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TischlerBise 4701 SANGAMORE ROAD I SUITE S240 I BETHESDA, MD 20816 Fiscal, Economic & Planning Consultants T: [PHONE REDACTED] I F: [PHONE REDACTED] I Website: tischlerbise.com FISCAL ANALYSIS I IMPACT FEES I REVENUE STRATEGIES DRAFT MEMORANDUM TO: Mike Kress, Missoula, Montana FROM: Dwayne Pierce Guthrie, AICP DATE: April 24, 2007 SUBJECT: Conversion of Impact Fees to Square Feet of Housing This memo documents the methodology for deriving residential impact fees based on the floor area of a single-family housing unit. Benefits of the proposed methodology are summarized below. 1. Progressive fee structure (i.e. smaller units pay less and larger units pay more). 2. More precise assessment of infrastructure demand using local demographic data. 3. Enhanced vertical equity (i.e. distributes burdens fairly across people with different abilities to pay). To derive impact fees by floor area of housing requires a linkage of demographic data from the U.S. Census Bureau and house size data from the Department of Revenue, with number of bedrooms as the common connection between the two databases. OPG staff provided City of Missoula data on average floor area of single family housing, by bedroom range. Based on the entire housing stock, 14,995 single-family housing units were identified using the Montana Department of Revenue CAMA data file. Average floor area results are shown below for single- family housing units (attached and detached). Multi-family units (apartments) were excluded from the analysis. Useable square footage represents all levels of the structure, including basements and finished attic space (11,535 housing units included basement area and 1,167 had finished attics). The average number of bedrooms fell at three. • Avg. potential useable square feet = 2,195 (all bedroom sizes together) • Avg. potential useable square feet 0-2 Bedrooms = 1,442 • Avg. potential useable square feet 3 Bedrooms = 2,265 • Avg. potential useable square feet 4+ Bedrooms = 2,988 ---PAGE BREAK--- Persons per Housing Unit As shown below, Missoula had 25,225 housing units in 2000. The weighted-average size in 2000 for all housing types was 2.13 persons per housing unit and 2.23 persons per household. According to the U.S. Census Bureau, a household is a housing unit that is occupied by year- round residents. In Missoula, the 2000 census indicates that 4.3% of residential units are vacant or seasonal housing. TischlerBise recommends that impact fees for residential development in Missoula be imposed according to the floor area of single-family housing units. Demand indicators, such as persons or vehicle trip ends by size of housing unit, are discussed further in the next section. To provide an indication of the demand units and impact fees for average size housing units, the impact fee report indicates typical fees for both single-family and all other housing types. Because single- family housing units are normally larger than all other housing types, they average 2.40 persons per housing unit (see the rows with yellow shading in the table below). All other housing types are normally smaller, averaging 1.68 persons per housing unit (see the rows with light gray shading in the table below). Population and Households by Units in Structure Units in Renter & Owner Housing Persons Per Vacancy Structure Persons Hsehlds PPH Units Housing Unit Rate 1-Detached 33,383 13,137 2.54 13,534 2.47 2.9% Mobile Homes 3,624 1,578 2.30 1,615 2.24 2.3% 1-Attached (Townhouse) 1,645 876 1.88 976 1.69 10.2% Two (Duplex) 3,617 1,698 2.13 1,739 2.08 2.4% 3 or 4 4,669 2,531 1.84 2,699 1.73 6.2% 5 to 9 2,413 1,321 1.83 1,379 1.75 4.2% 10 to 19 1,629 943 1.73 1,052 1.55 10.4% 20 to 49 952 708 1.34 756 1.26 6.3% 50 or more 1,765 1,223 1.44 1,317 1.34 7.1% Other (Boat, RV, etc.) 0 0 28 0.00 100.0% Total SF3 Sample Data 53,697 24,015 2.24 25,095 4.3% SF1 100-Percent Data 53,767 24,141 2.23 25,225 2.13 4.3% House Type Demographics Housing Persons Per Persons Hsehlds PPH Units Housing Unit Hsg Mix Single Family 38,652 15,591 2.48 16,125 2.40 64% All Other Housing Types 15,045 8,424 1.79 8,970 1.68 36% Group Quarters 3,286 Sample Difference 70 126 130 TOTAL 57,053 24,141 25,225 Source: U.S. Census Bureau, 2000 data. Demand Indicators by Size of Housing Unit Impact fees often use per capita standards and