Guiffrida Impact Fee SubmittalsImpact Fee Collection
The objective of this plan is to move away from a short term variable rate when collecting impact fees.
Along term averaged rate will create a fair and stable environment for the developers and the citizens
looking for growth caused infrastructure funding. I am proposing an impact feethat isbased off of an
average growth rate over the entire capital improvement report period. This rate is not subject to
adjustment for the duration of the planning window.
This plan would not adjust the methodology used to formulate the Impact Fee. We currently take a list
of capital improvement needs and apply them to a growth rate creating the amount of fee to ensure all
objectives of the plan are met. Under our current implementation processwe are reviewing and
adjusting the formula at varioustimes during the report period causing avariable rate. These
adjustments can potentially lead to significant fee increases or decreases. It also leads to the greatest
challenge of our fee methodology; increased fees occur when the economy is at itsworst.
If we create an average rate (red line) we create stability and fairness over the 25/ 30 year time frame.
Currently we have avariable rate (blue line) this meansthat the fee structure changes (potentially)
every two years. Our current technique creates the highest priced impact fee when the growth rate is
the lowest. This meanswe are adding stressto a building market which can slow economic rebound.
This method also causes inequality and true lack of fairness when you consider the fact that two
identical buildings could have significantly different impact fee costs depending on when they are built
due to the variable method we currently have in place. We can achieve the same incoming impact fee
revenue using an averaged rate.
7
6
5
4
3
2
1
0
1 2 3 4 5 6 7 8 9101112131415161718192021222324252627282930
(Graph used for illustration purposesonly, data is not accurate)
Higher Growth Rate
(Lower Impact Fee)
Variable Growth Fate
Averaged Growth Rate
Lower Growth Rate
(Higher Impact Fee)
The Role of the Impact Fee Committee under this plan
By law the committee will meet to review how much money has been collected from impact fees and
what it's being used for. They can make adjustments/ updatesto capital improvement priorities based
of growth trends as long asthey do not add any cost to the 25/ 30 year time period. Projects can be
added to the list as long as an equal amount of projects are removed. The capital improvement list must
remain balance neutral. On the 24t" or 29t" year of a 25/ 30 year impact fee plan they would do a full
study (consultant created engineering report and presentation) and make a recommendation for the
next 25/ 30 years.
Cost savi nqs
Under this plan there is potential that the 5%administrative fee (maximum allowed by state law) could
be reduced allowing for a reduction of the impact fee. You will also have reduced staff and engineering
oostsasyou are not paying for an engineering study every two years per impact fee. Thiswillhave
direct cost savings to the accounts these fees are paid from.
Loweri ng It he fee i n It he 30 year fee wi ndow
Business incentive: From time to time governing bodies may want to incentivize growth. Depending on
the legality of a plan an impact fee may be reduced as long as it is replaced by an alternative form of
funding. Example: Is it legal for impact fees to be reduced or eliminated in a-nFarea by replacing it with
-nFfundsto stimulate and incentivize growth that creates future tax increment?
Alternatives:
Rate i n creases.
Alternate funding ideas as requested at the last impact fee meeting
Potential issueswith implementing a fixed rate plan
Interest
Inflation
Growth Trends/ Project Prioritization
Early year funding availability
Large Project Funding
Developer Funded Projects/ Latecomers Agreements
Alternative/ Conjunction Funding Plan
This does not replace the impact fee. It is designed to work in conjunction with the above fee structure.
Funds collected through this method are not created through anew form of revenue generation. It is
strictly away for the City to allocate the taxes it will receive from an increased tax base caused by
growth outside of a TIFBoundary. Funds collected through this plan are allocated via these priorities:
1. Interest on bonds
2. Inflation
3. Capital Improvement
During the next study period interest and inflation can be worked into the impact fee. Thiswill allow
future funding to be applied to capital improvement projects only.
This plan creates a guideline for allocating a percentage of rg owth caused General Fund revenue. This
plan should only be implemented when the General Fund reserve cap hasbeen met. For the first 10
yearsall new construction not located in a-nFdistrict hasapercentageof its General Fund property tax
reallocated for the objectives listed above. This plan does not touch any assessment revenue. This plan
does not create anew account; all funds remain in the general fund. Anew line item under General
Fund will show funds available to allocate to this plan.
New Growth GF Capital Improvement Allocation
120% T -
100% i -
80%
60%
40%
20%
0%
2 3 4
5 6 7 8 9 10 11
Compounding Graph:
120%
100%
80%
60%
40%
20%
0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Tax Base Increase
Tax Base Increase
Tax Base Increase
Tax Base Increase
Tax Base Increase
Tax Base Increase
Tax Base Increase
- Tax Base Increase
Examples:
9ngle Family Home 10 Year Total amount currently allocated to General Fund: $4171.42
Future allocation: Capital Improvement = $1896.10 / General Fund = $2275.32
M ulti-Family Apartment Complex 10 Year Total amount currently allocated to General Fund: $4761.24
Future allocation: Capital Improvement = $2164.20 / General Fund = $2597.04
9-nall Business 10 Year Total amount currently allocated to General Fund: $36489.64
Future allocation: Capital Improvement = $16586.20 / General Fund=19903.44
Large Business 10 Year Total amount currently allocated to General Fund: $687,989.23
Future allocation: Capital Improvement = $312,699.65 / General Fund = $375,239.58
Large 5rale PUD 10 Year Total amount currently allocated to General Fund: $1,639,123.75
Future allocation: Capital Improvement = $745,056.25 / General Fund = $894,067.50
(Examples are based off on a 2012 tax bill that is multiplied for 10 years. This is done as we cannot speculate changes up or
down in tax rates for the future.)
Please See Attached Table
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