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Mark Estess 6-14-02 LetterRECEIVED JUN 1 7 2002 City of Meridian City Clerk Office VIA FACSIMILE AND US MAIL June 14, 2002 Tom Kuntz Parks and Recreation Director City of Meridian 11 West Bower Street Meridian, ID 83642 Re: Proposed Park Impact Fees Dear Mr. Kuntz: These written comments are intended to clarify and address five specific issues related to the calculation and administration of impact fees discussed during the May 22, 2002 Task Force .' meeting. As an initial matter, we would like to thank you for responding to our February 20, 2002 request to provide us with the detailed information and analysis our members need to adequately assess and justify an increase in Meridian's park impact fee. .. EXECUTIVE SUMMARY In our discussion below, we address whether the City may properly consider undeveloped open space lands when calculating park impact fees, address whether the City may impose a 10 percent "administrative fee" assessment as part of the impact fee calculation, address how the Level of Service ("LOS") for community parks will be affected when the City of Meridian has made a policy decision to stop building neighborhood parks, address whether the City may include a golf course and park pathways as part of its level of service standards, and address whether the City must use all its impact fee revenue to offset the. costs made necessary by new development. THE ADA COUNTY ASSOCIATION OF REM,TORS® REALTOR® 9550 West Bethel Court Boise, Idaho 83709 Tel: 208-376-0363 Fax: 208-37%8066 www.adacounty-reaitors.com 2002 OFFICERS: President GENE STRATE, CPS, OK[ President-elect MICKIE KNUDSEN, GRI, ABR. CRS, CS1 Vice President BEVERLEY ROSS, .M3R, CPS, GRI, LTG 2002 BOARD OF DIRECTORS: TIM BURROUGHS, CSP DALE K. HOYD SUE LIEN, CPS, CSP, GRI KATHI MCLEOD, CRS JIM PAULSON, CPS, CSP, GRI GREO SCRIVNER, CRS Pnst President SCOTt CRUM, GRI MLS Chairperson STEVE O.SBURN, GRI 2002 STATE DIRECTORS: ELIZABETH ALLAN HODGE CHERIE BARTON, CRS, CSP, GKI JULIE DELORENZO, CPS, CSP, LTG SHARRON L. DOMENY, CPS GARRET J. LONOSTREET, ABR, CPS SUE NIELSEN, CPS, CSP, GRI ROGER PATTERSON, GRI TRACY THOMPSON WCR President DARLENE BLAKESLEE ACAR Foundation President BARBARA A. DAWSON Executive Vice President DAMA W. OVERSTREET Tom Kuntz June 14, 2002 Page 2 In addition, in a separate letter to follow, we will analyze Whether Meridian's Impact Fee Ordinance 723 ("the Ordinance") is in compliance with the requirements of the recently amended Idaho Impact Fee Act ("IDIFA"). Issue No. 1: Does the IDIFA allow the City of Meridian to "take credit for" land it owns but has not yet developed when calculating impact fees? The IDIFA authorizes the imposition of impact fees to fund "parks, open space and recreation areas, and related capital improvements" that are necessitated by new residential development. From this language it appears that, in general, the acquisition of undeveloped lands to be maintained as open space may be funded with impact fees. The city may only expend development impact fees for a category of system improvements identified in its Capital Improvement Plan ("CIP").2 The November 2001 Meridian parks and Recreation System Plan Action Plan, ("Action Plan") meets the statutory requirements for a CIP or a CIP update. However, we note that this Action Plan includes recommendations for open space acquisition and trail development as part ora six year capital improvement plan.3 If the CIP identifies undeveloped or open space lands as part of its parkland level of service ("LOS") goal, then it would be appropriate to include existing city-owned undeveloped lands that are used for open space or passive recreation in the city's inventory of existing parkland for purpose of calculating impact fees. Ordinance 723 defines "park and facilities" to include "all lari~ls and facilities as described in the Comprehensive Plan including Neighborhood, Community, Linear, and Regional Parks as well as Special Use and Open Space Areas together with park system improvements necessary to support the recreation needs of the population served and to be served as identified ~ the Plan." However, Ordinance 723 calculates impact fees only for the acquisition and development of "neighborhood" and "community" parks, and does not expressly ~onsider the acquisition of lands to be designated as undeveloped open space. Based on the chart of"Current Park Space Available," prepared by the Meridian Parks and Recreation Department, the overall LOS for parks in the city is presently 2.39 aereas per 1,000 residents. However, the chart given to us entitled "impact Fee Calculation Information" indicates that the city currently has 90 acres of developed parks and 52 acres of undeveloped park area (identified as community and neighborhood parks), for a total of 142 acres of parkland. Based on the year 2000 population estimate of 36,000 residents, this works out to 3.9 acres per 1,000 residents, which is close to the stated LOS goal. Based on these numbers, therefore it appears that the current LOS figure provided by the city (2.39) is based only on developed parks. ~ Idaho Code § 67-8203(24)(e). 