In the winter of 1966, the city of Chicago was hit by a blizzard of unbelievable proportions -- three feet of snow fell in two days. The city was paralyzed. Roads crews tried to dig out so people could get to work. It took days. My husband and I lived there at the time because he was attending Northwestern University. We vowed when he graduated that if he had a job offer in the South, we would take it. He had three in Chicago and one in the South from The Miami Herald which had begun to recruit talented young journalists in the North, but particularly the Midwest. We moved to Key West and became part of the phenomenon known as the drain from the Rust Belt. We had an impact on the city. We needed streets to drive on, police protection, library facilities, firefighting facilities, water and sewage treatment, a local hospital. They were already there for us to use. No one charged us to use these facilities for moving to the city. That was twenty-nine years ago. Because Florida was experiencing such waves of immigrants, particularly retirees, a movement began about fifteen years ago that questioned whether that state and others in similar positions shouldn't start asking new residents to the an area to pay a so-called "entry fee," known as an impact development fee because it was levied on the developers who built the homes and apartments in which the newcomers would live. Jurisdiction after jurisdiction adopted the concept.
I lived in Florida eighteen years, many years before environmentalists began to turn to the impact fee. I lived in Broward County, one of the fastest growing areas in the United States. For three of those years, at the beginning of my journalism career, I developed my reporting job into an environmental writing speciality, where I got to observe and report on the tremendous problems that were being caused by this growth in the county. A citizens' group concerned with the same problems organized and was able to make their efforts at finding solutions known because of publicity they received in the media. It has always been my belief that it is the responsibility of the media to publicize the efforts of citizen groups who are pushing for solutions to a community's problems.
I quit work to raise our two daughters, but that did not allow me to escape from the problems of rapid population growth. Traffic jams made the area almost immobile at certain times of the days. A humor columnist I worked with at The Miami News, John Keasler, who just died recently, wrote a tremendously funny book about Florida called Surrounded on Three Sides. He wasn't talking about Broward County--you were always surrounded on four sides by other cars. The educators felt the problem of growth, also. The school board brought in portables to make room for the onslaught of students. School bus trips had to begin at 7:15 a.m. in the morning so high school students could be brought to school. Then the bus drivers turned around and immediately began to pick up the elementary school children.
Ten years ago, I moved to Atlanta when my husband was hired by the newspaper. It was like deja-vu. I was beginning to live the last eighteen years of my life all over again. It felt like a nightmare to me. My children were college age and I wanted an area with stability. The same growth explosion that hit Florida thirty years ago was impacting the Atlanta region. Gwinnett County was the fastest growing county in the region at one time, but it seemed that everywhere there was available land, someone had a use for it. The area was experiencing prosperity but at what price? I decided to work on this master's degree in urban studies at Georgia State University. Part of the curriculum involves doing a practicum and because statistics just could not be found for a thesis I wanted to do, I became interested in a growth control I had discovered in my reading called "impact development fees." That is the reason for this paper. It examines what the historical background of the fees were and the Atlanta metropolitan area experience with them. You can draw your own conclusion on whether they are worthwhile from the final part of this paper. The wealth of trees and rolling hills make this one of the most beautiful environments in the country. Recent construction around my home in the Perimeter Mall area has convinced me still more tools are needed to deal with the impact of growth in Atlanta.
This paper would not have been possible without the encouragement and strong editing of Dr. Harvey Newman and Dr. Barbara Ray. I thank them for their time and particularly their patience. Enjoyable prose it is not. The Georgia State University Law Library provided a wealth of information about the legal background. I also thank the many busy government officials who took time to comment and explain. My husband and children were tremendously curious about each step and that was a boost.
My drive to the Perimeter Mall near my home used to be past beautiful stands of pines.
Now the land is scraped raw in many areas to make room for satellite shopping malls.
Surely the urban affairs experts, architects and planners at Georgia State and
Georgia Tech could be asked how to design to save the trees. It is clear that more than
impact fees are needed, but read and see what they are accomplishing now.
Development Impact Fee -- a monetary charge collected from a property owner or developer to pay for the effects of development on road, water and sewer service, fire protection, school, and open space.
For the past several decades, Americans have left cold Northern homes in
unprecedented numbers and moved South in search of a warmer climate. In doing so,
they have created urban sprawl that has caused dawn-to-dusk traffic jams, strained
utility service, fire protection, and school districts and turned open green space into
downtrodden grassless parks. Oldtimers began to resent newcomers. They began
to look for ways to make the newcomers pay for their impact on the existing services.
One legal technique imposed through city and county ordinances was the "development
impact fee" in which developers and owners paid so much per unit to offset the impact of
the new development. This paper will explore the context of the problems which made them
necessary, the historical background of the fees, the forecast for the future, the legal
climate shaping the fees, how to draft ordinances, and Atlanta area impact fees.
