Impact Fees

North Logan, Utah

 

Originally prepared by:

Tischler & Associates, Inc.

Bethesda, MD and Los Angeles, CA

 

Updated September  - October 2006 by

Jeffrey M. Jorgensen  P.E.

City Administrator/Recorder North Logan City

 


Executive Summary

Impact fees are one-time payments used to construct system improvements needed to accommodate development.  As documented in this report, North Logan City has complied with all requirements of Utah’s Impact Fees Act. 

Impact fees for North Logan City are proportionate and reasonably related to the capital facility service demands of new development.  The written analysis of each impact fee methodology and the cash flow analysis found at the end of this report, establish that impact fees are necessary to achieve an equitable allocation of the costs, borne in the past and to be borne in the future, in comparison to the benefits already received and yet to be received.  Impact fee methodologies also identify the extent to which newly developed properties are entitled to various types of credits to avoid potential double payment of capital costs.

For each type of public facility included in this Impact Fees report, North Logan City has evaluated and selected an appropriate methodology.  Specific costs have been identified using local data and current dollars.  After discussions with City staff, Tischler & Associates, Inc. (TA) determined demand indicators for each type of public facility and calculated residential and nonresidential proportionate share factors.  These factors are used to allocate costs by type of development.  The formulas used to calculate the impact fees are diagrammed in a flow chart for each type of public facility.  Also contained in this report are summary tables indicating the specific factors used to derive each component of the impact fees.  These factors are also referred to as Level of Service (LOS) standards.

There are three basic approaches used to calculate the impact fees for the public facilities addressed in this report.  The first method is a replacement cost method.  This method documents the current Level of Service (LOS) for each type of public facility in both quantitative and qualitative measures.  The term “replacement cost” essentially describes how the LOS standards are determined (i.e., similar to the practice used by property insurance companies).  However, in contrast to insurance practices, the City will not use the funds for renewal and/or replacement of existing facilities.  Rather, North Logan will use impact fee revenue to expand or provide additional facilities as needed to accommodate new development.  A replacement cost method is best suited for public facilities that will be expanded incrementally in the future, with LOS standards based on current conditions in the community.  In North Logan, this method has been used for parks and recreation improvements.

The second basic approach used to calculate impact fees is the plan-based method.  This method is works well for public facilities that have commonly accepted engineering standards to guide capital facilities plans.  North Logan has used a plan-based methodology in the calculation of impact fees for roads, culinary water and wastewater collection systems.

A third impact fee calculation approach is the buy-in method.  To the extent that new growth and development is served by the previously constructed improvements, Utah’s Impact Fee Act allows the City to be reimbursed for the previously incurred public facility costs [see 11-36-202.(3)(b)].  This method is used for facilities that have adequate capacity to accommodate new development, at least for the next five to six years.  The rationale for the buy-in approach is that new development is paying for its share of the useful life or remaining capacity of an existing facility.  This method has been used for the City’s community park land and components of the water and sewer systems.

Another general requirement that is common to development fee methodologies is the evaluation of credits.  There are two distinct types of credits that should be considered when implementing impact fees.  First, revenue credits should be determined to avoid potential double payment situations arising from the payment of a one-time development impact fee and then subsequent payments of other revenues that may also fund growth-related capital improvements (e.g. gas taxes for roads).  Revenue credits for each type of public facility have been evaluated and included in this report.

The second type of credit is a site-specific credit for system improvements that have been included in the impact fee calculations.  Specific policies and procedures related to site-specific credits will be addressed in the ordinance that establishes the City’s fees.  However, the general concept is that developers may be eligible for site-specific credits only if they provide system improvements that have been included in the City’s impact fee calculations.  Project improvements normally required as part of the development approval process are not eligible for credits against impact fees.


The information set forth in Figure 1 below is included in this study simply for purposes of historical reference and comparison.  The City requires the payment of these fees at the time building permits are issued.

Figure 1:  Existing Fee Schedule


Figure 2 provides a schedule of the maximum supportable impact fees for North Logan City.   Residential impact fees are calculated on a per-housing-unit basis for parks and roads.  Nonresidential impact fees for roads are calculated per 1,000 square feet of building (gross floor area).  Impact fees for water and wastewater collection systems are calculated per water meter size for all types of development.

