Value Capture Webinar Series

Capacity Building Webinar:
Value Capture: Developer Contributions Techniques and Case Studies - Raw Transcript

June 27, 2019



[Please stand by for realtime captions.] >>

Ladies and gentlemen thank you for standing by. The conference should begin momentarily. >> Ladies and gentlemen, thank you for sending by. Welcome to the value capture development contribution techniques and case studies conference. At this time all participants are in a listen only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. If you should require assistance during the call please press star and then 0. I would now like to turn the conference over to your host, Cara.

Thank you. On behalf of the Federal Highway administration, I would like to welcome everyone to this webinar value capture, developer contributions, techniques, and case studies. I am Cara and I'm with the USDOT center in Cambridge, Massachusetts and now I'll be moderating today's webinar and facilitating questions and answers and helping to address any technical problems. On the top left side of your screen you'll find the audio column information. Below that in the chat box you can use to submit questions to our presenters throughout the webinar. You can also ask questions by pressing *1 on your telephone. You will receive more instructions about that later in today's webinar. If you have any technical difficulties please use the chat box to send a private message to me. Are webinar will run until 2:30 PM Eastern time and is divided into two sections. Thay Bishop will speak first followed by Lee and. We will cure questions for the presenters at the end of each section then we also anticipate having a few minutes of the for additional Q&A. The speakers presentation slides will be available for download on the left side of the screen at the end of the webinar. Before we begin I would like to ask participants in today's webinar to fill out the three quick poll questions on the screen. These are simply to help us understand your affiliation and how many people are participating along with your level of knowledge about the developer contribution topics. I will give you a few seconds to fill those out if you have not done so already. >> Here is some logistical information about today's webinar. And here is a list of the upcoming webinars in the value capture series that is taking place over the next several months. With that I would like to turn the webinar over to Thay Bishop, program advisor at the Federal Highway administration.

>> Good afternoon and good morning everyone. I'M Thay Bishop and I work for Federal Highway administration in the office of innovative program delivery. Welcome to this second value capture webinar series. The Federal Highway administration is currently implementing the fifth round of every day counts or EDC-5. The value capture is one of the 10 innovations included in the EDC-5. The EDC-5 value capture innovation promotes the use of value capture mechanisms as part of the funding and innovative financing strategies to accelerate project delivery. Value capture can provide a reliable and sustainable transportation gap funding. We have grouped value capture techniques into the seven broad categories. Last week's webinar we provided an overview of value capture for each category. And selected project examples. Today we cover the first category developer contributions. This slide provides you a value capture technique in each category and their purpose and can be use funding and or financing. There are two popular techniques under developer contribution. Negotiated exactions and the development impact fees. I will further define the concept and highlight the benefits, processes, and accounting and administration for the impact fees

Developer contributions are a form of fees or payments from the developer requires by the local government to get the permit approval. It requires a reasonable relationship established between the development and payment. It may be negotiated or voluntary basis. Developer can contribute directly to the new infrastructure facility and there are two types of development contributions. Negotiated exactions and development impact fees. Negotiate exactions is in-kind infrastructure contribution from the developers in exchange for the development permits. It can be land donated to the road, improvements, services, or cash contributions. It can be the physical improvements on site. Must be roughly proportional to the project's impact. Exactions are typically applied case-by-case through a negotiated transactions between the developer and the local government. Straightforward two way transaction -- and minimum fiscal impact. No voting requirements. But there must be an essential nexus -- between the exactions and the legitimate government purpose. There must be a rough proportionality between the exactions demanded and the impact of the proposed development. >> This slide provides you the list of the development impact fee on different name. Depending on city to city they call it differently but they are functioning the same and follow the same requirements. Let just use the general term impact fee is what we use to make it simple. So what is an impact fee? Impact fee is a one-time upfront payment by the developer to pay for the capital costs that are needed to serve the new development. Legislatively enacted fee, not a tax. Impact fee generally do not require voter approval. But it must meet the rational nexus test -- nexus. The needed improvements are tied to the impact of the new development. The new development that pays the fees should receive a benefit from the payment. In general, impact fees are designated to recover a portion of the costs associated with the new development to serve the new development. Such as construction of the off-site roadways, local street improvements, or intersection improvements. Impact fee is not a tax. Taxes primary is to generate the revenue, authority must be expressed, local authority to levy taxes governed and restricted by the state law. Proportionality benefits not required. Everyone pays whether you benefit or not. Impact fees differ from taxes. Impact fees are authorized through the police power, not the taxing power. They are part of the development approval process. They require an impact fee to provide adequate public facility is similar to meeting the site planning and zoning requirements. The primary purpose is to recover a portion of the costs not the revenue generate mechanism. Typically state law requires that the municipal impact fees not exceed the costs of providing the services. The fee payers must receive the benefit and timing of the improvement, geographic service area, accounting and expenditure are strictly controls. Impact fee allowed the public sector to recover a portion of the infrastructure costs required to serve the new development. To ensure that adequate capital facilities to support new development. Reduces the burden of the new facilities on the existing taxpayers and is based on the pre-determining formula so the developer has upfront knowledge of the fee to be imposed on the new development. Provides a better quantity of life for the community by funding the infrastructure needed to support. The additional population, employment and development in the community. It allows the reimbursement of the project already constructed with excess capacity and allows for implementation of the key system improvements over the piecemeal approach and the local can use the impact fee for the local matching share to the federal and state grants.

