User Fees and Other Revenue Sources
(from Maine Townsman, March 1989)
by Kenneth L. Roberts, Assistant Editor


Increasing or instituting fee schedules for a variety of municipal services is one tactic municipal officials are using to wage battle with the horde of federal funding cutbacks, state mandates, and local tax cappers advancing on their budgets.

One fee getting a real close look from a number of Maine communities is the impact fee, a fee assessed on developers for the specific impacts a development will have on a community's roads, sewers, landfill, public safety, etc.

But early this month, state Commissioner of the Department of Transportation Dana F. Connors, former city manager in Presque Isle and a past president of MMA, proposed a statewide highway impact fee on developers. The fee, to be dedicated solely for road improvements, is included in the proposed revisions to the state Department of Environmental Protection review procedure for construction projects.

In proposing the state advance on one of the few alternative revenue sources for taxtight municipalities, Connors explained to the media that it takes into account that roadways in one community are often impacted by development in another; that the town impacted but not benefited by the development currently must pay for road improvements on its own; and an impact fee collected and distributed by the state would eliminate that inequity.

Meanwhile, the Town of Brunswick remains the model Maine impact fee municipality. Anticipating growth, the town passed its first in-Maine comprehensive impact fee ordinance a couple of years ago while rewriting its zoning laws. The ordinance requires developers to provide the town Planning Board with detailed analyses of impacts on sewage, water, traffic, public safety, solid waste, storm water, recreation, and education.

Developers of both commercial and residential properties are required to analyze those impacts. Commercial developments additionally will include information on number of employees, hours of operation, type of waste to be discharged into the sewage system, and type and amount of solid waste generated.

Commercial builders of subdivision or condominium projects will pass the costs of the impact fees onto the homeowners.

Amy Naylor-Davis, the new Brunswick Planning Director, said the town realized a total of about $50,000 in impact fees last year from about 10 projects. She reported the fees were assessed principally in the areas of impact on roads, recreation and sewers. She said the town is still working some of the kinks out of the system, such as improved coordination of the flow of information through the planning board to the code enforcement office to the finance department.

The income from the impact fee should take a noticeable upward curve this year. The town is spending at least $200,000 to improve just two intersections in connection with the traffic impact of a new L. L .Bean facility.

Town Manager John Bibber says the intersection improvements will probably result in an impact fee assessment to the developer of that property of $40,000 to $50,000. He said other private developments will impact the roads, as will a municipal development.

Bibber said that Brunswick's broad impact fee ordinance has worked well in the town for nearly three years, requiring no amendments to its original wording. He said the town's administration is still attempting to get up to speed with the technical issues of impact assessments.

Bibber said that while the Brunswick experience with impact fees has been positive, he and the town council recognize the inherent policy conflict between impact fees and affordable housing.

It was on that basis, almost entirely, that a recent impact fee proposal by Portland City Councilor Pamela Plumb for Maine's largest city was abandoned just prior to council consideration. The impact fee proposal was calculated to increase the price of a single-family home by at least $3,600.

A town using the Brunswick ordinance model to develop its own system of impact fees is North Berwick. Selectman Gretchen Shufelt said the town embraced the principle and adopted an ordinance for impact fee assessments last year. But with legislative changes in the ground rules for local growth management, selectmen delayed implementing those fees.

Earlier this month at town meeting citizens were asked to accept $19,600 in a state grant and add $10,000 of town money to develop a new comprehensive plan by next year. The comprehensive plan would lay the groundwork for development of a capital improvement program, the impact fee ordinance with amendments, and some zoning changes. The whole package, hopefully, will be ready for next year's town meeting.

Mrs. Shufelt believes the town could use it. An average of 700 to 1,000 applications for housing construction have come before the planning board each of the last two years. The volunteer, unpaid planning board currently meets weekly to attempt to keep abreast of local growth and development activity. The board currently has applications for 800 houses before it.

Selectman Shufelt said the water district is now refusing additions to its system as it has reached capacity and has not received approval for fee increases to permit it to add capacity. The sanitary district is almost to the point of refusing add-ons, while the state Public Utilities Commission is resisting its request for a new $400 initial hookup fee to fund its expansion needs.

She said the town has just initiated fees for disposing of sheetrock and metal at the transfer station, and has just instituted a use permit fee for commercial haulers to the transfer station.

Selectman Shufelt said that from a recent MMA Legislative Policy Committee meeting to form a coalition on tax reform, North Berwick municipal officials got the idea for informally joining in a small regional group to attack common problems. From that idea has come one meeting of Lebanon, Berwick, South Berwick, and North Berwick officials to discuss solid waste, especially joining in recycling and sharing costs and revenues. Wells joined them in another meeting to discuss rescue, with a shared and formulated financing system to pay for it, together with the possibility of a similar arrangement for police and fire. Another meeting has raised the issue of sharing natural resources and the fees that would be assessed for their use. Planning, and zoning in particular, is being discussed so that at least abutting lands in separate towns are commonly zoned.

Developing an ordinance for impact. fees is exacting. The fee schedule must follow development of a satisfactory comprehensive plan together with a capital improvement plan and must be part of the total community planning package. The fees themselves must be strictly formulated, equitable and reasonable.

The City of South Portland adopted a sewer impact fee ordinance last November. In preparation for developing the fee the city hired a consultant to prepare a sewage master plan. The city then used the findings of the master plan to amend its comprehensive plan. With its comprehensive plan containing the details of its sewer master plan, the city is in a position to impose a sewer impact fee to help fund the projects contained in the master plan. One such project is separation - the city's old sewer system is 3/4 combined and the city is under the state DEP's gun to separate its system.

