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Testimony-Impact Fees

Impact Fees
Before the House Local Government Committee
Mr. Christopher Baj
Member, East Stroudsburg Area School Board
AUGUST 2, 2007

Good morning, my name is Christopher Baj and I am school director with the East Stroudsburg Area School District. I'd like to thank Chairmen Freeman and Saylor as well as our host, Representative Grucela, for conducting today's hearing on House Bill 72. PSBA and its members support the authorization for school districts to have the option to levy impact fees on development. Impact fees are not a new concept. Over 30 states allow local governments to use impact fees by municipalities. Now is the time to expand this option to school districts.

Growth is an issue that many of our school districts are facing today, including those districts in Franklin, Northampton, York and Monroe counties to name just a few. Growth has a very positive impact on school districts and their communities if it is well planned. Yet, rapidly increasing students enrollments have only exacerbated the funding inequities associated with Pennsylvania 's school funding system. Due to a 77% increase in student enrollment since 1992, my school district is expanding and renovating two of its six elementary schools, continuing renovation and expansion on one of our two high schools, preparing to construct a new elementary school and looking into the process of expanding an intermediate school and the other high school.

These construction projects are necessary for East Stroudsburg , so we can continue to make strides to improve student achievement. T he quality of school facilities has an impact on students' experiences and ultimately on their educational achievement. For example:

  • The cognitive requirements for learning and teaching are affected by the physical surroundings where they take place;
  • Overcrowded schools lead to higher absenteeism rates for both students and teachers and have detrimental effects on children' ability to learn and perform well;
  • Poor building conditions greatly increase the likelihood that teachers will leave their school; and
  • School quality has a direct and positive impact on residential property values. (1)

On top of ongoing construction, our tremendous growth in student enrollment has been accompanied by increases in students needing special education services. Since 1997, East Stroudsburg 's special education student population increased from 605 to 1,465, an increase of over 135%. Also since 1997, our Limited English Proficiency students increased from 50 to 272, an increased of over 540%. This has resulted in the need for my district to hire additional teachers and staff necessary to provide all students with sound educational programs. However, this has also proved costly and in order to keep personnel expenses down, we have increased class size at all levels and hired a minimal number of new staff members. All of these factors, combined with growth and other mandated expenses have forced my district to continually increase the local tax effort while the Commonwealth's share remains at 21%.

Educational impact fees are a responsible supplementary funding option for school districts. Existing property owners and businesses should not be asked to shoulder all of the financial burden of additional students. Rather, the responsibility should be shared with new residential development. New homes and subdivisions supply additional students, and should thus be asked to pay their share for building projects necessitated by their children. It is also important to note the importance of impact fees as a tool for encouraging efficient community growth. Educational impact fees may add to the price of new homes, but homebuyers also benefit from improved school facilities. Educational impact assessments, as outlined in House Bill 72, will enable school districts to plan much more efficiently for future growth.

PSBA believes it is necessary for education stakeholders, local communities and the General Assembly to find alternative revenue sources for growing school districts, just as House Bill 72 proposes. Educational impact fees are just one strategy to alleviate the burden of school property taxes in growing school districts. PSBA requests that the committee take up the legislation for consideration this fall, along with amendments incorporating PSBA recommendations that would improve the legislation for all growing school districts. While the monies provided to school districts through impact fees would certainly benefit districts and taxpayers, PSBA maintains that further improvements are necessary in order to clarify provisions of the legislation and broaden the bill's impact not only on new development, but also on real estate transfers and required road improvements. PSBA recommends that the committee consider the following recommendations for amendments to House Bill 72:

