HomeMy WebLinkAbout114-06 RESOLUTION•
RESOLUTION NO. 114-06
A RESOLUTION TO ACCEPT AND ADOPT THE MAY
2006 ROAD IMPACT FEE STUDY BY DUNCAN
ASSOCIATES
WHEREAS, the City hired Duncan Associates to update the Road Impact Fee
Study (first completed in 2004) based upon the estimates street bond program costs as
proposed in 2006; and
WHEREAS, the impact fees for roads within the Study are "consumption based"
which charges new development the cost of replacing the road capacity the new
development consumes of the major roadway system; and
WHEREAS, the City Council must determine whether or not to include the cost
of right of way acquisition within the road impact fee.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby
accepts and adopts the May 2006 Road Impact Fee Study by Duncan Associates attached
as Exhibit "A".
Section 2: That the City Council of the City of Fayetteville, Arkansas hereby
determines that if Road Impact Fees are enacted they will not include right of way
acquisition costs. `�,G� • • •� • Vis,,
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PASSED and APPROVED this 20th day of June, 2006.
By:
..4,
DAN COODY, Mayor,
SONDRA SMITH, City Clerk
Tim Conklin
Submitted By
City of Fayetteville
Staff Review Form
City Council Agenda Items
or
Contracts
6/20/2006
City Council Meeting Date
Planning and Development Mgt
Division
Action Required:
"265
//et
kd Imetrt G c.
Operations
Department
Adoption of the Road Impact Fee Study, May 2006, as prepared by Duncan Associates.
Cost of this request
Account Number
Project Number
Budgeted Item
Category / Project Budget
Funds Used to Date
Remaining Balance
Budget Adjustment Attached
Program Category / Project Name
Program / Project Category Name
Fund Name
Department irec or Date
City Attorne
FinaJ7(at4etilA
Internal Service Director
Mayor
Comments:
Date
44Dale/0(0
Previous Ordinance or Resolution #
Original Contract Date:
Original Contract Number:
Received in City Clerk's Office
Received in Mayor's Office /ENTENED
Wad
Vat
City Council Meeting of June 20, 2006
Agenda Item Number
CITY COUNCIL AGENDA MEMO
TO:
FROM:
DATE:
SUBJECT:
Mayor Dan Coody
Fayetteville City Council
Tim Conklin, Planning and Development Management Director
June 2, 2006
Adoption of the Road Impact Fee Study, May 2006, as prepared by
Duncan Associates
RECOMMENDATION
Staff recommends adoption of the road impact fee study, May 2006, as prepared by
Duncan Associates.
BACKGROUND
Duncan Associates has completed the update to the road impact fee study based on the
estimated street bond program costs as proposed in 2006 (please see attached). The road
projects that expand capacity and are included in the proposed bond program were
utilized to calculate the fees. The fees are calculated with and without right-of-way costs.
Table 1
ROAD IMPACT FEE SUMMARY
Land Use Unit Without ROW With ROW
Single -Family Detached
Multi -Family
Mobile Home
Retail
Office
Industrial
Dwelling
Dwelling
Dwelling
1,000 sq. ft.
1,000 sq. ft.
1,000 sq. ft.
$3,409
$2,363
$1,779
$4,023
$2,701
$2,353
$3,722
$2,580
$1,943
$4,393
$2,950
$2,569
Potential Annual Revenue $4,108,043 $4,485,558
Source: Maximum road fees from Table 20; potential revenues from Table 21.
RESOLUTION NO.
A RESOLUTION TO ACCEPT AND ADOPT THE MAY 2006
ROAD IMPACT FEE STUDY BY DUNCAN ASSOCIATES
WHEREAS, the City hired Duncan Associates to update the Road Impact Fee
Study (first completed in 2004) based upon the estimates street bond program costs as
proposed in 2006; and
WHEREAS, the impact fees for roads within the Study are "consumption based"
which charges new development the cost of replacing the road capacity the new
development consumes of the major roadway system; and
WHEREAS, the City Council must determine whether or not to include the cost
of right of way acquisition within the road impact fee.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby
accepts and adopts the May 2006 Road Impact Fee Study by Duncan Associates attached
as Exhibit "A".