John Johnston, in an article in Cornell Law Quarterly, enumerated the ramifications of the population movements: Urban population of the United States, as measured by decennial census, did not surpass total rural population until 1920. By 1960, urban residents comprised almost 70 per cent of total population. It has been estimated by the year 2000, 80 per cent of America's population will be concentrated in metropolitan areas. 1
Johnston notes that the "flight to the suburbs" has caused the pattern of residential development known as "sprawl." He draws on a report by the U.S. Department of Housing and Urban Development to outline the consequences: As the flight to the suburbs and to outlying areas gathered speed, much of the development took place in long vertical strips along highways. Often, desirable nearby land was skipped over in a leapfrogging operation and homes were built on cheaper outlying land, complete with septic tanks and wells which functioned satisfactorily only until density grew too great. Before long, tanks and wells were replaced at considerable expense by sewer lines, which would themselves have been cheaper if installed in the first place.2
The HUD report puts its finger on what was becoming apparent: Urban sprawl costs money because there is no planning involved to bring about economies of scale: The prevailing pattern in many localities of providing only single-family houses on relatively large lots contributed to the rapid consumption of land. This added both to the cost of the land and also to the cost of installing streets and sidewalks and water and sewer lines.3
The need for planning was apparent. Some order had to be brought to the sprawl. Some way had to be found to pay for the cost of facilities to accommodate those who were moving in. Officials wrestled with the problem and tried several alternatives which will be discussed later. The sprawl, too, was more likely to happen in the more desirable areas of the country in which to live -- namely the South, especially Florida, and the West, especially California. That meant that officials in those jurisdictions had to deal with the problems first. Consequently, they were the first to draft legislation and then have it contested in court where the precedents were set for the rest of the country. The HUD report also touches on more costs of unplanned sprawl: (Economic and esthetic values and civic amenities) may also be destroyed by the uneconomic and needless separation of such (land) uses giving rise to monotony; the absence of community facilities; and excessive travel to work, to shopping, and to places of recreation. 4
As urbanization took hold of the country in the last half-century, governmental regulators began to look for a way to pay for the resulting costs. The most prevalent were zoning, special assessments, and subdivision control regulations. The last two were precedents for the development impact fee. It is necessary to understand the legal underpinnings for them before understanding the legal rationale for impact fees.
Johnston, in the Cornell Law Quarterly after analyzing the "voluntariness," "privilege"
and "police power" rationales used to justify subdivision control exactions, decides that
the "police power" rationale is the most appropriate. Because imposition of such
exactions cuts into their profit margin, developers have often decided to fight their
legality. Arguments they use in court are deprivation of use of their property without
due process or a taking of private property for public use without due process.
The law has come a long way in the 78 years when this issue has been litigated. In
1917, in a case called Tilden v. Massieon 5 , the court ruled:
In the absence of any statute on the subject, the owner of the land might subdivide
it in any way he saw fit, having regard only to his own wishes and without regard
to public convenience."6
Forty-five years later, the pendulum had swung in the opposite direction with a court in Wisconsin deciding:
Thus, the business of subdividing is one affected with a public interest and is
subject to reasonable regulation to protect this interest.7
In the half-century between the two extremes in judicial thinking, several significant cases were decided to cause the evolution in subdivision regulation, Johnston says in his article. Over that half-century, subdivision plat approval became integrated with community planning and that provided the key to attaching restrictions which allowed communities to find a way to get dedication of land for roads and utilities and money for services as a condition to getting permits to build. Such restrictions depend on two variables: the scope of the state enabling act and the degree to which state courts are willing to supervise official action.8 Along with the transition in goals of subdivision control has been progress in the basis on which it was enacted: "volunteerism" to "privilege" to the police power. In the volunteerism" method, owners offer a plat for recording showing new streets. This is an offer of dedication. Acceptance by the governing body then means acceptance of how the subdivision has been done. In effect, a deal has been struck: dedication of streets in return for building approval. While it is called voluntary, there is more of an aspect of compulsion than volunteerism. But the Supreme Court of Michigan has found fit to rule that "in theory at least, the owner of a subdivision voluntarily dedicates sufficient land for streets in return for the advantage and privilege of having his plat recorded."9 Johnston says the courts do so so that uncompensated dedication for public use can be upheld.10 While the developers and government officials alike acknowledge the "volunteerism" argument is a sham and courts have upheld that argument, as a practical matter, it has been accepted as a way of doing business. "...municipalities clearly occupy a strong tactical position to require such dedication prior to plat approval Johnston writes.11 The morality of these legal tactics can be debated. And their legality has been and is being questioned in the courts. But the fact remains that the governmental jurisdictions were faced with the problems created by growth and had to find some way to pay for the huge costs in improvements that had to be made. Sometimes situations cause the law to evolve and morality takes on different tones. Developers cave in to the pressure to dedicate land because lawsuits are expensive, long court battles cut into the ability to get a project finished quickly and they fear punitive action on other projects. When the disputes have gone to court, Johnston points out, "Some courts have accepted the argument that plat recordation is a privilege rather than a right and hence, that reasonable conditions may be placed upon the grant of the privilege."12 Courts over the years have sometimes felt more comfortable invoking the rationale of police power as the basis of subdivision control. Police power stems from the duty of a government to pass laws to protect the health, public safety and welfare of its residents. Subdivision exactions are an outgrowth of that rationale where developers donate land or other items. The only catch has been that state courts have been reluctant to uphold subdivision control based on police power when there has been no authorization, usually an enabling act, Johnston says.13 Of great importance is the test of reasonableness, also: The imposition of regulations as a condition precedent to the subdivision of lands and the recording of plats thereof is not a violation of the constitutional requirement of uniformity of taxation or tantamount to the taking of private property for public use without just compensation.14
"Thus, if the municipality can demonstrate that its assessment of financial burdens
against subdividers is rational, impartial, and conducive to fulfillment of authorized planning objectives, its action need be invalidated only in those extreme and presumably rare cases where the burden of compliance is sufficiently great to deter the owner from proceeding with his planned development." says Johnston.15
"The ability of a defective environment to cripple or maim its inhabitants may not be so
dramatic and obvious as that of automobiles and other inherently dangerous
instrumentalities, but it is no less real."16 Standards are necessary to the imposition of the exactions. "...state and local officials (must) allocate sufficient resources to accomplish the formulation of defensible subdivision standards."17 Sympathetic judges can go a long way to making the problem of handling growth easier. If the governmental techniques are ruled legal, then a large part of the problem of raising money for improvements is solved.
