Value Capture Webinar Series

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

June 27, 2019

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Introductory Slides -
Value Capture Developer Contributions Techniques and Case Studies

Upcoming Webinars

Understand Value Capture Tools and Federal Resources June 20, 2019 1:00 pm - 2:30 pm ET
Value Capture: Developer Contributions Techniques and Case Studies
June 27, 2019 1:00 pm - 2:30 pm ET
Value Capture: Capital Improvement Plan
July 18, 2019 1:00 pm - 2:30 pm ET
Value Capture: Special Assessment Techniques and Case Studies
July 24, 2019 1:00 pm - 2:30 pm ET
Value Capture: Incremental Growth Techniques and Case Studies
Aug. 22, 2019 1:00 pm - 2:30 pm ET
Value Capture: Joint Development, Use ROW Agreement, and Case Studies
Sept. 19, 2019 1:00 pm - 2:30 pm ET
Value Capture: Capture Value from Existing Assets to Fund Previously Unfunded Infrastructure Projects and Case Studies Oct. 24, 2019 1:00 pm - 2:30 pm ET
Value Capture: Advertising, Naming Rights, and Case Studies Nov. 21, 2019 1:00 pm - 2:30 pm ET

Presentation 1 -
Value Capture: Developer Contributions

EDC-5 Value Capture Implementation Team

Landing page of the On-Ramp to Innovation website

** **

Special Assessments Fees Incremental Growth Joint Development Concessions Advertising and Naming Rights
One-time charges collected by local governments from developers to offset the cost of infrastructure and services necessitated by new development. An additional fee or tax assessed on businesses or residents in specified geographic areas benefiting proximity to a highway or other transportation facility or corridor. Similar to a utility fee, transportation fees are assessed based on how individual businesses and households use transportation facilities. A mechanism allocating back to infrastructure from some specified portion of increased property tax revenues fostered by new infrastructure - often for a specified period of time. Sale or lease of land or air rights on or adjacent to transportation facilities. This can include donations of land or other in-kind resources from the private sector in ongoing commercial operations. Sale or lease of government owned assets - such as toll roads or bridges - to private-sector investors/operators. Sale of advertising space or naming rights on a transportation facility. Note: Commercial uses within Interstate Highway System right of way, including rest areas, is prohibited by law; however, they may be allowed on toll facilities and in transit stations.

Value Capture Techniques

Category Technique Purpose Fund or Finance
Developer Contributions Impact fees Capital Expenses Fund
Negotiated Exactions Capital Expenses Fund
Special Assessments Special Assessment Districts Capital Expenses Fund or Finance
Business Improvement Districts Capital or Maintenance Fund or Finance
Sales Tax Districts Capital or Maintenance Fund or Finance
Land Value Taxes Capital or Maintenance Fund or Finance
Fees Transportation Utility Fees Operations and Maintenance Fund
Incremental Growth Tax Incremental Finance Capital Expenses Fund or Finance
Transportation Reinvestment Zones   Fund or Finance
Tax Allocation District   Fund or Finance
Joint Development At Grade Capital Expenses Fund or Finance
Below Grade Capital Expenses Fund or Finance
Above Grade (Air Rights) Capital Expenses Fund or Finance
Concessions Asset Recycling Capital Expenses Fund or Finance
Advertising & Naming Rights Advertising Capital or Maintenance Fund
Naming Rights Capital or Maintenance Fund

Introduction to Developer Contributions

  • Developer Contribution Overview
  • Development Exactions & Impact Fees Overview
  • Key Distinction: Fee vs. Tax
  • Why is the need for Developer Contributions
  • Legal Environment
  • Establish Transportation Impact Fees
  • Accounting & Administration
  • Q&A
Developer Contributions
  • Form of fees or payments or the provision of the improvements
  • Require "nexus" or a reasonable relationship established between the development & payment
  • May be negotiated or voluntary basis
  • Types of Developer Contributions
    • Negotiated Exactions
    • Development Impact Fees
Negotiated Exactions (Agreements)
  • A requirement imposed on an ad hoc basis during the processing of a discretionary land use application as a condition of approval of the application
  • Can take many forms including:
    • A conveyance or dedication of property for public purpose
    • A requirement to construct public improvements such as a new traffic signal, or
    • A requirement to pay money to finance acquisition or construction of public facilities
  • No voting requirements
Impact Fee By Any Other Name ....
  • Impact Fees
  • Development Impact Fees
  • System Development Fees
  • System Development Charges
  • Traffic Impact Fees
  • Transportation Impact Fees
  • Road Impact Fees
  • Capital Facility Charges
  • Mobility Fees

