For Reno … Cut Impact Fees … Just Like Reno’s “Twin City” of Rio Rancho, New Mexico

Above: Looking east towards Reno and the Truckee River, and associated irrigation ditch, trails, parks, and warehouses.

(October 15, 2012 – UNDER CONSTRUCTION) Reno, Nevada and Rio Rancho, New Mexico are twin cities in the high desert of the American Southwest, 900 miles apart, at 5000′ elevation.  Both cities are small towns, but have recently featured rapid population growth, with a moderately high percentage of highly educated middle class families, emigrating from nearby overcrowded cities, such as Sacramento, Las Vegas, and Albuquerque.

Both areas feature magnificent outdoor scenery, with numerous outdoor recreation opportunities.  And, both cities are similar in terms of particularly unique demographic and lifestyle interests, including hiking, riding jeeps, competitive sports, and all terrain vehicles.  You could drive from one city to the other, and think you were in the same town.  Both cities are “hipster” family towns, with lots of sports cars, motorcyles, large SUV’s, and Jeeps.

In terms of economic development, Reno is not only a gambling town, but is also home to numerous manufacturing and technology firms, Amazon.Com, and Apple in the near future.  Although Rio Rancho, called “The City of Vision,” is mostly suburban, it’s also home to Intel, Sprint-Nextel, and Hewlett Packard (click here for Rio Rancho street map).

Both Reno and Rio Rancho officials state that they want more technological firms. For photos of Rio Rancho, see my posts.  At this post, I photographed the entire perimeter of developable land on dirt roads in Rio Rancho in my Jeep: http://wp.me/pMHrW-1vv   Here, I discuss regional development, smart growth, and impact fees in Albuquerque and Rio Rancho: http://wp.me/pMHrW-1sN

However, this may or may not happen in Reno, due to high impact fees and property taxes, and a high cost of living.  At this point, despite high demand, Reno is growing very slowly, at only 24% from 2000 to 2010, with 214,000 persons, compared to 69% in Rio Rancho.

From 2000 to 2010, Rio Rancho increased from 51,000 to 87,000 persons, again, a 69% increase. Compare this to 42% in Las Vegas (NV), and 37% in both Bend, Oregon and Austin, Texas.

In addition, to stimulate economic growth, Washoe County must eliminate its 2008 potentially unconstitutional voter approved cap on population growth, to only 2% per year (link).  Of course, population growth is required for economic growth, and less unemployment.

In contrast, Northern New Mexico cities and counties have never voted on any anti-growth ordinances.  “Smart growth” with mixed use development is only weakly administered by the Albuquerque Planned Growth Strategy (a monstrous 750 page document), and another entity entitled “MRCOG,” the Mid Region Council of Governments.   Urban Growth Boundaries are not part MRCOG, unlike DRCOG in Denver, Metro in Portland, and PSRC in Seattle.  For more information on MRCOG, see my post at: http://wp.me/pMHrW-1sN

Both cities are also home to exceptional Southwestern research Universities and community colleges, the University of New Mexico (in Albuquerque with a branch campus in Rio Rancho), and the University of Nevada in Reno, along with numerous community colleges.  Reno along with Northern Nevada, along with Rio Rancho and Northern New Mexico, also feature numerous military bases.

In terms of urban planning, both cities feature wide streets and large lots, with very low population densities and sweeping views of distant mountains from large backyards.  Rio Rancho is a suburb of Albuquerque, yet there is little interaction between Rio Rancho (and adjacent NW Albuquerque), with the remaining area of Albuquerque east of the Rio Grande river.

Looking West from Albuquerque to Rio Rancho, and Looking East from Rio Rancho to Albuquerque –

Nobody knows where Rio Rancho is, so here it is, way in the distance on an eastward sloping mesa beyond The Rio Grande –

Looking downhill, to the WNW, into the Rio Grande Valley and the Village of Corrales, from NE Albuquerque. In the far distance is another mesa, rising uphill towards the west. That’s where Rio Rancho is growing rapidly. If you click to enlarge, you will see several brand new tall buildings, the new Towne Center, with the City Hall, hospitals, CNM-West, UNM-West, and the Santa Anna Star Center.

