Presentation and Discussion of the Draft Transportation Land Use Assumptions and Infrastructure Improvement Plan Report (Impact Fee Report) Town Council Meeting April 5, 2017

Purpose of Presentation Discuss Calendar Discuss Land Use Assumptions and Infrastructure Improvement Plan Discuss Draft Report Fee Amount Discuss Comparative Fee Information Identify Options re. Who Pays? Recommended Motion

Section 1 Calendar

Two Phase Process Approve / Disapprove the Land Use Assumptions (LUAs) and Infrastructure Improvement Plan (IIP) Set the Impact Fee Amount

Two Phase Process (concluded) Process Defined by State Law Extensive Stakeholder and Public Input Process 11 Month Process 4 Public Hearings

Phase 1: LUA & IIP 1. Present Impact Fee Study to Town Council Step Date 1. Present Impact Fee Study to Town Council 2. Set Public Hearing #1 Date for July 19 April 5 Council Meeting 3. Post Draft Study and Notice Public Hearing April 6 4. IIP/LUA Public Hearing #1 – No Action (At Least 60 days after Published Report) 5. Set Public Hearing #2 Date for September 6 July 19 6. IIP/LUA Public Hearing #2 – Possible Approval (At least 30 days after Public Hearing #1 but before 60 days) September 6

Phase 2: Impact Fee Step Date 1. Notice October 18 Public Hearing #1 to Increase Impact Fee September 7 2. Impact Fee Public Hearing #1 – No Action (At Least 30 days after Notice) 3. Set Public Hearing #2 Date for December 6 October 18 Council Meeting 4. Impact Fee Public Hearing #2 – Possible Approval (At least 30 days after Public Hearing #2 but before 60 days) December 6 5. Effective Date of New Fee (At least 75 Days after Approval) March 1, 2018

Outreach Objectives All Inclusive Staff Accessibility Transparency Town Boards and Commissions Development Community Existing Residents, Businesses and Other Key Stakeholders Staff Accessibility Transparency Ongoing Communications Completed by June 30th Input Summarized for July 19th Public Hearing

Outreach Meetings Informal Individual Meetings Meetings with TAC, PRAC and EDC Group Meetings Invitations via Member Organizations Example: Homebuilder Association Public Meeting General Invitation to Residents, Businesses and Key Stakeholders

Phase 1 and 2 Outreach Dedicated Webpage News Release Feedback Form News Release Water Bill Insert eNewsletter Social Media Facebook Twitter NextDoor

Section 2 Discuss Land Use Assumptions and Infrastructure Improvement Plan

The Process Financing General Plan Plan How will the IIP be Paid For? How will the Town Manage Growth? Transportation Master Plan What is the Town’s Level of Service? Infrastructure Improvement Plan (IIP) What Projects Must be Built to Achieve the Level of Service? Financing Plan How will the IIP be Paid For?

Land Use Assumptions (LAU) Source: General Plan Draft Report Land Use Assumptions (LAU) Source: General Plan Number of Units Single-Family Homes, Retail Square Footage, etc. Service Area 26 Square Miles

Infrastructure Improvement Plan (IIP) Draft Report Infrastructure Improvement Plan (IIP) Source: Transportation Master Plan Project List Traffic Volume, Congestion, Level of Service, Vehicle Miles Traveled

$195M 10-Year Plan

See Separate Presentation Entitled “Traffic Flow Analysis”

Section 3 Discuss Draft Report Fee Amount

What is an Impact Fee? One-Time Fee Assessed to New Development to Pay for the Proportionate Share of Infrastructure Costs New Development Imposes on a Community Town Impact Fees: Transportation, Police, Fire, Parks and Recreation, Library, & General Facilities

What is an Impact Fee? (continued) The Fee is Assessed Using a Standard Formula Based on the Specific Characteristics of the Development Single-Family Residential Multi-Family Residential Retail Office Industrial

What is an Impact Fee? (concluded) Most Recent Reform Effective August 1, 2014 Can Only be Used to Fund “Necessary Public Services” 10-Year Planning Period for Projects Fees Must be Recalculated At Least Every 5 Years

