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M M effectively been spent with the City's current ongoing facility expansion program. Furthermore, the City's capital improvements plan for the 1993 to 1998 period identifies ;7,819,500 in anticipated expenditures to satisfy the expected capacity needs for future growth within its electric service area. As the City's electric impact fee funds have effectively been spent, the City must rely on other funding sources to complete future facility expansions. Since City Electric is an enterprise fund operation, it is also limited to using bond financing programs or additional rate charges to its existing customers to fund facility expansions. And again, observing the policy that growth must pay for itself, City Electric has focused on the use of bond financing to fund facility expansions. The City has pledged its anticipated impact fee revenues as the source of re -payment for bonds which were issued to fund facility expansions. By using bond financing, City electric charges its existing customers for operation, maintenance and capital replacement costs, while avoiding the need to charge its existing customers for facility expansion costs. Depending upon the location of a housing unit and the availability of facilities for the housing unit, a developer may be required to pay up to four separate impact fees (Transportation, Water, Sewer, Electric). These impact fee costs do affect the cost of housing, and it is the Affordable Housing Advisory Committee's task to consider the effects of these impact fees on affordable housing. ANALYSIS: Community growth requires the expansion of public facilities to meet the needs of that growth. The expansion of public facilities, however, requires funding through the government. Governments faced with needed facility expansions must choose how the expansions will be funded. Impact fees are one funding mechanism available for governments to use in funding facility expansions. As with any funding question, however, a government considering using impact fees to fund public facilities expansions must weigh the advantages and disadvantages of impact foes. Impact Fee Advantages: Impact fees provide substantial advantages for governments which must expand their public facilities. First, impact fees provide a dedicated, alternative funding source from the standard funding mechanisms which are available to government (e.g. property taxes, sales taxes). By using impact fees, government is able to reduce its dependence on these other funding mechanisms, and this reduced dependence may be crucial when the funding mechanism is not a stable income source (e.g. sales taxes). Additionally, impact fees allow governments to charge those creating the facility need for the cost of providing the facility; if no development occurs and no demand is created, an impact fee is not going to be paid. The policy of growth paying for itself is often preferred by government and residents, since existing residents must incur costs if new growth does not pay its way. Finally, since impact fees are assessed using standardized rates, the amount of an impact fee for a project or housing unit is firmly established, and the fee charged directly corresponds to the impact created. • Impact Fee Disadvantages: One disadvantage of impact fees is that the fees are considered regressive in that they are not related to the size or value of a development project. Small inexpensive projects are typically required to pay the same impact fees that larger more expensive projects are required to pay. An example is that a ;3,000 impact fee must be paid for a $60,,000 home and a $250,,000 home; the impact fee represents 5% of the less expensive unit's cost but only 1.28 21 MAY 189 1995 BOOK 95 PAGE 130