It is important to understand the judicial underpinning for development exactions because they form the basis for development impact fees. In a report for the city of Atlanta, a consulting firm reviewed the two categories that evolved in four decades of court litigation over the exaction issue. They are classified as the broad view and the narrow view. The broad view was taken in Ayres v. City of Los Angeles 34 Cal. 2d 31, 207p.2d 1,5 (1949). There the California Supreme Court decided that even though a landowner would not get access to a major street when he subdivided he had to dedicate right-of-way anyway. The court wrote: In a growing metropolitan area, each additional subdivision adds to the traffic burden. It is no defense to the conditions imposed in a subdivision map proceeding that their fulfillment will incidentally also benefit the city as a whole.18
Thus. it can be seen that the case permitted a very general connection between the need for
or benefit of a facility and the land on which the burden fell. Another significant case which
fell under such a broad view was one which upheld park dedication requirements--Jordan
v. Village of Menomonee Falls, 28 Wis. 2d 608, 137 NW2d 442 (Wis. 1965). By contrast,
two early cases took a much narrower view of the issue in which courts applied what has
come to be called the "specific and uniquely attributable " line of reasoning. The Illinois
Court wrote that "if the burden cast upon the subdivider is specifically and uniquely attri-
table to his activity...(he must dedicate); if not it is forbidden and amounts to a confiscation of
private property."19 The Montana Supreme Court also adopted a strict interpretation in 1964. But it also upheld the dedication requirement. In a similar case, Connecticut adopted the rule. The case involved a park dedication and the court found that the need for a park
was uniquely attributable to the subdivision.20 Consultants point out that the "specifically
and uniquely attributable" "probably does not permit the pro-ration of costs of a facility that relates to several subdivisions." 21
This interpretation of the legal basis for impact laws seems particularly logical. Why should a developer pay for part of the costs of a sewage treatment plant or a park if other subdivision residents were going to use them? If a law seems logical, it would seem likely a developer would be more likely to comply because he would see all of his competi tors treated the same. Thus their costs are all similar and no one gains a competitive advantage.
Recent legal developments have seen a melding of the general connection test and
the "specifically and uniquely attributable" test. The first linkage came in the case of Nollan
v. California. That case involved a California couple who wanted to tear down their beach
bungalow and build a much larger home. The California Coastal Commission needed to
approve the request. The Commission approved the request with the condition that
the Nollans dedicate a trail easement across their beach to provide a link in a trail system
leading to a public beach. The Supreme Court ruled for the Nollans, citing the narrow,
conservative cases mentioned above. The Court adopted a "rational nexus" test in the case
but did not elaborate. Since the case was decided in 1987, some trends have emerged on
what "rational nexus" means. According to the Atlanta consultants who wrote the city's
report on impact fees, they are:
1. The requirement is more narrow than the old California rule in Ayres.
2. It does not appear to be so narrow as some of the early cases that actually
held that if the need for improvements was no "specifically and uniquely attributable" to a single subdivision, then the dedication or fee was invalid;
3. The Florida rules, or something very similar, are key elements in a defensible
system.
4. Careful technical studies to determine the projected impacts of different types of
development of different systems are crucial to establishing the 'rational nexus.'
or connection between the proposed development and the imposed fee.22
Post-Nollan case law has upheld fee systems in general and currently many jurisdictions are passing enabling legislation for impact fees. Georgia passed such enabling
legislation in 1989. Other states which also have done so are Arizona, California, Illinois,
Maine, Nevada, Oregon, Texas, Vermont, Virginia and Washington. After the Georgia enabling legislation was passed, Gwinnett and Fulton Counties, the City of Atlanta, Roswell and Alpharetta all passed impact fee ordinances. Now, impact fee ordinances are beginning to undergo the same court scrutiny that developer exactions have undergone for more
than a half-century. The enabling legislation in Georgia is sound, say consultants.
The State's Development Impact Fee Act reflects impact fee practices that have evolved from nearly five decades of experience with impact fees and related exactions. It is entirely consistent with the rules that have evolved from litigation in the field, most of which has occurred in the last two decades.23
Now that the pendulum has swung to the use of impact fees to fund needed infrastructure caused by new growth, examination by the courts of the technique has begun.
