Infrastructure in Your Future

By Norm Lenhardt  

1. What is infrastructure? 
It is every public service that we use in our 21st century modern city life. Who develops infrastructure? Local government usually builds it. Who pays for infrastructure? Established taxpayers pay most of the cost through taxes, from sales tax to bond issues. 

2. What items are included as infrastructure? 
Many things including, but not limited to, schools, drinking water, sewage, transportation, parks, storm water drainage, fire protection, landfill, libraries and government buildings. 

3. Is infrastructure expensive? 
For out-state Missouri towns growing moderately, the cost for each single-family new residence averages $31,000.00. Each new individual added to the population requires $15,000.00 of infrastructure. 

4. Does the new building owner pay for all of this cost? 
No, only a small part is now paid by the new resident. Most of this Infrastructure Cost User Fee (ICUF) is paid by sales tax and other tax assessed to long-term residents. You, the established taxpayers, are now subsidizing new housing and commercial growth in the city. 

5. Is this fair to you? 
The city of Columbia has the authority to charge 100% of the ICUF but charges only eighty three dollars for a water meter hook up while Lee's Summit Missouri charges $3,000.00 for a water hookup. Columbia subsidizes new growth by taxing you, the current taxpayer. 

6. Who benefits from subsidized Infrastructure Cost User Fees (ICUF)? 
New homeowners and the building/real estate industry are the great beneficiaries. If a default in the building lot title resulted in removal of 200 feet of street, water, sewer from the only access to the house, what is the selling price of the new home the following day? 

7. Does the new owner share the subsidized ICUF? 
No. The new homeowner gets an income tax deduction for the ICUF. When the house is sold the cost of any unpaid ICUF is added to the elevated price for tidy profit, which may result in a 20% capital gains tax avoidance. Other taxpayers paid for most of the elevated value of the house (from ICUF) but see no reduction in their taxes. 

8. What are the advantages of 100% recovery of ICUF? 
Current taxpayers either avoid some tax or get greater service for the same tax dollar. New growth develops closer to the central city core, using less infrastructure with lower cost. Less leap frog growth also protects farmland, reduces storm run off and protects the environment. 

9. Won't this 100% ICUF recovery stop people from building houses? 
No, where 100% recovery has been adopted, growth continues at the long term growth rate. Lancaster, California, adopted this recovery policy and continued to grow 16% in three years. The building industry uses this no-growth scare to try to avoid charging new buyers the true costs of buildings. Do you want to continue the subsidy for new housing or do you want fair taxation?