Authors:
DJ
Gerken
Brian
Haluska
Tianjin
Luo
Provision
of public facilities is a core function of state and local government.Public
facilities encompass a wide variety of amenities including potable water,
solid waste disposal, sewer systems, schools, libraries, parks, police,
fire departments and other infrastructure.The
provision of these public facilities is both an objective and a method
of growth management.
By
targeting development to existing growth areas, states and localities take
advantage of excess capacity in existing public facilities. In contrast,
the alternative 
to
growth management – sprawl - forces localities to extend new public facilities
ever further from the urban core.Growth
management also enables states and localities to take advantage of the
efficiencies that arise from concentrated infrastructure investment.Provision
of public facilities to a densely developed area creates economies of scale
that minimize the cost of infrastructure. Thus, efficient provision of
public facilities is an objective of growth management.
The
low density development that characterizes sprawl is often a net drain
on the tax base of localities.Low
density sprawl development forces localities to expend more on the provision
of public facilities beyond the boundary of the urban fringe than these
developments generate in new tax revenues.The
end result is that taxpayers in existing growth centers are forced to subsidize
new sprawl development.Because this
subsidy encourages sprawl development, efficient provision of public facilities
is a tool for encouraging growth management as well as an objective of
growth management.
States
and localities seeking to incorporate efficient provision of public facilities
into their growth management strategies must overcome multiple obstacles.Not
the least of these obstacles is a lack of appreciation among state and
local 
governments
of the extent to which sprawl complicates their mission of providing public
services efficiently and affordably.A
similar obstacle is the inadequacy of information available to state and
local governments regarding the cost of sprawl.The
tools and best practices described in the following sections each accomplish
at least one of three tasks: they enable localities to formulate organized
plans for the provision of public facilities that coincide with other growth
management strategies, they link development approvals to the existence
of adequate public facilities, and they eliminate subsidies that encourage
sprawl by forcing new developments to pay for their own way.
In
the following part, we will provide you information and our thorough thinking
through three sub-sections:
1.Planning
Tools
2.Adequate
Public Facility
3.Funding
Mechanism
I.
Planning Tools
Issues:
The
most basic approach to providing for efficient public facilities is the
generation of an informed plan.The
tools that follow link the normal planning functions and land use regulations
of local government to an orderly plan for the provision of public facilities
and to growth management policies.
Comprehensive
Plans, Capital Improvement Plans, and Zoning Regulations
Comprehensive
plans are documents that describe a community’s vision for future growth,
usually over a 20-year period.Localities
that hope to limit strain on public facilities must begin by laying the
groundwork for public facilities in their comprehensive plans.Along
with a statement of general goals, the document should articulate how those
goals will be implemented.The comprehensive
plan provides local governments with an opportunity to articulate growth
management policies for their localities and to link those policies to
the provision of public facilities.Written
correctly, a plan can provide planning commissioners and planners with
the tools they need to target development towards areas already serviced
by utilities.
Localities
may further cement the link between growth management policies and public
facilities through zoning regulations and capital improvement plans.Capital
improvement plans in particular announce to the development community the
order and priority of improvements to public facilities.If
a locality adheres to a policy of following the schedule of improvements
announced in its capital improvement plan, it can effectively guide new
development to designated growth areas as developers come to realize that
local government will not allow the development community to dictate the
location and timing of improvements to public facilities.
Fiscal Impact
Analysis
Localities
often obligate themselves to costly and inefficient expansion of their
public facilities through development approvals without fully appreciating
the ramifications of the development decision.For
this reason, many localities have incorporated fiscal impact analysis into
the development approval process.Fiscal
impact analysis is the process of evaluating the tax revenue that will
be generated by a new development in comparison to the cost of providing
the public facilities that will demanded by the project.By
identifying the marginal cost to the community of a new development, localities
can incorporate growth management policies into an informed individual
development decision.