As early as 1981, scholars had begun to view impact fees as a way to answer the local
government capital funding dilemma. Julian Juergensmeyer and Robert Black wrote on the topic in the Summer 1981 Florida State University Law Review. "...local governments have persisted in their attempts to shift the costs of growth".24
When the exaction process began not to work, governments began to exact "in lieu" fees which became a precursor of the impact fee. Juergensmeyer and Blake explain it in this way: "The in lieu fee solves this problem by substituting a money payment for dedication when the local government determines the latter is not feasible."25 show why the impact fee is a "much more flexible cost shifting tool." They say that because: In lieu fees are predicated on dedication requirements, they can only be used where required dedications can be appropriately utilized. In the case of sewer and water facilities are not an appropriate device to shift a portion of the capital costs to the development because one facility (and parcel of land) can service a very wide area and there is little need for additional land in extending these services.26
Other differences between impact fees and exactions are:
1. Impact fees usually collected at time building permits issued rather than when the land is platted.
2. Impact fees calculated on number of living units or bedrooms, not
percentage of acreage or its comparable value.
3. Impact fees collected for construction of needed facilities outside development rather than on its grounds.27 These differences give impact fees several advantages over in lieu fees, the authors reiterate. Some of them are:
1. Impact fees can be used to finance facilities and capital expenses which
aren't funded by dedication and in lieu funds. In addition, they can be
more easily applied to funds outside the development.
2. They can be applied to those developments platted before dedications or in lieu fees, thus providing a way for governments to impose on new residents their fair share of capital costs. 3. They can be used to extract funds from those developments which generally use little land or to which subdivision regulations don't apply such as condominimum, apartments and commercial buildings. 4. Impact fees can be collected closer to the point of growth, that is when building permits are issued, rather than at platting, which is earlier in the process.28
Thus, it is easy to see why a jurisdiction would opt for impact fees. They tend to keep developers happier because they are collected closer to the point of actual building. That lessens the possibility of lawsuits, meaning infrastructure improvements
are not held up by court suits.
Even though impact fees have had their advantages, they are not without legal challenges just like dedications. Juergensmeyer and Blake review the constitutional challenges to the fees. They come in two forms: 1. First, challengers will argue that the fees are not authorized by state statute or constitution. 2. If a state enabling authority is found, the local fee ordinance is challenged as an unreasonable regulation exceeding the state's police power or it is attacked as a disguised tax which violates state constitutional prohibitions.29
The first reaction by the courts to such payments was negative, but then they upheld them as "proper and reasonable exercise of police power."30 Juergensmeyer and Blake review the early restrictions courts applied to impact fees: The first landmark decision was Pioneer Trust and Savings Bank v. Village of Mount Prospect. Here a developer challenged an ordinance requiring subdividers to dedicate one acre per sixty residential lots for schools, parks and other public purposes. In this case, also, the court used the "specifically and uniquely attributable" rule of earlier decisions in dedication cases to determine whether the required dedications or money payments for recreational or educational purposes represented a valid exercise of the police power. Illinois Supreme Court justices zeroed in on the need for new facilities. They put the burden of proof on the village to prove that the demand for additional facilities was "specifically and uniquely attributable" to the new subdivision. If that couldn't be proved then the requirements were an unreasonable power not authorized by the police power. In this case, thus, where the schools had become overcrowded because of total development, not just from the children in the developers' subdivision, the subdivider couldn't be compelled to help fund new facilities which his activity would necessitate.
This rationale is a narrow one, but one which seems fair. It protects developers from a jurisdiction being unfair in its apportionment of expenses to someone whose development doesn't affect that entire particular area.
A second restrictive test of impact fees was handed down by the New York Court in Gulest Associated, Inc. v. Town of Newburgh. In that case, developers challenged an ordinance which charged in lieu fees for recreational purposes. The court held that the fee requirement was unreasonable regulation tantamount to an "unconstitutional taking because the funds collected were not used solely for the benefit of the residents of the particular subdivision charged, but rather could be used in any section of town for any recreational purposes."31 Thus, the Gulest direct benefit test required that money collected from mandatory payments for capital expenditures be "specifically" tied to a benefit directly conferred on the homeowners in the subdivision that was charged, the authors say. If money was used to buy a park outside the subdivision, the direct benefit test was not met and the ordinance was not valid.
This, too, seems to be a fair way to write the law. Developers would not have to pay for improvements in other subdivisions and consequently the ultimate buyer, to whom the costs would be passed on, would not have to pay either.
As the years have progressed, courts have turned away from the two restrictive
tests outlined above in Pioneer Trust and Gulest. In a case known as Jordan v. Village
of Menomonee Falls, the Wisconsin Supreme Court handed down a two-part "rational
nexus" test of reasonableness for judging the validity of extradevelopment impact and
in lieu fees, the scholars write.32 "The dual 'rational nexus' requirements deducible from Jordan provide a balanced, judicially consistent and realistic test of money payment requirements for extradevelopment capital funding. This test properly focuses on and
balances the legitimate interests of the developer and the general welfare concerns and
power of the municipality," the authors conclude. "In addition, the 'sufficiently
attributable' and 'sufficient benefit' proof requirements can be accurately and
realistically met through the use of modern cost accounting techniques. Finally, once
these 'rational nexi' are established, the burden to disprove the reasonableness of the
payment requirement shifts to the developer...," the authors conclude.33
While impact fees are used primarily to pay for roads, utilities and park land, there is still another dimension for which they are used which is fascinating. That is for housing linkages. The concept evolved in the 1980s, Jane E. Schukoske writes.34 It was seen as a way to "shift some of the burden of producing affordable rental housing away from government onto private developers."35 By definition, "housing linkage programs require or offer inducements to reproduce affordable housing or to pay a sum for development of affordable housing into housing trust funds."36 There are two reasons behind such programs: 1. Private developers who stand to benefit from nonresidential development when development attracts employees should assume part of the housing burden. 2. Land is an exhaustible resource therefore private developers must work with government to insure enough land is dedicated for housing. The way the linkage works is that the linkage is an extension of the use of exactions or impact fees to pay for "social infrastructure", such as schools and libraries, as well as housing now.
