Development Impact Fees

Adopted Land Use Assumptions and Infrastructure Improvements Plan (3/17/20) (Note: Development Fee Report pending adoption)

Intro

Arizona State Statutes authorize municipalities in the state to collect development impact fees to fund infrastrucuture necessitated by growth. The City of Tucson last updated its development impact fee program in 2014. As part of State law, municipalities are required to make updates every five years, including a new a Land Use Assumption Report (LUA) and an Infrastructure Improvement Plan (IIP). These reports project the amount of growth expected and identify necessary public services or facility expansions that will be needed. The City of Tucson is currently in process of updating the IIP and LUA as part of the five year update process.

General Information:

Development impact fees are one-time fees dedicated to expand:

  1. Roads
  2. Parks
  3. Police Services
  4. Fire Services

Development impact fees apply to developments if:

  1. There is new development (residential and commercial)
  2. A change in use that requires a larger service need

The Planning and Development Services Department works with developers to determine the service fee based on:

  1. The service area
  2. The use
  3. The development size

State law requires that there be a beneficial nexus between the development that pays the fees and the infrastructure built with those fee revenues. Fees collected in each of the service areas must be spent in the same respective service area. The fees can only be used to construct new facilities or expand existing facilities to provide service to new development. Fees may not be used to repair, replace, operate or maintain existing facilities.

Finance/Budget Division administers the program (prepares the budgets and tracks all revenue/expenditure activity). 

The Planning and Development Services Department assists with the required update process (currently ongoing) and collects development impact fees when a building permit is issued.

Summary of the Development Impact Fees Process To-Date:

Mayor and Council Regular Meetings

March 17, 2020:

On March 17, 2020 the Mayor and Council adopted the City of Tucson's updated Land Use Assumptions (LUA) and Infrastructure Improvements Program (IIP). The Mayor and Council emphasized that the Development Impact Fee Report would be reviewed for further discussion and adoption at the upcoming meetings in April and June.

Agenda Item #9

Mayor and Council Materials

Summary

February 4, 2020:

On February 4, 2020 the City of Tucson held a public hearing to discuss the City’s draft Land Use Assumptions (LUA) and Infrastructure Improvement Program (IIP) with the Mayor and Council. The public hearing began with a staff update on the Development Impact Fee update process and the outreach process to date. The hearing continued with a presentation of the methodology and findings of the draft LUA and IIP by the City’s Impact fee consultant, Carson Bise, from TishlerBise. Staff then provided an outline of recommended changes to LUA and IIP. Following the presentation, the public provided comment, discussing a variety of topics such as the proposed retail fee and a possible phase-in fee rate. After the close of the public hearing, the Mayor and Council directed Staff to return on February 19, 2020 for an additional study session.

Agenda Item #8

Mayor and Council Materials

Summary

Presentation

Mayor and Council Study Sessions

September 5, 2018:

During the September 5 Study Session staff gave an introduction of the City of Tucson’s development impact fee program to Mayor and Council. Staff explained the state mandates development impact fees be updated every five years and that municipalities produce a Land Use Assumption Report (LUA) and an Infrastructure improvement plan (IIP). Staff explained that, according to state regulation, service area boundaries must be determined based on the nexus between new developments and the services and facilities that are needed to serve the new developments. After a discussion on how impact fees could be spent and collected, Mayor and Council requested an outline of the funds available and the projects funds are committed to. Mayor and Council then directed staff to complete the required LUA and IIP and return to Council with a range of impact fees and alternative funding options to support infrastructure improvements.

Agenda Item #3:

Mayor and Council Materials

Summary

Presentation

February 20, 2019:

The development impact fee discussion of the February 20 Study Session began with a presentation on the City of Tucson’s development impact fee program. Staff explained where the City is in the state mandated development impact fee update process and described the next steps of the process. Mayor and Council discussed with the staff the possibility of a single services area to address funding for larger projects. Mayor and Council also addressed the need to ensure equity if the City moves to a single service area. Discussion continued about how the Land Use Assumption report was produced. Staff explained assumptions on future growth and land use are based on historic permit activity. Additional comments were made about projects that were already funded by Proposition 407.

