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Impact Fees in Virginia

Virginia Municipal League Annual Conference October 15, 2007

Jeffrey S. GoreHefty & Wiley, P.C.jeff@heftywiley.com

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James City County (Fiscal Year 2007): www.jccegov.com

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Paying for growth

James City County (Fiscal Year 2007): www.jccegov.com

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Planning for growth

Traditional planning tools in Virginia Comprehensive plan Subdivision ordinance Zoning ordinance Capital Improvement Program Conditional zoning (proffers) Land use taxation (including

agricultural, forestal, open space districts)

Purchase of development rights

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Planning for growth

New planning tools in Virginia: Urban Transportation Service Districts Urban Development Areas Cluster Development Transfer of Development Rights Impact Fees

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What are impact fees?

Road impact fee definition:

“A charge or assessment imposed against new development in order to generate revenue to fund or recover the costs of reasonable road improvements benefiting the new development.” Section 15.2-2318, Code of Virginia

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What are impact fees?

"Cost" includes, in addition to all labor, materials, machinery and equipment for construction acquisition of land demolition survey, engineering, and architectural legal, administrative interest charges and other financing costs if

fees used for the payment of principal and interest on bonds, notes, etc. 15.2-2318

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What are impact fees?

"Road improvement" includes construction of new roads or improvement or expansion of existing roads and related appurtenances as required by applicable standards of the Virginia Department of Transportation, or the applicable standards of a locality with road maintenance responsibilities, to meet increased demand attributable to new development. Road improvements do not include on-site construction of roads which a developer may be required to provide pursuant to §§ 15.2-2241 through 15.2-2245 [Subdivision ordinances]

15.2-2318

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What are impact fees?

Impact fees vs. cash proffers

Proffers only apply to re-zonings

Impact fees can apply regardless of zoning status, i.e., can apply to “by-right” or “stale zoning”

Proffers are voluntary, can be cash or in-kind (land dedication, certain improvements, etc.)

Impact fees imposed as prescribed by ordinance, not voluntary or based on “guidelines”

Proffered conditions credited against applicable impact fee

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What are impact fees?

Two types of impact fees in Virginia:

1. Roads only (Sec. 15.2-2317 et seq.)

2. Broad impact fees: roads, schools, stormwater, parks, public safety, and libraries (Sec. 15.2-2328 et seq.)

-limited applicability

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Who can impose impact fees?

Eligibility for broad impact fee program Limited to “urban counties” that have

established an Urban Transportation Service District under Section 2403.1 of the Code of Virginia

Urban county = pop. > 90,000 according to 2000 Census that did not maintain its own roads as of January 1, 2007

Fairfax, Loudoun, Prince William, Stafford, Spotsylvania, and Chesterfield Counties

Applies only to agriculturally zoned land outside of UTSD being subdivided for “by-right” development

Counties with UTSD required to maintain own roads within the district

Dec. 31, 2008 deadline to adopt UTSD

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Who can impose impact fees?

Eligibility for road impact fee program:

Must have zoning ordinance and(i) at least 20,000 population with 5% growth OR (ii) 15% population growth – many localities qualify

*Growth rates measured between last two decennial census years (1990-2000).

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Road impact fees: program requirements

Procedural requirements1. Designate of impact fee “service

area(s)” in comprehensive plan (15.2-2320)

2. Conduct road assessment and adopt road improvements plan (collectively “Road Improvements Program”) (15.2-2321)

3. Adopt impact fee ordinance and fee schedule (15.2-2322)

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Impact fee examples

Chesterfield County

First (possibly) to adopt road impact fees under new law.

Staff recommending: Single, countywide impact fee service area Only applicable to new residential - not commercial or

industrial, or to property subject to proffers (re-zonings) or CDA/service district funds

Impact fee of $5,820 Estimated to fund 5% of road needs Public hearing scheduled for October 16, 2007 http://www.co.chesterfield.va.us/communitydevelopment/planning/

CPCStaffReports/07-10-16/Impact-Fee-OCT16-CPC.pdf

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Impact fee examples

Stafford County

First/only locality to adopt road impact fee ordinance (2003)

Two impact fee service areas

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Utilizing impact fees to promote more sustainable growth

Impact fees can help pay for the very public projects necessitated by rapid growth

Impact fees may promote economic development by increasing predictability and certainty that public facilities will be provided

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Utilizing impact fees to promote more sustainable growth

Coordinate with neighboring localities when designating impact fee service areas: transportation network is regional

Impact fees in suburban areas may lead to more “in-fill” development of urban centers

Coordinate impact fee service areas with Urban Development Areas (may exclude impact fees from UDA) 15.2-2320

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Policy Considerations

Effects, if any, on housing affordability Impacts on economic development, i.e.,

which categories of land use on which to apply impact fees: residential, commercial, industrial?

Effects on growth patterns: will fees encourage “leapfrog development” to neighboring localities?

Political resistance to impact fees