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Development Impact Fees

Infrastructure Financing Plans and Calculating Fees

• How are Impact Fee Studies or Infrastructure Financing Plans prepared?
• How are credits applied?

3.1 How are Impact Fee Studies or Infrastructure Financing Plans prepared?

Impact Fee Studies or Infrastructure Financing Plans are prepared by the Planning Department with assistance from all of the other departments that are involved in planning and managing the construction of capital facilities. Each department provides estimates of future facility needs and costs. These are used by the Planning Department to calculate impact fees for different land uses in the various impact fee areas.An inventory of capital facilities in each of the fee areas is maintained and updated by the Planning Department, with new information provided by the other departments as future infrastructure projects are altered, initiated or eliminated. The Planning Department is also responsible for developing the land use and population projections that will allow future infrastructure costs to be allocated to all uses at the time the development is complete (generally buildout). Impact Fee Studies or Infrastructure Financing Plans are essentially compilations of the best information available on future population growth, land use development and capital facility requirements. View a diagram showing the process of calculating impact fees .

What types of infrastructure are included in the plans?

Only capital facilities and related equipment inventories that directly benefit future residential and nonresidential development are included in the plans. The facilities are all permanent City of Phoenix facilities that will last at least one year and generally have life cycles of more than twenty years. They must also meet minimum size or capacity requirements. For example, only water transmission mains of 16" diameter and larger are included in capital facility costs. Capital facilities that are owned and operated by entities other than the City of Phoenix are not included in the inventories used to prepare the plans. Facilities required by school boards, State or Federal agencies, or other public or government agencies, for example, are excluded. In some cases, such as the construction of interchanges or bridges involving both Phoenix and the Maricopa County Department of Transportation or Phoenix and the Arizona Department of Transportation, impact fees may be used to jointly fund facilities that are theoretically state or county responsibilities. The specific capital facilities included in the plans are:

• Equipment repair
• Fire protection
• Libraries
• Open space
• Parks and trails
• Police
• Roadway facilities
• Solid waste disposal
• Storm drainage
• Water and wastewater

How are infrastructure costs included in the plans?

If the facility has not yet been built, current, present-value estimates of design, construction, land acquisition and other costs are utilized. These estimates are based on recent experience with construction bids or land acquisition costs, or on information provided by consultants. If the facility has already been built and was designed and built with excess capacity to provide services for future development, and if bond debt for the facility remains, this debt is allocated to the future users. Generally, the remaining principal and interest payments on the bond debt are included in the impact fee calculations. An existing capital facility without bond debt would not be included in impact fee calculations.

What types of projections are used to prepare Impact Fee Studies or Infrastructure Financing Plans?

Impact Fee Studies or Infrastructure Financing Plans use projections on how undeveloped land will eventually be used, based on seven categories defined in the City Code:

• Single-family housing
• Multifamily housing
• Retail
• Office
• Industrial
• Public and quasi-public
• Other nonresidential

3.2 How are credits applied?

Simply stated, credits are reductions in development impact fees charged to developments resulting from developer contributions, payments, construction or dedication of facilities. If a developer builds facilities that are in the Impact Fee Study or Infrastructure Financing Plan, he/she can apply for credit against his/her impact fees. Credits are based on costs identified in the plans, not actual costs incurred by the developer in building the facility. Roadway facilities, water and wastewater credits are the most common types of credits claimed by developers of large commercial or residential projects because such projects often require significant expansions to the roadway facility network and water and wastewater networks. Credits for equipment repair, fire, police, library and solid waste facilities are more rarely obtained.

Last modified on 05/28/2009 13:28:02