Paying for new development: the urban structure program of the City of Lancaster.

• Author: Hill, Gary G.
• Position: Lancaster, CA - Includes related article on fiscal objectives of Lancaster's urban structure plan

A distance surcharge incorporated into the calculation of development impact fees creates economic incentives for developers to locate projects within the city's urban core.

Each year the Government Finance Officers Association bestows its prestigious Award for Excellence to recognize outstanding contributions in the field of government finance. The awards stress practical, documented work that offers leadership to the profession and promotes improved public finance. This article describes the 1996 winning entry in the policies and procedures subcategory of the financial management category.

For years, city governments throughout the United States and Canada, to some extent, have been the mediator between the pro-growth and the no-growth communities, charged with the no-win task of trying to make both sides happy. Opponents of growth argue that it results in a negative change in the quality of life for current residents: new people bring new and costly problems to an established community. Current residents wonder who will pay for new growth. Will increased costs be spread out, thus increasing the cost to current residents? On the other side are newcomers who do not want to provide all of the financing to make up for any deficiencies in current infrastructure. As the government tries to find a balance between these two opposing groups, the conflict usually escalates.

The City of Lancaster, California, has found a solution to this conflict in its urban structure program. The conflict-resolution process for the City of Lancaster required almost two years and hundreds of hours of meetings with citizens, homeowner associations, developers, city staff, and elected officials. Although reaching a consensus is not always easy, this process was very successful and culminated in a product that has the support of all sides.

The Challenge in Lancaster

The City of Lancaster, incorporated in 1977, is located in the Antelope Valley of Los Angeles County, approximately 60 miles north of metropolitan Los Angeles. In 1980, the city limits comprised approximately 37 square miles with a population of 47,882. During the 1980s, an intense period of building activity extended the urban areas of Lancaster to contain 94 square miles and 125,000 people.

This growth created the need for new and costly infrastructure expansions and increased levels of services. Moreover, several large projects approved for areas formerly restricted to rural use established a pattern of isolated development nodes located several miles from the city's urban core. The farther from the urban core new development locates, the greater the burden it places on the city's financial resources and ability to provide services; however, the fees Lancaster levied on new development were the same no matter where the development was located. Costs to the city for services that increase with distance from the urban core - like street and park maintenance and community safety - were not included in the fee structure at all. Since distance was not a factor in determining fees, developers located their projects away from the urban core where land costs were cheaper.

A secondary impact of this emerging urban sprawl land-use pattern was on city finances. The city imposed four impact fees on new development: streets, signalization, drainage/flood control, and park acquisition. These fees, however, were not sufficient to cover the full impact of new development upon the city budget, and the city faced an ever-widening fiscal deficit. It was therefore necessary for the city to develop a more equitable method of distributing the cost of providing expanded infrastructure and services to those who create the need for them.

Establishing Program Objectives

The city devised the urban structure program (USP) as a means of managing dispersed development and shifting the...