Impact Fees Overview

Impact Fees
  • One time upfront fee to fund capital improvements necessitated by new commercial and residential development
  • No voting requirements
  • Meet the "Rational Nexus"

Complete Streets

New Development > Impact Fees (costs sharing) > Road Capcity Improvements > Complete Streets
Fee vs. Tax
  • Taxes
    • Primarily revenue-raising
    • Authority must be express
    • Proportionality not required
  • Impact Fees
    • Land use regulations that mitigate off-site impacts - POLICE POWER
    • Authority may be implied
    • "Reasonableness" required
    • Strict accounting procedures
Benefits of Impact Fees
  • Ensure new development is paying its own way (growth paying for growth).
  • Alleviates burden of new facilities on existing tax base
  • Beneficial to smaller or rapidly growing communities to finance the infrastructure needed to support additional population, employment, and development in a community
  • Help to manage growth in developing communities as well as in older revitalizing communities
  • Consistent and known to developers
State Impact Fee Enabling Acts
map showing states with enabling legislation

Why is the Need for Impact Fees

Infrastructure Conditions

Text of 2017 Infrastructure Grades graphic

America's Cumulative Infrastructure Grade: D+

A: Exceptional B: Good C: Mediocre D: Poor F: Failing

Infrastructure Type Improving or Deteriorating Grade Infrastructure Type Improving or Deteriorating Grade
Aviation   D Parks and Recreation D+
Bridges   C+ Ports C+
Dams   D Rail B
Drinking Water   D Roads   D
Energy   D+ Schools D+
Hazardous Waste D+ Solid Waste C+
Inland Waterways D Transit D-
Levees D Wastewater D+
Funding shortages
  • U.S. infrastructure assets
    • End of useful lifecycle
    • Deferred maintenance
    • Maintenance backlog
  • A decrease in Federal & State funding for infrastructure improvements:
    • Outside funds are getting tougher to obtain
    • Resistance of the public to increased taxes.
  • Complete street initiative to improve safety
  • "Smart" Infrastructure Investment needs

Legal Framework

Requirement: Dual Rational Nexus

Need - new development creates need and the fee is proportional to the amount of capacity used by the new development.


Benefit - new development subject to the fee will benefit from the improvements resulting from the impact fee.

Impact Fee Act/legislation
  • Local governments authorized to impose impact fees
  • Must meet "Nexus" Test
  • Define eligible facilities
  • Define level of service
  • Eligible expenditures (must be used for expenditures by the local government for capital improvements)
  • Fee must be set to match the reasonable impact of new development on existing capital facilities
    • Must be no greater than necessary to defray impacts
    • May not be used to remedy existing deficiencies
  • Collection and refunding
    • Fees must be held in separate accounts and must be used only for the purposes for which they were collected
    • Monies must be spent within defined years of scheduled date for construction in the CIP
  • Crediting/Exemptions
    • Provide credit to avoid double charge to developer
  • Timing of phase in and Updates
    • Comprehensive review and update every 3-5 years
  • Annual reports
Eligible Costs
  • Facilities/Improvements required to serve new development (Yes)
  • Repairs and maintenance (No)
  • Operating Costs (No)
  • Excess capacity in existing facilities (Yes)
  • Improvements required to correct existing deficiencies (No)

Establish Transportation Impact Fees

Information Needed to Calculate Impact Fees
  • General plans or comprehensive plans, including updates
  • Zoning maps
  • Master plan
  • Master facilities plans
  • Capital improvement Plans
Capital Improvement Plans (CIPs)
  • 10-year Impact fee CIP
    • Completed
    • Underway
    • Future Projects
Capital Improvement Plan flow chart

Text of implementation flow chart:

Capital Improvement Plan

Identify Needs > Long-Range CIP Strategic Plan > Identify Funding & Financing > Five-Year CIP plan > Annual Capital Budget > Implement Projects & Programs > repeat ...

