Tax on New Home Construction Could be Decided in Early November

Tax on New Home Construction Could be Decided in Early November

As early as next month, the County Commission could pass a tax on new residential development to help fund new school construction.

The Williamson County Government put a draft version of the Education Impact Fee Study on its website on Friday.

It can be read or downloaded here: Education Impact Fee Study [Draft].

Carson Bise, of TischlerBise, who conducted the study, presented two options for implementing the fee and both are included in the draft plan.

Both would charge a fee to the developer of each new home in the county. Option one sets fees based on dwelling type, divided into single-family and multi-family homes. It places a $10,148 set fee on single-family homes and $5,291 on multi-family homes. The second option sets a variable rate that increases with square footage, under the assumption that the larger the home, i.e. more bedrooms, the more school-age children will live there during the lifespan of the house. Houses less than 1,799 square feet would pay up to $3,711. Six tiers of fees would be levied, topping out at 3,400 square feet and above incurring up to a $13,566 fee. Homes built within Franklin Special School District would pay less because the district already has its own tax.

After first recommending the county adopt the first option, at its meeting last week, the Task Force recommended option two, implemented in two stages.

“The second option is more popular because it is better in terms of proportionality,” Bise said at the August presentation. “But also it benefits the community because it promotes housing equity and affordability because smaller houses have a lower price point and are paying a lesser fee because they are creating less demand.”

Stages: effective on March 1 all new residential house permits would be charged at 50 percent of the full fee and go to 100 percent in September, 2017.

Option 2- fee schedule

(outside FSSD): 1,799 square feet or less: $3,860
1,800 to 2,199 square feet: $6,813
2,200 to 2,599 square feet: $9,112
2,600 to 2,999 square feet: $11,041
3,000 to 3,399 square feet: $12,654
3,400 square feet or more: $14,071

(inside FSSD): 1,799 square feet or less: $1,579
1,800 to 2,199 square feet: $2,609
2,200 to 2,599 square feet: $3,373
2,600 to 2,999 square feet: $4,019
3,000 to 3,399 square feet: $4,546
3,400 square feet or more: $5,000

Option 1– fee schedule(outside FSSD*):

Single-family home: $10,148
Multi-family home: $5,291

(inside FSSD):
Single-family home: $4,026
Multi-family home: $1,631

The Tax Study/Education/Budget Committee will meet to consider adopting the draft plan on Monday, Nov. 7, at 4:30 in the Auditorium of the Williamson County Administrative Complex.

“Assuming no hiccups, the County Commission would consider it at their regular meeting on the 14th,” said Joe Horne, director of community development for Williamson County.

The study was undertaken as a result of a resolution passed by the Williamson County Board of Commissioners in September 2015. It examines an impact fee as a possible funding mechanism for the future capital needs of the Williamson County School System, which said this week that it has plans for up to $500 million of new construction.

In the past, the county has paid for schools by borrowing money through bond issues. In the past six years, the county budgeted more than $96 million for land and construction for schools. On Monday, the Commission passed another $38.7 million in bond issues for schools, deferring a vote on $15 million more. With interest payments alone creeping well above the tens-of-millions, county officials agree that depending on borrowing is an unsustainable model, especially if it wants to maintain a Triple A credit rating.

Thus the idea for an Educational Impact Fee, which taxes new home construction in proportion to the number of students added for each new home.

Proposed fees could bring in up to $180 million over the next six years, if development continues at current rates.

Figuring out a fee system started last year with a county task force that commissioned a study by TischlerBise. That study was presented in July and the Task Force met again in August and this past Wednesday, along with county officials, developers and members of the public.

“Those most affected by the fee will be local small, high-quality builders,” Bise said. “Most likely this cost will be pushed onto the consumer, the home buyer. But it is a one-time fee, affecting only new construction on new land. Let’s say you tear down a single-family home and rebuild one in its place, the fee will not be recollected.”

There were 37,711 students in Williamson County Schools and Franklin Special School District combined in 2013, the year that was used for the study. Those numbers are expected to skyrocket in coming years as the county is projected to double its population by 2040. As the population increases, more schools will need to be built, such as the newly constructed Nolensville High School, which cost about $40 million to complete.

The fees, according to County Commissioner Todd Kaestner, could provide up to $30 million per year, if the average fee collected is about $12,000 and, taking the average number of new homes constructed over the past three years, there are 2,500 homes built. Taking into account debt service, it could save the county some $38 million a year.

There is a private act of the Tennessee legislature that would require the county to spend any fees it collects within six to 10 years.

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1 Comment

  1. diyrescuetn@gmail.com

    This on top of a $2.00 per sq ft “Privilege Tax” , nearly $18,000.00 in permitting, water and sewer tap fees among others. This is why those of us who where born and raised here are strongly considering where we will call home next. This has gotten way out of hand. It would cost someone nearly $40k just to turn a shovel on a modest home.

    Reply

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