KINGMAN - Members of the Arizona Corporation Commission listened to various impassioned pleas from local Realtors Thursday evening, each one all but begging commissioners to restore a free power line extension policy the commission voted to discontinue in 2007.
The meeting at the Mohave County Administration Building was the latest in a series the ACC has been conducting in rural areas around the state in an attempt to assess whether or not it should bring back the line extension policy in one form or another. Prior to 2007, the policy allowed rural landowners an allowance of anywhere from several hundred up to 1,000 feet of free power line, depending on the local electricity provider. For years, this made it easier and cheaper for landowners to develop land farther away from existing cities.
Before the last decade, commissioners were content to leave the policy as-is. But that changed in the mid-2000s, when the housing boom caused an explosion of growth in rural areas of the state, including Kingman. So many free line extensions were being sought that utility companies were scrambling to raise their rates in order to pay for the increased cost of expanding and maintaining their infrastructure.
Unintended consequences
Commissioners voted to discontinue the policy in 2007, citing the desire to keep utility rates low for those customers on fixed or reduced incomes. Following the collapse of the housing market, however, the policy shift appears to have had the unintended consequence of depressing land values and stalling even the most modest rural growth, due to line extensions now costing more than the land itself in some cases.
That was the main point raised by Realtors and County Assessor Ron Nicholson at Thursday's meeting. Nicholson led the protest against the policy shift, arguing that in the past three years alone, property values in the county have fallen by more than $10 billion and growth had all but ceased.
"We've seen homes around here that had sold three, four years ago for $600,000 selling for as little as $150,000, and the financing is unavailable, they can only be bought by cash," Nicholson said. "We're looking at land that we used to value as much as $14,000, $15,000 an acre, that sold for $20,000 an acre, now dropping down to as little as $2,400 to $5,000 an acre and probably still dropping because there are just no buyers out there."
He said that because the cost of building a new home usually exceeds the revenue from selling it, many landowners in the county are seeking to purchase mobile homes for their property, again mainly with cash. Even these people, he said, now have to pay an additional sum of several thousand dollars to get electricity connected to their site.
Growth pays for growth
Nicholson said he understood and even agreed with the "growth pays for growth" philosophy the commissioners cited when they agreed to change the line extension policy. But given the unprecedented market circumstances the county is currently facing, he said that he could not see the policy doing anything but continuing to hamper Mohave County's property values and growth rate over the next several years, if not longer.
"This may not be the proper time in this kind of market to implement this," he said. "Cause I'll tell you right now, construction's already practically stopped. This'll just delay it for a lot of years."
Open to compromise
While ACC chairwoman Kris Mayes said she could sympathize and in fact indicated that she would be open to some sort of compromise on the policy, she still stood behind her initial decision to end the free line extensions. She also noted the large quantity of vacant homes in the local housing market and questioned whether or not the free line extensions may have been partly to blame for the construction of so many of those unsold homes.
Nicholson replied that he believed the oversupply of homes was based on "investor frenzy" and anticipation of large growth for the region. He added that, during the boom, a $5,000 line extension would have been a "drop in the bucket" compared to what most homebuyers were paying. Now, however, that same $5,000 is something that most current homebuyers don't have to spend, especially with the difficulty in getting financing.
Eagle Realty owner/broker LeRoy Wissinger and David Roe of Kingman Quality Homes echoed many of Nicholson's and Ross' concerns, both arguing that county property values, and therefore property taxes, would likely continue to plunge, making life for everyone here more difficult in the long run.
Roe made one suggestion that appeared to pique Mayes' curiosity. He suggested the possibility of allowing for line subsidies on certain energy efficient Energy Star certified homes. Mayes said it was an interesting idea, but also maintained that housing developers had already had 50 years of "subsidies" when the free line policy was in place.
ACC commissioner Gary Pierce was more receptive to the idea, agreeing that timing was everything in this case and that it was the ACC's responsibility to implement a policy that struck a good balance between value to home builders and value to existing power customers. Mayes said the commission would take Unisource's pricing issues, as well as possible rebate or refund costs under consideration during its discussions on the policy, to take place later this year.
Reader Comments
Posted: Tuesday, June 29, 2010
Article comment by:
vock canyon
Say no to Real Estate Speculators and subdividors. Why should those of us who live here have to pay for power lines so that speculators can make money. Make them pay for their own building expenses. It's time for the silly profits that these folks are making to go away. Perhaps it's time these folks actualy contribute to our community, like pay for their own power lines.
Posted: Monday, June 28, 2010
Article comment by:
Ned Warren
Lets see, Pierce is running for reelection!?!? There should be no free extensions. This is a subsidy for real estate speculators and wildcat subdividers. There are plenty of houses and lots with lines running in front of them now to last for years and years. Do not subsidize remote rural development. Usually the real estate industry is complaining about government intrusion. But they love government intrusion when it benefits them. There is nothing in this about affordable housing. The rest of us should not subsidize remote develoment. Everytime I hear a complaint from someone who buys land in the middle of nowhere with no infrastructure they want all the rest of us to pay for their poor locational decision,and want the rest of us to give them government handouts for poor locations, and land speculation. Kris Mayes and Paul Newman got it right the first time.
