Madison residents, realtors and home builders discuss potential impact fee


MADISON, Ala – In the face of city-wide growth, Madison leaders are trying to find ways to support the impact of residents on city services and infrastructure.

“While there are profits and economic growth being made in some respects. There’s still a cost to our city,” voiced one resident at Wednesday’s city council work session.

Another resident chimed in saying, “The idea of those responsible for the growth, paying for the growth…for all the headaches that come with interesting to me.”

One revenue avenue under consideration is called an Impact Fee. Which essentially allows growth to pay for itself.

Click here for a past WHNT report and here for an extensive breakdown of the proposal provided by the City of Madison.

If an impact fee were to be enacted, home builders would be charged a one-time fee per home/unit and in some commercial cases, per square foot.

Under the current proposal, single-family homes would be charged a $10,896 impact fee while multi-family units would be charged $6,087 per unit. Hotels would be charged over a thousand dollars per bed and commercial developments would be charged $8.90 per square foot.

The fee structure could change if the local school system were to benefit from the impact fee. For that to happen, the City of Madison would need legislative approval. As of this writing, Madison is considering this and is in the process of gathering data.

According to data provided by Madison, the proposed fee for single-family homes is over the U.S. average of $6,857. (The chart below is provided in a report by the city. Madison WOULD NOT HAVE THE 2nd highest impact fee for single-family houses)

The Huntsville Area Association of Realtors has voiced concern that this proposed fee would price-out middle-class home buyers. At Wednesday’s work session, Mayor Paul Finley fired back at that claim, saying it was a “talking point.”

“This does not price middle-class out of having a house in the City of Madison. The short answer is no,” said Mayor Finley.

“You are taking out an important piece of your community. A strong community relies on all levels of income,” said Shay Jarboe, the 2020 President of Huntsville Area Association of Realtors.

One homebuilder told the council it’s already expensive to build in Madison.

“The City of Huntsville, you write a check for $1,000. The City of Madison you write a check for almost $17,000 just to start that house,” said the man.

If approved, Madison could see around $55 million in revenue. However, it’s unclear how consistent that money would be, given it’s a one-time fee.

Here’s a rough breakdown of where that money would go:

  • Street Department: $33.5 million
  • Parks Department: $10.6 million
  • Fire: $3.8 million
  • Police: $2.6 million
  • Library: $1.9 million
  • Public Works: 1.2 million
  • School System: ???

Not every department and city leader in Madison is jumping at the idea of an impact fee. A representative of the Economic Development office warned that hotels and millennial-focused housing providers were against the fee and would not move forward with plans involving Madison.

“This would have a significant impact, I think on future hotel development. We know there are some being contemplated in Madison,” said the employee from the Economic Development office.

That office also explained the city could lose some job opportunities if less houses are constructed because of the fee.

As of this writing, the Madison City Council has not voted on impact fees and nothing is formally on the agenda. The council is also unable to only have impact fees on designated developments. If applied, every development type from residential to commercial and industrial would see the fee.

Some cities have faced legal-backlash from opposition groups in the past concerning impact fees.

WHNT will continue to follow this story.

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