Section 2 That the City Council of the City of Fayetteville, Arkansas hereby
determines that if Road Impact Fees are enacted they will not include right of way
acquisition costs.
PASSED and APPROVED this 20th day of June, 2006.
ATTEST:
By:
SONDRA SMITH, City Clerk
APPROVED:
By:
DAN COODY, Mayor
CONTENTS
EXECUTIVE SUMMARY
LEGAL FRAMEWORK
BACKGROUND
DEVELOPER EXACTIONS AND CREDITS
SERVICE UNITS
IMPACT FEE METHODOLOGY
MAJOR ROADWAY SYS ITEM
EXISTING DEFICIENCIES
COST PER SERVICE UNIT
REVENUE CREDITS
TRAVEL DEMAND FACTORS
POTENTIAL FEES
APPENDIX A: MAJOR ROADWAY INVENTORY 26
APPENDIX B: ARKANSAS IMPACT FEE ENABLING ACT 31
LIST OF TABLES AND FIGURES
1
2
4
8
9
10
12
13
15
17
21
24
Table 1: ROAD IMPACT FEE SUMMARY 1
Table 2: CAPITAL FUNDING BY SOURCE, 2004-2008 4
Table 3: SALES TAX CAPITAL FUNDING, 2004-2008 5
Table 4: OUTSTANDING DEBT 5
Table 5: POPULATION GROWTH, 1990-2000 6
Table 6: RESIDENTIAL BUILDING PERMITS, 1996-2004 6
Table 7: EXISTING HOUSING UNITS BY TYPE 7
Table 8: TOTAL DAILY VEHICLE -MILES OF TRAVEL 14
Table 9: TOTAL DAILY VEHICLE -MILES OF CAPACITY 14
Table 10: SYS I EMWIDE RATIO OF CAPACITY TO DEMAND 15
Table 11: PLANNED ROAD IMPROVEMENT COSTS 16
Table 12: ROAD COST PER SERVICE UNIT 16
Table 13: FEDERAL/STATE HIGHWAY FUNDING, 2001-2025 17
Table 14: CITY SALES TAX FUNDING, 2004-2008 18
Table 15: ROAD REVENUE CREDIT PER SERVICE UNIT 19
Table 16: ROAD NET COST PER SERVICE UNIT 20
Table 17: AVERAGE TRIP LENGTH 22
Table 18: AVERAGE TRIP LENGTH BY TRIP PURPOSE 22
Table 19: TRAVEL DEMAND SCHEDULE 23
Table 20: ROAD NET COST SCHEDULE 24
Table 21: POTENTIAL ROAD IMPACT FEE REVENUE 25
Table 22: MAJOR ROADWAY INVENTORY 26
Figure 1: PLANNING AREA 7
Figure 2: IMPACT FEE FORMULA 11
Figure 3: EXISTING MAJOR ROADWAY SYSTEM 12
prepared by Duncan Associates
Clancy Mullen, Principal Author
13276 Research Boulevard, Suite 208, Austin, TX 78750
(512) 258-7347 x 204; Clancy@duncanplan.com
EXECUTIVE SUMMARY
This study calculates maximum impact fees that could be adopted by the City of Fayetteville to help fund
growth -related infrastructure improvements for major roads. The road impact fees have been calculated
with and without the inclusion of right-of-way (ROW) costs. If road impact fees are adopted, the City
would need to give developers credit against their impact fees for the cost of any required land
dedication or capacity improvement that adds through lanes to any adjacent or internal arterial or
collector roadway. However, if RO\V costs are excluded from the road impact fee, credit would need
to be given only for improvement costs.
