Planners approve impact fee regulations
November 23, 2009
NEW DURHAM — Following an extensive discussion and public hearing last week, planning board members voted to begin collecting impact fees on new homes and additions as a way to ease the tax burden of improvements to local schools.
The fees, which amount to $2.49 per square foot for any habitable structure between 150 and 3,000 square feet, will be added to the cost of residential building permits starting next year, and will be used to off-set the financial impact of large-scale capital improvements within the Governor Wentworth Regional School District.
Board Chairwoman Cathy Orlowicz explained at the start of the Nov. 17 public hearing that a Town Meeting vote in 2008 gave the board the authority to put an impact fee ordinance in place.
Since then, she said, the board has worked with consultant Bruce Mayberry (widely regarded as one of the state's leading experts on impact fees) to develop a formula and set of regulations for the assessment and collection of the fees.
Explaining that there had been "quite a bit of discussion" among board members as to whether the fees should be assessed on a per-unit, per-bedroom, or per-square-foot basis, Mayberry said they had ultimately decided that the square foot method would be the easiest to calculate and enforce.
Stating that he had based his calculations on an estimated average of 0.49 pupils per household (consistent with New Durham's enrollment figures over the past decade), Mayberry said that after factoring in the average amount of space needed for each pupil and the average cost of school construction per square foot, he had come up with impact fees of $1.39 per square foot for the elementary school and $1.10 per square foot for the high school — a combined total of $2.49 per square foot.
The average size of new homes in New Durham over the past few years has been around 1,645 square feet, meaning the average impact fee would be $4,096, he said, adding that fees will not be assessed on existing homes unless a homeowner builds an addition that adds a minimum of 150 square feet.
The national average for an impact fee on new construction is around $4,500, he said, placing New Durham "right in the middle of the pack."
The regulations adopted by the board last week define 'new development' or 'new construction' as:
-The construction of any new dwelling unit;
-The expansion of any existing year-round dwelling unit that results in a cumulative increase in living area greater than 150 square feet;
-Changes to any existing structure that would result in a net increase in the number of dwelling units or bedrooms;
-The conversion of an existing seasonal dwelling unit to a year-round home through winterization or other improvements; or
-The conversion of an existing use to another use that the board determines will result in a measurable increase in demand on local school facilities.
The replacement of an existing home destroyed or damaged by fire and the construction of porches, garages, sheds, decks, or other non-habitable structures are not considered new construction.
According to the regulations, impact fees can be assessed either at the time the board approves a site plan or subdivision plan, or when a building permit is issued (if the plan does not require board approval). The regulations also state that an impact fee must be paid in full before the town building inspector can issue a certificate of occupancy.
Homeowners who believe errors have been made in the calculation or collection of impact fees for their homes are permitted under the regulations to file an appeal with the zoning board, and a refund process is also outlined in detail.
Pointing out that the board had capped the assessment of impact fees at 3,000 square feet, Mayberry said it will need to review the regulations periodically in order to "stay in line with what's on the ground" in terms of enrollment statistics and capacity within the elementary and high schools.
Dave Bickford, the selectmen's representative to the board, asked how impact fees would apply in the case of a new development restricted to residents aged 55 or older.
"There was a lot of discussion about that," Land Use Administrative Assistant David Allen replied, explaining that the board had decided to set the threshold at age 62, since people below that age bracket might still have children or grandchildren in their care.
Commenting that impact fees are generally not assessed on age-restricted developments, Mayberry said he has seen towns take different approaches to the issue, and noted that the language of the impact fee ordinance can be changed at any time if the board needs to lower the threshold in the future.
Resident Mike Gelinas asked whether the fees would have to be put toward new capital projects, or whether they could be applied to the debt service on existing bonds.
"It would be almost impossible not to apply it to debt service," Mayberry replied.
Following up on his previous question, Gelinas asked whether fees collected for the elementary school would have to be separated from those collected for the high school.
Mayberry explained that the total amount of the fees could be put toward New Durham's portion of any capital expenditures within the school district as long as one or both of the schools have capacity for new homeowners to take advantage of.
"Workforce housing … How are you balancing that out?" Gelinas asked. "I'm just curious."
Allen replied that the board had decided to assess impact fees on workforce housing developments.
Mayberry added that the per-square-foot method of calculating impact fees would benefit developers looking to build smaller units.