High-Density
Infill Development
Dense
urban development generates economies of scale in the provision of public
facilities.By providing services
for a large population in a smaller area, localities can take advantage
of efficiencies that emerge from concentrating their public facilities
investments.In contrast, low density
sprawl development spreads the locality’s service-demanding population
over broad expanses of formerly rural land.Infill
development in existing urban areas also takes advantage of excess infrastructure
capacity in those areas before requiring expansion or new investment.In
contrast, sprawl development requires new infrastructure to accommodate
the growth.Thus, any of the growth
management tools discussed in this report that concentrate new development
in already developed areas and encourage density also assist localities
in their efforts to provide efficient and affordable public facilities.For
these reasons, a locality may further its objective of providing for public
facilities efficiently by employing growth management tools such as transferable
development rights, purchase of development rights programs, brownfield
redevelopment programs, urban growth boundaries, conservation easements,
and cluster development authority, among others tools.
Best Examples:
ØSarasota
County, Florida: Standardized Service Levels in Comprehensive Plan to Manage
Growth
Recommendations:
A
careful plan for the provision of public facilities can be an important
tool for growth management.The
plan is effective, however, only to the extent that the locality follows
the schedule of improvements designated by the plan.If
developers believe that the locality will deviate from the plan to accommodate
new development, a plan for the provision of public facilities will be
an inadequate incentive to target development in designated growth areas.
Resources:
http://www.co.sarasota.fl.us/growth_management/apoxsee/apoxsee.asp.This
link to the Sarasota County Comprehensive Plan is of particular interest
because chapters 4 and 5, deal with public facilities and incorporate level
of service standards.
http://www.tcrpc-pa.org/Planning%20Folder/RGMP.htm.
This link to the Harrisburg Regional Growth Management Plan Project shows
a list of 15 elements a Tri-County region in Pennsylvania is using to create
new growth management plan.
http://fws.municode.com/CGIBIN/om_isapi.dll?infobase=10122.NFO&softge=Browse_Frame_Pg42
This link to the Appendix J of Virginia Beach’s City Code details the city’s
Agricultural Reserve Program.
II.
Adequate Public Facilities
Issues:
Many
jurisdictions have recognized the social cost of subsidizing public facilities
for sprawl development and have chosen to approve new development projects
only when existing and planned public facilities are adequate to serve
the new development.These “adequate
public facilities” requirements link the public facilities planning tools
discussed in the preceding section with approval of development so that
efficient public facilities policies guide growth management and it has
three characteristics.
Public facilities
programs that are planned, rather than ad hoc.
When
public facilities programs operate independently of growth managementpolicy,
they can only react to development.To
break this cycle localities must link public facilities to land use and
growth management policies.Carefully
planned public facilities can be an effective growth management tool.In
fact, a carefully planned schedule of improvements to public facilities
may be crucial to the success of growth management programs.For
example, in Rampano, NY, failure to follow through on planned public facilities
investments barred all new development and led to dissatisfaction and eventual
repeal of the city’s adequate public facilities ordinance.
Development projects
require approval which is in turn contingent upon the adequacy of public
facilities to accommodate the new development.
Unless
new development is contingent upon the approval of the locality, localities
have no control over the growth of their public facilities short of refusing
to provide public facilities to newly constructed development.Sometimes,
that strategy can be more costly than investing in new facilities.For
example, Sarasota County, Florida found that its strategy of refusing to
extend public facilities did not prevent new growth.Instead,
the growth came anyway but was accompanied by piecemeal and inadequate
public services and infrastructure which the county later had to replace.When,
however, new development is conditioned upon the adequacy of public facilities,
localities can concentrate new growth in designated growth areas by providing
for those areas through carefully planned public facilities programs.Development
can be made contingent upon adequate public facilities requirements through
separate ordinances or, more often, through subdivision regulations.
Standards by which
to determine whether public facilities are adequate to accommodate the
new development.