persons per housing unit or persons per household to derive proportionate-share fee amounts. When persons per housing unit are used in the fee calculations, infrastructure standards are derived using year-round population. When persons per 2 TischlerBise ---PAGE BREAK--- household are used in the fee calculations, the impact fee methodology assumes all housing units will be occupied, thus requiring seasonal or peak population to be used when deriving infrastructure standards. TischlerBise recommends persons per housing unit multipliers that vary by number of bedrooms and/or residential floor area. Number of persons by bedroom range may be determined from survey data provided by the U.S. Census Bureau. As shown in the map below, Missoula is in Public Use Microdata Area (PUMA) 00700 along with two other counties (Mineral and Ravalli). PUMAs are areas of roughly 100,000 persons for which the Census Bureau makes available a 5% sample of responses to the long-form census questionnaire. TischlerBise used this data to prepare persons per housing unit multipliers that vary by number of bedrooms. Because the number of persons increases with the number of bedrooms, this approach may be used to make impact fees more “progressive” with higher impact fees imposed on larger housing units and lower impact fees on smaller, more affordable housing. Map of PUMS Area for Demographic Analysis 3 TischlerBise ---PAGE BREAK--- The table below indicates persons per housing unit, by number of bedrooms, based on PUMS data for PUMA 00700 (three-county area including Missoula). To avoid sample size problems, TischlerBise aggregated bedroom ranges to derive demographic multipliers for small (2 or less bedrooms), medium (3 bedroom) and large (4 or more bedrooms) housing units. Persons 0-2 3 4+ TOTAL Single-Family Housing 28,295 47,044 35,433 110,772 Housing Units 0-2 3 4+ TOTAL Single-Family Housing 17,071 19,241 11,273 47,585 Persons Per Housing Unit 0-2 3 4+ Wt Avg Single-Family Housing 1.66 2.44 3.14 2.33 Source: Data for PUMA 00700 (includes SFD, SFA and MH) US Census Bureau 2000 Public Use Microdata 5% Sample. Unadjusted Persons Per Housing Unit by Bedrooms TischlerBise recommends adjusting the persons per housing unit data (shown above) to 2000 census data for the City of Missoula, which had an average of 2.13 persons per housing unit. The calibration multiples each persons per housing unit factor by the ratio of 2.13 divided by 2.33 (unadjusted weighted average shown above). The demographic multipliers shown in the table below will enable Missoula to adopt progressive impact fees by size of housing that are proportionate to the demand for infrastructure. 0-2 3 4+ Wt Avg Single-Family Housing 1.52 2.23 2.87 2.13 Source: Census 2000. Weighted average from SF1. Persons Per Housing Unit by Bedrooms City of Missoula, Montana Average Number of Persons by Square Feet of Housing Determining the average number of persons by square feet of single-family housing requires a combination of demographic data from the Census Bureau and house size data from the Department of Revenue, with number of bedrooms as the common connection between the two databases. In Missoula, the average size single-family housing unit with two or less bedrooms has 1,442 square feet of floor area. The average size of a three bedroom single-family unit is 2,265 square feet of floor area. Single-family housing units with four or more bedrooms average 2,988 square feet of floor area. Average floor area and number of persons by bedroom range are plotted on the chart below, with a logarithmic trend line derived from the three actual averages in the City of Missoula. Using the trend line formula shown in the chart, TischlerBise derived the estimated average number of persons by size of single-family housing, using 100 square feet intervals. For the purposed of impact fees in the City of Missoula, TischlerBise recommends a 4 TischlerBise ---PAGE BREAK--- minimum fee based on a unit size of 1,200 square feet and a maximum fee based on a unit size of 3,200 square feet. For single-family residential units smaller than 1,200 square feet, impact fee will be based on an average of 1.15 persons per housing unit. For single-family units larger than 3,200 square feet, impact fees will be based on an average of 2.94 persons per housing unit. Persons by Floor Area City of