FOR IMMEDIATE RELEASE: Dec. 13, 2017
The City Auditor’s Office released an audit of the arterial street impact fee program. The purpose of the fee is to provide an equitable method to help pay for additional arterial street capacity needed to accommodate new development. The audit focused on whether the city would benefit from increasing arterial street impact fees in accordance with Chapter 39 of the Code of Ordinances.
The audit concluded that raising fees alone will not eliminate the structural imbalance created by the arterial street impact fee ordinance; fees need to be increased in conjunction with other changes to the arterial street impact fee ordinance. Although the city hired a consultant to do impact fee studies, the ordinance discounted the impact fee to half of the consultant’s maximum proposed fee, resulting in a funding gap. Fees have not been increased since they became effective in 2002 while construction costs have increased by 58 percent.
Ordinances authorize construction credits to developers based on the difference between the cost of the developer provided improvement and the impact fee. The audit determined, however, that the method used to calculate credits (using 100 percent of construction costs but discounting the impact fee to 50 percent) exacerbates the program’s structural imbalance. The ordinance also allowed developers to receive credit for improvements done up to 25 years before the ordinance was effective. Under the ordinance, if the city increased the impact fee schedules to account for inflation, it would have to adjust existing construction credits. If that happened, credits that developers could use to pay future impact fees would increase from $13 million to $21 million.
The audit includes recommendations to modify the Code of Ordinances in order to make the arterial street impact fee program sustainable. The mayor and management agreed with the recommendations.
View the complete report online at the City Auditor’s website.
For more information, contact Douglas Jones, City Auditor, at 816-513-3300.