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

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 7 th meeting to October 9 th Selection of the biennial audit option for program monitoring At the June 30 th meeting, staff will provide a more detailed presentation of the LUA & IIPs, including the recommended new fees.

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

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

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”

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

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 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 days until adoption) Oct 9* Adopt Fee Studies and Ordinance *special meeting date (wait 75 days until effective date) Dec 23 Fee effective date

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

Grandfathering Provision

Comparison of Current vs. Proposed Impact 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

Program Monitoring Options Advisory Committee vs. Biennial Audit –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 –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

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 7 th meeting to October 9 th Selection of the biennial audit option for program monitoring At the June 30 th meeting, staff will provide a more detailed presentation of the LUA & IIPs, including the recommended new fees.