View Full Version : Development fees vs. peer cities



Pete
04-22-2016, 01:02 PM
http://www.okctalk.com/images/pete/developmentfees1.jpg


http://www.okctalk.com/images/pete/developmentfees2.jpg


http://www.okctalk.com/images/pete/developmentfees3.jpg

onthestrip
04-25-2016, 09:44 AM
Article from todays paper shows the huge increase in impact fees that we might see in OKC. They gave two examples of existing or current projects to what they would pay in the proposed fee arrangment, and its gigantic increases. So big that I cant imagine how this wont send new developments to surrounding suburbs.

The OnCue service station and convenience store at SW 89 Street and Pennsylvania Avenue passed city inspections and was cleared to open on Sept. 17, 2013.
The building permit cost $4,716.43 and the existing water and wastewater impact fee was $1,320.
Under the proposed traffic impact fee, the OnCue would be classified as a high-traffic development in an "infill" area situated between the urban core and less-developed rural fringe.
At $3.38 per square foot, the 7,610-foot project's traffic impact fee would be $25,721.80.
The final inspection of the Social Security office at 12301 N Kelley Ave. was completed Sept. 26, 2014.
Building permits ran $10,844.56 and the existing impact fee was $1,370.
Under the proposed traffic impact fee, the building would fall under the office/institutional/lodging classification, situated in a rural area.
At $2 per square foot for 21,149 square feet, the developer would pay $42,298.

OnCue's new fee would be 20x higher. The SS office building would be 30x higher. Either OKC will bend and arbitrarily reduce the fees, like many of the other cities do listed above, or they will be forced to watch many new projects go to Edmond, Yukon, Moore, etc.

Oklahoma City Council considers impact fees to improve streets | News OK (http://newsok.com/oklahoma-city-council-considers-impact-fees-to-improve-streets/article/5493974)

bradh
04-25-2016, 09:50 AM
Development fees won't mean a damn to OnCue. They're going to build where it makes sense and is underserved. They're not going to avoid an underserved area in OKC where they could make a killing just because of an extra $20,000 in initial fees (that they'd likely make up the first day in business).

This is a very interesting topic, and touchy. When I asked Council McAtee about increasing impact fees at a trade org luncheon a few months back (not knowing this was in the works) I got a weird vibe from him about it, I took it as he knows it's a slippery topic.

onthestrip
04-25-2016, 10:26 AM
Development fees won't mean a damn to OnCue. They're going to build where it makes sense and is underserved. They're not going to avoid an underserved area in OKC where they could make a killing just because of an extra $20,000 in initial fees (that they'd likely make up the first day in business).

This is a very interesting topic, and touchy. When I asked Council McAtee about increasing impact fees at a trade org luncheon a few months back (not knowing this was in the works) I got a weird vibe from him about it, I took it as he knows it's a slippery topic.

Maybe not to OnCue, but what about Hobby Lobby, or the next PayCom. When you are building 100s of thousands of square feet of office or warehouse and the costs go up 100s of thousands of dollars, or even millions, they could easily go elsewhere. But even beside the big dogs, the guy who is building 20,000sf office building could go a few miles further outside of OKC and save themselves $75,000. And then what does OKC get? Nothing.

There is a reason the suburbs are anxiously awaiting this approval.

bradh
04-25-2016, 11:06 AM
What they should have done was tier it to where the further away from the core you built the more expensive it is.

onthestrip
04-25-2016, 03:13 PM
What they should have done was tier it to where the further away from the core you built the more expensive it is.

There is a slight discounted rate for the core area.

Pete
04-26-2016, 05:39 AM
Oklahoma City Council considers impact fees to improve streets | News OK (http://newsok.com/article/5493974)

Teo9969
04-26-2016, 07:32 AM
What they should have done was tier it to where the further away from the core you built the more expensive it is.

Have to be careful with this, otherwise you send development to surrounding regions.

What really needs to be done is to promote development in certain key areas by providing better rates, and better rates for certain densities, usages in certain areas. So I guess that you have to raise the rates as a whole then promote certain areas through discounts. But the density discount especially is important.

Pete
04-26-2016, 10:21 AM
City just issued this press release:

*********

Oklahoma City Council adopts impact fees for streets and parks

The Oklahoma City Council voted Tuesday to establish new development impact fees to help infrastructure keep pace with growth in Oklahoma City.

The fees are the product of years of collaboration between City staff and developers.

Oklahoma City charges impact fees for water and wastewater, which are only two of the eight categories allowed by state statute. The ordinance adopted Tuesday adds fees for two more categories: streets and parks systems.

The impact fee ordinance was introduced Jan. 26, and a public hearing was March 29.

How impact fees work

Local governments charge impact fees on a per-square-foot basis for new residential and commercial development projects. The fees are used to pay to build infrastructure needed to serve the new development.

