Economy shouldn’t be allowed to undermine efforts to make development pay its way
July 9, 2009
Human nature dictates that as the nation’s economic woes continue unabated, people cast about for ways to feel secure.
Thus, for example, the savings rate soars while retail sales languish.
Governments, as collective manifestations of human nature, act in a similar manner.
So it is that news reports are rife with stories about ways in which local and state govenments are attempting to de-regulate their way out of the economic doldrums.
In some cases, governments are abandoning all manner of regulations, such as impact fees, originally intended to make “development pay its way.”
The impulse is understandable enough. After all, not only is the nation in the throes of a deep recession, the recession arrived on the heels of an almost unprecedented development boom.
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It is only human to seek to rekindle those heady times.
But it is also potentially problematic, as Wednesday’s episode with a large sediment discharge into the Colorado River illustrates.
The discharge has been attributed to a pond breach on the foreclosed Orvis Shorefox property in Granby. What, precisely, caused the failure is unclear.
Unclear as well is who are the responsible parties and how any damages might be covered financially.
Orvis Shorefox is in bankruptcy proceedings, and ownership of the highly visible property, which is littered with weeds and other signs of neglect, is in limbo.
The development is within the Town of Granby, which conceivably could take it upon itself to mitigate any damages and send a bill to the owners. (It also has the option of attaching the costs to the property tax bill.)
But given the state of affairs at Shorefox – namely, about $12 million in mechanics liens that appear to be far back in the creditor queue – the town’s chances of getting reimbursed in a timely manner are sketchy.
Taxpayers could well end up footing the bill indefinitely at a time when town coffers are less than robust. And, in many ways, the public has already paid the price.
For example, Hot Sulphur Springs water users are without domestic water until the river clears sufficiently for the town’s treatment plant to operate properly. And businesses that rely on the river’s allure to anglers and rafters are going to suffer the consequences until the waters clear.
Shorefox is only one case, albeit a rather prominent one, of foreclosed and essentially abandoned properties around Grand County. On a lesser scale, similar consequences could result at some of these sites as well.
Fortunately, and to their credit, most towns and Grand County require performance bonds or other up-front commitments from developers to cover the costs of installing infrastructure and cleaning up construction sites in the event of bankruptcies or other contingencies that interrupt development.
Tempting though it may be to scale back or eliminate such up-front costs in an effort to jump-start the economy, officials would do well to stay the course.
Otherwise, they and their constituents may find out how much more difficult it is to recover costs after the fact than it is to have made allowances for them beforehand.