SUBJECT:
Title
An Ordinance of the Board of Trustees of the Town of Erie Amending Chapter 5 of Article 2 of the Erie Municipal Code, to Modify the Town's Impact Fees
Body
DEPARTMENT: Finance and Planning
PRESENTERS: Victoria Runkle, Finance Director
Carson Bise, Principal with TischlerBise Consultants
Julian Jacquin, Economic Development Director
TIME ESTIMATE: 60 minutes
60 minutes
FISCAL SUMMARY:
The proposed fees represent a slight (1%/$134) increase in total impact fees from current levels for single family residential projects outside the Town Center, and a significant (22%/$2,059) reduction in multi-family residential impact fees for projects outside the Town Center. Further, reflecting the denser, walkable development pattern in the Town Center and the Old Town area, which reduces traffic impacts, the proposed fees also reflect a significant additional reduction (36%/$2,256 and 51%/$2,575 respectively for single family and multi-family) in Transportation impact fees for development projects in the Town Center and Old Town area.
Impact fees generate significant revenue to partially cover the cost of infrastructure improvements needed to expand infrastructure capacity to serve new developments in Erie. This revenue may only be spent on such improvements, and may not be spent for maintenance, to correct existing deficiencies or to increase existing service levels.
STAFF RECOMMENDATION:
Adopt the Impact Fee Ordinance.
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
The Town imposes fees for a variety of infrastructure needs related to impacts of growth. These one-time fees are referred to as Impact Fees. The Town of Erie has imposed Impact Fees for over 25 years to help address the effects of growth. They were first adopted in 1995 for implementation in 1996. At that time, the Town adopted Impact Fees for Parks, Public Facilities, Transportation, and Trees.
Every five years, the Town engages a consultant to review the Town’s capital needs as it relates to infrastructure required due to population and commercial growth. Attached, are both the 2021 completed study and a power point presentation identifying the required infrastructure for the next five years and its associated costs. In 2021, the Town asked the consultant to review the needs in the following areas:
• Parks
• Police facilities
• Public facilities (aka general municipal needs) and
• Transportation Impact Fees.
The Town also adopted a Storm Water Impact Fee in 2020, and, given those services, as well as the Water and Sewer capital needs, were reviewed last year, we did not update these fees. Staff members review these annually to determine revenue needs and expenditure requirements. Staff will coordinate the next rate study no later than 2025.
The proposal is also to continue the Tree Impact fee with no change in the fee.
Staff and our consultant recommend adopting the Police Facilities Impact fee as a new fee to provide funding to assist with expanding Police facilities needed to serve the growing community. Parks Impact fees revenue may be used only for costs of Community Parks (not for neighborhood parks, which are normally covered by the developer). The Public Facilities (Municipal) fees address only Town Hall and the Leon A. Wurl Service Center. The Transportation Impact fees are dedicated to a list of projects included in the report. All impact fee revenue is deposited into and expended from the Town’s Capital (Impact) Funds that segregate the revenue into the appropriate category (Transportation, Public Facilities, Parks, Tree, Storm Drainage, and the new Police Facilities Fund if the Board approves that fee). This ensures the fee revenue is spent only on the specific category of facilities for which the Town collects each fee.
Impact fees address the additional demands new residents and commercial growth place on current Town facilities and infrastructure. Population and employment growth requires a municipality to add facilities and capacity to maintain the current level of service. Existing residents and new residents who move to Erie expect the Town to maintain services levels. However, new residents also create impacts on the municipality’s infrastructure. Impact fees help pay for the infrastructure improvements the Town must construct to maintain the level of service as the community grows.
Impact fees have had a long legal review. The U.S. Courts have been very clear that impact fees can only be used to mitigate conditions created by development. They cannot be used to address societal equity issues. While affordable housing for all residents is extremely important for every community, the Courts have stated fees must have a “roughly proportional” relationship to the burden the development imposes.
The review process this year first included three meetings with community development and building stakeholders. These meetings resulted in several changes, particularly in the parks area. We had discussions of the effect of impact fees on housing costs, again, noted impact fees are limited to the demand growth has on a municipality’s services.
