What are Impact fees?
Impact fees are money paid by builders to Jefferson County for the purpose of providing public services that will be provided to the new home. In Jefferson the fees must be paid to the county before a building permit will be issued. The fees are rigorously calculated using the actual county expenditures for services that the county currently provides its citizens. Those fees are then extended incrementally for one more new house or one more business to all development in the county. The impact fee is a one time payment and not a tax.
The impact fee charges for Jefferson County are for schools to educate new students, emergency services for police, fire and medical protection and parks. No impact fees are charged in Jefferson for environmental impacts, libraries, sewer, water, run off drainage or public facilities like public meeting places. Fees are charged to developments only to the degree that the development will use the fee. For example, houses need schools for children raised in the houses, but business do not need schools, so, new business development is not charged school impact fees. The fees are calculated for each type of housing or business based on the existing level of service for the new development.
Without Impact Fees – An Example of No Impact Fees
Below is a theoretical situation for demonstration of impact fee purpose. – Today the Jefferson County Planning Commission approved a special new housing subdivision in Jefferson County. The new subdivision will have houses with no kitchens in their floor plans. Our neighbor citizens will provide their kitchens. One neighbor will provide the refrigerator for the new homeowners. One will provide his stove whenever needed. Another neighbor will provide her sink and trash compactor while another will provide his dishwasher for the new home owners. One final neighbor will provide her table and chairs. This novel arrangement allows the houses to be sold cheaper although it is admitted that sacrifices must be made by current residents for the new home owners to enjoy Jefferson County. The same principle holds for impacts fees. Impact fees ask new residents to pay for their appropriate portion of public services that they will use at exactly the same rate as county residents who have already purchased and built. Those public services are schools for their children, fire, police and EMS protection, and parks.
How the Impact Fees are determined in Jefferson County
Consider the Impact fee for schools: The impact fee for schools is calculated by a detailed and involved process. Each student in Jefferson County Public Schools is identified as an elementary school, middle school or high school student and his or her home address is mapped to a house type in the county such as a single family home, a town home, mobile home or rental apartment. A pupil generation factor is calculated for each home type which results in the numbers of students in each type of home in the county. Mathematically this number can be expressed as the average number of students per a single family house in the county. For example the data shows:
On average the Students per Single Family Housing unit in the county are:
0.18 elementary student + 0.08 middle school student + 0.11 high school student
Similar calculations are made for all types of housing in the county.
The Jefferson County Schools incur costs for land purchase, building construction, bus purchases, maintenance buildings, administration offices and school equipment such as desks and computers. These expenditures are called capital costs. Using these costs and known student populations of the buildings, a capital cost per student is calculated. Those tabulations show the total capital cost per student in Jefferson County:
Elementary Middle High school
Capital costs per student: $30,232.15 $39,274.48 $46,477.41
The numbers shown are actual capital costs for a student in the Jefferson County Schools. These costs are capital only and do not include operating costs such as teacher salaries. Operating costs for the schools are paid for by property taxes in WV.
Therefore, the school capital costs for a home in Jefferson County can be found by using the capital costs calculations plus the students per household numbers. It can be thought of as the school capital cost of one more house built. It totals $11,358.00 for a single family unit. Similar calculations of school impacts are made for the other types of housing in the county.
Development in our county also has impacts for fire protection and emergency services, police and law enforcement and for parks and recreation facilities. Detailed calculations are made of public capital funds in these individual areas using actual Jefferson County capital expenditure dollars and are then allocated to development in the county.
The results of these calculations are an impact fee of $13,070.00 per single family house built in Jefferson County. The fee is comprised of 87% a school impact, 2% police and law enforcement impact, 5.7% for Parks and 5.3% for fire protection. It is charged for every new single family house built in the county. It is also derived for other types of housing in the county and for businesses started in the county according to their need for public services and the cost of an extra unit of those services.
The impact is spoken of as the incremental cost of new single family housing in the county to maintain the level of service (better read as quality of living) for the education of our children, protecting our homes, and providing parks for our relaxation equal to what we have now.
The fees in the County today are:
The impact fees imposed on development in 2012 are below.
The impacts must be used with the comprehensive plan of the County but not with the zoning of the county. The fees may not be used as a “No Growth” policy or to dictate patterns of growth. The fees are intended as growth facilitators within the county. This claim is heavily debated. The fees must be implemented in a manner of assessment, collection, and expenditure to clearly qualify the payment as a fee and not a tax. This legal responsibility has been fairly implemented in Jefferson County.
What the fees have done
The impact fees collected in the last five years (2006 through 2012) total $25,173,678. This includes $23,999,328 for new school construction in Jefferson County. If these funds were not collected from the new development in the county, there would have been an additional tax obligation to the 2011 estimated population of Jefferson County of $144.15 for each person to retain our current quality of county services or additional tax charges of $432.01 per the 18,093 single family homes in Jefferson County in 2011.
Benefits Claims of Impact Fees
Benefits of Impact fees are:
1. New development pays for additional services needed by new development rather than charging existing residents.
2. Real estate taxes of existing local residents are protected from costs of new development.
3. The fees act as a growth facilitator as they ensure that needed public services are financially feasible for development and are equal to the services currently available in the county.
Frequent criticisms of impact fees with answers to each Criticism:
The fees are heavily criticized by the Jefferson development community as inequitable demands upon development to fund public facilities for the county population.
