As Dunwoody continues to grow, especially in Perimeter Center, city officials again are set to consider implementing impact fees to cover costs of providing public services for new developments.
City Economic Development Director Michael Starling discussed impact fees with members of City Council during their retreat in February and the mayor and council members have asked to continue discussions in the near future.
“Impact fees have been discussed for many, many years,” Starling said recently. “We do plan to bring [the idea] back to council.”
Impact fees recently have taken a back seat to other methods of raising money for projects deemed ready to go. Efforts to lobby the General Assembly for approval to allow the council to consider raising its hotel/motel tax from 5 percent to 8 percent to pay for projects such as parks and trails in the Perimeter Center area took precedence early this year. The hotel/motel tax hike was approved by the Legislature and the city is considering whether to impose it.
Starling said adding impact fees on new development could help pay for such things as police protection and transportation improvements that the city would have to provide for new residents.
The massive new High Street development, for example, is expected to begin this year on about 36 acres at the intersection of Hammond Drive and Perimeter Parkway. It includes 3,000 residential units and is intended to be an “urban area” with easy access to the Dunwoody MARTA station.
Impact fees are calculated with formulas that can be complex, but they cannot be arbitrary and must be based on the city’s actual costs for public services and infrastructure. The council currently seeks to clear up confusion on what impact fees would exactly do. For example, if impact fees are in place and levied on the High Street development, they could be assessed only for those new 3,000-plus residents, Starling said.
“And we would have to determine what those impacts are,” Starling said. “I think that’s where the confusion and difficulty comes in.”
If the city were to approve charging impact fees on new development, fees assessed to the High Street development could possibly be used to pay for a park that would serve the new city residents, but the park does not have to be built on the High Street site, Starling said.
In 2011, the city conducted an in-depth study on impact fees as a potential revenue source for public facilities in the city, based on plans in place at the time. But the council decided not to implement them.
At that time, city staff determined impact fees could be used to fund 22 percent of the local capital costs in public facility categories of police, roads and parks from 2011 through 2030. Or, in other words, of the $29.1 million in local capital costs, impact fees could cover $6.4 million along with $2.1 million through taxes paid on new growth.
“If impact fees are adopted, the impact fee amount ultimately charged would represent a shifting of the burden to fund these capital projects from the tax base as a whole, to the new developments actually demanding the services being added through these projects,” according to the 2011 report that was also presented to the council in 2012.
Since 2011, though, a new Parks Master Plan and an update to the city’s comprehensive traffic plan are in the works. Any potential new impact fees would have to be assessed based on these new plans, Starling said.
In neighboring Sandy Springs, impact fees have been in place for a number of years. Last year, Sandy Springs City Council approved raising its impact fees to raise more than $300 million for parks, transportation and public safety by 2040.
The new Sandy Springs residential fees were boosted by more than 300 to 500 percent, up to $6,854 on houses and condos. The fee structure also includes exemptions, described as “affordable housing,” that are intended to encourage middle-income “workforce” housing and the demolition of older apartment complexes to replace them with ownership developments. Other fees apply to commercial, office and other types of development.
Concerns that impact fees may hurt development are an issue, Starling acknowledged.
“Obviously when you raise the cost of development, it doesn’t promote new development,” he said. “But some of it is dependent on what you are charging for. It’s dependent on the law that is put into place. There is complexity to this.”