Figure 2:  Impact Fee Schedule


Land Use and Demographic Assumptions

This section of the report documents the demographic and land use assumptions used to calculate impact fees.  Figure 3 is a summary of the development projections and demographic data used in the impact fees study.  Supporting documentation for these projections can be found in Figures 4 through 9.

Figure 3:  Annual Development Projections


TA and City staff evaluated several population projection alternatives (see Figure 4) and selected the linear projection method as the most appropriate for North Logan City.  From 1990 through 2006, the City’s population has been increasing at a 6.3% growth rate (i.e., average annual simple percentage change).  This growth rate has been used in the recommended population projections.

Figure 4:  Alternative Population Projections


The residential impact fees have been calculated on a per-housing-unit basis for Single Family Detached and All Other Housing Units.  These residential categories were determined after an evaluation of demographic data for North Logan City, as shown in Figure 5.  The difference in household size by type of residential development will be used to make residential impact fees roughly proportionate and reasonably related to service demands, as required by Utah’s Impact Fees Act.

Figure 5:  Persons Per Household


Projections of nonresidential development have been derived from an inventory of nonresidential floor area and building permit data from 1994 through 2006.  City staff prepared a complete list of existing nonresidential buildings in North Logan.  Using this 2006 inventory of nonresidential floor area, city staff produced the annual floor area estimates and projections shown in Figure 6.  The linear trend extrapolation projection, at 6.0% annual growth, has been used in the impact fee study.

Figure 6:  Alternative Projections of Nonresidential Floor Area

Employment by place of work (i.e., “Jobs” as shown in Figure 7) was derived from the nonresidential floor area data.  The square feet per employee multipliers shown below are based on national data, as documented in Figure 8.

Figure 7:  Nonresidential Floor Area and Job Estimate

Nonresidential development impact fees has been determined for the following three general types of development:  Commercial / Shopping Center, Office / Institutional and Industrial.  General employee and building area ratios used in the impact fees study are presented in Figure 8.

Figure 8:  Employee and Building Area Ratios

The projected increase in both population and nonresidential floor area was converted to annual development projections, as shown in Figure 9.  The average annual increase in housing units and nonresidential floor area (in thousands of square feet, or KSF) is consistent with recent development trends in North Logan City.

Figure 9:  Average Annual Increase in Development


Parks and Recreation

New residential development creates a need for additional park land and recreation improvements in North Logan City.  The methodology used to calculate the development impact fees for parks and recreation is shown in Figure 10 (not shown on web site version) .  Household size, by type of housing, is multiplied by the per-capita capital cost of land and improvements to derive the park and recreation impact fee.

Capital costs include community parks and trails land, plus park/recreation and trails improvements.  The recommended replacement cost methodology will enable North Logan to maintain its current Level of Service (LOS) standards by incrementally providing additional park and recreation improvements.

The Parks and Recreation impact fee uses a methodology based on the existing inventory of park land and improvements, as shown in Figure 11 and trails as shown in Figure 12.  The existing inventory of park land includes 44.7 acres of improved parks and 66.8 acres of undeveloped park land.  Also shown in Figure 11 is the capital improvement plan to maintain roughly the same LOS for park land and facilities.  As shown in Figure 12, the existing inventory of trails includes 5.14 miles of trails of which 2.60 miles are improved.  The trails include land either owned by the city for planned trails or places where the city owns trail easements on privately owned properties.  The capital improvement plan includes the City’s plan to acquire additional park land and trails to accommodate future development as well as developing existing land.  The replacement cost approach has been used for the Parks and Recreation impact fee maintaining the current LOS and using the population of North Logan in the year 2026.


Figure 11:  LOS for Community Park Land and Improvements - Parks

 


Figure 12:  LOS for Community Park Land and Improvements - Trails


The cost of maintaining the current LOS standards upon which the Parks and Recreation impact fee is based is shown in Figure 13.  The impact fee varies by type of housing and is based on the respective household size for Single Family Detached and All Other housing units per the 2000 census. 

