Arizona impact fee bill far-reaching

The Arizona Senate passed SB 1525 on February 28, 2011.  This bill amounts to a virtually complete rewrite of the Arizona statute for municipal impact fees.  It imports verbatim major sections of the Texas act, one of the earliest and most restrictive impact fee enabling acts in the country.  Let me highlight some of the most significant changes:

(1)  limits the types of facilities for which cities may charge impact fees to water, wastewater, roads, fire, police and parks (a major omission is drainage, which is one of only four facilities allowed in the Texas act);

(2)  prohibits fire and police fees from including training facilities, aircraft, or administrative vehicles or equipment;

(3)  excludes from park fees facilities larger than 30 acres, community centers over 3,000 sq. ft., swimming pools, and cultural facilities;

(4)  prohibits city-wide service areas, except for cities of less than 10,000 population;

(5)  requires courts to narrowly construe cities’ authority to impose fees;

(6)  requires that the infrastructure improvements plan be prepared by a licensed engineer;

(7)  requires that fees be refunded if not spent in 5 years;

(8)  requires review of fees by a developer-oriented advisory committee;

(9)  extends from 2 to 5 years the period that final approval (residential subdivision or nonresidential site plan) locks in the fee schedule in place at the time;

(10) requires existing fees to be brought into conformity with the revised statute by August 1, 2012;

(11) requires the preparation of land use assumptions (growth projections) covering at least a 10-year period;

(12) removes the ability of cities to adjust fees annually based on a cost index;

(13) requires the recalculation of the fee upon the completion of the infrastructure improvement plan, and if the recalculated fee based on actual costs is more than 10% below the fee charged, the difference to be refunded (this provision was in the original Texas act, but was later removed);

It also has a very strange provision.  Section Q states that “Development fees collected after August 1, 2012 are used solely for the payment of principal and interest on the portion of the bonds issued before December 31, 2010 to finance construction of the facility.”  I have no idea what this is intended to mean.

Clancy Mullen
Posted March 8. 2011

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