There is about 30 states that have impact fees enabling legislations but the power to implement the impact fees are at the local level. So here is why we believe the state and local should consider all alternative revenue sources and including the development impact fees. When there is a new development, the infrastructure assets-- that I highlighted will potential immediate impact to the city and county and for examples the road, bridge, drinking water, schools, fire stations, transit, water and sewer system. The cumulative infrastructure grading is D+ or poor condition. The challenge is to fund the current infrastructure condition and bring them to an acceptable condition and at the same time to accommodate the new capacity is not possible. This is a common challenge for all the states and local governments.

In general, the US infrastructure is reaching the end of the useful life cycle and additional funding mechanisms unsustainable. Increase in costs of replacing aging and decaying infrastructure due to deferred maintenance due to chronically underfunded. The current backlog in needed road, highway and bridge improvement is about $740 billion. Continuing the federal and state funding for infrastructure improvements is decline or diminish and the public is continuing resistance for any tax increase. Additional improvements such as complete street initiative are also needed to improve safety for the community, our street built long time ago based on automobile mode but today it must meet and be able to accommodate the all the mobility options that includes the pedestrians, bicycles, transit, car, truck, and electric scooters all over the city. Also there's additional funding infrastructure needed to take advantage of the technology to improve the public services and the life of the community. Whether we like it or not, the autonomous vehicle will become a reality in a couple of years. Without a developer contribution, new development areas and levels of services would be seriously compromised and it can be really impacting the safety. The good example of pedestrian death in 2017 was about 6000. This conversation need to be had with the developer and keep in mind that the developer wants to be able to sale or lease the property that they invested in. This is a win-win situation for the residents as well as the developer. >> Impact fees are subject to legal standards that satisfy three key tests. Need, benefit and proportionality. First the local government must demonstrate a reasonable connection between the need for the additional facilities and the growth resulting from the development. Second, there must be a reasonable connection between the expenditure of the fees collected and the benefit received by the development paying the fee. Third, the fee must not exceed the -- proportionate share of the cost incurred or to be incurred in the development that are paid a fee. A typical development impact fee legislation at the minimum should includes the local government authorized to impose the impact fee, must have an ordinance authorizing impact fees as a condition of issuance of a development permit. Meet the rationale nexus test, defined eligible facilities, and level of services and also define eligible expenditures. Collection and refunds must also clearly stated. All revenues are maintained in the escrow interest bearing account and refund the fee is not obligated within the defined period. Depend on local policy between some five or some ten years and some odd numbers. For eligible credit also needs to be very clearly stated. Give the developer the credit against they paid for the similar improvement. Waiver and exemption of the fee also very clearly documented. Also the requirement of the annual financial report, timing of the phaseout impact fee also should be stated and update the impact fee every five years. >> In general impact fees can be used for the capacity improving to accommodate the traffic generated by the development but not to address the existing or anticipated deficiencies-- unrelated to the new development. Thus, Facility improvements requires to serve new development are eligible. Repairs and maintenance no. Operating costs, no. Excess capacity in existing facilities, yes. Improvements required to correct existing deficiencies, no. The information needed to calculate or determine the impact fees came from the comprehensive plan that includes all the updates. The master plan or capital improvement plan. And by the way it should be consistent with the zoning requirements and the future need of the community. One of the ingredients to meet the rational nexus test is the capital improvement plans. It requires a 10 year projected built out plan and some require 25 years. That identifies projects, priorities, funding, and financing of the impact fee. Addressing the city immediate at long-term capital needs and facilitating informed decisions in the priorities funding and financing. Avoid unnecessary bonding or finance expenses because the capital improvement plan typically provides you the list of the projects as well as the cash flow so cumulative of the capital improvement plan will provide you how much money you need and when you need it to borrow the money. If you need to borrow that. It also allows the collection of the impact fee from the developer and meet the requirement of the ten year impact fee capital improving plan. That includes a completed projects underway projects and the future projects and by the way, I forgot to mention that there will be a capital improving plan webinar on July 18, that will be diving deep into the capital improving plan.