The programs have seven characteristics: 1. Are they mandatory or voluntary? 2. What type of development triggers the obligation? 3. What target group will live in the housing? 4. What formula is used to calculate the housing impact? 5. What is the housing linkage fee? 6. What are the mechanics of the program? 7. How is the program administered? Because they are controversial, developers have sued programs claiming they lack authorization, violate constitutional guarantees of equal protection or substantive due process or constitute unconstitutional takings.37 However, courts examined the issues and generally upheld linkage programs.
Schukoske outlines the process used to analyze legality: 1. The locality's authority to pass a linkage ordinance under its police or taxing power is reviewed. 2. In considering an equal protection challenge, a court looks at whether the lawmakers could have "rationally believed that the design of the ordinance would further the stated legitimate governmental interest. 3. To decide whether a linkage ordinance violates the due process rights of developers, the court looks at the connection drawn between requirements imposed on a developer and the permissible state objective. 4. Finally, a court examines whether the ordinance is a taking of property and if so, whether it is taken for public use and whether it provides for just compensation.38 In deciding one case on the last argument, the Ninth Circuit Court of Appeals ruled, "A purely financial exaction...will not constitute a taking if it is made for the purpose of paying a social cost that is reasonably related to the activity against which the fees is assessed."39 Author Schukoske concludes that if governments are careful in drafting their linkage ordinances by documenting their planning process carefully, they stand a better chance of persuading a court to "defer to local judgment and conscience."40
Linkage programs certainly are a novel advancement of the idea of impact fees.
But, it can be seen that it is logical to demand a developer to pay part of the cost of housing
the new employees his business will attract. After all, he is the one who will profit from their labor, so it seems just and moral to ask him to pay part of the housing costs.
Looking to the state level here, the Georgia State Legislature passed the state's first Development Impact Fee Act in 1990. The act was added as Chapter 71: Development Impact Fees to the Title 36 of the Official Code of Georgia Annotated. The act basically sets minimum standards under which cities and counties enact and carry out impact fees. The state act allows impact fees for be collected in seven categories:
1. Water supply, treatment and distribution;
2. Wastewater collection, treatment and disposal;
3. Roads, streets, and bridges;
4. Stormwater collection, retention detention, treatment and disposal facilities,
flood control facilities, and bank and shore protection and enhancement
improvements.
5. Parks, open space, recreation areas and related facilities;
6. Public safety facilities (police, fire, emergency medical and rescue;
7. Libraries and related facilities.41
In a report to the city of Roswell, Dr. Arthur C. Nelson of the Georgia Institute
of Technology notes: "Not all capital improvements in these categories are eligible; only
projects or portions of projects which increase service capacity or extend distribution
systems. Normal operation and replacement costs are not eligible. Equipment with a useful life of less than ten years may not be financed with impact fees"42
Here is a synopsis of the main requirements of the legislation. They are paraphrased from the original enabling legislation.
Legislative Intent -- Legislators passed the law because they wanted to promote "orderly growth and development,"43 to make sure impact fee ordinances were uniform, and to see that each developer paid his fair share of the cost of new public facilities.
Definitions-- This section defines the terms used in relation to this law. The two most important are "project improvements" and "system improvements." Project improvements apply only to those which serve their own occupants exclusively. System improvements mean "capital improvements that are public facilities and are designed to provide service to the community at large." 44
Imposition of Development Impact Fees -- Cities and counties are given authority to impose fees if they have adopted a comprehensive plan which includes a capital improvements element. Projects already underway are grandfathered in without the obligation to pay impact fees.45
Calculation of Fees -- This limits the governmental unit to imposing only fees which are a developer's proportionate share of system costs. The section also requires printed fee schedules and provision for certification and credits for previous work. Exceptions which may be granted are also spelled out.
Development Impact Fee Advisory Committee -- Requirements for committee membership are spelled out. Forty per cent of the committee must come from the development community.46
Hearings on Proposed Fee Ordinance -- Two public hearings must be held at least two weeks apart.
Credit for Present Value of Construction -- Developers can get credit for system improvements, but not project improvements.
Deposit and Expenditure of Fees; Annual Report -- Impact fees have to be put in interest-bearing accounts and records must be kept on the service areas from which they were collected and system improvements. Strict controls are placed on how the money is spent and the city or county must report annually on amounts collected and how they were used.47
Refunds -- A developer can collect a refund if service capacity is not available or if he hasn't started construction for six years. 48
Appeal of Fee Determination; Arbitration -- Cities and counties must set up a procedure for appealing the fee assessment and may provide for binding arbitration of any disputes.49
Intergovernmental Agreements -- Governments who are both affected by a development may agree to develop joint plans for improvements and spending of fees.50
Construction of Reasonable Improvements, Hook-up Fees, Water Authorities' Role -- This allows developers to be also ordered to make "reasonable" project improvements and for water authorities to collect impact fees as long as developers get credit for this when they apply for a building permit.51
After the state enabling legislation was passed, five local governments in the
Atlanta Metropolitan Area passed impact fee ordinances. They were Roswell, Alpharetta,
Atlanta, Gwinnett County and Fulton County. Here is a summary of what each
governmental unit decided to do, along with background information.
