Chapter 11
DEVELOPMENT FEES
Sec. 11-1 Title.
This chapter shall be known as the “2021 Development Fee Ordinance of the City of Kingman, Arizona,” and may be cited as such.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-2 Legislative intent and purpose.
This chapter is adopted for the purpose of promoting the health, safety and general welfare of the residents of the city by:
(a) Requiring new development to pay its proportionate share of the costs incurred by the city that are associated with providing necessary public services to new development.
(b) Setting forth standards and procedures for creating and assessing development fees consistent with the requirements of Arizona Revised Statutes (“A.R.S.”) § 9-463.05, as amended, including requirements pursuant to A.R.S. § 9-463.05(K) that, on or before August 1, 2014, the city replace its development fees that were adopted prior to January 1, 2012, with development fees adopted pursuant to the requirements of A.R.S. § 9-463.05 as amended by the State Legislature in SB 1525, Fiftieth Legislature, First Regular Session.
(c) Providing for the temporary continuation of certain development fees adopted prior to January 1, 2012, until otherwise replaced pursuant to this chapter, or longer where such development fees were pledged to support financing or debt for a grandfathered facility as permitted by A.R.S. §§ 9-463.05(K), (R), and (S).
(d) Setting forth procedures for administering the development fee program, including offsets, credits, and refunds of development fees. All development fee assessments, offsets, credits, or refunds must be administered in accordance with the provisions of this chapter.
This chapter shall not affect the city’s zoning authority or its authority to adopt or amend its general plan; provided, that planning and zoning activities by the city may require amendments to development fees as provided in section 11-7.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-3 Definitions.
When used in this chapter, the terms listed below shall have the following meanings unless the context requires otherwise. Singular terms shall include their plural.
Applicant: A person who applies to the city for a building permit.
Appurtenance: Any fixed machinery or equipment, structure or other fixture, including integrated hardware, software or other components, associated with a capital facility that is necessary or convenient to the operation, use, or maintenance of a capital facility, but excluding replacement of the same after initial installation.
Aquatic center: A facility primarily designed to host nonrecreational competitive functions generally occurring within water, including, but not limited to, water polo games, swimming meets, and diving events. Such facility may be indoors, outdoors, or any combination thereof, and includes all necessary supporting amenities, including but not limited to locker rooms, offices, snack bars, bleacher seating, and shade structures.
Building permit: Any permit issued by the city that authorizes vertical construction, increases square footage, authorizes changes to land use, or provides for the addition of a residential or nonresidential point of demand to a water or wastewater system.
Capital facility: An asset having a useful life of three (3) or more years that is a component of one (1) or more categories of necessary public service provided by the city. A capital facility may include any associated purchase of real property, architectural and engineering services leading to the design and construction of buildings and facilities, improvements to existing facilities, improvements to or expansions of existing facilities, and associated financing and professional services. Wherever used herein, “infrastructure” shall have the same meaning as “capital facilities.”
Category of development: A specific class of residential or nonresidential development against which a development fee is calculated and assessed. The city assesses development fees against the following categories of development: single-family, multifamily, mobile home, all other residential, industrial commercial, office and other services, institutional, hotel and assisted living.
Category of necessary public service: A class of necessary public services for which the city is authorized to assess development fees, as further defined in section 11-8(a)(1).
City: The City of Kingman, Arizona.
Credit: A reduction in an assessed development fee resulting from developer contributions to, payments for, construction of, or dedications for capital facilities included in an infrastructure improvements plan pursuant to section 11-12 (or as otherwise permitted by this chapter).
Credit agreement: A written agreement between the city and the developer(s) of subject development that allocates credits to the subject development pursuant to section 11-12. A credit agreement may be included as part of a development agreement pursuant to section 11-13.
Credit allocation: A term used to describe when credits are distributed to a particular development or parcel of land after execution of a credit agreement, but are not yet issued.
Credit issuance: A term used to describe when the amount of an assessed development fee attributable to a particular development or parcel of land is reduced by applying a credit allocation.
Developer: An individual, group of individuals, partnership, corporation, limited liability company, association, municipal corporation, state agency, or other person or entity undertaking land development activity, and their respective successors and assigns.
Development agreement: An agreement prepared in accordance with the requirements of section 11-13, A.R.S. § 9-500.05, and any applicable requirements of the Kingman Municipal Code.
Direct benefit: A benefit to a service unit resulting from a capital facility that: (1) addresses the need for a necessary public service created in whole or in part by the service unit; and that (2) meets either of the following criteria: (a) the capital facility is located in the immediate area of the service unit and is needed in the immediate area of the service unit to maintain the level of service; or (b) the capital facility substitutes for, or eliminates the need for, a capital facility that would have otherwise have been needed in the immediate area of the service unit to maintain the city’s level of service.
Dwelling unit: A house, building or portion of a building, apartment, mobile home or trailer, group of rooms, or single room occupied as separate living quarters or, if vacant, intended for occupancy as separate living quarters.
Equipment: Machinery, tools, materials, and other supplies, not including vehicles that are needed by a capital facility to provide the level of service specified by the infrastructure improvements plan, but excluding replacement of the same after initial development of the capital facility.
Excluded library facility: Library facilities for which development fees may not be charged pursuant to A.R.S. § 9-463.05, including that portion of any library facility that exceeds ten thousand (10,000) square feet, and equipment, vehicles or appurtenances associated with library operations.
Excluded park facility: Park and recreational facilities for which development fees may not be charged pursuant to A.R.S. § 9-463.05, including amusement parks, aquariums, aquatic centers, auditoriums, arenas, arts and cultural facilities, bandstand and orchestra facilities, bathhouses, boathouses, clubhouses, community centers greater than three thousand (3,000) square feet in floor area, environmental education centers, equestrian facilities, golf course facilities, greenhouses, lakes, museums, theme parks, water reclamation or riparian areas, wetlands, or zoo facilities.