Implement Projects & Programs

Funding/Revenue Sources
  • General Fund
  • Special Revenue Funds: gas tax, vehicle registration fees, etc.
  • Impact Fees, i.e. road/street impact fees, park fees
  • Grants: Federal, State, Regional, others
  • Special Assessment District
  • Others
Maximum Impact Fees Calculation
impact fees calculation chart

Text of Impact Fees Calculation flow chart

    • Projects Addressing Growth
      • Projects Accommodating the City/County Growth
        • Divide by Growth in Trips to Get Average Cost Per Trip
          • Create Impact Fee Schedules
      • Projects Non-Accommodating the City/County Growth
        • Cost paid by City/County or Others
    • Projects Addressing Existing Deficiencies
Evaluate Need for Credits
  • Site specific
    • Developer constructs a capital facility included in fee calculations
  • Debt service
    • Avoid double payment due to existing or future bonds
  • Dedicated revenues
    • Local option sales tax, gas tax
    • State and Federal Grants for Capacity
  • Some grey areas:
    • Dedicated sources that can be used for either rehabilitation or capacity expansion
    • Non-dedicated funding historically used for capacity improvements
Model Development Impact Fee Ordinance
  • A development impact fee ordinance enacts the rules and requirements formally adopted by local government for establishing and updating the development impact fee system
  • Highlights:
    • Supporting Documentation
    • Jurisdiction (Service Zones)
    • Application & Exemptions
    • Determination of Fees
    • Credits & Reimbursements
    • Appeal Process
    • Refunds
Summary of Impact Fee General Process
  1. Establish transportation/roadway impact fee service area & 10-year (or 25-year) new growth projection
  2. Establish Service Unit for impact fee calculations
  3. Roadway capacity plan, evaluate the existing roadway network capacity
  4. Develop fee structure & evaluate need for credits
  5. Develop policy & ordinance
  6. Public participation (Liaison committee)
  7. Decisions by elected officials(Percentage of maximum supportable fee)
  8. Adopt Transportation Impact Fee Ordinance

Accounting & Administration of Transportation Impact Fees

Accounting of Impact Fees
  • Impact fees generally must be paid before construction begins (prior to issuance of building permit)
  • Money earmarked and retained in special interest- bearing accounts
  • Subject to the GASB Statement 33, Accounting and Financial Reporting for Nonexchange Transactions
  • Deadline for Expending Impact Fees (vary from 5-10 years)
  • Refund the impact fees, plus earned interest, to the developer if fund not spend within the deadline
  • Expenditure should be made only for the category of system improvements within the service area for which the development impact fee was assessed and collected
  • May retain a portion of the Impact Fees to pay the County's costs of collection and administration relating to the Impact Fees
  • Must be periodically evaluated and updated to reflect recent data and cost factors
  • Provide an annual financial report reflecting the collection and expenditures of the transportation Impact Fees during the previous year
  • Comprehensive review & update every 5 years
  • General opposition to fee increases
  • Revenues are economically driven
    • Does not provide for a stable stream of revenue
  • Fee schedule is proportional to the development's impact
    • Require Impact Fees Study
  • Educate users regarding the costs and benefits
    • Every jurisdiction is different
  • Securing political support
Myths about Impact Fees
  • Add to the cost of housing
    • The market sets the price
  • Make the city less competitive
    • Better infrastructure tends to attract development
  • Unfair and difficult to navigate
    • Impact fees level the playing field (new growth pays its equitable share)
    • Meet the Rational Nexus Test: Need, Benefit, & Fair Share (proportionality)
  • Abuse System
    • State Legislation & Ordinance clearly define exemption, efficient process, and accountability
Select Project Examples
  • San Joaquin Hills Transportation Corridors
  • I-5 Fern Valley Interchange, Phoenix, Oregon
  • Osceola County Roadway and Bridge Bundling Program
  • Poplar Road Safety Improvements (phase I), Stafford County, Virginia
  • SR-163/Friars Rd Off-Ramp in San Diego