Funding and revenue sources. Should be included into the capital improving plan. This is just an example because it is different from city to city and county to county so in general, all the funding sources should be included into the capital improving plan. Looking at the maximum impact fee calculation. Some states enabling legislation dictates the maximum level of impact fee that can be imposed to the developer. I want to say in Georgia is about 50%. The capital improving plan provides the list of the project and eligible costs. The first step is to separate the project addressing growth from the project addressing existing deficiencies. The second step is the project accommodating the city or County growth from the non-accommodating the city County growth. Only the projects accommodating the new growth Can be used to determine the maximum impact fees by divide to the new development trips. And the final step, create the impact fee schedule. At the end of the impact fee represent a potential funding source that must be balanced against the development needs. The next step is to evaluate the need for the credits. Double assessment -- double assessment must be avoided by crediting the developer for any other payment on the same infrastructure or facility. The credit processes is needed to meet the rationale nexus test. The good example would be when the developer build a subdivision typically they would build the road access to the new subdivision and turn over to the city or county. they should get a credit for that. The situation where the city implements the impact fee and later implements the sales tax district and the developer already paid for impact fees. they might has paid the double amount. They pay the impact fee and then pay the sales tax. They need to be credited. The model development for impact fee ordinance. It is a very comprehensive and is defined exemptions, of process, and the accountability. We have some examples on the value capture website and you can look at them when you have a chance. This slide provides you the summary of some impact fee general process from what I just discussed. I combine them into one slight makes it easier for you.

The accounting and administration for the impact fees. All the impact fee received by the local must accounted for according to the state as local statute. Typically it requires all the collected impact fees must be deposited into the escrow interest bearing account. That clearly identifies the category, account, or fund of the capital expenditure for which the fee was opposed. Impact fee must be expended or obligated within 10 years from collection. I saw there some cities that require five years and I also saw the odd number like six years but anyway, unless there is the compelling reason for the fee to be held any longer, it must be documented in writing. The refund of the impact fee plus the earned interest to the developer if the impact fee is not expended, or obligated within the defined period of 10 years from the collection, or the city decided to end the impact fee program and the funding still remains in the account that are not obligated, then it should be refunded with earned interest to the developer. Or there will be a case where the developer decided not to move forward with the proposed development activity and request for the refund. Impact fees are subject to the general accounting principles and GASB statement number 33 and that has to do with the stipulation of the refund to the developer. Expenditure of the impact fee can only be made for the category of the system improvements within the service area for which the development impact fee was collected. Adequate financial reports also show the sources and disbursement of all revenues. This is to ensure that all money received uses exclusively for the project support of the new development. It requires to provide annual reports as well as a comprehensive review and update the impact fee every five years. Issues and challenges. Everything we do have some sort of challenges but it not a bad thing. It's important to know so that we can plan a solution for it. The developer generally opposition to the impact fee increases.

If you necessary increase the fee remember to communicate with the developer and be transparent of the reason for the increase. Local might have to upfront the cost of improvement and collect a fee at the development occurs -- if the development occurs. In that case you might consider looking at the potential for borrow from state infrastructure bank, state revolving fund loan or water revolving fund to obtain a low interest rate. Revenues are economically driven. Slower economic times, then is the recovery may be slow and depends on the new development. Education regarding costs and benefits and obtaining the -- it's an ongoing communication. There's another requirement is the comprehensive update of the impact fee for every five years. That is the cost however, that cost can be reimbursed by the impact fee.

