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Editorial


Front Page - Friday, June 22, 2018

Greater Chattanooga Realtors speak out against fee increases




Great Chattanooga Realtors (GCR) President Geoff Ramsey spoke on behalf of the association at the City of Chattanooga Council meeting June 19 regarding concerns stemming from the stormwater fee increases the city has proposed.

“Last year, when changes to the stormwater ordinance were proposed, we discussed with you the importance of cooperation between local stakeholders and the City of Chattanooga,” Ramsey began. “Our goal was to ensure that Chattanooga’s rapid growth results in a positive impact on the city.

“Unfortunately, Greater Chattanooga Realtors come before you today as a stakeholder who had no input regarding an issue that affects not only developers but current and future homebuyers, as well as business owners in Chattanooga.

“The manner by which the city handled the proposed fee increases has left Realtors with more questions than answers,” Ramsey continued.

“The concerns of our membership range from whether the City of Chattanooga wants development and affordable housing in the city to concerns that consumers will be negatively impacted by the proposed fee increase.

“Unfortunately, we had to tell our nearly 2,000 members, all of whom work daily with current and future property owners, that we did not have answers to their questions as we, too, were confused by the city’s entire process.”

Proposed fee process

Stakeholders were provided the study and proposed fee increase only three days before the first meeting of the Stormwater Regulations Board, which made its decision 10 days later, Ramsey noted.

“This timeline leads one to believe soliciting the stakeholders’ opinions was either an afterthought or a formality. It appears the fee increase was a done deal regardless of any comments or concerns by the public.”

Ramsey said the association’s perspective is based on its knowledge that the study, paid for by the city, provided the option to hold residential and business focus groups regarding a rate increase, yet none were held, and that prior to the public meeting and approval by the stormwater board, the city had already incorporated the proposed fee increase into the 2019 budget.

“The Water Quality Program Rate stated that Public Works adheres to five values, two of which are ‘People’ and ‘Accountability,’” Ramsey said. “Greater Chattanooga Realtors is not convinced these values have been given due consideration when it comes to the proposed increases and the process by which we got here.”

The Public Works’ value of “People” says, “Our citizens are our customers.

“We also believe people are our most valuable resources. We will embrace innovation, invest in our employees, reward excellence and partner with our communities to improve our city.”

“The City of Chattanooga had the opportunity to speak to its customers and partner with the community stakeholders during the year in which the study was being conducted. However, the city chose not to utilize this option,” Ramsey charged.

“This issue affects both the pocketbook and livelihood of many Chattanoogans, who have not had an opportunity to be heard.”

The Public Works’ value of “Accountability” says, “We believe in being accountable for all public funds. We will hold ourselves accountable to the highest standards, work to earn and maintain the public’s trust and be transparent.”

“The City Council has worked hard to make sure this entire budget process has been transparent, so we find it interesting that some City Council persons were unaware these fee increases were being presented as part of the 2019 budget,” Ramsey said.

“In addition, misleading information has been provided throughout this process, and we’re concerned the facts are not being relayed to the council.

“For example, information initially provided to stakeholders stated that under the proposed fee increase, Volkswagen would pay close to $1 million in ERU’s at the end of five years.

“However, we have since been told that Volkswagen is exempt from paying these fees.

“If Volkswagen is exempt, the City of Chattanooga should clarify this information.”

Proposed fee increases

Ramsey continued, saying GCR understands that fees have not increased in some time and that an increase in fees may be necessary to move the City of Chattanooga into the future.

“We agree that action must be made to maintain forward progress. However, we cannot go along with such a drastic fee increase without proper due diligence,” Ramsey said.

“As stakeholders, we were deprived that opportunity, and we feel strongly that the City of Chattanooga did not have ample opportunity to do its due diligence.”

Ramsey then asked the council to consider the following timeline, which demonstrates the process in which this issue was handled by the City of Chattanooga:

April 2017: The City Council authorized Public Works to conduct a Water Quality Program Rate Study.

April 2018: The City Council was made aware that the draft study had been received.

No specifics were outlined in that presentation; however, City Engineer Bill Payne was specifically asked by a city councilperson if this study meant that fees would increase, and he answered, “not necessarily.”

On Friday, May 3, Leslie Gower, executive director of the Associated General Contractors, contacted GCR regarding the proposed fee increase.

This was the first time the association was made aware of the proposed increases – by another stakeholder and not the city – Ramsey said.

On Wednesday, May 8, the City of Chattanooga sent an email containing Scenarios 1-4b for review.

On Friday, May 10, the city posted Scenario 5 as the proposed Preferred Rate Structure, which is the proposal included in the budget.

Scenario 5 was not included in the 168-page draft of the Water Quality Program Rate Study, which was provided to stakeholders the same day.

“To our knowledge, the study is still in draft form and has yet to be finalized by the City of Chattanooga,” Ramsey said.

On Monday, May 13, the stormwater board voted to recommend the proposed fee increases to the City Council.

“Based on what city staff said to the Stormwater Regulations Board, Scenario 5 was an alternative designed between Wednesday, May 8 and Friday, May 10,” Ramsey said.

“The change in the scenario does not reflect the information provided for in the study.

“From our viewpoint, Scenario 5 seems to have been developed last minute by city staff, and we question why the information in the touted ‘legally defensible’ study is not reliable. Again, we are left with more questions than answers.”

Affordability issues

At the recent National Association of Realtors (NAR) legislative meetings in Washington, D.C., NAR Chief Economist Lawrence Yun said challenging affordability conditions have prevented a meaningful rise in the homeownership rate after having fallen to a 50-year low a few years ago.

“To increase homeownership, more home construction is needed, which could be boosted by delivering regulatory relief to community banks, removing the lumber tariff, re-examining stringent zoning laws and training more workers for the construction industry,” Yun said.

“Although we are extremely concerned about how these fees will impact development in Chattanooga, an even bigger concern is how these fees will impact the citizens of Chattanooga,” Ramsey said.

“For Greater Chattanooga Realtors, this is not a selfish concern. Although the city continues to say the development community will be assessed the increased development fees, ultimately, the increased land development fees will trickle down to your constituents as they purchase homes, goods and services. This impact seems to be lost on everyone when discussing the proposed increased fees.”

Ramsey then provided an example, stating that a business owner with a property that contains storage units with 36 Equivalent Residential Units (ERU) is currently pays $4,147.20 in water quality fees.

In 2023, under the current proposal, that fee will have increased to $6,607.44.

To recoup the added costs, Ramsey suggested the business owner likely will increase the cost of rent on the storage units, thereby passing on the increased costs to the citizens of Chattanooga renting these units.

“This example is just one of the many ways the proposed increase in fees will potentially affect your constituents, not to mention the increase in stormwater fees your constituents will be paying on their own property,” Ramsey said.