These systems require continual investment to replace aging infrastructure and maintain systems in a state of good function. Maintaining infrastructure and utility service depends upon both on-going and future revenue streams. Most utilities are funded through monthly usage bills as well as tap and availability fees at the time of construction. Larger improvements may require bonding or general funds from tax revenue. Given current property tax caps within the State of Indiana, it is difficult for the City to proactively expand utility capacity to desired development areas.
In the future, growth must proceed in conjunction with utilities. Leapfrog development patterns and reactionary utility extensions can lead to inefficiencies and increased costs in more piping, pumping, and line replacement. The southeast area of the City, along I-65, is more vulnerable to a leapfrog development pattern given the shape and overall land availability in the area. However, very little utility infrastructure currently exists to support significant new development and future expansion into the area will be difficult due to distance from treatment facilities.
The City has been able to meet the current infrastructure needs and has not had to restrict new development because of a lack of services, but continued growth will present challenges. Therefore, the City should ensure that it is targeting its resources to areas where infrastructure already exists, for example in the downtown where redevelopment is feasible, or targeted future development areas such as the area between SR 39 and Hall Baker Road. There are many ways Lebanon can manage the growth of infrastructure and development. The most common ways the City can manage growth are through an adequate public facilities ordinance (APFO), long-range capital improvements planning, developer driven improvements, tax increment finance (TIF) districts, impact fees, or a combination thereof.
An APFO ties infrastructure to growth. An APFO, sometimes known as a concurrency ordinance, can be applied to almost any community facility including transportation, water, sanitary sewer, schools and parks. The APFO ensures that the existing utilities can service the new development and if not, then the developer will need to provide the additional facilities or wait until the facilities are available before the project can proceed. At a minimum, the City can require that the new development be concurrent to an area that is already served.
Advanced planning for a major utility improvement refers to master planning for the entire utility system. Many communities prepare dedicated utility master plans for various municipal utilities they may provide. The City of Lebanon has a Utility Master Plan for the entire City that identifies existing facilities and capacity for water and sanitary sewer systems as well as planned future extensions and capacity. The master plan identifies both major and minor improvements including new treatment facilities as well as line extensions, lift stations, and pipe upsizing. The master plan contains cost estimates and timing for each of these projects. The projects from the plan are then incorporated into a five-year capital facilities plan that is coordinated with the City’s annual budget.
Developer driven improvements are those utility infrastructure improvements that are specifically tied to a proposed development project. During the comprehensive plan process, the type and character of development is identified as part of the future land use plan. Some areas of the community may be identified as a lower priority for development and therefore the City may choose not to spend its valuable resources to expand or construct utilities in this area. Therefore, when a developer opts to develop property in a low priority area, the developer will be responsible for paying for the necessary utility improvements.
Tax increment financing (TIF) is a financing mechanism that the City can use to pay for and install utility infrastructure in a priority area. TIF districts are typically established for high growth or priority growth/redevelopment areas such as a business park or downtown. TIF districts capture the additional tax revenue as a result of development, redevelopment, or increased property values. Those additional revenues must be re-invested within the TIF boundary. The City can extend utility services for a development project and then use the tax increment generated by that project to pay back the cost of the improvement.
Impact fees are another tool that Indiana communities can establish to require developers to pay for the cost of providing public services to new construction. Impact fees are discussed in greater depth in another key initiative [insert link to initiative 13].
As a matter of policy, the City of Lebanon should not extend utility services outside of its municipal boundaries. However, if the City is going to extend services outside the City, it should ensure that the proposal:
- Only be considered when the utility request is accompanied by a petition for annexation;
- Is consistent with long-range utility master plans;
- Creates demand within current capacity;
- Meets city design and construction standards;
- Enhances the contiguous development area of the City of Lebanon.