To: Board of County Commissioners
Through: Bryan Weimer, PWLF, Director, Public Works & Development
Prepared By:
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James Katzer, PE, Transportation Division Manager, Public Works & Development
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presenter
Presenter: James Katzer, PE, Transportation Division Manager, PWD; Bryan Weimer, PWLF, Director, Public Works & Development
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Subject:
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2:30 PM *C17-07, C22-15 I70/Monaghan (Airpark) Interchange Project Update and Impact Fee Proposal
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Purpose and Request:
recommended action
Staff will be providing the Board of County Commissioners (BOCC) with a project update for the I-70/Monaghan (Airpark) Interchange and discuss the funding of the interchange improvements. Staff is seeking:
1. Support from the BOCC on pursuing this Impact Fee proposal for the construction of the Phase 1 of the ultimate improvements at the I-70/ Monaghan (Airpark) interchange.
2. BOCC input on implementation of this funding model for improvements to the I-70/ Monaghan (Airpark) interchange.
Public Works and Development staff recommends that the County pursue this funding option, as discussed further in this report, in an effort to develop a funding solution for the improvement at I-70 and Monaghan (Airpark) Interchange.
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Background and Discussion: In collaboration with the developers of Sky Ranch, the County is completing a CDOT 1601 interchange approval process to obtain the approvals and permits necessary to construct the improvements needed at the I-70 interchange at Monaghan (Airpark). It has been determined that the Sky Ranch Development will have traffic impacts on and will create a need for improvements to the I-70 interchange at Monaghan (Airpark), since the interchange was designed to accommodate rural levels of traffic. Future developments within the City of Aurora and Adams County will also have impact on this interchange and will benefit from the improvements to be constructed, as well as the future reconfiguration of the interchange
For the Sky Ranch Development, the original Preliminary Development Plan (PDP) and a subsequent amendment require the developer to provide the necessary interchange improvements needed for their development. The PDP and amendment allow the developer to develop up to a limited number of residential units without the interchange improvements. Sky Ranch has been developing the property in phases and is now approaching the limit of residential units that can be served by the existing interchange improvements.
The County contracted with David Evans and Associates (DEA) through the Request for Proposal (RFP) process to perform the Colorado Department of Transportation’s (CDOT) 1601 Interchange Approval Process, which is being funded by the Sky Ranch development. The 1601 Interchange Approval Process is completing the following tasks:
• Documentation of existing and forecasted traffic, roadway, and environmental conditions;
• Preparation of a System Level Study (SLS);
• Development of preliminary (30%) design of Phase 1 improvements that consider the potential construction of future reconfiguration of the interchange;
• Preparation of NEPA documentation as a Categorical Exclusion;
• Determination of right-of-way needs;
• Preparation of a Minor Interchange Modification Request (MIMR) to document interchange traffic operations for FHWA approval;
• Preparation of a Funding Plan for the Phase 1 interchange improvements; and
• Identification of Traffic Demand Management (TDM) strategies per the 1601 Policy Directive
The costs of the Phase 1 improvements have been estimated to be about $39 million. Phase 1 improvements consists of moving the current interchange 600 feet to the east, construction of a new bridge, and transitions into existing ramps, US-36, and Monaghan. The County recommends that Phase 1 of the interchange improvements be constructed, however, the funding of the project is complicated and expensive. As the project goes through Colorado Department of Transportation’s (CDOT) 1601 Interchange Approval Process, the project will undergo a technical and financial analysis to obtain approval from CDOT for the interchange proposal. Based on the proposed Phase 1 improvements to the I-70 at Airpark Interchange, the project falls under the Type 2 interchange improvement type, as a modification to an existing interchange. A Type 2 interchange project includes preparation of a System Level Study (SLS) that addresses the impacts of the proposed interchange modification on the surrounding transportation system and surrounding area. Since funding for the interchange improvements are not included in the Fiscally Constrained Regional Transportation Plan, the System Level Study must include a preliminary financial plan that identifies how the improvements will be funded. This plan will be necessary for National Environmental Policy Act (NEPA) decisions documentation.
The detail of how the improvements will be made (i.e., who pays and the amount of the payment) will be further defined as the financial plan is completed. The interchanges study completed in 2021 considered the following options to fund the interchange improvements: forming a regional transportation authority, creating a multi-jurisdictional regional impact fee, pursuit of grant funding, and utilizing fair share reimbursement. The study recommended that the County pursue the use of impact fees to fund the project improvements.