Figure 13:  Parks and Recreation Impact Fee

To accommodate projected development in North Logan over the next twenty years and to maintain the city’s current level of service for parks and trails, the City will need to spend approximately $153,000 per year for park and recreation land acquisitions, improvements to existing sites, plus trails acquisitions and improvements. 

 


Roads

The road impact fee for North Logan uses a plan-based methodology.  Projected costs for road improvements were provided by City staff.  As shown in Figure 14, trip generation rates, by type of development, are multiplied by the net capital cost per unit of trip capacity to yield the impact fees.  Capital costs included in the impact fee calculations reflect only the local share to be paid by North Logan City.  The cost of improving State and Federal highways is not part of the impact fee analysis.  Road impact fees have been reduced by appropriate gas tax and sales tax credits.  The sales tax credit has been included by North Logan in recognition of the fact that most commercial development is located along Highway 91 and therefore a majority of the commercial patrons are not City residents.

Figure 14:  Road Impact Fee Methodology Chart

The demand for additional roads will be generated by vehicle trips.  Figure 15 lists the road segments and bridges that will need improvements to accommodate the transportation demand in North Logan over the next twenty years.  The total cost of the road improvements, was divided by the projected total number of vehicle trips on an average daily basis, to yield the average cost of $144 per unit of trip capacity.  The average cost approach conservatively allocates the cost of road improvements to all vehicle trips (i.e., trips from existing development plus trips from new development over the 2006 to 2026 time frame).

Figure 15:  Roads Capital Facilities Plan Summary

The impact fee methodology for roads includes a credit for future gas tax revenue that will be used by North Logan for capacity projects.  Figure 16 indicates the projected gas tax revenue over the next twenty years that will be used for road improvements.  Annual revenues were divided by average daily vehicle trips to yield the gas tax credit per unit of trip capacity.  A net present value calculation was used to account for the time value of money.

Figure 16:  Gas Tax Credit

Although sales tax revenue is part of the General Fund and is not legally restricted to road construction projects, North Logan City has included a sales tax credit in the road impact fee methodology.  This additional credit acknowledges that sales tax revenue has been a major source of the General Fund contribution to road improvements.  Two methods have been used to calculate the sales tax credit.  For residential development, the sales tax credit is calculated on the basis of residential vehicle trips.  For commercial and shopping center development, the sales tax credit is allocated per 1,000 square feet of development.

In order to derive the sales tax credit, the projected sales tax revenue dedicated for road improvements over the next 20 years was allocated 12% to residential development and 88% to commercial / shopping center development.  This allocation was based on an estimate of local expenditures from the 2001-02 Consumer Expenditure Survey of the western region of the United States, published by the Bureau of Labor Statistics (BLS).    With this adjustment, it is estimated that approximately 24% of household income (before taxes) will be spent locally.  This estimated percentage of local expenditures has been used in the analysis of gross taxable sales, shown in Figure 17.  Median household income data from the 2000 Census was inflated to 2006 dollars and then multiplied by the number of households in North Logan to yield the 2006 aggregate household income of approximately $139 million.  If 24% of this income were spent locally, then North Logan households accounted for approximately 12% of the gross taxable sales in North Logan in 2006.

Figure 17:  Estimated Local Expenditures and Analysis of Gross Taxable Sales

Figure 18 indicates residential development’s allocation of projected sales tax revenue to be used for road capacity improvements and the projected increase in average daily residential vehicle trips over the next twenty years.  The net present value of the annual sales tax contribution per vehicle trip results in a credit of $22.21 per unit of trip capacity.

Figure 18:  Sales Tax Credit per Residential Vehicle Trip

North Logan receives sales tax revenue from commercial establishments located within the City.  Based on the analysis of gross taxable sales, 88% of the sales tax dedicated for road improvements will be credited against the road impact fees for commercial and shopping center development.  As shown in Figure 19, the projected increase in sales tax revenue has been divided by the projected increase in commercial floor area to derive the sales tax credit of $2,169.38 per 1,000 square feet of development.

