I know that for many people this topic has
political overtones. I will do my best to
not let my opinion show. I think most people
would, however, be surprised to learn just
how much of the cost of new construction in
Pima County goes to government fees and taxes.
My source is a study commissioned by the Southern
Arizona Homebuilders Association (“SAHBA”).
Now, I know some people might question the
objectivity of a study on this subject that
was commissioned by SAHBA. Even if their objectivity
might be questioned, however, it seems doubtful
that SAHBA would release an inaccurate study
on this subject, since it would be fairly
easy to check the figures. The figures come
from readily available government sources.
Because anyone who wanted to check the accuracy
of the figures could compile the data themselves,
it wouldn’t make much sense for the people
who did the study to fudge the figures. All
that would do is hurt their credibility, and
that of SAHBA, on anything else they do.
You probably know that people have differing
opinions on whether the fees and taxes on
new homes should be lower, or higher. The
debate is sometimes cast in terms of whether
population growth does or does not, or should
or should not, “pay its own way.”
And of course there are many different ways
of calculating the “cost” of population
growth in terms of public infrastructure,
services, and amenities.
Although I have not done any research on
the fees and taxes imposed on new construction
elsewhere, such fees and taxes are almost
certainly imposed everywhere in the United
States. There are undoubtedly places where
the total of the fees and taxes on each new
home is lower than in Pima County, and places
where the total is higher. Comparisons to
other counties in Arizona, and especially
to other states, are probably not particularly
meaningful because of variables such as the
cost of land, the cost of labor, how much
infrastructure already exists, and other factors
that will change dramatically from locale
to locale.
With that as background, here are the figures:
as of February 2004, the total fees and taxes
on a median priced new home ranged from just
over $12,000 in the Town of Sahuarita to nearly
$18,000 in the Town of Marana. The median
price of a new home in Pima County in February
2004 was $169,294, according to the study.
The totals of fees and taxes for the City
of Tucson, unincorporated Pima County, and
the Town of Oro Valley were between those
for Sahuarita and Marana.
I was surprised by those figures. They tell
me that in general, the fees and taxes on
a new home account for more than ten percent
of the purchase price. I would not have guessed
that the percentage would be that high.
The fees and taxes fall into two categories:
those that are a fixed amount for each building
or lot, and those based on the value of the
building. The value based fees and taxes are
building permit, fees and sales taxes. The
fixed fees are for connecting to the public
water and waste water systems.
Then there are the much discussed “impact
fees,” which are usually fixed fees supposedly
earmarked for infrastructure like roads and
parks that must be built to serve the new
homes. Impact fees are now imposed by all
of the local jurisdictions except the Town
of Sahuarita and the City of Tucson. The Tucson
City Council is currently considering an impact
fee proposal.
No one is suggesting that there shouldn’t
be fees for building permits and water and
sewer connections. Some folks may question
the amount of those fees (over $2,000 for
a building permit in many cases) and whether
impact fees should be imposed. My point in
this discussion is that any meaningful dialogue
about whether the taxes and fees on a new
home should be lower or higher cannot begin,
it seems to me, until everyone is better educated
on exactly what those taxes and fees are,
how the amounts are determined, and where
the money goes.
I can’t resist pointing out one other
little-known fact that has a bearing on the
amount of fees and taxes on a new home: did
you know that there is a nine-story building
in downtown Tucson, the City-County Public
Works Building, that is entirely occupied
by the city and county departments that oversee
construction in Tucson and Pima County? And
that doesn’t even include the towns of
Marana, Oro Valley, and Sahuarita!
