The University is engaged in a disagreement with the city of Durham concerning more than $1 million the city says Duke owes in fees affiliated with construction. Discussions over the course of the last few months have resulted in the disputed amount being lowered to about $600,000, but Duke officials said they still are not satisfied with the bill and how it was computed.
"We're not, in principle, opposed to the concept of impact fees," said John Burness, senior vice president for public affairs and government relations, noting that it is the manner in which the fees were levied that the University was protesting.
The disagreement is rooted in a change in the application of impact fees that Durham instituted in September 2001. The revised fee--designed, in part, to offset the cost of repairs to the infrastructure that comes with new development--applied to any new construction, according to the revised Durham City Code.
The changes, which at first appeared to be standard adjustments to city fees, went under the radar of University officials until several months ago when administrators realized the University had accumulated more than $1 million in bills to Durham due to an unusually large volume of already-planned construction on Duke's properties.
Burness said the University's construction should be mostly exempt from steep impact fees because the new buildings on campus are akin to renovations and do not increase substantially the amount of traffic in the area.
"There are no new bodies generally associated with those things," he said. He noted that most University buildings--like the Center for Interdisciplinary Engineering, Medicine and Applied Sciences--are designed to alleviate already-existing overcrowding rather than to increase the number of individuals working on campus.
Officials said the University filed a formal request that the city re-evaluate Duke's bill.
"This is not an argument about money. It's about principle," executive vice president Tallman Trask said. "You think the city--if they were going to do this thing in our partnership--would have told us."
Impact fees generally are used to pay for the cost of road, school and other infrastructure maintenance incurred by growth in a town and are therefore usually tied to construction that increases the wear and tear on these facilities. Some towns have increased the fees in recent years, however, to offset national and local budget crises that have threatened the financial stability of some city programs.
The revised impact fees, which called for a charge of $1,439 per square foot of University space constructed in the area where Duke is located, apply to development of any kind, not just development that adds stress to local infrastructure.
The city ordinance also includes a provision for fee payers to calculate an alternate fee, if the payer believes the fee is artificially high. The equation, which takes into account increased traffic flow and estimated cost to repair infrastructure, is designed to be used when the new construction does not result in increased traffic flow.
The University submitted a formal appeal against the $1 million bill earlier this year. The city, in consultation with Kimley-Horn and Associates, an outside firm that helped develop the guidelines for the fees, agreed the dollar amount was excessive and reduced the total cost to about $600,000, Trask said.
But the University continues to believe that the impact fees are being unjustly applied.
In the most recent move, Trask submitted a letter April 21 to Marcia Conner, city manager of Durham, protesting the new impact rates and the validity of the data KHA used to calculate the revised fee.
"We don't agree that our construction generates proportional traffic the way they believe we do," Trask said, adding that the fee controversy was a "good faith disagreement."
Conner and several other officials from Durham City Hall were unable to be reached despite repeated attempts last week. Representatives from KHA were also unavailable for comment.
The University also reacted specifically to the creation of a new category, "Major Research University," recommended in the revised guidelines earlier this year. Trask pointed out in his letter to Conner that Duke was the only entity in the category.
"A policy category with only one member is, on the face of it, suspect," Trask wrote.
Despite these disagreements, Trask said he remains confident that the issue will not affect the University's generally positive relationship with the city.
"I believe we're going to work this out," Trask said. "I'm not worried."
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