This past February 21, Manuel Moreno, Vice-Chair of the Capital Improvements Advisory Committee, wrote a letter to the City summarizing a presentation that had been made to his group by Raftelis Consultants on El Paso Water’s “Draft Water and Wastewater Study” (DWWS) dated January 3, 2024.
The presentation emphasized the need for El Paso Water to increase the impact fees charged to businesses for providing water and wastewater infrastructure to new housing developments in the Northeast, Westside, and Eastside.
The recommendations were presented to City Council on February 26 under agenda item 4.
Of the $149,522,179 recently spent on water and wastewater infrastructure for new housing developments, El Paso Water covered only $18 million through impact fees, forcing them to charge the remaining 88% of the cost to water customers at large!
Amazingly, there has been no change to water impact fees since 2009, with the public increasingly subsidizing private developments every year since.
This is an egregious form of corporate welfare and it must stop immediately.
In a constitutional republic operating under the rule of law, private developers should pay 100% of the infrastructural cost of their developments and nothing less.
According to the DWWS, the current impact fee in the Northeast is $1,469 per unit and should be increased by 287% to $5,684 if there is to be no subsidy added to our water bills. In the Westside, fees should increase by 105%, from $1,586 to $3,257. In the Eastside, they should increase by 1012%, from $1,617 to $17,981.
Of course, the increase in the impact fees will be passed on to consumers in the form of higher housing prices and taxable valuations, but at least their fellow taxpayers won’t be subsidizing their purchases.
Without a doubt, some developers will opt to build outside the City limits, in places where there are no impact fees, but that is how economics is supposed to work.
Government needs to step out of the way, stop distorting the private sector, and allow free-market competition to function without interference.
One positive outcome of the higher fees may be that some developers will turn their attention to our urban core, where there are no water impact fees for rehabilitation, restoration, and new construction projects.
As Libertarians, we cannot help but suggest that the private developers not only pay for their own water infrastructure, but that they build it themselves, which they can probably do at a lower cost than El Paso Water.
It is unclear how City Council will vote on this matter when it comes up for discussion and action in the near future, but we are hopeful they will vote for capitalism rather than corporate welfare.
PHOTO CREDIT: El Paso water treatment facility, El Paso Water