Bar Harbor explores impact fees to prioritize housing
File photo / Laurie Schreiber
Bar Harbor is looking at how hotels and campgrounds impact sewer, water and emergency services. Here, visitors explore the Bar, a spit of land revealed at low tide in Bar Harbor.
The Bar Harbor Town Council is exploring impact fees as a way to prioritize the development of local housing over transient accommodations such as hotels and campgrounds.
According to Maine law, municipalities can impose impact fees on developers to fund the cost of town-owned infrastructure that will be impacted by the development.
Infrastructure includes, but is not limited to, wastewater collection and treatment, solid waste, public safety, roads and traffic control, parks and other open spaces and schools.
The amount of the fee must be “reasonably” related to the development's share of the cost of improvements that are prompted by the development or, if the improvements were built at the town's expense before the development, the fee must be related to the portion or percentage of the infrastructure used by the development.
Funds from impact fees must be kept separate from the municipality's general revenues.
Town Manager Kevin Sutherland told the council that other Maine communities with similar fees in place had fees ranging from $1,600 to over $8,000 for a three-bedroom house. Impact fees can be targeted toward certain types of development, thus acting as a disincentive, he added.
The question of what types of development to target could be resolved during the comprehensive planning process, which is underway, he said.
“Where do you want to see development happen and how do you incentivize that or where do you not want to see development happen and how do you disincentivize that?” Sutherland asked.
Councilors said there was a balance to be struck between developments, such as hotels, that bring in more tourists and overwhelm the town’s carrying capacity but also bring jobs, property tax revenue and families.
“The fee structure has to be carefully designed,” said Councilor Gary Friedmann.
As an example, Friedmann posited construction of a 50-room hotel hooked into the town’s sewer system that at some point will reach capacity and then have to be expanded. Without an impact fee on the hotel development to fund improvement or expansion of the sewer system, the cost would be spread among all users.
Friedmann suggested the impact fee could be assessed on the development of new hotels and campgrounds, in order to create a fund for the town to prioritize affordable housing, which the town has identified as one of its greatest needs.
As far as future development of new transient accommodations, he said, he wasn’t sure the town needed to wait until the comprehensive plan was finished.
“We know there are major impacts” from large developments in town, particularly when there are more guests, he said.
“I think we have to take a hard look at what the impacts of major tourist developments are in the town,” he continued. “So putting an impact fee on transient accommodations seems like a relatively easy one. It’s not hurting nonprofits, it’s not hurting the hospital, it’s not hurting JAX or the bio lab. It’s just saying TAs [transient accommodations] are having impacts on many levels and here’s a way they can carry some of the costs that is putting the crunch on working families who can’t afford to find a place to live.”
Impact fees can be part of a multi-pronged approach to affordable housing development, he said.
“We should at least start the research,” he added.
Sutherland said he could develop a framework for what the fee would look like. The use of the fee as a tool to catalyze affordable housing, he said, hasn’t been done in Maine.
“So we’d be the first to look at that,” said Sutherland.
However, he added, the fee could get to the point where it disincentivizes construction or modifications for future vacation accommodations.
Councilor Joe Minutolo said getting a better understanding of the financial impact of tourism on the town’s budget for the sewer and water systems and police and fire departments would be useful.
Councilors Valerie Peacock and Erin Cough noted that tourism also has its benefits. Developing visitor accommodations results in property tax revenue, Peacock said. And the swell of tourists allows the small town, with a year-round population of 5,000, to have a major hospital, a major research facility and a more diverse community, said Cough.
While construction of a large hotel, Cough continued, results in impacts on town infrastructure, it also results in jobs.
“You’re talking about jobs and you’re talking about a middle and lower class that Bar Harbor is losing,” she said.
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