We also discussed issues related to development agreement (DA) and Impact Fees. Each development has a different Agreement negotiated between the Town and the Developer. In some cases, the Development Agreement (DA) was negotiated some time ago. These DA’s impose requirements that will serve only a particular development. For example, the Town may request the Developer build road expansions on the edges of the development that will serve only the residents entering into that development. Needs such as an acceleration and de-acceleration lanes are examples of the specific exactions the Town has requested as part of a development agreement.
As is the case with all impact fees, the Town imposes Transportation Impact Fees with the building permits. These fees go into a specific Fund to address town wide transportation issues. A list of the projects impact fee revenue will help pay for is included in the analysis and was shared with all stakeholders.
The recommended Transportation Impact Fees also proposes a different transportation fee in the Town Center area. Areas where residents can drive or walk use the transportation system less than other areas of the Town. In order reflect this lower impact, there are lower fees for the Town Center area.
Another issue the stakeholders identified is the relationship between the 2018 Town Neighborhood Park Development Policy and Impact Fees. The proposed Parks Impact Fees will provide for the use of revenue from this fee for Community Parks only. After reviewing the 2018 Neighborhood Parks Policy, and working with the consultant and development community stakeholders, staff agrees the Parks Impact Fee should be limited to the construction of Community Parks. The Town negotiates, through Development Agreements, Neighborhood Park exactions on specific developments, these parks are primarily used by a specific neighborhood.
Finally, the stakeholders noted all the costs associated with construction has an impact on affordability of housing for all residents. There are a variety of factors that influence home prices: land values, price of building supplies, labor, the cost of financing in capital markets, general property taxes, impact fees, and Special/Metro District property taxes. The proposed fees represent a slight (1%/$134) increase in total impact fees from current levels for single family residential projects outside the Town Center, and a significant (22%/$2,059) reduction in multi-family residential impact fees for projects outside the Town Center. Further, reflecting the denser, walkable development pattern in the Town Center, which reduces traffic impacts, the proposed fees also reflect a significant additional reduction (36%/$2,256 and 51%/$2,575 respectively for single family and multi-family) in Transportation impact fees for development projects in the Town Center. These changes reflect the overall cost increase associated with building new infrastructure to support new development, and the somewhat lower impact on Town facilities associated with new development in the Town Center and Old Town areas.
Another stakeholder recommendation is the Town annually present the sources and uses of the impact fees outside the budget process. Town staff members are working on that report and will complete it by the end of the calendar year for the past five years of collections and accomplishments.
The original stakeholder meetings did not explicitly include small businesses in the Historic Old Town area. However, in the past six weeks, staff have met with representatives and reviewed the planning objectives of the area. Staff believes the same goals of the Town Center zone apply to the Historic Old Town part of Erie. Over time people will access the services in this area using biking, walking, and other different modes of transportation, which will eventually also include better public transit services.
Because of this objective, the recommended transportation impact fees are lower in both the Town Center and the Historic Old Town areas. As an example, Single Family Transportation Impact Fee will be $1,623 less in these two areas than the remaining parts of the Town. Multi Family costs are recommended to be $1,000 less per unit. Fees on Commercial, Industrial, and Office development are also all lower than in other areas of the Town.
SUMMARY
The total proposed fees increase by $134 for a Single Family residential unit, excluding the Town Center and Historic Old Town Areas. The following table summarizes the current and proposed fees for impact fee and land use types.
When analyzing impact fees, the final question is always “how do these fees compare with other municipalities.” This is never an easy analysis because municipalities use a variety of tools to respond to their growth needs. Some ask residents for voter-approved property or sales tax increases for these needs, often in conjunction with impact fees. Others may charge differing levels of permits or use taxes to increase revenue for capital needs. Finally, each municipality has different needs. They may have fewer or more roads; they may separate districts for parks and recreation, as an example; or they may share facilities as some do with counties or other governmental units.
The following table compares the Town’s fees with other nearby jurisdictions. It shows that Erie’s total development fees are higher than some, but lower or significantly lower than most surrounding jurisdictions.
Board Priority(s) Addressed:
ü Attractive Community Amenities
ü Well-Maintained Transportation Infrastructure
ü Safe and Healthy Community
ü Effective Governance
ü Environmentally Sustainable
ü Fiscally Responsible
ATTACHMENTS:
1. Ordinance 33-2021- Changes
2. Consultant Study
3. Consultant PowerPoint