HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 9/20/2011 (3) *PLEASE NOTE: Since the Glendale City Council does not take formal action at the
Workshops,Workshop minutes are not approved by the City Council.
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MINUTES OF THE
GLENDALE CITY COUNCIL WORKSHOP SESSION
Council Chambers—Workshop Room
5850 West Glendale Avenue
September 20, 2011
1:30 p.m.
PRESENT: Mayor Elaine M. Scruggs, Vice Mayor Steven E. Frate and
Councilmembers Norma S. Alvarez, Joyce V. Clark, Yvonne J. Knaack,
H. Phillip Lieberman, and Manuel D. Martinez,
ABSENT: Councilmember Norma S. Alvarez
ALSO PRESENT: Ed Beasley, City Manager; Horatio Skeete, Assistant City Manager; Craig
Tindall, City Attorney; and Pamela Hanna, City Clerk
WORKSHOP SESSION
1. UPDATE ON DEVELOPMENT IMPACT FEES
PRESENTED BY: Stuart Kent, Executive Director, Public Works
Sherry Schurhammer, Executive Director, Budget and Financial Services
Staff will update City Council on new state legislation that takes effect on January 1, 2012
(known as Senate Bill 1525) regarding development impact fees and the changes this new law
will have on the process of assessing and collecting such fees. Development impact fees are one
time charges to developers that are used to offset capital costs resulting from new development.
This item addresses Council's goals of one community with high-quality services for citizens,
and one community that is fiscally sound by apprising Council of new legislation that impacts
funding for public infrastructure in Glendale.
The city currently collects impact fees for categories including water, sewer, roadways, police,
fire, libraries, recreation facilities, citywide parks, park zones 1, 2, 3, open space and trails,
general government, sanitation and landfill.
Starting January 1, 2012, Senate Bill 1525 prohibits cities from collecting development impact
fees in the sanitation, landfill and general government categories. The new law also disallows
the use of impact fees for "upgrading, updating, expanding, correcting or replacing existing
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necessary public services to serve existing development in order to meet stricter safety,
efficiency, environmental or regulatory standards." The law demands a substantial nexus or
direct linkage between the development and the application of impact fees.
In addition, other categories have been modified or restricted on how they qualify as a category
of impact fees, such as:
• Recreation facilities larger than 3,000 square feet cannot be used for impact fee
calculations, nor have impact fees used for their construction or equipment.
• Library facilities larger than 10,000 square feet cannot be used for impact fee
calculations nor have impact fees used for their construction or equipment.
In addition to these specific category restrictions, impact fees also cannot be collected or applied
to a number of types of infrastructure including aquatic centers, arts and cultural centers,
equestrian facilities, golf course facilities, and museums.
Other categories, such as water, sewer and roadways, were modified as well. The law now
requires impact fees to be applied to a specific geographic location and have a direct and
beneficial relationship to the development. These three categories have historically comprised
75% of impact fee collections.
The legislation also requires additional areas to be taken into account when assessing impact
fees, including:
• Requiring the city to modify fees to address the new law
• Requiring that the only impact fees that can be collected after January 1, 2012 must
be allowable under the new legislation, essentially requiring a complete overhaul of
the current fee structure
• Requiring all existing programs to be replaced with fees adopted under the new
statute by August 1, 2014, otherwise impact fees cannot be collected
• Requiring adoption of an Infrastructure Improvement Plan (IIP) identifying necessary
public services that are the subject of development fees
On June 13, 2006, Council adopted the impact fee schedule with an effective date of September
12, 2006. No other modifications to the fee schedule have occurred since that date.
Impact fees are a method for new development to pay its proportionate share of the impact
related to the development. The elimination of certain categories and the modification of what is
allowed under others will ultimately require the city to fund these improvements through other
revenue sources.
The analysis conducted by Financial Services, Transportation, Water Services and Public Works
staff indicates that impact fee collections for the current fiscal year, as compared to last fiscal
year, would decline from $2.2 million to $450,000 assuming the same level of development
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activity occurs. With the reductions in the first five years of the capital improvement plan, this
reduction in impact fee revenues will not change the city's ability to fund these projects.
Any loss of revenue attributed to the IIP study and adoption period would be offset by our
proposed early adoption schedule.
