Developers in Newark may soon be required to chip in to help pay for their projects’ impact on the city.
After years of informally discussing the idea, city council directed staff to begin developing impact fees for development projects.
Developers already pay permit fees and are required to fund any direct expenses related to their projects, such as the cost of installing water pipes at the site. Impact fees, however, are intended to help pay for the cost of the project’s broader impact on the city’s infrastructure and services.
“An impact fee is essentially a community ‘buy-in’ fee for new residents and businesses. In order to build a new home or business, developers and builders are assessed a fee to add or expand the public capital facilities or services that their new homes and businesses will need,” Planning Director Mary Ellen Gray explained Monday.
Gray said city staffers have been discussing impact fees internally for several months and plan to hire a consultant to help finalize the details.
“Impact fees must have a rational nexus to the project whereby there must be a reasonable connection between the need for additional facilities and benefit received,” Gray said. “Also, impact fees must be based on a fair share formula whereby similar projects in similar locations should pay similar fees and must be assessed to uses in a proportionate or fair share manner relative to their demand for, or impact on public facilities.”
Council is expected to vote on an ordinance establishing the impact fees early next year.
The city will focus on water and sewer impact fees first. After that, it could develop impact fees for electric service, parks and recreation, fire service and police protection.
The fees will affect University of Delaware construction as well as private development, Public Works Director Tim Filasky said. He declined to estimate how much the fees might be but said they will likely be less than New Castle County charges.
Councilman Chris Hamilton noted that he and others have been calling for impact fees for several years.
“Sometimes the wheels turn slowly, but they get there eventually,” Hamilton said. “I appreciate this impact fee, because we do have people that have been here a long time. When we keep adding things, it puts stresses on our system, and those stresses need to be paid for. I think it’s fair, and I think it’s necessary.”
Councilman James Horning Jr. concurred.
“What we’re addressing here is what I hear from a lot of residents – that in terms of infrastructure, development comes in and takes advantage of what has been maintained for so long, but doesn’t really pay in,” Horning said.