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Transportation Funding & Financing

Impact Fees

Impact fees are used by local governments to impose charges on new development to generate revenues for capital funding to pay for off-site public facilities necessitated by that new development.

Sample Legislation

The following sample impact fee legislation was prepared for NCHRP Project 2-14, Public/Private Partnerships for Financing Highway Improvements and is taken from NCHRP Program Report 307. Although it dates from 1986 (making some sections dated), this sample legislation will be helpful for municipalities considering implementing impact fees.

A Sample Impact Fee Act.pdf (23 KB) which would be enacted by a state government to grant municipal and county governments the authority to levy impact fees.

A Sample Impact Fee Ordinance.pdf (25 KB) which would be enacted by a local government to levy impact fees.

California

In California, government code section 66484.3 authorizes the formation of joint powers authorities by cities and county with territory along the right-of-way of a major highway improvement for the purposes of establishing a developer impact fee program to pay for the cost of the transportation improvement. This joint powers authorities may also be granted the power to levy tolls which can be used as security for bonds to fund the improvements. Developers obligated to pay the fees have formed Mello-Roos community facilities districts (govt. code sections 53311et seq.) which issue bonds secured by special taxes levied on property owners within a defined area. Developers have used a portion of the proceeds of these bonds to pay off their impact fee obligations early, thus receiving "credits" against fees due when building permits are pulled. The following sections of the California Streets and Highways code describe the use of Mello-Roos districts.

  1. STREETS AND HIGHWAYS CODE SECTION 3100-3101 : 3418 bytes.

  2. STREETS AND HIGHWAYS CODE SECTION 3120-3124 : 1860 bytes.

  3. STREETS AND HIGHWAYS CODE SECTION 3110-3117.5 : 23066 bytes.

Virginia

The Virginia Constitution allows the General Assembly to "authorize any county, city, town, or regional government to impose taxes or assessments upon abutting property owners for such local public improvements as may be designated by the General Assembly; however, such taxes or assessments shall not be in excess of the peculiar benefits resulting from the improvements to such abutting property owners." (VA Statute127). The Assembly, acting directly under that grant of power, allows cities, counties, and towns to assess levies on property in order to fund walkway, alley, sewer, and curb construction. The cities of Newport News, Norfolk, Richmond, and Virginia Beach are also authorized to impose assessments for the "initial improving and paving of an existing street" provided that 50 percent or more of the abutting property owners request the improvement.128 And, the General Assembly has granted to localities the power to use special assessments in order to finance inter alia, fire protection services, sanitary districts, drainage projects, and the addition of private roads into the state highway network.129 Virginia Statutory Law Virginia Transportation Service District Act.

More promising in the transportation context, however, are statutes that allow certain counties to create "transportation service districts" or "transportation improvement districts." The Virginia Transportation Service District Act, passed in 1987, allows certain counties (VA Statute130) to form special tax districts in order to raise revenue for transportation projects, including highways, mass transit systems, and related buildings, structures, and equipment. (VA Statute131). The different provisions of the Transportation Service District Act are provided in the following links.

15.2-4500 Short title
15.2-4501 Declaration of policy
15.2-4502 Definitions
15.2-4503 Conductors, etc., authorized to issue summons
15.2-4504 Procedure for creation of districts
15.2-4505 District a body corporate; name and style
15.2-4506 Creation of commission to control corporation
15.2-4507 Members of commission
15.2-4508 Officers of commission
15.2-4509 Bonds of members
15.2-4510 Compensation and expenses of members
15.2-4511 Meetings of commission
15.2-4512 Quorum and action by commission
15.2-4513 Funds of commission
15.2-4514 Accounts and records
15.2-4515 Powers and functions generally
15.2-4516 Regulation of fares, schedules, franchising agreements, etc.
15.2-4517 Protection of employees of public transportation systems
15.2-4518 Additional powers
15.2-4519 Authority to issue bonds and other obligations
15.2-4520 Judicial determination of validity of bonds
15.2-4521 Contracts and payment thereof
15.2-4522 Venue
15.2-4523 Acquisition of median strips for transit facilities in Interstate Highways
15.2-4524 Appropriations
15.2-4525 Powers granted are in addition to all other powers
15.2-4526 Liabilities of Commonwealth, counties and cities
15.2-4527 Planning process
15.2-4528 Procedures
15.2-4529 Procedure for enlargement
15.2-4530 Resolution or ordinance
15.2-4531 Financial obligations
15.2-4532 Public purpose; exemption from taxation
15.2-4533 Liability for torts
15.2-4534 Chapter liberally construed