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ITEM 42
City Council Memorandum Management Services Memo No.
22-006
Date:
August 26, 2021
To:
Mayor and Council
Thru
:
Joshua H. Wright, City Manager
Dawn Lang, Management Services Director
Matthew Dunbar, Budget Manager
From:
Julie Buelt, Police Planning and Research Manager
Subject:
Public Hearing - Results of Biennial Impact Fee Audit
Background/Discussion
In 2011, the Arizona State Legislature enacted SB 1525, which overhauled the State’s program for determining and using impact fees (also called system development fees). The new legislation required cities to develop and publish Land Use Assumptions (LUA) and an Infrastructure Improvement Plan (IIP) to support the calculation of impact fees, as well as requiring each City to either form an advisory committee or conduct a biennial audit to validate the collection and use of impact fees. If the biennial audit option is selected, the results of the audit must be presented in a public hearing.
The Management Services Department engaged Heinfeld, Meech and Co. (Heinfeld Meech) to conduct the audit for the period covering July 1, 2018 through June 30, 2020. Representatives from the firm collected pertinent records and submitted a final report on August 8, 2021. This is the third biennial audit required by state statutes, with Heinfeld Meech performing each of the audits.
Audit Results
Heinfeld Meech performed six procedures as part of their engagement:
Compared growth projections for 2019 and 2020 related to dwelling units, population, and the various commercial square footage units as reported in the IIP to actual results for the proportionate 10-year projections.
Obtained a City-prepared report documenting the progress of each project identified in the IIP and performed the following procedures:
Agreed expenditures as of June 30, 2020, to the underlying accounting records; and
Agreed amounts reported as estimated costs to complete to underlying accounting records.
Selected a sample of 80 building permits issued and determined impact fees were charged in accordance with authorized fee schedules and that each permit holder was charged the same rate as another equivalent permit holder.
Selected a sample of 50 expenditures and determined that the expenditures were associated with an approved project in the City’s IIP.
Evaluated any inequities in implementing the plan or imposing the impact fee through recalculating impact fees at the transaction level for the sample mentioned in procedure #3 above.
Determined that there were no instances in which the City waived impact fees, except as allowed for under A.R.S. 9-499.10.B and A.R.S. 9-500.18.
The results reflected variances in growth projections compared to actual dwelling units, population, and various commercial square footage, as would be expected. In the City’s response, it was noted that the comparison used was level growth over each year of the 10-year period, which does not reflect how development actually occurs.
As required by statute, the biennial certified audit report has been posted on the City’s website and the results presented in a public hearing. However, no formal action is required by City Council.
Attachments
Biennial Certified Audit Report
Public Hearing Presentation
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