Fans of In-N-Out Burger are literally drooling with anticipation now that work is due to get under way this fall on its first two outlets in the metropolitan Tucson area. The chain might think twice, though, before opening a third location anywhere in unincorporated Pima County, which, as of Tuesday (July 11), is planning to add $31,455 to the cost of building a typical In-N-Out Burger.
The fee is Pima County’s new roadway impact fee.
“Anyone with a drive-up is going to be affected the most,” says Chuck Huckelberry, Pima County administrator.
A study by Curtis Lueck & Associates completed in March, premises higher road impact fees on businesses with drive-throughs saying they encourage more use of roadways.
That’s just one example of some flawed logic, say officials representing the restaurant and food industries.
Rich Jennings, president of the Arizona Food Marketing Alliance, noted that the so-called “big box” stores of between 101,000 and 150,000 square feet are scheduled to see an initial impact fee of $1,825 per 1,000 square feet where grocery stores are slated for an initial impact fee of $2,970 per $1,000 square feet.
“That ignores the industry standard that big box stores will generate traffic from as far away as 15 miles, where your supermarket usually attracts shoppers from about 2½ miles,” said Jennings. “You tell me which one has more impact on the roads?”
According to the schedule outlined in the resolution, as of Jan. 1, 2008 fast food restaurants with a drive-through will face the highest per-square-footage impact fees of any kind of business in Pima County, when it is planned to $16,809 per 1,000 square feet.
That would put the impact fee for the typical 3,500 square foot In-N-Out Burger at $58,832.
For their part, an In-N-Out spokeswoman said the company didn’t want to comment on the Pima County impact fees noting they already have their permits for their first two stores, one at East Broadway and Dodge Boulevard in El Con and the other in Marana on Cortaro Road west of Interstate 10 in the Arizona Pavilions.
Convenience stores and gas stations are scheduled to face the second highest impact fees and banks with drive-throughs will see the third highest impact fees.
Even if In-N-Out didn’t have its permits for the two stores, neither would have been affected by the impact fees since both are in incorporated municipalities.
That may turn out to be problematic says Steve Chucri, president and CEO of the Arizona Restaurant Association.
“I know they say these fees are comparable to what’s being assessed in Maricopa County but I don’t think that’s necessarily a good comparison,” Chucri said. “Phoenix is a bigger market. A national retailer will consider paying more to into Phoenix because the potential is there for more business and the ability to amortize distribution costs is better. If Tucson were to charge the same fees as Phoenix, with about one-fifth population, a national retailer might skip the market.”
Huckelberry says he doesn’t think that will happen.
“There’s the expression commercial follows rooftops,” Huckelberry said. “If you look at the way these decisions are made they are directly related to population growth. When McDonald’s decides on whether to build they look at their per capita costs and the ratios that exist within the marketing area they intend to serve.”
Huckelberry says he doesn’t buy the argument that Tucson should have smaller impact fees because it’s a smaller market.
Still, an argument to Chucri’s point once again comes from In-N-Out Burger. San Luis Obispo in California has an ordinance that prohibits restaurants with drive-throughs, so the company skipped it and instead built in nearby Santa Maria. On the other hand, it recently built a non-cookie cutter store, without a drive-through, near Fisherman’s Wharf in San Francisco.
The size of the market and the urban setting made it worthwhile for the company to alter its usual plans for San Francisco but not San Luis Obispo.
In the Tucson area, impact fees levied by the City of Tucson are generally comparable to what’s in store for Pima, according to the Lueck & Associates report. But it also noted that neither Marana or Oro Valley have commercial impact fees.
Chucri and Jennings don’t deny businesses should pay their way for infrastructure improvements. But both are troubled by the fact they knew nothing of the new fee schedule until about two weeks before a final resolution was put before the Pima County Board of Supervisors in May. This despite the fact they represent two industries to be hit the hardest by the fees.
Chucri said it is going to cost anywhere from 190 percent to 240 percent more to build a restaurant in unincorporated Pima Country, depending on what category the restaurant falls into. Jennings says it’s going to cost supermarkets about 78 percent more to build.
“Our industry represents about 10,000 jobs to the economy of Pima County,” said Jennings of the Food Alliance. “I say that only to point out that it’s troubling that we were not involved in any way in the development of the incredible increases of these fees.”
Both Chucri and Jennings say they are putting together efforts to work with the county to try to lessen them.
Huckelberry said the county is still open for discussion.
“Obviously, we’re going to continue working with them and if there’s a brilliant idea that maintains equity with how we deal with traffic, then we’ll look at it,” he said.
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