City talks about impact fees

[metro]

The impact of impact fees
Journal Record
October 16, 2008

OKLAHOMA CITY – City officials plan to reveal preliminary proposals for the assessment of new impact fees for city development at public meetings in the next several weeks.

“As the city grows, so does the need for wider streets, better water treatment plants, parks and trails,” City Hall spokeswoman Kristy Yager said. “Impact fees are a way to accommodate that expansion without raising taxes.”

Yager said developers have already expressed concerns at the possibility of new costs for their projects. But at least a few said they realize the necessity. “I think it’s a great idea,” said Grant Humphreys, chief executive of the Humphreys Co. “This is something the city really needs to look at on edge development, anything that expands the city’s infrastructure. Because the model of growth that we’ve been operating under for the last 50 years is not sustainable for the long term.”
(Sidenote: Good for you Grant, it's about time someone steps up!)

A recent forecast of the city’s 10-year growth trend suggests the cost of maintaining service levels will outpace projected revenues by about $54 million.

City Council members and city staff for months have been exploring the possibility of making up that shortfall by adopting new impact fees. Impact fees are common in municipalities nationwide, according to Texas-based Duncan Associates, an impact fee consulting firm. The fees are used in about 60 percent of all cities with more than 25,000 residents and almost 40 percent of all metropolitan counties.

An impact fee is a charge on new development to pay for the construction or expansion of capital improvements necessary because of that development. Such infrastructure ranges from school districts to emergency services to wastewater utility systems. They are charged to developers according to standardized rates based on the expected effect of development.

Developers generally pass those additional costs on to their customers. The most recent nationwide study of impact fees by Duncan Bros. reveals they are used primarily in the South and West, and are rare in the Northeast and Midwest.

Total impact fees charged nationwide in 2008 average $11,276 for the development of a single-family housing unit, but the study doesn’t clarify whether that figure takes regional cost-of-living differences into consideration.

Other land uses such as retail and office space have different fee ranges. Mayor Mick Cornett and several City Council members have said they will likely support impact fee adoption depending on the specific details.

Yager said Wednesday she was unable to provide information about initially proposed fee structures because of the wide range of variables such as development size and land use. However, new impact fees are expected to be limited to streets, treatment plants, and parks and trails, she said.

Developer Bert Belanger with Urban Works said adding impact fees “would be unfortunate.” Developers already pay several building fees, inspection fees and utility tie-in fees. He has served on several committees to work with city staff to help them streamline the permitting process. “The problem with impact fees is that it basically becomes another tax,” he said. “We need less impediments to development, not more. The city already has several funding resources, like TIFs (tax increment finance districts). I’m not sure that adding costs to development is the answer.”

Humphreys said efficiency generally increases with population density as opposed to sprawling development. “Taking a long-term financial look at it, you need to have efficiency in your infrastructure usage,” he said. “We just finished an office building downtown. We don’t cause the fire department to change its coverage; we don’t require a new water main or city streets. We’re building on existing infrastructure.” But he’s not opposed to impact fees for inner-city development as well – if a new mixed-use project increases population in a previously dilapidated area, for example, Humphreys said additional funding might be necessary.“The question is, what’s the most efficient manner of handling growth and what works best long-term?” he said. “I support smart growth.”

Developer Cathy Jo See with See Cos. was pragmatic: “When you’re growing or you have older areas where the sewer and water is a problem … the simple fact is that the city cannot remedy certain things without impact fees,” she said. “From a developer’s point of view, we realize there’s so much money that goes into infrastructure – the cost to repair roads, bridges, water lines that break, new lines – it is incredible the money it takes,” she said. “So I look at it this way: Sometimes you have to give to your community to receive the things you need.” However, she’s not willing to just give her money away. “There has to be a lot of justification and evidence to support any new fee,” she said. Yager said the public meetings have not yet been scheduled.

[Midtowner]

Wow. I have a newfound respect for Humphries. I wonder whether he thinks those fees should be exempt from TIF?

[jbrown84]

The fees need to be much higher for developers that are extending the sprawl. Humphreys is exactly right.

[ultimatesooner]

it sounds like every single surronding city would have to have them as well or all of the developers would flock to yukon, moore, deer creek, etc more than they already have

[BDP]

it sounds like every single surronding city would have to have them as well or all of the developers would flock to yukon, moore, deer creek, etc more than they already have

If they don't want to pay for it, then let them go and let's stop building roads that we have to maintain and constantly widen to get people to and from there unless they pay for it. And if a developer wants a piece of Oklahoma City, maybe faced with a fee they'll choose to improve areas that have infrastructure instead of building in outer areas that need completely new infrastructure.

