Arizona Senate Bill 1406 addresses development fees that a municipality like Oro Valley can charge home builders. This Bill, introduced by Tim Bee passed 25-3 with 2 no votes, one of which was our representative, Charlene Pesquiera. On March 20, the bill was sent on to the Az House for approval.
On page 4, Paragraphy 3F, noted below, an amendment to the final bill states:
"PURSUANT TO SUBSECTION G OF THIS SECTION, A MUNICIPALITY'S DEVELOPMENT FEE ORDINANCE SHALL PROVIDE THAT A NEW DEVELOPMENT FEE OR AN INCREASED PORTION OF A MODIFIED DEVELOPMENT FEE SHALL NOT BE ASSESSED AGAINST A DEVELOPMENT FOR TWENTY-FOUR MONTHS AFTER THE DATE OF THE MUNICIPALITY'S FINAL APPROVAL OF THE DEVELOPMENT, PROVIDED THAT NO MATERIAL CHANGES SITE PLAN OR SUBDIVISION PLAT THAT WAS THE SUBJECT OF THE FINAL APPROVAL. THE TWENTY-FOUR MONTH PERIOD SHALL NOT BE EXTENDED BY A RENEWAL OR AMENDMENT OF THE SITE PLAN OR THE FINAL SUBDIVISION PLAT THAT WAS THE SUBJECT OF THE FINAL APPROVAL. THE MUNICIPALITY SHALL ISSUE, ON REQUEST. A WRITTEN STATEMENT OF THE DEVELOPMENT FEE SCHEDULE APPLICABLE TO THE DEVELOPMENT."
David Andrews, Oro Valley Town Manager, points out that this bill, if passed, will have a major detrimental impact on Oro Valley. Mr. Andrews states: "This 24 month waiting period would be applied to any new fees that become effective after Jan. 1,2009. This 24 month waiting period has the potential to cause both administrative and budgetary consequences."
The Oro Valley Council plans on having a Study Session on April 23 to discuss the proposed development impact fees. Click here to read the bill,including the amendments.
12 comments:
It would really be good to have numbers around this. Exactly what will this cost the town of Oro Valley. And, by the way, most of these kinds regulations do not apply retroactively.
Let's not react until we know what it means in dollars and sense.
In general, from a community viewpont, given the time it takes to plan and then start a development, a two year horizon of protection from a sudden onset of development fees is quite reasonable.
Otherwise, people would not build.
Zee man makes a very good point. Once an individual or developer decides to invest and has been through the development process they must be afforded some protection on cost increases otherwise they would never be able to get financing.
Now what this does do is it forces municipalities to look forward at what their costs will be 3-4-5 years down the road when those impact fees will actually be spent.
This isn't a "killer" as some would like for you to believe. It is a resonable bill that forces folks to make sure their pencils are sharp.
Perhaps there is a misunderstanding on this issue.
Due to the housing slowdown, the homebuilders lobby basically wanted, and so far got what they wanted: A freeze on new home fees.
What that means to Oro Valley, for example is this. Unless OV raises their impact fees in a very timely manner, starting in Jan 2009, the fees would revert back to what they are now. There would be a two year period that the fees would be the same.
Perhaps we should all remember that SAHBA convinced this council to not raise their water connection fees at one time, but to phase-in the increase over a five year period.
If OV can not, by law raise their fees for two years---or at least, not have the homebuilders pay a higher fee, you can rest assured the loss of revenue would have to be generated elsewhere.
"Elsewhere" is us----the taxpayers. Might it not be better for the new folks moving into new homes to absorb some of these costs, which would obviously be passed on in the price of the house.
The argument that people will buy elsewhere doesn't make sense. If one chooses to live in Scottsdale, for example, they pay to do so, rather than buy in Phoenix.
Oro Valley has much to offer---even a new Town Council, which makes us a desirable location.
Believe me----this issue should concern every resident of Oro Valley. Hopefully, our town will do the right thing.
Art
Sorry. But I did not see the word "freeze" in the bill. What I did see is that the provision Art referred to in his posting "does not apply to any development that received its final approval before January 1, 2009."
Thus, no existing development in OV would be subject to it. In addition, the Bill does not roll back impact fees; nor does it not allow OV to increase its fees; it merely notes that there has to be a process for increases in impact fees.
The "kicker" here is that the bill does require a set aside of these fees from the general fund and to use these fees to pay for the municipal impact that these fees have.
In addition, the fee must be "cost based". That is, bear a relationship to the costs actually incurred by the town to support this infrastructure addition and not based on whimsy. In other words, the fee is not supposed to be a money maker for the town.
