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B. The modification of impact fee requirements, including reduction or waiver of fees and alternative methods of fee payment for affordable housing. Impact fees and utility capacity charges are one time charges applied towards new construction to generate the revenues necessary to make capacity producing capital improvements. Overall, these impact fees and utility capacity charges increase the cost of housing. Legally, impact fees must be applied to all activities that create a demand for capital facilities. Consequently, impact fees cannot be waived or reduced without being subsidized from another revenue source for a justifiable reason. Consequently, there are methods of fee payment to assist income eligible persons with the cost of impact fees and /or utility capacity charges. Currently, Indian River County provides SHIP program loans and grants of up to $20,000.00 per unit to income eligible households for the cost of impact fees and utility capacity charges for new units. The county also provides SHIP loans and grants for existing units to connect to the county regional water and wastewater system. To obtain SHIP impact fee funds, applicants must execute loan or grant agreements with the county, indicating that they will comply with the county's Local Housing Assistance Program's requirements. Those loans or grants are limited to income eligible households in the Very low Income (VLI) (not to exceed 50% of the county's median income), Low Income (LI) (51-80% of county's median income), and moderate income (MI) (between 81-120% of the county's median income) categories. Besides providing impact fee loans and grants, the county also provides financing of water and sewer capacity charges for new units and existing units connecting to the county regional system. The following policies from the Housing Element of the Comprehensive Plan provide for financial assistance for payment of impact fees and connection charges for affordable housing units. POLICY 4.3: The county shall maintain its current policy of financing water and sewer capacity charges for newly constructed housing units. POLICY 4.4: The County shall maintain its Housing Trust Fund which provides below-market interest rate financing and/or grants for land acquisition, downpayment/closing cost loans, impact fee%apacity charges payment loans, and rehabilitation loans for affordable housing units in the county. The fund will also assist non-profit facilitators with pre -development expenses associated with very low, low, and moderate income housing development. Some disbursements from the Housing Trust Fund will be grants, but the majority of funds will be revolving loans, with borrowers paying back principal and applicable interest into the trust, therefore ensuring a permanent source of financing. ANALYSIS: Impact fees and utility capacity charges are needed to provide revenue for constructing capacity producing capital improvements necessary to accommodate growth. Overall, impact fee revenue partially funds construction of major roadways, libraries, schools, parks, correctional facilities, fire/ems facilities, law enforcement facilities, solid waste F:\Community Development\SHIP\AHAC\AHAC 2014\AHAC 2014 report.doc 7 52