Road Impact Fee Study. for Volusia County, Florida

Transcription

1 Road Impact Fee Study for September 2018 Item 12-1

2 Item 12-2

3 Table of Contents EXECUTIVE SUMMARY... 1 Background... 1 Summary of System Evaluation... 3 Updated Fees... 5 Comparative Fees... 6 METHODOLOGY... 8 Standards-Based... 8 Plan-Based... 9 Mobility Fees... 9 Recommendation DEVELOPER CREDITS Ordinance Amendments Recommendations SERVICE AREAS AND BENEFIT DISTICTS Service Areas Benefit Districts Recommendations SERVICE UNITS Trip Generation New Trip Factor Average Trip Length Adjustment Factor Travel Demand Summary COST PER SERVICE UNIT Major Roadway System Level of Service Roadway Project Cost NET COST PER SERVICE UNIT Debt Credit Gas Tax Credit Net Cost per Service Unit Summary FEE SCHEDULE APPENDIX A: MAJOR ROAD INVENTORY APPENDIX B: ROADWAY FUNDING APPENDIX C: FLORIDA IMPACT FEE ACT APPENDIX D: STUDY COMPARISONS Comparison of 2007 and 2018 Studies Comparison of 2016 and 2018 Drafts Item 12-3

4 List of Tables Table 1. Current Impact Fees and 2003 and 2007 Study Amounts... 2 Table 2. Comparison of Current and Updated Road Impact Fees... 5 Table 3. Comparative Road Impact Fees... 6 Table 4. Inflation-Adjusted Single-Family Fee Table 5. Road Impact Fee Cash Payments vs. Credits Used, FY Table 6. Outstanding Developer Credit Balances, Table 7. Expected County-Wide Vehicle-Miles of Travel Table 8. Local Adjustment Factor Table 9. Travel Demand Schedule Table 10. Total Daily Vehicle-Miles by Road Type Table 11. Existing Level of Service by Roadway Class Table 12. Major Roadway Cost per Lane-Mile Table 13. Cost per Vehicle-Mile of Capacity Table 14. Road Debt Credit Table 15. Gas Tax Credit per Service Unit Table 16. Net Cost per Service Unit Table 17. Updated Road Impact Fees Table 18. Existing Major Roadway Inventory Table 19. Federal/State Capacity Funding, Table 20. Local Option Gas Tax Funding, FY 2005-FY Table 21. Comparison to 2007 Study Table 22. Comparison to 2016 Draft List of Figures Figure 1. Comparative Single-Family Road Fees (per unit)... 6 Figure 2. Comparative Retail Road Fees (per 1,000 sq. ft.)... 7 Figure 3. Comparative Office Road Fees (per 1,000 sq. ft.)... 7 Figure 4. Cash Payments vs. Credits Used, FY Figure 5. Thoroughfare Road Impact Fee Benefit Districts Figure 6. Functional Classification Map Duncan Associates Clancy Mullen, Principal, Project Manager Rush Pea Circle, Austin, TX ; clancy@duncanassociates.com Item 12-4

5 EXECUTIVE SUMMARY This study evaluates the County s current thoroughfare road impact fee system, makes recommendations related to methodology, developer credits, land use categories, and benefit districts, and calculates updated fees based on those recommendations. This executive summary first provides background on the recent history of the County s road impact fees. It then summarizes the policy options and staff/consultant recommendations derived from the current system evaluation. Next, it compares current fees to updated fees. It concludes by comparing the current and updated fees to those currently charged by eight nearby or adjacent counties. Background The County s current thoroughfare road impact fees are summarized in Table 1 on the following page, and are also compared with the maximum fair-share amounts calculated in the 2003 and 2007 studies. The recent history of the County s road impact fees is summarized as follows The last comprehensive study of the road impact fees that was implemented by the County was prepared in The current road impact fees are based on a study prepared in This was not a complete update, addressing only the cost and revenue credit components. The travel demand factors (trip generation rates, new trip factors, and average trip lengths) continued to be based on the 1999 study Beginning February 2, 2004, the road fees were implemented at about two-thirds (67.9%) of the amounts calculated in the 2003 study. The fees were adjusted annually for cost inflation for the next three years, so that by February 1, 2007 the fees were at about 79% of the amounts calculated in A comprehensive update was performed in 2007, 3 but the updated fees were not adopted. The fees calculated in 2007 were generally more than triple current fees Road impact fees for residential uses were completely suspended for two years beginning July 1, 2011, and were phased back in over the following two years. 4 The fees were assessed at one-third beginning July 1, 2013, and at two-thirds beginning July 1, The residential fees were restored to 2007 levels (79% of 2003 study fees) on July 1, Ghyabi-Lassiter and Associates, Impact Fee Update Study, March 4, TEI and Tindale-Oliver, Roadway Impact Fee Update Technical Memorandum, September 25, Tindale-Oliver & Associates, Inc., Volusia County Parks & Recreation, Fire Rescue Services, and Transportation Impact Fee Update Study, November 6, Volusia County Ordinance Road Impact Fee Study 1 September 24, 2018 Item 12-5