A
key component of this growth management strategy is the development of
standards by which to assess the adequacy of existing and planned public
facilities.First, the locality establishes
“level of service” standards which designate quantifiable minimum levels
for each public service.Second,
the adequacy of existing public facilities are assessed against demand
for those facilities.If public
facilities fail to meet level of service standards for existing demand,
no further development can be allowed.Finally,
the locality estimates the increase in demand for public facilities that
will arise from approval of proposed development.If
the new development will generate an increase in demand that will cause
those facilities to fall below the minimum level of service, the development
cannot be allowed until: planned improvements to the public facilities
enable them to accommodate the proposed development, the developer promises
to institute measures which reduce the expectedimpact
to the public facilities, or the developer promises to pay for improvements
to the public facilities that will accommodate the new development.
Best Examples:
ØMontgomery
County, Maryland: APF Requirements Since 1973
ØFlorida:
Legislation Requires APF
Recommendations:
These
case studies identify several characteristics of a successful adequate
public facilities program.First,
the APF rule must be linked to an orderly plan for the provision of public
services and the locality must follow the schedule designated by that plan.Otherwise,
an APF regulation acts as a ban on all future development.Second,
after successfully linking APF regulations with an orderly plan for provision
of public facilities, an annual report like the one issued by Montgomery
County can capitalize on an orderly plan by providing developers with the
information and incentive they need to target development in designated
growth areas.Third, localities
should be prepared to face the possibility that APF regulations may force
developers to shoulder a greater share of the cost of public facilities
when the locality’s funding is inadequate to provide needed improvements.Under
an APF law, development cannot proceed unless a project satisfies APF standards
or the developer pays to improve public facilities so that they can accommodate
the development.APF requirements
eliminate the middle ground of tolerating new development which results
in inadequate levels of service for public facilities.Finally,
localities must be flexible in their approach to APF regulations and recognize
in particular that strict adherence to APF rules can conflict with countervailing
objectives of encouraging dense urban development and taking advantage
of existing infrastructure.
Resources:
Maryland
http://www.webcom.com/~pcj/reports/md/0051-md.html
- The Maryland Office Planning has issued a guidance document to assist
Maryland localities in drafting APF ordinances
http://pilot.wash.lib.md.us/washco/adqpub.html
- This link to a Washington County, Maryland APF ordinance serves as a
useful example of the language of such an ordinance
Virginia
http://www.sustain-loudoun.com/html/apfo.html
- Loudoun County has issued a similar resolution petitioning the Virginia
General Assembly for authority to impose an APF ordinance.
Florida
Douglas
A. Porter. Managing Growth in America’s Communities. Island Press.1997.
John
M. DeGrove. Planning and Growth Management in the States. Lincoln
Institute of Land Policy. 1992
Southern
Environmental Law Center. Smart Growth in the Southeast: new approaches
to guiding development. 1999.
Issues:
Public
facilities and the private development process are mutually interdependent.
When public facilities follow development, however, localities subsidize
the cost to developers of building beyond the urban boundary and create
subsidies that encourage sprawl. The key issue, then, in the application
of growth management policies to the financing of public facilities is
the incidence of the costs of new facilities on new and existing residents.Localities
across the nation are experimenting with innovative financing mechanisms
that link the cost of public facilities with the development that benefits
from them. In many states, for example, local governments charge impact
fees to recover the cost of extending public facilities to new development.
This financing mechanism, however, fails to link ongoing maintenance and
operating expenses associated with public facilities to the developments
they serve. To achieve that objective, other innovative financing programs
are necessary. The following section describes and critiques some of these
innovative financing programs, including Impact Fee, Special Districts,
Tax Increment Financing (TIF), Real Estate Transfer Tax and Tax-Base Sharing.
Special Districts
Special
districts are geographic areas within which fees or taxes are collected
to fund public facilities that benefit properties within the district.
Unlike other financing techniques that target new development to pay a
share of community improvements, special districts assess and tax all the
properties in an defined area, developed or undeveloped.
