Elgin lowers land value for impact fees

Elgin is lowering the value of its land available for residential development, which will reduce impact fees paid by builders to the city and school districts - which all the parties involved say is fair.

Ultimately, it's good news for homebuyers, said Pat Curran, president of West Point Builders, which is developing West Point Gardens in far west Elgin.

"It will help the homeowners move into our community," he said. "Everyone looks at the builder paying (impact fees), but in the end it's the homeowners paying that. We figure all our costs when we sell homes."

The fair market value of a developed acre of residential land in Elgin, currently $143,793, will be lowered to $85,000, a figure determined by two independent appraisers. The city council's committee of the whole approved the change and a final vote is expected next week.

"This has been kicked around for quite some time. Land values have dropped considerably, so it's not fair. It just hasn't been fair," Mayor David Kaptain said last week. "We need to do the best we can do to make it fair for the developers, just as any other property owner or homeowner."

The current land value figure stems from a 2000 ordinance that set it at $60,000 with a 6-percent annual increase. The new ordinance also will include an annual increase, but only equal to the consumer price index, which last year was 2 percent.

Last year the city received more than $240,000 in land impact fees; another $344,000 or so went to Burlington Central School District 301 and about $60,000 to Elgin Area School District U-46, said Marc Mylott, Elgin community development director.

With the lower land value, the amount to U-46 would have decreased by $6,000 or $7,000, Mylott said.

District 301 Superintendent Todd Stirn said his district, too, will get about 10 percent less in impact fees.

Stirn praised city officials for informing the district about six months ago of the likely change, which was factored into the $28 million expansion of Central High School that started recently and is partly funded by impact fees.

"A school district would never like to see impact fees decrease," Stirn said. "But that said, in my conversation with the city of Elgin and local developers, they were able to put together a fairly compelling argument."

If the original ordinance had set the CPI - and not a flat 6-percent - as the annual increase, there likely would be no issue now, Mylott and Stirn said. However, both pointed out, that was when residential development was booming, and before the recession.

Also, Elgin isn't the only community that sets land values - and therefore impact fees - too high, Curran said, praising the city for taking action. "Hopefully some others will see Elgin doing it and follow the city's lead."

The city reviewed its building permit fees in late 2015 after a yearlong study. A request for proposals for a comprehensive review of all remaining user fees is due in March, with a final study expected by the fall.