Federal Roles

Federal's Role in Value Capture Strategies

Text of Federal's Role in Value Capture Strategies chart

Universe of Land under State Legal Authority

  • Land owned/Regulated by City/County
    • Depends on the local's policies
    • Decision at the City/County Level
    • State DOT and FHWA have no direct influence
  • Land owned/Acquired by State DOT with State Fund
    • Decision at the State level
    • Federal has no direct influence
  • Land Purchased with Federal Fund
    • State DOT and Federal have direct influence
    • US DOT support value capture
Value Capture Implementation Team


  • Thay Bishop, FHWA Office of Innovative Program Delivery
  • Stefan Natzke, FHWA Office of Planning, Environment, and Realty


  • Jennifer Ahlin, Virginia Department of Transportation
  • Janine Ashe, FHWA District of Columbia Division
  • David Cohen, FHWA Office of Project Development & Env. Review
  • John Duel, FHWA Office of Planning, Environment, and Realty
  • Kathleen Hulbert, FHWA Infrastructure Office
  • Chip Millard, FHWA Freight Management & Operation
  • Diane Mobley, FHWA Chief Counsel Office
  • Kevin Moody, FHWA Resource Center
  • Ben Orsbon, South Dakota Department of Transportation
  • Jill Stark, FHWA Office of Planning, Environment, and Realty
  • Lindsey Svendsen, FHWA Office of Planning, Environment, and Realty
  • Jim Thorne, FHWA Office of Planning, Environment, and Realty
  • Bingxin Yu, FHWA Transportation Policy Studies
VCIT Focus Areas
  • Communication - Developing the tools to help FHWA staff and others promote Value Capture to local public agencies (Value Capture Implementation Manual)
  • Technical Assistance - Providing technical assistance to agencies interested in pursuing Value Capture (Peer Program)
  • Clearing House (website) - Identification of best practices and lessons learned and promoting further discussion on innovative funding options for local public agencies, lessons learned from past and current efforts, etc.
Clearinghouse for best practices/lessons learned
EDC-5 Funding Opportunities

State Transportation Innovation Council (STIC) Incentive

Accelerated Innovation Deployment (AID) Demonstration

Questions & Answers

Thay Bishop:
Tel: 404-562-3695 or

Presentation 2 -
Street Impact Fees

City of Austin Street Impact Fee Study (SIF)

Value Capture Webinar | June 27, 2019
Austin Transportation Department

report cover


  • Impact Fees in Texas
  • Why Street Impact Fees?
  • Study Overview
    • Service Areas and Land Use Assumptions
    • Roadway Capacity Plan
    • Fee Calculation
    • Policy Development
  • Next Steps
  • Questions

Texas Local Government Code Chapter 395

  • "Impact fee" means a charge or assessment imposed by a political subdivision against new development in order to generate revenue for funding or recouping the costs of capital improvements or facility expansions necessitated by and attributable to the new development.
  • Water, Wastewater, Stormwater, Roadways

Project Purpose:
Why Street Impact Fees?

  • Council direction to conduct impact fee study
  • Determining a method for growth to pay for growth that is:
    • Equitable
    • Predictable
    • Transparent
  • Ultimate purpose is to develop a fair and reasonable fee that development should pay for auto capacity improvements

What do Impact Fees do?

  • Impact Fees encourage a system that:
    • Funds transportation improvements: Continues to fund transportation improvements through the development process
    • Is fair among future developments: Fee is consistent and independent of when developers build (first or last)
    • Encourages building infrastructure: Allows flexibility to require infrastructure to be built up front
    • Is equitable in that all new development can contribute: All developments can contribute relative to their impact regardless of meeting a TIA threshold

What are Street Impact Fees?

  • One-time fee for New Development
  • Calculation to determine the cost of growth for street infrastructure

How do we calculate the "cost of growth for street infrastructure"?

