Multifamily Executive is reporting that an increasing number of cities are offering incentives to spur development.  These include the reduction or elimination of impact fees, reduced property taxes or tax holidays.  It is an intriguing development, but I tend to agree with ULI’s Ed McMahon, who is cited in the article:

“I don’t think these rollbacks will produce much new development. The reason development is not taking place has little, if anything, to do with development impact fees,” McMahon says. “It has to do with the marketplace; it has to do with the lack of financing.”

I would further add that there is a danger in programs such as this if they are creating incentives for developers to come build.  Not that I don’t love a reduction in taxes and fees, but if it attracts development companies that are trying to survive on fees alone, it could easily translate to an overbuilding situation.  It is nice to see, however, some municipalities appreciating the impact of having multi-family housing in the mix!

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