1. Funding the Town’s Transportation Infrastructure Improvement Plan (IIP) – An Initial Discussion of Impact Fees
Town Council Meeting
March 1, 2017

2. Total IIP: $196 M.

3. Purpose of Presentation
Discuss Current Impact Fee Program
Discuss Updated Fee (Estimate Only)
Discuss Comparative Information
Identify Policy Decisions
Discuss Calendar

4. Section 1 Discuss Current Impact Fee Program

5. 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

6. 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

7. 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

8. 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
$479
8. Public Safety
$167 1%
TOTAL
$15,899
100%

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

10. QC’s Current Impact Fee Components
10 Year
Costs %
1.Recovery of Existing Infrastructure Capacity (Debt Service)
$3.3M
34%
2.New Projects
$6.5M
66%
TOTAL
$9.8M
100%

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

12. Section 2 Updated Fee (Estimate Only)

13. The Process Financing General Plan Plan
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 Town Pay for the IIP?

14. Impact Fee Calculation
The Impact Fee Calculation is Based on Two Types of Information
Financial Information
Traffic Volume Information

15. Key Elements - Financial
Recovery of Existing Infrastructure Capacity (Existing Debt)
Infrastructure Improvement Plan (IIP)
New Borrowing Costs for IIP
Reduction (Offset) for Dedicated Construction Sales Tax

16. Key Elements – Financial (continued)
Recovery of Existing Infrastructure Capacity (Existing Debt)
Amount: $1.7M Over 10 Years
One Bond Issue from 2007 for Traffic Signals and Project
Refinanced in 2016

17. Key Elements - Financial (continued)
Infrastructure Improvement Plan (IIP)
Amount: $196M
Number of New Lane Miles: 91
Number of Projects: 41
Maintains Current Level of Service
Growth and Non-Growth Cost Allocation Determined for Each Project

18. $196M IIP

19. Key Elements - Financial (continued)
New Borrowing Costs for IIP
Discussed at Feb 15th Council Meeting
Estimated Amount: $20M
Short-Term Financing Anticipated
“Line of Credit” – Borrow Only Needed
Debt Payments Tied to Revenue Receipts
Paid Off by 10th Year

20. Key Elements – Financial (continued)
Reduction (Offset) for Dedicated Construction Sales Tax
$26M of Costs Otherwise Funded from Impact Fees were Reduced by the Town’s Dedicated Tax
Estimated
Fee
Total Growth Costs
$83M
Less Dedicated Construction Sales Tax
- $26 M
Growth Costs Funded From Impact Fees
$57M

21. Key Elements – Traffic Volume
Level of Service (LOS)
Population Estimates
Trip Generation Rates
Number of Service Areas

22. Key Elements – Traffic Volume (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

23. Key Elements – Traffic Volume (continued)
Projects Used in Calculation Cannot Increase LOS
New Lane Miles Needed: 111
New Lane Miles in IIP: 91
San Tan Valley
Traffic Impacts are Excluded from the Calculation

24. Key Elements – Traffic Volume (continued)
Population Estimates
Population Expected to Double by 2026
69K Population in 2026
8% to 10% Growth Annually

25. Key Elements – Traffic Volume (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

26. Key Elements – Traffic Volume (continued)
Town Specific Data was Used to Develop Land Use Travel Characteristics
75% of the IIP is Being Built to Handle Population Growth Caused by Single- Family Homes
All Other Uses Total 25% (Multi-Family, Retail, Office, and Industrial)

27. VMT Calculation Vehicle Trip Ends Trip Adjustment Factor Trip Length
# of trip ends entering and exiting a development
Trip Adjustment Factor
Adjusts for pass by and pass through trips
Trip Length
Average trip length for Queen Creek
Trip Length Weight Factor
Length of trip by development type
Vehicle Miles Traveled

28. VMT = Trip Ends * Trip Adjustment *Length * Length Weighting
VMT Calculation
VMT = Trip Ends * Trip Adjustment *Length * Length Weighting
VTE – The number of trips generated by a development
Trip Adjustment Factors – Adjusts trips for secondary stops or stops of convenience. Adjusts for trips leaving the Town, or passing through the Town from neighboring communities.
Average Trip Length – Estimates the average length of a trip (in miles) generated by new development
Trip Length Weight Factor – Identifies the difference in length of trips generated by development. Residential trips tend to be longer than non-residential trips.

29. Key Elements – Traffic Volume (concluded)
Number of Service Areas
One (Town Wide)
Basis for Recommendation
One Transportation System
Town is Relatively 26 Square Miles
Affect of Railroad Tracks and Two Creeks

30. New Estimated Fee

31. Components of the Calculation
Financial Information: $57M (of the $196M IIP) Can be Paid from Impact Fees
Traffic Volume Information: 91 New Lane Miles are Being Constructed to Create Capacity for 1.8M Vehicle Miles Traveled

32. Single-Family Home Fee
ESTIMATED Fee (Legal Maximum)
$4,800
Current Fee
$1,263
Increase (~3x)
$3,537

33. Why the Fee Increase?

34. Why the Fee Increase?
The Fee Increase is a Net Effect Caused by Two Issues
Significant Changes in Key Elements Increased the Fee
Refunding of Obligations Decreased the Fee