Staff estimates the cost to engage a consultant to develop the new infrastructure improvement
plan and see it through to adoption will cost $150,000.
Staff recommends suspending collection of all impact fees until an infrastructure improvement
plan can be developed and approved pursuant to the new state legislation. Should Council
concur with this recommendation, staff will bring a resolution forward at an upcoming Council
business meeting. Staff anticipates that the new infrastructure improvement plan can be
developed, reviewed, and adopted in 2013, before the August 1, 2014 deadline.
Stuart Kent, Executive Director, Public Works, provided the summary. He stated he and Ms.
Sherry Schurhammer, Executive Director, Financial Services, will be briefing council on
changes in state legislation that will affect the City's ability to collect development impact fees.
Development impact fees are one time charges developers pay that are used to offset capital
costs resulting from new development. Last fiscal year, the city collected $2.2 million in impact
fees. Over the past five years, approximately 75% of all impact fees collected were for the
water, sewer, and roadway categories. Impact fees are assessed on both commercial and
residential development.
Mr. Kent explained that Senate Bill 1525 was signed by Governor Brewer on April 26, 2011.
The bill is the culmination of work completed by the development community and the Arizona
League of Cities and Towns. The new legislation is substantially different from the old
legislation that allowed impact fees in that it is much more restrictive in terms of what types of
fees can be collected. Cities will be responsible to clearly establish a substantial nexus or
linkage between the impact fees charged to a specific development, whether it is commercial or
residential in nature, and the proposed infrastructure improvement. Because of the strategic
decisions the City Council has made over the past several years to focus on business
development rather than residential development, the impact to Glendale is much less than the
impact to other communities.
Mayor Scruggs said the changes made in the law apply to commercial development as well as
residential. So, why was the City of Glendale not going to feel anything?
Mr. Kent explained that many communities are focused on roof-top development as opposed to
commercial development, so as a result, the impact fees they were collecting were from homes
not being built.
Mayor Scruggs said our city was counting on commercial development, so it was in exactly the
same boat, only more expensive because the fees in commercial development were higher than
in residential. So, she didn't see how the City would be getting off easy on this at all.
Mr. Kent reiterated that Glendale has not focused on building homes for a number of years, so
the impacts will be less than other communities.
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Mayor Scruggs asked Mr. Kent if he was stating that the impact fees on water and treatment
facilities, etc. are okay, that the city can continue as it always was, if it's a commercial
development. But wouldn't if it's residential? My understanding was that the changes applied
across the board. So if the city was looking at commercial development, offices, retail,
manufacturing, whatever, that's what it's counting on and it will still realize the impact unless
she misunderstood the law and it does not apply to commercial development.
Mr. Kent noted the law did apply to commercial development and across the board.
Mayor Scruggs said she found it an odd statement that city's not going to feel the impacts
because its whole future is counting on that commercial development. And the city's not going
to be seeing impact fees from that commercial development, which generates a tremendous
usage of facilities, water, waste water treatment, roads,public safety,police, and fire.
Horatio Skeete, Assistant City Manager, reiterated that the city was not seeing the amount of
impact fees because the city focused on commercial rather than residential development. He
noted that impact fees will have the same effect on Glendale, but the magnitude of the dollars
will be different for us compared to other communities.
Mayor Scruggs said she really thought this was a misrepresentation, this situation, because in
commercial development the fees are much higher. So, the impact fees for the commercial
development the city was allowed to charge for would be higher. And then, how many tens of
thousands of high density residential units does the city already have entitled out there? So, it's
not fine to say Glendale was not going to feel an impact like other cities. Glendale was not going
to feel it in single family residential building, but Glendale was going to feel it big time when it
comes to the commercial development which is hundreds of thousands of square feet that the
city's counting on coming out of the ground once the economy turns around.
Mr. Skeete explained that the presentation did not say this would not have any impact on the
city. He noted the presentation only reports that when development comes back, they will be
ready to capture whatever is now allowed, which is drastically lower than what was previously
allowed based on the restrictions.
Mayor Scruggs said she understood but the presentation began with stating that this change was
not going to have as much of an impact on Glendale as on other cities. She said it will have a
huge impact on Glendale.