Missoula, Montana of Single-Family Housing Bedrooms Square Feet Persons Square Feet Persons 2 or less 1,442 1.52 1,200 1.15 3 bedrooms 2,265 2.23 1,300 1.30 4 or more 2,988 2.87 1,400 1.43 1,500 1.56 1,600 1.68 1,700 1.79 1,800 1.89 1,900 1.99 2,000 2.09 2,100 2.18 2,200 2.26 2,300 2.34 2,400 2.42 2,500 2.49 2,600 2.56 2,700 2.63 2,800 2.70 2,900 2.76 3,000 2.83 3,100 2.89 3,200 2.94 Estimated Actual Averages Persons per Housing Unit y = 1.8257Ln(x) - 11.791 R2 = 0.9885 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Square Feet Persons 5 TischlerBise ---PAGE BREAK--- Trip Generation by Size of Housing In Missoula, the recommended road impact fees are based on average weekday vehicle trip ends. Trip generation rates are from the reference book Trip Generation published by the Institute of Transportation Engineers (ITE, 2003). ITE publishes formulas for deriving trip generation rates based on the number of persons and vehicles available in a residential development. Using year 2000 PUMS data, TischlerBise derived average persons and vehicles available by number of bedrooms, as shown in the following table. Trip Generation Rates by Number of Bedrooms Bedrooms Persons Trip Vehicles Trip Average Recommended Ends Ends Trip Ends Trip Ends Rates per Housing Unit by Bedroom Range 0-2 1.52 6.69 1.79 10.86 8.78 7.46 3 2.23 9.49 2.15 13.04 11.26 9.57 4+ 2.87 11.93 2.51 15.17 13.55 11.52 Wt Avg 2.13 9.10 1.53 9.31 9.20 7.82 Persons and vehicles available per housing unit, by bedroom range, are from Census 2000 Public Use Microdata Sample, 5% data for Montana PUMA 00700. Vehicle trips ends based on number of persons [ITE, 2003, page 278, fitted curve equation is EXP(0.91*LN(persons)+1.52), r-squared=0.94]. Vehicle trip ends based on vehicles available [ITE, 2003, page 287, fitted curve equation is EXP(0.99*LN(vehicles)+1.81), r-squared=0.96]. Recommended trip ends are scaled down to make the average trip ends for a three bedroom housing unit match the average trip generation rate for a single-family detached unit (ITE, 2003, page 269). To derive number of vehicle trip ends by square feet of housing TischlerBise combined demographic data from the Census Bureau and house size data from the Department of Revenue that was summarized by OPG staff. The number of bedrooms per housing unit was the common connection between the two databases. In Missoula, the average size housing unit with two or less bedrooms has 1,442 square feet of floor area. The average size of a three bedroom unit is 2,265 square feet of floor area. Single-family housing units with four or more bedrooms average 2,988 square feet of floor area. 6 TischlerBise ---PAGE BREAK--- Average floor area and number of trip ends by bedroom range are plotted in the chart below, with a logarithmic trend line derived from the three actual averages in the City of Missoula. TischlerBise derived the estimated average number of trip ends and preliminary road impact fees by size of housing, using 100 square feet intervals. The input variables used to derive the road fee are from the draft report dated 3/8/07. For single-family housing in the City of Missoula, TischlerBise recommends a minimum impact fee based on a unit size of 1,200 square feet and a maximum impact fee based on a unit size of 3,200 square feet. For single-family residential units smaller than 1,200 square feet, the road impact fee will be based on an average of 6.35 vehicle trip ends per housing unit on an average weekday. For single-family units larger than 3,200 square feet, the road impact fees will be based on an average of 11.73 vehicle trip ends per housing unit on an average weekday. Missoula, Montana Bedrooms Square Feet Trip Ends Square Feet Trip Ends Road Fee 1,200 6.35 $1,643 two or less 1,442 7.46 1,300 6.79 $1,757 three 2,265 9.57 1,400 7.20 $1,862 four or more 2,988 11.52 1,500 7.58 $1,960 1,600 7.93 $2,052 1,700 8.26 $2,138 1,800 8.58 $2,219 1,900 8.87 $2,296 2,000 9.15 $2,369 2,100 9.42 $2,438 2,200 9.68 $2,504 2,300 9.92 $2,567 2,400 10.15 $2,628 2,500 10.38 $2,686 2,600 10.59 $2,741 2,700 10.80 $2,795 2,800 11.00 $2,846 2,900 11.19 $2,896 3,000 11.38 $2,944 3,100 11.56 $2,991 3,200 11.73 $3,036 Actual Averages Average Weekday Vehicle Trip Ends per Housing Unit y = 5.4852Ln(x) - 32.539 R2 = 0.9869 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Square Feet Trip Ends 7 TischlerBise