QC’s Current Impact & Capacity Fees (Single-Family Home) Amount % 1.Wastewater Capacity $5,082 32% 2.Water Capacity $4,014 25% 3.Parks and Recreation $3,681 23% 4.Transportation $1,263 8% 5. Library $723 5% 6. Fire $490 3% 7. Town Facilities $470 8. Public Safety $167 1% TOTAL $15,890 100%

QC’s Impact Fee History (Single-Family Home)

Transportation Impact Fee “Necessary Public Services” for Transportation includes: Arterial Streets Collector Streets Traffic Signals Right-of-Ways

QC’s Transportation Impact Fee History (Single-Family Home)

Impact Fee Calculation The Impact Fee Calculation is Based on Two Types of Information Financial (Cost) Information Traffic Volume Information

$195 M. 10-Year Project List

$195 M. 10-Year Project List Funding Sources Current IIP New Total Projects Other Government and Developer Participation $3 M $30 M $33 M Dedicated Construction Sales Tax $1 M $24 M $25 M Impact Fees (Maximum Amount) $6 M $52 M $58 M Subtotal – Growth $10 M $106 M $116 M Non – Growth (Operating Budget) $8 M $71 M $79 M Total $18 M $177 M $195 M

$177 M. New IIP

Financial Information IIP (Project List) New Borrowing Costs for IIP Reduction (Offset) for Dedicated Construction Sales Tax

Financial Information (continued) IIP (Project List) Amount: $177 M Number of New Lane Miles: 84 Number of Projects: 36 Maintains Current Level of Service Growth and Non-Growth Cost Allocation Determined for Each Project

Financial Information (concluded) New Borrowing Costs for IIP Estimated Debt Issue Amount: $20M Interest Cost: $6M Reduction (Offset) for 2% Dedicated Construction Sales Tax $24M Over 10 Years In Lieu of Proposition 400 Funding

Traffic Volume Information Level of Service (LOS) Population Estimates Trip Generation Rates

Traffic Volume Information (continued) Level of Service (LOS) Measures Traffic Volume and Flow Established in the Transportation Master Plan QC’s LOS is a ‘D’ Same as Most Cities

Traffic Volume Information (continued) Projects Used in Calculation Cannot Increase LOS New Lane Miles Needed: 119 New Lane Miles in IIP: 84 San Tan Valley Traffic Impacts are Excluded from the Calculation

Traffic Volume Information (continued) Population Estimates Population Expected to Double by 2026 67K Population in 2026

Traffic Volume Information (continued) Trip Generation Rates Impact Fees are Based on the Burden Each Classification of Development Places on the System Measured by Vehicle Miles Traveled (VMT) Residential Developments: Per dwelling unit Non-Residential: Per 1,000 square feet of floor area

Traffic Volume Information (concluded) Town Specific Data was Used to Develop Land Use Travel Characteristics ~75% of the IIP is Being Built to Handle System Demand Caused by Single- Family Homes All Other Uses Total ~25% (Multi-Family, Retail, Office, and Industrial)

Single-Family Home Fee Draft Report Fee $3,927* Current Fee $1,263 Increase $2,664 *This amount was initially estimated at $4,800. The decrease is due to several factors: splitting the total project list into two IIPs, reducing the project inflation assumption, removing existing debt payments from the new fee, paying off two development agreements, and recalculating the amount generated from Dedicated Construction Sales Tax Revenues.

Why Did the Fee Increase? Key Elements Increased Estimated Fee Current Fee Change New Projects Costs Paid from Impact Fees $52.0 M $6.5 M $45.5 M Population Increase 33K 20K 13K New Vehicle Miles Traveled 1.05M 510K 540K New Lane Miles 84 7 77

Section 4 Comparative Information

Transportation Impact Fee Only

Why Do Transportation Impact Fees Vary? Funding Sources Vary Types of Infrastructure Paid By Impact Fees Vary

Funding Sources Vary Funding Source Queen Creek Chandler Gilbert Mesa Operating Budget Yes Impact Fees No Proposition 400 (County Tax) Dedicated Construction Sales Tax Gas Tax (HURF) Voter Approved G.O. Bonds (paid from Property Taxes) Dedicated General Sales Tax

