Phoenix city council hikes developer fees, could bump up new home prices by thousands
PHOENIX (AZFamily) — The cost of building a new home may increase in Phoenix, which could indirectly impact the price of existing homes and rental prices.
The Phoenix City Council voted unanimously Wednesday to increase the impact fees developers pay to fund infrastructure in new communities.
Impact fees are what the city charges builders to help pay for things like water and sewer, roads, parks, libraries and fire and police stations.
City councilmember Jim Waring admits that higher fees will likely force people building new homes to pay thousands more, but he says they don’t have much choice when it comes to making sure new developments have what they need.
“Somebody has to build the fire stations, police departments, water infrastructure and streets, and that shouldn’t be you and I, who have lived here for many years,” said Waring. “We’ve already paid for the cost of stuff in our area, so we are trying to be as fair as possible, redistributing those costs among the future users.”
The bump in impact fees will vary across the city, but one of the biggest jumps will be in north Phoenix, near the TSMC chip manufacturing plant that is soon expanding and attracting thousands of employees, who will need a place to live.
Impact fees in that area will more than double, from around $15,578 to $34,772, and buyers are expected to bear the extra cost.
Tom Abraham with Fulton Homes said the higher impact fees come at a tough time when home prices are already high. Tariffs could push up the cost of construction materials, jacking up home prices even more.
There are also concerns that if prices go up on new builds, they’ll go up on existing homes and could push rent prices up.
“Unfortunately, with impact fees, we have to pass those costs along to our home buyers and home owners as they close on their homes and its going to continue to contribute to the affordability challenges we are seeing in this market,” said Abraham.
The Homebuilders Association of Central Arizona released this statement:
“Over the past year, cities across the Valley have imposed significant increases in impact fees to build infrastructure needed to serve new homes. The problem is that any increase in builders’ costs will directly increase the cost to purchase a home. Unfortunately, these increases come at a time when home buyers can least afford them, particularly in the middle of Arizona’s housing affordability crisis. While we recognize the City’s need to provide this infrastructure, we also must recognize that if policy makers, including at the Legislature, don’t take other immediate steps to bring down the cost of home building, the American dream of homeownership will remain out of reach for an increasing number of Arizona families.”
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