A slowing housing market is causing Queen Creek to tighten its belt.
The town, which relies on construction development fees for a significant portion of its revenue, is being more financially conservative as it finishes out this fiscal year to make up for less income. That includes a hiring freeze on 16 positions and cutting travel and training spending equating to a 15 percent budget cut, interim Town Manager John Kross said.
“We’re trying to adjust projection of revenues based on a slowing housing market,” Kross said. “It’s a natural response and most every city is doing it — especially in this state that has relied so heavily on new construction.”
In fiscal year 2005-06, the town issued more than 1,200 single-family building permits and collected $15.3 million in development fees. This fiscal year, which ends June 30, the town is on track to issue less than half that amount — between 550 and 600.
Town officials had already whittled down their development fee income projections about 30 percent but have recently decided a 50 percent reduction is more accurate.
“The slowdown is much more significant,” Kross said.
The building permit numbers will continue to be evaluated every week, he said.
Queen Creek collects five development fees: waste water; transportation; public safety; library and parks; and trails and open space. Beginning in February, the town will also begin collecting a fire service development fee. An example of a development fee being affected is the parks, trails and open space fee.
“We projected $4.9 million in the (parks, trails and open space) development fees for this fiscal year,” Kross said. “We’re probably going to be on track for $2.6 (million) to $2.9 million.”
Both Kross and Mayor Art Sanders said Horseshoe Park and Equestrian Centre and the ever-present traffic problems will continue to receive attention and money. “At this point in time, we don’t anticipate changes to the priority transportation projects,” Kross said. “Same thing with the Horseshoe Park. We’re in very solid shape to complete significant portions of phase one.”
Changes to capital improvement projects would be a couple of years down the road, but then more commercial development will be in place to bring in sales tax revenue, Kross said.
“There’s not a panic — we see this just like the other cities just like an adjustment period,” said Kross, who noted experts predict an 18-month slow cycle. “Fortunately for Queen Creek, we have very strong and robust commercial development that will be offsetting those revenues.”