Cedar Hammock Fire Control District
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1 Cedar Hammock Fire Control District FY 2015 Fire/Rescue Impact Fee Study February 24, 2016 Prepared by:
2 February 24, 2016 Mr. Jeff Hoyle Fire Chief th St W Bradenton, FL Re: FY 2015 Impact Fee Study Dear Chief Hoyle: Burton & Associates is pleased to present this of the FY 2015 Impact Fee Study that we have performed for the. We appreciate the fine assistance provided by you and your staff in the provision of the data required for the analysis, and in the interim reviews of the analysis. If you have any questions, please do not hesitate to call me at (904) Sincerely, Michael E. Burton President 200 Business Park Circle, Suite 101 St. Augustine, Florida Phone (904) Fax (904) N. Ashley Drive, Suite 513 Tampa, Florida Phone (813) Fax (813) mburton@burtonandassociates.com
3 TABLE OF CONTENTS TABLE OF CONTENTS SECTION 1. BACKGROUND INTRODUCTION IMPACT FEE BACKGROUND RULES GOVERNING IMPACT FEES IN FLORIDA OBJECTIVES GENERAL METHODOLOGY... 4 SECTION POPULATION PROJECTIONS COST BASIS RESULTS Impact Fee Calculation Fire/Rescue Impact Fee Survey CONCLUSIONS AND RECOMMENDATIONS i
4 INTRODUCTION SECTION 1. BACKGROUND Burton & Associates has completed an impact fee Study (Study) for the Cedar Hammock Fire Control District (District). This report presents the comprehensive results of the Study, including background information, legal requirements, an explanation of the calculation methodology employed, results of the analysis, as well as a comparative impact fee survey. This analysis was conducted by Burton & Associates, a firm that specializes in providing impact fee, rate, cost apportionment, and assessment consulting services to local governments and special districts. 1.1 INTRODUCTION Impact Fees represent charges levied on new development to reimburse local governments for the capital costs of constructing public facilities that are required to provide a defined level of service to that same development. Local governments may choose to charge impact fees at either full-cost recovery or at some portion thereof. New development (generally synonymous with Growth ) requires local governments to provide a variety of new public facilities. These facilities can include police, fire, parks and recreation facilities, roads, schools, libraries, water and sewer plants and other general government facilities. The requirements for public facilities can vary based on the type of new development. Most of the demand for public facilities based on required levels of service is driven by the new permanent and/or seasonal population (residents) supported by the new development. In some cases, however, these requirements arise from new development supporting employment and visitors that may or may not include residents. In any event, impact fees can only be assessed to new growth units within the District, even though the demand for some facilities may be caused by visitors or seasonal residents. 1
5 INTRODUCTION Independent special fire control districts have been conferred the authority to impose impact fees when authorized by special act or general law. Sections and , Florida Statutes, provide general authority for independent special fire control districts to impose impact fees for fire services to pay for the cost of new facilities and equipment the need for which is in whole or in part the result of new construction. New facilities is defined to mean land, buildings, and capital equipment, including, but not limited to, fire and emergency vehicles, radio telemetry equipment, and other firefighting or rescue equipment. The District s Special Act Chapter , Laws of Florida and Sections and , Florida Statutes, have conferred upon the District the specific authorization necessary under applicable Florida law for this District to impose an impact fee for the cost of new facilities and equipment that are needed due to new construction within the District. 1.2 IMPACT FEE BACKGROUND Impact fees are charges which are assessed against new development in an attempt to cover the cost of providing capital facilities (infrastructure) needed to serve new development. Impact fees are the mechanism by which new growth can pay its way, minimizing the extent to which existing residents must bear the cost of new or expanded facilities which are necessitated by new residents. Section , Florida Statutes has also come to be known as the Florida Impact Fee Act. This legislation outlined statutory requirements regarding the calculation of and accounting for impact fees. Most notably, the legislation requires 1) that the calculation of impact fees be based upon the most recent, localized data, 2) separate reporting/accounting of impact fee revenue and expenditures in a distinct fund, 3) that the administrative charges collected in impact fees be based upon actual costs, and 4) that 90 days notice be given prior to the effective date of an ordinance or resolution imposing or amending an impact fee. 2
