Homebuilders and real estate agents in Williamson County, TN, have slammed plans to introduce a tax on new home construction that aims to help fund local school capital projects for the system's rapidly growing student population, according to Nashville Public Radio.
The one-time tax on new residential construction was approved by county commissioners on Nov. 14. It will impose fees from $1,145 to $11,210, depending on the home's square footage. The tax should raise nearly $15 million in its first year, and the county has said it needs $340 million to fund the construction of 12 new schools in the next five years.
Critics of the impact fee say the cost burden of financing school construction should fall on all taxpaying entities in the county, not just homeowners, and that the assessment could keep people from moving to the county. An alternative would be to raise taxes. Property taxes in the county increased 15.5% last year, NPR reported.
Williamson County is a suburb of Nashville, which is among the secondary markets seeing an uptick in activity due to its affordable housing economy. That's attracting new residents from outside the city. In a recent analysis of its user data, real-estate listing website Zillow found that Nashville had the highest rate of in-migration for renters — meaning they moved to Nashville from another city — among large U.S. cities.
And, in a separate report, Zillow put Nashville among the cities with above-average income and employment growth and where the point at which purchasing a home becomes more affordable than renting is fairly low. Nashville's "breakeven horizon," according to Zillow, was one year and five months during the second quarter compared to one year and eight months for the U.S. overall.
Meanwhile, impact fees and other regulatory costs at the local, state and federal levels are pushing home prices up nationally, accounting for 24.3% of a home's selling price, on average, according to a May report from the National Association of Home Builders. Development fees, specifically, make up 14.6% of those regulatory costs. Builders credit regulatory costs, which have maintained their share of a home's price despite significant increases in its total cost, for tight inventory conditions nationwide.
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