Billing itself as Historic Roswell, the 75,000-resident city combines a respect for the past
with an optimism for the future that makes it one of the most desirable cities in the
metropolitan area in which to live. The Roswell Historic Preservation Commission cites
the historic attractions.52 Chief among them is Bulloch Hall, antebellum home of President Theodore Roosevelt's mother, Mittie Bulloch. Mittie's other son was the father of
Eleanor Roosevelt, who would visit the Hall when she and her husband, Franklin Roosevelt
came to Warm Springs, Georgia. In addition to exploring indoor historic attractions, Roswell has a wealth of outdoor opportunities, the most notable being parts of the Chattahoochee National Recreation Area. Its 4.7-mile Vickery Creek Loop can be accessed starting at the City Hall complex and leading to the creek portion of the hike. A county park along the river provides numerous opportunities for recreation, including canoeing, boating, crewing, fishing and jet-ski boating. Cultural attractions include the Georgia Ensemble Theatre and the Village Playhouses of Roswell, plus free concerts on the Roswell Square from May through October. All these amenities make Roswell a desirable place to live and consequently, planning officials worked to draw up an impact fee ordinance to alleviate the burdens new residents were placing on the city. Summarized below is the result of that work. Officials analyzed whether development impact fees were needed for fire facilities, library land, parks and recreation facilities, police facilities and water facilities.
Dr. Nelson prepared the technical report 53 for Roswell city commissioners to consider when deciding which types of impact fees to enact. The first part of the it analyzes the impact on fire facilities. It also notes that the city is presently served by five stations and
15 bays for a 1990 population of 47,923. Forecasting a population of almost twice that in 2010 or 75,000, the technical report says eight more bays or 22 will be needed then. And the report also warns that "new development will create the need for new facilities in which firefighters may be trained." The report breaks out how the facilities may be phased in:
| 1992 | (49,564) | 15 bays needed |
| 2000 | (64,337) | 19 bays needed |
| 2010 | 75,000 | 22 bays needed |
It then summarizes construction costs for the new facilities, including a training one serving both Roswell and Alpharetta. That figures out to be a total cost of $5,101,00. Of that a total of $3 million must be collected in impact fees. Other funds will come from General Revenue funds. To arrive at an impact fee for each category of fire service, the report assigned impact costs by major land use. Here is what the impact cost per land use worked out to be:
| Residential | |
| Single-family | $234.16 |
| Multiple-family | $166.61 |
| Non-residential | |
| Hotel-Motel | $72.91 |
| Offices | $240.60 |
| Retail | $145.82 |
| Industrial | $120.30 |
This cost is merely added to the cost of the new home or building, making Roswell a more expensive place to live, which in its own way could slow growth. Since 1993, the city has collected $251,261.03 from impact fees in this category, still a long way from the $3 million which must be collected in impact fees.
The next category to be examined was library land development impact. The
city council had decided that there would be no effort to recoup costs for library land
investment. However, Dr. Nelson made the following calculations which the
council could use if it changed its mind. The standard adopted was .30 square feet
per capita.
Here is the projection of needs to the year 2010:
| Year | Existing Space | Minimimum Required |
| 1990 | 21,799 sq. ft | 14,377 sq. ft. |
| 2000 | NA | 19,301 sq. ft. |
| 2010 | NA | 22,275 sq .ft. |
After analyzing the proportionate cost of the new library facility, the consultant figures
out that a recoupment-based impact fee if the council decides to enact one for libraries is:
Single-family $29.15
Multiple family unit $20.7455
However, as of now the city is collecting no impact fee for library facilities.
The third category to be considered for impact fees is parks and recreation
facilities. The estimated impact fee per single family home is $1,000.56 Because this is
so high, the council decided to make up funds from other sources. The city has collected $1,612,185.82 in impact fees in three years.
Dr. Nelson estimated that public safety facility needs are too great to
be collected from impact fees and the city will make them up from other sources.57
In its directions to the consultant, the city council said it wanted to ignore recoupment for past facilities. When this was done, it meant there is no impact fee for water facilities.58
While libraries, parks and recreation, public safety, and wastewater facilities
could certainly justify impact fees, the council's feeling must have been to spread them out.
The city uses a needs-based approach to develop transportation impact fees
because it meets the requirements of the Georgia impact law and because it provides
an impact fee system that is appropriate to the city of Roswell's needs. Here is the
schedule of fees that result in the various use categories:
| Single Family | $ 638 |
| Multiple Family | 362 |
| Retail | 1.81 |
| Retail 2 | 1.50 |
| Office Buildings | 1.21 |
| Office Park | .80 |
| Medical Office | 2.56 |
| Medical Office 2 | 2.57 |
| Light Industrial 2 | .30 |
| Fast Food | 822 |
| Gas Station | 3,922 |
| Hotel | 44,859 |
Thus, it can be seen that if the fire service and traffic impact fees are added together, they total $872.16 for a single family home. That additional cost may possibly make some families consider moving to another area to live. The total collected in impact fees is $1,181,113.53 in three years.
