CC - Agendas - City Council - WORKSHOP - 10/28/2008

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Prescott City Council Joint Special Meeting/ Study Session — October 21, 2008 Page 12 L. Water and Sewer Development Fees: 1. Adoption of Water and Wastewater Capital Improvement Plans. 2. Adoption of Ordinance No. 4665-0908 — An ordinance of the Mayor and Council of the City of Prescott, Yavapai County, Arizona, amending Title II, Chapter 2-1 and Title III, Chapter 3-14, of the Prescott City Code, regarding the imposition of water and sewer development fees. Deputy City Manager Craig McConnell said that this item was last considered on August 26, when the subject was rescheduled to today's meeting to allow additional time for dialogue with construction industry representatives. He said that the City engaged Economists.com, a rate and impact fee expert, to look at the rates/impact fees and to do that they had several objectives: 1) assure a stable financial footing for water and sewer enterprises, which includes rates (existing) and monies generated from impact fees or other financial tools; 2) continue quality infrastructure to the City's customers; and 3) achieve the Council's goal for a first-class utility system. He said that Mr. Jackson has pointed out before that the cost of operating and maintaining systems are rising. In May, water and sewer rates were adjusted and are now in effect supporting both rising costs and rehabilitation work. Part of the work has been accomplished which was a fundamental purpose. He said that raising rates/fees is a difficult proposition; the City is sensitive to the concept of raising rates. He said that the City's ratepayers are making their contribution to the cost of maintaining those systems, and this item is the second component. He said that if the City is going to have a policy of encouraging reasonable growth, they need to be prepared with infrastructure. In order to accomplish that it requires funding from some source or financing tool. He then reviewed the legal definition of impact fees. He said that the process sounds simple, but it requires a 250-page report and an expert that knows how to do these things because it all has to fit together. A ten-year financial plan is the basis for this report, but it also looks at projections well into the future to make sure that things will work as well in the future years. Mr. McConnell said that if impact fees are reduced, the funding is reduced for new infrastructure, so the implication is that projects have to be deferred or deleted. There is a relationship between the two. He said that the packet information also included some numbers for building activity