City of Oak Creek

Common Council Report

Meeting Date:  June 20, 2006

Item No.:        

Recommendation:  This item is intended to stimulate discussion on the appropriate course of action for the City to take in response to the State’s adoption of Acts 203 and 407 regarding the use of impact fees.

Background: This item serves as a follow up to Resolution No. 10646, in which the Council discussed the extension of the time in which they are permitted to extend impact fees.  Even though, by virtue of the adoption of the resolution, the Council granted an additional three years to expend collected impact fees, it still does not address the issue of how to use those funds for their intended purpose within the statutory time limits.

In order to gain a better perspective on the issue, one should first consider how the City collects impact fees.  Tables 1 and 2 illustrate the types and amounts of impact fees currently collected by the City of Oak Creek for a single family home.  Exhibit “A” identifies the 28 neighborhoods identified within the City for the purpose of collecting neighborhood park impact fees.  The current fund balance for each neighborhood is also shown.

These fees were first authorized by the Common Council in January of 1996 (Ordinance 1827 – Exhibit “B”) and further revised in April of 2001 (Ordinance 2124 – Exhibit “C”).  These ordinances were based on a needs assessment that was done for each of the fees by the firm of Ruekert & Mielke.  Copies of those individual needs assessments are not included as part of this report, but are available for review if you are interested.  When these fees were first authorized, the Common Council established a period of 15 years in which to utilize the funds.  After the 15 years, individual property owners could request that the unspent funds be returned.

The recent legislation changes this timetable dramatically.  It now requires that these funds be utilized within seven years.  An additional three years can be added on provided that the municipality passes a resolution identifying that the new legislation creates a hardship.

Even with the three year extension, there is the real possibility that the funds collected more than ten years ago (seven by law + three by extension) will need to be returned under the new law.

It would be appropriate for the Council to begin the discussions on how to address this situation.  Staff is in the process of compiling a more detailed report on the various impact fee accounts, including the dates at which those fees were collected.  This will identify those areas where, in some cases, refunds may be due.  Alternatively, it will identify those areas where the Council will need to make decisions on whether to spend impact fee money, or risk losing it.

Here is a brief summary of some of the issues pertaining to the current fees being collected in the City of Oak Creek.

Police facilities – These impact fees are currently being used to retire the debt for the new police station.  There should be little impact from the new legislation at this time.

Fire facilities - These impact fees are currently being used to repay an advance from Economic Development Fund used for the fire station #3.  There should be little impact from the new legislation at this time.

Community Parks – There are plans to develop portions of the master plan for Abendschein Park that will utilize the impact fee money that has been collected.  While the new legislation will make it more difficult to do that (by limiting the type of recreational facilities the money can be used for) the City’s ability to use that money in a timely manner may not be a problem.

Library – The library is currently the focus of discussions currently taking place concurrent with the remainder of the City Hall complex.  While it is likely that additional capacity will be recommended at the library, it is uncertain whether this can be accomplished within the time restraints in the new legislation.

Parks Administration Building – Under the new legislation, it appears that the City can no longer collect impact fees for this facility.  It is unclear how this affects the funds that have already been collected.

Neighborhood Parks – Perhaps the biggest challenge to the City will be to determine the appropriate course of action for utilization of the neighborhood park fees.   You will recall that the initial needs assessment for the neighborhood park impact fee established 28 separate neighborhood districts for the collection of fees.  Monies collected in each neighborhood were to stay within that neighborhood to help finance the development of neighborhood parks to meet the needs of the additional growth.

The Council, working with the Parks and Recreation Commission is going to need to review each neighborhood on an individual basis to determine if and how the money is to be spent within the statutory time limits.  In some cases this may mean borrowing the money for these improvements, and then using the collected impact fees to pay for the debt service or advances, as is the case with the fire and police departments.

This entire issue of impact fees and the new legislation puts the City in a potentially awkward position in that it may require additional borrowing.  In some cases, the City may even need to reassess their current fees in light of the new legislation to see if they need to be increased to offset the additional costs incurred by having to borrow money, administer the new rules or develop the facilities within the seven year maximum.

In any case, and regardless of opinions on the timeliness or appropriateness of the actions taken by the State, this legislation needlessly places a financial and administrative burden on local governments which will need to be addressed quickly by the City.

Fiscal Impact: There is currently more than $3.2million in the various impact fee accounts.  Funds not used in accordance with the new state law will need to be returned with interest. Those funds amount to approximately $2.2 million in the neighborhood parks, parks administration building and library accounts.  Refunds would be issued according to the date the fee was received.

Prepared by: Doug Seymour, AICP Director of Community Development

Respectfully submitted, Patrick DeGrave City Administrator

Fiscal Review by:

Beverly A. Buretta, CMC

City Clerk

Table 1

Impact Fees Collected by the City of Oak Creek

Impact Fee	Year Authorized	area collected	amount	Balance        (3-31)
Police facilities	2001	citywide	$     624	$168,350.42
Fire facilities	1996	citywide	$     181	$65,650.12
Community Parks	1996	citywide	$     265	$777,028.28
Neighborhood Parks	1996	neighborhood	varies	$992,201.93
Parks Administration Building	2001	citywide	$     265	$478,188.32
Library	1996	citywide	$     223	$750,012.84
				$3,231,431.91

Table 2

City of Oak Creek

Neighborhood Park Impact Fees

Neighborhood Park Fees	Fee
Carollton Estates	$198
Carrollville	$795
Cedar Hills	$414
Chapel Hills	$764
Edgewood	$0
Forest Hills	$306
Greenwood	$209
Lakeview	$147
Manor Marquette	$0
Meadowview	$603
Northbranch	$0
Oak Creek Manor	$795
Oak Leaf	$0
Oak Park	$410
Oakview	$795
Oakwood Manor	$795
Prairie View	$529
Shepard Hills	$529
South Hills	$795
Willow Heights	$209
Woodknoll	$795
Woodridge	$795
Woodridge	$1,018

Note:  The City also collects a $50 per lot bikeway fee.