There are several myths about the impact fees. Impact fee add cost to the cost of housing. Remember the market sets the price. The developer will lower or reduce the profit to sell their home or lease the office space that they spent the money to development. It will cost them every day for the house not turned over because of the construction loan money they borrow -- brought it down. That's not something the developer wants to leverage. Impact fee make the city less competitive. Actually the opposite is right. A better infrastructure tends to attract development. Impact fees system is unfair and difficult to navigate. Not really. Impact fees level the playing field and create greater equity all the developments pay, not just residential that meets zoning and larger home pays more because it's a greater impact. Impact fee abuse system. I just went through legislation and city ordinance with clearly define exemption, efficient processes, and there is a strict accountability. I reviewed dozen of the audit report and we have not seen anything that is really stand out that the abuse the system. Granted a city might be sloppy in term of a tracking record but it does not mean that they abuse the system. Here is the selected examples of the project paid with the impact fee. There are more project profiles which provide you much more detailed information that's available on the value capture website for your review. Looking at the federal influence on the impact fee I would say it's very limited. And probably none. But in general federal has very limited influence on the value capture strategies. The land use policy regulated by the city and the county so only the land purchased with the federal fund then the state and federal has a direct influence. So that means you just need the federal approval. USDOT supports value capture strategies and the federal highway assembled a multidisciplined team and available to assist on call requests. The team provides a communication and outreach and we bring you the awareness of the value capture strategy and the applicability to the highway projects such as webinar series and on call assistance. In terms of technical assistance we are implementing the peer program which includes the peer training and peer exchanges. We are partnering with the leading cities and counties to provide assistance to the agencies interested in value capture initiatives. But need some assistance. We also have a consultant experts on board to provide direct technical assistance as well. In terms of clearing house we are using the web platform to make information available to you 24/7. That includes lesson learned, project examples, case studies, and resources. We are currently developing value capture implementation manual and plan for the pilot in July 17 and 18. We are limited to 10 additional local transportation professionals. If you're interested to participate in this pilot workshop, please let me know. My contact information is at the end of the presentation. This slide provides you the link to all the resources on the value capture website and keep in mind this is evolving and we will continue to update the website as the information becomes available. But you can help us. If your state uses the impact fee or any other value capture techniques for the transportation project, please email us. We love to showcase them and make them available for others to learn from. There are a couple of grants opportunities that I want to share with you. This STIC grant is up to $100,000 per year. Let's say that the city wants to implement the impact fee. And the impact fee requires the expert to prepare the comprehensive methodology of calculation for impact fee report. As well as the impact fees schedule. This should be -- the city should consider to apply for the grant. The second one is up to $1 million annually and another example would be that if you have a project and wants to use a value capture technique that has not used in the city, this is an opportunity to apply for the demonstration grant. The application process and contact information are on the website and the link is provided on this slide. This concludes the presentation and thank you for listening. With that I am going to turn it over to Kara.

Thank you. Justin, we are ready to take questions over the phone. I will lined us up and we have a couple of the chat pod. Harry asks with the exactions or impact fees since no vote is required is public involvement required? >> If we don't answer them now, we can follow up after the webinar. I'm going to the second question. Would complete streets be considered a new city?

If it is a new facility that requires to support the new development then yes.


On the first question about public involvement and I'll talk a little bit about this a few minutes in Texas, yes, public involvement is required in state law requires an advisory committee that appointed by the political jurisdiction, the local body and in some cases the city Council appointed a body of advisers that are residents to advise the city on the impact fee study. Their meetings are public and their open record, open meetings requirements and in addition to that we engage with stakeholders both from the development community and from neighborhoods that are seeing the impact of development and have been engaging with different groups to get feet back on the process as we develop an impact fee and on the second question about complete Street in Texas yes, this part of a project complete streets would be included in the CIP. We are in Texas and are limited to only pay for standalone that are only benefiting pedestrians and bicyclists are just adding a sidewalk to the street but not adding any additional roadway capacity for vehicles would not be considered part of an impact fee eligible project but an entire complete Street, all of the needed components of that street would be part of that project. I will talk a little bit more about that. >>

Another question is what grant programs is the value capture concept required and how is it weighted in the valuation of the grant application. >> The -- I just mentioned on the zoning application and the process for applications as well the process of a evaluation program that's included on the website in the link I provided on the slide. Basically it will be required that you submit the request to the STIC counsel and then working with the division of federal highway division office and it goes to the evaluation process. I don't have the information with me but you can find that on the website.

Thank you. The we have any questions over the phone?

Thank you. Ladies and gentlemen, if you wish to ask a question over the phone please press star and then 1 and it was prompt will indicate your line has been opened. You may remove yourself from the queue at any time oppressing the star key followed by the digit 2. If you're using a speakerphone pick up the handset before pressing the corresponding digit. Once again press *1 for questions.

No phone questions at this time.

