Builders, developers and home owners seeking to improve their dwellings or projects in town were given an extension on permit and fee wavers earlier this month as the Pagosa Springs Town Council approved an extension of those waivers through 2011.
The waivers, first introduced in June 2009, were designed to encourage building and development in the shadow of a construction climate that had all but dried up. At that time, the general belief was (among most local government officials and some developers) that impact fees (along with permit and capital investment fees) were all that stood between a moribund development environment and a return to the building boom of the mid 2000s.
Effective July 2009, both the town and the county waived all fees related to building, with that 100-percent fee waiver lasting until the end of that year (if permits were pulled after July 1 and the project was completed by the end of 2009).
Sales tax rebates were also provided, with a 50-percent rebate offered in 2009 if local labor was used for the project and local materials were used for building.
For 2010, 50 percent of fees were waived, with sales tax rebates dropped to 25 percent.
In 2010, the Town of Pagosa Springs has waived a total of $5,300 in fees, hardly an indication that the town’s incentives have led to construction anywhere close to levels seen in a pre-2009 economy.
In fact, Pagosa Springs and Archuleta County are not alone in seeing a virtual standstill in new home construction or commercial development. Nationwide, with forclosures at a record high adding daily to an inventory of unsold homes, the situation has made construction one of the hardest hit industries in the U.S.
Unfortunately, relative to the rest of the state, Archuleta County has been hit particularly hard by the foreclosure crisis. In August, Archuleta County’s .61 percent was the second highest foreclosure rate (behind Grand County’s .77 percent) according to a report released by the Colorado Division of Housing.
Overall, the state has seen some improvement regarding the number of foreclosures; ranked No.10 in foreclosures by RealtyTrac in late spring, Colorado had dropped to number 16 by early fall (with a nearly 7-percent rise in housing prices).
The county, conversely, has shown no indication of easing continued foreclosures, for the moment. Unfortunately, there is no way of knowing what “critical mass” looks like in local housing inventory, nor how that will ultimately affect valuations in the county — rising values would suggest an increased demand for properties and an improved building climate.
With those conditions in mind, it has not been clear that the incentives of waived fees and sales tax rebates have actually encouraged development in the town or county.
When asked if requested waivers and rebates by builders arose from projects that would have gone forward in spite of incentives, town building Inspector Scott Pierce said, “There’s no way of knowing, but I suspect so.”
Nonetheless, with the construction sector of the economy all but flatlining in the county and town, council saw no reason not to extend waivers and rebates through 2011, hoping those incentives would help jump start an ailing industry.
In fact, as council considered the incentive extension, council member Jerry Jackson proposed waiving 100 percent of fees through the first half of 2011, with the fee structure returning to a 50-percent waiver after June. That idea was rejected, however, in favor of a simply extending the current fee waiver structure through the next year.
While the fiscal benefit of waivers and rebates appears negligible — if they have indeed spurred development, the amount has so far been miniscule — the symbolic importance of the waivers and rebates could have more value. The message council hopes to send appears more to be a general signal that the town is willing to accomodate development.
Indeed, the importance of that symbolism could very well outweigh the intended effectiveness of the incentives themselves.