Figure 19:  Sales Tax Credit per KSF of Commercial / Shopping Center Development

Maximum supportable development impact fees for roads are shown in Figure 20.  The LOS standards include Average Weekday Vehicle Trip Ends from the reference book, Trip Generation, published by the Institute of Transportation Engineers (ITE, 5th edition, 1991).  A "trip end" represents a vehicle either entering or exiting a development (as if a traffic counter were placed across a driveway).  For trip generation rates not shown below, North Logan staff may use the most appropriate rates from the Trip Generation manual, or rates from approved local transportation studies.  Residential trip generation rates reflect larger household sizes and local travel characteristics.

To calculate road impact fees, trip generation rates are adjusted to avoid double counting each trip at both the origin and destination points.  For Office/Institutional and Industrial development, the trip factor is 50%.  For Commercial/Shopping Center development, the trip factor ranges from 23-34%.  Trip adjustment factors are less than 50% because retail uses attract vehicles as they pass by on arterial and collector roads.  For example, when someone stops at a convenience store on the way home from work, the convenience store is not their primary destination.  The Trip Generation manual indicates that on average, 43% of the vehicles entering shopping centers, in the size range of 75,000-150,000 square feet, are passing by on their way to some other primary destination.  The remaining 57% of attraction trips have the shopping center as their primary destination.  Because attraction trips are half of all trips, the Commercial / Shopping Center trip adjustment factor is 57% multiplied by 50%, or approximately 29% of the trip ends.

For Residential uses, the trip adjustment factor is 62% because many of the employed residents of North Logan go to work outside of the City.  Half of the trips attributed to residential uses are production trips (leaving home) and half are attraction trips (returning home).  Therefore, the basic trip factor is 50%.  To this is added 12% to account for North Logan residents working outside the City.  According to 2000 census data, approximately 87% of North Logan workers were employed outside of the City.  Because home-based work trips generally account for 28% of all productions trips (see National Personal Transportation Study, US Dept. of Transportation, 1984), these three factors may be multiplied together (0.50 x 0.28 x 0.87) to indicate the percentage of home-based work trips to locations outside of North Logan.  The resulting 12% of trips have been added to the residential trip adjustment factor to account for increased road impact due to commuting patterns.

The road impact fee methodology includes a 8.96% reduction for discretionary General Fund taxes.  As shown in Figure 40, this reduction is based on the expenditure of locally generated taxes that may be spent at the discretion of City Council.

Figure 20 indicates the sales tax credit for commercial/shopping center development is $2,169.38 per 1,000 square feet of building.  This credit is not given on a per trip basis due to the lack of development projections by shopping center size.

Figure 20:  Road Impact Fee


Water System

The Water System impact fees are primarily determined by the capital cost per gallon of capacity for distribution system improvements.  As shown in Figure 21, four basic steps have been used to determine the net capital cost per gallon of capacity.  The major cost factor is for growth-related capital improvements needed to accommodate additional demands on the water system.  Capital projects are summarized in a five-year Capital Facilities Plan (CFP).  If North Logan were to stop growing, these growth-related projects would not be constructed.  The cost of growth-related capital improvement projects was divided by the incremental increase from the current water system average daily usage to the future water system average daily usage at the end of the CFP time frame.

In recognition of the value of the City’s existing water system, the second component in the impact fee methodology is the buy-in component.  The city has included the cost of recent water system improvements that were oversized to accommodate future development.

The third major step in calculating utility impact fees was the evaluation of funding mechanisms for capital improvements.  To avoid any potential double payments, the one-time impact fees were reduced to account for future principal payments from monthly utility bills.  The credit for principal payments on existing bonds was subtracted from the cost factors to yield the net capital cost per gallon of water system capacity.

As shown in the chart below, the net capital cost was multiplied by a consumption standard to yield the proportionate impact fee for a one-inch water meter.  Impact fees for all other meter sizes were derived from capacity ratios published by the American Water Works Association.

Figure 21:  Water System Impact Fee Methodology Chart

Water use for residential and nonresidential customers was determined from 1996 billing records.  The water use data shown in Figure 22 were used to project future water demand from both residential and nonresidential development.