Fee report: A written report developed pursuant to section 11-9 that identifies the methodology for calculating the amount of each development fee, explains the relationship between the development fee to be assessed and the infrastructure improvements plan, and meets other requirements set forth in A.R.S. § 9-463.05.
Financing or debt: Any debt, bond, note, loan, inter-fund loan, fund transfer, or other debt service obligation used to finance the development or expansion of a capital facility.
Fire facilities: A category of necessary public services that includes fire stations, equipment, vehicles and all appurtenances for fire stations. The term “fire facilities” does not include vehicles or equipment used to provide administrative services, helicopters, airplanes or any facility that is used for training firefighters from more than one (1) station or substation.
General plan: The comprehensive plan for development of the city establishing areas of the city for different purposes, zones and activities, adopted pursuant to A.R.S. Title 9, Chapter 4, Article 6, as amended, including specific area plans, if any, and including any part of such plan separately adopted and any amendment to such plan, or parts thereof.
Grandfathered facilities: Capital facilities provided through financing or debt incurred before June 1, 2011, for which a development fee has been pledged towards repayment as described in section 11-5(c).
Gross impact fee: The total development fee to be assessed against a subject development, prior to subtraction of any credits.
Infrastructure improvements plan: A document or series of documents that meet the requirements set forth in A.R.S. § 9-463.05, including those adopted pursuant to section 11-9 to cover any category or combination of categories of necessary public services.
Land use assumptions: Projections of changes in land uses, densities, intensities and population for a service area over a period of at least ten (10) years as specified in section 11-7.
Level of service: A quantitative and/or qualitative measure of a necessary public service that is to be provided by the city to development in a particular service area, defined in terms of the relationship between service capacity and service demand, accessibility, response times, comfort or convenience of use, or other similar measures or combinations of measures. Level of service may be measured differently for different categories of necessary public services, as identified in the applicable infrastructure improvements plan.
Library facilities: A category of necessary public services in which literary, musical, artistic, or reference materials are kept (materials may be kept in any form of media such as electronic, magnetic, or paper) for use by the public in a facility providing a direct benefit to development. Libraries do not include excluded library facilities, although a library may contain, provide access to, or otherwise support an excluded library facility.
Multifamily: Units in structures containing two (2) or more housing units.
Necessary public services: “Necessary public services” shall have the meaning prescribed in A.R.S. § 9-463.05(T)(7).
Offset: An amount that is subtracted from the overall costs of providing necessary public services to account for those capital components of infrastructure or associated debt that have been or will be paid for by a development through taxes, fees (except for development fees), and other revenue sources, as determined by the city pursuant to section 11-8.
Parks and recreational facilities: A category of necessary public services including but not limited to parks, swimming pools and related facilities and equipment located on real property not larger than thirty (30) acres in area, as well as park facilities larger than thirty (30) acres where such facilities provide a direct benefit. Parks and recreational facilities do not include excluded park facilities, although parks and recreational facilities may contain, provide access to, or otherwise support an excluded park facility.
Pledged: Where used with reference to a development fee, a development fee shall be considered “pledged” where it was identified by the city as a source of payment or repayment for financing or debt that was identified as the source of financing for a necessary public service for which a development fee was assessed pursuant to the then-applicable provisions of A.R.S. § 9-463.05.
Police facilities: A category of necessary public services, including equipment, vehicles and all appurtenances for police stations. The term “police facilities” does not include vehicles or equipment used to provide administrative services, helicopters, airplanes or any facility that is used for training officers from more than one (1) station or substation.
Qualified professional: Any one (1) of the following: (a) a professional engineer, surveyor, financial analyst or planner, or other licensed professional providing services within the scope of that person’s education or experience related to city planning, zoning, or development fees and holding a license issued by an agency or political subdivision of the state of Arizona; (b) a financial analyst, planner, or other nonlicensed professional providing services within the scope of the professional’s education or experience related to city planning, zoning, or development fees; or (c) any other person operating under the supervision of one (1) or more of the above.
Service area: The city has only one (1) service area, which encompasses all of the land within the city’s corporate boundaries, as they may be expanded or otherwise amended.
Service unit: A standardized measure of consumption, use, generation or discharge attributable to an individual unit of development calculated pursuant to generally accepted engineering or planning standards for a particular category of necessary public services or facility expansion.
Street facilities: A category of necessary public services including arterial or collector streets or roads, traffic signals, rights-of-way, and improvements thereon, and other necessary included facilities such as bridges, culverts, irrigation tiling, storm drains, and regional transportation facilities.
Subject development: A land area linked by a unified plan of development, which must be contiguous unless the land area is part of a development agreement executed in accordance with section 11-13.
Substantial nexus: A substantial nexus exists where the demand for necessary public services that will be generated by a service unit can be reasonably quantified in terms of the burden it will impose on the available capacity of existing capital facilities, the need it will create for new or expanded capital facilities, and/or the benefit to the development from those capital facilities.
Swimming pool: A public facility primarily designed and/or utilized for recreational noncompetitive functions generally occurring within water, including, but not limited to, swimming classes, open public swimming sessions, and recreational league swimming/diving events. The facility may be indoors, outdoors, or any combination thereof, and includes all necessary supporting amenities.
Useful life: The period of time during which an asset can reasonably be expected to be used under normal conditions, whether or not the asset will continue to be owned and operated by the city over the entirety of such period.
Vehicle: Any device, structure, or conveyance utilized for transportation in the course of providing a particular category of necessary public services at a specified level of service, excluding helicopters and other aircraft.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-4 Applicability.
(a) Except as otherwise provided herein, this chapter shall apply to all new development within any service area.
(b) The provisions of this chapter shall apply to all of the territory within the corporate limits of the city.