  • Project new growth for the next 10 years
    • Establish Service Areas within which a maximum impact fee is determined
    • Develop Land Use Assumptions and corresponding growth within each Service Area
  • Project corresponding roadway capacity needs (Roadway Capacity Plan) to accommodate that growth within each Service Area

Street Impact Fee Study

Street Impact Study flow chart

Text of Street Impact Study flow chart

  • Data Collection - Establish Advisory Committee
    • Phase 1:
      • Service Areas and Land Use Assumptions - Council comments on Service Areas, Land Use assumptions
        • Phase 2:
          • Roadway Capacity Plan Development (in coordination with ASMP) - Council action on study Assumptions
            *We are here
            • Phase 3:
              • Policy and Ordinance Review - Council action on Policy

Service Areas and Land Use Assumptions

Service Areas
  • Funds collected within a service area must be spent on projects within the same service area within 10 years
  • Water (Service Area: Citywide)
  • Sewer (Service Area: Citywide)
  • Roadway (Service Area: ~6 miles)
    • Limited to Corporate Limits for roadways; cannot include ETJ
  • Geography & Transportation Characteristics
    • Colorado River
    • Hill Country
    • Downtown
    • Loop Theme
    • Highway Boundaries
service areas map
Land Use Assumptions
  • Population and Employment projections
  • Establishes demands for infrastructure
  • Reference master plans, demographics, growth rates
  • Consistent with Water/Wastewater Impact Fee Study
Citywide Results
  City - Residential (Dwelling Units) City - Employment (Square Feet)
  Single Family Multi- Family Total Basic Service Retail Total
2017 Base Year 179,259 224,030 403,289 72,071,000 125,112,00
79,359,000 276,488,00
2027 Projections 212,913 315,313 528,226 84,503,000 158,956,000 109,182,000 352,641,000
Projected Growth
33,654 91,283 124,937 12,486,000 33,844,000 29,823,000 76,153,000
Texas Law: Service Unit definition
  • Standardized measure of consumption attributable to an individual unit of development calculated in accordance with generally accepted engineering or planning standards and based on historical data and trends applicable to the political subdivision in which the individual unit of development is located during the previous 10 years
  • Roadway utilizes vehicle-miles: one vehicle to travel one mile
Service Units
Home Trips 1.00 Vehicles (PM Peak)
(ITE Trip Generation)
x Trip Length 5.38 Miles*
Vehicle-Miles 5.38 Vehicle-Miles
Retail Store Trips 3.71 Vehicles (PM Peak)
(ITE Trip Generation)
Reduction for Pass-by Trips -34% (ITE Trip Generation Handbook)
2.45 Vehicles (PM Peak)
x Trip Length 2.70 Miles*
Vehicle-Miles 6.61 Vehicle-Miles


Roadway Capacity Plan

Texas Law: CIP Definition
  • Roadway (Street) facilities means arterial or collector streets or roads that have been designated on an officially adopted roadway plan of the political subdivision, together with all necessary appurtenances. The term includes the political subdivision share of cost for roadways and associated improvements designated on the federal or Texas highway system, including local matching funds and costs related to utility line relocation and establishments of curbs, gutters, sidewalks, drainage appurtenances, and rights-of-way.
Connection to Austin Strategic Mobility Plan

Council Action - April 11, 2019

  • Adopted by City Council, amending Imagine Austin
  • A coordinated transportation strategy for all modes that supports the growth concept of Imagine Austin
ASMP flow chart

Text of ASMP flow chart

  • ASMP
    • Policies
    • Indicators
    • Actions
    • Projects
      • SIF Roadway Capacity Plan
        • + An Updated, Multimodal Street Network Table
          • SIF Roadway Capacity Plan
What can Street Impact Fees pay for?
Components that can be paid for Components that cannot be paid for

Capacity Related Projects:

  • Construction cost of capital improvements in the Roadway Capacity Plan
    • Roadways - additional lanes, bridges, sidewalks and other "appurtenances" of roadways
    • Intersections - Signals, turn lanes
  • Corridor Planning and Preliminary Engineering
  • Survey and Engineering fees
  • Land acquisition costs
  • Debt Service of Street Impact Fee Plan
  • Study/Update Costs

Non Capacity Related Projects:

  • Projects not included in the Roadway Capacity Plan
  • Repair, operation and maintenance of existing or new facilities
  • Upgrades to serve existing development
  • Administrative costs of operating the program
Roadway Capacity Plan

