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Rp'r 17 O0 05:24p Mark C. Cramer (?04) 940-3172 . p.? Impact Fees - They Don't Make Sense ISSUe What are impact.fees? · An impact fee is a fiat dollar fcc (tax) charged to thc developer (or homcbuyer) for new development (i.e., $2,500 per lot or home, regardless of sales price). 'Fax revenues generated by impact fees am largely dependent upon economic cycles, and thus will fluctuate over time. This makes it difficult to usc those revenues to fund bond issues or to cash flow infrastructure development projects, as opposed to revenues generated by property taxes or a sales tax. Orange County, North Carolina approved school impact fees in 1994following the ptmage ora special bill by the state legislature. Orange County covers two school districts, Chapel Hill. Carborro and Orange County. The Orange County impact fee started at a $750 fee per housing unit. Within two years, however, the county doubled the.fee twice for the Chapel HilI-Carborro district to the current level of $$,000 per unit. Baclmround Cabarms County has a history of financing its infrastructure n~ds through broad-based taxes, the burden of which is shared by large segments of the population. The community h,.~ a unified utility department among other shared public services, and the community as a whole utilizes and benefits from these public services. It is iimdamentally unfair to say that those who move into the commtmity next year place a greater strain on these services than someone who moved into the community last year or 15 yearn ago, and that a newcomer next year should pay a special tax for the privilege ofjoinlng the rest of us who were lucky enough to have already moved to Cabarras County. With Impact Fees: Eaual Access to Educatiol~ is Denied. By charging an impact fee on new housing for thc purposes of school funding, you make those families buying a home pay a disproportionate share of the cost to fund public schools. This is not equal access to education. Homcbuycrs will be charged an extra fee to support the school system, even if they do not have children impacting the school system. Funding schools is a community issue, not a new home issue, and should be funded by the community as a whole. Fairness is Ouestioned. With an impact fee, it begs the question as to whether only new home buyers should be charged an extra fee to support schools, when there are students being generated from existing homes as well. Other Revenues will Continue to be Necessary. Even extremely high impact fees could not como close to meeting many communities' needs for infrastructure development, and thus bond issues would continue to bc necessary. This dual funding scheme could erode public accountability and understanding of infrastructure funding requirements, which could fiirtber diminish support for bonds in the future. -1-