Here, I’m standing on the edge of Rio Rancho, looking ESE in the opposite direction of the above photo. Below is the Rio Grande Valley and the Village of Corrales, followed by the Santa Anna Star Casino, and then NE Albuquerque, where I took the first photo. The Sandia Mountains are in the distance, an extension of the Rocky Mountains.

Albuquerque generally views Rio Rancho as an ugly, dusty, windy, sprawling community in the middle of nowhere, with rowdy ATV drivers.  However, Rio Rancho city officials plan to establish natural amenities as the city expands, with parks, bike lanes, a Towne Center, and wide landscaped boulevards. Here’s a typical residential street in Rio Rancho.  And, here’s a flooded arroyo and associated trail in Rio Rancho, where ATV’s have been irresponsible.  Of course, as Rio Rancho grows, increased zoning and regulations will fix these sorts of issues:

Wide streets in a typical large lot neighborhood in Rio Rancho, New Mexico.

Albuquerque has a “negative image” of Rio Rancho, since the city is very new (since the 1960’s), and has issues such as flooded arroyos and irresponsible ATV riders (above). Rio Rancho has plans to enforce zoning and fix these types of issues, becoming increasingly family oriented for its middle class employees at Intel, Sprint-Nextel, and Hewlett Packard, with more parks and trails.  The City has also recently built two new hospitals and two colleges.

The Major Differences – Tragedy for Nevada, Once a Great State, now “Calnifornicized”

Sadly, Nevada has been “Calnifornicized” by California environmentalists and tax policies.  Nevada’s unemployment is now 12%, compared to just 6.5% in New Mexico (7% in Sandoval Co. where Rio Rancho is, and 6.5% in Bernalillo Co. where Albuquerque is, and only 5.0% in Santa Fe Co.).  These are some of the lowest unemployment rates in the Southwest, similar to the Salt Lake City metro.

Reno and Washoe County residents voted overwhelmingly, at just over 70%, to cap population growth rates at 2% per year in 2008, with WC #3 (Washoe County, click here for the ballot initiative, with pro- and con- statements).  While I am not sure how this is enforced, apparently it’s done by making sure that water use does not exceed population growth.  The vague ballot question said:

WC #3 (November, 2008) –

Shall The Truckee Meadows Regional Plan be amended to reflect and to include a policy or policies requiring that local government land use plans be based upon and in balance with identified and sustainable water resources available within Washoe County? 

This resulted from Bob Fulkerson, of the anti-growth, anti-mining special interest group, “Progressive Leadership Alliance of Nevada, who sponsored a petition drive for this controversial anti-growth proposal on the ballot.  Special interest groups also block development in the region at Lake Tahoe, such as “Keep Tahoe Blue,” and “The League to Save Lake Tahoe.”  And, counties west of Reno in California, whose economies are closely tied to Reno, have strict growth management with urban growth boundaries. In addition, a radical 1963 law allows California cities to restrict development on rural land within their respective counties.  This is also probably unconstitutional, and should be repealed.

Surprisingly, Washoe County votes Democrat, whereas Nevada as a state can vote in either direction (likewise with New Mexico). Indeed, Californians have invaded the Reno metro area and destroyed much of its former Western character. Nevada used to be a thriving Libertarian state, but this isn’t the case in Reno, with high unemployment due to high impact fees, high property taxes, and the 2008 voter approved cap on population growth.  Individuals from more politically independent western states, such as Washington State, are surprised at the high regulatory and tax environment in Reno, with an average one bedroom apartment rate of $950 a month !

There are many development idiosyncrasies in Reno.  For example, there are no Shell gas stations or Smiths Grocery Stores anywhere on the west side of town. Smiths is the cheapest grocery store in the area, since it’s a Kroger chain.  Instead, the west side of town, along with Truckee and Lake Tahoe, features the very expensive Raleys, Scolaris, and Save Mart. The Internet and Cable company, Charter, along with Sierra Pacific Gas and Electric, are both very expensive.  Due to these sorts of issues, along with high impact fees and property taxes, Reno’s cost of living is very high.