Thank you. We will have an opportunity for questions again later in the webinar but for now I will turn it over to Lee and Miller, the senior process consultant for the city of Austin. >> As the slides are queuing up I'm with the Austin transportation at the city of Austin and we are embarking on a street impact fee for the city of Austin and I want to share a little bit about our experience thus far. I will talk a little bit about impact fees and taxes and what our law says, why we chose to pursue impact fees and Austin, the study that we have been undertaking since about 2016 and then what our next steps are and then I will take some more questions with Thay. Texas local government code chapter 395 defines an impact fee a charge of assessment imposed by a political subdivision against new development in order to generate revenue for funding or recouping the cost of capital improvements or facility expansions necessitated by and attributable to the new development. State law in Texas limits impact fees to be used for water supply treatment and distributor facilities, wastewater collection and treatment facilities, storm water, facilities and roadway facilities. Other states can pay for schools or library facilities and other public facilities but these are the four areas that Texas law has allowed for cities and we have had a water and wastewater impact fee since the early 90s but have never pursued roadway impact fees until a few years ago.

Why impact fees? We were directed in 2016 by our city Council to start the state required study to impose a from -- roadway impact fee and there were thinking about additional funding sources as the road infrastructure and typically we are only able to fund new roadway project through bonds which are voter approved, bond elections so that's not necessarily consistent funding source and by state funds that come through our NPO. They wanted to look into this as another option so the purpose of this study is to develop a method for growth to pay for growth in a way that is equitable and transparent and predictable. Those are what we keep talking about. Equitable means that every development is contributing to the network based on the same assumptions and calculations from the study that it's predictable and a development could understand their mitigation upfront in the planning of the project rather than going through a transportation impact analysis and at the end of the day signing -- finding out what their mitigation might be. And it's transparent to develop communities and to the public and how fees are being used and on what project. At the end of this study our goal is to have a fee that is fair and reasonable for development to contribute to the roadway project that are necessitated by that new development. So what do impact fees due? We think they do something very positive for both the streamlining of the development process and clarifying that process as well as actually providing infrastructure and responsive growth. Impact fees from transportation improvements through the development process. That's not say that that does not happen today, it's just a more I guess Streamline is doing to say process right now. Right now we have one off negotiations with developments based on a transportation impact analysis that's triggered by a number of trips that being generated by a certain development so there are often development that come in under that trigger so they may not be reviewed quite as closely as other so it's not necessary equitable across the board. It's also more fair to developments that come in the future because the fee is independent as to whether you are the first in or the last in. If you're the first in and you need a row to get your development and others are benefiting from that, the impact fee would make it so that everyone is good shooting their proportionate amount to that facility. Impact fees also encourage the building of infrastructure so it can actually incentivize a developer to knowing what their impact fee would be and knowing that they may be able to construct an improvement for a better price than it would cost the city to pay for it. The impact fee cancellation is based on what it cost the city to build that facility so the developer might see that they could actually benefit by getting credit for -- credited for building that facility. Is more equitable because now all development whether or not they are triggering an impact analysis would be contributing. Thay said this, impact fees are basically a one-time fee for new development and the study is the calculation to determine the cost for growth for street infrastructure. So how do we do that? In the first phase the project the amount of growth we expect over the next 10 years and that growth is estimated for residential and nonresidential uses within a service area. The fees collected in the service area can be spent in that area so we need the growth within each area in the second phase identify all capital project. In Austin for calling it the roadway capacity plan that are needed in response to that growth. That's a simple fine but it's a mass of dividing the total cost of this project divided by the new growth in terms of service and then have a maximum accessible fee in each service area.

This is a visual of the process we have been going through. As I mentioned on public engagement we established an advisory committee early on in the process and we piggyback on the advisory committee that our water utility was using for their impact fee studies and updates and we developed those service areas and land use assumptions, we received our city Council comments on those and then we developed the roadway capacity plan. I will talk a little bit more on how we did that in coordination with our transportation plan update and then we are about to get to the point where we are taking all those study assumptions to our city Council for the state required public hearing and then we will move into the process to actually calculate the accessible fees and provide a policy recommendation to the city Council for how the effect the program would actually be implemented. >> Just digging into that first phase developing service areas and land use assumptions. Service areas for transportation impact fees and taxes are a little bit more complicated than our water and sewer. Or wastewater which are citywide. For roadways are limited to no more than six miles and we have interpreted that to be any point-to-point within one area cannot be longer than six miles. Back translated for Austin into 17 different service areas. That means we will have 17 different maximum fees for Austin, which makes it a little bit harder I think for everyone to understand. Have to communicate a little bit more about what that means and then it's a policy decision on the Council's part whether they want to make all the fees across all the service areas the same or any other decision just so that it is below that maximum accessible fee based on the study calculation. These are those 17 service areas for the city full purpose and limited purpose jurisdiction. The Colorado River runs through the middle of Austin so that was a major barrier that we considered as part of transportation and trip characteristics that would affect how people move around other things that we looked at where west of downtown Austin it becomes much more hilly Salama topography consideration in West Austin. We also looked at our downtown and it had a unique trip characteristics so we defined a service area for our downtown. We also thought that there is Canavan inner loop and we don't have a defined highway loop in Austin like you do in Houston or Dallas but we have a pseudo-loop and thought that trips are to be shorter within the loop than they are outside of the loop so you can see like FIJL those service areas are going to have shorter trip length than those outside. Those are some the things we thought about in defining these service areas. >> We developed the land use assumptions which are the population and employment productions and those are what establishes the growth and demand for new infrastructure. We looked at various different sources of information to make these projections including growth trends, emerging development project that are likely to come online in the next 10 years, master plans that defined new growth areas. We work at our city demographer and looking at long range demographic projections and we had the benefit of the Austin water was updating the impact fee study for the water and wastewater impact fee so we were able to coordinate our assumptions with them to have consistent assumptions for a 10 year growth.