As part of the current 1601 Interchange Approval Process, DEA with Felsburg, Holt, & Ullevig (FHU) performed a preliminary assessment of implementing a transportation impact fee to fund Phase 1 of the I-70 at Airpark Interchange modifications. The effort evaluated the extent of traffic utilizing the interchange, the general area where travel demand was from, and determined a conceptual sub-regional fee structure intended as an illustration of a potential fee structure to be used to support conversations with stakeholders.
This effort is refreshing a previous impact fee assessment by updating the traffic model and analyzing how to appropriately assign the cost burden, focusing on the current Phase 1 interchange project.
Funding Plan Discussion
The collection of impact fees by cities and counties is allowed under Colorado Revised Statutes (CRS 29-20-104.5). The law allows a levy of one-time fees to be charged on new development to defray the cost of constructing infrastructure needed to serve the demands created by new development. To the extent that required improvements are needed to address both “existing deficiencies” as well as the projected impacts from growth, only the portion of the cost attributable to new development may be included. Fees can be charged on a city or countywide basis or can be applied for a particular subarea or district.
• Establishment - Impact fees can be imposed through adoption of a local enabling ordinance supported by a technical analysis showing a “nexus” between the fee and the infrastructure demands generated by new development. Fees may be charged for an individual improvement or for multiple infrastructure categories in a comprehensive program.
• Application - Impact fees must be applied to a broad range of land uses and cannot be applied to a single land use (i.e., applies to residential as well as non-residential).
• Who Pays? - Impact fees are typically collected when a building permit is pulled for qualifying construction within the established fee area. Generally, the burden incidence of impact fees is on the developers and builders who pay the fees. Fees are a cost of development and are internalized into project costs in the same manner as other development and construction related costs.
• Benefits - Impact fees provide a comprehensive and programmatic framework for identifying and allocating infrastructure costs to development based on rational nexus allocations. There is no discretion on the part of those subject to the fees nor is voter approval required for their implementation.
• Limitations - A key constraint on impact fees is that the fee levels adopted are often substantially less than the amount determined to be needed to pay for the measured impacts. This is because of concerns over the cost burden that fees place on area developers and their ability to compete in the area market. In addition to the burden limit, another limitation is related to the timing of development. Infrastructure is generally needed in advance of development, while fees are paid for as development occurs (generally at the time of building permit). This means that other funding sources or financing methods are needed to fill the funding gap. Fees are also irregular and depend on development activity, which vary with economic conditions.
• Other details - the addition of inflation adjustments, including financing costs, and adding a sunset fee sunset.
Arapahoe County has a Rural Transportation Impact Fee (RUTIF) collected between Gun Club Road and the eastern Arapahoe County boundary. The fee is $2,5313,594 on a 2,000 square foot home and between $1,092 to $5,405 per 1000SF of non-residential buildings. Interchanges are not included in the eligible projects to be funded with RUTIF in Arapahoe County, but projects such as paving and new road connections were included.
In 2022, the City of Aurora (City) collected a road impact fee of $667 per single family home. The City is in the process of considering a new transportation impact fee study as the current fees have not been updated for several years. The City’s draft fee study proposes fees in the $5,000 to $6,000 range for a single-family home; Council is likely to revisit the topic in Spring or Summer 2024. Adams County had a traffic impact fee for the eastern portion of the County that ranged between $2,900-$5,000 depending on size for residential land uses ($4,665 for 2000 sf) and $751 - $4,436 for non-residential development.
The County would need to determine how the proposed interchange impact fee would relate to the existing and other proposed impact fees, particularly if the County wants the City of Aurora and/or Adams County to participate.
Methodology
The initial interchange study, completed in 2021, established a likely range of impact fees necessary to fund the Phase 1 and ultimate interchange improvements. This impact fee study utilized the updated Phase 1 interchange cost estimate and the most recent 2050 Denver Regional Council of Governments (DRCOG) model with refinements for the interchange project.
Several potential options were assessed to calculate the impact fees to fund the Phase 1 interchange project, including evaluating different areas surrounding the interchange and the Phase 1 versus including the future potential ultimate interchange construction.
The recommended approach focuses on funding/constructing the current $39M Phase 1 interchange project which will account for the intermediate traffic demand. The Phase 1 interchange project also utilizes reasonable development forecasts in the DRCOG model south of the interchange, while the development forecasts to the north are uncertain and debatable by the jurisdictions to the north. The existing railroad serves as a barrier for development to the north of the interchange, which also limits the benefit this area realizes with the construction of the Phase 1 improvements. Therefore, utilizing the DRCOG model as well as estimates of development timing, a nine-square mile impact fee area south of the interchange was established as the area with the most benefit from the Phase 1 interchange improvements.
