Potential Madison development fee has area realtors and home builders concerned

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MADISON, Ala - A proposed development fee has realtors concerned about the impact on middle-class home buyers.

It's called an Impact Fee. Which is a mostly flat charge per housing unit or commercial development. Essentially, future growth would be paying for itself.

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.

Here's a detailed break-down. Impact fees are not common and less than a handful of Alabama cities actually have an impact fee.

The average U.S. city impact fee is around $6,000. Some cities are currently facing lawsuits over the legality of the fee by opposition groups.

"We have a lot more questions than we have answers at this point," said Shay Jarboe, the 2020 President of the Huntsville Area Association of Realtors.

At a Madison City Council meeting Monday night, Jarboe asked the council, "Do Madison residents have any choice in how these impact fees will be spent? The city just raised property taxes last year. Is that not enough?"

Those are just a sample of the questions area realtors have.

The impact fee is estimated to bring in 55 million dollars to the Madison city budget.

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: ???

A school system can benefit from an impact fee, however, the move has to be approved by the legislature.

"We've had discussions with them, but we are nowhere near even knowing if we are going to 1: implement the fees for the city and 2: we don't have school numbers yet," said Madison Mayor Paul Finley.

It's unclear if the fee would be issued for people who are expanding their current homes.

The City of Madison will hold a work session at 5:30 pm this Wednesday to talk about the proposed impact fee.

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