This is the result. This is a rollup of all 17 service areas so looking at 2017 at the base year and projecting out 10 years for population and employment. Residential and dwelling units and employment in square footage, those numbers are then converted to service units, which I will get into in a little bit. We recognize that these are estimates and there point in time. We don't have perfect crystal balls that tell us exactly what's going to happen in the future so that is why it is important that we will be updating the study at least every five years as required by state law but if something more significant happens like a major annexation or a development that was not anticipated, we can make edits to the study before that five years and bring those assumptions back to counsel for approval is needed. >> Talking about service unit so you are converting those land use assumptions into service unit and sort of what Texas law defined as a measure of consumption attributable to an individual unit of development. For roadway impact fees that measure a consumption is a vehicle miles so one vehicle to travel one mile. That something look some like something like this for an example of how we would calculate that. I am not a transportation engineer and I do not know then manual left and right so I think this is fairly basic mass that we can all figure out that when a single family home the calculated number of trips based on I.T. trip generation rates and standard trip length which we are still determining in our study and this is an example from another community so that resulting service units for that single-family home is 5.38 vehicle miles. The same for the retail store, has a standard trip generation rate and there is a reduction for passed by trips so subtracting 34% of those vehicle trips and multiplying by a standard trip length and again, a vehicle miles results. Those are a couple of examples of how that works.

Once we developed the land use assumptions we started working on the roadway capacity plan or CIP which is all the projects that would increase our capacity in a 10 year period. Texas law defines roadway facilities being arterial or collector streets that have been decimated on officially adopted roadway plan and this was very important for the city of Austin because we had not updated our transportation plan since 1995 when we started this study and for anyone who is familiar with Austin or has visited, you would know that roads have been very very rapid overdose 20 or 30 -- wrap it over those 20 or 30 years so we definitely needed that updated roadway plan. That's something that we have been working on concurrently so the Austin strategic mobility plan was initiated about the same time that we started the impact fee study and was just adopted by city Council in April and the plan itself is a policy document that sets goals and action items and metrics of success and also contains project and a roadway table that defines right away needs for all the streets in the city. That is where the connection between the roadway capacity plan and the transportation plan came in. Again, the project for the impact fee can only pay for capacity related projects. All components of those capacity related projects. The construction, the design, and engineering, land acquisition costs, all those things can be paid for. We cannot pay for operations and maintenance, we cannot consider things that are not capacity project such as standalone bicycle or pedestrian projects so we cannot pay for a shared use paths or an urban trail just with impact fee dollars. We can also consider bond projects so things that used to have another funding source, we can use impact fee dollars if those projects are capacity related to pay down the debt more quickly on those. That's something that actually our water utility does. They pretty much use other impact fee revenue to pay themselves back for projects that they funded through revenue bonds and other data sources. -- debt sources. The other thing we can include is state and water fee sources. If the city's contribute funds towards that project, that could be included as part of our impact fee program. >> So the main categories of project in the roadway capacity plan are street segments and intersection projects and as a subset of both our bond fund the project that are capacity related. For street segments we are talking about new roadways, expansion of existing roadways, access management adding a median and widening the streets. Intersections are signal project, extending turning lanes, other types of special roundabouts and other intersection designs, anything that would be adding capacity to an intersection. Our projects are -- this is getting back to the question about complete streets -- state law defines capital improvement project as facilities the in all of their necessary appurtenances. That's a very important phrase for us because when we are considering necessary appurtenances to be anything that's part of the standard process -- cross-section of the street. If the standard cross-section calls for raised bike lanes and zone for landscape and a sidewalk those would all be part of the cost of the project. If we are adding a new roadway it would include all of those facilities. As you can see from these cross-sections these are definitely complete streets designs and we are in the process of dating our criteria manual which contains these actual cross-sections and design guidance.