  1. Establish a board-approved supplemental realty transfer tax. Not all growing school districts are experiencing increased student enrollments due to new residential development. Some districts that are completely built out are still recognizing increased student growth due to young families revitalizing some of the older, traditional neighborhoods. One such example is York Suburban School District in York County. The superintendent of the district testified before the House Republican Policy Committee and reported that since the mid-1990's, his district's student enrollment increased by 40%, but the school district has no significant land for new residential development. Like all growing school districts, York Suburban had to undertake construction projects to accommodate this growth, however, an educational impact fee on residential development would not assist York Suburban's taxpayers in offsetting new enrollment-related expenses. Legislation addressing the financial burdens of growing school districts must account for the different causes of growth and afford districts the authority to implement a strategy, using impact fees and/or a supplemental realty transfer tax, so districts are not forced to turn to the property tax.
  2. Provide flexibility for impact fees with a maximum amount per residential dwelling. The impact of new residential development on school districts' expenses varies widely between districts and regions of the Commonwealth. The Municipalities Planning Code currently does not limit impact fee amounts, nor does it provide a cap for such impact fees. Districts should be authorized to quantify the reasonable impacts of proposed development on existing capital facilities and establish the impact fee or development charge at a level no greater than necessary to defray such impacts directly related to the proposed development. No impact fee should be imposed to remedy any deficiency in capital facilities that exists without regard to the proposed development and its impact on a school district.
  3. Require a capital facilities plan. Prior to a school district levying an impact fee, school districts should be required to adopt a capital facilities plan. A capital facilities plan would enable school districts to publicize building needs, so taxpayers would be aware of future financial realities associated with expanded development and increased student enrollments with or without impact fees. A capital facilities plan should include an analysis of the current capacity of existing structures, the current level of use of such facilities, and the number of additional or expanded facilities necessitated by development in the area.
  4. Address required road improvements. As a result of new school construction to house new students, many districts have been required to design, construct and finance off-site road improvement as a condition of approval for school construction projects by local municipalities. Section 503-A(b) of the Municipalities Planning Code expressly prohibits municipalities from requiring, as a condition of approval of construction projects, off-site improvements of "any nature whatsoever." (2) This language, however, has not halted local governments from placing conditions on school districts for road improvements and traffic signals/signs installation even though most school construction projects are ultimately necessitated by the residential developments approved by municipalities.
              The issue of required road improvements is not an isolated issue. PSBA has often heard from Pennsylvania 's growing school districts that required road improvements are increasingly common across the state and continue to increase school construction projects' bottom-line. PSBA recommends that the General Assembly expand the use of municipal transportation impact fees to include road improvements as a result of new school construction and/or renovations. This would relieve school districts officials of getting into the road construction business, afford municipalities an opportunity to raise the revenue needed to improve off-site roads around school district buildings, and ensure compliance with the Municipalities Planning Code.
  5. Clarify deduction provisions. House Bill 72 provides impact fee deduction opportunities for developers, however, the bill is not clear if such deductions are to be applied to a single residential dwelling or to the total impact fee paid by the developer. PSBA recommends that the committee clarify the sponsor's intention with regard to the deductions for National Energy Star ratings, open space preservation, school bus loading areas, stone and brick façade and porous materials used in sidewalks and driveways.
              In addition the definition of "porous materials" in section 502-B(d)(8) should not be left up to local school districts and municipalities to decide. For consistency purposes, PSBA recommends that the legislation be amended to require the Department of Environmental Protection (DEP) to establish a definition of the term, so developers have the same opportunity for the deduction across the Commonwealth.
  6. Broaden the use of impact for construction projects. House Bill 72 limits the use of dollars received from impact fees to new construction for additional classrooms, renovations to expand classrooms and additional personnel expenses due to increased enrollment. However, the specificity of the construction/renovation restriction does not recognize that districts often have to build larger cafeterias, gyms and auditoriums, add additional restrooms or simply widen hallways in order to provide efficient space for students. PSBA recommends that language restricting construction and renovations to classrooms be struck from House Bill 72 and replaced with, "school construction, school renovation, capital expenses, site acquisition, and debt reduction." All of these terms are related to school construction and renovation projects and would give districts enough flexibility to dedicate impact fee dollars toward construction projects where taxpayers could realize the most savings.

Pennsylvania will have to start making serious decisions to contend with development and its downstream consequences of overcrowded schools in our border counties. School districts are not against smart growth, but it must be smart. Population growth means that not only do local governments have to increase their spending in order to maintain the same level of services per resident, but school districts must assess whether appropriate renovations or construction of school buildings are warranted. Our taxpayers need an alternative from consistently increasing property taxes. Impact fees would not only help local school districts keep property taxes down, but they would also help protect the quality of education in growing districts. If educational quality suffers in growing school districts, so will the investments made by developers. Thank you for your consideration of PSBA's recommendations. I will be happy to answer any questions.

Growth and Disparity: A Decade of U.S. Public School Construction. Building Educational Success Together (BEST). October 2006. Page 6.

53 P.S. § 10-503-A.