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home : latest news : latest news August 19, 2014

4/30/2013 11:39:00 AM
Impact fee study could cost city between $50,000-$200,000

Marissa Freireich
Williams-Grand Canyon News Reporter

After hearing more information from a consultant, the Williams City Council is still torn on whether to continue collecting impact fees.

Council members unanimously voted at their April 25 meeting to continue exploring the issue at a half-day workshop with the consultant in the next couple of weeks.

Under a 2011 state law, cities must complete an Infrastructure Improvement Plan (IIP) in order to collect impact fees after August 1, 2014. A professional such as an engineer must develop the plan and update it every five years.

Pat Walker of Pat Walker Consulting discussed the IIP process at the meeting. She said the impact fee study can range from $50,000 to $200,000, depending on the size of the community and the fee categories. The study takes 12 to 15 months to complete, and cities can use impact fees to pay for the study.

"You have to develop what you're going to spend, justify it and how it's going to serve new growth," she said.

Walker said the purpose of impact fees is "to help pay the share of the cost of what growth does as far as needing facilities or infrastructure in the community."

A city can use impact fees to pay for improvements required to serve new development. A city can also use impact fees to recoup the costs if it has excess capacity in existing facilities for future growth, according to Walker. The city cannot use impact fees for maintenance and repairs.

Currently, Williams collects non-utility impact fees for police, transportation, fire, library and parks and recreation based on square footage. Generally cities in Arizona collect impact fees based on persons per household, Walker said. The city also collects impact fees for streets, the water system and supply and wastewater treatment.

In fiscal year 2012, Williams collected about $7,000 in impact fees, compared to $704,000 in fiscal year 2006. Williams has not updated its impact fee structure since 2004.

The first step in continuing to collect impact fees is deciding whether the city wants to have an advisory committee or a biennial audit. The law requires cities to have a six-member advisory committee with three members from building, real estate and development, one from homebuilding and no city staff members. The advisory committee would comment on the land use plan, IIP and development fee report. The alternative is for a qualified professional to conduct a biennial audit to ensure the city is spending the money the way it outlined in the plan.

After that, a consultant will develop the IIP and land use assumptions.

Then, the city must determine which of the three approaches to impact fees works best for Williams. The buy-in approach is backward-looking, and considers the city's existing capacity to serve growth. The incremental approach is forward-looking and considers what a city may build in the future for growth. The hybrid approach is both backward- and forward-looking, and considers current and future infrastructure.

The next step is to evaluate the actual impact fees and prepare a cash flow analysis.

Finally a consultant will prepare the report, which will undergo public hearings.

"What if you get into the study, you're doing the study, and all of a sudden you realize that oops, there's not enough growth here to put an impact fee on this particular project?" asked Mayor John Moore.

Walker said the city could do a half-day workshop to determine which areas may see growth in the next five to ten years and in which categories the city could continue collecting impact fees.

Councilman Lee Payne said he doesn't expect a great amount of growth in the coming years but knows residents always want more industry.

"We're always looking for that home run ball. Well if we don't (continue collecting impact fees) and they come in, I mean this town needs some major renovations to infrastructure as far as water goes and things of that nature. So who's going to pay for that?" he said. "Which in turn they may say, 'oh you can't support us so we're not going to come here.' So it's a catch-22."

Vice Mayor Don Dent was concerned about how the city would pay for its infrastructure without impact fees.

Dent said although he didn't like the idea of spending $50,000 for the study, he believes the city spent $30,000 on a study to implement impact fees in the first place. Since fiscal year 2005, impact fees have generated more than $2 million.

"So we may be cutting ourselves way short by thinking we're spending an awful lot of money when we're not," he said. "We also all know that we've got a couple projects looking at us that could blow those numbers out of the water. So I think we're almost foolish not to at least have that session, have a discussion and get our timeline started."

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