Some officials worry new fee could hamper growth in Cumberland County
Silver Spring Township, one of the commonwealth's fastest-growing municipalities, could be at risk of sliding back in the coming years.
Not only is land for new development getting harder to find, the Cumberland County township recently enacted a transportation impact fee on building permits that some municipal officials believe will slow the pace of construction.
The impact fee is an extra one-time cost developers pay to the municipality when building permits are issued. The fees are designed to fund projects — like adding turn lanes, widening roadways or building bypass roads — to handle traffic created by new developments.
Proponents say the fees ensure developers pay their “fair share” to keep roadways in good shape, while reducing the need to raise taxes to cover road construction.
But critics say the fees could prompt developers to pass the extra cost on to homeowners and businesses that will occupy developed lots, driving up land prices — if they go ahead with projects at all.
Indeed, developers may already be pumping the brakes on new projects in Silver Spring, said Joe Ricci, chairman of the township’s planning commission. He believes the impact fee, approved by the board of supervisors in December, is partially to blame for a lack of new development proposals so far this year.
“The planning commission agenda for our May meeting has no plans on it,” he said. “I can’t recall the last time that has happened.”
Despite the decline in new proposals, Silver Spring Township Manager Theresa Eberly cautioned that it’s too early to say what the new fee will mean for the township’s future.
Even as building permits dropped during the last recession, Silver Spring led Cumberland County for construction activity, due in part to its proximity to Harrisburg and the county seat in Carlisle, as well as access to Interstate 81.
Residents and businesses also have continued to flock to Silver Spring and neighboring Hampden Township because of relatively lower property taxes and the strong reputation of the Cumberland Valley School District.
But the impact fee, which is calculated based on the type and size of a building project, as well as the projected trips to and from the site during rush hour, could push developers away from Silver Spring and into nearby areas without impact fees.
Ricci grew up in neighboring Hampden Township and has lived in Silver Spring since 1993. Over the last two decades, he’s watched retail development sprawl up and down the Carlisle Pike, while large housing projects have popped up around it.
He is among those in the township who believe the impact fee, which applies only to newly proposed building projects, arrived too late for Silver Spring.
Ricci was part of the township advisory committee that studied the fee and recommended that the board of supervisors not approve it. But the board did so anyway by a 4-1 vote.
Silver Spring Township is one of only a few municipalities in Central Pennsylvania with a transportation impact fee. Others include Manheim Township in Lancaster County and York Township in York County. Some, such as Derry Township in Dauphin County, are studying a fee’s potential role in balancing future development with infrastructure needs.
Faster-growing municipalities often consider similar fees to bring in revenue to address traffic congestion, as they believe the situation may only get worse.
But the transportation impact fee, also called a traffic impact fee, has not been widely adopted in Pennsylvania in the nearly 30 years ago since legislation was enacted to allow it. Only about 60 municipalities across Pennsylvania had such a fee in 2007, according to a 2009 report from the state Department of Transportation, the last time a list was compiled as part of PennDOT’s handbook on the fee.
Most of the fees are levied in the Philadelphia and Pittsburgh areas.
PennDOT said it’s unclear how many municipalities may have added the fee over the last decade. Regional planners said they have not seen any uptick: Most municipalities have been reluctant to add new fees since the recession.
Plus, municipalities can spend upward of $100,000 to study and implement a fee program, one that could take time to produce meaningful revenue.
“It’s a cumbersome process to administer,” said Steve Deck, a Silver Spring resident and also executive director of the Tri-County Regional Planning Commission.
Before they levy the fee, municipalities look at future land-use assumptions and related capital improvement projects to calculate a per-trip amount. Every municipality has a different per-trip fee; some create separate rates for different sections of the municipality.
The fee amount also depends on a property’s planned use and how much traffic it is expected to generate. For a new house, the fee is paid on one trip. But new hotels, retail stores, restaurants or warehouses might generate dozens of extra trips, resulting in impact fees that total tens or hundreds of thousands of dollars.
The impact fee for a specific property represents the per-trip number multiplied by the estimated trip count.
The money, however, comes in only as permits are issued, meaning it could take a while for municipalities to collect what they need.
