Four years after the City Auditor’s Office issued a finding that the city’s police and fire impact fees imposed on annexations are inadequate, Mayor John Suthers urged City Council on June 27 to up the ante significantly.
The new fees will apply on all new development, not just annexations, and are designed to fund new police and fire stations made necessary by city growth.
We reported the proposed increase in fees in February, and the new proposal would lower some of those fees. No explanation was given for why the original plan showed higher proposed fees compared to the latest proposal.
City Council also heard a report on new regulations for forming special districts and approving debt.
First, the police and fire impact fees.
Currently, developers pay $1,985 per acre for fire and $677 per acre for police.
The proposal in February used several examples to show the increase. One was a 27-acre Dublin Commons, a mostly commercial development, which would pay a a total of $72,353. The formula proposed then would raise the fees to $167,133.
The version introduced on June 27 would place the total at $149,819.
The fees were derived based on density of housing projects and intensity of use for commercial and industrial sites. The higher the density, the higher the fees. The more population served by a commercial business, such as a retail store or fast-food restaurant, the higher the fees.
City Chief Financial Officer Charae McDaniel outlined the details of the proposal, which noted a backlog of at least fire stations and support facility, and the expansion of the police crime lab.
In the next 10 years, the city will need to build eight new fire stations and add several support facilities for police, such as a training academy, and build three police stations, at a total cost of roughly $45 million.
Suthers told Council the consideration of the change dates to the 2018 amendment of the Banning Lewis Ranch annexation agreement when “it became painfully obvious to me the city’s police and fire impact fee was inadequate.”
That was when the city auditor noted the city’s impact fees for annexations was insufficient.
Now, the city proposes to collect impact fees for public safety on all developments, not just annexations, when the use of a property changes. For example, if a mechanic’s garage located Downtown is demolished to make way for a multi-story apartment building, the developer would have to pay impact fees.
“I think all of you are well aware our city is entering a period of time where we’re going to have a significant expansion of capital needs,” Suthers said. While the city has added some 120 police officers and 48 firefighters since 2017, Suthers cited a planning study that calls for adding another 200 police officers and 80 firefighters in coming years.
That means building more police substations and fire stations, largely on the north and south sides of the more than 18,000-acre Banning Lewis Ranch, which forms a large flank on the city’s east side.
“We’re going to get into some serious capital expenses,” Suthers said. “I feel strongly that new development should pay most of the capital costs involved in expansion of police and fire service to those new areas.”
However, because new development also brings additional sales and property tax to the city, the fees are designed to capture 70 percent of the police and fire needs caused by that development.
“The bottom line is we have to move forward with a new structure of police and fire impact fees to deal with the issues the city is going to be dealing with in the years ahead,” Suthers said.
While most Council members expressed support, Nancy Henjum and Bill Murray questioned whether the fees should capture just 70 percent of such costs.
“A 100 percent fee is a better number than looking at a 70 percent fee, and hoping that all the other [city’s] fees will not be required for anything else,” Murray said.
Henjum echoed that concern, first saying the change should have happened years ago and then questioning how the city would fill the 30 percent gap, given all the other needs of the city, from roads, to forestry, to parks, and other issues, that will compete for funding in the future.
Suthers reminded Council that developers won’t pay the higher fees, rather those buying houses or renting apartments will pay.
“Let’s never forget it’s not the developer who’s paying it, it’s the person buying the house,” he said.
See the new fees as applied to existing developments on page 24 of this presentation.
Council also heard a report on major changes in how metro districts and business improvement districts are approved.
While complicated, the change essentially allows developers to increase the property tax mill levy for capital costs from 30 mills to 50 mills on new developments and to increase operating and maintenance from 10 mills to 20 mills.
The new ordinance also would require developers to seek approval for the total debt anticipated up front, rather than repeatedly returning to Council for additional debt.
Murray expressed opposition to giving developers additional taxing authority. “We gave the developer the right to tax you, so we better get this right the first time,” he said.
Henjum called the issue “complex” but expressed concern that board members who later run the districts might not be prepared to handle certain of those complexities.
Planning official Carl Scheuler noted the proposed ordinance, as well as a new state law, require additional disclosures on special districts’ websites. He also said the measure tightens up requirements when developers want to buy the very debt they’re issuing for a project.
Both the impact fees and new special district ordinance will face action by Council next month.