HomeMy WebLinkAbout02/07/2006 Blue Sheet Revisions to Impact Fees
TOWN COUNCIL
MEETING
INFORMATION
TOWN OF MARANA
MEETING DATE: February 7, 2006
AGENDA ITEM:
K.2
TO:
MAYOR AND COUNCIL
FROM:
James R. DeGrood, P.E. Assistant Town Manager
SUBJECT
Presentation and Request for Direction: Revisions to the South
Transportation Benefit Area, Northwest Transportation Benefit Area
and Parks Impact Fees to include a Construction Cost Adjustment and
to establish an Impact Fee Waiver for Affordable Housing
DISCUSSION
Continuing increases in the cost of infrastructure construction will erode the Town's ability to deliver the
infrastructure promised during the impact fee adoption process unless adjustments are made to account
for this inflation. Construction costs have been particularly volatile in the past three years.
To address this problem, the Town could adopt annual increases based upon a credible construction cost
index, such as the Engineering News Record 20-City Construction Cost Index, together with more
comprehensive impact fee updates every 3 to 5 years.
Recently, a resident of Berry Acres addressed the Council, concerned about the application of impact fees
to families in existing Colonia communities looking to add additional residences to their properties. The
Town currently has no provision for a waiver of the newly adopted impact fees for low income housing,
which may exacerbate the affordable housing problem in Marana. The Town could create a waiver
program that reduces or eliminates the impact fees charged for new homes in the existing neighborhoods
where low income residents live, but in doing so, the Town would either need to provide a credit to the
buyers of homes paying impact fees or offset the impact fees using accumulated general funds.
RECOMMENDATION
Council direction to staffto prepare an impact fee report, adjusting the impact fee amounts based upon
changes in a reputable construction cost index to account for the effects of inflation in construction costs,
and amend Parks and Northwest Marana Transportation impact fee ordinances to introduce a fee waiver
for new homes developed in the existing low income neighborhoods in Marana.
ATTACHMENT
Draft Annual Report and Recommendations for Impact Fees in Marana: South Transportation Benefit
Area; Northwest Transportation Benefit Area; and Parks.
SUGGESTED MOTION
I move to direct staff to begin the process of amending the Town's impact fee ordinances to account for
inflation adjustments and to allow for fee waivers in existing low income neighborhoods.
Annual Report and Recommendations for Impact Fees in Marana
South Transportation Benefit Area
Northwest Transportation Benefit Area
Parks
Town of Marana, Arizona
February, 2006
Table of Contents
Executive Summary
The purpose of this report is to provide written documentation in support of increased
development impact fees for the Town of Marana in accordance with ARS ~ 9-463.05.C.
The further intent of this report is to provide a review the collections and expenditures of
funds associated with the Town of Marana's development impact fees during calendar
year 2005, as well as to identify trends in construction costs, infrastructure needs, land
uses which may warrant future impact fee report revisions. This report addresses the
commitment made to reporting and transparency in the Town ofMarana's Impact Fee
Report for Northwest Roads and Parks, dated March 17,2005, butis not intended to
satisfy the requirements of ARS ~ 9-463.05.D
The Town commenced collection of impact fees in 2001, after the ;;idoption of an impact
fee for the South Transportation Benefit Area to fund econstruction ofthe Twin Peaks
Interchange. To date this benefit area has produce 78,846. TheTwin Peaks
Interchange project is anticipated to go to const n in fiscal year 2007-2008, with
right of way acquisition negotiation anticipatt1.d gin i alendar year 2006.
The most recently adopted impact fees are for the P
Northwest Transportation Benefit Areas. Fee collectio
date $1,299,196 has been collected for Parks and $54,963
Northwest Transportation Benefit Area.
n-wide) and for the
menced July 5, 2005, and to
een collected for the
Substantial changes have occurred in the cost of construction over the past year, with
nearly all recent constl1Jction projects exceeding estimated costs. These increases in
costs are partially dueto substantial cost increases in concrete, steel, plastics and fuel.
