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As construction rebounds, fee collections go up

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Ten years ago, families were building more than 1,000 new homes per year, and local governments saw a way to capitalize on the building boom.

They began charging fees when new subdivisions, homes and businesses were built. The money went toward parks and trails to serve the growing population, to a local development group working to attract new businesses or back into local governments to help pay for the staff needed to approve and process developments.

Then the economy and home building slowed significantly, and so did the amount of fees coming in. Johnson County Development Corp. was bringing in $70,000 per year from fees charged by the county, but that plummeted to just $7,000. New promotions were scaled back to save money.

In the past two years, about five new subdivisions have been proposed or planned or new sections of long-vacant subdivisions are preparing again for building, and developers are again paying those fees. The county development group collected $36,000 last year, the most it had raised since before 2008, when building dropped off.

Local officials are figuring out where to put the money raised by fees, with ideas including new parks, more trails or new technology to help process development plans.

The rebound in fees shows that the housing market and economy continue to improve, although they’re not hitting near the levels they were about 10 years ago. About 1,110 homes were built in 2006, but Johnson County had about 600 new houses go up last year. Still, that’s about 350 more houses than in 2009. Depending on where homes are located, developers are paying fees to support city parks or run the county development group.

In the county, money from the economic development fees — $75 for a home and $500 for a commercial development — goes toward operations such as promoting industrial sites and maintaining the Johnson County Development Corp. website. After the fee was first charged in 2005, the group was bringing in about $70,000 per year, but that dropped by 90 percent by 2009, and the group was forced to cut expenses.

“When the economy took a drink, it trended obviously down,” Johnson County Development Corp. president and chief executive officer Cheryl Morphew said. “It is trending back up, growth and development is coming back, and it’s on a steady trend upward.”

The organization gets the other two-thirds of its funding from local companies buying memberships, so during the downturn the group pushed for more support from private companies while also cutting expenses, Morphew said. Having fees supporting part of the annual budget makes the group more susceptible to sudden changes in the economy. The fees also provide the most money to the group when construction is at a high point, which is when the group should be doing the most work to attract new businesses, Morphew said.

Projects at city parks were stalled or cut back. Park infrastructure fees in Greenwood and Franklin also declined significantly during that same period.

In Greenwood fee collections fell to about $17,000 for all of 2009 but increased to nearly $300,000 the past two years. Franklin doesn’t collect nearly as much, rebounding from a low of $5,000 to more than $20,000 last year. Franklin is saving the money for additional trails projects.

Other fees paid by developers for building permits, inspections or reviews go back to the county and cities. In Franklin, the planning and engineering department collected more than $150,000 in permit fees in 2008 but only about $45,000 the next year. That meant the city needed to use more tax dollars to run its departments and led to cuts, resulting in no raises for employees.

Greenwood approved a fee increase in December because development was picking back up, which will go toward funding technology improvements in the future. Those fees eventually will help the city implement an online building permit system, director of community development services Mark Richards said.

Developers are once again starting to build new homes and design new subdivisions, just not nearly at the rate they were in the 1990s and early 2000s, Johnson County planning engineer Allen Kirk said.

“The fall of 2011 was when we started noticing an uptick in residential development, residential building permits. Through 2012 and 2013 we saw that increase even more,” Kirk said. “We’re starting having infrastructure for subdivisions being built, which we hadn’t had that for several years, and additional sections of subdivisions getting ready to prepare lots for new homes.”

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