And, instead of cutting impact fees that would give everyone the same tax breaks, and therefore be consistent with free market capitalism, Reno – to some extent – apparently picks and chooses who it wants to come to town, by preferentially awarding STAR bonds to various retailers, such as Cabelas, and various retailers at the Sparks Marina such as Lowes.

Reno has high property taxes and high impact fees.   Construction has stalled and construction workers are out of work.  Whereas Rio Rancho continues to grow, and New Mexico never had a significant housing crisis.

Rio Rancho Cuts Impact Fees To Compete With Albuquerque

In Albuquerque, land and housing prices kept up with inflation until about 1995 (link) when Albuquerque Mayor Martin J. Chavez passed the Planned Growth Strategy.  This huge document attempted to concentrate growth in a “smart growth” fashion into existing areas, and also established impact fees.  For more information, see my post on Albuquerque and Santa Fe impact fees: http://wp.me/pMHrW-1sN

However, the results were not good, but certainly not disastrous as they were in cities with limits on developable land, due to urban growth boundaries.  Albuquerque and Rio Rancho housing prices escalated in 2007, and then crashed by only about 20% (insert Trulia graph).  Due to the Albuquerque impact fees under the planned growth strategy (and, the Rio Rancho impact fees), 20,000 jobs in New Mexico were lost from 2007 to 2010, and most of these were construction workers.

New Albuquerque Mayor Richard Berry, a contractor, reformed the impact fee system, slashing fees by 50%. This increased building permits (see graph below).

However, Rio Rancho chose not to lower impact fees, and contractors went to Albuquerque instead of Rio Rancho.

Steve Ginsberg, in the New Mexico Business Weekly (August 31, 2012), writes:

“Since the Duke City [Albuquerque] cut impact fees in 2009, it has attracted development that might have gone to Rio Rancho, say developers, brokers and planners who have interests in both cities. With fewer projects during the recession, a cut in impact fees is necessary to remain competitive, they say.”

In addition, Ginsberg writes that Rio Rancho building permits decreased by 90%, from 2005 to 2011 !

“Councilor Tim Crum says the impact fee moratorium is critical if Rio Rancho is serious about competing for new projects. Rio Rancho saw 310 construction permits issued in 2011, compared to 3,111 in 2005. So far in 2012, 266 permits have been issued, eight of which were for commercial projects. In 2007, during good times, there were 48 commercial projects in Rio Rancho. Developers are likely sitting on the sidelines, waiting to see whether the moratorium will be enacted.”

And, Rio Rancho is now competitive with Albuquerque, according to a prominent realtor:

“Walt Arnold, a veteran broker at Sperry Van Ness, said Rio Rancho’s calling card historically in competing with the Duke City was cheaper land and its quick approvals process, but those advantages have faded.

“Rio Rancho’s old adage was ‘We can get you a permit in less than 90 days and you can start construction,’ but that has slowed down because of zoning and fire code issues. There is little difference between Rio Rancho and Albuquerque now on those issues . . . ”

Albuquerque’s Success Story Defies Skeptics

Skeptics writing for smart growth and new urbanism business (and, academic) interests claim that slashing impact fees fails to increase building permits. They claim that cutting impact fees diminishes city revenues, resulting in budget shortfalls.  However, this is not the case in Albuquerque, where building permits have increased dramatically, since Albuquerque Mayor Richard Berry cut impact fees in 2009. Steve Ginsberg of the aforementioned article writes:

“Since Albuquerque put a moratorium on impact fees in 2009, its number of building permits has grown. In fiscal 2009, 2,330 permits were issued for all types of projects, while in fiscal 2011 there were nearly 2,800.

There were nearly 2,700 permits in the first eleven months of the current fiscal year. Of those, 830 were for commercial projects, compared to 811 last year. Albuquerque dwarfs Rio Rancho in population, but Rio Rancho has much more raw acreage for development.”

Given these facts, how can University Professors of Urban Planning continue to remain employed, when they insist that cutting impact fees does not increase building permits?

