Title
Public Hearing - Infrastructure Financing Plan: 2020 Update and Recommended Development Impact Fees
Description
Request to hold a public hearing on recommended changes to development impact fees and the final Infrastructure Financing Plan: 2020 Update, as required by Arizona Revised Statutes (A.R.S.) 9-463.05.
Report
Summary
Development impact fees are collected by the City in designated "new development" areas to help pay for certain public facilities and equipment that are needed to expand city services to meet the needs of new development. Phoenix currently administers nine development impact fees including: Fire Protection, Police, Parks, Libraries, Major Arterials, Storm Drainage, Water, Wastewater, and Water Resources Acquisition (WRA). Arizona's development impact fee enabling statute (A.R.S. 9-463.05) requires cities to review and, if necessary, update development impact fees every five years. Updating the impact fee program helps ensure the fees are based on up-to-date growth projections, infrastructure master plans, and facility costs. The last impact fee update was approved by Council on Jan. 21, 2015, and the fees took effect on April 5, 2015.
A final written report of recommended development fee changes titled: Infrastructure Financing Plan: 2020 Update (2020 IFP), along with a Notice of Intent (NOI) to update development impact fees, was posted to the City's website on Nov. 18, 2019. The 2020 IFP is attached as Attachment A and can be accessed at: www.phoenix.gov/pdd/devfees/impactfees. In accordance with A.R.S. 9-463.05, the City is required to conduct a public hearing on the recommended fee changes no less than 30 days after the NOI. Between 30 and 60 days following this public hearing, Council will be required to approve or disapprove the development fees. It is anticipated that the recommended fees will be considered by Council during the Formal Session scheduled for Jan. 29, 2020. If approved at that time, the new fee schedule would take effect no less than 75 days later.
Background
A.R.S. 9-463.05 prescribes a two-stage development fee approval process. On July 1, 2019 the draft 2020 IFP, that included a written report of land use assumptions and infrastructure improvements plans was posted to the City's webpage and made available to the public. On Sep. 4, 2019, Council conducted a public hearing on the draft 2020 IFP. And, on Oct. 16, 2019 Council approved the Land Use Assumptions and Infrastructure Improvements Plans detailed in the draft 2020 IFP; completing the first stage of the two-step approval process.
2020 Infrastructure Improvements Plan
The 2020 IFP serves as a single document that consolidates the recommended impact fee schedules (Impact Fee Report), the Land Use Assumptions (LUAs) and Infrastructure Improvements Plans (IIPs). The Impact Fee Report summarizes the proposed changes and includes a comparison of existing and recommended fee schedules for each fee category and impact fee area. The LUAs are the main subject of Chapters 1 and 2. Chapter 1 provides the growth projections for each impact fee area in terms of 'development units' (e.g. dwelling units, 000's square feet) associated with different land use categories (e.g. residential and commercial). Chapter 2 details how 'development units' are converted to 'equivalent demand units' (EDUs) for the purpose determining infrastructure needs, and calculating fee assessments that are proportionate to the expected new demand for each type of land use. Chapters 3 - 11 consist of the IIPs for each of the City's nine development fee categories; including explanations of the methodology, assumptions, values and formulas used to calculate the potential, or maximum impact fee. Each IIP includes updated facility inventories, an analysis of existing service levels, anticipated new demands, planned facilities and costs, and offsets calculations where required.
In addition to the recommended changes contained in the draft 2020 IFP that were approved by Council on Oct. 16, 2019, the following substantive changes have been incorporated into the final 2020 IFP:
Introduction: The Impact Fee Report with recommended net impact fees per EDU has been added. A recommendation to not charge storm drainage fees in northeast Phoenix unless and until the full benefits are realized (i.e. elimination of the floodplain) by projects paying the assessment. This recommendation would be considered by Council as an amendment to Phoenix City Code, Chapter 29. Final language for this code amendment is currently being evaluated by the Public Works, Planning and Development, and Law departments.
Chapter 1 (Land Use Assumptions): Off-Project growth projections were added for the WRA fee.
Chapter 2 (Equivalent Demand Units): Corrected an error with the WRA EDUs for the Off-Project impact fee area (see Chapter 11).
Chapter 3 (Fire Protection): The potential net impact fee was adjusted to reflect alternative revenue offsets as required. Unit cost estimates were updated to be consistent with other design and administrative cost assumptions.
Chapter 4 (Police): The potential net impact fee was adjusted to reflect alternative revenue offsets as required.
Chapter 5 (Parks): The potential net impact fee was adjusted to reflect alternative revenue offsets as required. Unit cost estimates were updated to be consistent with other design and administrative cost assumptions.
Chapter 6 (Libraries): No changes.
Chapter 7 (Major Arterials): No changes.
Chapter 8 (Storm Drainage): No changes.
Chapter 9 (Water): Minor change to the planned infrastructure needs in Southern - Water impact fee area.
Chapter 10 (Wastewater): Minor change to planned infrastructure needs in Estrella South and Laveen West impact fee areas.
Chapter 11 (WRA): A result of the revised EDU estimate a high cost water supply was removed from the plan.
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Planning and Development Department.