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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 Ol Ln r` m r` N N O O 1 O oo o Ln r, m O O N If! Ln o ti Ln r` N 0 a c oo N oo m Ln rn � o r. N Ln Ln 0 N /} r` c t/T r` W m a m o m O Ln r O W F N N o O O c-I m Ln Ln W m a cm o m O Ln r O W m Ln rn � o r. 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