Chapter 3.1
Development Patterns and Infill

• ALL
• Remove Code Barriers
• Create Incentives
• Fill Regulatory Gaps

Cost of Services Studies for All Developments in Agricultural Areas

INTRODUCTION

The expansion of development into predominantly agricultural areas is often accompanied by unforeseen costs, including costs associated with “infrastructure construction and maintenance, special transit service for elderly or disabled persons, emergency services, schools and other civic facilities, and services for employees and residents of new development.”[1] Local governments looking for a method to understand these costs can require Cost of Service Studies (COSS) for all developments in agricultural areas and corresponding mitigation to ensure developers of large subdivisions or commercial developments account for their local impacts on agricultural land.[2] Typically used to assess the costs of providing electricity, the methodology of a COSS can be more broadly applied to assess the costs of other public services. Where necessary, local governments may also require the developer to mitigate some or all the associated costs.

A typical COSS analyzes the fiscal impact of a new development using four steps.[3] It begins by projecting the population increase associated with a development. Next, it converts the population increase into an estimate of the increased costs associated with increased public services based on regional market rates (including costs of “roads, schools, and emergency services”). Then, it projects potential tax and other revenues generated by the development. Finally, the COSS compares the projected costs and benefits (the associated revenues) tied to the development to determine whether a shortfall will exist and how to address that shortfall.[4]

In drafting COSS regulations, local governments can require developers to provide a more comprehensive analysis to capture the holistic costs of new developments. A more inclusive study may incorporate a variety of factors, including the impact the development will have on local ecosystems and traffic.[5] In conjunction with other study factors, local ordinances may also require an evaluation of the fiscal, social, and environmental impacts the additional infrastructure will have on the community.[6]

Another important factor for evaluating a new development is its socio-economic impact on the local community.[7] Local governments may require analysis of this impact through both quantitative and qualitative methods, “in terms of changes in community demographics, housing, employment and income, market effects, public services, and aesthetic qualities of the community.”[8] This can help a local government determine whether a new development will impact social equity issues, access to social services, and alter “overall social well-being.”[9]

New development in agricultural areas is often responsible for significant environmental costs to the community.[10] This includes “loss of open space, impacts on groundwater and surface water quantity and quality (e.g., drinking water supplies), changes in air quality, increases in impervious cover (e.g., paved roads, parking lots), alteration of wildlife habitat[,] and changes in landscape aesthetics.”[11] Communities should also recognize that developing in agricultural areas can reduce the amount of viable farmland and result in local food loss.[12] Consequently, environmental impacts are another important factor to include in a COSS. For more information about a specific variety of environmental impact analysis, see our brief on the Wetland Habitat Impact Analysis.

Once a party performs and evaluates a COSS, local governments may require the developer or party responsible for the development to mitigate costs to the extent costs exceed the benefits provided. Accordingly, local governments can require the inclusion of such mitigation measures in COSS ordinances.[13] Mitigation measures may include building certain infrastructure, including additional fire stations, off-site roads, or schools, or they can require the developer provide a revenue stream to pay for services.[14] In addition, local government can require a “development impact fee” that is applied directly to mitigation of the associated costs (for a brief specifically addressing open space and impact fees see our brief on Open Space Impact Fees).[15] The local planning committee can also require changes to the development plan where necessary to mitigate the costs beforehand, such as requiring certain site-design elements.[16] Other options include requirements to scale down the project or selecting an entirely new location.[17] Local governments can also require mitigation of costs related to new development by creating an Urban Service Area; these require developers to cover certain costs when they develop outside of a designated development zone. For more information about this type of ordinance, see our brief on Establishing Urban Service Areas.

Local governments have several additional options for implementation measures associated with COSS studies. They can require the developer to perform a COSS or to provide funds for an independent party to perform the study.[18] Several different options exist for who can perform a COSS, including requiring certified, independent professionals.[19] Local governments adopting this option may wish to include specific criteria necessary for any independent professional performing the COSS, including conflict of interest provisions. If a local government has the resources and repeated need to purchase the necessary software and to train staff, a local government can perform the COSS.[20] Another option is for the local government to partner with local colleges or universities with a strong economics department.[21]

EFFECTS

As many areas rapidly urbanize, the competition for land to develop residential, industrial, and commercial districts surrounding urban centers has intensified.[22] This includes less obvious competition “for land for golf courses, aggregate extraction, transportation corridors, service corridors, wetland complexes, and open space facilities.”[23] When development starts to encroach on traditionally agricultural areas, conflict starts to arise around the side-effects of urban life, including “[i]ncreased traffic, complaints about farm operations and the use of farm machinery, restrictions on when and how farmers can operate, and the closing of agricultural services.”[24] Development can also deplete available agricultural land and food production.[25] When development removes takes farmland “offline,” it removes the associated food production (or prevents potential food production). A loss of food supply then increases food demand and can cause detrimental setbacks in local food security.

Other dangers to rural communities accompanying the expansion of development include light pollution, which can effect certain agricultural operations, including greenhouses.[26] Higher traffic density associated with urbanization can make it difficult or even dangerous to transport large, slow moving agricultural equipment.[27] Some of that danger can be mitigated by construction of additional transportation corridors, which provide the added benefit of greater access to markets. However, conflicts with motorists can increase if the new roads are not specifically constructed to accommodate local agricultural traffic.[28] COSS can help agricultural communities take these impacts and others into account when considering new development.

Though it is a common perception that bringing urbanized development to an agricultural area will naturally boost the economy, this is often not the case. Many communities have conducted studies demonstrating that farm and forest land actually “require fewer community services and help maintain lower property taxes.”[29] This is because urbanized development greatly increases the demand for community services such as roads, sewers, schools, water, etc., while generally failing to make up these costs with increased property taxes.[30] It is important for local governments to understand the particularized impacts of a proposed development in their agricultural community in order to make the best informed choice and to require appropriate mitigation actions. COSS can help local governments obtain the necessary information.

