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Development Fee Program Changes Compliance with State Law - Mayor's Action Requested

This study session on June 3, 2014, requests Mayor and Council's direction on proposed changes to the Development Impact Fee Program to align with SB 1525. Discussion includes fee adoption timeline adjustments and selection of biennial audit option for program monitoring. The updated program aims to secure funds for infrastructure necessitated by new developments. State law changes mandate precision in growth projections, periodic plan reviews, and refunds for unspent funds. Implementation phases with key milestones are outlined, with a focus on fee adoption process, fee collection timeline, and comparisons of current versus proposed impact fees. The program monitoring options are presented for consideration, focusing on an Advisory Committee versus Biennial Audit approach, each with its requirements and effects on the adoption timeline. Mayor and Council's guidance is sought on these matters.

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Development Fee Program Changes Compliance with State Law - Mayor's Action Requested

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  1. Development (Impact) Fee Program Changes to Comply with State Law Mayor and Council Study Session June 3, 2014

  2. Action Requested Today Mayor and Council direction is requested regarding: • The fee adoption timeline presented which requires a June 30th special M/C meeting and moving the M/C October 7th meeting to October 9th • Selection of the biennial audit option for program monitoring At the June 30th meeting, staff will provide a more detailed presentation of the LUA & IIPs, including the recommended new fees.

  3. Development (Impact) Fees • A funding mechanism to help cover the cost of facilities and infrastructure needed to serve new development • Considered a development regulation, not a tax, therefore must have beneficial nexus to new development • Can only be used to expand facilities; may not be used for repair, replacement, operation or maintenance of existing facilities

  4. State Law Changes – SB 1525 • City required to re-do program; new requirements challenging to implement and administer • Requirement for precision in growth projections by benefit district and matching revenues to project plans • Review and update of land use model, growth projections and project plans every 5 years or more frequently as needed • Refund to developers if funding not spent within 10 years • Expanded tracking and reporting requirements

  5. Process to Comply with SB 1525 Phase 1 Changes made in January 2012: • Eliminated public facilities fee • Reduced police and fire fees due to removal of public safety training academy as eligible “necessary public service”

  6. Process to Comply with SB 1525 Phase 2 • Conduct & Post Required Land Use & Infrastructure Studies • Land Use Assumptions (LUAs) • 10 year projection: 73,000 new people, 31,000 new housing units, and 48,000 new jobs • Plan Tucson & PAG data used to distribution these to benefit districts • Infrastructure Improvement Plans for Streets, Parks, Police and Fire • Updated asset inventory and valuations (current level of service) • Identified projects from current CIP, IIPs, and unmet needs • Align 10 year project plan with projected growth and revenue by district • Complete Fee Adoption Process

  7. Fee Adoption Process May 1 Required studies (LUA & IIPs) were posted (wait 60 days until public hearing) June 30 Public Hearing on LUA & IIPs (wait 30-60 days prior to adoption) Aug 5 Mayor and Council adopt LUA & IIPs Aug 10 Post Notice of Intent and Draft Ordinance (wait 30 days until public hearing) Sept 9 Public Hearing on Fee Studies and Ordinance (wait 30-60 days until adoption) Oct 9* Adopt Fee Studies and Ordinance *special meeting date (wait 75 days until effective date) Dec 23 Fee effective date

  8. Fee Collection Gap Aug 1 – Oct 9 No impact fees charged; grandfathering as described in next slide Oct 9 - Dec 23 No impact fees charged; new fee not effective for 75 days Dec 23 forward New fees charged

  9. Grandfathering Provision

  10. Comparison of Current vs. ProposedImpact Fee Program • We will still have 4 fee categories (streets, parks, police, fire) • We will maintain same 5 benefit districts (collection/expenditure) for streets and parks, and citywide districts for police and fire • There will be no discount in the central benefit district for the streets fee • In infill areas, multi-modal facility expansion included in streets IIP • Fees will be assessed on a rooftop/unit basis rather than sq. ft. basis for residential • The program will be more costly to administer; this can be recovered through administrative fee

  11. Program Monitoring OptionsAdvisory Committee vs. Biennial Audit • Certified audit every 2 years by qualified professional • City responsible for procuring auditor, providing information to auditor, posting audit on website and conducting Public Hearing w/in 60 days of posting • Selected by majority of other cities in AZ • Minimum 5 member committee appointed by Mayor and Council (50% from real estate, development and building industry -- one from homebuilding) • Committee provides written comments on IIP progress, program implementation and need for updating IIP, and LUA to City annually • City responsible for establishing committee procedures and determining meeting schedule, staffing the committee, providing information to committee • Will delay fee adoption by 2-3 months

  12. Action Requested Today Mayor and Council direction is requested regarding: • The fee adoption timeline presented which requires a June 30th special M/C meeting and moving the M/C October 7th meeting to October 9th • Selection of the biennial audit option for program monitoring At the June 30th meeting, staff will provide a more detailed presentation of the LUA & IIPs, including the recommended new fees.

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