(c) The city manager or designee is authorized to make determinations regarding the application, administration and enforcement of the provisions of this chapter.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-5 Authority for development fees.
(a) Fee report and implementation. The city may assess and collect a development fee for costs of necessary public services, including all professional services required for the preparation or revision of an infrastructure improvements plan, fee report, development fee, and required reports or audits conducted pursuant to this chapter. Development fees shall be subject to the following requirements:
(1) The city shall develop and adopt a fee report that analyzes and defines the development fees to be charged in each service area for each capital facility category, based on the infrastructure improvements plan, calculated pursuant to section 11-8(a)(12).
(2) Development fees shall be assessed against all new residential and nonresidential developments; provided, that the city may assess different amounts of development fees against specific categories of development based on the actual burdens and costs that are associated with providing necessary public services to that category of development.
(3) No development fees shall be charged, or credits issued, for any capital facility that does not fall within one (1) of the categories of necessary public services for which development fees may be assessed as identified in section 11-8(a)(1).
(4) Costs for necessary public services made necessary by new development shall be based on the same level of service provided to existing development in the same service area. Development fees may not be used to provide a higher level of service to existing development or to meet stricter safety, efficiency, environmental, or other regulatory standards to the extent that these are applied to existing capital facilities that are serving existing development.
(5) Development fees may not be used to pay the city’s administrative, maintenance, or other operating costs.
(6) Projected interest charges and financing costs can only be included in development fees to the extent they represent principal and/or interest on the portion of any financing or debt used to finance the construction or expansion of a capital facility identified in the infrastructure improvements plan.
(7) All development fees charged by the city must be included in a “fee schedule” prepared pursuant to this chapter.
(8) All development fees shall meet the requirements of A.R.S. § 9-463.05.
(b) Costs per service unit. The fee report shall summarize the costs of capital facilities necessary to serve new development on a per-service-unit basis as defined and calculated in the infrastructure improvements plan, including all required offsets, and shall recommend a development fee structure for adoption by the city council.
(c) Carryover of previously established development fees and grandfathered facilities. Notwithstanding the requirements of this chapter, certain development fees adopted by the city prior to the effective date of this chapter shall continue in effect as follows:
(1) Development fees collected prior to January 1, 2012, shall be expended on capital facilities within the same category of necessary public services for which they were collected.
(2) The city may continue to collect and use any development fee established before January 1, 2012, even if the development fee would not otherwise be permitted to be collected and spent pursuant to A.R.S. § 9-463.05, as amended by the State Legislature in SB 1525, Fiftieth Legislature, First Regular Session, if either of the following apply:
a. Both of the following conditions are met:
1. Prior to June 1, 2011, the development fee was pledged towards the repayment of financing or debt incurred by the city to provide a capital facility.
2. The applicable capital facility was included in the city’s infrastructure improvements plan, or other city planning document prepared pursuant to applicable law, prior to June 1, 2011.
b. Before August 1, 2014, the city used the development fee to finance a capital facility in accordance with A.R.S. § 9-463.05(S).
(3) Defined terms in any previously established fee schedule shall be interpreted according to the ordinance in effect at the time of the fee schedule’s adoption.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-6 Administration of development fees.
(a) Separate accounts. Development fees collected pursuant to this chapter shall be placed in separate funds for each capital facility category within each service area.
(b) Limitations on use of fees. Development fees and any interest thereon collected pursuant to this chapter shall be spent to provide capital facilities associated with the same category of necessary public services in the same service area for which they were collected, including costs of financing or debt used by the city to finance such capital facilities and other costs authorized by this chapter that are included in the infrastructure improvements plan.
(c) Time limit. Development fees collected after July 31, 2014, shall be used within ten (10) years of the date upon which they were collected for all categories of necessary public services.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-7 Land use assumptions.
The infrastructure improvements plan shall be consistent with the city’s current land use assumptions for each service area and each category of necessary public services as adopted by the city pursuant to A.R.S. § 9-463.05.
(a) Reviewing the land use assumptions. Prior to the adoption or amendment of an infrastructure improvements plan, the city shall review and evaluate the land use assumptions on which the infrastructure improvements plan is to be based to ensure that the land use assumptions within each service area are consistent with the general plan.
(b) Evaluating necessary changes. If the land use assumptions upon which an infrastructure improvements plan is based have not been updated within the last five (5) years, the city shall evaluate the land use assumptions to determine whether changes are necessary. If, after general evaluation, the city determines that the land use assumptions are still valid, the city shall issue the report required in section 11-10.
(c) Required modifications to land use assumptions. If the city determines that changes to the land use assumptions are necessary in order to adopt or amend an infrastructure improvements plan, it shall make such changes as necessary to the land use assumptions prior to or in conjunction with the review and approval of the infrastructure improvements plan pursuant to section 11-10.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-8 Infrastructure improvements plan.
(a) Infrastructure improvements plan contents. The infrastructure improvements plan shall be developed by qualified professionals and may be based upon or incorporated within the city’s capital improvements plan. The infrastructure improvements plan shall:
(1) Specify the categories of necessary public services for which the city will impose a development fee, which may include any or all of the following:
a. Fire facilities.
b. Police facilities.
c. Parks and recreational facilities.
d. Streets facilities.
(2) Define and provide a map of one (1) or more service areas within which the city will provide each category of necessary public services for which development fees will be charged. Each service area must be defined in a manner that demonstrates a substantial nexus between the capital facilities to be provided in the service area and the service units to be served by those capital facilities. The city may cover more than one (1) category of capital facilities in the same service area; provided, that there is an independent substantial nexus or direct benefit, as applicable, between each category of necessary public services and the service units to be served.
(3) Identify and describe the land use assumptions upon which the infrastructure improvements plan is based in each service area.