Special
districts have several advantages. First, special districts shift the burden
of infrastructure finance from the general public to the properties that
receive the benefits. Property owners are assured that their taxes will
be used to provide and maintain public facilities that benefit them directly.
Second, this financing scheme taxes both existing development and vacant
land within the special district. Thus, revenue from the program is more
predictable than other finance schemes such as impact fees, development
taxes and developer exactions, which all depend on development cycles.
The
structure of special districts varies widely across the states. Some special
districts are temporary creations to raise revenue for specific improvements.
Assessments may be imposed either as user fees or taxes. Special districts
may be restricted to one local locality or cross jurisdictional boundaries.
In rapid growth areas, special districts are usually established as independent
special-purpose governmental entities with ongoing responsibilities.
Tax Increment
Financing (TIF)
Tax
increment financing is an internal accounting technique. No special fees
or taxes are assessed. Instead, the portion of tax revenues attributable
to new development are earmarked to retire bonds that finance the infrastructure
improvements that stimulated the new development.
Tax
increment financing is not a method for the private financing of public
improvements. Rather, it is a sophisticated method of shifting the cost
of public improvements among taxing entities. Tax increment financing is
attractive particularly to cities because it can result in other taxing
authorities, such as counties or school districts, contributing to the
costs of development.
Real Estate Transfer Taxes
Tax-Base Sharing
Competition
among neighboring jurisdictions for tax revenue often undermines regional
growth management efforts. Because nonresidential development generally
imposes a lesser burden on public facilities than new residential units,
localities often compete to attract such development in an effort to enlarge
their local tax base. The resulting economic development strategies often
include overzoning for commercial and industrial development that conflicts
with growth management policies.
Regional
tax-base sharing addresses this problem by redistributing the tax base
without changing jurisdictional boundaries or the organization of government.
A percentage of new growth in the property tax base is pooled and redistributed
back to the taxing districts according to a formula that favors those districts
with below-average per capita property values. As a result, all jurisdictions
share in the economic development of the region, regardless of where development
occurs. Localities can then participate in regional growth management strategies
without concern about the impact of growth management programs on their
tax base.
Impact fees
Localities
with the authority to impose impact fees may, at the time that they issue
a building permit, charge developers a fee to assist in the funding for
specified future public facilities required to serve the new development.Impact
fees can reduce community-wide fiscal burdens associated with new development.
Impact fees also force developers to shoulder the social cost of extending
public facilities to accommodate sprawl development, eliminating the subsidies
that make sprawl development so attractive.
Best Practices:
Special
District
ØMontgomery
County, Maryland: Special District Approach Used to Fund Public Facilities
Tax Increment
Financing (TIF)
ØCalifornia:
Uses TIF Program to Deal with Fiscal Constraints
ØPortland,
Oregon: Uses TIF Program for Urban Revitalization
Real
Estate Transfer Taxes
ØSan
Jose, California: Real Estate Transfer Tax to Fund Facility Development
ØBoston,
Massachusetts: Links Real Estate Transfer Taxes to Public Facility Management
ØMinneapolis-St.
Paul, Minnesota: Regional Tax Base Sharing Used to Fund Public Facilities
ØHackensack
Meadowlands, New Jersey: Another Innovative Example of Regional Tax Base
Sharing
Impact
Fees
ØFlorida:
Impact Fees Used for Public Facility Management
Ø
Recommendations:
Special Districts
Special
districts generally focus on certain communities and serve a single function.
Proliferation of special districts can weaken the authority of general
governments to deal effectively with growth and to govern comprehensively.
For example, a North Carolina legislative provision created the Research
Triangle Special District to provide services to the unincorporated area
and prevent the district from being annexed even if annexation and integration
into municipal facilities might have been more economically efficient.
The lack of visibility and accountability of this program created a confusing
hodgepodge of overlapping, independent taxing jurisdictions. Special districts
also can be abused due to assessment procedures and therefore should be
used very cautiously. In some cases, developers can use special districts
to finance internal improvements that lower initial prices in their development
while the costs of infrastructure will show up later in the form of higher
tax bills. During recession periods, assessment levels may even force some
landowners or the district into bankruptcy.