EXAMPLES

Suffolk, VA

Suffolk, VA scatters several aspects of impact analysis and mitigation through their ordinances. All application for rezoning by a developer must be accompanied by a Fiscal Impact Study report which contains “a comparison of the public revenues anticipated to be generated by the development and the anticipated capital, operations, maintenance and replacement costs for public facilities needed to service the project at the adopted level of service standards.”[31] The standards for Fiscal Impact Studies, embedded in a separate section of the code, require developers to meet set standards for streets, drainage, encouragement of economic development, overcrowding of land, and the ensured continuance of adequate public facility services.[32] The code also sets forth the expectation that subdivisions contribute to the maintenance of the community through “requiring the developer to pay fees, furnish land or establish mitigation measures to ensure that the development provides its fair share of capital facilities needs generated by the development.”[33]

Additionally, part of the code requires an Environmental Site Assessment (ESA) for subdivision plans or site plats in certain circumstances where exposure to particular environmental dangers is possible.[34] The ESA report includes “recommendations to address any and all adverse environmental conditions of the property, including without limitation, contamination of the soil, surface water or groundwater.”[35] Specifically in Suffolk’s Chesapeake Bay Preservation Area, the code includes a provision to force developers to submit a comprehensive Water Quality Impact Assessment, which includes specifications for necessary developer mitigation.[36] Lastly, Suffolk’s ordinances require the implementation of a Traffic Impact Study for all proposed developments “to identify the impacts on capacity, level of service and safety which are likely to be created by a proposed development.”[37]

To view the provisions see Suffolk, VA, Unified Development Ordinance § B14 (current through 2019); Suffolk, VA, Unified Development Ordinance § 31-601; Suffolk, VA, Unified Development Ordinance § B-9(m); Suffolk, VA, Unified Development Ordinance § B-13; Suffolk, VA, Unified Development Ordinance § 31-503(k); Suffolk, VA, Unified Development Ordinance § B-21.

Weld County, CO

Weld County, CO recognizes that it will encounter significant growth over the next several decades, likely to require “expansion in roads, drainage infrastructure and County facilities if existing levels of service are to be maintained.”[38] It has determined[39] that revenues generated by this likely growth will be unable to cover the associated needed improvements or to sustain the necessary levels of service in the community.[40] Thus, the County requires developers to proportionately share in the projected costs through the imposition of impact fees.[41] The fee payment is due upon issuance of a building permit, and can be increased if a modification to the development and its subsequent impact occurs.[42]

Impact fees assigned to a developer correspond to the appropriate impact fee schedule amount previously determined through an independent Impact Fee Study by the County.[43] Alternatively, if a developer believes their impact will be less than assumed through the impact fee schedule, they may commission an Independent Fee Calculation Study.[44] The County uses the impact fees to mitigate the proportionate costs in the specific district the developer is to incur them (for a brief specifically addressing open space and impact fees see our brief on Open Space Impact Fees).[45]

To view the provisions see Weld County, CO, Charter and County Code ch. 20 (2016); Weld County, CO, Charter and County Code ch. 22.

ADDITIONAL EXAMPLES

Franklin County, NC, Code of Ordinances § 4-29(b) (2012) (requiring the County advisory board to review fiscal impact analyses and to require mitigation through potential alternatives to any development plan action negatively impacting agricultural activities).

Fort Collins, CO, Land Use Code § 3.4.1(D) (2007) (requiring potential developments to complete an “ecological characterization study” if within 500 feet of a natural habitat, and requiring mitigation through any measure necessary, including through buffer zones).

Ontario, OR, Planning and Zoning Development Standards §§ 10-12-4(d)&(e) (2009) (requiring developers to identify and mitigate the effects, including environmental, of their “direct traffic impacts”).

Seattle, WA, Municipal Code §§ 23.52.008(B)&(C) (2012) (requiring developers to submit an impact analysis regarding impacts on transportation, including increased volume and availability, as well as impacts on pedestrians and bicyclists, while also requiring mitigation).

Perry, GA, Code of Ordinances ch. 13 (2008) (regulating “the use and development of land so as to assure that new development bears a proportionate share of the cost of system improvements necessary to provide facilities and infrastructure needed to serve an increased population from new developments within the city and the surrounding areas,” by requiring mitigation through an impact fee; this fee is determined through an independent study).

Bunnell, FL, Code of Ordinances art. XIV (2008) (requiring mitigation by developers through “fire protection, parks and recreation facilities, law enforcement, and transportation impact fees . . . ”; this is determined by multiple impact studies commissioned by the City, but a developer can supplement this with their own independent study).

Fayette County, GA, Code of Ordinances art. XII (2001) (finding “ imposition of impact fees is the preferred method of regulating land development in order to assure that it bears a proportionate share of the cost of the new public facilities necessary to accommodate the new growth and development, and to promote and protect the public health, safety, and general welfare of the citizens of the county”).

ADDITIONAL RESOURCES

Mary M. Edwards, Community Guide to Development Impact Analysis, Wisconsin Land Use Research Program  (Mar., 2000), https://perma.cc/C77D-8AMW.

Larry Leistritz, Economic and Fiscal Impact Assessment, Taylor and Francis 305 (1994), https://perma.cc/ZB6T-MR39 (explaining multiple fiscal impact analysis assessment techniques and methodologies).

Zenia Kotval & John Mullin, Fiscal Impact Analysis: Methods, Cases, and Intellectual Debate, Lincoln Institute of Land Policy (2006), https://perma.cc/HFC9-24ZF (explaining multiple fiscal impact analysis assessment techniques and methodologies).