(4) Analyze and identify the existing level of service provided by the city to existing service units for each category of necessary public services in each service area.
(5) Identify the level of service to be provided by the city for each category of necessary public services in each service area based on the relevant land use assumptions and any established city standards or policies related to required levels of service.
(6) For each category of necessary public services, analyze and identify the existing capacity of the capital facilities in each service area, the utilization of those capital facilities by existing service units, and the available excess capacity of those capital facilities to serve new service units including any existing or planned commitments or agreements for the usage of such capacity. The infrastructure improvements plan shall additionally identify any changes or upgrades to existing capital facilities that will be needed to achieve or maintain the planned level of service to existing service units, or to meet new safety, efficiency, environmental, or other regulatory requirements for services provided to existing service units.
(7) Identify any grandfathered facilities and the impact thereof on the need for necessary public services in each affected service area.
(8) Estimate the total number of existing and future service units within each service area based on the city’s land use assumptions.
(9) Based on the analysis in subsections (a)(3) through (a)(6) of this section, provide a summary table or tables describing the level of service for each category of necessary public services by relating the required capital facilities to service units in each service area, and identifying the applicable service unit factor associated with each category of development.
(10) For each category of necessary public services, analyze and identify the projected utilization of any available excess capacity in existing capital facilities, and all new or expanded capital facilities that will be required to provide and maintain the planned level of service in each service area as a result of the new projected service units in that service area, for a period not to exceed ten (10) years. Nothing in this subsection shall prohibit the city from additionally including in its infrastructure improvements plan projected utilization of, or needs for, capital facilities for a period longer than ten (10) years; provided, that the costs of such capital facilities are excluded from the development fee calculation.
(11) For each category of necessary public services, estimate the total cost of any available excess capacity and/or new or expanded capital facilities that will be required to serve new service units, including costs of land acquisition, improvements, engineering and architectural services, studies leading to design, design, construction, financing, and administrative costs, as well as projected costs of inflation. Such total costs shall not include costs for ongoing operation and maintenance of capital facilities, nor for replacement of capital facilities to the extent that such replacement is necessary to serve existing service units. If the infrastructure improvements plan includes changes or upgrades to existing capital facilities that will be needed to achieve or maintain the planned level of service to existing service units, or to meet new regulatory requirements for services provided to existing service units, such costs shall be identified and distinguished in the infrastructure improvements plan.
(12) Forecast the revenues from taxes, fees, assessments or other sources that will be available to fund the new or expanded capital facilities identified in the infrastructure improvements plan, which shall include estimated state-shared revenue, highway users revenue, federal revenue, ad valorem property taxes, construction contracting or similar excise taxes and the capital recovery portion of utility fees attributable to development based on the approved land use assumptions. The infrastructure improvements plan shall additionally estimate the time required to finance, construct and implement the new or expanded capital facilities.
(13) Calculate required offsets as follows:
a. From the forecasted revenues in subsection (a)(12) of this section, identify those sources of revenue that: (1) are attributable to new development, and (2) will contribute to paying for the capital costs of necessary public services.
b. For each source and amount of revenue identified pursuant to subsection (13)(a) of this section, calculate the relative contribution of each category of development to paying for the capital costs of necessary public services in each service area.
c. Based on the relative contributions identified pursuant to subsection (13)(b) of this section, for each category of necessary public services, calculate the total offset to be provided to each category of development in each service area.
d. For each category of necessary public services, convert the total offset to be provided to each category of development in each service area into an offset amount per service unit by dividing the total offset for each category of development by the number of service units associated with that category of development.
e. Beginning August 1, 2014, for purposes of calculating the required offset, if the city imposes a construction, contracting, or similar excise tax rate in excess of the percentage amount of the transaction privilege tax rate that is imposed on the majority of other transaction privilege tax classifications in the city, the entire excess portion of the construction, contracting, or similar excise tax shall be treated as a contribution to the capital costs of necessary public services provided to new development unless the excess portion is already taken into account for such purpose pursuant to this section.
(b) Multiple plans. An infrastructure improvements plan adopted pursuant to this subsection may address one (1) or more of the city’s categories of necessary public services in any or all of the city’s service areas. Each capital facility shall be subject to no more than one (1) infrastructure improvements plan at any given time.
(c) Reserved capacity. The city may reserve capacity in an infrastructure improvements plan to serve one (1) or more planned future developments, including capacity reserved through a development agreement pursuant to section 11-13. All reservations of existing capacity must be disclosed in the infrastructure improvements plan at the time it is adopted.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-9 Adoption and modification procedures.
(a) Adopting or amending the infrastructure improvements plan. The infrastructure improvements plan shall be adopted or amended subject to the following procedures:
(1) Major amendments to the infrastructure improvements plan. Except as provided in subsection (a)(2) of this section, the adoption or amendment of an infrastructure improvements plan shall occur at one (1) or more public hearings according to the following schedule, and may occur concurrently with the adoption of an update of the city’s land use assumptions as provided in section 11-7:
a. Sixty (60) days before the first public hearing regarding a new or updated infrastructure improvements plan, the city shall provide public notice of the hearing and post the infrastructure improvements plan and the underlying land use assumptions on its website; the city shall additionally make available to the public the documents used to prepare the infrastructure improvements plan and underlying land use assumptions and any proposed changes to capital facilities.
b. The city shall conduct a public hearing on the infrastructure improvements plan and underlying land use assumptions at least thirty (30) days, but no more than sixty (60) days, before approving or disapproving the infrastructure improvements plan.