6 INTRODUCTION In addition to these statutory requirements impact fees must be developed and managed in accordance with judicial standards that have been established through case law, the most important of which is the rational nexus standard. This rational nexus standard requires that the impact fee 1) must bear a reasonable relationship to the benefit received by those who pay it, 2) must not exceed the proportional share of the cost of new facilities or services needed to serve new development and must include credits for contributions the development will make toward deferring that cost, and 3) must be earmarked and expended in such a way as to ensure that those paying the fee receive benefit from that payment. In addition, impact fees cannot be legally used or charged for operations and maintenance expenses or renewal & replacement expenses. 1.3 RULES GOVERNING IMPACT FEES IN FLORIDA In addition to the legislation sited in the prior section, the Florida Supreme Court has upheld the use of impact fees by local governments for the purpose of recovering the capital costs of providing public facilities that are required to provide a defined level of service to new development. Over the course of upholding this concept, several cases have provided local governments with direction in the development of legally sound impact fees, to include 1) development of a rational nexus of benefit, 2) fair and equitable allocation of the impact on new facility requirements, and 3) assigning credits for identifiable contributions that offset the capital costs of new public facilities. The demonstration of a rational nexus of benefit is arguably the most important foundation of a legally sound impact fee. Local governments are required to demonstrate a reasonable connection between both the requirements of public facilities generated by new development and the expenditures of impact fee revenue and benefits received by those who paid the impact fee. Level of service is the benchmark for defining the capital needs of new growth and, therefore, capital facility expenditures to maintain current levels of service to meet these requirements of growth are essential components of establishing an impact fee. Also, a fair and equitable allocation of the cost of public 3
7 INTRODUCTION facilities should reasonably reflect any differences in the impacts between different types of new development. Finally, new development should be credited for 1) contributions of land, cash, or facilities that satisfy the impact on public facilities and off-set costs and 2) future contributions of taxes or other revenues that would typically be used to fund the same public facilities for which the impact fee is being charged. 1.4 OBJECTIVES The objectives of the Study were to determine the full cost recovery impact fees for Fire/Rescue. Additionally, the study provides a comparison of these results to the District s current impact fees, and the charges of neighboring and other generally comparable fire districts and municipalities. 1.5 GENERAL METHODOLOGY Determining impact fees for general government services is a level of service (LOS) based process. For fire services for which LOS standards have not been adopted, the observed LOS is used as the basis for the capital costs needed to serve new growth while maintaining the current observed LOS. The objective is to determine the costs of facilities and capital equipment necessary to serve new growth. If impact fees are not assessed, either 1) the facilities and capital equipment to serve new growth will not be constructed or acquired and the level of service provided to current properties will degrade as growth occurs, or 2) the facilities and equipment to serve new growth will be constructed or acquired but will be funded by current properties for the benefit of new growth. Therefore, the premise of our approach is to determine the cost of new facilities and equipment that must be provided to meet the demands of growth while preserving the current LOS being provided. 4
8 SECTION 2. This section describes the calculation of the Fire/Rescue impact fees for the District. The District provides Fire/Rescue services to all residential and non-residential properties within the limits of the District. Therefore, the costs eligible for inclusion in a Fire/Rescue impact fee are only those capital costs incurred by the District that are necessary to provide the observed levels of service to new growth and will be recovered from all new residential and commercial growth within the District. 2.1 POPULATION PROJECTIONS In order to develop the required land, facilities, and equipment to provide the required levels of fire service, it was necessary to establish a projection of population for the District for the next five (5) year period. The population projections that were used in the Study were derived from the University of Florida, Bureau of Economic and Business Research (BEBR) projections and are as follows: Population Projections FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Projected Population 87,500 89,071 90,670 92,298 93,955 Annual Growth - 1,571 1,599 1,628 1,657 Cumulative Growth - 1,571 3,170 4,798 6,455 These population projections served as the basis for determination of residential and nonresidential square feet that were used to derive unit cost per square foot in our calculation of the impact fees. 5
