The difference between COA and DIF Projects

The City needs capital additions to its many infrastructures in order to continue to be able meet the service demand needs of new development without decreasing the level of service to the existing community. That is pretty much the rationale of calculating, adopting and imposing development Impact Fees (henceforth referred to as DIFs). But some very large infrastructure projects generated by new development are not included in the DIF calculation. Why would that be?

The simple answer is that these projects that are not included in a DIF calculation, generally called Condition of Approval (henceforth referred to as COAs) projects do not benefit the greater at-large City. The COAs are only required by and benefit that one private development. The best example of one (and I think you have all seen one) would be a mid-block traffic signal providing access in and out of a regional shopping center. But for that shopping center, that signal would probably not be needed and for that reason it is left out of the City-wide Circulation Development Impact Fee calculation. So, these projects are identified and specifically called-out as Conditions of Approval of the private development project that is generating 100% of the need for that public infrastructure improvement.

Development Impact Fee projects on the other hand, are those infrastructure that have wide-spread benefit, such as a single location fire station or a traffic signal at the intersection of two arterials that will promulgate the movement of traffic throughout the City. So probably, the traffic signal at a corner of the shopping center would be included because it is at the intersection of two arterial roadways but not the one that is mid-block. Projects that are rarely Conditions of Approval would be police and fire stations, city halls and city yards, and parks, community centers and libraries. They benefit the city at-large and meet cumulative service demands.

So, as a DIF consultant I need to work with staff and identify the difference between the two. Here are a few real-world examples:

● A developer constructed a helipad in a heavily wooded hilly area to allow for a secondary evacuation capability for homeowners should there be a fire. That is great planning, but the benefit is limited to that 500-acre development and not anyone else. Had it been included as a DIF project, all other remaining developments in the city would have had to pick up some of the tab for that facility. This is what we strive to prevent.

● Open space can also be contentious when the City has an Open Space Impact Fee. Many developers who have land that they simply cannot develop (slope or whatever reason), have requested a credit against the City’s Open Space Impact Fee and also want the City to accept that land. Unless the undevelopable parcels have been identified as open space the City desires to add to their inventory, I would suggest a very strong no to both. There is no need to accept the liability inherent in those parcels.

● A large residential development in a higher elevation of a city required a great deal of water pumping capability not required anywhere else in the city. Again, there was no need for a developer of land in the flatter area of the City to subsidize the development generating the need for the pumps. The same holds for unusual specifically related sewer or storm drainage projects. These should also be required as a COAs and not included in the DIF calculation.

● All streets (including curb, gutter, sidewalk, and street light improvements), storm, water and sewer pipes that are within the footprint of a residential development are referred to as “locals” and treated as COAs as those projects are intended to meet only the local needs of the homes within that private development. No other development within the City benefits from those local improvements so they should not be put in a position of having to assist that developer in paying for them. They benefit only that one development.

Often Conditions of Approval are not even predictable in a General Plan and are thus never identified in the DIF process. Again, as an example, that mid-block traffic signal required to get vehicles and pedestrians in and out of that large regional shopping center would not have been identified in either a General Plan or the DIF costing process until the developer made it known as part of an application to the City to construct that regional shopping center. It is only specific to that development proposal and is not identified until the developer’s proposal is made known.

So, to increase fairness to all developers of land within the city, limit your development impact fee projects to those that can be predicted (via General Plan or other land-use demand documents) and that serve the City at-large and are not attributed to any one single development project.