2 Idaho Code § 67-8210(2) 3 Action Item OS-9, Five Mile Creek Pathway, see pp.2-22 and 5-5 of the Action Plan. Two other proposed open space acquisitions are also indicated at pp.2-22 and 5-6 of the Action Plan. Tom Kuntz June 14, 2002 Page 3 Including city-owned undeveloped open space areas in its calculations of current park inventory would be consistent with the definition of"park and facilities" in Ordinance 723, and also consistent with the Action Plan, which calls for the city to acquire open space as part of its parks and recreation system plan. It would also bring the city's current overall park inventory almost to the stated goal of 4.0 acres per 1,000 residents.4 We believe it is a significant issue whether new development will bear the cost of meeting a level of service that exceeds the level of service achieved for existing development. In particular, because parks are a type of public good that are not restricted to particular users, in the same way that a water pipe or local road improvement serving new development might be, there is a real concern that forcing new development to assume the cost of achieving a 4.0 acre per 1,000 resident standard, while existing development lags that standard, will over time increase the community's overall level of service primarily at the expense of new development. This is particularly a concern given the stated intention to focus future park development on community parks serving a larger service area, which may include already developed portions of the city that are presently "underserved" by parks, rather than principally on the neighborhood parks serving a smaller area more immediately related to the new development. Issue No. 2: Whether the IDIFA permits the City of Meridian to assess an additional ten percent (10%) of a calculated impact fee to cover the administrative costs of implementing the Ordinance? To offset the cost of preparing a capital improvement plan, the IDIFA expressly authorizes local governments to impose a "surcharge...by ordinance on the c011ection of a development impact fee which surcharge does not exceed the development's proportionate share of the cost of preparing the plan." 5 To the extent the administrative fee being charged by the city,is characterized as a surcharge, it would be permissible. However, the charge is only permissible to the extent that it does not exceed a development's proportion.ate share of the cost of preparing the CIP. Under this provision of the IDIFA, City staff would hax;e to develop a reasonable method for calculating each development's proportionate share of the actual cost to prepare the CIP. Because it is unlikely that the fiat ten percent 00%) assessment is based on such a calculation, the proposed ten percent fee would not appear to be authorized by this provision. The surcharge to offset the cost of the CIP is the only surcharge or administrative fee expressly authorized under the IDIFA. The question remains, therefore, as to whether the city may impose an administrative fee by some other authority. According to the Idaho Supreme Court, a municipality may, under its police powers, "provide for the collection of revenue incidental to the enforcement of Ia] ..; regulation.., however if the fee or charge is imposed primarily for revenue raising purposes, it is in essence a tax and can only be upheld under the power of 4 Note that impact fees are not properly used to remedy an existing deficiency in a community's level of service, but only to provide capital facilities to serve new development. To the extent that the city intends to develop additional park facilities to serve existing development at 4 acres per thousand residents LOS, it should not use impact fees on new residents to pay for those facilities. 5 IDIFA § 4, amending Id. Code § 6%8208(0. / Tom Kuntz June 14, 2002 Page 4 taxation." 6 In other words, if the administrative fee is charged "for a direct public service rendered to the particular consumer," it fails within the municipaiity's lawful police powers as long as it is reasonably related to enforcing a regulation or ordinance.7 However, a fee will be ' considered an unauthorized tax if it has not been speeifieaily authorized by statute and it serves the purposes of providing funding for public services at large.8 In Idaho Building Contractors Ass'n v. City of Coeur D'Alene, the Idaho Supreme Court struck down aa impact fee ordinance that was not specifically authorized by statute because the impact fee, by providing funding for public services, constituted an unauthorized tax. Based on this reasoning, the City of Meridian could not collect the impact fee itself absent the authorization created by the ID1FA. By the same logic, a charge imposed to offset costs associated with administering the impact fee ordinance that is not itself authorized in the IDIFA could aiso be considered an unauthorized tax. However, while it appears that the "administrative fee" is not specifically authorized by the IDIFA, there may be other sources of authority to impose aa equivaient charge. For example, in the same way that permit fees may cover the estimated cost of administering the development review process, these costs, in the case of a project subject to impact fees, would arguably include the costs of administering the impact fee ordinance "as a direct public service rendered to a particular consumer." Issue No. 3: How will the LOS for community parks be affected when the City of Meridian has made a policy decision to stop building neighborhood parks, once two remaining planned neighborhood parks are developed? According to the Ordinance, community parks are usually about 20 acres in size, designed to serve areas within a one to two mile radius, and offer a wide ~ange of recreationai facilities, including sports fields. Neighborhood parks, on the other hand, are intended to servoresidents within a ½ mile radius and are generally only about 5 acres in size. If the city has decided that residents will be better served through community parks than. thro. ugh