Consideration and Adoption of Ordinance No. 2014-10:  An ordinance of the Flagstaff City Council adopting Public Safety development fees (Impact fees for public safety). 

Current Arizona law requires all development fee programs be abandoned or re-established by August 1, 2014.  SB 1525 provides a specific process and time line to adopt new development fees. Adoption of the attached ordinance is the final step in adopting new fees in compliance with state requirements.

As presented, the proposed public safety development fees will provide revenues which will fund a proportionate share of capital projects for the Fire and Police Departments necessary to provide services to new development. If impact fees are not collected, alternative revenues will need to be budgeted to maintain the current level of service or the level of service provided to the community can be decreased.

1. Retain, expand, and diversify economic base    
2. Effective governance

On January 7, 2014, the City Council held a public hearing on the Land Use Assumptions (LU) and Infrastructure Improvement Plan (IIP). On February 18, 2014, the City Council adopted the LU and IIP. On April 1, 2014 the City Council held a public hearing on the proposed development fees. Council directed staff to bring back alternatives to the maximum supportable fee presented in the TischlerBise report. 

On April 15, 2014, a majority of City Council gave direction to prepare an adoption ordinance with a fee that includes all of the incremental expansion components and removed all components attributed to existing debt service.  The direction also including providing one fee for single family homes and removing the bedroom size differential.

1) City Council may adopt the Ordinance as presented with an anticipated effective date of August 1, 2014.
2) City Council may amend the proposed Ordinance to add or remove IIP components, thus changing the proposed fees.  The Ordinance could be considered on first reading, with the revisions presented at second reading on May 20, 2014.  
3) City Council may reject the proposed Ordinance and allow the impact fee program to sunset on August 1, 2014.

At the April 15, 2014 regular meeting a majority of City Council directed staff to prepare development fees that do not include the debt service components and to collect one fee for all single family homes, not a fee based on the number of bedrooms.  The attached report prepared by TischlerBise, dated May 6, 2014, reflects this direction.  Pages 10-13 explain the Council's policy decision and provides updated tables that calculate the proposed development fees.  Tables 5 and 6 include the infrastructure components that will be funded by the adjusted fees.  Public Safety fees for the Fire Department will fund a proportionate share of Fire vehicles and communications equipment.  Fees to the Police Department will fund a proportionate share of Police facilities, vehicles and communications equipment.  Both fees will pay for a portion of the Infrastructure Improvement Plan and Development Fee study.     

Impact fees provide a predictable standard that all developers and builders can plan for as they consider new projects in our community.  Should impact fees not be assessed, a similar financial consideration for maintaining current public safety levels may be considered.  However, negotiations with each developer will occur separately which may result in an unequal and inconsistent burden due to the timing and result of each project.   

Impact fees assess new development their fair share of the costs to expand services that will maintain the current level of service.  Alternative funding sources would be required to maintain services or a reduction in the level of service to the entire community could be considered.  

Inform - City staff has continued to meet with interested groups and provide the latest information on impact fees.  Since the April 15 meeting, staff has provided updates to the Chamber of Commerce Board of Directors and the group known as Flagstaff Professionals. An informational piece was distributed in March to a number of professional organizations and neighborhood associations. 
  
Consult - Through the public outreach staff has received feedback on the maximum supportable fee.  Staff is aware of one letter provided to City Council from the Chamber of Commerce.  Public comment has been provided at Council meetings over the past four months.  

Involve - Two public hearings have been held; one on the Infrastructure Improvement Plan and Land Use Assumptions, and one on the proposed Development Fees.

1. City Council may adopt the Ordinance as presented with an anticipated effective date of August 1, 2014.
2. City Council may amend the proposed Ordinance to add or remove IIP components, thus changing the proposed fees.  The Ordinance could be considered on First Reading, with the revisions presented at Second Reading on May 20, 2014. 
3. City Council may reject the proposed Ordinance and allow the impact fee program to sunset on August 1, 2014.