Castle Rock Banner
Share to Facebook Share to Twitter Bookmark and Share
File #: ORD 2019-031    Version: Name:
Type: Ordinance Status: Passed
File created: 8/28/2019 In control: Town Council
On agenda: 9/17/2019 Final action: 9/17/2019
Title: Ordinance Repealing and Reenacting Section 3.16.030 of the Castle Rock Municipal Code Adjusting the Development Impact Fees for Residential Uses and Amending Stormwater Development Impact Fees for Residential and Non-Residential Uses and Amending Section 3.16.035 of the Castle Rock Municipal Code for Inflation (Second Reading - Approved on First Reading on September 3, 2019 by a vote of 6-1)
Attachments: 1. Attachment A: Ordinance 2nd Reading, 2. Attachment B: Impact Fee Nexus Study: Proposed Castle Rock 2019 Impact Fee Program, EPS, 3. Attachment C: Impact fees overview, 4. Ordinance 1st reading, 5. Presentation - 1st Reading, 6. HBA Letter to Town Council 083019, 7. Impact Fee Options Memo, 8. Impact Fee Options Presentation, 9. HBA Letter to Town Council 091719 - 2nd Reading

To:                     Honorable Mayor and Members of Town Council

 

From:                     David L. Corliss, Town Manager

 

Title

Ordinance Repealing and Reenacting Section 3.16.030 of the Castle Rock Municipal Code Adjusting the Development Impact Fees for Residential Uses and Amending Stormwater Development Impact Fees for Residential and Non-Residential Uses and Amending Section 3.16.035 of the Castle Rock Municipal Code for Inflation (Second Reading - Approved on First Reading on September 3, 2019 by a vote of 6-1)

Body

________________________________________________________________________________

 

Executive Summary

 

The Town collects impact fees on new construction projects to ensure the Town’s levels of service to the community can be maintained as Castle Rock continues to grow. The Town updates these and other fees periodically to ensure they are aligned with market conditions.

 

In early 2018, staff engaged Economic & Planning Systems (EPS) to perform an assessment of impact fees for non-utility areas for the Town. This analysis concluded the Town should be charging significantly higher impact fees, based upon the estimated future project needs of a high-growth community, and on higher construction costs.

 

In conjunction with the 2019 budget process, Council approved an ordinance to implement the proposed fees, which gradually phased the fees up closer to needed levels over a multiyear period. Given the immediate capital needs in the community as necessitated by growth, staff is requesting Council consider increasing all non-utility impact fees to the maximum supportable level as indicated in the EPS impact fee study. Staff has prepared an ordinance to adopt concurrently with the 2020 Budget to make this increase effective January 1, 2020.  (Attachment A)

 

If impact fees are not increased, choices include 1) providing reduced levels of service to the community and/or 2) asking voters to provide for additional revenue sources to address the capital needs of a growing community, such as a property tax increase.

 

Discussion

 

The Town, like other Colorado municipalities, collects impact fees on new construction projects to ensure the Town can meet its established levels of service to the community as Castle Rock continues to grow. Impact fees are collected when a building permit is issued to pay for growth-related improvements, facilities and equipment in the areas of transportation, fire, police, parks and recreation and municipal facilities. (System development fees for Castle Rock Water are calculated separately, as part of the annual rates and fees study.) These one-time payments must be used solely to fund system improvements that benefit multiple development projects and the entire Town.

 

The Town updates these and other fees periodically to ensure they are aligned with community growth and market conditions. Given the economic conditions associated with the recession in early 2008, coupled with the slowdown in growth, the Town engaged a consultant to re-evaluate the level of impact fees being assessed. At that time, single family residential impact fees were adjusted, including a significant reduction in the park and recreation ($955, or 28% reduction, for a 2,600-square-foot home) and transportation ($84, or 3%, for a 2,600-square-foot home) fees. After the economy began to rebound, and growth increased in the Town, impact fees were once again updated; an external consultant performed an impact fee study in 2016. At that time, Council approved a fee structure that increased building use tax to industry standards, along with impact fees, in total by 9% in 2017 and 8.5% in 2018, exclusive of any needed Castle Rock Water system development fee increases.

 

Given the high growth rates over the past several years, and to stay responsive to changing market conditions, the Town engaged consultant EPS in 2018 to help determine whether the fees being collected for development activity were adequate, given current economic conditions. The consultant analyzed residential and nonresidential impact fees for transportation, fire, police, parks and recreation, and municipal facilities. EPS’ Impact Fee Nexus Study: Proposed Castle Rock 2019 Impact Fee Program (Attachment B) identified that the Town should charge significantly more for these fees, based upon estimated growth and associated future project needs, as well as higher construction costs.

 

Given the immediate capital needs in the community as necessitated by growth, staff is requesting Council approve increasing all non-utility impact fees to the maximum supportable level as indicated in the EPS impact fee study effective January 1, 2020. An overview of the proposed fees and associated projects, as well as comparisons between the proposed fees and fees in other communities, is included in Attachment C. The following table shows impact fees over the past 12 years, as well as a projection for the next five years, on a 2,600-square-foot house.

 

 

Residential Fees

 

In order to accommodate capital needs necessitated by growth, and to maintain current levels of service, the Town would need to increase the current non-utility impact fees by approximately $2,758, or 19.4%, from the currently adopted 2020 fees for a 2,600-square-foot home. (This is the average home size in Town for the past 10 years). Such an increase equates to approximately 0.61% of the value of a $450,000 home in Castle Rock. As noted in the 2018 ordinance, impact fees will then continue to increase each year based on an inflationary index.

 

The table below summarizes the proposed single-family residential fee changes for a sample 2,600-square-foot home. Inflation has not yet been applied to these figures.