Impact Fee Study

WHAT ARE IMPACT FEES?

  • A one-time fee imposed by the City on new construction to fund the cost of infrastructure to meet the needs of new development
  • Based on providing the same level of service to the new development as is provided in the city currently
  • The list of potential projects is defined by the City’s capital improvement program (CIP), which is largely defined in master plans
    • Utility plans
    • Parks and Recreation plan
    • Transportation master plan
    • Other facilities plans

HOW FEES ARE CALCULATED

  • City must use an impact fee consultant who:
    • Apportions costs of improvements that are attributable to growth
    • Determines what portions benefit existing city residents
    • Verifies the city’s growth projections over a ten-year period
  • Formula is basically: Cost of projects attributable to growth ÷ Number of units of growth expected* = impact fee per unit
    *Can be dwelling units, square feet, plumbing fixtures, impervious surface, trip generation, etc.
  • What other cities do is irrelevant in the statute

KEY STATUTORY PROVISIONS

  • Can’t cure existing deficiencies
  • Can’t raise the level of existing service
  • Cannot include any on-going or overhead
  • Can only charge impact fees for fire apparatus greater than $500,000 in cost to commercial development
  • Must notify and involve key stakeholder groups
  • Must consider all available revenue sources in the study
  • Must prepare and adopt an impact fees facilities plan
  • Revenue must be maintained in separate interest bearing accounts
  • Revenue must be encumbered or spent within 6 years of collection
  • Revenue can be used to reimburse prior capacity expansions
  • City must file an annual report with the audit

TYPES OF IMPACT FEES AUTHORIZED

  • Water
  • Wastewater
  • Stormwater
  • Electric power
  • Parks and trails
  • Transportation
  • Public safety facilities

CONSULTANT MUST CERTIFY

  • Fees include only allowable projects and allowable costs
  • No O&M expenses included
  • Projects funded will not raise existing service levels
  • No overhead expenses included
  • Fees are offset by any additional revenue sources like grants
  • Study complies in each and every relevant respect with the Impact Fees
    Act

POLICY QUESTIONS

  • Who should bear the cost of new growth? – All on new growth, some on new growth or none on new growth
  • Should impact fees be more geographically limited? – More transparent, but harder to manage and spend in time limits
  • How often should fees be updated? – All at once or one at a time?
  • What is the role of competitive forces in the market? – Impact fees can affect the rate of development in a community

IFAs

IFFPs

Presentations

Impact Fee Service Area Map

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  • Orem, UT 84057

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