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Decatur moving forward on development impact fees

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Decatur moving forward on development impact fees

Decatur City Hall. Photo by Dean Hesse.
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By Cathi Harris, contributor

Decatur, GA — The Decatur Downtown Development Authority (DDA) on Friday got its first look at a proposed new impact fee program, leaving some members concerned about the potential impact to the city’s affordable housing efforts.

“We have a serious lack of affordable housing in this city. By its very nature, this will increase the cost of development, which will make that problem worse,” DDA Board Chair Conor McNally said. 

Decatur has been considering the use of impact fees for the past several years and formed an advisory committee last October to explore how they might be applied in Decatur.

Impact fees are used to help offset the increased cost to a city or county of providing additional infrastructure and services to new residents or businesses. 

Decatur is studying the use of impact fee programs in two main areas – public safety (police, fire and emergency management services) and parks, recreation and open space (park land, recreational facilities and bike and trail systems).

Georgia state law strictly regulates which cities can implement impact fees, how high the fees can be and what they can be implemented for, said John Maximuk, director of design, environment and construction for the city of Decatur. 

“We have been looking at this for a while based on interest from the City Commission in capturing all of the benefits of the development that the city was attracting and seeing that other jurisdictions have done that,” Maximuk said.

During the DDA board’s regular meeting Friday morning, they reviewed a draft impact fee methodology report. The report included the projected commercial and residential growth in the city of Decatur for the next 20 years, the expected increased demands on city services in that time, as well as a schedule of the maximum allowable impact fees that could be charged for each type of new development – residential, commercial, institutional, etc. The draft report can be found here.

As one example, it indicated a maximum allowable total impact fee of roughly $7,000 per new single-family home or apartment dwelling unit. 

McNally questioned why the fee for a single-family home would be the same as for a much smaller apartment.

“For the categories that we are looking at, apartments have the same impact and demand for services,” responded Bill Ross, the consultant hired by the city to develop the draft methodology. “Individual apartments have the same number of kitchen fires, the same number of police calls, and have the same use of public parks and bikeways as single-family homes. If we were looking at road impact fees, it would be different. Road [usage] would be lower, total would be lower. But on the categories that we are looking at, impact is about the same.”

The fees would only be applicable to new residential developments, Ross added. A builder who buys and tears down a single-family home to replace it with a larger home would not be subject to an impact fee for the services covered in this proposed program.

“There is no impact for these services on a replacement house where you have one house torn down and one built,” Ross said. “There is no change–from an impact fee standpoint–on demand when you replace a house, even if you tear down a two-bedroom house and add a bedroom. Impact fees are on new construction, a new unit constructed on a site for the first time.”

DDA board member David Harry said that the proposed amounts would seem to disproportionately affect new construction of denser housing, which the authority has been pursuing as a means of reining in skyrocketing housing costs.

“It does seem to be a little more punitive toward residential,” Harry said during the meeting. “Looking at what is in Decatur, I am not sure that it would be impactful because there is not a lot of available [undeveloped] land.”

Ross responded that the figures published in the draft report represented the maximum allowable fees that the city could charge, but that it could choose to implement lower fees in its final ordinance. Or, it may even choose not to assess all the fees it is permitted to under state law.

However, state law prohibits local governments from giving blanket exemptions to certain types of development, even if it is a type they want to encourage.

“You can’t exempt an entire land use, for example,” Ross said. “You can’t charge the impact fees for single-family and not multifamily.”

If you assess impact fees for residential development, you have to assess for all residential development.

The city could allow exemptions to the fees for types of development that it wants to encourage—for example, affordable housing, he said. But, state law requires that the local government make up the difference from some other funding source for each exemption granted.

So, if a developer is granted an exemption of 50 percent of the total impact fees for an affordable multifamily development, then the city would have to contribute the difference between what that developer pays and what they would have owed.

“They would have to contribute the difference to the general fund. That is something that is in the state law in black and white and cannot be altered,” Ross said.

Although the amounts represent a lot of money, they usually represent less than 1 percent of the cost of construction, he added. “In my experience, it has not negatively affected development at all. In the areas that have implemented impact fees, they have not seen a noticeable decrease.”

Another option would be for the city to give developers credit for infrastructure that they construct themselves that could be applied toward the amount of impact fees that they would be assessed.

“For example, if they don’t want to wait until the city can build a park or a sidewalk and they decide to set aside some acres of land toward the park or and build the sidewalk themselves, whatever dollar amount that is worth would be given as a credit,” Ross said.

The city does need to consider whether surrounding and “competing” jurisdictions have similar impact fees when deciding what, if any, to implement within their boundaries.

Decatur also has a mandatory inclusionary zoning ordinance, requiring all new residential development of five or more units to set aside 10 percent as affordable housing, which already makes financing new development more difficult.

The city’s current Unified Development Ordinance waives the building permit fees for affordable housing units to encourage their development, said Angela Threadgill, the DDA’s executive director and the director of planning and economic development for the city of Decatur.

“The units cost the same amount of money to build, but they can’t recover that by charging the market rate for rent or for sale,” she said.

Right now, the fees are still in the discussion stage, said Ross. He will be presenting the draft methodology report to the city’s Planning Commission on April 13 and then the City Commission on the 19th. 

After that, the advisory board will continue writing a draft impact fee ordinance for eventual approval by the City Commission. 

At the same time, a complementary capital improvements element (CIE), a document describing the capital improvements the city plans to make in these areas over the next five years, must be approved by both the Atlanta Regional Commission and the Georgia Department of Community Affairs before the city can begin collecting impact fees.

He expects a draft ordinance to be ready for the commission’s consideration in June. State law requires two public hearings at least 20 days apart before an impact fee ordinance can be adopted. Hearings could be held as soon as June and July and then the program adopted in August.

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