Cost Accounting in Local Government

Circulation Infrastructure Nexus

In my early years of calculating development impact fees (henceforth DIFs) I had to experiment with different nexus factors for distributing the costs of the various infrastructures.  Some of the earlier ones back in the early 90’s were a little rudimentary but were improved after countless hours on the internet.  Over the next year I am going to identify what we at RCS use now.   Seems like a bold move, I know. But if it appears that I am giving away the store, it wouldn’t be the first time RCS work has been used as “the sincerest form of flattery.” But you can’t copyright math, or for that matter even the nexus argument.  However, you can be better than your competitors in knowing what ideas work best and how and when to use them in DIF calculations and application.

The first infrastructure to be highlighted will be distributing the costs of circulation system improvement project costs necessary to accommodate the additional traffic generated by development.  Originally I came across a volume of Trip Generation, 6th Edition, compiled and published by the Institute of Transportation Engineers (henceforth ITE).  It consists of an amazing amount of empirical trip frequency data compiled by civil engineers from all over the country, and I just love empirical data.  It has trip-end data for peak traffic hours (the two daily work drive times) as well as trip-ends per day.  I prefer to use the latter.  It is important to note that most of your “trips” are actually a series of trip-ends, or stops throughout the day.  Most of us stack a number of trip-end errands on a single trip.  Think of a series of stops at dry cleaners, gas stations, hardware stores, medical appointments and perhaps even a stop at the grocery store before going home.

The ITE publishes daily trip-end information for single family detached housing, various density apartments, condominiums and townhouses, mobile homes in parks, commercial lodging, dormitory rooms and hundreds of business uses fully encompassing retail, office, service and industrial uses.  This data was comprehensive and incontrovertible, so it was perfect, for a while at least.

One day I met with a group of developers for a question/answer session about some recently updated DIFs at a client city.  Afterwards one developer stayed behind and asked if I would be willing to listen to his thoughts about the distribution of development-related costs to the City’s circulation system.  I was willing and open minded.  He started out by stating that his company developed all manner of housing, commercial centers, and industrial buildings, so he was not arguing on behalf of one kind of land-use. Because DIFs being a closed system, all the development costs just move from one land-use to another based upon the nexus used.  In other words, he had nothing to gain.  But increased fairness was afoot so he had my attention.  He indicated that while he supported use of the ITE for the trip-generation factor, he felt that frequency factor was only half of the circulation demand equation.  He then made a case that the circulation system DIF cost distribution would be greatly improved by incorporating a distance factor. Otherwise, he pointed out, high trip frequency but short trip distance developments would be bearing greater financial responsibility then perhaps a development with lower trip frequency but each of them involving great distances.  The former would include gas stations and banks, which you usually schedule into your day’s activities, while the latter could possibly be your place of work, because most of us drive farther to work than we drive for a tank of gas.

I had to agree with him that using trip frequency without trip distance was likely skewing the data in favor of some land-uses over others (residential housing benefitted most as it turned out).  So I searched and found a study that calculated distances for the same land-use trip-generation data that I already had.  A bonus was that it included pass-by and diverted trips.

A pass-by trip-end is a stop at a gas station as you go along on some other sort of errand, or to/from work.  You simply find a brand of gas you like and pull-in and pull out, but never once changed from your initial route.  That is why gas stations have one of the highest trip-end generating rates, but most of those trip-ends have a very limited, or non-existent, distance factor.

A diverted trip-end has some distance involved, by not necessarily a great deal.  An example would be that your favorite gas station is a block off of your normal trip to/from work, so you turn off of your normal route and go 200-300 yards further away to your favorite band of gas (or I suppose the cheapest) and then return to your normal route.

RCS created a nexus distribution that considers frequency of trips, distance of those trips, and includes adjustments for pass-by and diverted trips, thus increasing fairness to all land-uses.   To best use this nexus distribution, all I can suggest is that you get it from the original, RCS.  We understand it as we created it.

Well, you are all now seasoned traffic engineers (and they not engineers, as it turns out).  So I listened and got some useful advice that I truly believe improved the fairness, quality and accuracy of our circulation system DIF cost distribution work.  In many ways it is gratifying to see it in many other documents produced by other consultants.  So, thanks Leon, I appreciated your efforts, approach, and willingness to share your insight.  There are a lot of people that have benefitted from it.

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