The cost of building a home has been increasing due to rising material costs and supply chain issues. And the costs will continue to rise in Lebanon, as the city will be increasing impact fees to developers building new housing in the city.
Lebanon City Council is poised to approve new ordinances May 10 that would increase impact fees, with those funds going toward parks and recreation, as well as transportation.
City Manager Scott Brunka said the city has been charging developers impact fees for the past eight years.
Impact fees are one-time payments used to construct system improvements needed to accommodate future development. The impact fee represents future development’s proportionate share of infrastructure costs.
City officials said impact fees may be used for infrastructure improvements or debt service for growth-related infrastructure. In contrast to general taxes, impact fees may not be used for operations, maintenance, replacement, or correcting existing deficiencies.
A study was recently completed by TischlerBise of Bethesda, Md., that determined an increase in impact fees was needed to ensure that new development is equitably contributing to the demands placed on park infrastructure and amenities as well as roadway capacity.
The proposed ordinances are updates to the city’s current impact fees that are paid to the city by the developer for each new residential building constructed and can only be used for the expansion of park and trail recreational facilities.
“Impact fees are a way to meet growth-related infrastructure needs,” Brunka said. “It requires new development to pay their proportionate share of capital costs for system improvements (transportation and parks). Impact fees cannot be used to support system maintenance and repair.”
He said the impact fee study quantifies the impact that new development has on transportation and park levels of service —what is needed to maintain current level with developments.
Brunka said the last time Lebanon reviewed its impact fees was about four years ago. He said it’s recommended that the city review its impact fees every three to five years.
Currently, the city charges impact fees for single-family dwellings of $1,361 for parks and recreation and $389 for transportation for a total of $1,750. The current impact fees for multi-family dwellings are $986 for parks and recreation and $260 for transportation for a total of $1,246.
Impact fees for parks and recreation are not charged for industrial, commercial or office development. However, transportation impact fees are charged per 1,000 square feet of $165 for industrial; $1,385 for commercial; and $477 for office development.
If council approves the proposed increased impact fees on May 10, the parks and recreation impact fees will rise to $2,045 for a single-family home; and $1,356 for new non single-family housing or new age-restricted housing in the city. Those fees would also increase again on Jan. 1, 2023 to $2,338 for new single-family housing;, and another increase on Jan. 1, 2024 to $2,630 for new single-family housing.
The new parks and recreation impact fees for new non single-family housing and new age-restricted housing will go up to $1,550 on Jan. 1, 2023; and $1,743 on Jan. 1, 2024.
The new transportation impact fees for a new single-family home will increase to $908; new non single-family home impact fees will increase to $649; and new age-restricted dwellings will go to $415.
The new transportation impact fees for non-residential development, per 1,000 square feet, will be $,1,197 for commercial development; $517 for office development; $227 for industrial; $1,077 for institutional; $124 per bed for assisted living; and $258 per room for lodging development.
City officials said no building permits will be issued until all transportation and parks and recreation impact fees are paid.