6 Executive Summary Table 1. Current Impact Fees and 2003 and 2007 Study Amounts 2003 Current 2007 Land Use Type Unit Study Fee Study Residential Single-Family Detached Dwelling $2,653 $2,174 $7,201 Apartment Dwelling $1,838 $1,506 $5,379 Townhouse/Condo/2-3 Family Dwelling $1,347 $1,105 $5,557 Mobile Home Park Space $927 $761 $3,039 Retail/Commercial Retail: Less than 10,000 1,000 sq. ft. $6,560 $5,350 $14,286 Retail: 10,000-99,000 1,000 sq. ft. $4,250 $3,470 n/a Retail: 100,000-1,000,000 1,000 sq. ft. $3,770 $3,080 n/a Retail: Greater than 1,000,000 1,000 sq. ft. $4,560 $3,710 $12,655 Bank w/drive thru 1,000 sq. ft. $13,430 $10,960 $48,085 Bank w/no Drive thru 1,000 sq. ft. $5,570 $4,550 $26,730 Quality Restaurant 1,000 sq. ft. $9,910 $8,090 $33,440 High-Turnover Restaurant 1,000 sq. ft. $12,980 $10,590 $38,667 Fast Food Restaurant 1,000 sq. ft. $28,190 $23,010 $100,216 CBD Sandwich Shop 1,000 sq. ft. $5,860 $4,780 $4,077 Auto Care 1,000 sq. ft. $4,530 $3,700 $13,535 New and Used Car Sales 1,000 sq. ft. $6,450 $5,270 $18,287 Supermarket 1,000 sq. ft. $8,330 $6,800 $18,084 Convenience Store 1,000 sq. ft. $21,040 $17,170 n/a Convenience Store w/gas Pumps 1,000 sq. ft. $17,880 $14,590 $48,635 Convenience/Gas/Fast Food 1,000 sq. ft. $33,700 $27,510 $126,262 Home Improvement Store 1,000 sq. ft. $4,410 $3,600 $12,920 Pharmacy/Drugstore w/drive Thru 1,000 sq. ft. $3,550 $2,900 $9,818 Furniture Store 1,000 sq. ft. $780 $630 $2,547 Tire Store/Auto Repair Bay $3,384 $2,762 $9,056 Quick Lubrication Bay $4,713 $3,847 $8,714 Movie Theater Screen $11,514 $9,398 $31,972 Hotel Room $1,545 $1,266 $5,156 Motel Room $832 $683 $2,870 Office Office under 10,000 1,000 sq. ft. $6,290 $4,320 n/a Office over 10,000 1,000 sq. ft. $2,830 $2,310 $11,341 Corporate Headquarters Building 1,000 sq. ft. $1,810 $1,480 $5,843 Medical Office 1,000 sq. ft. $6,810 $5,560 $24,454 Industrial/Warehouse Light Industrial 1,000 sq. ft. $1,500 $1,220 $4,945 Manufacturing 1,000 sq. ft. $830 $680 $2,742 Warehouse 1,000 sq. ft. $1,060 $860 $3,562 Mini-warehousing 1,000 sq. ft. $530 $430 $1,073 Public/Institutional Hospital 1,000 sq. ft. $3,050 $2,490 $10,556 Church 1,000 sq. ft. $1,480 $1,210 $4,880 Day Care 1,000 sq. ft. $5,380 $4,390 $16,697 Nursing Home Bed $265 $218 $869 General Recreation Campsite $941 $768 n/a Major Sports Facility Pk Space $571 $466 n/a Local Park Pk Space $431 $352 n/a District Park Pk Space $841 $523 n/a Source: Study fees from reports cited on previous page; current fees from Volusia County Code of Ordinances, fees effective February 1, 2007 (fees include 3% administrative charge; fees shown to nearest dollar; current nonresidential fees per square foot have been multiplied by 1,000). Road Impact Fee Study 2 September 24, 2018 Item 12-6

7 Executive Summary Summary of System Evaluation Methodology The major methodological alternatives are consumption-based versus plan-based. The County s fees were calculated using a consumption-based methodology, which is by far the most commonly-used road impact fee methodology in Florida. So-called mobility fees are a variant of transportation impact fees calculated using one of the two basic methodologies. Mobility fees tend to differ from traditional road impact fees in two main respects: including multi-modal components and/or having different fee schedules that apply in different geographic subareas. However, mobility fees are not part of this update study. This update is consistent with the methodology of the 2003 study, with the following exceptions: (1) it excludes municipal roads and collectors that don t provide regional connectivity from the fee calculations, (2) it calibrates travel demand characteristics to current observable traffic, and (3) it provides a credit for outstanding road debt. Developer Credits There is a current imbalance between adopted fees and developer credits. Current fees are based on a 15-year-old study and are low relative to actual current costs. Developers, on the other hand, get credit for the current costs of right-of-way dedications and improvements. As a result, the use of credits has become a relatively large share of fee payments, reducing the amount of cash fee revenues. The consultant recommends that the County consider adopting updated fees at close to the full current cost. The County could also impose some additional ordinance restrictions on developer credits to help rein in their future growth. These could include the following: Collector roads that do not provide regional connectivity have been excluded from the updated fee calculations. Developer improvements of such roads should not be eligible for credit against the thoroughfare fees. Tie ownership of future credits to the property that was subject to the right-of-way dedication or roadway improvement requirement, rather than to the person who paid the fee. Only allow transfer of excess credits beyond what is needed to offset fees for the planned development. Set an expiration date for the use of credits, requiring them to be used within a certain time period (e.g., ten years from approval of the development agreement or completion of the improvement or dedication). Note that the current ordinance requires the County to refund fees not spent in seven years. Land Use Categories The County has indicated a desire to retain the current land use categories to the extent practical. This update recommends the following changes to be consistent with current trip data and to make it easier to assess fees. Road Impact Fee Study 3 September 24, 2018 Item 12-7

