Fee generates less than projected

An impact fee intended to shift some of the costs for increased traffic from taxpayers to developers raised far less than expected the first six months it was in effect.

According to a report to the city council Tuesday, the traffic impact fee raised $1.3 million through June 30, or $2.6 million on an annualized basis.

The city had projected the fee would bring in about $6.7 million per year.

City Manager Jim Couch said collections were “a little slower” than projected but that he thought some developers moved projects into place before the fee took effect Jan. 1, 2017.

The traffic impact fee is levied on residential and commercial development.

The city council adopted it in April 2016 along with a companion fee solely on residential development, for parks and trails.

Oklahoma law allows cities to levy impact fees for streets, parks, water, wastewater, storm water and transit, and police and fire protection.

Previously, though, Oklahoma City collected impact fees only for water and wastewater.

Fees are intended to offset some of the cost of new and expanded infrastructure, such as widening streets to accommodate increased traffic or laying new water and sewer lines.

The scheme adopted by the city council divides the city into assessment areas, so that fees levied in a particular part of town go toward projects in that area.

One drawback of that approach was apparent in the first report, as no areas accumulated enough in the first six months to begin any work.

Once enough money accumulates, traffic studies to determine various areas’ needs likely will be among the first projects funded, said Craig Freeman, the city’s finance director.

Impact fees brought in the most on the northwest and southwest sides, while central, northeast and southeast produced less.

One hot area of development, according to a map of traffic impact fee revenue, is the area in west Oklahoma City along the path of a planned turnpike expansion.

Sharing costs

Bonds repaid by property taxes finance most of the cost for streets, parks and trails.

Impact fees shift some costs for new and expanded infrastructure to residents and businesses most likely to benefit from improvements.

That is seen as more equitable than taxing residents on one side of town for a full share of the cost of a new street on the other side of town, one they may never use.

The gap between the council’s April 2016 vote and the effective date of the impact fees affected initial receipts, Couch said.

“That was something the developers asked us to do,” he said.

“I think a number of them had projects in the pipeline,” Couch said, “and they wanted to make sure those projects got going before the impact fees kicked in.”

Negotiations with developers also resulted in an agreement to cut proposed rates by nearly half. Fees are assessed on a rate per square foot of development.

Residential levy

Overall, the impact fee levied on residential development for parks and trails brought in about what was expected. That fee was discounted 50 percent for the first year.

Based on revenue generated in the first six months, the parks and trails fee appeared headed to produce about $2 million per year, as projected.

When the development impact fees were under consideration, the city estimated responding to “deficiencies in capacity created by new development” had cost an average of $20.4 million per year over the previous seven years, for wider roads and safer intersections.

Couch told the council Tuesday it was too early to tell exactly what the revenues generated by the fees would be but, “I think it’s going to be beneficial to us as we go forward.”