Figure 22:  Culinary Water Average Daily Demand Factors

The residential and nonresidential demand factors discussed above were developed from the actual and projected water usage in North Logan summarized in the annual water demand data shown in Figure 23.

Figure 23:  Annual Water System Demand

A summary of North Logan’s water system Capital Facilities Plan (CFP) is shown in Figure 24.  Capital projects have been placed in three categories.  At the top of the CFP summary are water distribution and storage projects that are necessary to accommodate new water connections over the next twenty years.  These growth-related projects have a projected total cost of approximately $3.41 million.  The second category is for projects which will increase the city’s water production with a projected cost of $475,000.  The third category is for the cost of acquiring water rights sufficient to maintain the same relative amount of water rights currently possessed by the city for wells only.  Based on these factors, the total cost per gallon of system capacity is $5.89. 

Figure 24:  Water System Capital Facilities Plan Summary

Utah’s Impact Fee Act states that local political subdivisions may impose an impact fee for public facility costs previously incurred by a local political subdivision to the extent that new growth and development will be served by the previously constructed improvement (see 11-36-202.(3)(b)).  Almost every year North Logan City makes improvements to the water system in which elements are oversized to accommodate future development.  The buy-in cost component shown in Figure 25 is based on the added value of the system improvements for the past eleven years (those below the line) divided by the system capacity in the year 2026. 

Figure 25:  Water System Buy-In Cost Component


North Logan City has outstanding debt obligations for water system improvements.  Total principal payments were divided by the projected average daily water demand to yield annual principal payments per gallon of capacity.  To account for the time value of money, a net present value calculation was used at an annual discount rate 6%, to derive the credit of $0.88 per gallon of average daily water demand.

Figure 26:  Principal Payment Credit for Water System Improvements


The LOS standards used to derive the Water System impact fee are shown in the boxed area of Figure 27.  The net cost of capital improvements for new growth is $7.21 per gallon of capacity or usage.  The typical usage per residential connection is 460 gallons.  Multiplying these two numbers provides the impact fee for a typical residential customer.  Water system impact fees for users requiring larger meters are based on the water meter sizes and their capacity relative to a standard one-inch meter.  The capacity ratios by meter size are from the American Water Works Association.

Figure 27:  Water System Impact Fee


Wastewater Collection System

Wastewater collection system impact fees are based on the net capital cost per gallon of system capacity.  As shown in Figure 28, three basic steps have been used to determine the net capital cost per gallon of capacity.  The major cost factor is for growth-related capital improvements needed to accommodate additional demands on the wastewater collection system.  The cost of growth-related capital improvement projects was divided by the incremental increase in system capacity (i.e., a marginal cost approach).

In recognition of the value of the City’s existing wastewater collection system, the second component in the impact fee methodology is the buy-in component.  North Logan City has included major wastewater collection system improvements, constructed during the past 24 years, that were oversized to accommodate future development.

The third major step in calculating utility impact fees was the evaluation of funding mechanisms for capital improvements.  To avoid any potential double payments, the one-time impact fees were reduced to account for future principal payments on existing sewer bonds.  This credit was subtracted from the cost factors to yield the net capital cost per gallon of sewer system capacity.

As shown below, the net capital cost was multiplied by a wastewater generation rate for a typical residential unit.  Wastewater collection impact fees are derived from capacity ratios according to the size of the new connection’s water meter.

Figure 28:  Wastewater Collection Impact Fee Methodology Chart

Total wastewater generation from residential and nonresidential customers was determined from the City’s wastewater treatment bills for the years from 2000 through 2006.  The proportionate share factors by type of development are based on the water billing records as of September 2006.

Figure 29:  Wastewater Average Daily Demand Factors


The residential and nonresidential wastewater generation rates discussed above were multiplied by projected development in North Logan to yield the annual wastewater demand data shown in Figure 30.  Wastewater demand is projected for a 25-year time frame.  However, the cash flow analysis for this report only reflects a five-year schedule of improvements.