Tax Increment
Financing (TIF)
Tax
increment financing programs must be employed cautiously with careful attention
to the economic stability of the area. Sometimes tax increment financing
districts can depress the local tax base. In the mid-1980’s about 3.5 percent
of the property value in California was channeled into tax increment financing
districts, souring relations between localities with tax increment financing
districts and other taxing entities such as state and county governments
and school district.
Real
Estate Transfer Tax
Real
estate transfer taxes can not be adopted by local governments without state
enabling legislation. Also, real estate transfer taxes tend to lack the
political appeal of impact fees.
Tax-Base
Sharing
Tax-base
sharing techniques provides some equalization of the tax base among jurisdictions,
a reduction in competition among jurisdictions for commercial and industrial
development, and a reduction of the incentive for exclusionary zoning practices.
Virginia
state law authorizes localities to enact impact fee programs for roads
only.Localities may also collect
connection fees for water and sewer system expansions.Without
specific legislative authorization for impact fees, localities have relied
instead on proffers to meet infrastructure needs.
Resources:
http://www.quadcities.com/rockisland/econtif.htm
– This program allows the increased property taxes that occur within the
established TIF district to be used for further development within the
district. The City of Rock Island has two TIF districts.
http://www.utexas.edu/depts/lbj-school/21cp/TIF.html
– Information on the State of Texas’$1.5
billion Telecommunications Infrastructure Fund.
http://www.state.nh.us/revenue/rett.htm
– Real Estate Transfer Tax Law in the State of New Hampshire.
http://www.metrocouncil.org/planning
– introduce
tax-base sharing program of Metrocouncil Regional Government in Twin City.
http://www.mrsc.org/planning/impactpg.htm
- This link is a tremendous resource for general information in impact
fees, including sample ordinances, general FAQs, and bibliographies.
http://www.emkfla.com/impactfees.htm
- This private consulting company has written an introduction to impact
fees in Florida.
http://www.amcity.com/tampabay/stories/1998/03/23/story6.html
- Florida County considering ordinance that would make transferable the
impact fee offsets credits developers obtain when they proffer new infrastructure
in conjunction with the project.Currently,
those offset credits can only be used on the project for which they are
earned.
http://www.ci.orlando.fl.us/departments/planning_and_development/tp/tif.html
- Orlando, Florida’s homepage describes the operation of impact fees within
the locality.
Nelson
C. Arthur, Duncan B. James. Growth Management Principles and
Practices. APA. 1995
Virginia
Chapter of the American Planning Association, Virginia’s Growth Management
Tools. June, 1999.
John
M. DeGrove. Planning and Growth Management in the States. Lincoln
Institute of Land Policy. 1992
Southern
Environmental Law Center. Smart Growth in the Southeast: new approaches
to guiding development. 1999.
Recommendations
1.State-wide
legislation expanding the authority of Virginia localities to impose impact
fees beyond their current narrow authority to impose road impact fees so
that localities may levy impact fees to address burdens placed by new development
on any of the public facilities provided by local government.
2.State-wide
legislation granting explicit authorization to Virginia localities to impose
adequate public facilities requirements on new development.
3.State-wide
legislation granting optional taxing authorization to Virginia localities
to develop more flexible funding programs
Nelson
C. Arthur, Duncan B. James. Growth Management Principles and
Practices. APA. 1995
Virginia
Chapter of the American Planning Association, Virginia’s Growth Management
Tools. June, 1999.
John
M. DeGrove. Planning and Growth Management in the States. Lincoln
Institute of Land Policy. 1992
Southern
Environmental Law Center. Smart Growth in the Southeast: new approaches
to guiding development. 1999.
Douglas
A. Porter. Managing Growth in America’s Communities. Island Press.1997.