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of :o-crom." in tact,the tax rn-oits that began with the cost tat an average home. Bu:.iiice bilk for Mater aiad st`wer
<br /> Proposctan i_; to Caiirorma.and eon-mue to:his day,are an sen,ces.most impact fees are assessed on an average-cos, hasis. the
<br /> .a indirect ackno viedgement that current patterns and rates of impact fees on a new home located 10 niiies from a treatment plant
<br /> 4rvciopmcn:simpi.\ are not sustainable,As federal subsidies for tend to be the same as those levied on homes two miles away.rtien
<br /> aerstate highways,sewer work,and other pubiic infrastructure though the actual costs of providing services to the former may be
<br /> 4.a: made sora-1 possible disappeared over the pact two decades much higher.
<br /> (witnour any apparent cut in federal taxes),the public simph,was To address this equin,issue.some jurisdictions, including
<br /> nor willing to see those costs shifted to state and local government Tallahassee.Florida,and DuPage Counn-.Illinois,have begun to
<br /> budgets.As a result,government's ability to cope with growth move toward geographically variable fees.a variation of°marginal
<br /> pressures is often paralyzed."We have now effectively neutralized cost"pricing.Other jurisdictions in Florida and California are
<br /> government's ability to raise money."saes Nicholas. seliing"pre-paid subscriptions" to landowners and developers who
<br /> plan on hooking into public service systems within the next 20
<br /> A Question of Fairness years.
<br /> TO add to the complexity of the issue,the costs of sprawl are not Frank think that many local governments now have the
<br /> distributed evenly.uthen new developments are built far from analytical capacity to create more sophisticated marginal pricing
<br /> water and sewer treatment plants or schools,it creates higher systems.Yet acceptance of marginal cost pricing by local
<br /> incremental or"marginal"costs for adding new sewer system governments has been slow.The problem,"Politicians don't like to
<br /> caoacity or operating school buses. By contrast,the marginal cost of charge voters one rate and others a differenr onc," notes Frank.Jim
<br /> new develooment closer to existing services or facilities is lower. Nicholas seconds that observation,noting that average-cast pricing
<br /> However,becausc costs currently are evenly distributed among all has been used because it is simpler and easer to defend in court.
<br /> users by average-cost pricing.those who live farther away pay appearingto be fair—even if it really isn't.
<br /> proporrionateh•less.As a result,some users subsidize other users. Nicholas believes the shift to marginal cost pricing can happen
<br /> FSU's Frank says the result is"an enormous price subside."He only if impact fees arc an accepted realiry in a jurisdiction and there
<br /> estimates that the true marginal costs of providing sewer sera ice to a is a;aod history of case law regarding their consritutionaiin•and
<br /> new home can range from 52,738 to 526,263—far higher than methodology.Frank suggests that One v,•ay to build support for a
<br /> most existing impact fees.And because newer homes tend to be more equitable pricing system may be to build coalitions of people
<br /> most affordable for high-income buyers,this inequiry often in low-cost locations who are willing to complain that sewer rates
<br /> translates into a subsidy of the rich by the poor,Frank says. are far too high because high-cost locations are not being charged
<br /> "There is a tremendous equiry issue here,'sav Nicholas."What full cost,The difficulty with building such coalitions is that a clear
<br /> we've evolved is capitalism for the poor and socialism for the rich. geographic break may not actually exist in terms of land ownership
<br /> So many problems we have today can be related back:to that." patterns.
<br /> One visible impact of this subsidy is sprawl.V?hy?As with \Xt"nen officials in L.ee County,Florida.proposed a S7,500
<br /> bsidies for the automobile,subsidies for sprawl simply encourage "sprawl"surcharge on outlying development,it was met with"near
<br /> more development in costly-to-serve locations,because developers riots"at a public hearing,with iirde support even from existing
<br /> are allowed ro pass off some of their costs to the general public.A homeowners in central locations,according to Nicholas.A public
<br /> less visible impact of subsidies is the ongoing fiscal distress of many poll later revealed that many of the existing homeowners were
<br /> growing communities.Frank believes that cuing average-cost speculating on land at the urban fringe that would be subject to the
<br /> pricing"systematialh•underfunds"public services.Actual marginal new surcharge.
<br /> costs are often higher that assessed costs,creating an ever-widcning
<br /> fiscal deficit for local and state governments. Melding Markets and Law
<br /> The larger question,says Nicholas,is whether full cost/marginal
<br /> Recapturing the Costs of Sprawl cost pricing would influence development at all.He notes that in
<br /> V;-hat an be done to account fully for the cost of development and Lee County.the proposed S. 500 surcharge would have been a
<br /> eliminate inequities in the current system' WriE t taxpayers already minor portion of the cost of$200.000-5400.000 homes or of lots
<br /> pushed to the limit,and many governments facing huge deficits,is valued at more than S 100,000."If the issue is trying to affect
<br /> there hope for changing course? development patterns,don't hook your cart to this horse(full-cast
<br /> Communities increasingly are charging impact fees for schools, pricing),"%%arns Nicholas."It is certainly a component of
<br /> roads,and sewers.According to Jim Nicholas,these fees can be as solution.But would sprawl go away if development picked up
<br /> high as S50,000 on a single-family home in some parts of the all these costs?I think the answer is no."
<br /> country,in other places,impact fees are nonexistent.The average Nicholas observes that"12w sets the parameter of the
<br /> impact fee for a single-family home is S 10,000.but is growing at a marketplace.If we don't like the results of the marketplace,then
<br /> rate of 20 percent per year.Typical rata are$7 per square foot for we need to go back to those laws and either restructure them or
<br /> retail space,S6 per square foot for office development.and SS per somehow modify they to get the results we want,"One strategy he
<br /> square foot for industry. recommends is tailoring planning incentives to reduce road impact
<br /> Nicholas sees impact fees rising to an average of 525.000 to Pecs if a developer agrees to promote vanpooling or mass transit,as
<br /> $30,000 per single family home--not an insubstantial portion of is done in Montgomery County,Maryland.Similar incentives
<br /> could be createa to encourage compact development,affordable
<br /> Kevin Kasewsii is director of the National Growth Afanagement housing,and other desirable outcomes.
<br /> �•ea,,4 p Project in Portland Oregon. NGAILP i;a 21-statr nerwo,k
<br /> conservation and planning organi atioru.Its mission is to advocate Least-Cost Development
<br /> MEN new state and regional solutions to managinggrowtly through Another intriguing way to use market and regulatory strategies
<br /> education, research,and leadership.develapmenr. This article originally togcther to contain sprawl—particularly in an era of ti,,hr money--
<br /> appeared in Developments, the NGAILP newdarer, may be the idea of"least-cost"development.The electric power
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