City Council Meeting - FINAL

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Meeting Date: 09/15/2020  
From: Tiffany Antol, Planning Director

Public Hearing: Proposed Public Safety development fees (impact fees).
  1. Hold the public hearing.
  2. Provide notice to the public that October 20, 2020, is scheduled for Council's potential first read of an Ordinance adopting the proposed Public Safety Development Fees.
Executive Summary:
Arizona Revised Statute 9-463.05, allows a municipality to assess development fees to offset costs to the municipality associated with providing necessary public services to a development, including the costs of infrastructure, improvements, real property, engineering and architectural services, as well as, financing and professional services required for the preparation or revision of a development fee, including the required land use assumptions and infrastructure improvements plan.  Municipalities are required to update their land use assumptions and infrastructure improvements plan at least every five years.

Development fees assessed by the City are required to result in a beneficial use to the development and may not exceed a proportionate share of the cost of necessary public services to the development.  Development fees can only be used for public services identified in the adopted infrastructure improvements plan including construction, acquisition or expansion of public facilities.  Development fees may not be used for repair or maintenance of existing or new public services, or for facility expansions.
Financial Impact:
Development Fees collected will be used to help fund capital improvements and equipment necessary to meet the demand generated by new residential and non-residential growth.  The alternative to development fees is to identify the impact of each project during the entitlement process and include public safety fees in a project development agreement, fund increased demand through general fund revenues, or decrease the level of service.
Policy Impact:
The City is in process of completing the steps required by the State of Arizona to support continuation of the Public Safety development fee program.  A public hearing on the proposed development fees supported by the November 3, 2020 TischlerBise report is required.  Staff believes development fees provide a consistent and predictable expense for the construction industry and predictable revenue for the City's public safety capital budget.
Connection to PBB Key Community Priorities/Objectives & Regional Plan:
Priority Based Budget Key Community Priorities and Objectives
Safe & Healthy Community
  • Foster a safe, secure, and healthy community.
  • Provide public safety with the resources, staff and training to respond to community needs.
High Performing Governance
  • Enhance the organization's fiscal stability and increase efficiency and effectiveness.
Regional Plan
Goal CD.1. Improve the City and County financial systems to provide for needed infrastructure development and rehabilitation, including maintenance and enhancement of existing infrastructure.
Policy CD.1.3. Analyze the feasibility of expanding development fees within the City of Flagstaff, which may enable future development to provide for adequate off-site improvements and facilities.
Policy CD.1.5.  Require that new development pay for a fair and rough proportional share of public facilities, services, and infrastructure.
Previous Council Decision on This:
The City of Flagstaff adopted police and fire development fees in 2008.  Since then the public safety development fees have been readopted twice: in 2011 and in 2014. 

The City Council held a work session on the draft Land Use Assumptions (LUA) and Infrastructure Improvement Plan (IIP) on January 7, 2020.  The City Council then held a public hearing on the draft LU and IIP on February 28, 2020. The Council agreed with the direction to schedule the adoption of the LU and IIP for April 7, 2020.  After the adoption of the LU and IIP another work session was held with Council on June 30, 2020 to discuss what fees should be adopted.
Options and Alternatives:
  1. Hold the public hearing and provide notice to the public that October 20, 2020, is scheduled for Council's potential adoption of an Ordinance for the fees as proposed.
  2. Hold the public hearing and direct staff to prepare a process for adopting revised fees.
  3. Hold the public hearing and discontinue the Public Safety Development Fee program. 
At the January 7, 2020 work session, City consultant TischlerBise provided an overview of the draft Land Use Assumptions (LUA) and Infrastructure Improvement Plan (IIP).  After receiving public input at the February 18, 2020, Council adopted the draft LUA and IIP on April 7, 2020.  A follow up work session to discuss the fees to be scheduled for adoption was held on June 30, 2020.

The Land Use Assumptions (LUA) are found in Appendix C (page 33) of the November 3, 2020, TischlerBise report.  The LUA provides demographic estimates and development projections that are used to prepare the IIP and calculate development fees.  Key land use assumptions for the City of Flagstaff development fee study are population, housing units, and employment projections.  During the next 10 years, citywide development projections indicate an average increase of approximately 560 housing units per year and approximately 130,000 square feet of nonresidential floor area per year.  The LUAs provide an analysis of single-family and multi-family residential units by bedroom size.  The average person per household increases as the number of bedrooms increase, thus increasing the demand for services.  This methodology provides a more accurate estimate of the demand generated by residential units.

The report also includes the methodology to develop the IIP for both fire and police services.  Development fees for the necessary public services made necessary by new development must be based on the same level of service (LOS) provided to existing development in the service area.  There are three basic methodologies used to calculate development fees.  They examine the past, present, and future status of infrastructure.  Reduced to its simplest terms, the process of calculating development fees involves two main steps: 1) determining the cost of development-related capital improvements and (2) allocating those costs equitable to various types of development.

Fire fees will be used to fund facilities, apparatus, and communications equipment as well as the cost of preparing the Fire Facilities IIP and related Development Fee Report.  Police fees will provide for facilities, vehicles, and communications equipment.  The demand for specific services is summarized through the IIP and a schedule of Fire Facilities Development Fees (Figure F11, page 17) and Police Facilities Development Fees (Figure P11, page 28) are found in the report.
Key Considerations:
Impact fees provide a base standard which allows for predictability which developers can plan for as they prepare development projects in our community.  Should impact fees not be assessed, the same type of financial consideration will need to be attained as part of a project's impact analysis.  This is typically achieved through a development agreement when the cost to mitigate project impacts is determined.  While impact fees are paid at the time a building permit is issued, development agreements may specify payment prior to seeking building permits at the time a project's public improvements are required.
Expanded Financial Considerations:
The Development Fee report calculates Public Safety fees supported by projected growth over a ten year period.  However, the development fees must be re-examined every five years to assure the land use assumptions and proposed capital improvement program are representative of the experienced demand or require an update to meet the current community need.
Community Benefits and Considerations:
Development fees assess new growth a proportionate share of the cost to provide the services needed to meet the additional calls for service.  Alternatives to public safety impact fees are to identify the cost to provide services and negotiate the payment at the time of entitlement (zoning map amendment or subdivision), to fund the increased service demand through other general fund revenues, or to decrease the level of service.
Community Involvement:
Inform: The attached report was published on the City's website as is required by Arizona Revised Statutes.  A public hearing notice was published in the Arizona Daily Sun on Saturday, August 15, 2020. 

Consult:  The purpose of the public hearing is to receive public input on the proposed Public Safety Development Fees.  In the past staff has made presentation or provided additional information to the Chamber of Commerce, City of Flagstaff Housing Commission and Planning & Zoning Commission, the Northern Arizona Building Association, and the Northern Arizona Association of Realtors.
Expanded Options and Alternatives:
  1. Hold the public hearing and provide notice to the public that October 20, 2020, is scheduled for Council's potential adoption of an Ordinance for the fees as proposed.
  2. Hold the public hearing and direct staff to prepare a process for adopting revised fees.
  3. Hold the public hearing and discontinue the Public Safety Development Fee program. 
Flagstaff Public Safety Development Fees 11/3/2020


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