While we recognize the value of a “fee-in-lieu-of” system for sparking growth in a community, the system as it currently works leaves towns – and ultimately taxpayers – holding the bag.
Here’s how the “fee-in-lieu-of” system works: Most towns have land development rules that require developers to build sidewalks or small open space areas within their project. But developers don’t want to add to the expense of their project by building sidewalks – or don’t want to lose a buildable lot because they set it aside as open space.
Towns will allow them to pay a fee instead. That fee is supposed to be equal to the cost of actually making the improvement. The town will set that money aside until it grows large enough to take on a more significant project somewhere within the town limits.
Developers, as Zebulon planner Julie Spriggs noted recently, almost always prefer to pay the fee instead of making the improvement.
But the problem comes when the town gets ready to build a park or construct a sidewalk several years later. Thanks to inflation, the money those developers paid several years earlier is no longer enough to do the same amount of work at present-day costs.
That means the towns get fewer sidewalks or parks. Or, if the town wants to get the same amount of work done, that cost is most likely borne by taxpayers and not the developers who have long since finished their work and moved on to some other project in some other town.
Both Wendell and Zebulon are currently considering fee-in-lieu of programs and they have offered them in the past as have most other towns we are familiar with. Eliminating the fee-in-lieu system would put Wendell and Zebulon at a competitive disadvantage when it comes to attracting new growth.
But we would encourage town leaders in both communities to reconsider the formula they use to give developers an out. It’s impossible to know just how inflation will change the cost of infrastucture years into the future.
But adding an inflation factor into the formula will make it more likely the towns could recoup more of the cost of this work and relieve taxpayers of the burden of paying for what developers should have done in the first place.