Impact fees & Housing Affordability: A Guide for - HUD User

138 Pages·2008·1.96 MB·English

U.S. Department of Housing and Urban Development
Office of Policy Development and Research
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IMPACT FEES AND HOUSING AFFORDABILITY

A Guidebook fo r Practitioners

Prepar ed for:
U.S. Department of Housin g and Urban Development
Washington, DC

Prepared by:

Newport Pa rtners, LLC
Davidsonv ille, MD
an d
Virginia Polytechnic Institute and State University
Alexand ria, VA
June 2008

About the Guidebook
This Guidebook was prepared by Liza K. Bowles of Newport Partners, LLC and Arthur C. Nelson of Virginia
Polytechnic Institute and State University under contract to the Department of Housing and Urban
Development. It draws heavily on various research papers prepared under subcontract to Newport Partners.
These papers and their authors are listed here:
• The Past, Present and Future of Impact Fees, August 2005, prepared by James C. Nicholas,
University of Florida;
• State Impact Fee Enabling Acts and Housing Affordability, February 2005, prepared by Arthur C.
Nelson, Ph.D., Professor and Director of Graduate Studies in Urban Affairs and Planning, Virginia
Polytechnic Institute and State University, and Clancy Mullen, Duncan Associates;
• Proportionate Share Impact Fees and Housing Affordability, January 2006, prepared by Arthur C.
Nelson, Ph.D., Professor and Director of Graduate Studies in Urban Affairs and Planning, Virginia
Polytechnic Institute and State University; and Liza K. Bowles and David J. Dacquisto, Newport
Partners; and,
• Infrastructure Financing Techniques: Impact Fees and Alternatives, June 2005, prepared by Arthur
C. Nelson, Ph.D., Professor and Director of Graduate Studies in Urban Affairs and Planning, Virginia
Polytechnic Institute and State University.
• The case study material was developed by Bowles and Dacquisto of Newport Partners in conjunction
with Nicholas, Nelson, Mullen and Juergensmeyer.
Full copies of the briefing papers as well as additional resource material prepared under this project are
available at HUD’s Regulatory Barriers Clearinghouse http://www.huduser.org/rbc/.
Acknowledgements
In addition to the authors listed here, we would like to acknowledge the help of Lorie Ebersberger for cover
design, Kermit Baker for thoughtful review and input, Matthew Hawkins for preparation for publication and
Ed Stromberg of HUD for his timely and constructive review and support throughout the project.
We would also like to thank the following impact fee experts for serving as a review group on the
Guidebook and offering additional insights and information:
L. Carson Bise II, AICP
Vice President
TischlerBise
4701 Sangamore Road S240
Bethesda, MD 20816
Ray Burby
University of North Carolina
New East Building
Campus Box-3140
Chapel Hill, NC 27599-3140
Ken Szymanski, AICP
Executive Director
Charlotte Apartment Association &
Apartment Association of North Carolina
2101 Rexford #330E
Charlotte, NC 28211-3499
Robert P. Wallace, P.E., AICP
Vice President
Tindale-Oliver & Associates, Inc.
3660 Maguire Blvd. Suite 103
Orlando, FL 32803
Mark White
White & Smith, LLC
Planning and Law Group
1125 Grand Blvd. Suite 1500
Kansas City, MO 64106
Finally, we acknowledge the constructive review by David Crowe (who also provided data on the relationship
between house size and occupants per unit by unit type) and Paul Emrath, both of the National Association of
Home Builders.
NOTICE
This report was prepared as an account of work sponsored by the U.S. Department of Housing and Urban
Development. Views and opinions expressed herein are the responsibility of the authors. References herein
to any product, process or system do not constitute an endorsement, but are included solely because they
are considered essential to the object of the report.
TABLE OF CONTENTS

Executive Summary .......................................................................................... i

Introduction .................................................................................................... 1

Chapter 1 - Impact Fees - Past, Present and Future ............................................. 7

The Need for Infrastructure Financing Tools ................................................................... 7

The Proliferation of Impact Fees ................................................................................... 12

General Trends in Impact Fees..................................................................................... 14

Chapter 2 - Capital Facility and Infrastructure Financing Options........................ 17

Principles of Efficient Facility Pricing ............................................................................. 17

General Financing Options............................................................................................ 20

Principal Revenue Methods .......................................................................................... 22

Policy-Making Criteria ................................................................................................... 28

Alternative Funding Decision Charts ............................................................................. 32

Decision Chart 2.1 Public Safety Facilities .................................................................... 33

Decision Chart 2.2 Water-Based Utilities ...................................................................... 34

Decision Chart 2.3 Public Amenity Facilities ................................................................. 35

Decision Chart 2.4 Transportation................................................................................. 36

Chapter 3 - The Role of the State .................................................................... 37

Review of State Enabling Acts ...................................................................................... 37

Impact Fee Statutes and Affordable Housing................................................................ 40

Chapter 4 - Impact Fees and Housing Affordability ........................................... 43

Review of Impact Fee Cost Variables ........................................................................... 43

Description of Square Footage Valuations Using Impact Fees ..................................... 48

Elements of Program Design ........................................................................................ 54

Decision Chart 4.1 Designing a Level of Service (LOS) Area ....................................... 62

Decision Chart 4.2 Designing for Affordable Housing ................................................... 63

Decision Chart 4.3 Including Situation Specific Reductions .......................................... 64

Decision Chart 4.4 Assessing Appropriate Revenue Credits ........................................ 65

