Impact Fee Alternatives Being Used by Cities to Finance Infrastructure
In the face of the current housing downturn and dwindling economic resources, communities across the nation are lowering or suspending impact fees and looking at other available financing mechanisms such as public improvement districts and tax increment financing to raise revenues for needed public facilities.
To assist home builder associations with changing the conversation from impact fees to these alternative financing mechanisms, the NAHB Land Development Committee is hosting a free webinar on Sept. 24 beginning at 2:00 p.m. EDT that will provide an in-depth analysis on this issue.
The third in a series of NAHB webinars on critical land development issues, “Understanding Infrastructure Finance Tools That Are Successful Alternatives to Impact Fees” will feature national experts who will dissect the use of special district financing tools and explore how they can be used on various local projects.
Panelists are: Toby Rittner of the Council of Development Finance Agencies (CDFA), a national association dedicated to the advancement of development finance concerns and interests; and Ken Powell of Stone & Youngberg, LLC, a nationally recognized financial services firm. Michael Noonan, the chairman of the Land Development Committee, will moderate.
As an example of successful alternative financing, the City of Austin has used Tax Increment Financing (TIF) to create a mixed-use village on the former site of the Mueller Airport. Located only three miles from Austin’s downtown, this new neighborhood will ultimately consist of 4,600 residences and 650,000 square feet of retail space valued at $1.3 billion.
A TIF enables an increase in value over time to be captured to finance current improvements, with public projects pushing up the property values of the surrounding real estate. This alternative financing tool lets communities improve an area without burdening existing tax payers and increase the tax base over the longer term.
One of the most highly used tools for addressing today’s infrastructure challenges, special assessment districts can improve an area while lessening the upfront costs to the developer, builder and consumer.
Today, 49 states and the District of Columbia, have special district financing programs. These districts can go by many names — public improvement district, community development district, municipal utility district — but they typically result in an annual assessment to property owners in a defined area that is included along with their tax bill. The advantage of these districts is that the infrastructure is paid for over time and does not affect the affordability of the new construction.
With a reduction in impact fees enough to determine the viability of a new development, NAHB is encouraging HBAs to approach their local jurisdictions to get them to consider alternative methods of financing infrastructure.
To access NAHB resources on this issue, including the webinar series on infrastructure, NAHB members can go to www.nahb.org/infrastructurefinance.
To register for and attend the Sept. 24 webinar on "Understanding Infrastructure Finance Tools That Are Successful Alternatives to Impact Fees," click here.
For further information on infrastructure financing, e-mail Thais Austin at NAHB, or call her at 800-368-5242 x8343.