Councilmember Lieberman agreed with Mayor Scruggs. He believes the city will have about
the same impact placed on it as the other cities in the valley. He noted that by his calculations,
Glendale will suffer a lot by this. He added they were suffering right now because their
construction was so low. He discussed the problems with Westgate and the bad state of the
economy. He believes cities were all within 5% of each other in the decrease in growth and
therefore in revenue from impact fees.
Councilmember Clark remarked she too shared the same concern. She noted her concern was
that the city was allowing two years to come up with new development impact fees. She stated
commercial developments were huge users of water, sewer, sanitation and roadways. She
explained those were all the things that will be severally impacted by the new impact fees. She
inquired as to what the city was doing in the next two years to prepare for this new development.
Mayor Scruggs said yes, City Council wants to hear staff's presentation. She explained her
questions were a reaction to the staff's statement that because the city made all these smart
decisions in the past, it's not going to be affected which was so far out of reality.
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Councilmember Martinez inquired as to what new revenue sources will be used to address the
impact of this new state legislation. Ms. Schurhammer noted it will come primarily from the
General Obligation bond program that is funded by the city's secondary property tax. . She
added that with sanitation and landfill capital there are revenues from user fees. Councilmember
Martinez asked if this would be enough. Ms. Schurhammer replied they really don't have a
choice given the legislation.
Mayor Scruggs said that's exactly the point. She said suppose the city was fortunate in that one
of these wonderful office buildings was ready to be built, but it doesn't have the bonding
capacity to be able to provide the transportation or whatever. She continued the city just doesn't
have the bonding capacity because the assessed valuation was going to stay depressed for a long
time. Three to five years at least, she hadn't seen anything that says anything different. So, if
the city doesn't have the bonding capacity and the other source of revenues, general obligation
bond, to use she would say that the city's hurt more than others. She said so let's go through the
presentation, but Council needed some full disclosure here.
Mr. Kent stated the legislation requires cities, by January 1, 2012, to act on several issues, most
notably that certain categories are eliminated from impact fee collection and that the remaining
fees be updated to comply with the new restrictions in state law. He explained that the downturn
in the economy has resulted in a limited amount of impact fee collection and as this has
coincided with reductions in the capital improvement plan over the next several years, the impact
is revenue neutral.
Mayor Scruggs asked if the city needed a company to do a study. Ms. Schurhammer noted the
city has hired a consulting firm to do impact fee studies in the past.
Mayor Scruggs asked does the city need to do a study in order to comply with the law. Ms.
Schurhammer replied yes. Mayor Scruggs said in other words, a law required the city to go out
and spend money to hire some consultant, for one hundred fifty thousand dollars, the law says
the city has to do that? Mr. Kent replied yes. Mayor Scruggs asked are there people who
understand this new law enough to be able to do this. Because what she'd heard was that nobody
understands it.
Ms. Schurhammer explained there were a number of consulting firms that have been working
with the League and other cities on establishing a consistent interpretation of the law.
Mayor Scruggs said in reference to speculation about how this law came about as the response to
the League working with the legislature, she wanted to clarify the League was not in any way
supporting the impact fee law at all. The League stepped in to try to soften the harmful impact
on cities. The League was brought in to mitigate what was going on. In no way was the League
of Arizona Cities and Towns involved in furthering this legislation. She continued the League
tried to come up with the something that did the least harm compared to what the Central
Arizona Homebuilders Association wanted; this was an improvement. Mayor Scruggs said she
wanted to clarify for anybody who was listening who might wonder, why does the city belong to
the League of Arizona Cities and Towns if this is what happens? No, the League saved cities
from a fate much, much worse.
Ms. Schurhammer explained that the collection and use of parks and library impact fee revenue
have been significantly restricted under the new legislation. For example, proposed recreation
facilities larger than 3,000 square feet cannot be the subject of impact fee calculations nor have
impact fees used for the construction or equipment. Land acquisition for parks would also be
restricted to less than 30 acres. Similarly, proposed libraries larger than 10,000 square feet
cannot be the subject of impact fee calculations nor have impact fees used for their construction
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or equipment. Ms. Schurhammer explained that only the first 3,000 square feet of the Foothills
Recreation and Aquatics Center could have had development impact fee revenue applied to its
construction. As it was, there was no DIF revenue associated with the construction of this
project.