Making the decision
With Orlowicz asking the remaining board members whether they were ready to adopt the regulations, Bickford said he did not feel the time was right.
With the construction industry already at a low point, and the recession making things harder for first-time homeowners, he said, adding $4,000 to the cost of a building permit might be "a pretty tough pill to have to swallow."
With the "homework" already done, the board was "ready to roll" with the regulations at any time, he said, adding that he saw no need to act on the matter immediately.
Board Vice Chair Bob Craycraft remembered the issue coming before the board in 2001 or 2002, and said the argument against an impact fee system at that time was that the town didn't need it, and it might "drive people away."
Over the next few years, he added, the town went through a dramatic growth spurt, which put pressure on local taxpayers that impact fees could have alleviated.
"I think it's time to put this thing in place," he said.
Board member Dot Martin Veisel asked Building Inspector Arthur Capello whether any residential permits had been issued recently.
Replying that there hadn't been many, and that most of the revenue from impact fees would be coming from additions to existing homes, Capello asked whether the town was set up to properly handle and account for impact fees.
Allen said he had discussed the issue with the town administrator and finance officer, who both understood what it would involve, and did not foresee any significant problems.
After retrieving information on recently-issued building permits from his office, Capello said most of the new homes on the list measured around 1,200 square feet.
Alternate board member Jeff Kratovil, who said his children currently attend a parochial school, asked whether residents who home-school their children or pay to send them to schools outside the Governor Wentworth district would have grounds for objecting to impact fees being assessed on their properties.
Alternate Scott Drummey said that while he currently home-schools his children, and appreciated Kratovil's concerns, his situation (or that of any other family in town that home schools or sends its children out of the district) could change at any time.
Capello, he added, shouldn't have to go knocking on doors every month asking whether or not people are continuing to home-school their children.
Allen compared the position of home-schoolers to that of a couple with two children in college.
While they might personally object to the idea of paying for capital expenses in a school system they don't utilize, he said, regulations are regulations.
Interrupting the discussion to correct his earlier statement regarding building permits, Capello said he recently issued six permits for new homes measuring in around 1,600 square feet; one for a 2,200-square-foot home; and one for a home just below 1,000 square feet.
Agreeing with Craycraft, board member Paul Raslavicus said he felt the town needed to be "pro-active," and that impact fees could have helped to offset some of the burden placed on taxpayers over the past few years.
While "there's always inequities," he said, it is also important to find ways to decrease the overall tax impact on the town.
Veisel said she appreciated Bickford's position that impact fees looked, on paper, like a penalty on young families, but also saw the wisdom in collecting them.
Explaining that he had no objection to the logic behind impact fees, Bickford re-iterated that he simply didn't feel the time was right.
"It's not like it's not ready," he said. "We don't need to do it tonight."
Capello asked whether a developer would have grounds for suing the town if the board voted to implement the new regulations in anticipation of an upcoming application for a large subdivision.
Allen replied that they would have no legal standing, since impact fees are assessed at the time of construction, not during the application process.
Mayberry noted that given the incentive the developer would have under the regulations to pursue a greater number of smaller homes, it would be nearly impossible for them to prove that the regulations had prohibited them from utilizing their property.
Veisel said she thought the assessment of impact was an "appropriate" way to ease the tax burden on the town.
"I think [new homeowners with children] will get a wonderful value for their fee, Dave," she said, addressing Bickford.
"I think their investment is well worth it," she added.
Suggesting that the regulations might prevent people who have already purchased lots from being able to build, Bickford also argued that there was no "significant impact" from new construction at the present time to warrant the collection of impact fees.
"But you'll be ready when the major development arrives," Raslavicus replied.
Craycraft moved to adopt the regulations, and begin assessing impact fees immediately.
Orlowicz, however, amended the motion, asking that the regulations be implemented on Jan. 1, 2010, giving town officials time to prepare for the new process.
The amended motion passed by a vote of 4-1, with Bickford dissenting.
Capello commented that with the addition of impact fees, a building permit for a 200-square-foot structure will cost around $650.
Following the final vote, the board met briefly with Mayberry to discuss moving forward with the development of an impact fee to off-set the cost of capital expenses associated with public safety.
The board's next meeting has been scheduled for Tuesday, Dec. 1, at 7 p.m. in the downstairs meeting room at Town Hall.
Brendan Berube can be reached at 569-3126 or firstname.lastname@example.org