8 Executive Summary Drop the townhouse/condo/2-3 family category. Condominium is an ownership type, townhouse trip rate data are not very robust, and ITE trip data are not available for duplex/triplex units. This category should be folded into the multi-family/apartment category. Split multi-family into low-rise (1-2 stories) and mid-rise (3-10 stories) to reflect the latest trip generation data. The County might also consider adding a category for age-restricted singlefamily units to address a common land development type. Combine multiple retail and office categories by size into single retail and office categories. While trip rates decline with shopping center and office building size, this is counter-balanced by the tendency of new trip factors and trip lengths to increase with size. Combine separate categories for convenience store and convenience store without gas sales. Higher ITE trip generation rates for convenience stores without gas sales are based on a small number of older studies. Drop some categories for which current trip characteristics data are not available. These include CBD sandwich shop, general recreation, local park, and district park. Add public park, for which current data are available. Major sports facility has been retained, but the trip information is dated. Consider eliminating from the fee schedule and assessing any new such use based on an independent fee determination. Change the assessment basis for movie theaters and nursing home from screens and beds, respectively, to building square feet. Service Areas/Benefit Districts Retain a single, county-wide service area. Consider consolidating the existing four benefit districts into a single county-wide district. At a minimum, consolidate them into two (east and west), consistent with how credits can be used. Fee Study Comparisons Comparisons between methodologies and fee calculations used in this study to the 2007 study prepared by Tindale-Oliver and to the 2016 staff review draft of this study are provided in Appendix D. Road Impact Fee Study 4 September 24, 2018 Item 12-8

9 Executive Summary Updated Fees The updated fees are compared to current fees in Table 2. Table 2. Comparison of Current and Updated Road Impact Fees Current Updated Percent Land Use Type Unit Fee Fee Change Change Residential Single-Family Detached * Dwelling $2,174 $5,379 $3, % Multi-Family, 1-2 Stories Dwelling $1,506 $3,213 $1, % Multi-Family, 3+ Stories Dwelling $1,506 $1,950 $444 29% Mobile Home/RV Park Space $761 $1,982 $1, % Retail/Commercial Shopping Center/General Retail 1,000 sq. ft. $3,080 $6,385 $3, % Bank with Drive-Through 1,000 sq. ft. $10,960 $9,745 -$1,215-11% Bank without Drive-Through 1,000 sq. ft. $4,550 $5,779 $1,229 27% Quality Restaurant 1,000 sq. ft. $8,090 $17,224 $9, % High-Turnover Restaurant 1,000 sq. ft. $10,590 $21,428 $10, % Fast Food Restaurant 1,000 sq. ft. $23,010 $47,373 $24, % Auto Care 1,000 sq. ft. $3,700 $3,654 -$46-1% New and Used Car Sales 1,000 sq. ft. $5,270 $8,357 $3,087 59% Supermarket 1,000 sq. ft. $6,800 $10,708 $3,908 57% Convenience Store 1,000 sq. ft. $14,590 $24,015 $9,425 65% Super Convenience Store (10+ fuel stations) 1,000 sq. ft. $27,510 $29,396 $1,886 7% Home Improvement Store 1,000 sq. ft. $3,600 $12,278 $8, % Pharmacy with Drive-Through 1,000 sq. ft. $2,900 $5,162 $2,262 78% Furniture Store 1,000 sq. ft. $630 $1,782 $1, % Tire Store/Auto Repair Bay $2,762 $4,363 $1,601 58% Quick Lubrication Shop Bay $3,847 $4,611 $764 20% Movie Theater 1,000 sq. ft. n/a $12,981 n/a n/a Hotel Room $1,266 $2,974 $1, % Motel Room $683 $1,189 $506 74% Office General Office 1,000 sq. ft. $2,310 $3,974 $1,664 72% Corporate Headquarters Building 1,000 sq. ft. $1,480 $3,238 $1, % Medical Office 1,000 sq. ft. $5,560 $14,630 $9, % Industrial/Warehouse Light Industrial 1,000 sq. ft. $1,220 $2,022 $802 66% Manufacturing 1,000 sq. ft. $680 $1,592 $ % Warehouse 1,000 sq. ft. $860 $710 -$150-17% Mini-Warehouse 1,000 sq. ft. $430 $614 $184 43% Public/Institutional Hospital 1,000 sq. ft. $2,490 $2,128 -$362-15% Church 1,000 sq. ft. $1,210 $1,378 $168 14% Day Care Center 1,000 sq. ft. $4,390 $6,074 $1,684 38% Nursing Home 1,000 sq. ft. n/a $1,318 n/a n/a Major Sports Facility Pk Space $571 $468 -$103-18% Public Park Acre n/a $156 n/a n/a * category also includes a mobile home on a single-family lot Source: Current fees from Table 1 (shopping center based on 100,000 square foot center; office based on building greater than 10,000 sq. ft., super convenience store based on convenience store/gas/fast food category); updated fees from Table 17. Road Impact Fee Study 5 September 24, 2018 Item 12-9