This report relies heavily on the road impact fee analysis contained in the June 2004 Impact Fee S/mjy:
Road, Fire and Police that we previously prepared for the City. The major change was to substitute the
proposed bond program projects for the historical projects used as the basis for the road impact fees.
The calculated maximum fees for selected land uses and potential annual impact fee revenues are
summarized in Table 1. The maximum road impact fees and potential revenues would be 8 percent
lower if ROW costs are excluded. It should be kept in mind that the City will need to give credit against
the road impact fees for the value of some developer dedications or improvements, and consequently,
actual road impact fee revenues received in cash will likely be less than indicated in the table below.
Table 1
ROAD IMPACT FEE SUMMARY
Land Use
Unit Without ROW With ROW
Single -Family Detached
Multi -Family
Mobile Home
Retail
Office
Industrial
Potential Annual Revenue
Dwelling
Dwelling
Dwelling
1,000 sq. ft.
1,000 sq. ft.
1,000 sq. ft.
$3,409
$2,363
$1,779
$4,023
$2,701
$2,353
$3,722
$2,580
$1,943
$4,393
$2,950
$2,569
$4,108,043 $4,485,558
Source: Maximum road fees from Table 20; potential revenues from Table 21.
•
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LEGAL FRAMEWORK
Municipalities in Arkansas are authorized by state law to enact impact fee ordinances, provided that they
follow the requirements of Arkansas Statutes § 14-56-102, Development Impact Fees. This section
provides a brief summary of those requirements most relevant to the City of Fayetteville. The entire
statute is reproduced in Appendix B.
Impact fees are a one-time fee that can only be assessed on new development. \Vater and wastewater
impact fees can be assessed at the time of purchase of the water meter, but all other types of impact fees
must be assessed at the time of issuance of the certificate of occupancy. The amount of impact fees paid
for a newly -constructed building must be separately itemized on the closing statement at the time the
property is sold. The City can allow the fee to be paid in installments.
Impact fees must be spent for capital improvements that provide benefit to the fee -paying development.
This can include existing improvements that have excess capacity that was built to accommodate future
growth. Section 14-56-102(c)(1) provides that the fees can only be used for:
... the planning, design and construction of new public facilities or of capital improvements to existing
public facilities that expand its capaciry or far the recoupment of prior capital improvements to public
facilities that created capacity that is available to serve new development.
Impact fees can be pledged to repay bonds that have been issued to fund growth -related capital
improvements. However, they cannot be used to pay for:
the operation or maintenance of any public faciliry, or for the construction or improvement of public
facilities, that does not create additional capacity. (Section 14-56-102(c)(3))
In Arkansas, impact fees can only be adopted to fund certain types of public facilities. Section 14-56-
102(b) limits the use of impact fees to "providing necessary public facilities," and Section 14-56-102(a)(7)
defines "public facilities" to include only the following:
(A) Water sappy, treatment, and distribution, for either domestic water or for suppression of fires;
(B) IVastewater treatment and sanitary; sewerage;
(C) Stormwater drainage;
(D) Roads, streets, sidewalks, highways and public transportation;
(E) Library;
(t) Parks, open space, and recreation areas;
(G) Police orpublic safety;
(H) .Fire protection; and
(L) Ambulance or emergency medical transportation and response.
To assess impact fees, a city must first adopt an ordinance. The ordinance must be preceded by the
development of a capital plan and level of service standards for the types of facilities for which the
impact fees are to be imposed. The capital plan must include:
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Fayetteville\Road Impact Fee Study May 2, 2006, Page 2
... a descnption of new public facilities or of new capital improvements to existing pcb/ic facilities or of
previous capita/ improvements to public facilities that continue to provide capacity available for new
development that includes cost estimate., and capacihy available to serve new development ... (Section
14-56-102(1) (1)
As noted, prior to adopting a road impact fee ordinance, the City must adopt a capital plan and a level
of sense standard for roads, pursuant to Section 14-56-102(e)(2). The capital plan, which describes the
projects that would be eligible for funding with the City's road impact fees, is shown Table 11. The level
of service on which the fees calculated in this report are based is a one-to-one system -wide ratio of
vehicle -miles of capacity to vehicle -miles of travel (see the discussion in the sections on "Road Impact
Fee Methodology" and "Existing Deficiencies," as well as the formula in Figure 2).