This is an example of a service area B and the math that contains all the projects, segment projects. We look that existing project needs where we had incomplete roadways where there is no curbs or sidewalks to determine the type of project feasibility to make sure that we were not in a major flood zone or if it was not going to be feasible because of some physical constraint and as I mentioned again yes, coordinated with our mobility plan. The intersection project is the same service area. We have a lot of requests for new signals that are community driven requests so we evaluate those and we added those to the list that they had been warranted and we also looked at intersections that were currently always stop control to see if they would be good candidates for new signals. We looked at where we could add additional truly capacity or extend existing turn lanes for more queuing space and included those bond eligible projects and again, did a sensibility check. -- feasibility check. All of that is to consider the study assumption. The service area, land use assumptions and roadway capacity plan and state law requires that we publish those assumptions and hold a public hearing. That is the point in the process that we are at now. We have completed the study assumption report and its public and available on our website including the methodology as well as the results of all of those elements for the roadway capacity project there is an individual page with a table and a map showing all the projects, the limits of every segment and what the intersection projects are. All of that is what the city Council will be considering at their public hearing in August and then we will move into the phase to calculate the maximum impact fees for each service area and being bring back to city Council the policy recommendations that we would make for how to implement impact fees. Our impact fee advisory committee getting back to that public engagement component will be very valuable to us as we develop those policies questions and how and what we would recommend and teamed those up for our city Council's consideration.

The impact fee advisory committee is also required by law to advise the city on when to update the study next. At a minimum we have to do it every five years but there is a reason to update it sooner, they would advise on that as well as receive semiannual report on what fees are being collected and what the money is being spent on. They received earlier this month they receive that semiannual report from the water utility documenting what water and wastewater impact fees have been collected and what project had been funded.

Just to talk about the calculations. We have not come completely to this part so this is the limits of my knowledge but as we talked about projected assumptions and develop impact fee, CIP or roadway capacity plan and then we will remove the costs associated with existing development and growth. Existing development we cannot use the demands of existing development, we have to only consider that new growth component of the project and then we will calculate the fees by dividing the recoverable cost of the impact fee CIP by the gross and you service unit so we have an impact fee per service unit and then as Thay was talking about the credit calculation would occur after that. This is what it would look like, very basic term for every service area we would have calculated the maximum fee in vehicle miles, that's what the study determines and then the city Council sets the effective rate of the impact fee. That could be different for every service area or they can make service areas within inside the loop same, outside the loop the same, Fort Worth is the second largest city in Texas that has roadway or is the largest city in Texas that currently has roadway impact. They have waived impact fees in certain service areas because they want to incentivize growth in those areas. This is another way for us to talk about what we think the benefits are for Austin in impact fee so these are some samples developments and what some other cities in Texas what their effective rate is for an impact fee. Frisco having to at different rates in Fort Worth is a flat rate and then prosper, Texas has some lower and higher as you can see from his single-family home across different cities and service areas how that fee would be different. And up to industrial facilities. We took some examples of development that happened in the city of Austin and said okay, what actually was collected based on the transportation impact analysis and how would that compare to if we had an impact fee at those rates in other cities. We looked at multi family developments, some office, medical office and then mixed use development. This is what we saw so we can see for example the 878 apartment complex, we did not collect any medication from that development. They did not contribute anything to their impact on the network. Versus the medical office the 55,000 square-foot office development paid a pretty hefty fee in comparison to what might have been collected in other cities. And then in other cases like the mixed-use we were pretty on par with what might have been collected. That's just an example to show how right now it's not equitable across development. We are still roughly proportional and is also required by state laws and mitigation that has been collected from these developments is roughly proportional to their impact but is not necessarily equitable or very predictable or transparent to those development and what their contribution would be. That's just an example of why we think an impact fee would be a better solution for Austin. With that I am happy to take questions and hopefully can answer those. Thank you so much.

Thank you go just in we are ready to accept questions over the phone.

Thank you. Once again, if you would like to signal a question, please press *1. Again, *1 to signal a question.

We have a few of the chat pod. Johnny Hamilton asks how different our impact fees from the establishment of municipal utility districts where new residents assess percentage -- and maintain utilities and future roadways and rough file answered setting up a impact program includes public involvement and after it's been set up individual developer applications do not require public involvement at the rules and fee levels if they are preset and in the public domain.