Ms. Susan Canon, planning and zoning administrator, said the impact fee
process calls for lengthy work with the developers and that their main problem is
not enough staff members to handle the workload. She said the city had been using
exactions before and that they had worked fine. The city only switched to impact
fees because of the passage of the state law. Of the $3 million collected since June
of 1993, $600,000 has been used on the park system.
Just to the north of Roswell is the affluent suburb of Alpharetta which has enacted
three impact development fee ordinances to help it cope with the costs of development.
In a brochure60 which the city publishes, the suburb calls itself the "urban village." Some
demographic figures give an idea of what kind of place Alpharetta is to live. The 21-square
mile city had a 1992 population of 14,012. The assessed valuation of permitted construction in 1992 was $140 million. Household size was approximately 2.46, with median household income of $44,335 in 1990. The median value of a house was $119,800, considerably above the Atlanta value of $92,300. Median age is 32 years. The city had a high educational level with 44 per cent of the residents in 1990 having a bachelor's degree or better. Cultural amenities include a library, several historic landmarks, and more than 150 shops in the regional North Point Mall with 1.3 million square feet.61
In an introduction to the capital improvement program, the city makes some
observations about itself. "Over the period 1980 to 2010, Alpharetta is expected to add
50,000 people and 22,000 homes," the report says. The pace of growth can be seen
from these figures: between 1980 and 1990, the city's population grew 315 per cent
from 3,128 to 13,002. Occupied dwelling units increased from 1,057 to 4,700, an increase
of 323 per cent. Employment grew from 1,614 to 13,500, an increase of 775 per cent.62
Because much land is vacant and will be developed, the city council enacted impact
development fee ordinances for parks and recreation, fire and roads. Here are details about each one:
The ordinance, passed November 16, l992, pretty well parallels the state
impact ordinance which was analyzed above. 63 The fee schedule adopted by the
ordinance is reproduced below:
| Single-family | $545.00 |
| Multi-family | 396.00 |
| Hotel, motel room | 8.00 |
| Business 1,000 sq.ft. | 14.00 |
The fire protection impact fee ordinance was passed earlier than the parks impact fee ordinance on March 30, 1992. Here is the schedule of impact fees enacted based on the assumption that in the next five years, the city will have to double its fire protection services:
Impact fees for retail/commercial, hotel/motel, industrial and general office range from $192 to $285 depending on rooms and square footage.64 Total collected so far is $1,176,841.
| Single-family | $264 | |
| Multi-family | $203 | |
Impact fees for retail/commercial, hotel/motel, industrial and general office range from $192 to $285 depending on rooms and square footage. Total collected so far is $1,176,841.
The traffic impact fee ordinance is patterned after the state ordinance just as are the
other two impact ordinances in Alpharetta. Adopted March 30, 1992, the ordinance sets
these fees for road impact, the most expensive of the ordinances:
Single family $1,132
Multifamily $1,123
Retail/commercial, hotel, industrial and general office range from $513 to $4,210, depending on square footage and number of rooms. 65
Total impact fees for a single family home are $2,249 which is another consideration a family buying a home has to take into account. They simply drive up the cost of housing. The total collected for roads up to the present is $1,531,180.
Richard Wittington, director of the Alpharetta program, says that collections are
a little bit hard to handle for impact fees but that development has not slowed down in the
city. He feels it is a more legitimate way to pay for facilities around the city. To date, a total of $3,498,016 has been collected from the program. Developers were a little hesitant when they had to come up with the fees at the beginning of the building process, he said, but that presents no problem now.
The final city to have enacted an impact development ordinance is Atlanta. The historical background, published in material by the Atlanta Chamber of Commerce makes it easy to understand the city's development to the present. The city began as the site for the southern end of the Western & Atlantic Railroad in 1837. Railroad workers worked and lived in the first buildings. The town was called Terminus until 1843 when it was incorporated as Marthasville. In 1845, the charter was changed to Atlanta, which some believe is a feminine version of Atlantis, part of the name of the railroad. In 20 years, the city became a manufacturing hub, but that was demolished by Gen. Sherman when he burned the city during the Civil War. Determined citizens rebuilt the city. Today, the city's symbol is the Phoenix, a legendary bird which rose from its own ashes 66 and which is now on the city seal.
A look at the demographics today shows why the city is still attractive to developers. The city enjoys a moderate climate with the average annual temperature 61.2, the January monthly mean 41.9, and the July mean 78.6. Average monthly rainfall is 4.23 inches. The city's population is 394,017 with the median age 31.8. An affluent city, the average after-tax income is $42,897 with 26.9 per cent of the population completing four or more years of college.
After extensive study the City of Atlanta passed its impact development ordinance covering new transportation, parks and recreation, fire protection, emergency medical services and police facilities. The ordinance became effective March 26, l993. Transportation impact fees vary from $987 for a single-family home to $2,416 for a 50,000 square foot office building. Fire/EMS impact fees vary from $97 for a nursing home to $133 for a hospital. The police impact fees range from $15 for a hotel/motel room to $38 for a hospital.
Again, the total impact fee cost for a single family home is $1,634, midway between Roswell and Alpharetta, which again may be a determining factor in what kind of residents are attracted to the city. Since Atlanta adopted its ordinance in 1993, the city has collected $3,650,903 in impact fees. The total is broken down in this way: Transportation $2,382,733; Police $86,338; Fire $279,783; Parks North $730,890; Parks South $71,891; Parks West $99,268.