Pursuant to Section 14-56-102(e)(3), the impact fee ordinance must contain the following:
(A) A statement of the new public facilities and capital improvements to existing pnb/ic facilities that
are to be financed by impact fees and the /eve/ of service standards included in the capital plan for the
public facilities that am to befinanced with impact fees;
(13) The actual formula or formulas for assessing the impact fee, which shall be consistent with the level
of service standards;
(C) The procedure by which impact fees an. to be assessed and collected; and
(D) The procedure for refund of excess impaclfees, in accordance with subsection (b) of this section.
Impact fees collected must be deposited into a separate interest-bearing account and spent only for the
type of improvements for which they were collected. Interest earned on these accounts shall be spent
for the same purposes as the impact fees themselves. Any funds not spent within seven years must be
refunded to the fee -payer.
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BACKGROUND
An impact fee is a form of "exaction," through which a developer or builder is required to contribute
to the costs of public improvements required to serve the development. Generally, impact fees are
designed to pay for the new development's proportionate share of the cost of off-site improvements, and
credit against the fees is given if the developer is required to contribute to the system of facilities for
which the fees are charged through on-site dedication, construction or monetary payment. Typically the
fee is levied on some easily measurable unit of activity, such as the construction of one dwelling unit or
1,000 square feet of commercial or industrial space. In Arkansas, impact fees are generally collected at
the time of certificate of occupancy or water meter purchase.
The City finances most capital improvements on a pay-as-you-go basis. This is done utilizing revenues
from the one -percent City sales tax renewed in 2002 (of which, by City Council resolution, 50 percent
is used to fund capital projects), the one -percent Hotel, Motel, Restaurant sales tax adopted in 1996 to
fund park improvements, and operating revenues from the City's enterprise funds, including water,
wastewater and solid waste.
The City's last five-year capital improvements program (CIP), excluding non-recurring funding such as
one-time bond proceeds, included over $66.6 million in capital funding for the five-year period. Over
half of the pay-as-you-go funding is from the one -percent sales tax, as shown in Table 2.
Table 2
CAPITAL FUNDING BY SOURCE, 2004-2008
Revenue Source
Amount Percent
Sales Tax
Water 8 Sewer Fund
Airport Fund
Shop Fund
Parks Development Fund
Solid Waste Fund
Off -Street Parking Fund
$36,854,000
$12,983,000
$6,755,000
$6,625,000
$2,391,000
$854,000
$113,000
55.4%
19.5%
10.1%
10.0%
3.6%
1.3%
0.2%
Total
$66,575,000 100.0%
Source: City of Fayetteville. Capital Improvements Program, 2004-
2008, December 2003 (excludes bond proceeds).
The City's sales tax capital funding is spent on a wide variety of improvements. Foremost among these
are streets and traffic signals, other transportation improvements and parks, as shown in Table 3.
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Fayetteville\Road Impact Fee Study May 2, 2006, Page 4
•
Table 3
SALES TAX CAPITAL FUNDING, 2004-2008
Project Type
Amount
Percent
Streets and Signals
Other Transportation
Parks
Bridge 8 Drainage
Other
Fire
Police
Library
$12,682,000
$7,706,000
$4,565,000
$3,444,000
$3,122,000
$2,455,000
$1 290,000
$1,590,000
34.4%
20.9%
12.4%
9.3%
8 5%
6.7%
3.5%
4.3%
Total
$36,854,000
100.0%
Source: City of Fayetteville, Five Year Capital Improvements
Program, 2004-2008. December 2003.
The City has about $62 million in outstanding debt, as shown in Table 4. However, none of that debt
is related to road facilities. The new 2005 Sales and Use Tax bond issue will consist of $26.235 million
in refunding bonds and $65 million in new debt for a total of $91.235 million.