10 Executive Summary Comparative Fees Volusia County s current and updated thoroughfare road impact fees are compared with transportation impact fees charged by eight abutting or nearby counties in Table 3, including fee amounts for typical land use types, the date of the last update, and the adoption percentage. Note that most if not all use a consumption-based methodology. Volusia s current fees are among the lowest of the group, while the updated fees are toward the high end of the comparison counties. Table 3. Comparative Road Impact Fees Volusia County St. Ala- Indian Land Use Unit Current Updated Brevard Lake a Orange Johns b Osceola chua c Polk d River Single-Family Det. Dwelling $2,174 $5,379 $4,353 $2,706 $3,898 $7,337 $4,585 $5,183 $2,155 $4,248 Multi-Family Dwelling $1,506 $3,213 $2,677 $1,240 $2,524 $4,909 $3,203 $2,073 $1,351 $2,742 Retail 1,000 sf $3,080 $6,385 $5,270 $3,080 $5,477 $4,205 $6,823 $8,974 $3,808 $2,862 Office 1,000 sf $2,310 $3,974 $5,058 $2,623 $4,050 $2,600 $4,623 $4,275 $2,237 $4,321 Industrial 1,000 sf $1,220 $2,022 n/a $1,505 $2,163 $1,378 $2,024 $2,857 $666 $663 Date of Last Update n/a Adoption Percentage 79% 100% n/a 70% 50% 60/75% 100% n/a 100% 100% Consumption-Based Meth. Yes Yes Yes Yes Yes Yes Yes n/a Yes Yes Notes: (a) south benefit district; (b) fees shown have been reduced 25% for residential and 40% for nonresidential; single-family is 2,501-3,750 sf residence; multi-family is 801-1,800 sf residence; retail is 100,000 sf center; office is building greater than 100,000 sf; (c) residential fees are for urban area assuming 2,500 sf for single-family and 1,000 sf for multi-family; retail is for non-tnd center of 100,000 sf; office is for 50,000 sf or larger building; (d) excludes impact on State/Federal highways, collector roads, and municipal roads Source: Current and updated Volusia County fees from Table 2; fees for other counties from survey by Duncan Associates, August 1, $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Figure 1. Comparative Single-Family Road Fees (per unit) Road Impact Fee Study 6 September 24, 2018 Item 12-10

11 Executive Summary Figure 2. Comparative Retail Road Fees (per 1,000 sq. ft.) $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Figure 3. Comparative Office Road Fees (per 1,000 sq. ft.) $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Road Impact Fee Study 7 September 24, 2018 Item 12-11

12 METHODOLOGY A wide range of methodologies have been developed to calculate impact fees, consistent with the legal requirements and guidelines described above. Despite variations, there are two primary types of methodologies, which can be referred to as standards-based and plan-based. Standards-based methodologies use a system-wide level of service standard, such as the system-wide ratio of road capacity to demand. Plan-based methodologies are generally based on modeling and geographicallyspecific level of service standards (e.g., all road segments and intersections shall function at LOS D or better ), and rely on a facility master plan to create the nexus between the cost of planned improvements and the projected growth over a defined time period. In general, the standards-based approach provides greater flexibility in expenditures (a plan-based approach requires a master plan update when planned projects change). The two approaches are described in more detail below. Standards-Based The standards-based methodology uses a generalized level-of-service standard to determine the costs to accommodate new development. This approach does not require that there be a master plan, or even a list of specific planned projects that will be funded with the impact fees. Most often, the standards-based approach uses the actual level of service (LOS) that exists at the time the study is prepared. For transportation, the most common standards-based approach is often referred to as the consumption-based methodology. This methodology charges a new development the cost required to replace the capacity the new development will consume in the major roadway system. In other words, if a development will generate 100 vehicle-miles of travel (VMT) per day, it is charged impact fees based on the average cost to create 100 vehicle-miles of capacity (VMC). Most well-functioning roadway systems have considerably more than one VMC for each VMT (although at least a portion of this surplus system-wide capacity represents needed slack in the system to accommodate the fact that capacity of some roads will never be fully utilized). For the purposes of the consumption-based methodology, the appropriate LOS indicator is the system-wide ratio of capacity to demand, not the LOS of individual roadway segments. A variant of the standard consumption-based approach, called modified consumption-based, uses a VMC/VMT ratio higher than 1.00 but lower than the system-wide average. A problem with this approach is that it is often difficult to quantify the ratio between 1.00 and the existing level that is appropriate for the long term without a build-out master plan. The standard assumption of a 1.00 VMC/VMT ratio continues to be used in this update. The County s current road impact fees were calculated in 1999 and partially updated in 2003 using a standard consumption-based methodology. The major road system was defined as all arterial and collector roads in the county, including County, municipal and State roads, but excluding the interstate system. The travel demand generated by specific land uses was based on a combination of national data and Florida studies. Average road costs per VMC were based on the cost of historical and planned projects in the county. A LOS of 1.00 VMC/VMT was implicitly assumed. Revenue credits were calculated for future gas tax revenues that would be generated by new development and available to fund capacity-expanding road improvements. The 2007 study, which was not adopted, relied on Road Impact Fee Study 8 September 24, 2018 Item 12-12

13 Methodology the same methodology, but added an adjustment to remove the cost of municipal collector roads, in recognition of the fact that some cities have adopted their own road impact fees. This update is consistent with the methodology of the 2003 study, with the following exceptions: (1) it excludes municipal roads and collectors that do not provide regional connectivity from the fee calculations, (2) it calibrates travel demand characteristics to current observable traffic, and (3) it provides a credit for outstanding road debt. Plan-Based In contrast to standards-based methodologies, which rely on generalized, system-wide LOS standards and the average cost to add capacity, plan-based methodologies rely on segment or intersectionspecific LOS and the total cost of a list of planned improvements. A plan-based methodology basically divides the cost of planned improvements over a fixed time period by the anticipated growth in service units over the same time period. The portion of the cost of planned improvements attributable to existing LOS deficiencies must be removed from the cost used in the fee calculation. The least defensible of these approaches are those based on a Capital Improvements Plan, because there is not a strong correlation between short-term planned improvement costs and long-term costs to accommodate new development. Much more defensible are those based on a long-range master plan or build-out plan. Plan-based methodologies seldom account for the cost of existing excess capacity. Instead, they focus solely on future costs to be incurred, and generally exclude any future costs to retire debt on existing capacity. A potential advantage of the plan-based approach is that it can be used to justify reducing fees in more developed areas that have most of the build-out infrastructure in place, in order to provide an incentive for development in such areas. The difficulty, however, is in defining such areas as reasonable service areas for a major roadway system that is primarily designed to move traffic long distances. The major drawback of this approach is that any change to the long-range master plan must be accompanied by an update of the impact fees, and vice versa. Mobility Fees There has been much confusion in Florida in recent years over the concept of mobility fees. While often referred to as an alternative to transportation impact fees, a mobility fee is a transportation impact fee. The concept of a mobility fee was originally put forward as a funding mechanism to replace transportation concurrency requirements. The Community Renewal Act of 2009 (SB 360) states that The Legislature determines that the state shall evaluate and consider the implementation of a mobility fee to replace the existing transportation concurrency system. As originally contemplated, mobility fees would, like traditional road impact fees, be charges on new development, but they would be multimodal (able to fund more than roads), multi-jurisdictional (at least county-wide) and distance-based (areas far removed from urban development would pay more based on greater driving distances). It was originally thought that the multi-modal aspect of the fees would provide the ability to fund transit Road Impact Fee Study 9 September 24, 2018 Item 12-13

