Finding a Better Way

Things have not worked out well for the city of Steamboat Springs in its efforts to create new sources of revenue. That's what happens to plans that don't have public support.

On Tuesday, two developers appeared before the City Council seeking $47,000 in impact fee refunds. The developers had received planning approval of their projects before the impact fee ordinance was approved in 2001. But both developers were required to pay the impact fees when their building permits were issued.

The developers argue this goes against state law. A bill Gov. Bill Owens signed in 2001 prohibits cities from collecting impact fees for projects already approved, even if building permits have not been issued.

The city argues it doesn't have to follow the state's rules because it is a home rule charter city.

Likely, the courts will have to sort this out. Ultimately, up to $80,000 may be at stake for the city.

The short-lived impact fee was a mess for the city. The fee was approved by the City Council without voter approval. Next the fee had to be amended to accommodate affordable housing. Then the ordinance was discarded altogether in favor of an excise tax voters did approve. Finally, the city may end up giving back thousands because it did not follow state law in assessing the fee.

The lesson is that the city must earn greater public trust as it attempts to resolve its revenue woes. The impact fee failed in part because it was wholly driven by the City Council -- and a city-funded consultant study -- with little public input. When the city challenged residents to offer a better plan, they came up with the excise tax, which was approved fairly easily.

This is instructive for the city as it looks again at a new tax. After the defeat of the 5 mill property tax for fire and ambulance service last November, the city can't expect simply to come back with a similar plan and wow voters, which Councilwoman Arianthe Stettner seemed to suggest last week. "It takes two times for a lot of these things to get by," Stettner said.

The reason the property tax for fire and ambulance services failed isn't that voters needed more time to think about it. It's because the tax really wasn't for fire and ambulance services. The city would have used the $1.9 million the tax raised to hire additional firefighters, but what it really wanted was to free up the $1.3 million it was already spending on fire and ambulance to spend elsewhere. The problem was the city did a poor job of defining specifically how those funds would be spent.

We have said before the city needs to look at its tax strategy and identify other sources of revenue. But the public must be involved in that process and the city must define specifically how any new tax revenues will be spent.

Anything less is doomed to a fate similar to impact fees and the 5 mill property tax.

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