One Time Capital Charges and Fees (System Development Charges, Assessments, Impact Fees ETC.)

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1 One Time Capital Charges and Fees (System Development Charges, Assessments, Impact Fees ETC.) Jeff Hughes Kara Millonzi (Assessments) Environmental Finance Center UNC School of Government (919)

2 Methods of Revenue for Capital Costs Rates (160A-314/153A-277) Availability charges (160A-317) Impact fees (160A-314/153A-277)? Assessments (160A, Art.10/153A, Art. 9) Critical Infrastructure Assessments (160A, Art. 10a/153A, Art. 9a)

3 Impact Fees/System Development Charges?? GS 160A-314 /153A-277 A) A city may establish and revise from time to time schedules of rents, rates, fees, charges, and penalties for the use of or the services furnished by any public enterprise.

4 What s Not Covered in the Statutes Method of calculating cost pool or value to be covered by fees Method of allocating the costs to individual customers What to call them

5 Diverse Implementation Many justifications: buy in, contribute to reserve future capital costs?? Many methods: meter size, house size Many names: User Fee, Capacity Charge, Availability Charge, Facility Investment Fee, System Development Charges.

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11 OWASA SERVICE AVAILABILITY FEE

12 City of Charlotte

13 Special Assessments... are charges levied against property to pay for public infrastructure projects that benefit that property. Lien on property superior to all liens except tax liens Use property tax collection remedies to enforce Not truly voluntary although may require a petition Assessed based on benefit to property Targeted revenue generation

14 Special Assessments Traditional Special Assessments Limited Statutory Purposes Generally No Petition Requirement (except streets and sidewalks) Amount of assessment must be based on one or more statutory bases Unit must follow detailed statutory procedures before imposing assessments Unit may not pledge assessment revenue as security for loans Unit must complete public improvement projects before assessments may be imposed Assessments often are paid in up to 10 yearly installments New Special Assessments Expansive Statutory Purposes Petition Requirement (50%, 66% value) Assessment method within discretion of governing board, but must relate to benefit to properties assessed Unit must follow detailed statutory procedures before imposing assessments Unit may borrow money to front the costs of capital projects and may pledge assessment revenue as security for loans Unit may impose assessment before the capital projects are complete, based on estimated costs Assessments may be paid in up to yearly installments Authority EXPIRES July 2020 July 2015

15 Traditional Special Assessments Special Assessments Bases of Assessment New Special Assessments 1. Frontage abutting project, equal rate per foot 2. Area of land served, equal rate per unit of area a. Can establish benefit zones 3. Value added to land (difference between appraised values before and after project), equal rate per dollar of value added Governing board establishes assessment method that most accurately assesses each lot or parcel of land according to the benefits conferred upon it by the project b. Can establish benefit zones 4. Number of lots served if involves extension of existing system to residential or commercial subdivision, equal rate per lot 5. Combination of the above bases

16 Brunswick County Boiling Springs Lake Example (2013) Boiling Springs Sewer Collection Departments/LandDevelopment/Utilities/ BoilingSpringLakesWastewaterCollectionSyst em.aspx

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18 Brunswick County Boiling Springs Lake Total Project Cost: $2,844, % of costs covered by assessment Approximately 200 parcels benefiting Individual property assessments a function of Area of benefiting lots Assessments can be paid over 10 years in 10 annual installments at 2.84 % simple interest Assessments will not be held in abeyance (vacant lot owners pay or begin to pay same time as improved lot owners)

19 Brunswick County Boiling Springs Lake Full payment of assessment results in 5% discount Connection within one year waives sewer capacity charges Connection within one year waives grinder pump fees Customers with well water are required to connect and pay water charges

20 Allocation Method Matters

21 Town of Hillsborough $4.63 million at 7.75% for 10 year term Funds will be used to establish parks and open space, construct and improve water, wastewater and drainage facilities, construct and improve streets, roads, and rights-of-way in the assessment district Assessments totaled $6.2 million on properties within 210 acre area, with payments over 10.5 years

22 Special Assessments Units or Square Feet Units Estimated Future Assessed Value Total Assessment Total Assessment Per Unit/SF Average Annual Installment Per Unit/SF Land Use Residential Units Single Family 129 $45,150,000 $1,011,023 $7,837 $ Townhouses 122 $24,400,000 $546,378 $4,479 $ Multifamily ,964,000 2,395,196 $4,187 $ Total/Average Residential 823 $176,514,000 $3,952,597 $4,803 $ Square Commercial Square Feet Feet Office/Retail 427,000 $85,400,000 $1,912,323 $4.48 $0.41 Retail and Restaurant 68,000 19,312, ,445 $6.36 $0.58 Hotel 85,000 24,140, ,556 $6.36 $0.58 Total/Average Commercial 580,000 $128,852,000 $2,885,323 $4.97 $0.45 Total $305,366,000 $6,837,920