9 Cedar Hammock - Fire Impact Fee Projected Developed Square Footage FY 2015 IMPACT FEE STUDY 5-Year Population Growth: 6,455 Residents per Household (1) : 2.18 Total 5-Year Household growth 2,961 Average Sq Ft per Single Family Home: 2,520 Total 5-Year Residential Sq Ft Growth 7,462,000 Existing Ratio of Non-Residential to Res. Sq Ft: 0.32 Non-Residential Expansion Factor 1.00 Effective Ratio of Non-Residential to Res. Sq Ft: 0.32 Total 5-Year Non-Residential Sq Ft Growth 2,379,720 Total 5-Year Developed Sq Ft Growth 9,841,720 (1): Based upon Census Data for South Bradenton CDP 2.2 COST BASIS The District currently maintains four (4) Fire/Rescue stations throughout the District limits. These four (4) stations currently serve 41,156,615 square feet of existing residential property and 13,125,330 square feet of existing non-residential property. The cost basis for the impact fee calculated herein includes the total land costs of these facilities and the estimated construction cost of the facilities as provided by the Manatee County Property Appraiser and District staff, escalated to 2015 replacement cost per facility. In addition, the District has provided a full inventory of equipment and vehicle assets with replacement costs of each asset that were evaluated to determine the existing LOS. These equipment and vehicle costs are included in the fee cost basis at their 2015 replacement cost. These costs are presented in the table below: 6
10 Cedar Hammock - Fire/Rescue Impact Fee Existing Cost Basis FY 2015 IMPACT FEE STUDY Existing Assets Costs Total Land Value of Existing Fire Stations $ 287,000 Total Building Cost of Existing Fire Stations $ 5,211,000 Total Existing Vehicle Replacement Cost $ 1,581,250 Total Existing Equipment Replacement Cost $ 198,000 Total Existing Asset Costs $ 7,277, RESULTS Impact Fee Calculation To determine the impact fee amounts, the total costs identified above are divided amongst the total developed square footage in the District to determine the cost per square foot to provide the current observed level of service. Developed square footage is defined as the size or square footage of all structures and buildings developed on residential and non-residential properties within the District. The developed square footage does not include the size of land or any vacant acreage within the District. The total existing square footage within the District was obtained using data from the Manatee County Property Appraiser. A subsequent 10% credit was then applied to the cost per square foot in the calculation of the impact fee amount to avoid double recovery of grants and other funding sources such as ad valorem taxes or other non-ad valorem assessments. In addition, a 3% reduction for allowance of estimation and contingency was included in the fee calculation. The table below presents the Fire/Rescue impact fee calculation. 7
11 Cedar Hammock - Fire/Rescue Impact Fee FY 2015 IMPACT FEE STUDY Developed Sq Ft Residential - Existing 41,156,615 Non-Residential - Existing 13,125,330 Total Existing Developed Sq Ft 54,281,945 Projected New Developed Sq Ft thru FY ,841,720 Total Developed Sq Ft - FY ,123,665 Assets Total Costs of Existing Assets $ 7,277,250 Total Costs of New Assets thru FY 2019 $ 4,611,532 Total Assets FY 2019 $ 11,888,782 Impact Fee Calculation Asset Cost per Sq Ft $ Less Credit for Grant and Other Funding $ (0.019) 10% Less Allowance for Estimation/Contingency $ (0.006) 3% Impact Fee per Sq Ft $ Dwelling Unit Impact Fee Calculation Average Sq Ft per Dwelling Unit 2,520 Calculated Fee for Average Dwelling Unit $ Existing Fee for Average Dwelling Unit $ $ Change $ 5.72 % Change 1% Increase The impact fees are calculated on a square footage basis. Discussions with staff reflect that the response for non-residential properties is different from that of residential. Whenever a call is received, a set of units is deployed. If the property is identified to be non-residential, a second set of units is deployed, including a ladder truck. This second set of units is necessary because many commercial properties are large, maintain flammable materials, and/or are multi-story. About 19.6% of the District s non-residential properties have factory/industrial, hazardous, or storage land uses according to the Manatee County Property Appraiser. The District does not currently possess a ladder truck, and the closest available resources to provide such equipment when there is a fire does not come from within the District. About 75% of this second response is provided 8