Ms. Schurhammer also explained that the new legislation requires a direct linkage between the
identified growth and the proposed capital projects required to serve this growth. The current
one-size-fits-all fee structure that many municipalities have will need to be modified to look at
zones of development and identify the infrastructure improvements needed to support growth in
each zone.
Councilmember Clark remarked Council has only heard about all the things the city can no
longer charge impact fees for; what about what the city can charge for? Ms. Schurhammer noted
there were the least restrictions in the water, sewer and roadway categories. She explained those
were the three categories the city can continue to assess fees the way it has in the past.
Councilmember Clark asked if anyone had thought of or had developed a fee to charge the
homebuilders.
Mayor Scruggs responded yes, she had heard the Mayor of Goodyear speaking and Goodyear
was considering doing away with impact fees totally. Goodyear's Mayor indicated it was too
much work to administer the program; and, the cost to administer would override whatever it got
from impact fees. And so, the Goodyear city manager was studying this to bring it to the
Council. So what Goodyear staff was looking at right now was: no new development, no on all
rezoning, and all new development will be under development agreements or else it won't
happen. She added homebuilders don't believe it though.
Councilmember Clark remarked that this calls for a valley-wide consortium and believes there
was strength and safety in numbers. She hoped to figure out some other kind of fee, other than
the current development impact fee.
Councilmember Martinez agreed with Councilmember Clark; however, he believed if that were
to happen, the cities would be worse off because the legislature would come back with
something else. Councilmember Clark agreed, but added it would take the legislature a couple
of years to figure it out and in the meantime, the cities would have collected something.
Mr. Kent provided a few examples of what these legislative changes mean for Glendale. He
stated that in the past, Glendale used impact fees to help pay for the Field Operations Center
expansion in 2005 and the development of the Grand Canal Linear Park in 2008. The new
legislation would prohibit any use of impact fees to pay for the design, construction and any
equipment for the Field Ops Center expansion because the general government category is
eliminated as an eligible category in the new law. General government impacts fees totaling
$5.6 million covered 33% of the total $17.2 million cost of the improvements. The equestrian
trail and staging area for the Grand Canal Linear Park was constructed with parks impact fees at
a cost of four hundred fifty thousand dollars. Under the new legislation, impact fees cannot be
used for equestrian facilities.
Ms. Schurhammer provided additional examples related to planned capital improvement
projects. The city will not be able to fund any portion of the new city court facility with impact
fees given that the general government category is eliminated. For the western area regional
library, impact fees could be used only for the design and construction of the first 10,000 square
feet. Additionally, no equipment inside the new library building, such as book shelves, could be
purchased with impact fees.
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She noted there were two critical dates in the new legislation. The first is January 1, 2012. As of
that date, the city cannot collect impact fees for the eliminated categories -- landfill, sanitation
and general government. The city must also revise the remaining fees to account for the
restrictions on the remaining categories and account for all of the other legislative changes that
impact the fee calculations. In addition, staff must track when a developer's impact fees are
locked in for a 24-month period depending on the type of development undertaken.
The second compliance date of August 1, 2014 is the deadline by which the city must adhere to
additional requirements such as completion of an infrastructure improvement plan and a new
public comment process in order to assess impact fees.
In order to collect impact fees under the new law, the city must complete an infrastructure
improvement plan. This plan is different from the CIP because it will specifically only include
growth related projects that are allowed under the new categories identified in the recently
approved legislation. Projects in the IIP must demonstrate a direct linkage to areas where
development is expected to occur. She noted the CIP was a planning document for all capital
investment in the city, regardless if it is needed for growth, replacement, or compliance with
regulatory laws. Projects shown in the CIP are limited by the funding available to pay for the
projects.
Mayor Scruggs asked Ms. Schurhammer to repeat her previous explanation Ms. Schurhammer
reiterated her explanation that staff must track when a developer's impact fees are locked in for a
24-month period depending on the type of development undertaken. Mayor Scruggs asked what
final approval, final approval of the zoning, and final approval of the design? Ms. Schurhammer
stated it was all specified in the legislation. Mayor Scruggs said so, for example, we had final
approval of zoning on hundreds and hundreds of thousands of square feet of development that
was way more than two years ago. So what do developers have then, no fees? Ms. Schurhammer
explained that was what staff was trying to work out with the League and other cities right now.