neighborhood parks, then to maintain the overail parkland LOS constant, the number of acres dedicated to community parks may need to go up. If more community parks are anticipated, then one would e :xpect that the impact fee associated with community parks would likewise increase, and to the extent that these are more expensive facilities, the overail impact fees would increase. On the other hand if the decision is to eliminate neighborhood parks, without altering the LOS for community parks, then the city would presumably need to include a greater percentage of other types of parklands, perhaps open spaces or "speciai use areas," in order to maintain a constant overail LOS. Although authorized under the IDIFA, it appears that, to date, the city has not chosen to impose impact fees associated with open space or special use areas. As a related point, it would be important for our members to know whether the city will accept a dedication of neighborhood parks in a new development in lieu of impact fees, even though the city itself does not intend to build any more neighborhood parks. Such facilities are the type most 6 Idaho Building Contractors Ass'n v. the City of Coeur D'Alene, 890 P. 2d 326, 329 (Idaho 1995). 7 See Id At 329. aid. Tom Kuntz June 14, 2002 Page 5 easily included within a new development, and it might be a significant consideration for developers if the city were to decide that dedications of neighborhood parks would not count against park impact fees. Issue No. 4: Can the City of Meridian include the public golf course and park pathways in its inventory of developed parks for the purpose of calculating impact fees? As discussed above at Issue No. 1, the IDIFA authorizes the imposition of the impact fees to fund "parks, open space and recreation areas, and related capital improvements" that are necessitated by new residential development.9 The IDIFA does not provide a definition of recreation areas. Likewise if"park pathways" are part of the city's park system, they would appear to fall within the scope of projects for which impact fees may be imposed. To the extent that the golf course and park pathways are counted toward meeting the city's LOS goal, this presumably will decrease any LOS deficiencies that may require city funding. This in mm would free up more revenue to assist in financing system improvements for new development, which may, in mm, help keep impact fees down. In addition, if by counting such facilities towards the LOS standard it helps particular service areas to meet or exceed LOS goals, park impact fees in those areas should be lower or non-existent, which would help encourage infill development. Issue No. 5: Should the City of Meridian use a level of impact revenue less than 100 percent to offset the cost of new development? There are strong public policy reasons for setting impact fees at a level that is less than 100% of what would be needed to achieve the indicated LOS for new development. Impact fees should not be the sole source of financing system improvements if other funding sources are,available. The IDIFA requires local government to identify in a CIP "all sources and levels of funding available to the governmental entity for the financing of syste, m improvements." l0 Furthermore, because parks are a public good that are easily used by existihg as well as new residents, some portion of the benefit from new parks will accrue to existing residents who are not subject to impact fees, as well as the residents of new developments that are. This is particularly the case where there is an existing deficiency in LOS, and would be even more true where the park plan calls for an emphasis on "community parks" and other large facilities serving larger service areas rather than neighborhood parks. As new parks come on line at a ratio of 4.0 acres per 1,000 new residents, the existing residents who must make do with parks at a lower ratio would be expected to take advantage of the new parks to some extent. The amount of such use might depend on where the new parks are located in relationship to existing development and also on the extent to which the existing deficiency is addressed with parks funded from sources other than impact fees. But until the existing LOS equals the target LOS on which the impact fee would be based, there are good policy arguments why some portion of the target LOS for new deVelopment II)IFA § 2, amending Id. Code § 67-8203(24)(e). ~o IDIFA § 4, amending ID. Code § 67-8208(i). Tom Kuntz June 14, 2002 Page 6 should be achieved with revenues derived from the population as a whole rather than just from new residents. To the extent that tax revenues are used in order to make up an existing LOS deficiency, a further argument exists for funding a portion of the new development target LOS with general revenues. Otherwise, new development would be forced to bear the full costs of meeting the target LOS through impact fees, and some portion of the tax revenues derived from the new residents will go to remedying the LOS deficiency suffered by existing residents. This would result in new residents not only paying in full for the parks that they will enjoy but also subsidizing some portion of parks built to serve existing residents. Sincerely yours, Mark H. Estess Director of Oovermnent Affairs CC: Mayor Robert D. Corrie Tammy de Weerd, Keith Bird William L.M. Nary Cheri McCandless CC: Plam~ing & Zoning Commission Keith Borup, Jerry Centers Kevin Shreeves David Zarimba Leslie Mathes CCl Shari Stiles, Planning Director Brad Hawkins-Clark Steve Siddoway cc: Bill Nichols cc: Will Berg