San Jose, Calif.
In 2014, the San Jose City Council adopted an Affordable Housing Impact Fee program to help create and preserve affordability within the city. The new policy requires developers of market-rate rental property with three or more units to pay a one-time fee of $17 per finished, livable square foot. Beginning in July of 2017, the fee will increase by 2.4 percent each year, and when the program is fully operational, it is expected to generate between $20 million and $30 million per year. The Affordable Housing Impact Fee excludes for-sale property developments because the city’s inclusionary housing program is already in place to generate revenue from those projects.
Fairfax County, Va.
The comprehensive plan for the Tysons Corner Urban Center in Fairfax County, Va., is an example of how linkage fees can be used in a transit-oriented context. The plan addresses the redevelopment of the Tysons Corner area, an edge city undergoing major growth with the addition of several new transit stops and thousands of new jobs and residents. The plan includes a recommendation that developers of new nonresidential projects contribute $3 per square foot toward a housing trust fund. Fee revenue is dedicated to creating low- and moderate-income housing opportunities in Tysons Corner, helping to meet the need for workforce housing resulting from the new development and ensuring that families of all incomes can afford to live in Tysons.
Alachua County, Fla.
In 2010, as part of their Mobility Plan, Alachua County, Fla. implemented a fee schedule called Multi-modal Transportation Mitigation (MMTM). This mitigation plan focuses on supporting the development of mixed-use, transit-oriented development that reduces the general impact on the County’s transportation network. The plan does this by encouraging two forms of development: Traditional Neighborhood Development (TND) and Transit-Oriented Development (TOD). Both TND and TOD feature a mix of uses (i.e., retail and residential) and include infrastructure for bicycles and pedestrians, but TOD focuses much more strongly on high-density development and access to transit-based, walkable neighborhoods.
The most current version of The MMTM schedule (published in 2013) provides significant allowances for TND and TOD development. Developers of homes built in accordance with TND standards pay a fee that is $670/1,000-square-feet lower than the rate assessed on non-TND urban residential development, while developers that build homes in accordance with TOD standards pay a fee that is $1313/1,000 square-feet less. The MMTM schedule also applies to recreational, commercial, and office development, as well as institutional development such as schools or medical facilities.
The county also has allocated funds for forgivable second mortgages to cover the costs of impact fees for households with incomes below 80 percent of the area median income when they purchase a home below a specified price, in an amount equivalent to the cost of the impact fees. Recipients are required to repay a portion of the loan if they refinance, sell or rent their home within five years of purchase. The program is funded through appropriations from the county’s general revenue fund. To qualify, households must earn less than 100 percent of the area median income, and the home price must be below an annually adjusted sales price threshold.
Albuquerque, N.M., began phasing in impact fees in July 2005, charging 34 percent of the proposed fee in the first year, 67 percent in the second and 100 percent of the full cost beginning in 2007. In addition to varying fees based on the level of infrastructure already in place, the city allows fee waivers for certain types of development, including affordable housing. Specifically, the city waives impact fees completely for owner-occupied housing that is affordable to households earning 80 percent or less of the area median income and located in targeted redevelopment areas. New affordable homes in areas zoned for higher-density, mixed-use and mixed-income development are also eligible for impact fee waivers. All homes that receive an impact fee waiver are subject to a five-year deed restriction, which ensures that the units remain affordable to qualifying families during this period.
The city also substantially reduces fees (up to 70 percent) for new industrial, manufacturing, institutional and office development that helps promote a jobs-housing balance in primarily residential areas of the city. To the extent that such fee reductions bring commercial development to these neighborhoods, this policy can help address housing affordability issues by reducing commuting costs for area employees.
Hillsborough County, Fla.
Up until March of 2014, Hillsborough County, Fla., home builders had the option to participate in the time-payment program, which uses an Accrued Guarantee Revenue Fee (AGRF) to split the cost of water and sewer impact fees between builders and home buyers. The program was designed to cover the carrying costs of the water system’s excess capacity. That excess capacity was taken up in March 2014 and the AGRF was reduced to zero as a result. However, the program is still a good example for jurisdictions facing a similar issue.
At the outset of the program, builders who chose to participate were responsible for a per-unit impact fee payment of $2,170 for a single-family home ($1,300 per unit for multifamily housing), which was collected prior to the issuance of a certificate of occupancy. Homebuyers were responsible for the remainder of the fee (approximately $3,300) and could choose to either pay the full amount in a lump sum at closing or spread payments out over a 20-year period. Households that chose to finance their fee payments typically paid an interest rate lower than a home mortgage rate, and could choose to prepay the balance owed without penalty at any time. Because income from the ongoing installment payments was bondable, the county was also able to increase its financing capacity and build even more infrastructure.
See page 102 of the Impact Fee Handbook to read the National Association of Home Builders’ description of the program.
Officials in Phoenix, Ariz., have divided the city into “non-impact fee areas” and areas where impact fees are charged. “Non-impact fee areas” are areas in which existing public facilities have the capacity to accommodate projected growth. The areas where impact fees are charged are not as well-developed and will require varying levels of infrastructure improvements as the city continues to grow. Across each of these fee areas, charges associated with new development vary depending on the need for new facilities spurred by new development. As of April 6, 2015, net fees charged on a new single-family home in one of the impact fee areas range from a low of $6,413 to a high of $14,667 in areas requiring considerable new investment. By more precisely defining service areas for impact fees, communities can ensure that rates remain low for homes in well-served neighborhoods.