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Impact Fee Programs and Land Secured Financing Districts

Impact Fee Programs and Land Secured Financing Districts. 2007 National Impact Fee Roundtable Portland, OR Presented by EPS, Sacramento County, & River Rock Development Company. Introduction/Overview.

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Impact Fee Programs and Land Secured Financing Districts

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  1. Impact Fee Programs and Land Secured Financing Districts 2007 National Impact Fee RoundtablePortland, ORPresented by EPS, Sacramento County, & River Rock Development Company

  2. Introduction/Overview • Objective = Describe issues, policies, and mechanics surrounding the overlap of impact fee programs and land secured financing mechanisms. • Participant Introductions and Roles • Order of the Discussion/Presentation • Describe Baseline Assumptions for Discussion • Sacramento County Experience • A Developer’s Perspective • Lessons Learned

  3. Baseline Assumptions • $30.0 Million Freeway Interchange • Fee Program Funding for Interchange • Two developers – Dev. A and Dev. B • Public Agency has experience with fee credits and land secured financing • Proceeds from Land Secured Financing District will fund Impact Fee-funded Interchange

  4. Scenario A Fee program funds interchange construction with cash payments. Scenario B Developer A advance funds the $30m interchange and is reimbursed through fee credits & cash reimbursement from the fee program.

  5. Scenario C Developer A advance funds the $30 million Interchange and is reimbursed through a land secured financing district.

  6. Sacramento County Story Case Study as an Example of the Issue

  7. Request for Consideration • Developers from two projects made request • Initial reaction – No! • Fundamental Question • “Should Public Agencies allow for facilities to be funded by both programs?”

  8. Background • County Board is pro-development • Late 90’s changing environment with Annexations and Incorporations • County’s experience with CFDs mostly with single owner large developments • County’s experience with fee programs mostly large areas with many owners • Evolution of Specific Plans

  9. Convened team of interested and experienced parties • County Infrastructure Finance Section • County Counsel • Developer • Developer’s Attorney • County’s Financial Consultant (Special Tax and Impact Fee Program Expertise) • Developer’s Financial Consultant (Special Tax and Impact Fee Program Expertise)

  10. Issues Addressed • Should Fee Program Credits be allowed for facilities that are advanced funded with CFD proceeds? • Should Future Reimbursements from Fee Programs be allowed for facilities advanced funded by a CFD? • Economic Impact of taxes and fees on development projects – • Does a development fee or special tax affect the value of a property? • Does this depend on circumstances such as amount of tax and the economy? • To what extent is there a deduct on the value of a property for the present value of a tax stream or the amount of an impact fee?

  11. Issues Addressed (continued) • Public Policy Issues • Why would you want to do this? • Provides Assistance to Developers • Supports Aggressive Conditioning • Supports the Specific Planning Approach • Leads to facilities in the ground earlier • Policies should be clear to developers and the public

  12. Implementation Example • (I) CFD Acquisition Agreement – Provides for the acquisition of facilities constructed by developers • (II) Fee Program Credit Agreement for Advanced Funding of the Facilities - Authorizes credits against fees for participation in CFD that advanced funded facilities • (III) Fee Program Reimbursement Agreement - Agreement authorizes reimbursement for amount over and above the amount credited under Agreement II

  13. County’s Conclusions • Important to Address up front so everyone understands the policies and rules • Good to have staff involved in the administration of both programs • Flexibility to Developer • Still encourage not to include in both programs. CFDs should first be used for facilities not funded by fee program • Important to have a clear system where specific agreements authorize the credits and reimbursements and that the credits/reimbursements be tracked and tied back to the agreements • Future reimbursements should go to the CFD if advanced funded by the CFD

  14. Scenario C – County Implementation Developer A advance funds the $30 million Interchange and is reimbursed through a land secured financing district and fee program reimbursements.

  15. A Developer’s Perspective Additional Views on the Issues

  16. Developer Cash Flows for Interchange Cost Developer A $30m CFD Special Tax Lien $30m Pay Contractor to build interchange $30m CFD Bond Proceeds Reimbursement $15m Reimbursement from Interchange Fee Program from Developer B fees. $15m Net amount paid for Interchange Developer B $15m Pay Interchange fees at Building Permit.

  17. Cash Flow Analysis

  18. Lessons Learned • County perspective • Developer’s perspective • Recommendations for Further Research • Market effect of special tax lien on property valuation • Review of other jurisdiction’s policies (uniformity ?)

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