Construction Industry Fuels Payson Economy

Benefits and burdens of town growth debated

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While the Payson Town Council battles over growth and water, many people insist sales tax revenues from construction companies benefit our community. But others ask if the benefits outweigh the cost of growth.

Nearly 19 percent of all the sales taxes collected in Payson come from the construction industry, according to Glenn Smith, chief fiscal officer of the town.

"It's a significant number. Out of the more than $5.5 million we collected in sales taxes last year, about one-fifth came from the construction industry," he said.

However, overall sales tax revenues in Payson have dropped steadily in the past 10 years according to Smith.

"During the 1996-1997 fiscal year, we saw a 15 percent growth in sales taxes. There was a lot of home building in the community, and retail sales were up, too. The state's economy was good then and that had a lot to do with our community doing well," he explained.

"During the fiscal 2002-2003 year, our sales tax growth was only .3 percent. But, this coming year, we're anticipating about a 4.5 percent growth," he said.

Growth paying for growth

Bill Schwind, director of the town's parks and recreation department said since 2001, construction companies, and businesses supporting them, have contributed more than a half million dollars for park improvements.

"Once a new building permit is pulled, part of the fee, $647, goes directly into a park development fund. Money from that fund over the years has paid for the soccer field next to the library, lighting for ball fields, and the new fields under construction west of the library," he said. "We received about $528,100 since 2001. Those impact fees are tremendously important to our department," Schwind said.

"When we're forced to expand services, the concept of growth paying for growth works. The concept is sound. As long as construction adds new residents, the people demand services," said Schwind.

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Ray LaHaye, the town's chief building official.

Local construction supervisor Jon Barber of SRJ Construction agrees that Payson residents have benefited greatly from the construction-driven sales taxes. "When my family moved to Payson 11 years ago, Trailwood was just starting to sell; it was a new development. That kind of started a construction boom here," said Barber.

"When people pay for building permits, that money goes for many town improvements, including for the parks department and streets," he said.

Need for balanced growth

Despite the financial benefits of growth, there are concerns that Payson has a water shortage and not much open land left.

Although he's a builder, Jon Barber insisted there needs to be a balance to Payson's growth. "Construction isn't important enough to have it at any cost. It has to be a balanced situation. There isn't enough water here and there isn't a lot of land left to build on," he said.

"My income does come from construction, but I can find a job no matter what. Construction is important. We can't say we're going to have construction no matter what," he said.

Building permits are up, over last year, according to numbers from the town. During the past 11 months, 214 permits for single-family homes have been issued by the town's community development office, and that doesn't include any pending permits or those being taken out in December. There were 179 single-family permits taken out in 2004 and, just as a comparison, 192 in 2000.

"The boom is not over. With us being a quasi-bedroom community from Phoenix, we see some people finding it might be better to buy in Payson, rather than in Chandler," said Ray LaHaye, the town's chief building official.

"The issue always has been about water. Things could change; it could be busier here for construction if we find more water, or, depending upon the council and mayor decisions, something else could happen; we don't know," he added.

Hal Baas, a former engineer and secretary-treasurer of the Committee for Community-Based Growth, said although the town receives benefits from the parks and other improvements made possible by development fees, the public needs to remember that growth means the town has to spend more money on fire trucks, police cars, roads and related infrastructures.

"So the town can't just spout off noting the sales tax benefits without looking at the additional costs of growth," he said. "Saying Payson's economy will dry up and die if the construction is slowed down is a myth, and not consistent with the current reality," said Baas.

"The other issue to consider is: I believe Payson has exceeded its ability to build here. Ask plumbers and electricians here, you'll find that they can't keep up with their work load, or find workers to help, so many construction companies from the Valley have to come up here to do work. That money is not staying in Payson, it's going to Mesa, or wherever their company is," Baas said.

"How much expense is being added on the back of taxpayers by having growth? The council needs to do an analysis looking into that," said Baas.

Smith admits the town has spent a great deal of money on equipment to maintain a certain level of services and keep up with Payson's growth. However, he said those expenses haven't only been driven by increased growth, but also by tourism. "We have to maintain a certain level of service for police and fire, for example. Due to growth and tourism, we've had to buy new communications equipment for public safety, we added a fire station on the north end of Payson, and we bought a ladder truck. That truck is necessary and was bought to enhance public safety. We had to put out big bucks for that truck, due to the increase in service demands," he said.

Police keeping up with growth

Payson Police Chief Gordon Gartner agreed, and said a community has to find a balance.

"You have to have roughly one officer for every 500 or 750 population to maintain the same standards as they exist today. We also make some things work because we have volunteers. There are no public safety impact fees to pay for some of our needs. We try to project growth within the police department. Then we try to project staffing needs," he said.

Gartner said anytime a new business like The Home Depot, comes in, or an apartment complex is built, that means there are more people moving in and more services needed.

"There might be more accidents around the business, or calls out to the apartment complex," he said. "Not because crime is following them, but because there are just more people around now."

But Gartner said his department has been able to keep up with the growth and, given a choice, he would like to see some growth.

"A town needs to be healthy. An economically depressed community has more problems with crime," Gartner said. "I think the town needs to have some growth for our own economic vitality."

Fred Carpenter, Payson town manager, said it's difficult to predict the impact on Payson if there were a cutback on home building. He said he believes it would hurt the community.

"Once there's a shortage of land, and less building, you'll see a decrease in work force housing, and probably an increase in higher end homes. It's happening some already, but if there's a slowdown in construction, our situation will become exacerbated," he said.

Ray Erlandsen, the Payson zoning administrator, said he's not sure how much vacant land is available around Payson, but said it's common knowledge that there isn't much.

Erlandsen and Community Development Director Jerry Owen provided the Payson Roundup with growth figures involving Payson and several other Arizona communities. Those numbers, from the Arizona Department of Economic Security, show that Payson has seen a population growth of about 13.9 percent between 2000 and 2005.

Community comparisons

Kelly Udall, former Payson interim town manager and now town manager of Pinetop/Lakeside (population 4,103) said his community has seen a 3 to 4 percent population increase in the past year. He noted, during the last year, the construction industry had a tremendous impact there, but retail sales from tourism are really the driving force. In the past five years, Pinetop/Lakeside has grown by 14.5 percent.

Cottonwood has a 2005 population of about 10,845, an increase of more than 18 percent in the last five years. Charlie Scully, Cottonwood city planner, said a lot of multiple subdivisions are going in. Compared to the activity in many cities in Yavapai County, there aren't a lot of huge building projects under way right now, he said. Scully said there is one large subdivision on the books, however.

Scully added he doesn't have any numbers, but it seems to him as though Cottonwood's local economy is also driven by construction.

Show Low has seen a 25.5 percent growth in the past five years.

Baas is still concerned.

"We think the town (Payson), in the last year or two, has reached explosive growth. We think it needs to get back to a well-planned, managed growth rate that fits the needs of the citizens and is consistent with the town's resources," said Baas.

But Department of Economic Security figures show Payson has actually grown more slowly than many northern Arizona communities over the past five years. And therein lies the crux of the growth debate -- what one person considers to be explosive growth, another sees as healthy economic progress.

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