12 by mutual aid from neighboring fire departments. The District, therefore, incurs only about 25% of the cost for the additional response to non-residential properties. For smaller non-residential properties the additional deployment of personnel and vehicles is not necessary and can be returned to the stations. Consequently, for non-residential properties that are 5,000 square feet or less, the impact fee per square foot is less than for larger non-residential properties. Non-Residential Impact Fee Calculation Calculated Fee for Non-Residential Property up to 5,000 Sq Ft $ Calculated Fee per Sq Ft 5,001+ $ It is important to note that the District has discretion regarding the percentage of cost recovery utilized in the establishment of impact fees. The impact fees can be established to recover up to the full cost recovery amounts identified herein. If the impact fees are established at a partial percent cost recovery, the percentage of full cost recovery must be applied to the impact fees consistently across all property classes. Adoption of impact fees at full cost recovery would lessen the pressure on taxes and other general fund revenues used to fund fire/rescue facilities and equipment, thus reducing the need for funding of those facilities and equipment with general fund revenues. However, as stated previously, the District has discretion to adopt any amount up to 100% of the amounts identified herein applied consistently across property classes. Once established and collected, Florida Statute (4) provides that collected impact fees must be kept separate from other revenues of the District and must be used exclusively to acquire, purchase, or construct new facilities or portions thereof needed to provide fire protection and emergency services to new construction Fire/Rescue Impact Fee Survey In order to provide additional information to the District regarding the calculated Fire/Rescue impact fees, a comparison of the fees for the District to those of neighboring and other generally comparable fire districts/departments was prepared. These 9
13 comparisons are presented in the table below and provide a comparison of the District s calculated Fire/Rescue impact fees for a typical single-family residential home to the fees currently imposed by neighboring jurisdictions. Impact Fee Survey Results Parrish Fire District Southern Manatee Fire District West Manatee Fire District East Manatee Fire District North River Fire District Cedar Hammock Fire District New Residential Dwelling: $500 $500 $500 $500 $311 $400 Commercial or Industrial Structures 5,000 sq ft or less: Commercial or Industrial Structures over 5,000 sq ft a base fee of: Plus over 5,000 sq ft an additional fee per sq ft of: New travel trailer or recreational park per lot or permitted space: $500 $980 $980 $980 $800 $800 $500 $800 $800 $0.15 $0.25 $0.25 $0.25 $0.15 $0.20 $25 $125 $125 $0 Prepared by Burton & Associates It is important to note that the reader must view the above comparison results with caution as no in depth analysis has been performed to identify the methods used in the development of the impact fees imposed by the other jurisdictions, nor has any analysis been performed to determine whether the fees of other jurisdictions represent 100% cost recovery impact fees. 2.4 CONCLUSIONS AND RECOMMENDATIONS The fundamental conclusions and recommendations of the Fire/Rescue impact fee calculation are as follows: The calculated Fire/Rescue impact fee of $ per dwelling unit supports the District s current impact fee of $400 for residential and multifamily properties. 10
14 The calculated Fire/Rescue impact fee of $805 for the first 5,000 developed square feet and $0.201 per square foot thereafter supports the District s current impact fee of $800 for the first 5,000 developed square feet and $0.20 per square foot thereafter for non-residential properties. We recommend that structures that have both residential and commercial uses be assessed by applying a proportional assessment methodology to the structure. The residential portion of the structure s use should be assessed in accordance with the residential rate (based on dwelling unit(s)), and the remaining commercial portion of the structure should be assessed using the non-residential assessment methodology (based on square footage). We recommend that, if any non-residential property is expanded or redeveloped, the impact fee be assessed for the incremental increase in the square footage. We recommend the District adopt the Fire/Rescue impact fee at the 100% cost recovery levels identified herein to maximize the recovery of expansion-related capital costs from new customers while minimizing the burden of these capital costs to existing properties. In order to provide that the above recommended impact fee schedule does not become deficient over time as costs escalate, we recommend that the District adopt an annual cost escalation factor. The most common factor that is used in this way and that is understood and generally accepted by citizens is the Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All items, published by the United States Department of Labor, Bureau of Labor Statistics. Therefore, we recommend adoption of the application of this index to the prior year impact fee schedule at the beginning of each fiscal year after adoption of the above referenced initial recommended impact fee schedule. In addition, we recommend that the District evaluate and consider updating this analysis every 5 years to ensure that the charges for fire protection service are adequate relative to the cost of providing such service. 11
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