The "cost based" concept is common in rate making in the public sector. In other words, a fee imposed must bear a relationship to the cost incurred. Electric rates,for example, must be set based on the costs incurred in operating the electric generating and transmission system plus a reasonable return for the assets invested in doing this and not some whimsical desire to set a rate based on another factor. This principle protects us from TEP gouging us with high rates.
Regarding the impact fee, there is much the town can and should do to quantify the significant dollar impact a development has on our community: from added infrastructure to direct costs. And we should do so.
To me, the bill is neither pro not anti development. The problem with our prior rates was that they were far too low for the costs incurred by the town to pay for needed public items, like added police.
Question is: Were the new rates cost based or whimsical? I got no clue.
Zee Man--- Your next to last sentence is the big issue.
"The problem with our prior rates was that they were far too low for the costs incurred by the town to pay for needed public items, like added police."
My understanding is that 1406 modifies how credits are determined and protects/delays developers from any additional impact fee or any increase in existing impact fees starting in 2009. This bill allows developers a 2 year window waiting period before any new impact fees (for all newly platted development plans) can be assessed.
That is the problem.
As I see it, The Town should not give any "incentives/accolades/thanks to Sanofi Aventis for being green.
The Town is going to need all the $ they have and I do not want my taxes raised.
Why in H did The Town approve The Town Council Memorial Crematorium if they feel so "green"?
"Once an individual or developer decides to invest and has been through the development process they must be afforded some protection on cost increases otherwise they would never be able to get financing."
In Oro Valley, developers have traditionally purchased this "protection" by paying off the campaign debts of council members.
In Oro Valley, an increase in water impact fees was delayed for over a decade, even though officials knew that a costly CAP project loomed on the horizon.
Last year, Oro Valley decided to increase water impact fees to reflect the true costs of delivering water to future residents. SAHBA appeared before Council to cry a river, Council yeilded, and the fees were phased in over 5 years.
Now SAHBA and their pals in Maricopa County have done an end run around the Council and gone to the legislature to make sure that they will not have to pay the phased-in fees for at least another 2 years after they get phased in.
If this is successful, Oro Valley may not receive enough income to complete the CAP project and deliver water to the new homes in Arroyo Grande, so they may have to deny permits based on lack of water.
I'm sure that won't help the developers' ability to get financing.
OV Mom consistently makes so much sense. Thanks for setting the record straight one more time. I, and I trust our readers, appreciate your insight.
Art
Space limitations prevent me from going into detail about how impact fees can and are used. However it is clear that the greatest misunderstanding is that they could ever be used for general fund expenditures such as police. They simply can't.
And this bill does not delay any existing impact fees as stated by OV Mom or freeze any fees as stated bt Art.
The net effect of the current impact fees is quite high. Last time I checked it added around$70,000 to the cost of a home when you take into consideration the cost of financing.
We sit around and gripe over a proposed secondary property tax of $200-300 a year to pay for a much needed park and yet we can't wait to increase impact fees may that cost the same potential taxpayer
$70,000.
Might Don Cox(OVOT) be more concerned as a backer of SAHBA that his real estate sales may be less? That seems to concern him more than Oro Valley's financial future.
Allow me to once again point out what David Andrews, OV Town Manager said.
"This 24 month waiting period would be applied to any new fees that become effective after Jan. 1,2009. This 24 month waiting period has the potential to cause both administrative and budgetary consequences."
Hopefully Oro Valley will get their new impact fees in line prior to the Jan 1, 2009 cut off date.
I for one, am more concerned about the existing OV taxpayers than the home builders and those that may buy in the future.
Art my dear friend, if I had to rely on real estate sales these days for my primary source of income, I would be holding up a sign and cup out on the corner.
Since any income I receive from real estate is based on the sale price, higher impact fees would actually put money in my pocket. So from that standpoint your logic once again is faulty.
David is just being his usually cautions self. As your own right- hand-man(Zeeman)states this bill does not favor either side.
Seems to be a certain agenda being pursued in the original post. The new Section F. actually begins --- EXCEPT FOR ADJUSTMENTS PURSUANT TO SUBSECTION G...
Said adjustments permit annual changes based upon a nationally recognized index... (unchanged from the original statute).
So, the essence of the change:
[Prohibits the assessment of a new or increased development fee against a development within 24 months after final approval of the development.]
no freeze, no moratorium.
Does Oro Valley want to be on the same page as Surprise and Buckeye?
Post a Comment