14 Methodology operating costs. However, because the Legislature has not authorized any new kind of development fee, any mobility fee must be adopted under the authority to impose impact fees. Most transportation impact fees that have been called mobility fees allow the fees to be spent on more than new roads, widened roads, signalization and intersection improvements. These include things like bicycle and pedestrian facilities, bus pull-out lanes, and transit shelters. However, such improvements are also eligible to be paid for by traditional road impact fees, at least when they are constructed as a necessary part of a vehicular capacity improvement. For example, Volusia County s standard cross-section includes some multi-modal components, such as sidewalks and bike lanes, and such improvements can be funded with road impact fees when part of an improvement that adds vehicular capacity under the terms of the current ordinance. Some Florida counties with traditional road impact fee methodologies have ordinance provisions that specifically allow road impact fee funding for such improvements when they are not part of a vehicular capacity improvement. Some mobility fees also have multiple impact fee schedules that are applicable to different subareas or development types, although again this is not unique to those that call themselves mobility fees. Recommendation This study s recommendation is to retain the standard, consumption-based methodology. This is a solid, defensible methodology, it is by far the most common approach used in Florida, and it provides the flexibility to amend capital plans over time without requiring a master plan/impact fee update. Unless there is some objective of the County that can only be achieved with a plan-based approach, retaining the current methodology would seem to make the most sense. The recommended approach differs somewhat from that used in the 2003 study, as well as in the unadopted 2007 update. It uses the inventory of existing facilities and data on existing land uses to calibrate the travel demand factors, rather than relying solely on data from national sources or other Florida jurisdictions. In other words, it determines how much daily VMT would be expected on the major road system in Volusia County based on the travel demand factors, and compares that to the actual VMT. If expected VMT is higher than actual VMT, a calibration factor is introduced into the formula to reduce the expected travel demand. This has the effect of reducing the calculated fee by an across-the-board percentage for each land use category. Calibrating the travel demand schedule in this way ensures that the fees reflect actual travel demand in Volusia County. This update also excludes municipal roads from the fee calculations to ensure there is no overlap with municipal road impact fees. The County s current road impact fees are based on the cost of arterials (excluding interstates and U.S. highways) and collectors. This update generally retains the definition of the major roadway system, but removes municipal roads and collectors that do not provide regional connectivity. Road Impact Fee Study 10 September 24, 2018 Item 12-14

15 DEVELOPER CREDITS Road impact fees differ from most other types of impact fees in that developers often are required to dedicate right-of-way or make capacity-expanding road improvements, whereas they are not generally required to make similar contributions toward other growth-related infrastructure needs, such as parks, fire/rescue or school facilities. Consequently, the approach to developer credits for road improvements is more significant in terms of potential revenue than it is for other types of impact fees charged by the County. Volusia County provides developer credits for a capacity-expanding improvement to a collector or arterial roadway that is not site-related. In addition, Volusia County s ordinance assigns the ownership of credits to the fee-payer, and allows credits to be transferred or sold to other developers for use in the same benefit district or an adjoining district (between Zones 1 and 2 on the east side and Zones 3 and 4 on the west side). Some other Florida counties assign ownership of credits to the land owner, and only allow excess credits (i.e., the amount in excess of what is needed to offset the fees from the proposed development) to be transferred or sold (some counties don t allow any transfer of excess credits). These credit policies have been accompanied by adopted road impact fees that cover less than the full net cost of accommodating the road impacts of new developments. The 2003 study fees were adopted at about two-thirds of the calculated amounts, and, even after three years of inflation adjustments in , are now about 20% lower than what was calculated 15 years ago. The unadopted 2007 study calculated fees that were generally three times the amounts calculated in Even if it is assumed that the 2003 study fees were recovering the full cost at the time, the current fees would need to be roughly doubled just to keep up with construction cost inflation. For a single-family home, for example, the current road impact fee would need to be increased by 102% to account for generalized construction cost inflation, as shown in Table 4. Table 4. Inflation-Adjusted Single-Family Fee 2003 Calculated Single-Family Fee $2,653 x ENR-CCI, March 2018/March Inflation-Adjusted 2003 Fee $4,387 Current Adopted Single-Family Fee $2,174 Inflation-Adjusted 2003 Fee $4,387 Percent Increase to Account for Inflation 102% Source: 2003 study and current fees from Table 1; inflation index from Engineering News-Record Construction Cost Index. Road Impact Fee Study 11 September 24, 2018 Item 12-15