Developed with the Austin Strategic Mobility Plan

  • Street segment projects
    • New roads
    • Expand Roadway & Substandard Street (Widening)
    • Access Management
  • Intersection projects
    • Signals
    • Turn lanes
    • Special intersections
  • Bond Projects
    • Capacity-related
Austin area map
Street designs based on:
  • Street Network Table > Right of Way
  • Transportation Criteria Manual > Cross-sections
Cross section diagram 92' roadway including pedestrian walkways, bike access
Cross-section diagram of 116' roadway including pedestrian walkway, bike access, and divided median
Projects: Segments
  • Reviewed existing project needs
  • Identified incomplete roads
    • No curbs, sidewalks
  • Determined the type of project (e.g. widening, access management)
  • Checked feasibility (ROW, etc.)
  • Coordinated with Mobility Plan
example map showing segments
Projects: Intersections
  • Reviewed existing requests
  • Considered all-way stop controlled intersections
  • Considered additional turn lane capacity needs
  • Identified eligible bond projects
  • Preliminary feasibility check
example map showing intersections

SIF Study Assumptions Report

Study Assumptions Report
  • Service Areas
  • Growth Projections
  • Roadway Capacity Plan
report materials
Study Assumptions Report
  • Roadway Capacity Plan
  • Based on the ASMP
example assumptions data
example area map
Next Steps
  • Study Assumptions Public Hearing and Council approval
    • August 8
  • Phase 3 - Fee Calculation & Policy Development
    • Begin in Fall 2019

Impact Fee Calculation

How are Impact Fees Calculated?

  • Land Use and Population Projections
  • Develop 10-Year Impact Fee CIP (RCP)
  • Remove costs associated with existing development and growth at 10+ years
  • Calculate Pre-Credit Max Assessable Impact Fee
    • Impact Fee Per Service Unit = Recoverable Cost of the CIP ($) / New Service Units
  • Credit Calculation
Study Results
  • Study Determines Maximum Fee
  • Council Determines Effective Rate
  • End result looks like a table as follows:
Service Area Max Impact Fee (vehicle-mile) Study Determines Effective Rate Impact Fee
(vehicle-mile) Council Determines
Collection Rate Comparisons
LAND USE Frisco* (60% of max, Lowest SA) Fort Worth (Flat Rate all SA's)** Prosper (Lower SA) Frisco* (60% of max, Highest SA) Prosper (Higher SA)
Single Family Home $2,358 $3,750 $4,589 $5,260 $6,053
Apartment Unit $1,462 $2,118 $3,556 $3,261 $4,690
3,000 ft2
$11,844 $18,675 $16,677 $26,418 $21,999
10,000 ft2
$31,990 $32,340 $38,910 $71,360 $51,320
50,000 ft2
$154,700 $164,750 $188,100 $345,050 $248,100
300,000 ft2
$204,000 $133,500 $495,900 $455,100 $654,300
* Maximum in SA A; Minimum in SA D
** Effective January 1, 2019
Sample Developments
878 units
Residential: 878 Apartments
298 units
Residential: 298 Apartments
55,000 square feet
Office: 55,000 ft2 Office
73,000 square feet
Office: 73,000 ft2 Medical Office
Small Mixed Use
24,500 square feet
Small Retail: 12,000 ft2 Office, 11,000 ft2 Retail, 1,500 ft2 Restaurant
Collection Rate Comparisons
Austin Development Austin TIA
Frisco* (60% of max, Lowest SA) Fort Worth (Flat Rate all SA's)** Prosper (Lower SA) Frisco* (60% of max, Highest SA) Prosper (Higher SA)
878 Apartments $0 $1,283,636 $1,859,604 $3,122,168 $2,863,158 $4,117,820
298 Apartments $86,288 $435,676 $631,164 $1,059,688 $971,778 $1,397,620
55,000 ft2 Office $317,388 $175,945 $177,870 $214,005 $393,965 $282,260
73,000 ft2 Medical Office $25,277 $559,180 $583,708 $659,117 $1,247,205 $839,430
12,000 ft2 Office
11,000 ft2 Retail
1,500 ft2
$64,109 $78,344 $84,390 $96,412 $174,752 $127,165
* Maximum in SA A; Minimum in SA D
** Effective January 1, 2019