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Current Topics Relating to Development Impact Fees. Presented by Andrew J. McGuire, Esq. Alternate Title: How I Spent My Spring Break, My Summer Vacation, My Fall Break, My Christmas Vacation, Another Spring Break, Probably Another Summer Vacation . . . Current Law A.R.S. § 9-463.05.

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current topics relating to development impact fees

Current Topics Relating to Development Impact Fees

Presented by

Andrew J. McGuire, Esq.

slide2

Alternate Title:How I Spent My Spring Break, My Summer Vacation, My Fall Break, My Christmas Vacation, Another Spring Break, Probably Another Summer Vacation . . .

current law a r s 9 463 051
Current Law A.R.S. § 9-463.05
  • Adopted 1982
  • HBACA chipping away year-by-year
  • Amended a few times
    • most recent addition — reporting requirements — to address homebuilders concerns about “transparency” (I really hate this word!)
current law a r s 9 463 052
Current Law A.R.S. § 9-463.05
  • DIFs generally
    • Allowed for costs to municipality for providing necessary public services to a development
    • “Necessary public services” is not defined; generally, anything a municipality may provide
current law a r s 9 463 053
Current Law A.R.S. § 9-463.05
  • Beneficial use to development
  • Accounted for separately
  • Credits for infrastructure provided
  • Paid at building permit
  • Must bear a reasonable relationship to burden on a municipality
  • Assessed in a non-discriminatory manner
current law a r s 9 463 054
Current Law A.R.S. § 9-463.05
  • DIF Approval process
    • 60 days notice of intent and report supporting the DIF
    • Public hearing after 60 days and at least 14 days before adoption
    • Effective 90 days after adoption
current law a r s 9 463 055
Current Law A.R.S. § 9-463.05
  • Annual Report (this was the original “transparency” change)
    • Amount assessed for each type of fee
    • Beginning and ending balance of each fee
    • Amount of interest earned
current law a r s 9 463 056
Current Law A.R.S. § 9-463.05
  • Amount of DIF funds used to repay
    • Bonds for CIP project that was subject of fee assessment
    • Monies advanced by the municipality
  • Amount of DIF funds monies spent on CIP project & location of improvement
current law a r s 9 463 057
Current Law A.R.S. § 9-463.05
  • Amount of DIF fee monies spent for each purpose other than a CIP project
  • Filed with municipal clerk
  • FAILURE TO FILE = PROHIBITED FROM COLLECTING FEES
hb 2381
HB 2381
  • HB 2381 generally
    • Striker bill
    • Massive attack on municipal authority
    • Stated agenda was “transparency” but real agenda was “to prevent cities from doing stupid things like adopting plans for lakes that they have no money to build.”
hb 23811
HB 2381
  • Passed by one vote in each house
  • HB 2381 content:
    • Defined “public services” to specifically exclude “airplanes or arts or cultural facilities”
    • Other uses were in a non-exclusive laundry list
    • Stepping stone to exclusive list in later years
hb 23812
HB 2381
  • First introduced the idea of linking development impact fees to CIP
    • General concept was hard to argue against — development impact fees should be tied to capital plan
    • “Capital improvements plan” — definition was problematic
    • LOS for all fees – NOT WORKABLE
hb 23813
HB 2381
  • Created a CIP approval process similar to development impact fee process
    • 60 days notice of intention
    • Hearing on changes at least 30 days before adoption
  • Needed to be completed BEFORE development impact fee process started — would have extended adoption time
hb 23814
HB 2381
  • Amended without notice/hearing if related to
    • Something developer might be reimbursed for, but specifically excluded parks, open space, etc.
    • Adjusting cost of providing the service or estimated time
    • Development exactions
hb 23815
HB 2381
  • Created specific requirements for fee study
    • Service areas/LOS
  • Linking improvement to specific fee — refund issue — counter intuitive to LOS methodology
    • Required identification of other funds to be used (i.e. new construction sales tax) for non-DIF portion of capital costs
hb 23816
HB 2381
  • Required a refund TO THE PAYOR if DIF not spent in the service area
    • Camel’s nose — next step in fees tied to specific infrastructure
    • Nightmare of refunding to original payor (i.e. single-purpose LLC)
hb 23817
HB 2381
  • REQUIRED an offset against the development impact fee amount for any non-DIF amounts to be used for a capital project, including grants, new construction sales tax, etc.
  • Introduced the concept of indexing (about the only good thing in this bill)
hb 23818
HB 2381
  • Look-back provision would have invalidated virtually every municipality’s fees
  • Introduced requirement for discrepancy in assessment to be raised within two years of date fee is paid
hb 23819
HB 2381
  • Created definitions for:
    • “Capital improvements plan” — problematic term, even as defined
    • “Development”
    • “Level of service” — again, a non-standard definition of a commonly used term
    • “Public infrastructure” — first step to an exclusive list
hb 238110
HB 2381
      • “Public service” — first step to an exclusive list
      • “Service area”
  • Governor’s VETO
    • How it happened
    • Her directive
sb 14231
SB 1423
  • Background — A Different approach
    • League compromise bill to start
    • Worked directly with the “stakeholders” (hate this word, too!); Senate President as sponsor
    • The uneasy truce — no end-around changes — I AM NOT HOLDING MY BREATH!
sb 14232
SB 1423
  • Highlights of the bill
    • Clarifies the broader scope of DIF uses beyond infrastructure (i.e. police cars)
    • Requires fees to be spent within the same category as collected (basically stating what we believe to be the law already)
    • Explains credits for developer-constructed infrastructure
sb 14233
SB 1423
  • C of O + 15 days with DA
    • SAHBA requirement
    • Requires bond or other security
    • Hard to argue against because it is at the municipalities’ option
sb 14234
SB 1423
  • Requires DIF study to be based upon an infrastructure improvements plan (IIP)
    • IIP — 60 day period before public hearing
    • Public hearing 30 days before IIP adopted
    • May be amended without hearing (but 14 days notice) if it addresses only items currently in the IIP
sb 14235
SB 1423
  • Elements of IIP
    • Estimate of future necessary public services required by new development
    • Forecast cost & estimate time of completion
sb 14236
SB 1423
  • Other changes to current statute
    • Adds DIF study requirements
      • Identify methodology
      • Explain fee relationship to IIP
      • Identify indices used + timing
    • Automatic indexing (w/o hearing, with 30 days notice )
    • Adopts 2 year collection period
sb 14237
SB 1423
    • Defines IIP – non-exclusive list
  • Issues left out
    • Commercial pre-payment
    • Refunds
      • Payor vs. current owner
      • Tied to specific infrastructure
sb 14238
SB 1423
  • Definition of “necessary public services”
  • Affordable housing
  • Greater breakdown of residential uses
  • Grandfathering
    • Plat + 2 years for SFR
    • Site plan approval for MFR
sb 14239
SB 1423
  • Calculation of exiting residents’ benefit
  • Separate accounting of non-DIF funds; contributed when DIF is deposited
questions

QUESTIONS?

Andrew J. McGuire

Gust Rosenfeld PLC

201 E. Washington St., Suite 800

Phoenix, Arizona 85004

(602) 257-7664 direct dial

(602) 304-1538 facsimile

amcguire@gustlaw.com

www.gustlaw.com