Table 4
OUTSTANDING DEBT
Bond Issue
Ori • inal Issue Ori • inal Amount Outstandin •
Sales Tax, Series 1997 (Walton Arts Center)
Water 8 Sewer, Series 1999 (Water Main/Tanks)
Water 8 Sewer, Series 2002A and 20026
Sales Tax, Series 2002 (Wastewater Treatment/Sewerage)
Hotel 8 Restaurant, Series 2003 (Town Center)
Sales Tax, Series 2004
1997
1999
2002
2002
2003
2004
$2,610,000
$8,365,000
$9,270,000
$25,000,000
$6,335,000
$35,000,000
$290,000
$5,840,000
$7,700,000
$7,290,000
$6,215,000
$35,000,000
Total
$86,580,000
$62,335,000
* as of December 31, 2004
Source: City of Fayetteville, Annual Budget and Work Program, 2005.
Impact fees are most appropriate for communities that are experiencing rapid growth. The Fayetteville -
Springdale -Rogers Metropolitan Statistical Area (MSA), comprised of Washington and Benton Counties,
was the sixth fastest growing MSA in the country in the 1990s.' Washington County, of which
Fayetteville is the county seat, has been growing at a compound annual growth rate of 3.4 percent since
1990, and one-third of the population added since then has been in Fayetteville. The city itself has been
growing at 3.2 percent annually, over twice as fast as the state as a whole. Fayetteville's population is
estimated to be 64,190 as of July 1, 2004. It is not surprising that this pace of growth has created
problems in terms of the City's ability to finance the capital improvements needed to accommodate new
development.
'U.S. Census Bureau, Statistica/ Abstract of the United States: 2000, Table No. 34, p. 33.
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Fayetteville\Road Impact Fee Study May 2, 2006, Page 5
Table 5
POPULATION GROWTH, 1990-2000
1990 2000 Increase Annual Rate
Fayetteville
Springdale *
Other Municipalities*
Unincorporated
42,249
29,941
10,503
30,716
58,047
43,787
17,540
38,341
15,798
13,846
7,037
7,625
3.23%
3.87%
5.26%
2.24%
Washington County
State of Arkansas
113,409 157,715
44,306 3.35%
2,350,624 2,673,400 322,776 1.30%
* only the Washington County portion of Springdale and Elm Springs
Source: U.S. Census Bureau; Northwest Regional Planning Commission
The City has been issuing permits for an average of almost 400 single-family homes annually since 2000,
as shown in Table 6. The number of multi -family permits issued annually has increased from about 470
per year in the late 1990s to almost 700 per year in the last five years.
Table 6
RESIDENTIAL BUILDING PERMITS, 1996-2004
Year Sin . le-Famil Multi-Famil Total
1996
1997
1998
1999
2000
2001
2002
2003
2004
445
265
272
357
279
258
239
611
583
154
281
40
515
272
440
792
1,258
711
599
546
312
872
551
698
1,031
1,869
1,294
Avg., 1996-99 335 469 804
Avg., 2000-04 394 695 1,089
Source: City of Fayetteville, Inspection Department.
Based on building permits issued since the 2000 Census, it is estimated that Fayetteville has about 31,000
dwelling units as of April 2005, as shown in Table 7.