(2) Minor amendments to the infrastructure improvements plan. Notwithstanding the other requirements of this section, the city may update the infrastructure improvements plan and/or its underlying land use assumptions without a public hearing if all of the following apply:
a. The changes in the infrastructure improvements plan and/or the underlying land use assumptions will not add any new category of necessary public services to any service area.
b. The changes in the infrastructure improvements plan and/or the underlying land use assumptions will not increase the level of service to be provided in any service area.
c. Based on an analysis of the fee report and the city’s adopted development fee schedules, the changes in the infrastructure improvements plan and/or the underlying land use assumptions would not, individually or cumulatively with other amendments undertaken pursuant to this subsection, have caused a development fee in any service area to have been increased by more than five (5) percent above the development fee that is provided in the current development fee schedule.
d. At least thirty (30) days prior to the date that any amendment pursuant to this section is adopted, the city shall post the proposed amendments on the City of Kingman website.
(b) Amendments to the fee report. Any adoption or amendment of a fee report and fee schedule shall occur at one (1) or more public hearings according to the following schedule:
(1) The first public hearing on the fee report must be held at least thirty (30) days after the adoption or approval of the infrastructure improvements plan as provided in subsection (a) of this section. The city must give at least thirty (30) days’ notice prior to the hearing; provided, that this notice may be given on the same day as the approval or disapproval of the infrastructure improvements plan.
(2) The city shall make the infrastructure improvements plan and underlying land use assumptions available to the public on the city’s website thirty (30) days prior to the public hearing described in subsection (b)(1) of this section.
(3) The fee report may be adopted by the city no sooner than thirty (30) days, and no later than sixty (60) days, after the hearing described in subsection (b)(1) of this section.
(4) The development fee schedules in the fee report adopted pursuant to this subsection shall become effective after adoption of the fee report by the city, at the time set forth in A.R.S. § 9-463.05.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-10 Timing for the renewal and updating of the infrastructure improvements plan and the land use assumptions.
(a) Renewing the infrastructure improvements plan. Except as provided in subsection (b) of this section, not later than every five (5) years the city shall update the applicable infrastructure improvements plan and fee report related to each category of necessary public services pursuant to section 11-9. Such five (5) year period shall be calculated from the date of the adoption of the infrastructure improvements plan or the date of the adoption of the fee report, whichever occurs later.
(b) Determination of no changes. Notwithstanding subsection (a) of this section, if the city determines that no changes to an infrastructure improvements plan, underlying land use assumptions, or fee report are needed, the city may elect to continue the existing infrastructure improvements plan and fee report without amendment by providing notice as follows:
(1) Notice of the determination shall be published at least ninety (90) days prior to the end of the five (5) year period described in subsection (a) of this section.
(2) The notice shall identify the infrastructure improvements plan and fee report that shall continue in force without amendment.
(3) The notice shall provide a map and description of the service area(s) covered by such infrastructure improvements plan and fee report.
(4) The notice shall identify an address to which any resident of the city may submit, within sixty (60) days, a written request that the city update the infrastructure improvements plan, underlying land use assumptions, and/or fee report and the reasons and basis for the request.
(c) Response to comments. The city shall consider and respond to any timely requests submitted pursuant to subsection (b)(4) of this section.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-11 Collection of development fees.
(a) Collection. Development fees, together with administrative charges assessed pursuant to subsection (a)(5) of this section, shall be calculated and collected prior to issuance of permission to commence development; specifically:
(1) Unless otherwise specified pursuant to a development agreement adopted pursuant to section 11-13, development fees shall be paid prior to issuance of a building permit according to the current development fee schedule for the applicable service area(s) as adopted pursuant to this chapter, or according to any other development fee schedule as authorized in this chapter.
(2) If a building permit is not required for the development, but water or wastewater connections are required, any and all development fees due shall be paid at the time the water service connection is purchased.
(3) No building permit, water or sewer connection, or certificate of occupancy shall be issued if a development fee is not paid as directed in the previous subsections. If a building permit is issued in error, or if construction is commenced without proper authorization, the building permit may be revoked and work on the property ceased until the development fee is paid in full.
(4) If the building permit is for a change in the type of building use, an increase in square footage, a change to land use, or an addition to a residential or nonresidential point of demand to the water or wastewater system, the development fee shall be assessed on the additional service units resulting from the expansion or change, and following the development fee schedule applicable to any new use type.
(5) For issued building permits that expire or are voided, development fees and administrative charges shall be as follows:
a. If the original permittee is seeking to renew an expired or voided permit, and the development fees paid for such development have not been refunded, then the permittee shall pay the difference between any development fees paid at the time the permit was issued and those in the fee schedule at the time the permit is reissued or renewed.
b. If a new or renewed permit for the same development is being sought by someone other than the original permittee, the new permit applicant shall pay the full development fees specified in the fee schedule in effect at the time that the permits are reissued or renewed. If the original permittee has assigned its rights under the permits to the new permit applicant, the new permit applicant shall pay development fees as if it were the original permittee.
(b) Exceptions. Development fees shall not be owed under either of the following conditions:
(1) Development fees have been paid for the development and the building permit(s) that triggered the collection of the development fees have not expired or been voided.
(2) The approval(s) that trigger the collection of development fees involve modifications to existing residential or nonresidential development that do not: (a) add new service units, (b) increase the impact of existing service units on existing or future capital facilities, or (c) change the land use type of the existing development to a different category of development for which a higher development fee would have been due. To the extent that any modification does not meet the requirements of this subsection (b)(2), the development fee due shall be the difference between the development fee that was or would have been due on the existing development and the development fee that is due on the development as modified.
(c) Temporary exemptions from development fee schedules. New developments in the city shall be temporarily exempt from increases in development fees that result from the adoption of new or modified development fee schedules as follows:
(1) Residential uses. On or after the day that the first building permit is issued for a single-family residential development, the city may, and at the permittee’s request shall, provide the permittee with an applicable “grandfathered” development fee schedule that shall be in force for a period of twenty-four (24) months beginning on the day that the first building permit is issued, and which shall expire at the end of the first business day of the twenty-fifth month thereafter. During the effective period of the applicable “grandfathered” development fee schedule, the developer shall pay the fees on that schedule, and any building permit issued for the same single-family residential development shall not be subject to any new or modified development fee schedule.