Ginsberg writes about developers waiting for impact fee reductions before submitting building permits:

“Developers who have projects in mind for Rio Rancho are waiting for the fee reductions to be approved before submitting their plans. La Vida Llena has a $60 million retirement community project in the pipeline for 12 acres adjacent to the Loma Colorado residential development, but won’t submit the plans until the moratorium is enacted . . .

Reducing Impact Fees Compensates for Difficulties Getting Loans due to Horrible Federal Government Financial Policies since the Stock Market Crash on 9-19-08

It’s very difficult for developers to get loans due to the national financial crisis since the stock market crash on 9-19-08.  All of us in architecture, planning, horticulture, and real estate remember where we were on that horrible day.

Local City Councils who cut impact fees can help developers get these loans, and override the terrible decisions of Presidents George W. Bush, Barack H. Obama, and the Democrat party in Congress.  Indeed, isn’t it time to stop looking to Washington DC for solutions to local problems?  In fact, the Rio Rancho Tea Party, which is incredibly non-partisan, was instrumental in supporting the candidacies of three Rio Rancho councilors who voted to cut impact fees (see below).  [Be sure to check out their web site.  Click here for an interesting survey of freedom in all 50 states, from George Mason University, linked to their web site.]

Steve Ginsberg in the aforementioned article writes about developers Josh Skarsgard and Jason Skarsgard of Rio Rancho, and how cancelling impact fees help them get a loan:

“Developer Josh Skarsgard is planning a 50,000-square-foot shopping center on 6.75 acres in southern Rio Rancho. He said reduced fees would save him between $70,000 and $85,000 on Springgard Development’s Unser Pavilion.

“In a competitive retail market in a recession, the decision of where to go often hinges on impact fees and other off-site administrative fees. Those extra fees often tip the balance when it comes to getting a loan,” Skarsgard said.

After the City of Albuquerque (COA) established impact fees in 2005 with its Planned Growth Strategy under Democrat Mayor Martin J. Chavez, building permits declined, and home prices increased, while Rio Rancho permits remained about the same.  When the COA cut impact fees in 2009 under Republican Mayor Richard Berry, building permits increased, while Rio Rancho permits declined.  In September 2012, in an effort to “compete” with Albuquerque, Rio Rancho cut impact fees, pursuant to the schedule on their web site (see below).  Source: The Rio Rancho Observer, http://www.rrobserver.com/news/local/article_6295c57a-d834-11e1-99de-001a4bcf887a.html  Accessed October 14, 2012.

New City of Rio Rancho Impact Fees, September, 2012. From: http://www.ci.rio-rancho.nm.us/index.aspx?NID=1085 Accessed: October 14, 2012

2012 – New Rio Rancho City Councilors Lonnie Clayton, Mark Scott, Chuck Wilkins, and Tim Crum Cancel Impact Fees

In 2012, the new Rio Rancho councilors “saw the light,” (indeed, it is “The City of Vision”). In September, 2012, they voted overwhelmingly, 4-2, to cut impact fees by 100% for commercial construction, and 50% for residential dwellings.

This follows an even more dramatic decision in Santa Fe, where City Councilors voted to cut impact fee rates for both residential and commercial construction by 100%.  Santa Fe’s unemployment rate is now only 5%.

Las Lunas, New Mexico issued a two year moratorium on residential impact fees.

Nearby Durango, Colorado also reformed its impact fees, to amounts consistent with elsewhere in Colorado.

Clearly, Northern New Mexico and Southwest Colorado, along with Salt Lake City, do not have the anti-growth attitude present on the West Coast.

When this post is completed, I will detail more about the Rio Rancho impact fee cuts, and discuss how this market could become the #1 market, along with Durango, Colorado and Salt Lake City, for small to medium sized technology firms in the Southwest.

I will also suggest why a 50% cut in impact fees in Reno and adjacent cities would stimulate construction and gradually decrease unemployment.  So far, Reno has tried special tax breaks for Apple, and STAR bonds for Cabelas and the Sparks Marina.  While this has helped, how about also cutting impact fees?  It’s worth a try, given the high employment.  And, Reno deserves to succeed, due to its exceptional quality of life in the high desert of Nevada and Lake Tahoe area.

