Development Perspective: Impact Fees Frequently Impact Multi-Housing Unfairly

By Arthur C. Nelson, Ph.D. FAICP, University of Utah.Denser neighborhoods tend to reduce residents’ automobile usage and the costs for services such as roads, storm and waste water systems. But it is common practice to charge impact fees as flat rates per housing unit for these services, leaving residents of multi-housing developments to carry the largest load.During the earlier part of this decade, Volusia County, Fla., charged a flat impact fee of $1,927 per housing unit for fire protection, parks, and public school facilities—regardless of unit type or size. The county perhaps reckoned that with an average of 2.02 persons (based on the 2000 census), the impact of the typical dwelling on these facilities amounts to $954 per person, or $1,927 per unit.Census figures, however, show that the average occupancy of single-family detached homes is 2.39 but for apartments it is 1.17, less than half as large. To be proportionate, impact fees should be $2,277 for single-family homes and $1,115 for apartments. Instead, single-family homes pay $350 less than they should while apartments pay $812 more. Unfortunately, this is not an isolated situation. Many local governments charge flat impact fees for all residential units based on a single average. According to a survey from February 2005 by Duncan and Associates, up to 29.2 percent of municipalities charged their residents a flat impact fee for police services.Flat impact fees calculated on a per unit basis tend to be more regressive than impact fees calculated according to occupancy of a unit, meaning residents of smaller units tend to pay a larger portion of their income. Generally, the number of persons per 1,000 sq. ft. of living space does not vary much. According to my research, this rate hovers at just under 1.5 in communities throughout the country from Collier, Florida to Douglas, Colorado.Numerous studies have shown that density mitigates the costs of expanding waste and storm water systems. A study by Robert Burchell with Rutgers University shows these water services cost higher-density development (more than six units per acre) about 20 to 30 percent less.Density also affects costs related to road development, since denser, mixed-use neighborhoods bring more opportunities to use transit, ride a bike or walk. Federal travel behavior surveys report that as density increases, highway demand per person decreases. And vehicle miles traveled per person falls with respect to residential density. Aside from density factors, when a development is located near public transit rail stations, vehicular use goes down. The same is also true for proximity to bus routes, albeit to a lesser extent. In Arlington County, Va., 47 percent of the workforce commutes via transit and 73 percent of them walk to transit stations—yet its density is only half that of Los Angeles, where transit ridership is less.National studies have shown that dwelling units within one-half mile of transit stations have about 60 percent fewer automobiles than their metropolitan area averages. Numerous studies have shown that rail transit ridership ranges from 25 percent to 50 percent of workers living within a quarter-mile of stations and half that percentage between a quarter-mile and half-mile. Other studies have indicated that use of bus transit ranges from 15 percent to 30 percent for workers living within a quarter-mile of the bus line, and about half that percentage between a quarter-mile and a half-mile.Exceptionally, Atlanta recognizes the reduced impact on roads because of close proximity to public rail transit. The city reduces impact fees by 50 percent for all multifamily communities within 1,000 feet of rail transit stations.Mixed use developments and master-planned mixed-use developments can also reduce automobile use substantially. For example, in a typical single-use office/business park, walking trips may account for three percent to eight percent of all mid-day trips. That figure rises to 20 percent to 30 percent when other uses are accessible such as shopping, and personal and financial services.What other factors should influence impact fees? New urbanism, new developments, new communities and planned unit developments all likely reduce their impact on facilities, but they have not been codified into impact fee studies. While numerous examples exist, they have not been codified into impact fee studies, although DeKalb County, Ga., considered reducing fees by up to 40 percent for new development in census tracts that exceed 6,000 person per square mile and also include employment of at least 1,000 persons per square mile.Even greater gains are made when new community design combines compact development (even in the suburbs), mixed uses, connectivity and networks of pedestrian and bicycle pathways. Studies in California have shown that when compared to conventional suburban subdivisions with single or few uses, curvilinear streets, and cul-de-sacs, modern new community design can reduce vehicle miles traveled by 50 percent. Modern neo-traditional or new urbanism designs reduce trip lengths and induce non-vehicular use for short trips, especially if also served by mass transit. Impact fees should also be designed to respond to these trends.Arthur C. Nelson, Ph.D. FAICP, is presidential professor and director of metropolitan research at the University of Utah. He is also the author of the book Guide to Impact Fees and Housing Affordability.