Most analysts suggest that these material cost increases will stabilize in the near term. It
is recommended that the impact fees be linked tothe Engineering News Record 20-City
ConstructionC dex (ENR CCI) so that the effects of inflation my addressed.
rec
land use c
Benefit Area,
the number of
of these changes i
Transportation Ben
the Northwest Marana land use plan, as a result of
njunction with recent Town Core planning efforts. These
aluated for their impact upon the Northwest Transportation
the new roadways to support the evolving plan as well as
and commercial development now proposed. Upon approval
rana General Plan, a comprehensive update of the Northwest
Area Impact Fee Report may be warranted.
The existing inventory of affordable housing is diminishing in Marana as the community
urbanizes. Most new communities being developed do not meet the need for affordable
housing. Affordable housing which is currently being developed is largely occurring in
the existing Colonias within the Town, both through the Town's affordable housing
program and individual efforts.
It is therefore recommended that a waiver be created for affordable housing in Colonias
established within the Town.
1
Impact Fees Collected
Marana has collected fees for three separate impact fee benefit areas during 2005. These
benefit areas are the South Transportation Benefit Area, the Northwest Transportation
Benefit Area and the Parks Benefit Area. The South Transportation Benefit Area was
adopted in 2001, while the Northwest Transportation Benefit Area and the Parks Benefit
Area were adopted in 2005. Collection of impact fees for the Northwest Transportation
Benefit Area and the Parks Benefit Area commenced on July 5, 2005.
The South Transportation Benefit Area had a fund balance of $6,~
2005. This fund balance increased to $7,881,116 by the end of
increase of $1 ,577,853. This increase in fund balance is aU .
and impact fee contributions.
3,263 on January 1,
l/yndar year, an
to accrued interest
The North Transportation Benefit Area began fee collection on July
grew to a balance of $54,963 by the end of 2005 through impact fee co ions. The
fund growth was modest due to a substantial aJ1l0unt of credit granted for il"l~~ovements
made on eligible roadways. The credits will be discussed in later sections of this report.
The Parks Benefit Area also began c
$1,299,196 by years end through imp
rate than either of the other funds due t
the relatively modest number of projects
ections on July 5, 2005. The fund balance grew to
collections. Thi$fund grew at a more rapid
that the benefit area is town-wide and
it for public improvements.
2
Expenditures of Impact Fee Funds
There were no expenditures of impact fees collected during 2005.
The most mature impact fee fund is the South Transportation Benefit Area, and the Town
has expended in excess of $800,000 to date for design of the benefiting project, the Twin
Peaks Interchange. The Town has been expending funds from other sources to fund this
design and conserve the impact fee capital for actual construction and right of way
acquisition. Construction of this project is still anticipated in fiscal year 2007-08.
3
Credits for Eligible Improvements
The Town entered into five development agreements with the builders of master planned
communities. The five communities are Gladden Farms, Rancho Marana 154, San
Lucas, Ironwood Reserve and Continental Reserve. There also are pre-existing
development agreements for the Skyranch and Saguaro Ranch projects which
contemplated impact fees in their original agreements.
Gladden Farms
The Gladden Farms project includes the construction of Gladd
Adams Road, as well as a publicly dedicated park. The pro 0
Farms Road, which will be funded by an improvement di
lots in phase 3.
s Blvd and Lon
o includes Tangerine
will apply to the
For phases 1 and 2, the Northwest Marana Transportation fee was om $5,941 to
$1,773. Phase 3 will be reviewed upon further cost development on the one Farms
Road project, however it is anticipated that the phase 3 lots will not be assessed a
Northwest Marana Transportation fee.
All lots in Gladden Farms equally bene;f!it.Jrpm the development of the Gladden Farms
Park, and from the dedication of additional parkland for future park development. The
Park fee for Gladden Farms was reduced from $2,884 to $822 per new dwelling.
Rancho Marana 154
The Ranch Mara constructing portions of Tangerine Farms Road and
Clark Farms Blvd as a f 'ect improvements. Both of these roads are
eligible for credit, and the v. <projects to the Town exceeds the impact
fee liability for the Northwest Marana Transportation Benefit Area.
This project is also dedicating landfC>T the Barnet Linear Park, and will receive a $500
credit, thus reducing the Parks impact fee from $2,883 to $2,383.
San Lucas
The San Lucas Projeqtwill construct substantial park and road improvements. The
project will construct a new railroad crossing, realigns and paves Cochie Canyon Trail,
and extends Adonis Road. These projects are all creditable. These improvements do not
fully develop the roadways to their ultimate configurations, and only partial credit was
granted for improvements. As such, the Northwest Transportation fee reduced to $346.
