Planning commission forwards Phase Two of Lexington's impact-fee update, including transportation component, to council

The Town of Lexington Planning Commission on April 22 voted unanimously to send Phase Two of the town's development impact fee update to the Lexington Town Council for consideration, moving the transportation component of the fee study forward after the completion of the town's Local Transportation Improvement Plan (LTIP) 2.0.

Consultant Matt Newcaster of City Explained, Inc., who presented the update to the commission, said the transportation analysis used an "improvements-driven" approach tied to the LTIP 2.0 and identified additional projects and costs since the 2019 study. "The cost per trip went from roughly the $80 range in 2019 up to about the $125 range for 2025," Newcaster said, and added that higher project lists and construction cost increases explain the rise.

Newcaster told commissioners that state law limits how impact fees may be used: "They need to be used to increase capacity of your system," he said, adding that the fees cannot be spent on operations, maintenance or replacement of existing facilities. He also highlighted improvements to the capital improvements plan (CIP) in the packet, including one-page project summaries and clearer identification of funding sources to help the public and staff understand each proposed project.

On policy choices, Newcaster said the draft ordinance currently applies a 0% discount rate, which "charges the maximum allowable" justified by the analysis, but that applying a nonzero discount rate remains a council policy decision. He also stressed the clear cutoff for which fee applies: building permits pulled before an ordinance's effective date would pay the old fees; permits pulled after the effective date would pay the new fees.

Commissioners asked how to explain impact fees to the public. In response, Newcaster said the fee applies to new development and certain newly built structures: "Impact fees are an additional fee on new development only. That helps offset the impacts of them coming into your community and creating new demand for services," he said. He clarified that ordinary resale of an existing house does not trigger an impact fee because such sales do not generate a building permit.

The commission's recommendation moves the update to council in May; staff noted the ordinance requires two readings in a public hearing and adoption is expected in June barring council delay. The commission also reviewed the required housing-affordability analysis and received staff confirmation that Phase One (parks and municipal facilities) had been adopted by council March 3, 2025. The motion to forward Phase Two passed by unanimous voice/hand vote.

The commission adjourned at the end of the meeting. Staff asked members of the public with follow-up questions to contact the municipal clerk and reminded commissioners of rules limiting outside communications about agenda items.