[jbrown84]

it sounds like every single surronding city would have to have them as well or all of the developers would flock to yukon, moore, deer creek, etc more than they already have

Fine with me.

[The Old Downtown Guy]

Perhaps "Pay As You Go" will catch on even in Oklahoma City.

[Kerry]

I live in Florida where this is common practice - it doesn't help. All that happens is the price of widening the roads or adding new water lines goes up to match the amount of money now available. The real answer, and the only one that will solve the problem, is to shrink the size of the city to the current urbanized area. If people want to live in the country then let them live on a dirt road and have a septic tank.

If you in any way think this will stop urban sprawl you are dillusional. You only have to look at Tampa, Florida for the evidence.

[veritas]

As a developer in the metro, I can understand where the City is coming from. However, often lost in this debate is the extra tax generating revenue each household represents to a City. This includes the obvious property tax, but also should include extra commercial developments that move in because of an increased amount of roof-tops. A single house hold has an economic foot print that reaches far beyond the obvious revenue generated for the City.

The rush to place the burden on developers (and ultimately the paying customer) should be balanced with a holistic approach. Otherwise, the City risks cutting (potentially) off a source of revenue growth for the long term.

[metro]

As a developer in the metro, I can understand where the City is coming from. However, often lost in this debate is the extra tax generating revenue each household represents to a City. This includes the obvious property tax, but also should include extra commercial developments that move in because of an increased amount of roof-tops. A single house hold has an economic foot print that reaches far beyond the obvious revenue generated for the City.

The rush to place the burden on developers (and ultimately the paying customer) should be balanced with a holistic approach. Otherwise, the City risks cutting (potentially) off a source of revenue growth for the long term.

Yes, but what about decreasing sprawl and increasing sustainability? We MUST work on becoming a more sustainable city. We've got sections of our city of subdivisions that were the best 20 years ago and now have fallen in decay. With this mentality, It will continue to spread past Memorial in another 20 years. Obviously your method doesn't work either or we wouldn't be in this dilemma of having our resources stretched beyond capacity providing utilities, roads, etc. to the outskirts of town (which do have added retail, etc.). With all the additional retail and development, it still isn't generating enough income to provide the services from the city without the city taking a hit.

Oh, and if you want to talk footprints, what about the carbon footprint and ecological footprint from all these new home developments? I guarantee you they have a carbon and ecological footprint FAR larger than their actual property.

[PLANSIT]

'Bout time.

[veritas]

Yes, but what about decreasing sprawl and increasing sustainability? We MUST work on becoming a more sustainable city. We've got sections of our city of subdivisions that were the best 20 years ago and now have fallen in decay. With this mentality, It will continue to spread past Memorial in another 20 years. Obviously your method doesn't work either or we wouldn't be in this dilemma of having our resources stretched beyond capacity providing utilities, roads, etc. to the outskirts of town (which do have added retail, etc.). With all the additional retail and development, it still isn't generating enough income to provide the services from the city without the city taking a hit.

Oh, and if you want to talk footprints, what about the carbon footprint and ecological footprint from all these new home developments? I guarantee you they have a carbon and ecological footprint FAR larger than their actual property.

You've crossed over into an argument about changing consumer habits which falls beyond the scope of the issue at hand. If the City wishes to penalize fringe development via higher impact fees that is a choice that they can make.

I can, however, point to cities in the country where higher impact fees on the fringes of a city only hastened sprawl to suburbs due to developers seeking lower fees and better profits.

That said, impact fees are definitely necessary part of growth. The balance between impact fees and long term revenue growth for the city (via a larger tax base) is the hard part to figure out.

[Kerry]

Based on the above discussions you guys (and maybe the city) needs to decide what problem you are trying to solve - urban sprawl or the financial exposure of the city. They are not the same problem. As near as I can tell the city only wants to limit the financial exposure rural development brings. Many on this site want to limit urban sprawl. I can tell you that impact fees will only cause more urban sprawl. For crying out loud, just look at where this has been tried in Florida. It is a total 100% failure on the urban sprawl front and only had a minimal success on reducing financial exposure.

The best option that solves both issues is to reduce the city limits. If people want to live in the country then let them live on a dirt road and have a septic tank. Most people don't want to live on a dirt road so people won't move to the country. If you pave a road to the middle of nowhere don't be surprise if some one wants to drive there.

[jbrown84]

The best option that solves both issues is to reduce the city limits.