Impact fees in Oklahoma can be used for construction of infrastructure, but not for maintenance. Using impact fees to help pay for new infrastructure allows more revenue from general obligation bonds to be spent on maintenance instead of new construction.

As OKC continues to grow, being able to use more bond money on maintenance is critical to keeping basic infrastructure like water, sewer service and streets in good shape. Using too much bond revenue on new construction can stretch resources too far.

“We are chasing development and struggling to keep up with basic infrastructure, not to mention the other important things that make our communities work like parks, schools (and) libraries,” Planning Director Aubrey Hammontree told the Council in January.

‘Pay-as-we-grow’

The adopted streets and parks impact fees range from 61 cents to 70 cents per square foot of new residential construction, depending on the location. Partial exemptions can apply for local private parks built by the developer if the park meets criteria for size and amenities.

The adopted streets impact fees range from and 26 cents to $2.20 per square foot of non-residential construction, depending on the location.

The streets fees were reduced between 40 and 45 percent from the original proposal in January.

The Council approved several other amendments to the original proposal from January, including allowing performance bonds for park exemptions to be delayed until half of the lots have been developed. Other amendments included modifications to requirements for pools or splash pads, clarifications regarding existing local parks and delaying the fees’ implementation until Jan. 1, 2017.

The City will use the streets fees for improvements to streets required by the new developments. The parks and trails fees will be used to pay for increasing capacity in local and regional parks and trails to meet increased demands caused by the new developments.

Hammontree has described the use of impact fees as a “pay-as-we-grow” formula similar to the MAPS program.

Collaborative effort

Discussions about development impact fees new fees date to as early as 2000. The City Council discussed a multi-departmental City staff study at a workshop in 2007, and staff met with private developers to discuss the fees in 2007-08.

After discussions were put on hold in the wake of the global recession, the process re-started after the state Legislature defined how cities can administer the fees in 2011. City staff began research, developed a new approach and met with stakeholder groups to review the current proposal in 2014. More collaboration during the adoption process this year led to the amendments approved Tuesday.

The discussions and stakeholder feedback meetings helped shape a proposal that the market can bear and allow Oklahoma City to remain competitive.

Rover
04-26-2016, 11:18 AM
What they should have done was tier it to where the further away from the core you built the more expensive it is.

How about based on density and existing infrastructure rather than geo-specific. Should work out for the core under that scenario anyway. But urban pockets outside the core should be rewarded also.

bradh
04-26-2016, 11:22 AM
How about based on density and excited isting infrastructure rather than geo-specific. Should work out for the core under that scenario anyway. But urban pockets outside the core should be rewarded also.

Good idea

David
04-26-2016, 12:07 PM
I watched the council stream this morning, and per the discussion that idea is actually how the new fees will work.

It was pretty interesting, I'll keep an eye out for the youtube recording and post a timed link.

bradh
04-26-2016, 12:19 PM
What was the general tone of everyone on the council?

David
04-26-2016, 12:22 PM
Generally supportive of the change, though Ed wasn't a fan of the 50/50 residential/commercial property split somehow baked into the rules.

He also had some great slides shown detailing roads way out from the core that received the fancy four lane treatment in spite of having mostly tiny daily traffic counts.

bradh
04-26-2016, 01:01 PM
He also had some great slides shown detailing roads way out from the core that received the fancy four lane treatment in spite of having mostly tiny daily traffic counts.

No kidding Ed, isn't that why this was being proposed? What does that have to do with the price of tea in China?

David
04-26-2016, 01:53 PM
Today's discussion: Oklahoma City City Council - Tuesday, April 26, 2016 (https://www.youtube.com/watch?v=p45-7SceUdk&feature=youtu.be&t=1457). The development fees part starts at 24 minutes in in case that link starts at the beginning.

warreng88
04-27-2016, 08:07 AM
From the JR:

OKC Council adds fees for infrastructure growth

By: Brian Brus The Journal Record April 26, 2016

OKLAHOMA CITY – Residential and commercial development in Oklahoma City will soon be supported by fees from the industry to help pay for infrastructure growth.

City Council members on Tuesday approved amendments to city ordinances that will provide $8.7 million a year to build and maintain streets as well as and parks near where taxpayers live. Oklahoma City already levied one-time impact charges for water and wastewater services, only two of the eight categories allowed by state statute.

Discussions about Oklahoma City establishing new development impact fees have been going on for a decade. Just a few weeks ago, when it seemed residential developers had agreed to proposed changes, those on the commercial side called for more research. City officials such as Planning Director Aubrey Hammontree and Councilman Mark Stonecipher said Tuesday they were pleased that they had found figures that satisfied commercial developers’ concerns.