Furthermore, while some would argue that increased population growth in Reno and Washoe County would diminish water supplies and cause traffic congestion, the region is already planning for growth, with new freeway lanes and freeway extensions, and the widening of existing boulevards.  Furthermore, droughts and water supplies are tied to La Nina and El Nino weather conditions affecting the Sierra Nevada mountains.  Fears of running out of water in Reno have intensified since about 2009, due to a prolonged La Nina pattern with below normal Sierra snowfall. The forthcoming winter of 2012-2013 is expected to produce normal or slightly above normal snowfall, due to weak El Nino conditions.

Rio Rancho Tea Party Discusses Impact Fees with New City Councilor Mr. Lonnie Clayton

City Councilors Lonnnie Clayton, Mark Scott, and Chuck Wilkins were voted on the Rio Rancho City Council on April 17, 2012.  All favored impact fee reductions.  They were both endorsed by the Rio Rancho Tea Party,  and both won in run-off elections that featured multiple candidates, including incumbents.  Ultimately, in the final run-off elections, they lost to the incumbents (click here for results).

The election of Clayton and Scott is a success story of how YOU can make a difference in stimulating your local economy, and opposing smart growth, by voting anti-impact fee councilors on your city council.  Indeed, this is why I do not subscribe to “Agenda 21” conspiracy theories about “smart growth,” since I’m aware of many success stories where “smart growth” and impact fees are defeated by City Councilors.

For the entire conversation, click:  http://rioranchoteaparty.org/government-activity/city-council-votes-to-stop-charging-new-businesses-impact-fees/?doing_wp_cron=1350204417.0092720985412597656250

Rio Rancho Voice: What does Rio Rancho gain by lowering the impact fees to zero for commercial and 50% for residential?

Mr. Clayton: “The bottom line is a lower cost to build in Rio Rancho. When new businesses and homes are built in Rio Rancho, jobs are created and Rio Rancho’s economy will grow. This growth has a long term effect on other taxes and/or fees that Rio Rancho can collect to offset the loss of impact fees for the two year period proposed. The impact fees are paid once; all other taxes are ongoing.”

Additional Articles from the Rio Rancho Observer, on Impact Fee Cuts, September, 2012 –

http://www.rrobserver.com/news/local/article_6295c57a-d834-11e1-99de-001a4bcf887a.html

http://www.rrobserver.com/news/local/article_f3dfc4b2-ee1f-11e1-8b1f-0019bb2963f4.html

http://www.rrobserver.com/news/local/article_d9b7c170-feaf-11e1-be07-0019bb2963f4.html

Rio Rancho City Councilors Lonnie Clayton, Mark Scott, and Chuck Wilkins, were elected to the Council in April, 2012. They were all supported by the Rio Rancho Tea Party. If you oppose smart growth and its tactics such as impact fees, support your local candidates and “Be – MAD “, i.e. Make A Difference in your community. Rio Rancho will become even more prosperous in the next decade, under the populist leadership of Clayton, Scott, and Wilkins.

Rio Rancho City Council Chuck Wilkins Speaks Out Against Eminent Domain Plans of Mayor Tom Swisstack and Fired City Manager James Jimenez

Councilor Chuck Wilkins speaks out against eminent domain abuse from the Mayor Tom Swisstack, and Fired City Manager James Jimenez, at this link: http://www.chuckwilkins.com/issuesemdomain.html Wilkins states:

“For the past several years, we have seen our Mayor [Tom Swisstack] and City Manager [Fired City Manager James Jimenez] take their case for Eminent Domain to the State in order to further their deals with developers. They make the case that too many land owners live out of state, many have died and left the land to relatives, and stress that the “antiquated platting” needs to be changed in order for our City to grow. But the reality is that this is simply a way to make it easier for the City to grab huge areas of land to give to developers to build on. The Mayor continually stated that no one complained when they used Eminent Domain to create Cabezon, but failed to mention that there was a gag order in place as part of the settlement.

