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14 <br /> CHCCS School Impact Fee Report(DRAFT) <br /> extent can be interchangeable, because each allocates facility costs in proportion to the needs created by <br /> development. <br /> Reduced to its simplest terms, the process of calculating impact fees involves two main steps: (1) <br /> determining the cost of development-related capital improvements and (2) allocating those costs <br /> equitably to various types of development. In practice,though,the calculation of impact fees can become <br /> quite complicated because of the many variables involved in defining the relationship between <br /> development and the need for facilities. The following paragraphs discuss three basic methods for <br /> calculating impact fees and how those methods can be applied. <br /> Plan-Based Fee Calculation.The plan-based method allocates costs for a specified set of improvements to <br /> a specified amount of development.The improvements are identified by a facility plan and development <br /> is identified by a land use plan. In this method, the total cost of relevant facilities is divided by total <br /> demand to calculate a cost per unit of demand. Then, the cost per unit of demand is multiplied by the <br /> amount of demand per unit of development (e.g. housing units or square feet of building area) in each <br /> category to arrive at a cost per specific unit of development (e.g., single family detached unit). <br /> Cost Recovery Fee Calculation. The rationale for the cost recovery approach is that new development is <br /> paying for its share of the useful life and remaining capacity of facilities already built or land already <br /> purchased from which new growth will benefit. This methodology is often used for systems that were <br /> oversized, such as sewer and water facilities. To calculate a fee using the cost recovery approach, the <br /> facility cost is divided by ultimate number of demand units the facility will serve. <br /> Incremental Expansion Fee Calculation. The incremental expansion method documents the current LOS <br /> for each type of public facility in both quantitative and qualitative measures, based on an existing service <br /> standard (such as square feet per student).The LOS standards are determined in a manner similar to the <br /> current replacement cost approach used by property insurance companies. However, in contrast to <br /> insurance practices, the fee revenues would not be for renewal and/or replacement of existing facilities. <br /> Rather, revenue will be used to expand or provide additional facilities, as needed, to accommodate new <br /> development. An incremental expansion cost method is best suited for public facilities that will be <br /> expanded in regular increments,with LOS standards based on current conditions in the community. <br /> Credits. Regardless of the methodology, a consideration of"credits" is integral to the development of a <br /> legally valid impact fee methodology. There are two types of "credits" each with specific, distinct <br /> characteristics, but both of which should be addressed in the development of impact fees. The first is a <br /> credit due to possible double payment situations. This could occur when contributions are made by the <br /> property owner toward the capital costs of the public facility covered by the impact fee.This type of credit <br /> is integrated into the impact fee calculation. The second is a credit toward the payment of a fee for <br /> dedication of public sites or improvements provided by the developer and for which the impact fee is <br /> imposed. This type of credit is addressed in the administration and implementation of an impact fee <br /> program. <br /> 7 <br />