Specific Housing Affordability Measures as Part of Impact Fee Policy..........................66

Decision Chart 4.5 Affordable Housing ......................................................................... 70

Chapter 5 - Case Studies............................................................................... 71

Atlanta, Georgia ............................................................................................................ 71

Albuquerque, New Mexico ............................................................................................ 78

Alachua County, Florida ................................................................................................ 87
Chapter 6 - Summary and Conclusions ........................................................... 93

APPENDICES ................................................................................................ 95

Appendix A. The Relationship between Impact Fees, Planning and Exactions............ 95

Appendix B. Special Assessment Districts ................................................................... 99

Appendix C. Land Purchase Option Contract Language Accounting for Impact Fees at

the Purchase of Land ........................................................................ 101

Appendix D. Proportionate Share Impact Fees and Housing Affordability ................. 103

LIST OF TABLES
Page
TABLE 1-1. METROPOLITAN POPULATION, CITIES & POPULATION PER CITY 1980 - 2000 ............ 7

TABLE 1-2. AVERAGE IMPACT FEES BY TYPE ...................................................................... 12

TABLE 1-3. AVERAGE TOTAL NON-UTILITY IMPACT FEE SINGLE FAMILY HOME........................ 12

TABLE 1-4. CONSTANT SAMPLE IMPACT FEE ....................................................................... 13

TABLE 1-5. PALM BEACH COUNTY SCHOOL IMPACT FEE....................................................... 16

TABLE 1-6. CANTON PARK IMPACT FEES............................................................................. 16

TABLE 2-1. ANNUAL CAPITAL FACILITY AND SERVICE DELIVERY COSTS 1,000 HOUSING UNITS

CONSTRUCTED AT DIFFERENT DENSITIES, LOUDOUN COUNTY, VIRGINIA ........................ 18

TABLE 2-2. ECONOMIC CHARACTERISTICS AND PREFERRED FUNDING FOR SELECTED MAJOR

FACILITIES ................................................................................................................. 21

TABLE 2-3. GOVERNMENT UNITS: 1972 - 2002 ..................................................................... 25

TABLE 2-4. SUMMARIZING THE POLICY-MAKING ISSUES OF ALTERNATIVE FINANCING

MECHANISMS ............................................................................................................. 31

TABLE 3-1. FACILITIES ELIGIBLE FOR IMPACT FEE ASSESSMENT BY STATE ........................... 39

TABLE 3-2. SELECTED IMPACT FEE PROVISIONS ................................................................. 40

TABLE 4-1 PERSONS PER 1,000 SQUARE FEET .................................................................... 44

TABLE 4-2. OCCUPANCY BY OCCUPIED UNIT SIZE BASED ON UNIT TYPE............................... 46

TABLE 4-3. OCCUPANCY BY UNIT SIZE BASED ON UNIT TYPE FOR ALL UNITS ........................ 46

TABLE 4-4. IMPACT FEE ADJUSTMENTS BASED ON DISTANCE TO WATER SUPPLIER AND

NEIGHBORING HOUSES............................................................................................... 51

TABLE 4-5. VEHICLE TRIPS BY HOUSEHOLD SIZE ................................................................ 52

TABLE 4-6. BASIC FACTORS FOR SETTING HOUSE-LEVEL IMPACT FEES................................ 54

TABLE 4-7. AVERAGE DAILY VEHICLE MILES TRAVELED PER HOUSEHOLD PERSON BY UNIT

TYPE ......................................................................................................................... 57

TABLE 5-1. ATLANTA IMPACT FEE CALCULATIONS .............................................................. 74

TABLE 5-2. ATLANTA FEE SCHEDULES ............................................................................... 75

TABLE 5-3. ALBUQUERQUE PUBLIC SAFETY LEVEL OF SERVICE, NET IMPACT COSTS, AND

IMPACT FEES BY SERVICE AREA .................................................................................. 82

TABLE 5-4. ALBUQUERQUE PARKS, RECREATION FACILITY, TRAIN AND OPEN SPACE LEVEL OF

SERVICE, NET IMPACT COST, AND IMPACT FEES BY SERVICE AREA ................................ 83

TABLE 5-5. ALBUQUERQUE NET IMPACT COSTS, PROJECTED IMPERVIOUS ACRES, AND

DRAINAGE IMPACT FEE PER ACRE BY SERVICE AREA .................................................... 84
TABLE 5-6. ALBUQUERQUE LEVEL OF SERVICE, NET IMPACT COST, ROAD IMPACT FEES BY
SERVICE AREA ........................................................................................................... 84

TABLE 5-7. LAND USE ASSUMPTIONS ................................................................................. 89

LIST OF FIGURES
Page
Figure 1-1. Rate of Inflation 1970 - 2004 ...................................................................................................... 8

Figure 1-2. Average Non-Utility Impact Fee................................................................................................ 13

Figure 1-3. Impact Fees By Type 1988-2004 ............................................................................................. 13

Figure 3-1. States With Impact Fee Acts .................................................................................................... 37

Figure 5-1. Atlanta Parks and Recreation Service Areas............................................................................ 72

Figure 5-2. Public Safety Service Area ....................................................................................................... 80

Figure 5-3. Parks, Recreation Facilities and Open Space Service Areas ................................................... 81

Figure 5-4. Drainage Facility Service Areas ............................................................................................... 81

Figure 5-5. Road Facility Service Areas ..................................................................................................... 81