Building Taxes: A Tale of Three Cities

Three different Colorado newspapers recently published stories about how three different cities are handling building taxes in this time of economic recession. The cities are Denver, Loveland, and Boulder.

The Denver Business Journal reports, “The city of Denver will offer free building permits through the first half of June for home-improvement projects as a way to encourage economy-boosting renovation work. … Building-permit fees normally range from $20 to several thousand dollars, depending on the value of the project.”

Did you get that? A building permit for a home-improvement project can cost you as much as several thousand dollars! The city is implicitly granting that these high fees (or taxes; the difference between those terms is increasingly meaningless) hurt economic development. For two weeks the city will stop screwing home owners. But what about the rest of the time?

Still, this is the best story from among our three cities.

The Fort Collins Coloradoan reports:

McWhinney, Loveland Commercial and other developers will ask the Loveland City Council on Tuesday for a 25 percent reduction of 10 permitting fees in hopes of stimulating building in the city.

The reduction would last 18 months and target the city’s community expansion fees, commonly referred to as CEFs. The fees generate revenue for streets, parks, recreation, trails, open space, the public library, the museum, general government, fire protection and law enforcement, assistant city manager Rod Wensing said.

The CEFs together cost $11,339 for every residential building permit issued in the city of Loveland.

So Loveland may give home owners a slight break for a year and a half.

And Boulder? Surely the city is following suit and considering easing building taxes and fees? Of course not.

Boulder’s Daily Camera blared the headline, “Taxes on new Boulder developments could skyrocket.” The paper reports, “For more than a year, the council has been studying whether to replace the city’s voter-approved excise tax structure with an impact-fee system that circumvents voter approval and raises the amounts charged on new development.”

The new taxes would be used to fund government projects and “affordable housing.” Because Boulder has made housing so expensive through its building controls that few can afford housing there. So obviously Boulder needs to charge higher taxes on housing in order to make it more affordable. During a recession. Huh.

The unsophisticated layperson unacquainted with higher Boulder logic might imagine that such taxes would make housing less affordable for some in order to give others a government handout.

It’s the sort of plan that has given Boulder its national reputation.