There is a clear cost of growth in any community. A city’s infrastructure provides a given quality of life in a community, and growth can put strain on that infrastructure. Particularly as it relates to consumables like water and electricity, the City not only needs to provide a means for getting the commodity to a given development but also needs to provide the capacity to meet peak demands. In addition, stormwater runoff must be addressed and capacity provided in the system to avoid damage to others. Sewer lines must be of adequate size and capacity must be provided at the treatment plant to treat the wastewater. Street systems, including traffic signals and street capacity, must often be modified to address added vehicle miles traveled in a community resulting from new growth.
Given that the impacts are real and the costs can be quantified, different cities take different approaches to paying for the impacts of that growth. In some cities, the full cost of growth is born by the people and consumers already there. Utility rates and taxes are set at a level that covers the cost of growth. In other communities, the full cost of growth is covered by those creating the demand, and state law provides a mechanism called impact fees to collect funds to offset the City’s cost of accommodating growth. Some cities fall at neither end of the spectrum and assign some of the cost of growth to those already in the system and some of that cost to the developer creating the demand.
In Provo’s case, we have never assessed the full cost of growth to those creating the demand for growth in city systems, but we have determined as a matter of policy to assess most of that cost to those creating the demand.
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State law allows cities to impose impact fees on new development for water, wastewater, stormwater, parks, transportation, electrical services and public safety facilities and equipment.
In 2005, the City elected not to assess a fee for public safety facilities and equipment, and to not assess 100% of the anticipated cost of growth to developers. In fact, impact fees were actually phased in over three years, so the percentage of the cost of growth recouped was even less in the first two years.
New capital facilities plans for water, wastewater and transportation were completed in 2011 and the stormwater capital facilities plan and parks facilities plan are currently being completed.
Once all the studies are completed, the City will embark on a new review of impact fees to determine what approach the City should take with regard to the fees and what portion of the cost of growth should be assigned to those who create those costs and what portion should be assigned to those who are already here.