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Fayetteville\Road/mpactFee Study May 2, 2006, Page 6
EXISTING
Table 7
HOUSING UNITS BY TYPE
Housing Type
2000
Census
5 yrs. of
Permits
Estimated
Apr. 2005
Single -Family
Multi Family
Mobile Home/Other
12,663
11,808
855
1,970
3,473
n/a
14,633
15,281
855
Total
25,326
5,443
30,769
Source: 2000 U.S. Census for Fayetteville. AR, SF -3 11 in 6 sample
data) permits from January 2000 through December 2004 from Table
6
In addition to development within its incorporated limits, the City is also affected by, and has some
control over, development in unincorporated areas within its extraterritorial jurisdiction. Within this
area, which extends up to five miles from the corporate limits or half the distance to any adjoining
municipality, the City exercises joint subdivision authority with Washington County. The area covered
by the City's extraterritorial jurisdiction is larger than the area within its corporate limits. The combined
corporate and extraterritorial jurisdictions are referred to as the City's planning area, which covers
approximately 92 square miles
Figure 1
PLANNING AREA
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Fayetteville\Road Impact Fee Study
May 2, 2006, Page 7
DEVELOPER EXACTIONS AND CREDITS
The City does not impose a road impact fee on new development, but there are a number of developer
exactions for roads in the City's Unified Development Code. A "large scale development," defined as
any development larger than one acre,must dedicate sufficient right-of-way (ROW) to bring any abutting
or intersecting major road to the standards of the master street plan. A lesser dedication may be
recommended by the Planning Commission and approved by the City Council in cases of undue
hardship or practical difficulties. Developers of large-scale developments may also be required to make
off-site street and other improvements, "where the need for such improvements is created in whole or
in part by the proposed large scale development"- When commercial, industrial or multi -family
development is proposed adjacent to any street not constructed to current city standards, the developer
is required to dedicate sufficient ROW and install paving, curb and gutter, and sidewalks necessary to
bring the street into conformity with current standards. The regulation provides that the City Council
may reduce the dedication requirement, and the cost of required improvements shall be in proportion
to the needs created by the development' Finally, off-site road improvements may be required where
a proposed subdivision has access to paved streets only by way of substandard or unimproved streets.
In such cases, the subdivider is required to contribute a proportionate share of the cost of the off-site
improvements. The proportionate share is based on the acreage of the subdivision as a share of the
acreage of all property benefitting from the improvement, or by an alternative method determined by the
planning commission.'
In general, these requirements mean that development abutting an unimproved or substandard street
must dedicate the required ROW and construct the adjacent half of the street improvement. The
developer does have the option to do a traffic study to attempt to demonstrate that the required
improvement exceeds the impact of the development. Even lot splits can trigger the requirements to
improve abutting roadways.
The proposed road impact fees differ from the Fayetteville's existing water and wastewater fees, and from
the proposed fire and police fees, in that a significant portion of the fees may need to be used to
compensate developers who have frontage on major roadways and are required to construct or improve
them. If the road impact fees calculated in this report are adopted, the City would need to give credit
against the fees to developers for the value of required improvements to arterial and collector roadways.
No credit would need to be given for the value of RO\V dedications if ROW costs are not included in
the impact fee calculations.
There are a variety of ways that credit provisions can be structured, and these issues should be addressed
in the impact fee ordinance. One thing that needs to be defined in the ordinance is what constitutes a
capacity -expanding improvement eligible for funding with road impact fees. The definition should
exclude bringing an existing substandard two-lane arterial or collector road up to current standards
'Section 166.05: Large scale development.
'Section 171.03: Street improvements.
E Section 166.07: Required off-site improvements.
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Fayetteville\Road Impact Fee Study May 2, 2006, Page 8
Developers are often required to make such improvements to adjacent roads, and the ordinance should
make clear that this is not the type of improvement that is eligible for impact fee funding or impact fee
credit. For example, the ordinance could define eligible improvements as capacity -expanding
improvements to the major roadway system, including building new roads, widening existing roads by
adding additional lanes, and intersection improvements that add signalization or turn lanes.
In the event that the City Council chooses to adopt road impact fees at a level that excludes the cost of
ROW, the ordinance will need to address whether the impact fee revenues can be expended to acquire
ROW. The consultant recommends that if developers are not going to be given credit for the value of
ROW they are required to dedicate, the ordinance should prohibit the expenditure of impact fee funds
for ROW acquisition. Such a prohibition may not be legally required, but it would serve as an important
clarification that ROW is not any part of the road impact fee program.
