Staff recommends that City Council conduct a public hearing and approve the proposed resolution setting arterial construction fee assessment rates for FY22.

Arterial construction fee assessments are set annually by resolution.  Arterial construction fees are based on zoning and square footage to reflect the relative average impact on arterial roads.  The existing rates are not adequate to provide for the capital investment necessary to continue providing service at the current level. The attached resolution specifies the proposed rates that will result in an estimated overall 3.1% increase for FY22.  During the Public Works budget presentation to Council in May 2021, a 3.1% increase was proposed based on the April 2021 Construction Cost Index (CCI) which was the most recent CCI at the time.  The CCI released in August 2021 was 9%.  The revenues produced under the proposed rates will not generate enough revenue to keep up with inflationary levels if these high levels of inflation continue which will result int the need to cut or defer some planned construction projects utilizing arterial funds that are in the approved FY22 - FY26 Capital Improvement Plan, 

Additionally, City Council adopted new zoning code on January 25, 2021, which overhauled the previous zoning code.  Because the arterial construction fee assessments are based on zoning, the assessment impacts to individual property owners are varied.  Some property owners' assessments will increase more than 3.1% and some will increase less than 3.1%.  However, the overall revenue increase for Public Works is calculated to be 3.1%. 

The arterial construction assessments requires two-thirds (2/3) of all Council members present and voting to pass an increase in assessments.

City Council must hold a public hearing and then may:

• Approve the recommended resolution,
• Approve an amended resolution, or;
• Not approve a resolution.  If Council does not approve a resolution, an amended resolution to establish arterial construction fee assessments will need to be considered at a future City Council meeting to establish rates for fiscal year 2022.

In FY21, an average 9,600 square foot residential lot that was perviously zoned R-96 paid $52.42 per year.  The adjusted fee in FY22 for an average 9,600 square foot residential lot zoned either N1, N2, or N3 is $53.76 per year.  This is an annual increase of $1.34 or 2.6%.  The annual increase in revenues for FY22 is approximately $140,000.