City fees blamed for storefront vacancies
October 7, 2008
By Jon Savelle
Officials try to solve problem that’s keeping downtown shops empty
Vacant storefronts on Front Street are mute testimony to the high cost of the city’s transportation impact fees, which can add more than $100,000 to the price of putting those properties back in service. Such fees must be paid by developers of new projects to offset the city’s cost of providing additional service, but they also are charged to tenants who change the use of an existing building.
It is the latter requirement that occupied the Council Land Use Committee Oct. 2, when downtown property owner Keith Watts explained that high fees have discouraged prospective tenants for several Front Street properties just north of Sunset Way.
One of them is the former Allen Furniture store at 131 Front St. Now vacant, the space most likely would be converted to restaurant use when leased again. But changing from retail to restaurant use triggers a Municipal Code requirement that a transportation impact fee be charged to pay for the increased traffic the restaurant would attract.
The trouble is, the fee in question is about $100,000. When added to the $400,000 it would take to convert the building to a restaurant, the city’s bite is prohibitive, Watts said. He added that the landowners are willing to hold out until a tenant is found who can manage the fees, but other property owners are not.
Consider the former Lewis Hardware store up the street: $40,000 in transportation impact fees would be levied on the operators of any new restaurant there. And at 185 Front St. N., where the Kung Fu space was planned for a re-do as a sports bar, the hit would be $20,000 in county fees plus the same from the city.
“All work has stopped there,” Watts said, because the owners cannot continue in the face of $40,000 in fees.
Were such fees to be substantially lower, or waived altogether, there would be no shortage of tenants, Watts said. Again, the most likely new use would be restaurants, which would serve the city’s growing cultural and nightlife attractions.
For committee members John Rittenhouse, Maureen McCarry and John Traeger, the question is how to make the street hospitable to small businesses. Planning Director Mark Hinthorne explained that the City Council could, if it wanted, reduce the fees by any amount it chooses. But transportation costs would still have to be recovered somehow.
At the moment, the Planning Department is working on an agenda bill that would change the impact fee structure. To be brought before the council in November, the measure would reflect the removal of the once-proposed Southeast Bypass from the fee schedule. At present it accounts for roughly 40 percent of transportation impact fees, so presumably they would drop by that percentage once the bypass is eliminated. But Hinthorne cautioned that inflation has pushed costs up in the meantime, so the actual reduction would not be the full 40 percent.
And if a tenant wanted to convince the city that a new use generated no more traffic than the old one, it would be up to that person to do the traffic study and provide the data.
Nobody can afford to do that, Watts said, adding that it would cost $20,000.
So, the committee pressed on, looking for ideas. One suggestion was to divide the city into fee districts, with higher or lower fees depending on a variety of factors, such as the types of business, traffic volumes and so on.
But clearly the idea that attracted the most interest at the meeting was McCarry’s suggestion that fees could be waived for businesses of 10,000 square feet or less. Watts was all for it, saying that 10,000 square feet would fit nearly every business space on Front Street.
With that in mind, Hinthorne said he would develop a list of options to present to the council in November. The goal is to keep Front Street viable as a place for small businesses while avoiding onerous fees and red tape.
“Simpler is better,” McCarry said.
When the list of options is returned to the committee, the members will study it and make a recommendation to the full council. Action is likely before the end of the year.