16 Developer Credits The County s historical practice of charging less than full-cost fees, while simultaneously providing credits at the full cost to the developer, has resulted in a large portion of impact fee obligations being paid with credits. Cash payments versus credits over the past five years are summarized in Table 5 and illustrated in Figure 4. Over the last five years, credits accounted for half of total revenues in the Zones 1 and 2, and over one-third county-wide. Table 5. Road Impact Fee Cash Payments vs. Credits Used, FY Zone 1 Zone 2 Zone 3 Zone 4 Total Cash Fees $5,408,778 $2,114,255 $3,436,586 $3,775,293 $14,734,912 Credits Used $5,362,778 $2,317,933 $327,557 $171,801 $8,180,069 Total Revenue $10,771,556 $4,432,188 $3,764,143 $3,947,094 $22,914,981 Credit Percent 50% 52% 9% 4% Source: Volusia County, July 2, % $25,000,000 Figure 4. Cash Payments vs. Credits Used, FY $20,000,000 Credits Used Cash Payments $15,000,000 $10,000,000 $5,000,000 $0 Zone 1 Zone 2 Zone 3 Zone 4 Total Some jurisdictions have dealt with this problem by valuing credits at the same percentage at which fees are adopted. For example, if the fees are adopted at 50% of the full-cost amounts, credits are provided at 50% of the actual cost to the developer. This approach, however, unfairly penalizes the developer who is required to make a road improvement, compared to a developer who is only required to pay the reduced fee. It also does not address long periods of time between fee updates without consistent annual increases for cost inflation. These considerations emphasize the importance of maintaining a balance between road impact fees and the credits that are provided to developers. Currently, there are over $6 million in outstanding developer credits (see Table 6 below). The good news is that credit balances have gone down significantly over the last six years. Road Impact Fee Study 12 September 24, 2018 Item 12-16

17 Developer Credits Table 6. Outstanding Developer Credit Balances, Year Zone 1 Zone 2 Zone 3 Zone 4 Total 2012 $6,937,420 $7,952,652 $731,432 $120,749 $15,742, $6,475,751 $7,673,906 $563,039 $120,749 $14,833, $5,314,918 $6,827,600 $579,330 $96,836 $12,818, $4,325,224 $5,492,883 $481,913 $30,918 $10,330, $2,070,642 $4,823,220 $446,879 $30,918 $7,371, $1,717,271 $4,556,886 $446,879 $30,918 $6,751, $1,352,190 $4,188,783 $718,867 $30,918 $6,290,758 Decrease $5,585,230 $3,763,869 $12,565 $89,831 $9,451,495 % Down 81% 47% 2% 74% Source: Volusia County, July 9, % Ordinance Amendments The problem with having a large portion of impact fee revenue in the form of developer credits is that impact fee expenditures are disproportionately steered toward localized improvements needed for a particular development rather than for more pressing regional priorities. Besides adopting updated fees at close to the full cost, the County could also consider some ordinance changes that could help rein in the future growth of credits. This study has removed collector roads that do not provide regional connectivity from the fee calculations. These roads tend to be low-volume arteries that primarily serve a localized area, are often constructed by developers, and are seldom in need of capacity expansion. The ordinance should be amended to clarify that such roads are not eligible for thoroughfare fee expenditures or developer credits. The use of future credits could be tied to the property that was subject to the right-of-way dedication or roadway improvement requirement, rather than to the person or entity that owns the property. Credits could be restricted to development on the property. Transfers of credits to other properties could be prohibited or restricted to the excess beyond what would be needed for the development of the host property. Another possibility would be to set an expiration date for the use of credits, requiring them to be used within a certain time period (e.g., ten years from approval of the development agreement or completion of the improvement or dedication). Note that the County is required to refund impact fees it collects if they are not spent within seven years. Recommendations Adopting road impact fees significantly below current net costs, while providing credit against those fees for the full cost of developer contributions, tends to create an imbalance that can have a significant negative impact on future impact fee revenues over the long term. Aside from the general recommendation to adopt fees at close to the full net cost, the County could also consider imposing some additional ordinance restrictions on developer credits, as described above. Road Impact Fee Study 13 September 24, 2018 Item 12-17

18 SERVICE AREAS AND BENEFIT DISTICTS The types of improvements to be funded with impact fees are related to the geographic areas they serve. There are two types of geographic areas in impact fee analysis: service areas and benefit districts. The service area corresponds to the area served by a set of facilities, and is generally the geographic level at which impact fees are calculated. However, a service area may be divided into multiple benefit districts as a way to further ensure that a fee-paying development will receive significant benefit from improvements. Fees that are collected in a benefit district are earmarked to be spent on improvements in the same benefit district. Service Areas The service area corresponds to the area primarily served by a set of facilities, and is generally the geographic level at which impact fees are calculated. Volusia County s thoroughfare road impact fees are based on the calculation of fees for the entire county, including all municipal and unincorporated areas. A single service area is reasonable, because the thoroughfare road system is primarily designed to move traffic relatively long distances and across jurisdictional boundaries. The fact that lower class roadways, such as collectors, tend to serve more limited areas is addressed through the use of benefit districts, as discussed below. The use of a county-wide service area continues to be appropriate, and the scope of this update study does not include the calculation of updated fees for multiple service areas. While the county could be divided into multiple service areas, these areas must correspond to the general service range of the roadway facilities located within them. Because State roads and County arterials, which carry most of the traffic on the system, are designed to move vehicles long distances, designing small service areas could be problematic. Benefit Districts Benefit districts are subareas within a service area where the fees collected are earmarked to be spent. For the County s thoroughfare road impact fee, the county is divided into four benefit districts that roughly approximate quadrants (Zone 1 NE, Zone 2 SE, Zone 3 SW, and Zone 4 NW), as illustrated in Figure 5. The current configuration of benefit districts does not follow County Council district boundaries, which helps avoid the tendency toward balkanization and promotes greater consideration of county-wide improvement priorities. In addition, ordinance provisions allow funds to be used in an area extending one mile north or south of the boundary separating north from south quadrants. Credits can be transferred anywhere between adjoining east-side or west-side districts. As noted above, benefit districts are a way for the County to acknowledge that some portions of the major roadway system (i.e., collector roads) serve relatively small areas. With the exclusion of collectors that do not provide regional connectivity, there is less reason to continue to have multiple benefit districts, and the County could reasonably have a single, county-wide benefit district. Another reasonable possibility, based on the current limited flexibility allowed for the use of funds, would be to have two benefit districts east and west (i.e., consolidate Zones 1 with 2, and 3 with 4). The County has indicated support for possibly consolidating into east and west benefit districts, since this would be consistent with how credits can be used. Road Impact Fee Study 14 September 24, 2018 Item 12-18