Another issued to be addressed in the ordinance is whether a developer will be reimbursed directly from
impact fee funds collected from all developments, or whether the impact fees paid within the developer's
project will be reduced. Our recommendation is that credit be provided as a direct reimbursement to
the developer that dedicated the ROW or made the improvement. One approach would be to set aside
a maximum percentage of annual impact fee revenues to be used for such reimbursements. If the
outstanding reimbursements owed in any given year exceed the amount available from impact fee
revenues, each developer would receive a proportionate share of their outstanding reimbursement, and
be eligible for more reimbursement in subsequent years. This approach would make collecting impact
fees much easier, since the fees would be collected in full on all building permits, without the permit
clerk having to check to see if a fee reduction due to credits is required.
The impact fee ordinance will also need to deal with other credit issues, such as the following.
o If credits are provided in the form of fee reductions, what happens when the amount of the
credit exceeds the impact fees that would be due from the development project?
o To what extent should credits be given for past contributions for development projects that have
not yet been completed?
SERVICE UNITS
Service units create the link between supply (roadway capacity) and demand (traffic generated by new
development). An appropriate service unit basis for road impact fees is vehicle -miles of travel (VMI).
Vehicle -miles is a combination of the number of vehicles traveling during a given time period and the
distance (in miles) that these vehicles travel. The unit of capacity that is consumed by the demand unit
represented by a VMT is a vehicle -mile of capacity (VMC). VMC is calculated as the capacity of a
roadway segment multiplied by the length of the segment in miles.
The two time periods most often used in traffic analysis are the 24-hour day (average daily trips or ADT)
and the single hour of the day with the highest traffic volume (peak hour trips or PHT). Available traffic
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Fayetteville \Road Impact Fee Study May 2, 2006, Page 9
counts for area roadways are for average daily trips. Consequently, average daily VMT will be used as
the service unit for Fayetteville's road impact fees.
IMPACT FEE METHODOLOGY
The major alternative methodologies for calculating road impact fees are the "improvements -driven" and
"consumption -based" approaches. These are briefly described below.
The "improvements -driven" approach essentially divides the cost of growth -related improvements
required over a fixed planning horizon (or to build -out) by the number new service units (e.g., vehicle
trips) projected to be generated by growth over the same planning horizon in order to determine a cost
per service unit. The improvements -driven approach depends on accurate planning and forecasting.
For example, the fees will be accurate only if the forecasted increase in traffic actually necessitates all of
the improvements identified in the transportation master plan. If many of the planned improvements
will provide excess capacity that will be available to serve additional development beyond the planning
horizon on which the fees are based, the fees may be too high.
The "consumption -based" approach does not depend on knowing in advance what improvements will
be made or what type or density of development will occur. The consumption -based model simply
charges a new development the cost of replacing the capacity that it consumes on the major roadway
system. That is, for every service unit of traffic (e.g., mile of vehicle travel) generated by the development,
the road impact fee charges the net cost to construct an additional service unit of capacity. The
consumption -based system can be based on a transportation plan, but the total cost of the plan does not
affect the amount of the fee, which is based on the unit cost of creating new capacity.
A strength of the consumption -based system is that it is very legally defensible because it generally under-
estimates the full cost of growth. Since travel is never evenly distributed throughout a roadway system,
actual roadway systems require more than one unit of capacity for every unit of demand in order for the
system to function at an acceptable level of service. Suppose, for example, that the City completes a
major arterial widening project. The completed arterial is likely to have a significant amount of excess
capacity for some period of time. If the entire system has just enough capacity to accommodate all of
the vehicle -miles of travel, then the excess capacity on this segment must be balanced by another segment
being over -capacity. Clearly, roadway systems in the real world need more total aggregate capacity than
the total aggregate demand, because the traffic does not always precisely match the available capacity.
Consequently, the standard consumption -based model generally underestimates the full cost of growth.