Figure 30:  Annual Wastewater Collection System Demand

A summary of North Logan’s wastewater collection system Capital Facilities Plan (CFP) is shown in Figure 31.  Capital projects to accommodate new growth are shown in Figure 31.  The CFP summary includes only growth-related projects that are necessary to accommodate new wastewater connections.  Growth-related projects, with a total cost of approximately $3.2 million will expand to cover the wastewater collection system average day need (capacity) by 855,760 gallons per day over the next 20 years.  These factors represent a LOS standard of $3.75 per gallon of system capacity.

Figure 31:  Wastewater Collection System Capital Facilities Plan Summary


Utah’s Impact Fee Act states that local political subdivisions may impose an impact fee for public facility costs previously incurred by a local political subdivision to the extent that new growth and development will be served by the previously constructed improvement (see 11-36-202.(3)(b)).  Recent sewer line projects that were oversized for future growth are listed in Figure 32.  The cost of oversizing was allocated to the projected wastewater collection system’s capacity in 2025.  This 20-year time frame represents 40 percent of the typical useful life of major sewer lines.

Figure 32:  Wastewater Collection System Buy-In Cost Component


North Logan City is making payments on a bond used for wastewater collection system improvements.  Principal payments were divided by the projected average daily wastewater flow to yield annual payments per gallon of capacity.  To account for the time value of money, a net present value calculation was uses, at an annual discount rate of 6%, to derive the credit of $0.47 per gallon of average daily wastewater demand.

Figure 33:  Principal Payment Credit for Sewer System Improvements


The LOS standards used to derive the wastewater collection system impact fee are shown in the boxed area of Figure 34.  Fees for the 0.75 and 1.00 inch water meters are based on the assumption that most single-family residences will have either the standard 3/4 - 5/8  inch or a 1.00 inch water meter.  The fees for sewer connections for locations with larger than this standard sizes water meter are based on the relative capacity of the larger water meter with respect to the base size 1.00 inch meter.

Figure 34:  Wastewater Collection System Impact Fee


Cash Flow Analysis

Utah’s Impact Fee Act requires the Capital Facilities Plan to consider all revenue sources, including impact fees, to finance the impact on system improvements.  The cash flow analysis presented in this section documents the projected capital costs and revenues pertaining to the types of public facilities included in the Impact Fees study.

The general parameters shown in Figure 35 are used to calibrate TA’s proprietary software program that uses local demographic and fiscal data to analyze cash flow to North Logan City over the next five years.  The demand base data are derived from 2006 estimates of population and nonresidential floor area in North Logan City.

Figure 35:  General Parameters


A profile of new development characteristics is presented in Figure 36.  The five development categories were selected as being representative of the majority of new developments expected in North Logan City over the next five years.  Data are consistent with the assumptions used in the Impact Fees study.

Figure 36:  New Development Profile

The capital facility demand and cost inputs for parks and recreation are shown in Figure 37.  The CFP for the water system, wastewater collection system and roads have been direct entered into the model using the capital cost data already presented in the Impact Fees report.  All capital facilities will be funded on a pay-as-you-go or cash basis.

Figure 37:  Capital Facility Demand and Cost Inputs


Revenue inputs used in the cash flow model are shown in Figure 38.  Rows 1-13 are the Impact Fee (IF) amounts from the maximum supportable fee schedule (see Figure 2).  The water and sewer impact fee amounts for all nonresidential development are derived using an equivalent residential connection approach.  Based on the AWWA capacity ratios, most nonresidential connections will require either a 1.0 or 1.5 inch water meter.

Rows 14-19 in the table below indicate the non-impact fee revenues that will be used to fund capital improvements. The base year budget amounts are projected to increase over time at the same rate of growth as new development.

Figure 38:  Revenue Inputs

The cash flow analysis summary is presented in Figure 39.  The top portion of this table indicates projected revenues from impact fees, general fund contributions, utility rates and gas taxes.  The summary of expenses, shown in the middle of Figure 39, indicates the cost of capital facilities for parks and recreation, roads and the City’s water and wastewater collection systems.

The net capital facilities cash flow for parks and recreation, water and sewer systems, and roads can be found at the bottom of Figure 39.  Dollar amounts in the cash flow analysis are in thousands of constant dollars (i.e., not inflated over time).  Annual deficits are indicated by parentheses ($) around the dollar amount.