South Portland's sewer impact fee is based on projected sewer flow rates which are contained in a state document that projects flow rates for different types of building uses. When a person applies for a building permit, a sewer impact fee is assessed and must be paid at that time.

The city has not had sufficient experience with its sewer impact fee to have developed figures, but Assistant City Manager Jeffrey Jordan says the city is confident the fee will contribute its share to the overall funding plan to expand sewer capacity.

Jordan said that two years ago the city took a look at its entire fee structure and raised nearly every one of them. One new area the city has found since, however, is its landfill. A landfill area for white goods, building debris, etc., had been open just a couple of hours a day with little attention. It was decided to regulate and charge for use of the area. Fees such as $40 for a regular dump truck load, $600 for a 100 cubic yard rolloff truck load, or $2.50 for a yearly residential permit have been imposed. Those fees are being placed in a dedicated account which will be used to pay for the landfill's closure.

The Windham Town Council recently has been taking a close look at its fee schedules, comparing them with at least half-a-dozen area communities, and making some adjustments after years and years of the same charges.

For instance, the council jumped the special amusements fee from $10, plus the cost of advertising, to $75; increased the annual bottle club fee from $10 to $100; hiked the coin-operated amusement device license fee from $25 to $50; revised the movie theater license fee to $150 per screen; increased the street excavation permit fee from $10 to $100; and instituted a new off-premise catering license fee of $10 per event, per day.

At a meeting earlier this month the council was to consider hiking license fees for tow truck operators from $50 to $175, as well as adjusting the fee scale for use of the Community Center gymnasium.

In that respect, Brunswick's John Bibber also mentioned that his town is attempting to get its recreation programs on a self-sustaining basis through a fee structure. He said the town is approaching that goal with about $200,000 to $225,000 a year going through the recreation accounts.

Late last year the Windham Town Council also made some adjustments to its planning and growth-related fees, designed to get the planning department on a self-sustaining basis. That goal hasn't been reached in just these few months, but the adjusted fee structure will help the town attain its objective over the years.

Planning-related fees adjusted recently include establishing the subdivision review fee at $200 per lot (it previously had been $125 preliminary total subdivision fee, $150 total subdivision at final approval, plus $25 per lot for over four lots); increasing the site plan review fee to $500 for the first 2,000 sq. ft. and $100 for each additional sq. ft. (it was $150 total); and charging $250 for each request for a zoning change (there used to be no charge). The planning department's permit fees were all updated.

Additionally, the council adopted an impact fee ordinance for road construction and development of recreational space. No developments affecting either roads or recreation have come before the town since its enactment.

In Bangor, the city council has given final approval to the school committee's request for increases in the hot lunch programs. Meals were increased by a nickel, to 95 cents in the elementary schools, $1 in the middle schools, and $1.05 at the high school. The school committee had argued that the increase was necessary to prevent the costs of hot lunches being borne by the property taxpayers of Bangor, following continued decreases in the federal subsidy for the hot lunch program.

Bowdoinham is continuing its worthy and fruitful attempts to promote recycling. A special town meeting earlier this month was to vote on articles associated with expanding its recycling attempts as well as instituting a schedule of fees to help defray its costs. The fees were to include $1 for dumping a 30-gallon trash bag; $5 for a white goods item with a motor, $3 without; $1 for a tire, also for a battery; and $4 for non-burnable large pieces of furniture, $2 for small.

The town council in Freeport, aware and concerned with citizen unrest over increasing property taxes, instructed the town administration to look for new sources of revenue. Town Manager Dale Olmstead and his department heads came up with lists of areas where revenues could be increased or new revenues raised. They asked council members which should be considered for a serious look and the drafting of a new fee schedule. The council replied, "All of them." Freeport's council now is looking at a new fee for snow removal, another for sidewalk maintenance, and another for litter control, all in the Village area. Fees for the disposal of junk metals and white goods, for geneaology research, for liquor license advertisements, for fire department inspection of commercial properties (now done free), for a fire department inspection to obtain an occupancy permit (now done free), for a hazardous materials incident fee are all recommended. A short-term parking fee in the town's two parking lots in the Village area, increasing the victualers and shellfish license fees, as well as the long-term parking fees, doubling and tripling parking fines, from a minimum of $3 now to $10 and a maximum of $50 now to $100, and all fees, permits, applications and licenses with respect to planning and building and growth have been recommended for increase.

Olmstead said that following hearings on the fees, changes and alterations and deletions likely will be made. He said that if all the fees were to be put in place as recommended the town would realize about $100,000 in non-property tax revenues the first year.

In Bath the city council has been hearing information indicating that an increase in its ambulance fees might be in order. A workshop session of the council on a proposal to upgrade the rescue service brought out the information that Bath's $40 ambulance fee for residents and $50 for non-residents is far less than amounts charged in other Maine communities.

City Finance Director George Sargent had compiled a report which showed resident ambulance rides cost $55 in Topsham, $60 in Freeport, $75 in Brunswick, $151 in Lewiston, $135 in Waterville, $120 in Augusta, $110 in Bangor, and $100 in Portland.

In addition, Bath does not charge for use of special, expensive equipment often used in connection with ambulance calls. Sargent's report noted that, in contrast, fees for use of a defibrillator range from $20 to $87, and for oxygen from $6 to $25. Sargent's report noted that Bath is losing $63 on every trip the ambulance makes simply by failing to meet the $120 rate that is acceptable to Medicaid.