Sugar House projects may be eligible for impact fee funding

Sugar House, Utah - During the week of September 20th, the Salt Lake City division of Housing and Neighborhood Development (HAND) released a new impact fee draft plan for the rates of the fees and eligible projects they can go toward. Impact fees are charged to developers when they build new structures within a city to help mitigate the impact of that new growth on municipal services such as police and fire. 

According to HAND: “Impact fees are used by municipalities to maintain levels of service in areas experiencing additional demand due to development growth. The fees are governed by state statute and can only be spent in service areas on projects including public utilities, roadways, parks, and police and fire facilities.”

A map outlines the regions of the city where certain impact fees will be collected from any developers building there. Certain kinds of fees are collected for certain areas. The idea behind impact fees is that the city builds infrastructure such as large water tanks that are bigger than the community needs. They regard this as a sort of loan from the citizens as the cost is greater than what the city needs at the time. They collect impact fees from builders who bring new growth into the area to fill up that “excess utility” as a way to pay back the citizens.

According to the HAND representatives, “The city’s current Impact Fee Facilities Plan specifies particular areas in the city where impact fees can be collected and spent. The draft plan recommends fees be collected and spent citywide. The draft plan also adjusts the amount of fees collected from various types of development based on a review of historic impact and service use.”

Sugar House occupies an interesting spot as impact fees for the transportation section are not collected in Sugar House from the new developers. This makes impact fees potentially smaller when building in Sugar House versus other areas in Salt Lake City. But the large amount of growth can benefit the community with new funds for park renovations, improved streets, and expanded fire or police departments, but it is no guarantee that the fees collected from Sugar House developers will be spent in Sugar House. 

So while impact fees can be valuable to the community their exact effectiveness may differ from project to project or area to area.

Judi Short from the Sugar House Community Council said, “Impact fees are to be used to keep a current level of service for new growth to a city, not to repair deficiencies and to mitigate the impact of new development on public infrastructure. And it has to be used for projects in the adopted Impact Fees Facilities Plan (CIP 10-year Plan).”

In discussing the potential projects impact fees can be spent, she said, “As you can see as you read through the pages [of the draft], pretty soon the projects don’t get any funding for this year because the list is longer than available money.”

However she continued, “The good news is that we need a new Fire Station No. 3 for Sugar House, and that has been on the list for some years. Because of all the new tall buildings, we need a ladder truck, and a ladder truck won’t fit in the existing fire station. So a new station is eligible for impact fee funding because of this growth. It will pay for 33 percent of land acquisition and 33 percent of the construction.”

Short said that there is often a misunderstanding about impact fees and what can be done with them. For example, many think roads can be fixed, but that isn’t necessarily true. She said, “Every five years we are required to do a survey of the streets and determine what are existing conditions. If they have decided that all roads need to be at a “good” level of service, they can use the money for street improvements if it is not just the regular maintenance for that road. So impact fees can only pay for that cost that is related to growth.” That is the “excess capacity” of the infrastructure the city has already built.

Some additional projects in Sugar House that may be eligible for impact fee funds are the new dog park in Fairmont, the Salt Lake and Jordan Canal Shared Use Pathway, the restrooms at Fairmont, and new traffic signals. Short is also hopeful that Impact Fees can help pay for a ladder truck for Station No. 3 in the future.