Homebuilders hail law easing impact fees

Cities and towns across Arizona will have a harder time requiring developers to pay for everything from infrastructure to services under legislation signed by Gov. Jan Brewer.

The legislation, Senate Bill 1525, puts a temporary end to a six-year fight between Arizona cities and homebuilders.

"This is a substantive change to the impact-fee statutes," said Spencer Kamps, chief lobbyist for the Home Builders Association of Central Arizona. "They (statutes) haven't been updated in the 20 years since they were adopted, and we grow differently, we build differently and cities plan differently. We've made that argument for a number of years."

The homebuilders and cities and towns agreed on the sweeping legislation that requires cities to change the way they collect impact fees and what they can pay for with that money. It creates public-notice and hearing procedures to replace current systems by Aug. 1, 2014, or a municipality will be unable to continue collecting fees.

The law also created a list of uses for which impact fees can be charged.

A moratorium on new impact-fee changes until the 2015 legislative session gives both sides time to cool off and allows time for the new statute to fully take effect.

"At the end of the day, being able to at least negotiate a cease-fire, that's something," said Avondale City Attorney Andrew McGuire, a negotiator in the hard-fought compromise. "That's an accomplishment."

Kamps said a compromise was a significant accomplishment.

"We've never been opposed to impact fees," he said. "We've been opposed to new growth paying for more than its fair share."

Impact fees, typically added to the price of a new home, are imposed on developers to help pay for infrastructure and public services needed to meet the demands of growth.

McGuire said the new law was better than what homebuilders introduced in the Legislature, but "by no means would I call it good."

He said the bill required cities and towns to pay millions of dollars for new studies in a short time span, and in some instances, residents would be paying higher user fees because impact fees pay for fewer things.

For example, residents may have to pay for sanitation trucks, which will no longer be covered by impact fees.

"If you're not allowed to charge the development fee to the new home coming in to pay for the new truck, then the cost has to be spread somewhere," McGuire said.

Kamps said sanitation trucks should be paid for with user fees.

Brent Stoddard, director of intergovernmental programs for Glendale, said only time will show the full effects of the law.

He said there was no question that existing residents would pick up more of the costs of new development.

He said the homebuilders sensed an opportunity under the strong Republican-majority Legislature to bring a massive patchwork bill to destroy impact fees.

Some welcome the new law.

Mesa Mayor Scott Smith said the compromise was good because it ended the fights at the Legislature, and it gives cities an opportunity to put fee systems in place and give them time to work.

"It brings clarity and consistency, and it still has growth paying for itself, and that's the most important thing," Smith said. "The original bill made such drastic changes to the system that, basically, it would have made impact fees virtually worthless."

The legislation determines what a growth-related cost is, Smith said.

Ken Strobeck, executive director of the League of Arizona Cities and Towns, said cities would have to redo impact-fee programs with a narrower list of eligible projects.

"It (SB 1525) just makes a very substantial number of changes to the program, but it actually allows cities and towns to preserve their impact-fee programs," Strobeck said.

McGuire said that without the intervention of the governor, a compromise may not have been reached.

"I think the governor's interest in this issue was extremely important," McGuire said.

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Key provisions of impact-fee bill

- Allows continued assessment and collection of current impact-fee schedules to pay debt service on existing bonds for projects already underway, even if the fees would no longer be allowed after the effective date of the bill, which is Jan. 1, 2012.

- Maintains the phrase "necessary public services." A new definition, however, narrows the uses of impact fees to address homebuilder concerns about improper use of fees for general government purposes and certain facilities, such as parks over 30 acres or libraries over 10,000 square feet.

- Limits development fees to the proportional share of the cost of new infrastructure that is attributable to new development, and prohibits increasing the level of service that is provided to existing residents.

- Clarifies that offsets against impact fees need only be provided for taxes that are applied to capital costs of infrastructure.

- Clarifies that credits against impact fees are only due when a developer pays for, or is required to provide, infrastructure in an infrastructure-improvements plan for which development fees were assessed.

- Creates new public notice and hearing procedures for assessing, adopting, and amending development fees. Existing fee studies and plans must be replaced using the new system no later than Aug. 1, 2014, or a municipality will be unable to continue collecting fees.

- Requires infrastructure-improvements plans to: identify all capital projects that are the subject of development-impact fees; disclose existing facilities, required upgrades and other costs of existing facilities not associated with new development; identify offsets; and include a professionally-prepared fee study to establish the development fees necessary.

- Requires a refund to current property owners of certain impact fees if the infrastructure that is the subject of a development fee is not built within 10 years or the time identified in the infrastructure-improvements plan, or 15 years for water and wastewater projects.

- Requires creation of either an advisory committee to provide input on adoption and administration of impact fees or a biennial audit of a municipality's impact-fee program.

- Ends existing development-fee freeze on December 31.

Source: League of Arizona Cities and Towns


by David Madrid The Arizona Republic May. 3, 2011 12:00 AM




Homebuilders hail law easing impact fees