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The Cortez Planning and Building Department is floating the idea of reducing or waiving certain building permit or use tax fees in undeveloped parts of town to temporarily spur residential development.<\/p>\n
The proposed program is called the 2019 Cortez Home Affordability and Mitigation Program. The City Council heard a report on the proposal at a Nov. 27 workshop. Planning and Building Director Sam Proffer said the city implemented a similar program about six years ago, on the heels of the 2008 economic downturn, when the city cut building permit and use tax fees by 50 percent for commercial projects smaller than 10,000 square feet.<\/p>\n
\u201cIt was very successful,\u201d Proffer said at the workshop. \u201cIt was really geared toward our small-business owners.\u201d<\/p>\n
The new proposal is in draft form. In an interview, Proffer said city staff will meet with the local development community in December or January and come up with a plan to forward to City Council for approval. City Council would determine the desired incentive level.<\/p>\n
\u201cThe developers\u2019 success is our success,\u201d Proffer said. \u201cThe city and our department \u2013 we want to see stuff happen.\u201d<\/p>\n
Several local developers, builders and real estate professionals told The Journal that they believe a reduction in fees could help incentivize additional homebuilding.<\/p>\n
\u201cI agree wholeheartedly that it would increase the purchase of building permits and development of some of the vacant lots,\u201d said Preston Dillon, president of development and real estate company Eagle Investment.<\/p>\n
Leila Hanson, broker for West Slope Realty Century 21, said she thinks the proposal would be a good idea as long as the city could support the loss of revenue from the reduction in fees.<\/p>\n
\u201cOverall, if you have fewer fees it\u2019s going to incentivize some people to do it,\u201d Hanson said. \u201cSo, therefore, Sam would be correct.\u201d<\/p>\n
Both Dillon and Rodney Case, owner of Case Construction, said the city\u2019s use tax fee deters some developers.<\/p>\n
Proffer said the use tax is a 2.02 percent fee assessed upfront on the valuated cost of construction if the building costs more than $10,000. Builders then receive a tax exempt certificate that they can present to local vendors to buy materials to recapture some of the fee. The use tax fee for a 1,200-square-foot home with a two-car garage is about $3,700.<\/p>\n
\u201cIt was a tool to try to get local builders to buy materials locally,\u201d Proffer said.<\/p>\n
But Dillon said suppliers often buy materials from wholesalers outside of Cortez, so it can be hard for builders to get their money back.<\/p>\n
\u201cThat\u2019s the whole purpose of it, but it doesn\u2019t work,\u201d Dillon said.<\/p>\n
Similarly, Case said he often buys materials from Home Depot in Durango, but Durango doesn\u2019t honor the Cortez tax exemption. \u201cThat\u2019s what I don\u2019t like about it,\u201d Case said.<\/p>\n
Case said builders will always complain about fees, but he said a reduction in use tax fee would make a lot of difference for builders.<\/p>\n
\u201cIt makes a lot of difference,\u201d Case said. \u201cLook at it this way: Before I can break ground on a house in Southern Bluffs, it cost me an estimated $18,000 before I can even break dirt.\u201d<\/p>\n
All three development and real estate professionals are involved with the Southern Bluffs subdivision south of East Seventh Street. The subdivision was platted in 2004, but several phases remain incomplete.<\/p>\n
Hanson has a real estate sign advertising 16 vacant lots at the end of an unfinished road that is planned to loop around and include nearly 80 homes. \u201cYou see there\u2019s a whole arm where my sign is, a peninsula if you will, that doesn\u2019t have anything happening,\u201d she said.<\/p>\n