Agenda - 09-16-2008 - 6d - Laserfiche WebLink

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p~ SCHOOL IMPACT FEES: Cw,re~ Hiu-Cn~sORO Cmr $CHOOIS Orange County, North Carolina APPROACH AND METHODOLOGY There are three basic methodologies used to calculate impact fees. The incremental expansion method documents the current level of service for each type of public facility in both quantitative and qualitative measures. The intent is to use fee revenue to expand or provide additional facilities, as needed to accommodate new development, based on the current cost to provide capital improvements. The plan-based method is commonly used for public facilities that have adopted plans or engineering studies to guide capital improvements, such as utility systems. A third approach, known as the cost recovery method, is based on the rationale that new development is paying for its share of the useful life and remaining unused capacity of an existing facility or land. Maximum supportable school impact fees for Chapel Hill-Carrboro City Schools (CHCCS) are derived using the incremental expansion approach. For school capital improvements, the most common methodology employed is typically the incremental expansion method when future capacity needs are anticipated. This approach allows for the greatest flexibility in providing future capacity improvements. Under this methodology, the fees are based on current levels of service (LOS) and project costs for each type of school facility (i.e., elementary, middle, and high), land for school sites, support facilities, portable classrooms, and buses. The LOS is documented, and the intent is to use fee revenue to provide additional or expanded public school and related facilities as needed to accommodate new development. The current LOS and capital costs for new or expanded facilities are used to derive a cost per student for each type of school facility. Using the cost per student and the average CHCCS student generation rate, a cost by type of residential unit is derived. The term "student generation rate" refers to the average number of public school students per housing unit in the CHCCS system. Further discussion on student generation rate calculations is provided in the body of this report and in Appendix A. A general requirement common to impact fee calculations is the evaluation of credits. Two types of credits should be considered, future revenue credits and site-specific credits. Revenue credits are necessary to avoid potential double payment situations arising from the payment of a one-time impact fee plus the payment of other revenues that may also fund growth-related capital improvements. Revenue credits are dependent upon the fee methodology used in the cost analysis. To avoid this potential double payment situation, future revenue credits are integrated into the fee to account for outstanding debt on CHCCS school facilities. A credit is necessary since new residential units that will pay the fee will also contribute to future principal payments on this remaining debt through property taxes. A credit is not necessary for interest payments because interest costs are not included in the costs. Tischleriise 2 fisat',C[~omic&Pianntng Ccnm!t~nti.