June 1, 1996

Tie fee structures to development densities

COUNTERPOINT

In cities across Northern Colorado, the cry continues that growth is not paying its own way.

On April 1, the City of Greeley unveiled its Cost of Development Study. Later, on April 16, the City of Fort Collins presented its Capital Expansion

Cost Study. Both studies indicate that financial resources have not kept pace with governmental capital-investment needs.

Unfortunately, a continuing emphasis is placed upon finding more ways to collect fees. In the City of Greeley study, nine Front Range cities and

Grand Junction were surveyed for governmental fees charged for residential and commercial development. Absent from the survey were costs paid

directly by developers to the cities – estimated at an additional 40 percent of fees charged – to construct streets and utilities owned by the public sector.

For commercial buildings, a 30,000-square-foot structure with a $750,000 value was the model for comparison. Greeley’s fee of $30,200 was the

lowest among all cities. Loveland’s fee was $99,200, ranking it next to highest. The highest fee of all was $104,275, in the City of Fort Collins.

Incidentally, this fee has been increased by the City Council since the survey.

On the residential side, a 2,000-square-foot home valued at $150,000 was the standard. Greeley’s $8,150 ranked it second lowest. Loveland’s fee of

$12,840 was fourth highest. Including the latest fee increase as of May 21, Fort Collins collects $14,050, or third from the top.

A major problem within our cities is the lack of density constructed over the past several decades. Greeley, Loveland, Windsor, and Fort Collins

commonly find that their development projects yield densities of less than four units per acre.

At the same time, mass-transportation studies indicate that densities of 12 units per acre are required for it to function well. Transportation alternatives

are key to the future of our communities. Vehicle miles traveled must be reduced as a function of more-compact urban development. The solution for

our future is to provide incentives and to charge fees in a way that promotes higher densities where they belong.

A fee structure with incentives must be advanced to promote the future goals of our cities. The recent pattern is to increase impact fees based upon any

reason known or unknown to city staffs or city councils. Yet, the persistent and real problem is that none of the Northern Colorado communities is

developing at densities to allow efficient levels of governmental services and infrastructures.

For fees to be constitutional, they must bear some direct relationship to capital improvements or governmental services caused by the impacts of

development. The time has come to tie fees to development density and quit the incessant march to increase impact fees at every turn.

Accordingly, a fee structure must be designed that charges no fee if the required density is met. For example, if the overall costs per acre (including

utilities, roads, etc.) are $21,000 and the desired density is eight units per acre, then the fee per unit per acre – replacing all other impact fees – would

be: one unit, $21,000; two units, $10,500; three units, $7,000; and so on – except at eight units and above, the fee would be $0.

The time has come to intelligently use fees to accomplish the desired goals of our cities. Tying fees to density is long overdue.

John Knezovich is a former mayor of Fort Collins and a certified public accountant.

COUNTERPOINT

In cities across Northern Colorado, the cry continues that growth is not paying its own way.

On April 1, the City of Greeley unveiled its Cost of Development Study. Later, on April 16, the City of Fort Collins presented its Capital Expansion

Cost Study. Both studies indicate that financial resources have not kept pace with governmental capital-investment needs.

Unfortunately, a continuing emphasis is placed upon finding more ways to collect fees. In the City of Greeley study, nine Front Range cities and

Grand Junction were surveyed for governmental fees charged for residential and commercial development. Absent from the survey were costs paid

directly…

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