Agenda - 10-18-2016 - 7-a - School Impact Fee Updates

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2 a. Note for this option: Accessory dwelling units (e.g., granny flats) are included in the multi-family category (0-2 bedrooms), so setting the fee for the "average" calculation may result in an increase for accessory dwelling units, depending on the percentage of MSIF chosen. 4. Options 1-3 can also be implemented by increasing the percentage of MSIF over a period of time (e.g., adopt at x% effective 2017, y% effective 2018, and z% effective 2019). It should be noted that the adopted percentage of MSIF must be the same for all housing types (e.g., fees cannot be adopted at 40% MSIF for one housing type and 60% MSIF for a different housing type). Although no members of the public spoke at the public hearing, there was extensive discussion on the impact fee topic. Discussion included: • potential impacts on housing affordability; • lack of availability of a regional school construction cost inflationary index; • how units would qualify for the age restricted housing rate; • how changes in demographics, including housing choices, have resulted in differences in the impacts by housing types which could result in potential large increases in impact fees for some housing types, particularly multi-family, due to the large increase in the housing type's proportional impact on student membership; and • comments about which potential option to choose, including potential phasing, and at which percentage levels. Additional information regarding the "breakeven point" between current and updated fees was also requested by the BOCC. Details of this information, including assumptions regarding projected dwelling unit counts and bedroom count splits, are included in Attachment 1. In order to calculate the estimated impact fee collection amounts if fees are collected based on the number of bedrooms a unit contains, staff assumed a 50/50 split between units with fewer bedrooms and units with a greater number of bedrooms. If actual construction differs significantly from assumptions, actual impact fee amounts collected would be different (either higher or lower, depending on actual construction activity). The estimated breakeven point if data is disaggregated to bedroom count levels is 37% of the MSIF. The estimated breakeven point for the "calculated average" of housing types is 43.5%. When updated impact fees were last adopted in 2008, the initial fee amount was set at a level (32% of the 2008 MSIF) expected to collect $1.6 million in the Chapel Hill — Carrboro district in order to reach the amount budgeted for debt service in that district. The "breakeven point" was not calculated in 2008 (i.e., the MSIF percentage point was based on budget needs). Additionally, a four-year implementation period was adopted since the starting point of 32% of the MSIF provided a very low partial cost recovery. The fee started at 32% of the MSIF on January 1, 2009 and moved to 40%, 50%, and 60% each January 1 of subsequent years, completing the annual increases in 2012 (see Attachment 5). Information addressing comments regarding affordability is included in Attachment 4. This topic was also discussed at the joint BOCC/School Boards meeting on September 29 (agenda materials at http://www.orangecountync.gov/document center/BOCCAgendaMinutes/160929.pdf). A few of the topics discussed were construction inflation in the Triangle region, impact of class size legislation, and level of service standards as they relate to portables.