Mr. Kent explained that the language in the bill was poorly written and very vague. He stated
staff would continue to work through it and it was also part of the reason staff would be bringing
in a consultant to help with what final approval really means.
Mayor Scruggs asked so do these consultants know what final approval means? So in other
words part of the agreement was that everyone was going to decide what final approval means?
Mr. Craig Tindall, City Attorney, stated that the statute does define final approval as approving
the site plan or if there is not site plan approval, the final subdivision plat. That is for non-
residential multi-family development. Single family residential development is approval of the
final subdivision plat. However, he still agrees with Mr. Kent that there was quite a bit of
vagueness in that definition; nevertheless, the communities will all have to continue to work
through while the statute is being implemented.
Councilmember Lieberman asked for how long this was good. Mr. Tindall explained that after a
development receives final approval, it had 24 months, and if the city's impact fees were to
increase within the 24 months, the development would be grandfathered in, paying under the old
rates. However, the new rates would apply to anything after that.
Councilmember Lieberman inquired if they all have to live with this until the legislature changes
it at some future date, if they see fit to do that.
Mayor Scruggs replied yes, you live with laws. That's what the city's dealing with in a lot of its
major issues. There are laws you have to live with.
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Councilmember Clark asked starting in January 2012, under what fee schedule would the city be
under and what can the city still collect. Mr. Kent explained staff would have to change
everything and theoretically develop an infrastructure improvement plan called for by the
legislation in the span of three months, which was not realistic. He noted that staff is suggesting
to zero out the fees so the city would be in compliance with the law's January 1, 2012
requirements, recognizing that at least in the down turn of the economy, the impact is not as
severe as potentially at a different time. This would provide time to move the plan as quickly as
possible and get it approved and then move forward.
Councilmember Clark inquired that if staff was suggesting that within the next two years, there
would be no impact fees charged until the City Council adopts a new fee schedule in 2014. Ms.
Schurhammer replied yes. She explained that based on new legislation, staff's recommendation
was that staff proceed with a resolution to eliminate all impact fees effective January 1, 2012
until a comprehensive and legally compliant infrastructure improvement plan can be developed
and approved by the City Council. Staff anticipates this new plan could be developed and
approved by the end of 2013; a full seven months ahead of the deadline. She noted there was so
much vagueness in the new law that it was hard to understand what it really meant and how the
city would should apply it.
Mayor Scruggs asked why not go ahead and charge the developers? She was sure that whoever
was developing the project was going to complain if they understand this and say this is not in
compliance. Nobody understands this. Why would the city zero everything out for two years?
Ms. Schurhammer explained staff did a study of how much revenue would be brought in once
the fees are modified assuming the same level of development as occurred in FY 2011. The
amount was four hundred fifty thousand dollars compared to the $2.2 million collected under the
impact fees currently in effect.
Councilmember Clark remarked that four hundred fifty thousand dollars was better than zero.
Mayor Scruggs agreed and commented especially since one hundred fifty thousand dollars of it
was going to pay for a consultant. Ed Beasley, City Manager, stated this was only a
recommendation based on the information staff was provided. He noted depending on what
Council decides to do, the recommendation can be changed.
Councilmember Clark stated collecting something was better than collecting nothing, especially
since it would offset the cost of the consultant's study. She said that not charging anything did
not make any sense.
Mayor Scruggs agreed and commented staff doesn't know what development might come in
during this time. Right now it looks like nothing was going to come in but there was so much
land out there entitled already. What if something did come in from which the city could
generate fees much greater than the four hundred fifty thousand dollars?
Councilmember Lieberman said if a developer comes in on January 10th and the final plans are
approved, the city cannot apply any impact fees for two years, if City Council follows staff's
recommendation. Mr. Kent replied yes.
Councilmember Martinez said the city should get whatever it can, at this point.
Ms. Schurhammer explained that the present impact fees were adopted in 2006, and based on the
2005 CIP. Those impact fees were developed based on a methodology that was valid and
commonly used at that time but under the new legislation is no longer valid. She noted that in
order to make the fee schedule compliant with the new law, staff would have to go back and
eliminate a lot of projects that were included in the impact fee study at that time, but can no
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longer be included and then recalculate the fees. She remarked that it could be done if Council
so chooses.