35. Significant Increases in Key Elements
Estimated Fee
Current Fee
Change
% Change
New Projects Costs Paid from Impact Fees
$57.9 M
$6.5 M
$51.4 M
791%
Population Increase
33K
20K
13K
63%
New Vehicle Miles Traveled
915K
510K
405K
79%
New Lane Miles 91 7 84
1206%

36. Change in Impact Fee Components
ESTIMATED FEE
10-Year
Costs
CURRENT FEE
10-Year Costs
Change
1.Recovery of Capacity in Existing Infrastructure
(Debt Service)
$1.8M
$3.3M
($1.6M)
2.New Projects (IIP)
$57.0M
$6.5M
$50.5M
3.New Borrowing Costs for IIP
$0.9M NA
TOTAL
$59.7M
$9.8M
$49.9M

37. Refunding of Obligations
The Refunding of Existing Obligations has Reduce the Amount of Costs Funded from Impact Fees by $11.8M
Refinanced 2007 Bonds
Savings: $0.8M Over 16 Years
Refinanced Improvement District Bonds
Savings: $2.9M Over 16 Years
Refinanced Two Development Agreements
Savings: $8.1M Over 20 Years

38. Section 3 Comparative Information

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

40. How is the Town Different?
Operating Budget Capacity
Opportunity for Town
$6.5M Placeholder for:
Debt Payments / Pay-As-You-Go Project Funding
Operating Costs for New Roads Constructed by the Town and Private Development
Other Uses (i.e. Parks Master Plan)

41. How is the Town Different? (continued)
Dedicated Construction Sales Tax (vs. Dedicated General Sales Tax)
Town: 2% on all Construction Activity (Narrow Base)
Mesa: 0.3% on all Taxable Activity (Broader Base)
Dedicated Construction Sales Tax Revenues are a Direct Reduction from Impact Fees

42. How is the Town Different? (continued)
Proposition 400
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
Peoria: $15M

43. How is the Town Different? (continued)
Gas Tax (HURF)
The Town uses 100% of our Revenues for Operations and Pavement Preservation - Not New Projects
Because Street Expenses Exceed Revenues Its Not an Issue whether Used for Operations or Projects

44. How is the Town Different? (continued)
Voter Approved G.O. Bond (Paid from Property Taxes)
Approach
Citizen Bond Committee Formed to Develop a List of Projects
Project List to Ballot for Vote
Property Taxes Set to Cover Annual Debt Service Payment

45. Comparison of Current Impact Fees (Single-Family Home)

46. Pinal County (North Central) is a Good Comp to QC
Single Family Fee is $7,978
Same Level of Service as QC
91 New Lane Miles
$90M Total Cost
49% Growth Related

47. Comparison of Impact Fees (Single-Family Home Historical Highs)

48. Comparison of Current Impact Fees (250 Unit Multi-Family Apartment Complex)

49. Comparison of Current Impact Fees (5,000 Square Foot Restaurant)

50. Comparison of Current Impact Fees (25,000 Square Foot Grocery Store)

51. Comparison of Current Impact Fees (50,000 Square Foot School Building)

52. ** UPDATED ** QC’s Impact & Capacity Fees (Single-Family Home)
Amount
1.Wastewater
$5,082
2.Transportation
$4,800
3.Water
$4,014
4.Parks and Recreation
$3,681
5. Library
$723
6. Fire
$490
7. Town Facilities
$479
8. Public Safety
$167
TOTAL
$19,436
Total Fee Increased
By 22% (from $15,899)

53. Comparison of Current Total Impact & Capacity Fees (single Family)

54. Section 4 Policy Decisions

55. Decision Needed to Prepare the Impact Fee Study
Finalize Assumptions Related to the Following Obligations
Interfund Loan for Payoff of Development Agreements
Line of Credit for Growth Costs

56. Decisions Related to the Financing Plan Who Pays?
Set the Impact Fee at the Legally Maximum Amount?
8+ Month Total Process
6 Months of Stakeholder Meetings and Feedback

57. Impact Fee Calendar (8+ Months)
Task
Date 1
IIP/LUA Reviewed with Town Council
Day 1 2
IIP/LUA Published with Public Notice of Public Hearing
Day 2 3
IIP/LUA Public Hearing (At Least 60 days after published report)
Day 62 4
IIP/LUA Approved (At least 30 days after Public Hearing but before 60 days) & Notice of PH to Assess Dev. Fees
Day 92 5
Impact Fee Public Hearing ( At least 30 days after Notice of Hearing) For Fee Study
Day 122 6
Approve Impact Fee Ordinance (At least 30 days after but before 60 day of Public hearing)
Day 182 7
Impact Fee Effective Date (75 days after Resolution to Approve Fee)
Day 257

58. Decisions Related to the Financing Plan Who Pays? (concluded)
Use Existing Sources of Funding or Consider New Ones?
How Much to Use of $6.5M Placeholder?

59. Section 5 Calendar

60. Proposed Calendar Meeting #1 TBD
Dates
Task
Meeting #1 TBD
Presentation of Draft Impact Fee Study
Discuss Recommended Transportation Funding Plan
Meeting #2 TBD
Discuss Updated Debt Management Plan

61. Questions and Comments