The existing alternative is to negotiate with developers to secure upfront contributions toward improvement near proposed development sites.
“If I don’t have a fee, I can get money in a big lump sum at the outset of the project,” Ricci said. “And I can do the improvements before the impact of the development is ever realized.”
Silver Spring supervisor Carl Machamer, who voted for the impact fee, said he has heard that argument.
But, he said, “You can’t force developers to negotiate.”
The fee gives municipalities a long-term funding tool to ensure revenue for local infrastructure needs, he added.
“Maybe we are a little late, but we’re in it for the long term,” he said.
Jason Kratsas, director of engineering and environmental services for Cranberry Township in Butler County, agreed that impact fees create greater funding certainty for a municipality than do ad hoc negotiations with developers.
Cranberry Township, a suburban Pittsburgh community, was the first municipality in Pennsylvania to adopt the impact fee. It has been in place there since 1991.
Each year, dozens of new projects still come through Cranberry Township, Kratsas said, citing recent growth in restaurants, shops and hotels. Cranberry Township has about 31,000 residents and is projected to top out around 50,000, he said.
“Without that program and the improvements it has leveraged, our infrastructure would be so far behind,” he said.
But the hefty price tag, especially on commercial development, can lead investors to look at townships that don’t charge the extra fee.
Laura Martin, broker and owner of Latus Commercial Realty in Hampden Township, said she has had investors walk away from real estate deals, including land sales, because of the additional cost of building in Silver Spring. Those clients declined to be interviewed about their concerns.
Ricci said he’s not surprised and has heard some of the concerns. He believes investors who want to build residential subdivisions or commercial offices and warehouses in Cumberland Valley will still do so, but they may consider neighboring Monroe and Middlesex townships instead of Silver Spring.
Supervisor David Lenker II, who chairs the Silver Spring board of supervisors and cast the lone vote against the fee plan in December, said he remains skeptical and believes the decision will curb the township’s development over the long run.
“If this is a godsend, why aren’t there more (municipalities) doing it?” he asked.
Machamer conceded that higher costs may slow development in Silver Spring.
“I’m not sure that is a bad thing,” he said. “Maybe it’s better to slow down and get it right. There is still quite a bit of land available in the township.”
He believes developers will adjust and continue building.
Some Pennsylvania municipalities with an impact fee have made changes, including reducing the per-trip fees or excluding certain corridors from the fee, hoping to attract more development. Most existing programs also are updated every few years as improvement projects are completed and new ones added. Fees also can go up.
Jeff Geesaman, township manager in Washington Township, Franklin County, said officials there decided last year to remove the $2,714 per-trip fee on the Route 16 corridor through the municipality to encourage redevelopment.
The revenue from impact fees is often seen as a way to shift some of the burden away from existing property owners, who might otherwise face higher property taxes to pay for infrastructure improvements.
But for developers looking to breathe new life into older vacant properties, the higher building fees might make redevelopment too expensive, Geesaman said.
Development in the township has started to pick up again, he said, after coming to a crawl during the recession, which is when the township approved the impact fee. However, he doesn’t see building construction getting back to pre-recession levels.
Geesaman encourages municipalities that may now be considering the fee to take their time to study the issue and the potential consequences.
“I’m not sure knowing what we know today whether we would implement the impact fee again,” he said.
Kratsas, in Cranberry Township, believes in the long-term benefits of the fee.
“Administering is hard and it is a burden to make sure you are collecting the fees properly, spending them properly and updating the program,” he said. But, he added, “As the township develops out, it still generates dollars.”
Silver Spring, at a glance
Silver Spring Township is the biggest reason that Cumberland County has been the fastest-growing county in Pennsylvania this decade.
Township population: 16,954 as of 2016, up nearly 3,300 from 2010
Rank: No. 2 for population growth among Pennsylvania townships between 2010 and 2016
Building permits: 2,322 new residential permits between 2007 and 2017. Silver Spring accounted for one out of five building permits in Cumberland County over that span.
Housing market: As the housing market has grown over the last six years, Silver Spring has averaged nearly 250 building permits per year.
History: Silver Spring saw a wave of large housing developments proposed between 2005 and 2007, before the recession. The majority of the new homes built over the last decade were teed up during that time period.