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Impact Fees

Background

About Impact Fees

Impact fees are fees imposed on a developer by a municipality to support project funding to accommodate growth from the development. The fees pay for the portion of new capital improvements that are needed to service growth. State Statute 4354 Impact Fees (1987) authorizes municipalities to require construction of offsite capital improvements or the payment of impact fees instead.

Impact fees can be imposed either before or after completing the infrastructure improvement. They must be reasonably related to the development's share of the cost of infrastructure or, if the improvements were constructed prior to the development, the fee must be reasonably related to the portion or percentage of the infrastructure used by the development. Fees are designed to pay for capital improvements, not maintenance, operating costs or service delivery.

The impact fees may be designated for infrastructure facilities. Applicable facilities include:

• Wastewater collection and treatment facilities
• Municipal water facilities
• Solid waste facilities
• Public safety equipment and facilities
• Roads and traffic control devices
• Parks & other open space or recreational areas, and
• School facilities

Impact fee funds are segregated from general revenues and are refunded if they exceed the project cost or are not used. 

Scarborough's Use of Impact Fees

Scarborough began imposing impact fees on development in 1990 with traffic/roadway improvement fees that applied to the Payne Road corridor, which was part of a PACTS Regional approach to the corridor. Additional traffic impact fees have been added over the last 30 years.

The School Impact Fee was added in 2002. Many existing fees are outdated, or soon will be, as the improvements contemplated as the basis for the fee will be completed.

Existing Ordinances

  • Chapter 415 Impact Fee Ordinance (2002, 2020)
    • Chapter 1 - General Provisions
    • Chapter 2 - School Impact Fees
  • Chapter 415 A – Dunstan Corner Capital Improvement District (2006, 2011)
  • Chapter 415 B – Haigis Parkway / Route One Capital Improvement District (2011)
  • Chapter 410 Roadway Impact Fee Ordinance: Payne Road Area Capital Improvement District (1990, 2017)

Impact Fee Amendments

In 2023/2024, the Town Council began the process of reviewing amendments to current traffic impact fees. This is in line with their growth/development-related council goal to update impact fees. Their current work is to:

  • Review ordinance amendments to consolidate existing impact fees into one chapter
  • Create a new recreation impact fee
  • Repeal three Payne Road impact fees
  • Establish two new roadway impact fees with an effective date of July 1, 2024

Proposed Amendments

  • Chapter 415 – Impact Fee Ordinance
    • Section I - General Provisions - Combined from all
    • Section II – School Impact Fees
    • Section III – Recreation Impact Fees (New)
    • Section IV - Reserved for Open Space
    • Section V - Roadway Impact Fees –
      • General Roadway Impact Fee Standards – Consolidated
      • Dunstan Corner District (MOVED)
      • Haigis Parkway / Route One District (MOVED)
      • Payne Road Area District 5 (MOVED)
      • Payne Road / Ginn Road District (NEW)
      • Payne Road / Nonesuch River District (NEW)
  • Repeal Chapter 415 A – Dunstan Corner Capital Improvement District
  • Repeal Chapter 415 B – Haigis Parkway / Route One Capital Improvement District
  • Repeal Chapter 410 Roadway Impact Fee Ordinance: Payne Road Area Capital Improvement District (includes Area 1, 2, and 3)

NEW TRANPORTATION IMPACT FEE ANALYSIS

The draft ordinance will require new development to pay 50% of the overall design and construction costs associated with capacity improvements along two areas on the Payne Road corridor. The existing Traffic Impact Fee Ordinance does not require new development to pay towards the significant traffic that is anticipated to utilize the Maine Turnpike Exit 42 to travel north on Payne Road to Scarborough’s new developments. Improvements within Payne Road Districts 1, 2, 3 and 4 will soon be complete, and these Districts will be repealed. Impact fees from the development community will now shift to the next pinch points in our transportation network along this essential corridor.

Why the change?

Requiring a Traffic Impact Fee that is 50% of the estimated overall design and construction costs for the two new Payne Road Traffic Impact Fee Districts is based on the following factors:

1) It is anticipated that projects of this magnitude would require funding through a combination of Developer, Town, State, and Federal funding sources. Responsibility of the equitable share from each stakeholder would be based on the impacts that the development or other factors have on the districts.

2) The business community has voiced concerns that the Town should not only look to new development to fund the cost of services that benefit all residents or which have external factors of commuting thru-traffic on our local roadways.

3) Staff looked at initial cost estimates for necessary mitigation work associated with the Scarborough Downs development. The Maine Department of Transportation issued a Traffic Movement Permit outlining offsite projects to mitigate impacts from the approximately 3,000 trips generated by this new development. Analysis of the breakdown of the cost share for this project showed that the developer paid for 59% of the total project cost. The cost estimates for this work were developed in 2021 and totaled $14,000,000. Actual project costs have been significantly higher than the 2021 estimates, therefore the 59% cost share for the developer is considered extremely low. This analysis is considered conservative when predicting the cost of project design and construction.

Timeline

Updating impact fees is an ongoing, long term growth management strategy. The Town Council has set out to advance a few this year to start the process. The process began in 2023 and anticipated to take a year.

October 4, 2023: Town Council Workshop RE: Impact Fees (View Recording)

March 13, 2024: Ordinance Committee presentation

March 21, 2024: Scarborough Economic Development Corporation (SEDCO) presentation

March 26, 2024: Transportation Committee presentation

May 1, 2024: Town Council First Reading; Traffic Impact Fee presentation (View Recording)

May 15, 2024: Town Council Public Hearing

May 23, 2024: SEDCO Business Forum; Impact Fee presentation

June 5, 2025: Town Council Second Reading

Resources

Impact Fees Presentation - May 1, 2024 (PDF)