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 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 Info on Impact Fees
Development Impact Fees are one time fees dedicated to expand:
- Police Services
- Fire Services
Development Impact Fees apply to developments if:
- There is new development (residential and commercial)
- 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:
- The service area
- The use
- 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)
Planning and Development Services assists with the required update process (currently ongoing) and collects impact fees when a building permit is issued
Summary of the Process To-Date
Mayor and Council Study Sessions
September 5th, 2018:
During the September 5th Study Session staff gave an introduction of the City of Tucson’s impact fee program to Mayor and Council. Staff explained the state mandates 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:
February 20th, 2019:
The impact fee discussion of the February 20th Study Session began with a presentation on the City of Tucson’s impact fee program. Staff explained where the City is in the state mandated 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
April 9th, 2019:
The April 9th Study Session’s discussion of impact fees began with an introduction by staff and the 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:
August 6th, 2019:
The August 6th, 2019 Study Session began with an overview of impact fees and where we are in the process. Staff presented the tentative 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 impact fees to pay for regional projects such as the RTA. Council gave direction to staff to publish the draft impact fee report and proceed with the public review process.
Agenda Item #8:
January 8th, 2019
March 15th, 2019
April 24th, 2019
June 24, 2019