Well said. I think this is the best bet.

[metro]

Kerry, I agree. I'm a big fan of deannexing some of our 660 sq. miles of city land, but I don't think our current leaders have the guts to tackle it. Hopefully if I ever get in office, I will try to address it.

[southernskye]

How did it get to be such a big sprawling mess in the first place?

[Kerry]

It is time the city takes a little responsibility for the financial exposure they have created and stop trying to pass the cost of having such a spread out city on to the people that want to move to OKC. Nothing says "welcome to OKC" like a bill for $10,000. The only responsible thing to do is start de-annexing rural parts of the city. The city created the financial risk by annexing huge tracts of rural land. It is time to undo past mistakes.

[HOT ROD]

How did it get to be such a big sprawling mess in the first place?

Answer = Watershed

Oklahoma City needed to protect it's watershed, and since the city owns the water district, the city needed to keep out others from encroaching and diverting it's water rights.

That said, I think the state should step in and grant OKC's water district trust status or put it under ACOG regional government (instead of city) so that the city can focus on CITY issues and let the regional government focus on water, transit, and other REGIONAL issues. That is how we do it in Seattle, we have King County METRO as our regional authority who do water, sewer, and transit; the city does city ONLY - and it works.

Oh, metro; OKC has 608 sq miles (not 660); still a lot.

My answer would be to make the water a trust or under ACOG and trim OKC's city limits down to LA's roughly 450 sq miles. Trimming it to the urbanized area (roughly 250 sq miles) doesn't give OKC access to much of it's outer revenue infrastructure that has been established.

Where to trim? All of NE OKC past Bryant and N of just North of Memorial. All of N. OKC 1 mile N or Memorial. All of OKC W of Sarah Road (except where industrial parks exist), All of SE OKC W and S of 1 mile of Lake Stanley Draper. This trimming of the fat would make OKC roughly 450 sq miles and would make the city's' density increase overnight by 35% and the city would still have it's near 555,000 residents of today!

But like I said, the city is keeping those areas to keep OUT anyone who would encroach on the water district, is what I understand was the original idea - old news in my opinion!

[HOT ROD]

As for the impact fee.

Another thing that could be done, considering Kerry's valid argument; is the city hsould establish growth zones where they want to add density. Anywhere outside of that would be assessed. Anywhere inside would be held to dense building zoning and most likely be eligble for city assistance.

With this idea, you kill two birds with one stone. You encourage development in the inner city that is dense and pedestrian friendly while also give a reason for doing so in defining how you want the city to grow. Portland did this very thing, and now have a pretty dense urban city (they did it on the metro level too).

Honestly though, I still think the city should trim off the watershed and waste areas AND implement impact fees outside of growth areas (that the also should establish).

Developers would still build in OKC because people do still want to live in the city regardless if they are in the inner city or in the suburban part. So, in reality, we wnat to get rid of the rural portion - if the suburbs win that, so be it; it's still OKC metro and OKC would still see the revenue from retail. ...

One more thing, I think OKC should trim it's inner city school district too. That way, you focus on OKC kids. Let Jones and such form their own suburban district of go to MWC. Keep the dollars in the inner city schools where they belong.

Oh, one final thing. Once (or should I say IF) the city starts demanding growth in the inner city and demands quality urban building and amenities - people will live in the inner city. Long gone are the days when people are afraid to live near someone because of their race or economic status (within reason, I suppose). Most often, people look for the intangables of where they live and the more tangibles you have - people will most likely live there.

So the city needs to improve the intangables of the inner city (by getting rid of them); they are making a great run in the downtown to Asia district to crown heights corridor (though they need to do much more in the older areas); but they need to spread it to more of the inner city in the eastside, the southside, westside, and the rest of the near north (past crown). And trimming the city school district thereby increasing available dollars to their inner schools, would be a great tangible (thereby hiring more/better teachers and programs) that could immediately turn things around in the 'hoods.

[andy157]

Answer = Watershed

Oklahoma City needed to protect it's watershed, and since the city owns the water district, the city needed to keep out others from encroaching and diverting it's water rights.

That said, I think the state should step in and grant OKC's water district trust status or put it under ACOG regional government (instead of city) so that the city can focus on CITY issues and let the regional government focus on water, transit, and other REGIONAL issues. That is how we do it in Seattle, we have King County METRO as our regional authority who do water, sewer, and transit; the city does city ONLY - and it works.

Oh, metro; OKC has 608 sq miles (not 660); still a lot.