Mayor Scruggs asked if staff had heard that any other cities were proposing to eliminate all
impact fees for the next two years. Ms. Schurhammer stated staff had talked to other cities but no
decisions had been made and nothing had moved forward in other cities.
Mayor Scruggs stated she could not imagine how, as a body, City Council could vote on a public
policy that basically stated "let's throw this money away because it's too much work to do the
math."And that's how it felt to her.
Councilmember Clark said she heard staff say that by changing the fee structure, there would be
projects that would have to be thrown out. Nevertheless, that would be true whether or not the
city tries to recover anything during this two year period. She noted there were projects that
were no longer eligible period because of the downturn. Ms. Schurhammer explained staff
would not only eliminate the three categories that are no longer allowed, but for the categories
that remain valid, staff would still have to take out projects that are no longer allowed under this
new legislation. She provided a few examples.
Mayor Scruggs said what staff was saying was the fee the city charges the builder changes
because of what went into the calculation. However, wasn't that how staff got to the four
hundred fifty thousand dollar figure taken out of the $2.2 million? So staff has done some of the
work, Councilmember Clark was asking about. Staff knows that if the same things that the city
collected $2.2 million on last year were built under the new legislation, the city would get four
hundred fifty thousand dollars. And that's all Councilmember Clark was asking wouldn't the
city get something out of this?
Ms. Schurhammer asked to clarify the reason behind staff's recommendation. She stated the
reason staff made this recommendation was to be compliant with the law. The law was vague
and leaves a lot of room for interpretation. She explained that staff can make their best guess
about interpreting the new legislation in order to modify the fees by the January 1, 2012, date;
however, they could be wrong. She added staff was not making this recommendation to avoid
doing work as that was not the case at all.
Councilmember Clark stated she did not mean to imply that staff was trying to avoid work.
However, she couldn't accept the logic of zeroing things out completely on the slight chance that
whatever the consultant comes up with might be wrong.
Mayor Scruggs asked what the law says the penalty is if the city makes an error. Was there a
penalty written in the law? Mr. Tindall said he didn't believe there was a penalty.
Mayor Scruggs responded because no one can figure it out. So the project's developer,probably
before paying the fee, would say no, we think the city's wrong in how it's calculating this then
something would be worked out. So, this kind of goes to the whole fireworks thing; the city
didn't do a ban on fireworks because the law was poorly worded and it might be doing
something wrong, but other cities banned fireworks and nothing happened to them. She
continued we need to see where everybody on Council was; she thought some of Council was
not in agreement with the staff's recommendation.
Councilmember Lieberman stated he didn't agree with staff.
Vice Mayor Frate remarked that this was staff's recommendation; however, now staff has heard
that Council does not want to zero out the impact fees. He stated if staff miscalculates, they will
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fix the issue at that time. He noted this was a good example for everyone to know how the
legislature's decisions affect their cities even to the point of smaller cities becoming insolvent.
Mayor Scruggs said several Mayors, at different times, in different settings have made the
comment, cities are not going to go back to building 1970's and 1980's type neighborhoods.
Cities aren't going to approve developments that they cannot provide the services for and cannot
build to the standards that people who live in Arizona at this point in time want. People want
quality of life and amenities such as parks and they demand libraries. People demand these
facilities; cities didn't just dream these things up for no reason, it was in response to what
citizens said they wanted in a community in which they lived. She'd heard many of her
colleagues say, their cities just will not allow development where the city doesn't know how it's
going to pay for fire and police which cities are required to pay for. This goes back to some of
the developments in the City of Glendale that the city spent millions of dollars in neighborhood
partnership funds improving, because all they were was a sidewalk, a patch of dirt with rocks and
broken glass, or whatever debris was collected, a block wall, very unattractive, no finishing on it,
just blocks put together, and houses backing up to busy streets. And, everyone says, we're not
going to do that again, that's not what people want, we're not going to pollute our communities.
Mayor Scruggs said she'd heard developers talk, who already have neighborhoods existing, who
said the new kinds of neighborhoods that would be built without the quality of life features are
going to bring down the values of the homes that are already built. So, in other words, developers
don't want this mess built next to their development because it's going to depreciate what
they've built. She said this has served nobody, except the Central Arizona Homebuilders
Association who in the words of their lobbyist, did it because they could. That was their
answer...we're doing this because we can. She really doubted that our legislators and or our
Governor really understood what the outfall's going to be from this. It's very, very serious. She
invited people interested in the effects of this impact fees legislation to attend the Urban Land
Institute panel discussion on October the 13th. She said this legislation was not well accepted
and not just by cities. It's not well accepted by the development community...the ones that go in
first...the ones that create the master plan communities.
