Impact Fee Liaison Committee Agenda and Packet 2011 06 20

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collected 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. 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. All three methodologies are employed for the fees included in this study and are described further in this report in the respective fee chapter. A summary is provided in Figure 1 showing the methodologies, infrastructure components, and allocations used to calculate impact fees for the City of Louisville. The objective of evaluating these different methodologies is to determine the best measure of the demand created by new development for additional infrastructure capacity. Figure 1: Recommended Calculation Methodologies CREDITS A general requirement common to impact fee methodologies is the evaluation of credits. Two types of credits should be considered, future revenue credits and site specific credits. Revenue credits may be necessary to avoid potential double payment situations arising from a one -time impact fee plus the payment of other revenues (e.g., property taxes) that may also fund growth related capital improvements. There is a potential for double payment of capital costs due to future payments on debt for public facilities. This type of credit is included for the Recreation and Library Impact Fees. The second type of credit is a site specific credit for system improvements that have been included in the impact fee calculations. Policies and procedures related to site specific credits for system improvements should be addressed in the ordinance that establishes the development fees. However, the general concept is that developers may be eligible for site specific credits only if they provide system 6 Methodology Fee Category Component Buy -in incremental Expansion Plan -based Parks Improvements Trails Recreation Facilities General Government City Hall City Shops Police Headquarters Library Facility Materials Transportation Bicycle and Pedestrian Improvements Street Projects collected 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. 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. All three methodologies are employed for the fees included in this study and are described further in this report in the respective fee chapter. A summary is provided in Figure 1 showing the methodologies, infrastructure components, and allocations used to calculate impact fees for the City of Louisville. The objective of evaluating these different methodologies is to determine the best measure of the demand created by new development for additional infrastructure capacity. Figure 1: Recommended Calculation Methodologies CREDITS A general requirement common to impact fee methodologies is the evaluation of credits. Two types of credits should be considered, future revenue credits and site specific credits. Revenue credits may be necessary to avoid potential double payment situations arising from a one -time impact fee plus the payment of other revenues (e.g., property taxes) that may also fund growth related capital improvements. There is a potential for double payment of capital costs due to future payments on debt for public facilities. This type of credit is included for the Recreation and Library Impact Fees. The second type of credit is a site specific credit for system improvements that have been included in the impact fee calculations. Policies and procedures related to site specific credits for system improvements should be addressed in the ordinance that establishes the development fees. However, the general concept is that developers may be eligible for site specific credits only if they provide system 6