The approach used a tiered method to create fee levels for two tiers of zones, with the first tier being traffic analysis zones (TAZs) that would have the highest use of the interchange, and a second tier of TAZs with less but still substantial use of the interchange. The method creates tiers of TAZs use rather than calculating individual fee level specific to each TAZ because the model is a high-level, regional tool. Looking at results for groups of TAZs helps to even out the inevitable unevenness in results when looking at the detailed TAZ level. This tiered method was applied to the I-70/Airpark interchange Phase 1 project.
After the analysis was completed, the impact fees fell within a reasonable range for each land use type based on $674.57/daily trip for Tier 1 and $383.31/daily trip for Tier 2. For example, the Tier 1 single-family unit impact fees estimated to be $6,361 for Phase 1 improvements. This fee is calculated based on DRCOG development forecasts. which may be lower than what occurs. It is also based on collection of fees from all development in the impact fee area. Only 52% of the impact fee area is in unincorporated Arapahoe County, with the remaining 48% in City of Aurora. The proposed impact fee would be ideally implemented uniformly in both jurisdictions. It is unclear if the City of Aurora will adopt the impact fees. If Aurora doesn’t adopt the impact fee or contribute in some other way, there is more likely to be a shortfall in the full funding of the Phase 1 interchange improvements.
The impact fees will fund the full Phase 1 project with new development, but the fee has been calculated to fund the interchange assuming all of the forecasted area development contributes its fair share. If Aurora were to not implement the fee for its development or if the implementation is in the future, a significant funding shortfall would be expected. This will need to be covered in the funding plan. The project team will discuss the impact fees amounts that will be required by Arapahoe County development if Aurora does not implement the impact fee. This will mitigate the risk of not collecting enough revenue to pay for the improvement.
Discussions have occurred with the developer of the Sky Ranch development and associated Sky Ranch Community Authority Board (CAB), whereby they would “up-front” the funding for the improvements, and the impact fee would be used to reimburse the developer’s costs in excess of the development’s proportional share of the improvements attributed to the development’s impacts. This model would be beneficial since it would afford the ability to construct the improvements when needed as opposed to after impact was created. The risk is that if development does not occur, resulting in less impact fee being collected, the full reimbursement would not be provided back to the developer. This becomes a business decision of the developer and is the reason concurrence on the approach to the impact fees and handling of adjacent jurisdictions is important for a uniform and effective implementation.
The future phases of the interchange have been identified but will only be required when development in Aurora and to the north in Adams County. The County views these future improvements as a benefit to those areas and should be funded from those developments and managed by those jurisdictions.
Fiscal Impact: The County has signed a funding agreement with the Sky Ranch Developer, which sponsors the Developer is obligated for $854,905 cost to complete the CDOT 1601 Interchange Approval Process. Because the 1601 process must be initiated and completed by a local jurisdiction, the work is being managed by the Public Works and Development Department, however, the County will see no fiscal impact. There is no funding action required with this study session agenda.
Alternatives: The County has several other funding alternatives at this interchange as traffic demand increases due to development. Much of the development that contributes traffic to the interchange is outside the control and oversight of Arapahoe County. As discussed above the projected improvements are expensive and are not the sole responsibility of the County or the Sky Ranch Development.
The other funding alternatives could be explored to fund the construction of the interchange; however, these options are limited in their effectiveness. Funding options identified and explored in the Interchanges Study could be considered. One of the options included creating a regional transportation authority (RTA). The Interchange study showed that the RTA would not generate enough revenue due to the restrictions of the law (ex. 5 mill property tax, 1% sales tax, $10 motor vehicle registration fee, etc.), to cover the cost of the interchange improvements. The RTA would need to be voter approved which could be a challenging, as the number of lots have increased with recent developments.
The pursuit of grant funding for the interchange improvements is very competitive and this type of project does not score well in these types of grant opportunities. This is particularly true because we are trying to be pro-active on providing improvements when they are needed, as opposed to waiting until there are congestion, operational, and safety problems.
The County could pursue the no-build alternative, which would not provide any improvements at the interchange in the immediate future, but the County will continue to restrict the Sky Ranch and other developments while Aurora allows developments within their jurisdiction to continue to build. These developments would then contribute traffic to the interchange absorbing existing capacity and in a few years, the existing interchange will be at or over capacity.
Alignment with Strategic Plan:
☒Be fiscally sustainable
☒Provide essential and mandated service
☒Be community focused
Staff Recommendation: PWD staff recommends that the County pursue the implementation of an impact fee to help fund the improvements at the I-70/Monaghan (Airpark) interchange.
Concurrence: The Arapahoe County Attorney’s Office has reviewed this report.