Proposition 400 (County Tax) 0.5% Dedicated Transportation Sales Tax in Maricopa County Most Cities in Maricopa County Receive Prop 400 Funding – QC Does Not Represents Significant Funding for Projects Mesa: $47M over 10 Years

QC’s Dedicated Construction Sales Tax Sales Tax Rates Vary QC’s Dedicated Construction Sales Tax 2% Additional on All Construction Activity Direct Reduction to Impact Fees Others Entities Have a Dedicated General Sales Tax Mesa: 0.3% on All Transactions Broader Base

Types of Infrastructure Paid By Impact Fees Vary Major Arterials Collector Streets Traffic Signals Right-of-Way Support Facilities Apache Junction Yes No Chandler Gilbert Peoria Phoenix Pinal County Queen Creek

Comparative Information Comparative Impact Fee Information is Presented for the Southeast Valley Entities Chandler (6 Zones, 3 Traffic Fee Zones) Gilbert (2 Zones, 2 Traffic Fee Zones) Mesa (1 Zone) Pinal County (5 Zones, 5 Traffic Fee Zones) Queen Creek (1 Zone)

Transportation Impact Fee Only (Single-Family Home)

Transportation Impact Fee Only (175 Unit Multi-Family Apartment Complex)

Transportation Impact Fee Only (2,000 Square Foot Restaurant)

Transportation Impact Fee Only (5,000 Square Foot Restaurant)

Transportation Impact Fee Only (25,000 Square Foot Retail Store)

Transportation Impact Fee Only (185,000 Square Foot Grocery Store)

Transportation Impact Fee Only (25,000 Square Foot School Building)

Total Impact / Capacity Fees

Preliminary QC’s Impact & Capacity Fees (Single-Family Home) Amount 1.Wastewater $5,082 2.Water $4,014 3.Transportation $3,927 4.Parks and Recreation $3,681 5. Library $723 6. Fire $490 7. Town Facilities $479 8. Public Safety $167 TOTAL $18,554* * Total Fee Increased By $2,664, or 14% (from $15,890)

All Impact / Capacity Fees (Single-Family Home)

All Impact / Capacity Fees (175 Unit Multi-Family Apartment Complex)

All Impact / Capacity Fees (2,000 Square Foot Restaurant)

All Impact / Capacity Fees (5,000 Square Foot Restaurant)

All Impact / Capacity Fees (25,000 Square Foot Retail Store)

All Impact / Capacity Fees (185,000 Square Foot Grocery Store)

All Impact / Capacity Fees (25,000 Square Foot School Building)

All Costs

Amounts in Presentation Reflect Updates to April 1 Staff Memo All Costs Summary Amounts in Presentation Reflect Updates to April 1 Staff Memo Single-Family Gilbert (See Next Slide) Pinal County (Pending) All Other Categories Gilbert (Pending)

Comparison: QC and Gilbert Single-Family Home QC Current QC Draft Report Gilbert Current Gilbert Draft Report* Impact / Capacity Fees $15,890 $18,554 $18,071 $22,145 Permit/Plan Review Fees*** $2,750 $903 Sales Tax ** $18,624 $18,453 $13,459 $13,263 Total Costs $37,264 $39,757 $32,433 $36,311 * Reflects Draft Water and Wastewater Impact Fee Report ** Reflects QC’s 4.25% tax rate, Gilbert’s 1.5% tax rate *** Based on Best Information Available from Gilbert

Section 5 Options re. Who Pays?

Impact Fee Objectives Justifiable Equitable Predictable

Options re. Who Pays? Options Being Evaluated Buy Down the Impact Fee Increase Phase-In the Impact Fee Increase Timeline July 19th Public Hearing

Related Issues / Timing Update to Parks and Recreation Master Plan and Impact Fee Update to Wastewater Master Plan and Capacity Fee Update to Water Master Plan and Capacity Fee

Section 6 Recommended Motion

Recommended Motion Approve a Motion to Set the Public Hearing on the Land Use Assumptions and the Infrastructure Improvement Plan for the Transportation Impact Fee for July 19, 2017 at 7 p.m.

Questions and Comments