Council Discusses Impact Fee Waiver

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On Monday, February 10, Milford City Council discussed continuing the waiver of impact fees for businesses in the City in an effort to promote job growth. Currently, the city ordinance does not include new construction for commercial buildings.

“We had this in place, but it has expired,” City Manager Richard Carmean explained. “The fact is that we have a few companies now ready to move into Milford who were told we had this benefit, and they have started asking about it.” One company which Mr. Carmean described as a franchise business who will add many new jobs to the city, is ready to begin building, but wants information about the impact fee waiver before the begin.

The current waiver exempts a certain number of Equivalent Dwelling Units (EDUs) depending on the number of jobs created by the company over three years. Creation of five to nine jobs exempts one EDU, and the exemption increases to five EDUs for the creation of twenty-five or more jobs over three years. In order to qualify, a business must employ five full-time employees in the City of Milford.

Councilman Dirk Gleysteen asked what the City does to document that those jobs were actually created. “We really don’t have the staff to keep up with it, but if we find out, the business does sign an agreement that we could use to take them to court and recover the fees,” Mr. Carmean explained.

Councilman Bryan Shupe asked if it would benefit the city to require the business to provide documentation on an annual basis during the three-year exemption period. Councilwoman Katrina Wilson suggested a compliance letter be sent to each business, requiring them to report back to the city how many jobs had been created.

Mr. Carmean said that this and other business incentives have worked well toward bringing businesses to Milford. “This is part of economic growth, something we need in the city, so I feel we need to fix this ordinance,” said Councilwoman Wilson.

Councilman Dirk Gleysteen said he did have some reservations based on the earlier comments during the public hearing about the bond bill. “We just agreed to ask citizens to pay for a $3.5 million loan but now we want to give businesses a break,” Councilman Gleysteen said. “I am concerned we may have our rate structure set incorrectly and that we may be running into difficulties supporting initiatives like this.”

Mr. Carmean explained that reserves are still plentiful so the rate structure does seem adequate. “However, we need to balance whether those fees bring jobs or retail and focus on the benefits those bring to the community,” Mr. Carmean said. “We have had businesses come here that added jobs because of the waiver of these fees. In some cases, this can save a business $35,000 to $45,000.”

Councilman Garrett Grier said that he sees the waiver of impact fees for commercial properties to be beneficial. “We stopped waiving those fees for residential developments, which I feel was a good move,” Councilman Grier said. “What we want is for those old, run-down places turned into nice ones, and I think waiving fees on rehabilitation and new construction of businesses is a way to achieve better economic development.”

Councilman Pikus said that building permit fees were down considerably, and this may encourage building. “I have seen that other municipalities upstate are offering no taxes for ten years and other incentives to businesses,” Councilman Pikus said. “We can’t do that, but we can offer this to encourage businesses to locate here.”

City Council requested that David Rutt, City Solicitor, draft an ordinance to be introduced at the February 24, council meeting this month.

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