Councilmember Knaack remarked that there was another twist to this item. She explained that as
a property owner, she was going to have to pay huge impact fees to renovate her business. Her
rate was going to be the same as establishing a new property under the current fee structure. She
didn't agree with this cost since the property was already there. She explained the new fee
structure could actually help the Centerline project because under it business owners can
renovate without having to pay full impact fees. She noted this provided an incentive for
business owners to renovate without fear of huge fees. In her case, after meeting with the city,
she was able to negotiate paying $9,000 in impact fees as opposed to the original $32,000.
Mayor Scruggs said Councilmember Knaack has a point that there was some overreaching on a
single building. However, another example in Centerline could be a property where everything
was demolished and someone was going to put in a fifty thousand, hundred thousand square foot
building. It would not be reasonable to say there's no major impact. She made this point recently
in a meeting where all the focus was totally on new development. Glendale has infrastructure
that might have been built in the 1940's and 1950's. She stated putting in a use totally different
than what was there was over burdening that system. So, impact fees really do very heavily apply
to redevelopment. She agreed when you're doing one building, there could be a very serious
overreach and there should be some differentiations, however, it's unfortunately stories like that,
that lead the homebuilders to be successful in getting this legislation through.
Councilmember Clark stated she could understand Councilmember Knaack. However, new
development taking the place of old development creates an intensity of use, most likely that
wasn't there before. She added it made sense and was feasible to have impact fees.
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Councilmember Knaack agreed, but added that the intensity had to be looked at to establish the
difference. She noted it should not just be treated like new development. Mayor Scruggs added
that was something that needs to be fixed.
Mayor Scruggs asked Councilmembers where are they were on hiring a consultant?
Councilmember Clark believes Council has no problem with that aspect.
Mayor Scruggs asked Mr. Kent if he was absolutely sure it's going to be one hundred fifty
thousand dollars. Mr. Kent explained that the one hundred fifty thousand dollars was the high
end number, relative to the total work. The infrastructure improvement plan that had to be
developed was different than the CIP. Staff will have to start from scratch and go from there.
Mayor Scruggs asked will Council be seeing more requests to hire consultants come up with
water and sewer rate fees and everything in addition to what's going on over here. Because you
know, you always come back with the consultants and they tell us what our water, sewer and
sanitation rates should be. But now we have this situation going here. How do you see
managing those different interests?
Mr. Skeete stated that the contracts with Red Oak Consulting and other consultant companies are
very specific contracts for specific purposes. Mayor Scruggs said while the city's impact fees
are being evaluated, she would assume there would be nothing coming forward to recommend a
change in rates on water, sewer or sanitation because staff really doesn't have all of the
information.
Mr. Skeete explained that the impacts on sanitation and utility rates are not all growth related
impact fees. He added that if fees change drastically from where they are today, staff might have
to present a study that, even without growth, shows a need for a modification to the rate
structure.
Mayor Scruggs asked wouldn't that be contradictory to the reason Council was given recently on
why rates didn't need to raised? The last reason given to Council by staff about why water,
sewer and sanitation rates didn't need to be raised was because the city wasn't experiencing
growth.
Mr. Skeete agreed that growth was the major contributing factor for not having to raise rates last
year. However, he added that some rate changes are driven by capital expansion, as well as
operating cost.
Mayor Scruggs asked wasn't it just last year, 2010, when the city had the two rate increases?
Then why does the city have two years of operating expenses accumulated when the city just had
two rate increases one year ago? Mr. Skeete explained that the rate increases that city had a year
ago was based on operating expenses from the previous year.
Councilmember Clark remarked that the tax payers will also be paying for this development
impact fee structure scheme since the city will not have the ability to charge for new growth.
Mayor Scruggs said Council was not going to adopt a resolution to reduce all impact fees to zero
until adopting new fees supported by an IIP. And we are going to hire a consultant to develop an
IIP of new fees. The councilmembers agreed.
ADJOURNMENT
The meeting was adjourned at 2:35 p.m.
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