(2) Commercial, industrial and multifamily uses. On or after the day that the final approval, as defined in A.R.S. § 9-463.05(T)(4), is issued for a commercial, industrial or multifamily development, the city shall provide an applicable development fee schedule that shall be in force for a period of twenty-four (24) months beginning on the day that final development approval of a site plan or final subdivision plat is given, and which shall expire at the end of the first business day of the twenty-fifth month thereafter. During the effective period of the applicable development fee schedule, any building permit issued for the same development shall not be subject to any new or modified development fee schedule.
(3) Other development. Any category of development not covered under subsections (c)(1) and (c)(2) of this section shall pay development fees according to the fee schedule that is current at the time of collection as specified in subsection (a) of this section.
(4) Changes to site plans and subdivision plats. Notwithstanding the other requirements of this subsection, if changes are made to a development’s final site plan or subdivision plat that will increase the number of service units after the issuance of a “grandfathered” development fee schedule, the city may assess any new or modified development fees against the additional service units. If the city reduces the amount of an applicable development fee during the period that a grandfathered development fee schedule is in force, the city shall assess the lower development fee.
(d) Option to pursue special fee determination. Where a development is of a type that does not closely fit within a particular category of development appearing on an adopted development fee schedule, or where a development has unique characteristics such that the actual burdens and costs associated with providing necessary public services to that development will differ substantially from that associated with other developments in a specified category of development, the city may require the applicant to provide the city manager or designee with an alternative development fee analysis. Based on a projection of the actual burdens and costs that will be associated with the development, the alternative development fee analysis may propose a unique fee for the development based on the application of an appropriate service unit factor, or may propose that the development be covered under the development fee schedule governing a different and more analogous category of development. The city manager or designee shall review the alternative impact fee analysis and shall make a determination as to the development fee to be charged. Such decision shall be appealable pursuant to section 11-14. The city manager or designee may require the applicant to pay an administrative fee to cover the actual costs of reviewing the special fee determination application.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-12 Development fee credits and credit agreements.
(a) Eligibility of capital facility. All development fee credits must meet the following requirements:
(1) One (1) of the following is true:
a. The capital facility, or the financial contribution toward a capital facility that will be provided by the developer and for which a credit will be issued, must be identified in an adopted infrastructure improvements plan and fee report as a capital facility for which a development fee was assessed; or
b. The applicant must demonstrate to the satisfaction of the city that, given the class and type of improvement, the subject capital facility should have been included in the infrastructure improvements plan in lieu of a different capital facility that was included in the infrastructure improvements plan and for which a development fee was assessed. If the subject capital facility is determined to be eligible for a credit in this manner, the city shall amend the infrastructure improvements plan to (1) include the subject replacement facility and (2) delete the capital facility that will be replaced.
(2) Credits shall not be available for any infrastructure provided by a developer if the cost of such infrastructure will be repaid to the developer by the city through another agreement or mechanism. To the extent that the developer will be paid or reimbursed by the city for any contribution, payment, construction, or dedication from any city funding source including an agreement to reimburse the developer with future collected development fees pursuant to section 11-13, any credits claimed by the developer shall be: (a) deducted from any amounts to be paid or reimbursed by the city; or (b) reduced by the amount of such payment or reimbursement.
(b) Calculation of credits. Credits will be based on that portion of the costs for an eligible capital facility identified in the adopted infrastructure improvements plan for which a development fee was assessed pursuant to the fee report. If the gross impact fee for a particular category of necessary public service is adopted at an amount lower than the maximum amount justified by the fee report, the amount of any credit shall be reduced in proportion to the difference between the maximum amount justified by the fee report and the gross impact fee adopted. A credit shall not exceed the actual costs the applicant incurred in providing the eligible capital facility.
(c) Allocation of credits. Before any credit can be issued to a subject development (or portion thereof), the credit must be allocated to that development as follows:
(1) The developer and the city must execute a credit agreement including all of the following:
a. The total amount of the credits resulting from provision of an eligible capital facility.
b. The estimated number of service units to be served within the subject development.
c. The method by which the credit values will be distributed within the subject development.
(2) It is the responsibility of the developer to request allocation of development fee credits through an application for a credit agreement (which may be part of a development agreement entered into pursuant to section 11-13).
(3) If a building permit is issued or a water/sewer connection is purchased, and a development fee is paid prior to execution of a credit agreement for the subject development, no credits may be allocated retroactively to that permit or connection. Credits may be allocated to any remaining permits for the subject development in accordance with this chapter.
(4) If the entity that provides an eligible capital facility sells or relinquishes a development (or portion thereof) that it owns or controls prior to execution of a credit agreement or development agreement, credits resulting from the eligible capital facility will only be allocated to the development if the entity legally assigns such rights and responsibilities to its successor(s) in interest for the subject development.
(5) If multiple entities jointly provide an eligible capital facility, both entities must enter into a single credit agreement with the city, and any request for the allocation of credit within the subject development(s) must be made jointly by the entities that provided the eligible capital facility.
(6) Credits may only be reallocated from or within a subject development with the city’s approval of an amendment to an executed credit agreement, subject to the following conditions:
a. The entity that executed the original agreement with the city, or its legal successor in interest, and the entity that currently controls the subject development are parties to the request for reallocation.
b. The reallocation proposal does not change the value of any credits already issued for the subject development.
