Sugar Grove may cut impact fees to spur building

Once-booming Sugar Grove is poised to cut developers some slack on village impact fees for housing.

The village board might vote as soon as its next meeting Oct. 6 to cut those fees in half at the request of the Prairie Glen subdivision's developer, the Windham Group.

Village President Sean Michels said the move would be kind of a "loss leader" for the village. "What the board is thinking is (to cut the fees) for a few homes to get things going - to get the economic engine going," he said.

In the late 1990s and early 2000s, Sugar Grove was issuing 300 or more building permits a year, most for homes, right up until the real estate market began to crash in late 2006. It issued five in fiscal year 2008-09, which ended April 30, and since then has issued none.

In Prairie Glen's case, a developer would normally have to come up with about $23,180 on average per unit in impact fees. Of that, more than $14,000 goes to the village for things like sewer connections, future village building needs, streets and police services. The rest goes to other taxing bodies, including the Kaneland school district.

Impact fees are a way for taxing districts to immediately cover the costs of serving the properties. It can take up to 18 months for a government to receive property taxes from a new property.

In 2006, two developers abandoned plans in Sugar Grove, saying increases in impact fees had helped make the projects financially unfeasible. One of them, Neumann Homes, filed for bankruptcy in late 2007.

The village portion of the fees would be cut through Aug. 31, 2010. The developer would have to agree to finish building the unit and get a certificate of occupancy from the village by Aug. 31, 2011. Michels estimates that could be 25 to 50 houses.

Village staff will discuss with the school, park and library districts what affect they'd feel if their portions of the impact fees were cut.

The board also asked village staff to study how a reduction in impact fees would affect other unfinished developments, including Settler's Ridge and Hannaford Woods.

The village raised several of the fees in 2006. Michels said the village has studies that justified the amount it was charging. He said, however, that it may be worthwhile to cut them to spur growth, as the more houses the town has, the more likely it is stores, restaurants and the like will build there. That's something residents of the primarily residential village have asked for over the years.