Loveland Council Considers New Approach to Impact Fees

The City of Loveland uses a “buy-in” method to calculate capital expansion fees (CEFs) — otherwise known as impact fees — on new construction based on a per unit implied capital investment of current land uses. However, the City has hired BBC Research and Consulting to analyze the equity of the current methodology and a possible alternative known as plan based.

At the May 27 study session, BBC representatives told the Council that the buy-in method is fair. However, a plan based methodology, calculated on the proportionate share of planned infrastructure development, is an equally acceptable means of calculating fees that some members of Council might prefer. The downside to the plan based method is that it requires more data and predictions. The development of 25-year master plans for specific service areas such as the facilities plan and capitol plan would make it easier to adopt a plan based methodology if the City Council decides to change the way it calculates the fees.

The plan based fees wouldn’t necessarily result in dramatically different costs for developers though. Examples for residential single-family units provided by the consultant, illustrate this: the current Library CEF is $532.27. Using the plan based method, the fee would be $541.35. The current fire CEF is $713.30 but using the plan based method it would be $612.30.

The next step in the process will be the Budget Office presentation of the 10-year Capital Plan. This is scheduled for the first study session in June and at the first meeting in July when the City Council will consider a resolution approving the 10-year list of projects.

In addition to feedback from Council, staff will be looking for direction as to the appropriate time to set up public comment meetings on the Capital Expansion Fees. Public meetings might be scheduled in June or in July, after the adoption of the 10-year Capital Plan resolution.

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