The consumption -based system is a conservative, legally sound and relatively simple approach to the
calculation of road impact fees. This is the recommended approach for Fayetteville. The recommended
formula for the road impact fees is shown in Figure 2.
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Figure 2
IMPACT FEE FORMULA
MAXIMUM FEE = VMT x NET COST/VMT
Where:
VMT = TRIPS x % NEW x LENGTH + 2
NET COSTNMT = COSTNMT • CREDITNMT
Where:
TRIPS = Trip ends during a weekday
% NEW = % of trips that are primary, as opposed to passby or diverted -link trips
LENGTH = Average length of a trip on the major roadway system
+ 2 = Avoids double -counting trips for origin and destination
COSTNMT = Average cost per lane -mile divided by average daily capacity per lane
CREDITNMT = Revenue credit per daily VMT
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MAJOR ROADWAY SYSTEM
A road impact fee system should include a clear definition of the major roadway system that is to be
funded with the impact fees. The major roadway system to be funded with the proposed impact fees
is comprised of arterials and collectors within the City's incorporated area, including most state roads but
excluding freeways and expressways. These roadways are identified on the City'sMaster StreetPlan, which
is an official map that is used in conjunction with the Circulation Element of the 2020 General Plan. It
classifies streets into a number of functional types, including freeway/expressways, principal arterials,
minor arterials, collectors and local streets. The Master Street Plan shows the location of new roads and
allows the City to preserve corridors for roadways expected to need widening or extension.
An inventory of the existing major roadway system was compiled in order to identify existing capacity
deficiencies and to determine the average length of a trip on the major roadway system (see Appendix
A). The roadway segment descriptions include the street name, roadway termini, number of lanes and
roadway length and width. Average daily traffic volumes were estimated for most segments from state
highway department counts. The existing major roadway system within Fayetteville's incorporated limits
is illustrated in Figure 3.
Figure 3
EXISTING MAJOR ROADWAY SYSTEM
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EXISTING DEFICIENCIES
In most rapidly growing communities, some roadways will be experiencing an unacceptable level of
congestion at any given point in time. One of the principles of impact fees is that new development
should not be charged, through impact fees, for a higher level -of -service than is provided to existing
development. Another common way of expressing this concept, although it is somewhat less precise and
subject to misinterpretation, is that impact fees should not be used to pay for remedying existing
deficiencies. In the context of road impact fees, this has sometimes been interpreted to mean that impact
fees should not be spent on roadways that are already over -capacity. A variant of this approach is that
impact fees should only be used to fund a percentage of the project that can be attributed to providing
additional capacity beyond what is needed to remedy any existing deficiency. There are a number of
practical problems with these approaches. First, impact fees are restricted from being spent on roadways
that are most in need of improvement, while the fact that fee -funded improvements to other roadways
may also relieve the deficient segments is ignored. Second, these approaches complicate impact fee
administration by requiring that the portion of the cost of each improvement that is attributable to
remedying deficiencies be funded from a different source than impact fees.
The most significant objection to these approaches, however, is that they are not consistent with the
conservative nature of the consumption -based road impact fee methodology. The consumption -based
system does not promise that all road segments will function at a given level of service (e.g., LOS C or
LOS D). All the consumption -based model does is assume that for every unit of capacity that is
consumed, another will be constructed to replace it. Implicitly, the level of service used in a
consumption -based impact fee is a one-to-one ratio of capacity to demand in the major roadway system
as a whole. As long as the current system provides at least this capacity/demand ratio, the impact fees
are not charging for a higher level of service.
To determine the capacity/demand ratio, the first step is to estimate total VMT on the major roadway
system. This figure will also be used in the average trip length and revenue credit calculations. Recent
daily traffic counts are available for road segments accounting for almost three-fourths of all lane -miles
in the major roadway system. Adding estimated traffic from road segments for which counts were not
available, on the assumption that such segments would carry about three-quarters the volume of
segments with counts, yields a estimate of about 1.1 million daily vehicle -miles of travel on Fayetteville's
major roadway system.
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