19 Service Areas and Benefit Districts Figure 5. Thoroughfare Road Impact Fee Benefit Districts Recommendations Retain a single, county-wide service area. Consider consolidating the existing four benefit districts into a single county-wide district. At a minimum, consolidate them into two (east and west), consistent with how credits can be used. Road Impact Fee Study 15 September 24, 2018 Item 12-19

20 SERVICE UNITS In impact fee analysis, a service unit is a standardized measure of the demand generated by development for the type of infrastructure covered by the fee. The service unit for consumptionbased road impact fees is vehicle-miles of travel (VMT). The vehicular travel demand generated by specific land use types in Volusia County is a product of four factors: 1) trip generation, 2) percent new trips, 3) average trip length and 4) a local adjustment factor to calibrate VMT generation by land use based on national and Florida travel characteristics to reflect actual system-wide travel demand. Trip Generation Average daily trip generation rates are based on information published in the most recent edition of the Institute of Transportation Engineers (ITE) Trip Generation manual. Trip generation rates represent trip ends, or driveway crossings at the site of a land use. Thus, a single one-way trip from home to work counts as one trip end for the residence and one trip end for the work place, for a total of two trip ends. To avoid over counting, all trip rates are divided by two. This places the burden of travel equally between the origin and destination of the trip and eliminates double charging for any particular trip. This update utilizes the 10th edition of the ITE manual published in The current fees are based in part on trip generation rates from the 6th edition, published in New Trip Factor Trip rates must also be adjusted by a new trip factor to exclude pass by and diverted-linked trips. This adjustment is intended to reduce the possibility of over-counting by only including primary trips generated by the development. Pass by trips are those trips that are already on a particular route for a different purpose and simply stop at a development on that route. For example, a stop at a convenience store on the way home from the office is a pass by trip for the convenience store. A pass by trip does not create an additional burden on the street system and therefore should not be counted in the assessment of impact fees. A diverted-linked trip is similar to a pass by trip, but a diversion is made from the regular route to make an interim stop. The reductions for pass by and diverted-linked trips are drawn from a recent compendium of Florida origin-and-destination studies. Average Trip Length In the context of a road impact fee based on a consumption-based methodology, it is important to determine the average length of a trip on the major roadway system. Average trip lengths are derived from a recent compendium of Florida origin-and-destination studies. Adjustment Factor This update study uses national data and Florida data for trip generation rates and average trip lengths and calibrates total VMT to local conditions using a local adjustment factor. The local adjustment factor is derived by dividing the VMT that is actually observed on the major roadway system by the VMT that would be expected based on existing land uses, national trip generation rates, and statewide new trip factors and average trip lengths. Road Impact Fee Study 16 September 24, 2018 Item 12-20

21 Service Units The first step in developing the adjustment factor is to estimate the total daily vehicle-miles of travel (VMT) that would be expected on Volusia County s major roadway system based on national and Florida travel demand characteristics. The number of existing units for each land category is multiplied by average daily trip generation rate, new trip percentage and average trip length and summed to determine total expected county-wide VMT. As shown in Table 7, existing county-wide land uses, using national and Florida trip characteristics, would be expected to generate approximately 9.5 million VMT during an average weekday. Table 7. Expected County-Wide Vehicle-Miles of Travel ITE Existing Trip % New Avg. Trip Expected Land Use Code Unit Units Rate Trips Length VMT Single-Family Detached 210 Dwelling 184, % ,771,273 Multi-Family 220 Dwelling 57, % ,068,405 Mobile Home 240 Dwelling 23, % ,777 Retail/Commercial 820 1,000 sf 41, % ,539,255 Office 710 1,000 sf 19, % ,245 Industrial 130 1,000 sf 10, % ,628 Warehouse 150 1,000 sf 21, % ,647 Public/Institutional 620 1,000 sf 29, % ,670 Total 9,524,900 Source: Existing residential units from 2010 Census, American Community Survey, and countywide building permit data from Volusia County on July 2, 2018; existing nonresidential square feet from Volusia County Property Assessor database as of June 14, 2018, received July 2, 2018; trip rates, % new trips and average trip lengths from Table 9; expected daily VMT is product of existing units, trip rate, % new trips and average trip length. The next step in developing the local trip length adjustment factor is to determine actual county-wide VMT on Volusia County s major roadway system. An inventory of the existing major roadway system was prepared as part of this update (see Table 18 in the Appendix). Roadway segment lengths and current traffic volumes are used to determine actual daily travel, which totals about 5.69 million VMT for all State highways, County arterial streets, and County collector roads. Municipal arterials and collectors have been excluded from the major roadway inventory to ensure no overlap with municipal road impact fees. The expected VMT based on existing land use data and national/regional travel demand characteristics over-estimates VMT actually observed on the major roadway system. This is not surprising given that the major roadway system excludes travel on interstates, U.S. highways, local roads, municipal roads, and roads outside the county. Consequently, it is necessary to develop an adjustment factor to account for this variation. The local adjustment factor is the ratio of actual to expected VMT on the major roadway system. As shown in Table 8, the expected travel demand for each land use category should be multiplied by a local adjustment factor of Table 8. Local Adjustment Factor Actual Daily Vehicle-Miles of Travel (VMT) 5,686,467 Expected Daily Vehicle-Miles of Travel (VMT) 9,524,900 Ratio of Actual to Expected VMT Source: Actual daily VMT from Table 10; expected VMT from Table 7. Road Impact Fee Study 17 September 24, 2018 Item 12-21