(7) A credit agreement may authorize the allocation of credits to a noncontiguous parcel only if all of the following conditions are met:
a. The entity that executed the original agreement with the city or its legal successor in interest, the entity that currently controls the subject development, and the entity that controls the noncontiguous parcel are parties to the request for reallocation.
b. The reallocation proposal does not change the value of any credits already issued for the subject development.
c. The noncontiguous parcel is in the same service area as that served by the eligible capital facility.
d. The noncontiguous parcel receives a necessary public service from the eligible capital facility.
e. The credit agreement specifically states the value of the credits to be allocated to each parcel and/or service unit, or establishes a mechanism for future determination of the credit values.
f. The credit agreement does not involve the transfer of credits to or from any property subject to a development agreement.
(d) Credit agreement. Credits shall only be issued pursuant to a credit agreement executed in accordance with subsection (c) of this section. The city manager or designee is authorized by this chapter to enter into a credit agreement with the controlling entity of a subject development, subject to the following:
(1) The developer requesting the credit agreement shall provide all information requested by the city to allow it to determine the value of the credit to be applied.
(2) An application for a credit agreement shall be submitted to the city by the developer within one (1) year of the date on which ownership or control of the capital facility passes to the city.
(3) The developer shall submit a draft credit agreement to the city manager or designee for review in the form provided to the applicant by the city. The draft credit agreement shall include, at a minimum, all of the following information and supporting documentation:
a. A legal description and map depicting the location of the subject development for which credit is being applied. The map shall depict the location of the capital facilities that have been or will be provided.
b. An estimate of the total service units that will be developed within the subject development depicted on the map and described in the legal description.
c. A list of the capital facilities, associated physical attributes, and the related costs as stated in the infrastructure improvements plan.
d. Documentation showing the date(s) of acceptance by the city, if the capital facilities have already been provided.
e. The total amount of credit to be applied within the subject development and the calculations leading to the total amount of credit.
f. The credit amount to be applied to each service unit within the subject development for each category of necessary public services.
(4) The city’s determination of the credit to be allocated is final.
(5) Upon execution of the credit agreement by the city and the applicant, credits shall be deemed allocated to the subject development.
(6) Any amendment to a previously approved credit agreement must be initiated within two (2) years of the city’s final acceptance of the eligible capital facility for which the amendment is requested.
(7) Any credit agreement approved as part of a development agreement shall be amended in accordance with the terms of the development agreement and section 11-13.
(e) Issuance of credits. Credits allocated pursuant to subsection (c) of this section may be issued and applied toward the gross impact fees due from a development, subject to the following conditions:
(1) Credits issued for an eligible capital facility may only be applied to the development fee due for the applicable category of necessary public services, and may not be applied to any fee due for another category of necessary public services.
(2) Credits shall only be issued when the eligible capital facility from which the credits were derived has been accepted by the city or when adequate security for the completion of the eligible capital facility has been provided in accordance with all terms of an executed development agreement.
(3) Where credits have been issued pursuant to subsection (e)(2) of this section, a development fee due at the time a building permit is issued shall be reduced by the credit amount stated in or calculated from the executed credit agreement. Where credits have not yet been issued, the gross impact fee shall be paid in full, and a refund of the credit amount shall be due when the developer demonstrates compliance with subsection (e)(2) of this section in a written request to the city.
(4) Credits, once issued, may not be rescinded or reallocated to another building permit or parcel, except that credits may be released for reuse on the same subject development if a building permit for which the credits were issued has expired or been voided and is otherwise eligible for a refund under section 11-15(a)(2)(a).
(5) Notwithstanding the other provisions of this section, credits issued prior to January 1, 2012, may only be used for the subject development for which they were issued. Such credits may be transferred to a new owner of all or part of the subject development in proportion to the percentage of ownership in the subject development to be held by the new owner.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-13 Development agreements.
Development agreements containing provisions regarding development fees, development fee credits, and/or disbursement of revenues from development fee accounts shall comply with the following:
(a) Development agreement required. A development agreement is required to authorize any of the following:
(1) To issue credits prior to the city’s acceptance of an eligible capital facility.
(2) To allocate credits to a parcel that is not contiguous with the subject development and that does not meet the requirements of section 11-12(c)(7).
(3) To reimburse the developer of an eligible capital facility using funds from development fee accounts.
(4) To allocate different credit amounts per service unit to different parcels within a subject development.
(5) For a single-family residential dwelling unit, to allow development fees to be paid at a later time than the issuance of a building permit as provided in this section.
(b) General requirements. All development agreements shall be prepared and executed in accordance with A.R.S. § 9-500.05 and any applicable requirements of the City Code. Except where specifically modified by this section, all provisions of section 11-12 shall apply to any credit agreement that is authorized as part of a development agreement.
(c) Early credit issuance. A development agreement may authorize credit issuance prior to acceptance of an eligible capital facility by the city when the development agreement specifically states the form and value of the security (for example, bond, letter of credit) to be provided to the city prior to credit issuance. The city attorney shall determine the acceptable form and value of the security to be provided.
(d) Noncontiguous credit allocation. A development agreement may authorize the allocation of credits to a noncontiguous parcel only if all of the following conditions are met:
(1) The noncontiguous parcel is in the same service area as that served by the eligible capital facility.
(2) The noncontiguous parcel receives a necessary public service from the eligible capital facility.
(3) The development agreement specifically states the value of the credits to be allocated to each parcel and/or service unit, or establishes a mechanism for future determination of the credit values.
(e) Uneven credit allocation. If the credits are not to be allocated evenly, the development agreement must specify how credits will be allocated amongst different parcels on a per-service-unit basis. If the development agreement is silent on this topic, all credits will be allocated evenly amongst all parcels on a per-service-unit basis.
(f) Use of reimbursements. Funds reimbursed to developers from development fee accounts for construction of an eligible capital facility must be utilized in accordance with applicable law for the use of city funds in construction or acquisition of capital facilities, including A.R.S. § 34-201 et seq.
