Looming Concurrency Issues in Northern Nevada
by Jess Traver, P.E, Director of Government Affairs

     On January 11, 2007, the Regional Planning Governing Board approved Concurrency Management Principles (the "Resolution").  The Resolution was motivated by the terms of the Settlement Agreement (Program of Annexation) entered into by the City of Reno, the City of Sparks, and Washoe County (Case CV02-03469 in the Second Judicial District Court of the State of Nevada), which states that the Cities and County “agree to establish concurrency standards that are not inconsistent for all three jurisdictions”.
   Concurrency is simply defined as a planning tool used to ensure that the public infrastructure needed to serve new development will be in place at the time impacts of new development are realized.  The funding mechanism for this effort can be accomplished in many ways but for this article, I will focus on exactions and impact fees.
   Exactions are defined in Black’s Law Dictionary as “The wrongful act of an officer in compelling payment of a fee…  See also Extortion.” Although we are not implying that such acts occur, the term is used by some jurisdictions in staff reports and presentations.  This process of funding is currently used to fund the bulk of the infrastructure needed for growth.  One example would be a requirement that before a subdivision map is approved, the developer must provide a fire engine or fire station.  There are many problems with this method as you can imagine.  The foremost issue is fairest in application.   
   Impact fees are allowed and defined in Nevada Revised Statue (NRS) 278B.  The law is clear:

• Impact fees shall be required solely based on the comprehensive facility plan (Capital Improvement Plan).  NRS defines exactly what the impacts fees can be utilized to purchase.  NRS has requirements in preparing a CIP and requires moneys collected to be used or refunded within a time frame.
• A new development's obligation to fund concurrent facilities shall be proportional to that new development's demand for such facilities.  The jurisdiction is required to prove that the “expense” equals the “impact”.
• Reimbursement programs (credits) will be established for any new development that provides facilities in excess of those required by that new development's demand for such facilities.

   Although NRS 278B is clear pertaining to overall principals it lacks some clarity on issues such as:

• Appropriate levels of service
• Specific levels of funding concurrency
• Phasing of infrastructure for concurrency
• Exactions issues
• Determination of facility deficiencies

   NRS deliberately leaves these issues open for resolution through the facility planning process which requires public hearings at many levels.

   The Builders Association of Northern Nevada is currently working with the City of Reno on the execution of their CIP and impact fee.  We have dissected the proposal and have many concerns.
   Impact fees can be a permissible and rational method of taxation.  We must keep in mind, impact fees are charges levied against new development in order to generate revenue to pay for capital improvements needed for new growth.  Such fees are, in effect, a hidden tax on the purchase of a new home.   As impact fees and other regulatory costs rise, families are priced out of the opportunity to own their own homes.  In a depressed economy, large upfront construction cost will possibly push many out of business and force development from the community.  Bottom line:  Bad timing for large fee increases.    
   The selection of the level of service for the elements (such as fire, police, parks) in the CIP is critical for determining the impact fee.  If the CIP represents a higher level of service, the more likely it is to create or enlarge existing deficiencies.  Existing deficiencies must be paid for through other means such as taxes.  If the jurisdiction creates different levels of service between new and existing development there are parity issues that need to be addressed.  The questions the Builders Association of Northern Nevada is asking is what monies have already been collected in the form of exactions, what are the existing deficiencies, and who is going to pay for them?
   Phasing infrastructure to meet the impacts of new development is a reality for the developer/builder.  Due to the unpredictability of development in an area it is difficult to detail phasing into the CIP.  The important alternative is private development agreements to allow a developer to move faster by constructing the facilities. NRS allows this agreement but requires the extra funding above impacts fees to be credited back to the developer.  Collecting on credits can be challenging.
  The City of Reno’s proposed concurrency plan requires impact fees concurrently with “exactions”.   The Builders Association of Northern Nevada will argue that the impact fees at issue violate proportionality when they are coupled with exactions.  The City cannot impose and collect a fire impact fee and then ask the developer to provide a fire engine.  The cost of the fire engine would need to be credited toward the impact fee.  NRS 278B is very clear that impact fees cannot be used to pay for equipment.

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(For more information on how to make a difference for your business and the industry, or for how other communities nationwide have come up with ways to jump start construction through a reduction of up-front fees and costs, contact Jess Traver, the Builders Association of Northern Nevada’s Government Affairs Director, at 775-329-4611 or email jesst@thebuilders.com)