Builders in Cortez could soon benefit from a one-year incentive program that waives or reduces fees to encourage development on legally platted and developed vacant lots throughout town.
City Council on Tuesday approved the Cortez Housing Affordability and Mitigation Plan, or CHAMP. Cortez Planning and Building Director Sam Proffer said the development community in Cortez still hasn’t recovered from the 2008 recession.
“Here we are 11 years later,” Proffer said. “We aren’t anywhere near the permitting that we were doing prior to 2008. We’re hoping this will kind of spur that along a little bit.”
The CHAMP program – effective March 1, 2019, to March 1, 2020 – would waive 75 percent of use tax and building permit fees for site-built homes and would waive 100 percent of use tax and building permit fees for new manufactured homes.
According to a staff memo, a new 1,500-square-foot home with a two-car garage comes with a $3,920 use tax fee and a $1,620 building permit, for a total of $5,540. With the 75 percent incentive rate, the fees would reduce down to $1,390.
The city could miss out on approximately $20,000 based on the number of new homes built in recent years. But based on preliminary interest, the staff memo states the city could see a revenue loss of $40,000.
The city has issued 28 manufactured home permits in the past three years, all of which have been used homes, typically trailers. The city will completely waive the $700 home permit for a double-wide trailer and the flat rate use tax fee of $225.75.
“Based on the above data the financial impact will be minimal,” the memo states.
Proffer said the city will lose some revenue, but there are tangible and intangible benefits that come with new development.
New homes raise the value of adjacent properties, puts builders to work and leads to more local purchases of building materials. Proffer said new homes typically have fewer property maintenance issues, so the city could save staff time on enforcement.
The city and school district also would take in more tax revenue. He said it’s about increasing the quality of life in Cortez.
“It’s kind of a holistic way of looking at it,” Proffer said.
The CHAMP program focuses solely on legally platted lots with existing curb, gutter, water and sewer hookups. The boundary of the program spans throughout most of the city, but excludes four areas with a history of new construction, like parts of the Brandon’s Gate and Southern Bluffs subdivision. The focus is on “areas of neglect.”
Proffer said the intent is to create an environment where developers are able to build affordable entry-level homes geared toward young families who can’t afford custom homes.
There are plenty of examples of legally platted and developed subdivisions throughout Cortez that simply don’t have houses on them, including acres of land surrounding Brandon’s Gate as well as some areas on the south side of town.
Once the one-year incentive program has ended, Proffer said city staff will look at how much revenue was lost and how many new homes were built. Based on that information, staff could propose a new incentive or target other areas of need.
