Council reviews impact fee methodology
By Tara DeRock Mahoney
Senior Staff Writer
Madison City Council members held a work session with impact fee consultant Bill Ross Monday to discuss the methodologies through which impact fees are calculated.
Impact fees are monies paid by developers and used to offset the cost of community infrastructure such as fire and police services, roads, sewer services, and parks.
“Without impact fees, the existing tax base would pay about 68 percent of the cost of future projects,” said Ross.
“With impact fees, the existing tax base would pay about eight percent of the cost [if the maximum impact fees were charged.] You’re shifting the cost burden to future development.”
The city has not yet chosen to enact an impact fee ordinance, which would have to be approved by the state; but the council is going through the steps necessary to enact one should it make that decision later this year.
Ross went over some of the court-approved calculations for impact fees for the council’s benefit.
Impact fee costs tend to be expressed in terms of cost per square foot, said Ross, so that developers can easily calculate the fees due for a particular project. For example, if impact fees for general light industrial developers are calculated to be $1.65 per square foot, the developer can simply multiply that factor by its square footage and understand its total impact fee bill.
Collected fees are placed in interest-bearing accounts to be held until the project in question is built. Sometimes impact fees can be used to retroactively pay for services that were built before the arrival of a population; for example, the city’s new water reclamation facility has excess capacity that is expected to one day serve new growth within the city. The cost of that excess capacity could conceivably be offset by impact fees.
Impact fee calculations vary, but are often established by taking the size of a needed facility and dividing that number by the total served population, and thus arriving at a per-person cost of services.
The city has some leeway to adjust its so-called Capital Improvements Element, or CIE, over time, as projects and populations change.
“Your projects will almost certainly change in your CIE over time,” said Ross. “Your timelines will change.”
The city council will continue to discuss impact fees this fall; it will also hear further recommendations from its Impact Fee Committee before ultimately deciding whether or not to enact an impact fee ordinance for the city.