22 Service Units Travel Demand Summary The result of combining trip generation rates, new trip factors, average trip lengths and the local adjustment factor is the travel demand schedule. The travel demand schedule establishes the average daily vehicle-miles of travel (VMT) generated by various land use types per unit of development for Volusia County. The updated travel demand schedule is presented in Table 9. For each land use, daily VMT is the product of trip rate, percent new trips, average trip length, and the adjustment factor. Table 9. Travel Demand Schedule 1/2 Trip Local Trip % New Length Adjust. VMT/ Land Use Type (ITE Code) Unit Rate Trips (mi.) Factor Unit Single-Family Detached (210) Dwelling % Multi-Family, Low-Rise (220) Dwelling % Multi-Family, Mid-Rise (222) Dwelling % Mobile Home/RV Park (240) Space % Shopping Center (820) 1,000 sq. ft % Bank w/drive-thru (912) 1,000 sq. ft % Bank w/o Drive-Thru (911) 1,000 sq. ft % Quality Restaurant (931) 1,000 sq. ft % High-Turnover Restaurant (932) 1,000 sq. ft % Fast Food Restaurant (934) 1,000 sq. ft % Auto Care (943) 1,000 sq. ft % New and Used Car Sales (841) 1,000 sq. ft % Supermarket (850) 1,000 sq. ft % Convenience Store (853) 1,000 sq. ft % Super Convenience Store (960) 1,000 sq. ft % Home Improvement Store (862) 1,000 sq. ft % Pharmacy w/drive-thru (880) 1,000 sq. ft % Furniture Store (890) 1,000 sq. ft % Tire Store/Auto Repair (849) Bay % Quick Lubrication Shop (941) Bay % Movie Theater (444) 1,000 sq. ft % Hotel (310) Room % Motel (320) Room % General Office (710) 1,000 sq. ft % Corporate Headquarter Bldg (714) 1,000 sq. ft % Medical Office (720) 1,000 sq. ft % Light Industrial (110) 1,000 sq. ft % Manufacturing (140) 1,000 sq. ft % Warehouse (150) 1,000 sq. ft % Mini-Warehouse (151) 1,000 sq. ft % Hospital (610) 1,000 sq. ft % Church (560) 1,000 sq. ft % Day Care Center (565) 1,000 sq. ft % Nursing Home (620) 1,000 sq. ft % Major Sports Facility Pk Space % Public Park (411) Acre % Source: Trip rates are ½ of daily trip ends from Institute of Transportation Engineers (ITE), Trip Generation Manual, 10th Edition, 2017 (major sports facility from TEI, Roadway Impact Fee Update, 2003), new trip percentages and trip lengths from Florida studies summarized in Tindale-Oliver & Associates, City of St. Cloud Mobility Fee Study, January 2017; local adjustment factor from Table 8; VMT is product of trip rate, % new trips, trip length, and adjustment factor. Road Impact Fee Study 18 September 24, 2018 Item 12-22

23 COST PER SERVICE UNIT This chapter calculates the cost per service unit (VMT) used in the impact fee calculations. The methodology used is the consumption-based approach described in the Methodology chapter. Major Roadway System The consumption-based road impact fee methodology charges new development for the capacity that it consumes in the major roadway system. To determine the cost per service unit of new travel on the major roadway system, it is necessary to clearly define the major roadway system. Thoroughfares are defined as all State roads, County arterials, and County collectors that provide regional connectivity. Excluded from this definition are interstates and U.S. highways, which tend to carry a significant amount of through traffic, and municipal roads, to ensure that the County road impact fee does not overlap with municipal road impact fees. The functional classification of roadways in Volusia County is illustrated in Figure 6 on the following page. The distribution of existing daily VMT by roadway type on the major roadway system is summarized in Table 10. Over half of total daily VMT in Volusia County s major roadway system is on the State highway system. Table 10. Total Daily Vehicle-Miles by Road Type Roadway Class Total VMT Percent State Highways 3,053, % County Arterials 1,708, % County Collectors 924, % Total 5,686,467 Source: Table 18 in Appendix A % Level of Service The consumption-based methodology implicitly assumes that new development should replace the capacity that it consumes on a one-to-one basis. For each new vehicle-mile of travel (VMT) generated by a development, new development is charged the cost to construct an additional vehicle-mile of capacity (VMC). Another way of stating this is that the level of service that the road impact fees are designed to maintain is a ratio of VMC/VMT equal to one. While it is a relatively straight-forward matter to determine the amount of travel, the capacity of a roadway depends on the operational level of service that is acceptable. Volusia County has adopted minimum level of service standards for all its major roadways, varying from LOS C to LOS E. The County has also developed generalized maximum roadway capacities for each roadway segment, which take into account functional classification (major collector, minor arterial, etc.), roadway cross-section (number of lanes, whether divided or undivided, turn lanes, etc.), and area (rural undeveloped, rural developed, and urban). This analysis utilizes the County s current capacity estimates. Road Impact Fee Study 19 September 24, 2018 Item 12-23

24 Cost per Service Unit Figure 6. Functional Classification Map Road Impact Fee Study 20 September 24, 2018 Item 12-24