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Consultant outlines annual impact-fee study and a 10-year "Schedule 2" rate to spread developer costs
Summary
Consultant Chris Thompson told the Payson City Council work session that annual impact-fee updates plus a 10-year incremental utility surcharge (a "Schedule 2" rate) can help the city collect the full allowable impact fees while reducing political and developer backlash.
Chris Thompson, a consultant and former public works director and city engineer, told the Payson City Council at a May 21 work session that Payson should consider two changes to how it charges for growth: (1) refresh the city’s impact-fee study every year and (2) adopt a ‘‘Schedule 2’’ start-up utility rate that places a modest surcharge on new accounts for a fixed period (he suggested 10 years).
Thompson said Utah has an existing housing shortfall and that periodic, large catch‑up increases in impact fees produce political backlash and legal scrutiny from builders. He described the impact‑fee cycle he’s observed in other cities: after several years of no update, an impact‑fee study often produces a large one‑time increase that alarms builders and leads to pushback from groups such as the Home Builders Association.
Thompson recommended annual updates so fee levels track costs and inflation more smoothly. He described the Schedule 2 rate as a way to collect the maximum lawful impact fee over time by adding a modest monthly surcharge to a utility base rate for the first decade after a home or building is connected. "It's not a rate increase for existing residents," Thompson said. "It's simply what the rate is for new accounts for the first 10 years." He added that billing implementations are straightforward because the surcharge attaches to the base utility account and is visible on monthly bills.
Council members asked operational questions and expressed general support for more frequent updates. One councilor asked whether 10 years is too long; another said the Home Builders Association has favored annual, small incremental changes rather than large, infrequent increases. Thompson said Spanish Fork had used annual adjustments and the Schedule 2 approach successfully and that larger industrial customers sometimes prefer a Schedule 2 approach to a large upfront impact fee because it spreads their initial cost.
No formal action was taken at the meeting. Staff said they will research Payson’s comparative impact-fee levels and return with options, including whether dedicated utility billing software changes or consultant updates are needed.
Ending: Council members and staff signaled interest in exploring annual updates and a Schedule 2 model but asked staff to provide comparisons with nearby cities and draft implementation options.
