New impact fees on real estate developments approved Oct. 18 by the Sandy Springs City Council are among the highest in northern metro Atlanta. The city says the fees could raise more than $300 million by 2040 for parks, transportation and public safety, but an organization of developers warns they could inhibit the city’s economic growth.
The new residential fees were boosted more than 300 to 500 percent, to up to $6,854 on houses and condos. The fee structure also includes exemptions, described as “affordable housing,” that are intended to encourage middle-income “workforce” housing and the demolition of older apartment complexes and replace them with ownership developments. Other fees apply to commercial, office and other types of development.
Mayor Rusty Paul said at the council meeting that “largely what we’re doing is rationalizing and modernizing” the impact fees, which had not been updated since 2008.
The Council for Quality Growth, a Sandy Springs-based developers’ organization, has “concern” about the amount of the impact fee increase, said James Touchton, the group’s policy and government affairs director. That concern is focused on the park-related impact fee increase, which formerly was $165 and applied only to new housing, but now is more than $4,500 on new housing.
“While we believe parks and recreation, as well as multi-use path systems, are highly beneficial to the quality of life in our communities, we have serious concerns the approval of a 2,600 percent increase in these impact fees by Sandy Springs potentially inhibits economic development activity in this thriving community,” Touchton said in an email.
Impact fees are intended to offset the increased costs the city pays to support new developments with services such as policing or infrastructure such as roads and sidewalks. In Sandy Springs, separate fees go to transportation, public safety and parks and recreation, with an amount that may vary depending on the development’s type and size.
According to a city presentation last year, Sandy Springs had some of the lowest impact fees among nearby cities. Under the previous fee rates, the highest total impact fee for a new residential unit in Sandy Springs was about $1,646. That was higher than Atlanta’s, which is about $1,500, but Milton and Roswell may charge over $4,000 and Alpharetta may charge nearly $6,500, according to the presentation.
The newly adopted Sandy Springs fees are among the highest in the region in many categories.
The City Council approved the new impact fee structure Oct. 18 without any presentation or discussion of their actual amounts. Asked later why the city chose to set the new fees at the high end, Assistant City Manager Jim Tolbert in a written statement described the process and purpose of impact fees rather than giving a specific reason. The rates will help to fund the city’s official list of eligible capital improvement projects, he said.
Impact fees are calculated with formulas that can be complex, but by law they cannot be arbitrary and must be based on the city’s actual costs for public services and infrastructure.
According to Bill Ross, an impact fee consultant hired by the city, the city could collect up $306 million under the new fee structure, could be applied to an estimated $700 million in various pending city projects. In some categories, it could include $120 million for parks and recreation, $50 million for paths and sidewalks, and $72 million for roads.
The new fee structure includes two exemption categories. One is for business-related projects that are also eligible for city tax incentives, which essentially mean job-creating developments. The other exemption category is “affordable housing,” which the council discussed briefly before its vote.
One of those exemptions applies to projects creating at least 150 new or replacement housing units and where at least 20 percent of the total units are priced to be affordable to households making up to 120 percent of the Sandy Springs annual median income. That median income is currently about $63,000, so that rate would mean housing for households making up to around $75,000. The median income would increase as more expensive housing is built in the rest of the development and around the city.
The other exemption applies to projects that replace at least 150 existing rental housing units with at least 150 new units and where at least 75 percent of the new units are for-sale, not rental, units.
Councilmember Gabriel Sterling called the affordable housing exemptions a “strong incentive” for developers to tear down the city’s older apartment complexes and replace them.