Response to Criticism
The fees ask new residents to pay their appropriate part of public capital investment associated with their development. Other communities have commercial industry and require their industry to fund public capital needs for services. Jefferson has limited industry, and does not ask its residents to pay more property taxes than other communities who have industries. Therefore, each development must pay its share of impact on community services.
The fees hurt development and business growth.
Response to Criticism
The fees ensure complete development of both public and private expenditures for new development in the county. New residents to the community expect public facilities to be at the current level of service. Without impact fees in Jefferson and with large development rates there is no way that public services can maintain their current level of service to the county without raising taxes on existing residents.
Fees are charged for development such as schools, public protections and parks without regard for possible operational capacity that may already exist.
Response to Criticism
There is no buffer capacity in Jefferson County for public services. It does not exist. This is especially true in our schools. Overall, West Virginia is a state with a declining population. With this fact, it is not possible to get any state funding that can be used for future needs of schools. Any state funding done in the state is calculated for an existing or smaller population than a growing population’s need. Further, public expenditure comparisons show the county is far underserviced in public parks compared to neighboring metropolitan area expectations. There are no buffer capacities in Jefferson public facilities.
Fees are extended to all development without breaks for the local long time resident to build homes for their children on their property.
Response to Criticism
Impact fees must be implemented equally to all development. No breaks in impact fee implementation are allowed by law. This rule is needed to prevent favoritism and to maintain the integrity and fairness of the system. Impact fees are not taxes that are subject to political manipulation of emphasis by loopholes. Fees are one time payments of appropriate public capital required for the development to maintain current levels of service in the community without political breaks.
School Impact Fee needs have been largely supplemented by revenues from Hollywood Casino table games. The impact fees started before the table games revenue stream and their needs have been diminished by the extra gambling revenues.
Response to Criticism
The revenue stream from the race track that is allocated for schools in Jefferson County is intended for all of its citizens and not to deal with impacts from the new citizens of Jefferson County. Enormous needs for county schools should be addressed by these funds for all of our population and not just for newcomers. In addition, the table games revenue is subject to competition from surrounding states and is not stable.
Impact Fees unfairly charge a flat fee for residential houses. Small houses are charged the same fee as larger houses, which usually provide a larger school impact than a very small house.
Response to Criticism
Separate studies have been done to address this criticism. The results of the studies show inconclusive data for the appropriate fee modification. Some studies show a higher student population in smaller homes. Most studies show that using square footage of housing to determine impact fees becomes more complex and that the system becomes subject to “gaming” of the definition of square feet for houses. The proposed changes have not been implemented for this reason.
Court reviews of Impact Fees
Court reviews of impact fees across the country have supported public governing entities collecting fees for development to the maximum degree of development’s need for additional public facilities. Possibly because of this fact, no local court reviews of county impacts fees have occurred.
The courts have reviewed impact fees upon development by local governments along the legal idea of a “rational nexus” between the developer and the government. The nexus test refers to a joint activity between the developer and the government for furtherance of the needs of the development. This partnership idea of government and development demands that the impact fee be based upon below guidelines:
- All fees must be attributable to a development impact on services.
- Fees must show a reasonable connection of the fee charged and the public needs of the development
- Fees must be proportional to the amount charged to developers and the public facilities needed by the development
- Fees must be applied to all development on the same basis. All new development that creates an impact on the community must be assessed the same kind of fees; however, those fees may vary by the magnitude of the impacts and related to the public purpose. (Interpretation here not simply understood.)
- The methodology and derivation of the fees must clearly define the impact fee as a fee to pay for public facilities and not as a tax upon the development.
Jefferson County compliance within these guidelines defines a safe harbor for the collection of impact fees from development in the county without challenge in the courts.
APA Impact Fee Standards
The American Planning Association, APA, has adopted Impact Fee standards which are presented below:
• The imposition of a fee must be rationally linked (the “rational nexus”) to an impact
created by a particular development and the demonstrated need for related capital
improvements pursuant to a capital improvement plan and program.
• Some benefit must accrue to the development as a result of the payment of a fee.
• The amount of the fee must be a proportionate fair share of the costs of the improvements
made necessary by the development and must not exceed the cost of the improvements.• A fee cannot be imposed to address existing deficiencies except where they are
exacerbated by new development.
• Funds received under such a program must be segregated from the general fund and used
solely for the purposes for which the fee is established.
• The fees collected must be encumbered or expended within a reasonable timeframe to
ensure that needed improvements are implemented.
• The fee assessed cannot exceed the cost of the improvements, and credits must be given
for outside funding sources (such as federal and state grants, developer initiated
improvements for impacts related to new development, etc.) and local tax payments which
fund capital improvements, for example.
• The fee cannot be used to cover normal operation and maintenance or personnel costs, but
must be used for capital improvements, or under some linkage programs, affordable
housing, job training, child care, etc.
• The fee established for specific capital improvements should be reviewed at least every two
years to determine whether an adjustment is required, and similarly the capital
improvement plan and budget should be reviewed at least every 5 to 8 years.
• Provisions must be included in the ordinance to permit refunds for projects that are not
constructed, since no impact will have manifested.
• Impact fee payments are typically required to be made as a condition of approval of the
development, either at the time the building or occupancy permit is issued.
Take action. Contact your Commissioner Information: 304-728-3284 or email Dale Manuel, President: