As you mentioned, the commission is seeking public comment on two draft guidances. Could you explain the thinking behind those?
So the host community agreement guidance, which was drafted by Commissioner [Britte] McBride and which I fully support, it was addressing the question that has been raised recently around community impact fees.
Let me explain what that is. When the legislature was setting up the structure where applicants would have to get approval at the local level and approval at the state level, they set it up so that an application can’t be approved by us at the state level until it has local approval.
And so they were balancing two different interests.
The one interest is that we don’t want municipalities to have to bear any kind of burden. They shouldn’t have to be paying if there are costs to them for hosting these businesses. We want to encourage them to help these businesses. So the legislature added a three percent local tax, which they can use however they want to benefit their local communities, and then they also wrote in that optionally, as a voluntary matter, they could contract together in the host community agreement for the business to cover costs that come up that are reasonably related to them being in that city or town.
They also were considering that it’s a top priority in this law that this should be an inclusive industry that’s open to everybody, open to small businesses. And in order to prevent a situation where local approval would just go to whoever is willing to pay the most, they put a strict cap, so those costs can’t exceed three percent [of annual revenue].
The reason that this has become an issue is because a few municipalities have decided that that three percent is not enough for them. And so they have started drafting agreements where they ask for three percent, with like no documentation, and then, on top of that, more money and all sorts of ridiculous descriptions for what those additional amounts of money are for.
And it got to the point where the two legislators who led the passing of this law wrote us a letter. Sen. [Pat] Jehlen and Rep. [Mark] Cusack asked us to start enforcing this three-percent cap, so that’s what led up to that discussion [Thursday] and releasing this guidance to make clear what the law says about the three percent.