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Author’s Note:

The results from the study, Cost of Infrastructure to Serve New Residential Development in Austin, Texas (Jan. 2011) are fairly typical of cities throughout the country. In Austin, each new single-family house generates public costs totaling $36,625 for the six infrastructure categories evaluated in the study (schools, roads, water, sewer, stormwater, and park facilities). The remaining six infrastructure categories were not included due to budget constraints, but may be evaluated at a later time.

The $36,625 is a net cost after crediting the development for all impact fees and future taxes it will contribute towards repaying bonds issued to finance the infrastructure. This cost will be paid by other taxpayers and not by the new development. At Austin’s current growth rate, new residential development will cost local taxpayers $122 million each year.

The figure below shows the cost breakdown for each infrastructure category.

The road system cost of $4,548 reported in this study is low due to the limitation of relying on available studies and data from local government. The local planning agency used a very low road cost estimate and did not include sufficient road projects to maintain service levels (congestion will double). If the City were to build adequate road capacity at current construction prices, the costs reported in this study would be more than $10,000 higher per new house.

This study shows that residential development can generate a sizable fiscal drain on local government. These findings help explain why cities and counties around the country are making greater use of development impact fees to help recover these capital costs and keep local taxes from increasing.

- Eben Fodor

Links to Cost of Infrastructure to Serve New Residential Development in Austin, Texas, January 2011, by Fodor & Associates:

 

 

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