Traffic Impacts of Development

Traffic volumes have been growing in our area due to development, and it's not likely that the necessary road improvements will occur before the traffic problems get really bad. If the increase in traffic is the result of the development, why not get the developers to pay for some of the costs of needed road improvements? That sounds like a great way to get the burden off the taxpayers' backs. Can we do that? Yes and no. Yes, we can get the developers to pay for some of the costs of needed road improvements, but we probably cannot get them to pay for everything. In fact, Oakland's communities have been fairly successful at getting developers to pay for improvements to RCOC roads. Many of the gravel road paving projects in recent years have been paid for by developers. Here are three methods of collecting money from developers, the first two of which are currently available to cities, villages and townships.

Special Assessment Districts

A bounded area or district is identified and property owners within the district are assessed their share of the cost of road improvements on the basis of road frontage, acreage or some combination thereof. You may be familiar with this as being a method for getting subdivision streets paved. However, it can also be used at office and commercial locations.

Special Assessment District page

Local Development Finance Authorities (LDFA)

Once again, a district is identified in which development is anticipated. The concept here is to "capture" the increase in property tax revenues that results from new development within the district. The property tax level that came from the previously undeveloped land continues to flow to the community, school district and county, but the amount of new property tax revenue resulting from the new building on the land is captured for a limited number of years and is available for infrastructure improvements such as road improvements. Some local school districts have opposed this approach since they must wait to realize an increase in their revenue from the new development. Others have recognized the importance of planned development and timely infrastructure improvements and have worked with the local community in putting together this type of financing.

Development Impact Fees

Here an actual fee is charged to the developer to pay for road improvements needed to serve the traffic generated by the development. A traffic impact zone or district is identified around an area of expected development, and the type and cost of needed road improvements to serve the new development are determined. A fee is calculated proportional to the amount of traffic generated. Thus, a developer of a large complex would pay proportionally more than the developer of a smaller complex next door. The money CANNOT be used to correct existing deficiencies, so if the roads are already congested, the community must come up with funds from some other source to improve them to an acceptable level before charging the developers for even more improvements to serve new traffic. This method of financing is used extensively in states such as Florida, California and Colorado. It is not currently available here, since the state Legislature must first pass enabling legislation.

The Road Commission has attempted to get the legislation passed in the past. Could a community use a combination of two or more of the above methods? Possibly, so long as nobody is being asked to pay twice for the same improvements. Even if we were able to pull together all three, it may not provide us with a total solution to our growing road problems. Note that each method requires the creation of a defined area or district. What about that next major congested intersection just outside the district? Where will the funds come from for that? In the best case scenario, if all these methods were available, it is doubtful that there would be a lot of districts, with all of them overlapping each other. There would be gaps, and the roads in between would need to be improved also.

Roads in Oakland County brochure