(g) Deferral of fees. A development agreement may provide for the deferral of payment of development fees for a residential development beyond the issuance of a building permit; provided, that a development fee may not be paid later than the fifteen (15) days after the issuance of the certificate of occupancy for that dwelling unit. The development agreement shall provide for the value of any deferred development fees to be supported by appropriate security, including a surety bond, letter of credit, or cash bond.
(h) Waiver of fees. If the city agrees to waive any development fees assessed on development in a development agreement, the city shall reimburse the appropriate development fee account for the amount that was waived.
(i) No obligation. Nothing in this section obligates the city to enter into any development agreement or to authorize any type of credit agreement permitted by this section.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-14 Appeals.
A development fee determination by city staff may be appealed in accordance with the following procedures:
(a) Limited scope. An appeal shall be limited to disputes regarding the calculation of the development fees for a specific development and/or permit and calculation of service units for the development.
(b) Form of appeal. An appeal shall be initiated on such written form as the city may prescribe, and submitted to the city manager.
(c) Action by manager. The city manager shall act upon the appeal within thirty (30) calendar days of the filing of the appeal, and the applicant shall be notified of the city manager’s decision in writing.
(d) Final decision. The city manager’s decision regarding the appeal is final.
(e) Fees during pendency. Building permits may be issued during the pendency of an appeal if the applicant (1) pays the full development fee calculated by the city at the time the appeal is filed or (2) provides the city with financial assurances, in the form acceptable to the city attorney, equal to the full amount of the development fee. Upon final disposition of an appeal, the fee shall be adjusted in accordance with the decision rendered, and a refund paid if warranted. If the appeal is finally denied, and the applicant has provided the city with financial assurances as set forth in clause (2) above, the applicant shall deliver the full amount of the development fee to the city within ten (10) days of the final decision on the appeal. If the applicant fails to deliver the full amount of the development fees when required by this subsection, the city may draw upon such financial assurance instrument(s) as necessary to recover the full amount of the development fees due from the applicant.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-15 Refunds of development fees.
(a) Refunds. A refund (or partial refund) will be paid to any current owner of property within the city who submits a written request to the city and demonstrates that:
(1) The building permit(s) that triggered the collection of the development fee have expired or been voided prior to the commencement of the development for which the permits were issued and the development fees collected have not been expended, encumbered, or pledged for the repayment of financing or debt; or
(2) The owner of the subject real property or its predecessor in interest paid a development fee for the applicable capital facility on or after August 1, 2014, and one (1) of the following conditions exists:
a. The capital facility designed to serve the subject real property has been constructed, has the capacity to serve the subject real property and any development for which there is reserved capacity, and the service which was to be provided by that capital facility has not been provided to the subject real property from that capital facility or from any other infrastructure.
b. After collecting the fee to construct a capital facility the city fails to complete construction of the capital facility within the time period identified in the infrastructure improvements plan, as it may be amended, and the corresponding service is otherwise unavailable to the subject real property from that capital facility or any other infrastructure.
c. For a category of necessary public services, any part of a development fee is not spent within ten (10) years of the city’s receipt of the development fee. For the purpose of determining whether fees have been spent, the city shall use a first-in, first-out process.
d. The development fee was calculated and collected for the construction cost to provide all or a portion of a specific capital facility serving the subject real property and the actual construction costs for the capital facility are less than the construction costs projected in the infrastructure improvements plan by a factor of greater than ten (10) percent or more. In such event, the current owner of the subject real property shall, upon request as set forth in this subsection (a), be entitled to a refund for the difference between the amounts of the development fee charged for and attributable to such construction cost and the amount the development fee would have been calculated to be if the actual construction cost had been included in the fee report. The refund contemplated by this subsection shall relate only to the costs specific to the construction of the applicable capital facility and shall not include any related design, administrative, or other costs not directly incurred for construction of the capital facility that are included in the development fee as permitted by A.R.S. § 9-463.05.
(b) Earned interest. A refund of a development fee shall include any interest actually earned on the refunded portion of the development fee by the city from the date of collection to the date of refund; provided, however, that interest is not required to be paid if the refund is requested by the developer or property owner due to voluntary cessation or abandonment of work. All refunds shall be made to the record owner of the property at the time the refund is paid.
(c) Refund to government. If a development fee was paid by a governmental entity, any refund shall be paid to that governmental entity.
(d) Time limitation. Any refund request must be made not later than one hundred eighty (180) days following the occurrence of any event described in subsections (A)(2)(a) through (A)(2)(d) of this section.
(Ord. No. 1928, § 3, 7-20-21)
Sec. 11-16 Oversight of development fee program.
(a) Annual report. Within ninety (90) days of the end of each fiscal year, the city shall file with the city clerk an unaudited annual report accounting for the collection and use of the fees for each service area and shall post the report on its website in accordance with A.R.S. §§ 9-463.05(N) and (O), as amended.
(b) Biennial audit. In addition to the annual report described in subsection (a) of this section, the city shall provide for a biennial, certified audit of the city’s land use assumptions, infrastructure improvements plan and development fees.
(1) An audit pursuant to this subsection shall be conducted by one (1) or more qualified professionals who are not employees or officials of the city and who did not prepare the infrastructure improvements plan.
(2) The audit shall review the collection and expenditures of development fees for each project in the plan and provide written comments describing the amount of development fees assessed, collected, and spent on capital facilities.
(3) The audit shall describe the level of service in each service area, and evaluate any inequities in implementing the infrastructure improvements plan or imposing the development fee.
(4) The city shall post the findings of the audit on the city’s website and shall conduct a public hearing on the audit within sixty (60) days of the release of the audit to the public.
(5) For purposes of this section a certified audit shall mean any audit authenticated by one (1) or more of the qualified professionals conducting the audit pursuant to subsection (b)(1) of this subsection.
(Ord. No. 1928, § 3, 7-20-21)