Agenda Item #5

Mayor and Council Materials

Summary

Presentation

April 9, 2019:

The April 9 Study Session’s discussion of impact fees began with an introduction by staff and the development impact fee update process. Staff requested guidance from Mayor and Council on refining the project list and consideration of service area configuration. Mayor and Council indicated that a single City-wide service area would not be supported. Staff also discussed with Mayor and Council the state requirement that fees must be refunded if they are not spent within 10 years. The requirement to refund unused funds is why it is important to create a project list that can be completed within a set timeframe. Discussion continued with the determination of the impact fee rates. Staff explained they will research different service area scenarios, configurations, and possible fee structures and come back to Mayor and Council.

Agenda Item #7:

Mayor and Council Materials

Summary

Presentation

August 6, 2019:

The August 6, 2019 Study Session began with an overview of development impact fees and where we are in the process. Staff presented the tentative Development Impact Fee Schedule and discussed assessing residential rates by size rather than by number of units. Staff went on to present the impact fee infrastructure project list and explained that the list had transitioned from a list of specific projects to a more general list. Staff explained that a general list builds flexibility into the City’s process so that the City can more easily respond to the needs of new development. Council and Staff also discussed a city wide streets service area that would use a proportion of the street development impact fees to pay for regional projects such as the RTA. Council gave direction to staff to publish the draft development impact fee report and proceed with the public review process.

Agenda Item #8:

Mayor and Council Materials

Presentation

December 17, 2019:

During the December 17 Study Session staff reviewed the City of Tucson’s progress on the draft Land Use Assumptions (LUA), Infrastructure Improvements Plan (IIP), and Development Fee Report with Mayor and Council. Staff explained how the draft report reflects Mayor and Council direction on LUA, IIP, Service Areas, the Proposed Fee Schedule, and the Mixed Use Incentive. Staff shared how stakeholders have been involved in the Report drafting process. After discussions on Service Areas alignment, Mayor and Council requested ongoing discussions with staff in individual meetings to consider impacts of alternative Service Area alignments to funding the IIP and funding projects within each Service Area.

Agenda Item #6

Mayor and Council Materials

Summary

Presentation

February 19, 2020

The February 19, 2020 Mayor and Council Study Session began with an overview of the Development Impact Fee update process. Staff explained the Land Use Assumptions (LUA) and Infrastructure Improvements Plan (IIP) are will be brought before Mayor and Council on March 17, 2020 for adoption. While discussing the demolition credit provided in the Development Impact Fee program, the Mayor and Council directed staff to emphasize adaptive reuse and restoration of historic buildings. The Mayor and Council directed staff to review the Parks and Recreation Facilities inventory to ensure its accuracy. The Mayor and Council discussed the possibility of phase-in fee rates, but did not come to a decision. Staff explained that new projects may be added to the IIP and Capital Improvements Program (CIP) annually. The Mayor and Council directed staff to pursue the creation of a CIP Coordinator position. Finally, the Mayor and Council directed staff to keep the three service area structure of the draft Report. The meeting adjourned with direction to staff to make the changes discussed and present the final LUA and IIP at the upcoming adoption meeting on March 17, 2020.

Agenda Item #2

Mayor and Council Materials

Summary

Stakeholder Meetings

January 8, 2019

Agenda

Presentation

March 15, 2019

Presentation

April 24, 2019

Presentation

June 24, 2019

Presentation

September 23, 2019

Presentation

Additional Resources:

2020 Update Residential Fact Sheet

2020 Update Nonresidential Fact Sheet

Impact Fee General Information Handout

Updating Development Impact Fees Flyer

Development Impact Fees Budget Department Page

Development Impact Fee Calculator

Development Impact Fees Program 2014

Staff Contact Information:

Lynne Birkinbine

Deputy Director

Lynne.Birkinbine@tucsonaz.gov

(520) 837-3708

 

Elisa Hamblin

Principal Planner

Elisa.Hamblin@tucsonaz.gov

(520) 837-4966