City considers establishing impact fees 

click to enlarge Aubrey Hamontree, Head of theCity of Oklahoma City Planning Department, sits on one of the new park bencheson the east side of City Hall, 1-28-16. - MARK HANCOCK
  • Mark Hancock
  • Aubrey Hamontree, Head of theCity of Oklahoma City Planning Department, sits on one of the new park bencheson the east side of City Hall, 1-28-16.

When builders turn over permit applications to the City of Oklahoma City, they receive a summary of fees.

Ranging from hundreds to several thousand dollars, builders write big checks to cover new construction fees, pay for water hookups and, in some cases, fund a traffic impact analysis.

Aubrey Hammontree, director of the city’s planning department, described the traffic impact analyses as unfair, especially in the case of an undeveloped, four-corner intersection. The first developer pays for a traffic impact analysis, which reveals the intersection requires future improvements. The study results repeat for the second and third developers but alter for the fourth.

“The fourth corner trips the trigger,” Hammontree said. “The intersection now needs the improvement, and the last person in pays for the entire improvement. That’s the system we have now. It is not an equitable system.”

New approach

City planners propose ditching traffic impact analyses. Instead, they recommend establishing impact fees. The proposal comes after two years of in-depth research and study following a decade of conversation.

Impact fees, also called development fees, are a one-time way to raise money for new infrastructure. In Oklahoma, state law allows municipalities to utilize impact fees to fund infrastructure projects associated with new development.

The plan, introduced as an ordinance, was presented Jan. 26 to the Oklahoma City Council. In it, homebuilders face traffic and park impact fees of 77 cents to 92 cents per square foot. Commercial builders would pay traffic impact fees of 48 cents to $4 per square foot.

If approved, city planners estimate impact fees would generate $6.7 million annually for new street and traffic projects and $2 million for new parks and trails.

While city planners view the proposal as equitable, some developers believe the proposal falls short of fair.

The Central Oklahoma Home Builders Association (COHBA) is one of the organizations against the ordinance in its current form.

“Most of our builders realize there is a need for infrastructure in the outer parts of the city,” said Rusty Appleton, COHBA executive director.

He said the group began discussions with city planners on impact fees in 2014.

“We do realize we need to pay a share of that, but we have to strike a balance. We want good infrastructure, livable communities with good parks and nice trail systems,” Appleton said. “Anytime the price of homeownership goes up, that’s a concern to us and everyone in the industry. There is no doubt this will cause the price of homeownership to go up.”

Leaders with Associated General Contractors of Oklahoma and Associated Builders and Contractors of Oklahoma expressed concerns about the impact fees during the Jan. 26 council meeting.

Development deterrent?

For more than three decades, OKC resident Jeff Van Hoose, president of Van Hoose Construction, has worked closely with the city’s planning department.

He agreed the city needs to revise its current requirement for developers to fund traffic impact analyses; however, he didn’t believe the solution lies with impact fees.

Like Appleton, Van Hoose said the proposed fees negatively impact OKC building projects. If approved, commercial developers face steeper costs when applying for building permits. Under the proposal, a developer constructing a 1,000-square-foot office building would be charged a $1,929 impact fee, according to city figures.

Van Hoose said developers will avoid those fees by building in cities neighboring OKC, like Yukon, Edmond, Mustang, Moore, Del City and Midwest City.

“We are going to lose a lot of business,” Van Hoose said. “The bottom line is, when you lose business, you lose job growth and tax revenue.”

Impact fees are not new to OKC or neighboring cities. The city now charges water and wastewater impact fees. Three local cities — Edmond, Moore and Norman — charge impact fees for residential and nonresidential builds.

Cities like Lincoln, Nebraska; Fort Worth, Texas; and Albuquerque, New Mexico, impose impact fees. However, their impact fees are higher than proposed OKC rates.

Van Hoose said city officials should explore all building rates and fees when comparing cities. In his experience, one city might charge impact fees but offer lower fees in other building areas. He proposed the city examine other options, such as a gas tax or a MAPS for roads sales tax, which would generate revenue to fund road projects utilized by all residents.

What’s next

The Brookings Institution think tank describes impact fees as a “more efficient way to pay for infrastructure than general taxes, and ensure benefits to those who pay them.”

Hammontree said planners reviewed national studies and findings on impact fees, including Washington, D.C.-based Brookings Institution data, when developing the ordinance, which is more than 30 pages.

“We think we have developed a fair approach that will benefit our citizens and not compromise our competition among peer cities,” she said.

If the council approves the proposal, more general obligation bond money could shift to maintaining streets, sidewalks and parks, Hammontree said.

Currently, the city utilizes bond money to fund new construction on quality-of-life projects. Between 2008 and 2013, OKC spent an average of $20.4 million each year to widen roads and improve intersections in response to new development, according to the city.

Hammontree and other city staffers plan to meet with homebuilders and developers to discuss the proposed ordinance. Both Van Hoose and Appleton said they plan to present other options they believe are more fair.

The council revisits the issue at a public hearing March 29 and could vote at its April 5 meeting.

Print headline: Fee fairness, OKC’s impact fee proposal meets with criticism as developers voice concerns over the potential economic impact.

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