Next question. Did the study evaluate title VI concerns or populations?

I'm guessing that question is for me. This is Leanne again. We have not yet considered the impact of a fee on different population with Austin. We will be required to submit an affordability impact statement with any new fetus the proposed so we will probably also conduct an equity assessment and that's where we will talk about what we think the impact would be on different populations and different parts of Austin. I am always thinking when we talk about affordability impact that it is kind of a temporal issue if people saying this is going to increase the cost to develop property which isn't going to be passed on to the residence so it's going to make something more unaffordable but this is a way for us to pay for new facilities as growth occurs rather than relying on property taxes and bond elections down the line but are then applied to everyone in the city and are also language meeting to affordability concerns of rising property taxes. I think are going to pay for it at some point. It's just whether that's happening with the development based on a calculation of what that development actual impact is versus spreading that across the entire city for people who are not part of that development. I hope that kind of answers the question but we do anticipate looking at environmental populations through an equity assessment.

The next question is if the quarter requiring capacity upgrades extending beyond one local jurisdiction what are the options for applying impact fees or other tools?

We can only spend impact fees, we can collect impact fees revenue and spend impact fees revenue in service areas and those service areas have to be in those purpose are limited purpose jurisdictions in the city of Austin. We would hope that if there was a project that extended beyond our city boundaries that we would be in a partnership with the county or another local jurisdiction to partner on that project at the time that we had had that funding. Like Thay said if the funding is not used in 10 years it goes back to developers so that's definitely something that we want to make sure we looked into in the development of that project so that we were not kind of filling a facility to know if the other jurisdiction was not able to fill the funds to complete the project.

Next question. Impact fees versus concurrency fees, what are your thoughts on this? Remark >> I'm not sure what concurrency fees are so I will let Thay answer that. >> I don't know what concurrency fees are so it would be helpful if the person was asking that can give us more details. I have not seen that term used before.

I think the concurrency fee is very popular down in Florida.

Looks like somebody's check -- typing in the chat pod but for now that's all the questions. One more question. Within the city of Austin are there roads under jurisdiction by county or state. If so how would impact fees be shared with them?

Yes, there are roads under the jurisdiction of the state within the city of Austin, and so we can spend impact fees revenue on those projects and it's a matter of what the local match would be. If -- we just have to estimate we already know what the project cost and how much does it is contributing to those facilities. As an example Loop 360 is being improved by -- in the city and his last major bond election got funding to help upgrade some of the intersections to be great separated. I think our contribution, I cannot remember if it's 42 or $46 million is going to that project so we can pay back that debt through impact fee revenue. That's how it would work and in cases where we don't already know what the contribution is, we would have to estimate whether that's a typical like 20% or however we want to do that. That's something we have been talking about and if we don't know now what the city contribution would be or if there would be any, maybe it is worth leaving that out of the CIP for now and we have more certainty that we could add those project back in at a steady update every five years. >> Looks like that's all the questions in the chat pod. Are there any over the phone?

Once again, if you'd like to signal over the phone please press *1. Again, that is *1 if you like to signal over the phone. No questions on the phone at this time. >> Now we can move on to the closing or the next closing for questions about the impact fees. Just as a quick kind of knowledge check about what you picked up on today's webinar. If you don't mind taking a moment to fill that out, that would be great. >> [Captioner standing by]

>> [ Group in being polled ]

>>. Thank you. Now we will move on to the next webinar in the value capture webinar series. We have one last weekend today's webinar and then the next one is on July 18th, the value capture capital improvement plan. You can register for these webinars I clicking on the link servicing the value capture website. We have a couple more polls. These are quick closing polls before we wrap up today's webinar. Again, if you don't mind spending a moment filling those out, we would appreciate it. >> You will notice that the presentations are available for download on the left and right of the web room right now. >> [ Group is being polled ] >> We will give people another few seconds to fill these out. >> That concludes our webinar. We will leave you with these nine FHWA standards evaluation questions that we would appreciate if you filled out as well and any closing remarks, Thay?

I wanted to thank Leanne Miller. I really appreciate her sharing her valuable time and her expertise and her experience of the street impact fee in the city of Austin. Thank you, Leanne. I also want to thank the participants for being patient and listening to the webinar today and I also want to remind the participants that if you have any project in the state that is using any value capture technique, we would love to showcase them and please email it to us. So we can make it available to others to learn from and thank you everyone. >> Okay, we can wrap up the webinar now.

Thank you. That concludes our conference for today and thank you for your participation and for using AT&T services. You may now disconnect.

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