Figure 39:  Net Capital Facilities Cash Flow Summary


Proportionate Share Analysis

Impact fees for North Logan City are proportionate and reasonably related to the capital facility service demands of new development.  The written analysis of each impact fee methodology and the cash flow analysis have established that impact fees are necessary to achieve an equitable allocation of the costs, borne in the past and to be borne in the future, in comparison to the benefits already received and yet to be received.

The Impact Fees Act requires that certain factors are used in evaluating the fairness of the impact fees to be charged.  The analysis of these factors is discussed below.

1)      The impact fees for North Logan City are based on the cost of existing public facilities.  The water and wastewater collection impact fees include minor buy-in components that were derived from the actual construction costs of specific capital improvements by North Logan City.  All of the impact fees are primarily based on Capital Facilities Plans that were prepared using local cost factors and construction practices typical to North Logan City.  The Parks and Recreation section contains a detailed inventory of existing facilities and the cost of improvements.  This inventory of existing facilities was used to derive level of service standards.  These standards were then used to project the need for future park and recreation improvements in order to maintain a similar level of service.

2)      The impact fee analysis has identified the manner of financing existing public facilities, which includes user charges, bonds, general taxes, and intergovernmental transfers.  These revenue sources are summarized in the cash flow analysis found at the end of this report.

3)      The extent to which properties in the municipality may have already contributed to the cost of existing public facilities has been estimated and a credit for past contributions has been addressed in the impact fee methodology.  The maximum supportable impact fees include a percentage reduction for General Fund contributions.  This reduction is based on an analysis of North Logan’s budget over the past five years, as shown below in Figure 40.

4)      The relative extent to which properties will make future contributions to the cost of existing public facilities has also been addressed in the principal payments credits that have been included in the impact fee calculations.  These credits for water system improvements and wastewater collection system improvements lower the maximum supportable impact fees for new development.

5)      North Logan City will evaluate the extent to which newly developed properties are entitled to a credit for common facilities that have been provided by owners or developers as compared to common facilities provided by the City in other parts of the municipality.  These “site-specific” credits will be available for system improvements identified in the Capital Facilities Plans, as summarized in this report.  Administrative procedures for site-specific credits will be addressed in the impact fee ordinance.

6)      Citywide service areas are appropriate for the types of public facilities included in the impact fees study.  Therefore, separate geographic zones for the collection and expenditure of impact fees are not necessary in North Logan.  Extraordinary costs, if any, in servicing the newly developed properties will be addressed through administrative procedures that allow independent studies to be submitted to the City.  These procedures will be addressed in the impact fee ordinance.

7)      The time-price differential inherent in fair comparisons of amounts paid at different times has been addressed in the evaluation of credits for each type of impact fee.  All costs in the impact fee calculations are given in current dollars with no assumed inflation rate over time.  Necessary cost adjustments can be made as part of the annual evaluation and update of impact fees.

Figure 40:  General Fund Expenditures for Capital Improvements


Implementation and Administration

Impact fees should be evaluated and updated to reflect recent data.  One approach is to adjust for inflation in construction costs by means of an index like the Engineering News Record (ENR).  This index would be applied against the calculated impact fee.  If cost estimates change significantly the City should evaluate an adjustment to the fee.

Another possible change in calculation will occur if the City begins financing any of the facilities included in this impact fee report, through the issuance of new bonds.  Should that take place, new development should be credited for the debt service it will pay for these capital facilities.  Those credits will need to be deducted from the maximum supportable impact fees.

As specified in the Impact Fees Act, there are certain accounting requirements that will be met by North Logan City.  Impact Fees must be deposited in separate interest bearing ledger accounts.  Fees must be spent within six years of when they are collected, with the expenditures limited to system improvements identified in the CFP.

There are also administrative procedures required by the Impact Fees Act.  For example, a local political subdivision shall ensure that the impact fee enactment contains a provision authorizing adjustment of the standard impact fee in response to unusual circumstances in specific cases and to ensure that the impact fees are imposed fairly.  Also, there may be adjustment of the amount of the impact fee based upon studies and data submitted by the developer.