Opinion: Fees and more fees – the insatiable quest for more money

The Boulder City Council majority is about to approve a charge on homeowners who build additions to pay for more affordable housing. As with other recent fee decisions, it means more money for the council without a citizen vote, since TABOR requires a vote on taxes, but not on fees. And again, the fee’s logic and legality are sketchy, in my opinion. Here’s my take:

Per last year’s U.S. Supreme Court’s decision, all fees, including those legislatively enacted (i.e. generally applicable), should be able to meet the Nollan/Dolan case standards: (1) there must be a “rational nexus,” a logical connection between what the fee is being charged for and the impact the fee will pay to mitigate (the Nollan case), and (2) “rough proportionality,” a close equivalence between the cost being covered and the amount of the fee (the Dolan case).

Last year, the council approved using stormwater fees to pay for the South Boulder Creek dam. These fees are calculated on the “impervious area” (the area that produces runoff) of a person’s lot within Boulder. But almost 100% of the water that the dam will contain comes from outside Boulder. Thus, it seems obvious to me that these fees completely fail the “rational nexus” test.

Then, earlier this year, the council approved a Transportation Management Fee to help pay for road maintenance. These fees are calculated using nationwide averages for traffic generation. Thus, they ignore significant individual differences, for example, someone uses a bike or a light compact sedan versus driving a heavy SUV, which causes multiple times the road damage. So, this fee fails the “rough proportionality” test.

Last week, the council tentatively passed a fee on residential expansions to pay for more affordable housing. But it only taxes expansions over 500 square feet; it exempts smaller ones and Accessory Dwelling Units. The asserted “rational nexus” (as best as I could make sense of the material, which was opaque in the extreme) is that such expansions happen because those homeowners doing the expansions make more money, and there is a statistical connection between higher income and more economic activity in general, and so there is a need for more affordable housing for more workers. And the “rough proportionality” is asserted based on those numbers.

The problems are numerous:

·         The city completely failed to demonstrate the applicability of the asserted general relationship between income and economic activity to how people on the higher end of the income range spend their money. People who expand their single-family houses are generally wealthier than average. So, they are more likely to have topped out on spending on local goods and services, and spend their wealth extra on travel, higher-end imported goods, services, their children, etc. The point is that their higher income does not necessarily create a significant need for more local worker housing.

·         Boulder is not “average.” We have a more affluent-than-average population; local businesses are only a small fraction of our economic activity, which is largely focused on high tech, R&D, etc., pay much more than average, and serve national and international markets. So, applying averages doesn’t work here. Thus, the fee fails the “rough proportionality” test.

·         CU and its effects on the local housing and job market are very significant and not even close to any general average. For example, almost half the students come from out of state.

·         Adding space to a house does not necessarily increase general economic activity. For example, an aging grandmother may need to move out of her apartment, and her child may want to take care of her at their home rather than sending her to assisted living. So, adding living space for her may in fact have no relationship to increased economic activity (other than temporarily during construction). And it certainly creates no need for more housing: Her moving out of her previous housing increases, not decreases, the housing supply, exactly the opposite of the asserted “rational nexus.”

·         The homeowner’s money could have been made from stock market investments unrelated to Boulder’s job or housing market.

·         The exemption for adding Accessory Dwelling Units is inappropriate, since there is no significant difference between an ADU and any other housing development in terms of simply adding living space.

·         It fails “rough proportionality” in that someone who builds a 499 square foot addition pays nothing, but one doing a 501 square foot addition pays the full fee. Or someone can do a larger addition in multiple stages and avoid the fee.

A good start to fixing this mess would be for council members to actually read the Nollan, Dolan and the Supreme Court cases.