Take a look at our current approvals for subdivisions already in place. Already existing undeveloped approved subdivisions include Mariposa (6400 homes), Solcito (160 homes), Cuesta Al Este (560 homes), Loma Encantadas (1600 homes), Northern Meadows (100 homes), Loma Colorado (200 homes), High Range (230 homes), Paseo Gateway (1900 homes), Cielo Norte (182 homes), La Plazuela (144 homes), Enchanted Hills (350 homes), Cabezon (300 homes), Melon Ridge (142 homes). These numbers are based on February 2011 reports from the City. With all of these lots available to build on, there should be no excuse for Eminent Domain.”

Reno Residential Development Stalls, Foreclosures Rise, Demand for Single Family Detatched Products Increases as Families Escape California

California’s high regulatory environment continues to force families out of the state.  Reno could use this to its advantage, but unfortunately, blocks growth by not overturning the 2008 voter approved cap on growth, and by not cutting impact fees and property taxes.  Furthermore, utilities, rent, and property taxes are all expensive.  Therefore, Reno’s growth rate from 2000 to 2010 was about 22%, compared to 37% in Bend, Oregon, and 69% in Rio Rancho, New Mexico.

Nevertheless, Reno’s suburban atmosphere is exceptionally attractive and well planned, with large lots, wide streets, bike lanes, large parks, undisturbed natural vegetation, and natural areas.  Indeed, Reno’s natural amenities are similar to what Rio Rancho wants to do, in terms of adding more parks, bike lanes, and landscape wide streets, as described on their web site.

If Reno would release its impact fees, then development could increase, bringing rich Californians who could help struggling locally owned Reno businesses stay in business, and even start new businesses. Otherwise, they will migrate in greater rates elsewhere, especially considering the stagnant Washoe County 12% unemployment rate, compared to 7% in Rio Rancho and 6% in Salt Lake City.

Example of Prime Commercial Real Estate in Reno – Monte Vista Office Park in NW Reno (Private)

Private Streets in Monte Vista Village and Monte Vista Office Park, not maintained by the City of Reno.

The private Monte Vista Office park is partially completed in highly coveted NW Reno, located at 9710 S. McCarran Blvd., Reno, NV 89503, near the intersection of I-80, West 4th Street, and McCarran Blvd.  Seven lots remain in the office park.  Below, you can see this is a highly desirable, low density office park, with sweeping views of high desert vegetation and distant low density hillside residential areas.

Note: I do not know if impact fees have been paid for the local utilities, that are listed at this web site.  However, I’ve used photos of this exceptional development to serve as protypical examples, of first class vacant commercial real estate all over Reno.  Indeed, the architecture and landscaping are very similar to numerous other commercial properties in Reno.  Indeed, just like Boise, Salt Lake City, Denver, and Albuquerque, Reno has the potential to develop into a major center of commerce in the Intermountain West.

If Reno eliminated impact fees for commercial developments just like Rio Rancho, would properties similar to Monte Vista develop at a faster rate?

Entrance to Monte Vista Village (including Monte Vista Office Park) with Private Streets not maintained by the City of Reno.

Roundabout at entrance to Monte Vista Office Park, with Farmers Insurance, and sagebrush in bloom, October, 2012.

Monte Vista offices.  Exceptional architecture in a residential setting.  Sagebrush in bloom in October, 2012.  (Zoning:  All lanes are fire lanes in many areas of Reno.)

Looking south over the Monte Vista Office Park property for sale, towards the southwestern suburbs of Reno in the far distance (Interstate 80 is also down the hill; McCarran Blvd. is to the right, 200 yards from where I am standing).

Artists rendition of Monte Vista Office Park when it is completed. Looking north with McCarran Boulevard in the upper left corner. From: http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=17590550 Accessed: October 15, 2012.

Additional Reno Photos

I’ll continue to add more photos of Reno properties and the landscape . . . For example,

Looking north to Reno from south of Reno in unincorporated Washoe County –

Looking north to Reno from an unincorporated area of Washoe County.

Steamboat Irrigation Ditch and associated bike / walking path (where I’m standing) in NW Reno, with Peavine Mountain in the distance.