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Case Study
Step Five - Funding  

School district K-12 enrollment:  ~16,000 at the time (now over 60,000)

Setting: Large metro area suburb with rapid (10% –17%) growth annually

Characteristics: Rapid growth rate; tax base was grossly inadequate and lagging (two years to get new properties fully on the tax rolls); relatively small existing housing base with large build out potential resulting in the need for many more schools.

My personal impact fee experience is based upon being Douglas County School District’s planner during a period of rapid (percentage) growth with a weak and severely lagging tax base. Because I had experience with other infrastructure impact fees prior to working for the district, I was assigned the responsibility to develop an impact fee methodology for schools in a state (Colorado) with unclear statutory authority. It was well known that the school district itself did not have any authority to assess impact fees. Thus, the district had to rely on the county’s (or town’s) land use authority and cooperation.

Negotiations were extensive but an agreement was reached that allowed the district to pursue impact fees on new housing. I researched several different sources for specific methodologies to assist with determining the best approach for our situation. A combination of approaches from both Florida and Maryland seemed to be the best fit in that they satisfied the guidelines expressed in the previous paragraph and the premise for the fees were very similar.

Another key component of the process for determining the impact fees was discussions with the local home builders’ association and key developers. Incorporating this dialog allowed us to discover certain key issues with which they were concerned and that we could address. One of these primary elements was when the fee was assessed, which could range from early in the planning process to certificate of occupancy issuance. While we didn’t gain their support for the impact fee, the dialog created an understanding within most of the home building community that the district could not provide an adequate educational opportunity for all students with the existing financial constraints. (The phrase in bold type became a key consideration for the Supreme Court justices in the ensuing litigation.)

As expected, the methodology was challenged along with the County’s legal authority to assess the fee on behalf of the school district. Long story short, the legal proceeding excluded the impact fee methodology challenge. Impact fee case studies were clear that an impact fee does not have to be precise or exact to be valid; the primary guideline is that it has to be reasonable, which provides a fair amount of flexibility and latitude. The methodology developed satisfied those conditions.

Bottom line: Considerable caution is advised when generating school impact fee methodologies. However, be comforted that there is a good history of these and other infrastructure fees that set the precedent for reasonable and rational methodologies that can be followed. Additionally, conducting a strategic process to develop the methodology that includes gaining the input of affected parties is also important for providing insights about what might be accepted and what would not be well received. The response we received from the home builders’ association, while not specifically stated, ran along the lines of “not only no but hell no” and “over my dead body”. This should be expected because their livelihood would be compromised and I suspect I might do the same if I were in their shoes. Unfortunately, that kind of response does not solve the school district’s lack of funding. As you traverse this road understand that due diligence requires conducting a full exploration of options.