Beginning Jan. 1 next year, homebuilders will receive building permits in exchange for development fees ranging from 77 cents to 92 cents per square foot, depending on overall size and location of the structure. Commercial projects will be charged 48 cents to $4 per square foot. One of the biggest differences in the two types of rates is that commercial developers won’t be expected to support parks. Lower rates will be found in the already-developed urban core, with higher rates on the fringes of the city.

Comparing municipal processes between cities and types of construction was complicated, City Manager Jim Couch said. City staff looked at 10 cities of similar size including Albuquerque, New Mexico; Charlotte, North Carolina; and Colorado Springs, Colorado.

“It is important to note that the amount of an impact fee actually charged can vary substantially depending on credits or discounts granted by a particular city,” Couch said. “Credits are sometimes given to developers who chose to install improvements themselves. These credits can be used in lieu of paying impact fees.”

For example, Fort Worth awarded $4.9 million in impact fee credits last year to balance the value of arterial street improvements built by developers. That city also accepted $2.3 million worth of credits in lieu of impact fees. At the same time, Fort Worth benefited from 14 million square feet of residential construction and 12.2 million square feet of commercial development. On the other hand, discounts in Jacksonville, Florida, are granted to developments near well-connected transportation infrastructure and local retail.

Councilman Ed Shadid expressed frustration that City Hall had even reached a point of needing such a drastic change. He likened shortfalls in previous infrastructure bond issues to a Ponzi scheme that had finally fallen short.

Developer Mark Ruffin said he agreed that earlier development incentives might have been misdirected.

“We obviously need to contribute more to what we’re doing, and that’s why we’re here today,” he said. “I don’t disagree with you at all, councilman.”

bradh
04-27-2016, 08:39 AM
Councilman Ed Shadid expressed frustration that City Hall had even reached a point of needing such a drastic change. He likened shortfalls in previous infrastructure bond issues to a Ponzi scheme that had finally fallen short.

This is why no one likes you Ed. You bitch to hear yourself bitch.

warreng88
01-03-2018, 08:06 AM
OKC development fee collections less than expected

By: Brian Brus The Journal Record January 2, 2018

OKLAHOMA CITY – City Hall collected $1.8 million in new development impact fees for the first half of 2017 that will be invested in public parks, trails and streets infrastructure, city officials said Tuesday.

That total was less than what was originally expected when the City Council approved the change in 2016, City Manager Jim Couch said, although he did not cite a specific figure for comparison.

Councilman David Greenwell suggested the slow growth was due in part to a general economic downturn. He said fee collections will improve along once the market for new construction picks up again.

Couch agreed and added that developers also had projects already underway before the effective date of implementation, Jan. 1, 2017.

“It’s a little slower than the amount of money that we projected with the impact fees, but I think the developers … put some of their projects into place before the impact fees came into play,” Couch said.

Developers agreed on both counts. Jeff Van Hoose at Van Hoose Construction, for example, said contractors simply had less work to complete last year, but new impact fees had more significance than City Hall might realize.

“I still think the traffic impact fees are the worst thing that’s ever happened to Oklahoma City,” Van Hoose said. “It’s the opposite of pro-business. I call it a Robin Hood – they are trying to steal from the rich and give it to the poor, and the city thinks it’s OK to take money out of, say, 15 developers’ pockets and let everybody benefit from it.”

For more than a decade, City Hall had been trying to win over developers to contribute a larger portion toward infrastructure demands resulting from their construction projects. The logic behind the proposal was simple: More people living in any particular area means heavier traffic and greater demand for parks and related amenities nearby, Planning Department Director Aubrey McDermid said.

By mid-2016, city officials had worked out a proposal that garnered enough industry backing to pass in the City Council. Developers asked for a slight delay in implementation until the start of 2017, however, giving them time to file for as many building permits as they could reasonably schedule at a lower cost.

Some threatened to reduce their work in Oklahoma City and instead build in neighboring municipalities. Van Hoose said the change put Oklahoma City in a bad competitive position because rental rates are so low that developers struggle to recoup costs.

The fees collected so far have not been spent. Finance Director Craig Freeman said they are held in escrow and earmarked for certain projects that have not been identified yet, although a traffic study has been planned. Freeman said the fees are kept separate to ensure they go to projects near each development.

The City Council originally agreed that beginning in 2017, homebuilders would be charged development fees ranging from 77 cents to 92 cents per square foot, depending on overall size and location of the structure; commercial projects would be charged 48 cents to $4 per square foot. One of the biggest differences in the two types of rates is that commercial developers aren’t expected to support parks. Developers may request exemptions if they plan to build or improve parks themselves; however, a performance bond is required.

Couch said the city staff will make recommendations about how to spend the fees and leave the decision up to the City Council. The fees cannot be spent on maintenance costs.

“It’s clearly too early to tell exactly what the revenues are going to be. It was years and years to come up with this process,” Couch said. “I think it’s going to be beneficial to us as we go forward.”