Sunday, November 10, 2013

Study Recommends Substantial Reduction in Water Impact Development Fees

A study performed for the Oro Valley Water Department  by consultant CH2M Hill recommends a substantial reduction in the Alternative Water Resources Development Impact Fee (AWRDIF)and Potable Water System Development Impact Fee (PWSDIF). These are fees that are charged on new construction.  Essentially, they are fees that are passed through to the buyer of the property through higher price. The study will be discussed at tomorrow's water utility commission meeting.

"The proposed development impact fees would result in decreases across all customer classes with the exception of the commercial and industrial AWRDIF and the irrigation AWRDIF.  On a combined basis, the net change in proposed Water Utility development impact fees would be a decrease for all customer classes except irrigation, which would increase 17 percent."

These fees are "collected at the time new water meters are purchased.

Studies of this nature require a projection of the number of service units ("connections") that could occur in the utilities service area.

The water department projected that a total of 4,131 new connections are possible at full build-out of existing town boundaries.  That is an 18% increase.  It also means that the town is currently 82% built out.

In terms of actual water use, irrigation and commercial uses far outstrip uses of  families. Irrigation is by far the largest water user in Oro Valley.  Thus, the town is wise to work to convert these users to reclaimed water.

Source: Oro Valley Water Utility Development Impact Fees Study, October 2013: Public Review Draft
The last time we reported anything of significance on these fees was on June 14, 2007. At that time, the council had an option to accept a cost based fee or put in a scheduled that was more punitive to business.  They opted, at that time, to select the lowest rate, after urging from various groups, including the Southern Arizona Home Builder's Association.

This time, however, we believe that state law will prevent the council from playing politics.  State law (ARS §9-463.05) requires that these fees be based on cost of service: "Development impact fees should reflect the average cost to construct a unit of capacity required to serve new development."  This means that municipalities can not set rates for "social engineering" purposes or to meet political goals.

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