CC - Agendas - City Council - REGULAR - 8/29/2006

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roe `N.1 'rktzo�r City of Prescott, Arizona Public Report Parks, Recreation, Library, Police, Fire, and Public Buildings & Fleet Impact Fees Update January 24, 2006 (Revised June 6, 2006) Background In 1982, the state legislature responded to the rapid growth in the state by passing legislation that allows municipalities to assess development impact fees to offset the costs incurred in providing public services to the new development. Arizona Revised Statutes Section 9-463.05 provides the statutory authority for the imposition of impact fees. The City of Prescott Charter also provides authority in Article 1 Section 3. A development impact fee is a one-time fee paid when a building permit is issued; it is intended to have new development pay a fair and proportionate share of new capital facilities required to serve the development. There must be a reasonable relationship between costs of facilities required to service the new development and the amount of the impact fee. The new facilities must be a direct result of the new growth; they are not intended to be used for operational expenses or to pay for capital improvements to correct an existing deficiency or shortfall. Development fees are required to evaluate possible credits. Future revenue credits were considered to avoid potential double payment for capital facilities.The Streets impact fee was the only impact fee that has a credit to offset the Streets and Open Space 1% privilege tax. The Streets impact fee is not part of this study and will be presented separately in the future. The second type of credit is a site-specific credit for system improvements that have been included in the development fee calculations. Project improvements normally required as part of the development approval process are not eligible for credits against development fees. Specific policies and procedures related to site-specific credits for system improvements are addressed in the ordinance that establishes the City's fees. However, the general concept is that developers may be eligible for site-specific credits or reimbursements only if they provide system improvements that have been included in the development fee calculation schedule. City History In 1994, the City contracted with nationally recognized impact fee consulting firm Tischler & Associates, to perform a feasibility analysis of potential impact fees for the City. A Citizen Advisory Committee on Development Impact Fees was formed to analyze the fees and underlying formulas and determined the methodology to be valid. In May 1995, the City collected the first impact fees for recreation, parks, library, police, fire, and streets.