and sell houses. 

“What they’re doing is trying to shift the burden onto the new home buyer,” Solomon said.

Financial reports show single-family-home building permits have fallen well behind what town leaders had budgeted for.

In the first two months of fiscal 2009, the town issued 26 single-family home building permits, as opposed to the 42 that were anticipated.

At that rate, only 156 new homes would be built in the budget year, not the 250 homes town leaders planned for.

Town leaders designed the new review fees to help keep costs down, Andrews said.

Currently, development plans often go through as many as four reviews before meeting the town’s standards.

The new fees would encourage builders to follow the town’s development requirements more closely, thereby cutting down the man hours put into reviewing plans multiple times.

Oro Valley’s review process and development standards are known to be more difficult than those of surrounding communities.

Even town officials acknowledge that Oro Valley’s review process is more detailed than it is in Marana, where a similar 100-lot subdivision could fetch more than $90,000 in review fees. 

“Our process is a little more involved,” Town Finance Director Stacey Lemos recently told council members.

Solomon, who has been building homes in Oro Valley since 1994, agrees that the town has rigorous review standards.

“I think that they’re telling you they are going through four reviews, tells you that their process is considerably more stringent than other municipalities,” Solomon said.

He added that while it’s more difficult to build in Oro Valley, he appreciates the high standards and complimented the professionalism of town reviewers.

Despite the high costs, Solomon said he intends to keep building in Oro Valley. He also lives in the town and over the years has built more than 200 homes here.

The town council will revisit the fee proposal at future meeting.

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