Are Developers paying too much in Platting Fees? Absolutely NOT!
If anyone has been paying too much for NEW infrastructure and development, it has been the tax payers of Sioux Falls. When the 2nd Penny sales tax was raised to a full penny over a decade ago to fund infrastructure expansion, the promise was developers would put in 40-60% into that fund in platting fees. That hasn’t happened, not even close. In fact, taxpayers at one point were putting in over 10x more into that fund then the developers.
Well apparently some developers are now crying the platting fees are too much (about $20K per acre on vacant lots in undeveloped areas). Sioux Falls City Councilor Greg Neitzert talked about it in a recent post on his Facebook page. He seemed to be sympathizing with the developer because they used the tired old excuse that they pass those prices to the consumer of the new development. Well duh. The consumer is getting brand new sewer, water, and roads, why shouldn’t they pay the cost? How is charging me extra in sales taxes fair? What do I get out of it except higher taxes and water/sewer rates?
In about 50% of US cities with populations of 25K or more they charge the developer a 100% of the cost of new development infrastructure, so current users are not subsidizing new growth. This makes sense, because as I have often argued, new growth without a plan to pay for it, makes no sense. Slow growth that is properly funded is fiscally responsible to taxpayers. When developers don’t have enough workers to build their developments, that should tell us that maybe the ‘growth’ isn’t needed. Who are you building and expanding for?
I think we should eliminate platting fees all together and have developers instead pay for the entire cost of new infrastructure. If the NEW development is really truly needed, it will pay for itself. That’s just common sense.