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