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CALCULATION METHODOLOGIES <br /> There are three basic methods used to calculate impact fees. The incremental expansion method <br /> documents the current level of service for each type of public facility. The intent is to use revenue <br /> collected to expand or provide additional facilities, as needed to accommodate new development, <br /> based on the current cost to provide capital improvements. The plan-based method is commonly used <br /> for public facilities that have adopted plans or engineering studies to guide capital improvements. A <br /> third approach, known as the cost recovery method, is based on the rationale that new development is <br /> paying for its share of the useful life and remaining unused capacity of an existing facility. All three <br /> methodologies are employed for the fees included in this study and are described further in this report <br /> in the respective fee chapter. A summary is provided in Figure 1 showing the methodologies, <br /> infrastructure components, and allocations used to calculate impact fees for the City of Louisville. <br /> The objective of evaluating these different methodologies is to determine the best measure of the <br /> demand created by new development for additional infrastructure capacity. <br /> Figure 1: Recommended Calculation Methodologies <br /> Methodology <br /> Fee Category Component Buy-in Incremental plan-based <br /> Expansion <br /> Parks Improvements ✓ <br /> Trails ✓ <br /> Recreation Facilities ✓ <br /> City Hall ✓ <br /> General City Shops ✓ <br /> • <br /> Government Police ✓ <br /> Headquarters <br /> Library <br /> Facility ✓ <br /> Materials ✓ <br /> Bicycle and <br /> Transportation <br /> Pedestrian ✓ <br /> Improvements <br /> Street Projects ✓ <br /> CREDITS <br /> A general requirement common to impact fee methodologies is the evaluation of credits. Two types of <br /> credits should be considered, future revenue credits and site-specific credits. Revenue credits may be <br /> necessary to avoid potential double payment situations arising from a one-time impact fee plus the <br /> payment of other revenues (e.g., property taxes) that may also fund growth-related capital <br /> improvements. There is a potential for double payment of capital costs due to future payments on debt <br /> for public facilities. This type of credit is included for the Recreation and Library Impact Fees. <br /> 6 FINAL VERSION <br /> 12 <br />