The Albuquerque City Council has voted to extend the current Impact Fee Reduction, which was set to expire on March 23, 2011, for another year. Impact fees are currently at 50% of what their maximum allowable rate is. So, what does this mean? Lets put some numbers to it

For a 2,958 s.f. home with an 869 s.f. garage and 915 s.f. of covered patios and at the 50% reduction rate, one can expect to pay $5,587 in Impact Fees to get a permit issued through the City of Albuquerque. Without the 50% reduction, the Impact Fees would total $11,174. Obviously, this is a significant savings. The actual break-down of what the Impact Fee is apportioned to is as follows: $306 to Public Safety, $642 to Drainage, $2,381 to Parks, and $2,258 to Roads.

For those who are wondering what an Impact Fee is, in essence, it is a fee that is implemented by a Governmental Entity as a means to help pay for the increased incremental useage of the Public Services that may be impacted (or increased) through the addition of the new development (home). In other words, if you are going to build a new home, the City wants you to pay for a portion of the Services and Infrastructure that will be used to your benefit.

Now, we also need to look at the other associated costs in having a Construction Permit issued. The total square footage of the project (including the garage and covered patios) is used to calculate the Plan Review Fee and the Permit Fee. In this instance, with our 2,958 s.f. home and associated patios and garage, the Plan Review Fee is $1,085 and the Permit Fee itself is $1,561.

Additionally, a Utility Expansion Fee is charged by the Albuquerque Bernalillo County Water Utility Authority and in our Real-Life example, the Utility Expansion Fee came out to $4,851, of which $1,953 was for Sewar, $2,603 was for Water and $295 was for the Water Meter.

So, while we only had $5,587 in Impact Fees (at the 50% reduced rate), we still had $2,646 in Plan Review and Permit Fees and $4,851 in Utility Expansion Fees for a total of $13,084 to get a Building Permit issued by the City of Albuquerque. If Impact Fees were at the full rate, it would take $18,671 to get a Building Permit Issued by the City of Albuquerque. Pretty disheartening isnt it?

Are there areas around Albuquerque (but still within the Metroplex) that are less expensive to build in? Absolutely there are, just as there are also some areas that are more expensive to build in. This is where consulting with a competant Builder prior to purchasing property can actually save you thousands of dollars, especially when you amortize these expenses over the course of a thirty year mortgage.

Now, would you be interested if you could be shown how to completely eliminate all Impact Fees within the City of Albuquerque for new Residential Construction? So that it would only cost $7,497 to have the Construction Permit issued, per the home that was used in this example? Even if the Impact Fees were at their full rate? This is possible, please read our Blog Post regarding the City of Albuquerques Green Path Program to see how.