My answer would be to make the water a trust or under ACOG and trim OKC's city limits down to LA's roughly 450 sq miles. Trimming it to the urbanized area (roughly 250 sq miles) doesn't give OKC access to much of it's outer revenue infrastructure that has been established.

Where to trim? All of NE OKC past Bryant and N of just North of Memorial. All of N. OKC 1 mile N or Memorial. All of OKC W of Sarah Road (except where industrial parks exist), All of SE OKC W and S of 1 mile of Lake Stanley Draper. This trimming of the fat would make OKC roughly 450 sq miles and would make the city's' density increase overnight by 35% and the city would still have it's near 555,000 residents of today!

But like I said, the city is keeping those areas to keep OUT anyone who would encroach on the water district, is what I understand was the original idea - old news in my opinion!

Not trying to nit-pic here, but, according to the City, as stated in it's budget document for FY/ 08-09, the City covers 620 sq. miles. Still a lot.

[southernskye]

Answer = Watershed

Oklahoma City needed to protect it's watershed, and since the city owns the water district, the city needed to keep out others from encroaching and diverting it's water rights.

That said, I think the state should step in and grant OKC's water district trust status or put it under ACOG regional government (instead of city) so that the city can focus on CITY issues and let the regional government focus on water, transit, and other REGIONAL issues. That is how we do it in Seattle, we have King County METRO as our regional authority who do water, sewer, and transit; the city does city ONLY - and it works

Thank you for the explanation. Just out of curiousity, how long have you lived in Seattle and do you get back to OKC often ?

[HOT ROD]

lived in Seattle/area since 1991 (with a brief stint in Denver 95-97). Born and raised in OKC (PC North); get back to OKC annually, was just back in May.

The 620 includes the water, by the way. Nobody lives on water, so it's usually excluded from density calculations.

[andy157]

lived in Seattle/area since 1991 (with a brief stint in Denver 95-97). Born and raised in OKC (PC North); get back to OKC annually, was just back in May.

The 620 includes the water, by the way. Nobody lives on water, so it's usually excluded from density calculations.

Thanks for clearing that up. Thats good to know. By the way, don't you think they (the city) should have included that little tid-bit of information in the report, could have saved us all a lot of worry and confusion.

Based on what you have said, is it safe to assume that the 620 will fluctuate depending on a lakes rise and fall in elevation. For instance go back a couple of years ago, remember when Hefner was so low due to the drought, it almost dried up for gosh sakes. Until we got some rain I bet we were pushing 621, maybe 622. Again, not trying to nit-pic, but there is a guy who actually lives in his boat house, at Draper lake, on the water. I wonder how they calculate for him?

[veritas]

As for the impact fee.



Oh, one final thing. Once (or should I say IF) the city starts demanding growth in the inner city and demands quality urban building and amenities - people will live in the inner city. Long gone are the days when people are afraid to live near someone because of their race or economic status (within reason, I suppose). Most often, people look for the intangables of where they live and the more tangibles you have - people will most likely live there.

The only problem with the oft cited market demand to live downtown is the market itself. The urban core market tends to be a mix of the 20 something crowd and the empty-nest market. As long as schools in OKC leave something to be desired, you will never see the young families moving in to the urban core with the same numbers you seem them moving to the fringes.

This leaves areas on the fringes as the driving area for new roof-tops and, ultimately, retail growth. This, in turn, creates a tax revenue growth model problem for the core market because the engine for growth is inherently inhibited by a lack of of a primary desire for the "creative class"; good schools for children. Prohibitive or structured impact fees as a mechanism to engineer a desired outcome can never work until the quality school issue is addressed.

Don't get me wrong, I would love to see development for young families on core development. Additionally, I too can point to both exceptions where a particular school or family has bucked the trend in the core and made a push. But the numbers don't lie; the fringes will continue to be a large part of a healthy budget for the City of OKC in the years to come.

As a side note, an interesting new trend I have seen around the country has been the beginnings of "micro" cores that have begun to spring up in the fringes, replicating (on a smaller scale) the office parks, density, and attractions that can be seen in traditional cores. These new micro core areas are based on the desire to have access to work/attractions but within a closer proximity to home. I will be very interested to see how this plays out in the future.

/two cents

[kevinpate]

> there is a guy who actually lives in his boat house, at Draper lake, on the
> water. I wonder how they calculate for him?

They have achap who remeasures the shorline for a 1/4 mile in each direction, every day and sends in a new calculation from his HP pocketpro3004. He longs for a promotion to code enforcement, so he can again enjoy the better things in life.