Finance Committee Agenda and Packet 2010 12 06 AMENDED 12/02/10

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COUNCIL COMMUNICATION TO: MAYOR AND FINANCE COMMITTEE MEMBERS FROM: MALCOLM FLEMING, CITY MANAGER DATE: DECEMBER 6, 2010 SUBJECT: IMPACT FEE REVIEW AND ADJUSTMENT ORIGINATING DEPARTMENT: CITY MANAGER SUMMARY: The City imposes impact fees on new development. Revenue from the fees is used to cover a portion of the cost to construct Transportation, Municipal Government, Police, Library, Parks, Trails and Recreation capital facilities. The impact fee revenue may not be spent for periodic or routine maintenance, rehabilitation, or replacement. Section 3.18.040.C.1.a of the Louisville Municipal Code (LMC; see below) provides for the annual adjustment of impact fees to reflect the effects of inflation on the City’s costs for capital facilities. The LMC specifies that the adjustment shall be based on the annual construction cost index published by Engineering News Record. Based on that index, between December 2006, when the City adopted its current impact fees, and October 2010, the most recent date the construction cost index was published, the cost of construction increased 13.2%. The City’s Impact Fees have not been adjusted since they were implemented in December of 2006. The LMC, in section 3.18.100 (see below), also requires the City Manager or designee to review the impact fees at least once every five years to ensure several things, including making sure that the fees do not exceed the actual costs of constructing the capital facilities for which the fees are paid. Anecdotal evidence suggests that the City and other entities including CDOT have experienced good bid prices for various transportation, parks and other construction projects. Accordingly, it may be appropriate for staff to review the actual unit costs or other factors to determine if the City’s impact fees are set at the appropriate level or if they need to be adjusted as provided by the LMC. Sec. 3.18.040. C.1.a: Annual adjustment of fees to reflect effects of inflation. The impact fees shown in Appendix A: Impact Fee Schedule shall be adjusted annually to reflect the effects of inflation on those costs for city municipal capital facilities, police capital facilities and transportation capital facilities. Prior to November 1, 2007, and on November 1 of each following year unless and until the fees in Appendix A are revised or replaced, each impact fee amount set forth in Appendix A shall be adjusted for inflation, based on the annual construction cost index published by Engineering News Record. Such adjustments in the impact fees shall become effective immediately upon SUBJECT AGENDA ITEM ë