Fernando Costa, director of the city's bureau of planning, says, "I think the
program had been generally positive. It's required considerable effort to enact the
system and administer it."
The 648,951 residents of Fulton County are attracted by the same amenities that attract developers to seek to fill in the open space with homes, apartments and commercial enterprises. Ninety-six per cent of the county is urban, four per cent rural. 67 Seventy-seven per cent of the residents live in family households. Mean age is 34.1, making for a relatively young county. Thirty-six per cent have a college degree. Average household income is $46,049 with median household income $29,997. 68 Average family income is high -- $55,620.67 The residents are well-educated and well-heeled and able to buy the services of developers.
The Fulton impact fee ordinance was passed Nov. 4, 1992. It provided for imposing impact fees on transportation facilities. The impact fee is figured cost per trip, trip generation factor, and total discount. Based on the various service areas, impact fees range from $29.39 to $63.28.68 Since the program began, the county has collected $1,569,526.54. The traffic impact fee for three road projects for a single family home totals $1,184.87. This is the second lowest impact fee for a single family home, but it could again be enough to deter a potential buyer particularly when you figure the developer will add to his actual costs. Since 1992, Fulton County has collected $1,569,526.
Christine Godfrey, an impact fee administrator, says that the fees collected
have enabled the county to develop a fair share of water and sewer facilities. She
said road impacts have been assessed since 1992 and she expects there may be a
change in the fee structure in that area.
Gwinnett County is located 30 miles northeast of downtown Atlanta. It covers 437 square miles and has a 1990 population of 356,500 with a population of 541,000 forecast for 2000 and 721,000 for 2010. These figures tell why the commission enacted a development impact fee ordinance in November of 1992. Average home price is $125,000 and the average household income $47,024 (median $44,341). Served by 63 public schools, the interest in education can be measured by the fact that at one time the county had the largest PTA enrollment in the country -- 60,000. The county offers the Gwinnett Civic and Cultural Center as a place to stage cultural events. The Gwinnett Chamber of Commerce enumerates the cultural offerings: the Red Oak Concert Series, Gwinnett Ballet Theatre and Pickneyville Arts Center.
Tourist attractions are the Atlanta Falcons Training Center, Road Atlanta, the Chattahoochee River, Vines Botanical Gardens, the Yellow River Wildlife Game Tour, and the Gwinnett Plantation Tour.69
The Gwinnett Commission enacted its impact fee ordinance November 30, 1992.
It applied to traffic impact and to water impact fees. As of May 1995, the commission
had decided not to implement the traffic impact portion. The water impact fees range from
$416 for a 3/4 inch meter to $31,893 for a 10-inch meter.70 The total collected for water impact fees in two-and-a-half years is $7,735,278. The total collected for wastewater impact fees is $12,291,546.
Now that an examination has been made of impact fees in the Atlanta Metropolitan Statistical Area, what conclusions can be drawn?
1. The jurisdictions generally thought of as the most desirable places to live are the ones who passed impact ordinances because of the pressures they felt from growth. Less desirable areas are still giving financial incentives to businesses and developers to locate in their jurisdiction.
2. Some jurisdictions are not feeling the same pressures of growth so have not passed an impact ordinance. DeKalb County studied one, but decided to take no action on it. These areas want to keep down the cost of development because they still want to attract growth.
3. There is competition between jurisdictions on what to charge as impact fees. This can be seen from the wide variation for fees charged for single-family homes in Roswell of $872.16 to $2,249 for a single-family in Alpharetta.
4. Cities and counties vary widely in what they charge impact fees for. Fulton County charges only for traffic impact whereas Alpharetta charges for fire protection, parks and recreation, and traffic impact.
5. Impact fee ordinances get a great deal of required directives from the state so they don't vary from jurisdiction to jurisdiction. The rules of the game stay the same.
6. Impact fees can be used for a variety of purposes depending on which problem or problems the city or county feels is most severe -- from traffic to emergency medical services.
7. More jurisdictions will pass impact fee ordinances when they begin to feel the pressures of growth that those who have them already have.
These are my conclusions. What do the experts who have studied the techhnique across the United States say?
8. Development fees can cause sales prices and rents to rise for existing as well as for new housing,71
9. Impact fees are too restrictive about what they may be spent on. Authors Snyder and Stegman believe governments should be able to change things around.72
10. Impact fees do not promote more efficient use of resources because no user fees are paid.73
11. Development fees seldom reflect the true public costs of providing different services in different areas of the community to different types of development.74
In the Atlanta Metropolitan Area, at least several jurisdictions have found
the technique comes in handy. If a comparison of the amounts collected is any measure of the pressures of growth felt, then Gwinnett County is the most hard-pressed financially to deal with growth. The county collected $7,736,278 in water impact fees and $12,291,546 in wastewater impact fees alone, far more than any other jurisdiction. Atlanta collected almost $3.8 million. Alpharetta was third with $1,531,180 for roads, $1,176,841 for fire, and $789,995 for parks and recreation for a total of $3,487,016. Roswell took in $3,138,717.01. Fulton was last with $1,569,526.54. As other jurisdictions in the Atlanta begin to feel the pressures of growth more and more, they will most likely use the impact fee as a
means of paying for that growth.
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