The Parks fee is fully offset by improvements.
4
Continental Reserve
The Continental Reserve project is only subject to the Parks impact fee. The developer of
Continental Reserve dedicated an improved park to the Town, and as a result the impact
fee for this community was reduced to $1,323
Ironwood Reserve
The Ironwood Reserve project dedicated a parcel ofland to the Town for a future
trailhead for access into Saguaro National Park West. This trailhead and parking lot site
was not developed. The Parks fee for Ironwood Reserve was reduced to $2,430.
Skyranch
The Skyranch project had a preexisting agreement wjth~he Town for the development of
the Children's Desert Education Center and a con;esponding $1,000 per unit contribution.
This contribution is creditable against the Par~fee.
Saguaro Ranch
of $1 ,000,000 and a $1,000
ment term supersedes
The Saguaro Ranch project agreed to avg~lJntary contrib
per lot contribution for park improvemenJ> This developmen
and exceeds the Park fee.
Standard Fee Amount
Northwest Road Fee Twin Peaks Fee
Impact Fee Assessments - Pr .
Proiect Name
$5,941 $2,435
San Lucas (All Blocks)
Rancho Marana 154 (All
Blocks)
Continental Reserve (All
Blocks)
Ironwood Reserve
Gladden Farms (Phase 1)
Gladden Farms (Phase 2)
Gladden Farms (Phase 3)*
Saguaro Springs (Estimated)
SkyRanch**
Saguaro Ranch
$0
$346
N/A
$0
N/A
$1,323
$2,430
$722
$822
$822
$0
$1,884
$1,000
N/A
N/A
$1,773
$1,773
$0
N/A
N/A
N/A
$2,435
$2,435
N/A
N/A
N/A
$2,435
N/A
N/A
* Buyers in Phase 3 of Gladden Farms will be subject to improvement district costs for Tangerine Farms
Road
** Buyers in Skyranch are also subject to a $1000 Desert Education Center Fee
5
Trends in Construction Costs
Recent, substantial increases in the cost of construction have been anecdotally reported
widely. The basis ofthe reported increases can broadly be described as due to increases
in raw materials, land and a competitive environment which has few bidders seeking the
construction contracts being bid.
Material prices have soared recently for concrete, steel, plastics and petroleum products.
This has been due, in part, to high world-wide demand for construction materials, as well
as the impact of governmental tariffs. Short - term shortages of.materials have occurred,
further adding to the construction cost due to delays and premium pricing. The cost and
availability of construction equipment has been reported to be a problem for contractors,
and petroleum prices have been volatile, adding uncertainty to those bidding projects.
The Arizona Department of Transportation has s~udied recent bid trends, and found a
relationship between the number of bidders O?~!'~~ject anqthe likelihood of the project
low bid being over the project estimate. Many praJ~~~~ ,,:~C'lt'\Vould have attracted 5-10
bidders two years ago are now attracting only one or twi)!bids. Part ofthis attributable to
the bidding climate, but it may also be partially attribu to fact that most public work
contracts do not typically allow for cast adjustments due g or volatile materials
costs. Should materials prices stabilize Of should public wo racts be made more
flexible to allow for cost adjustments due to fluctuations in th rice of materials, some of
the recent construction increases may be reversed. Nevertheless, much of the recent
construction cost inflat" e permanent.
t fee reports for the South Transportation Benefit Area,
enefit Area and the Parks Benefit Area, the Town
s. These projects include projects which
e in deSIgn. The Town has also seen a dramatic rise
actions occurring at as much as $140,000 per
t impact fee rates will require review, and should
n appropriate construction cost index.
Further evidenc
for the cost of the
cost $57 Million in
ge in construction costs is the recent increase in the estimate
aks interchange. The interchange was initially estimated to
It is currently estimated to cost nearly $70 Million.
Inflation in construction costs will be an ongoing issue for the Town's impact fees. The
only options available for adjustment of fees is to periodically review and revise the
impact fee ordinances at great effort, or to index the impact fees to a relevant construction
cost index. Given the effort associated with revising impact fee reports and the vast
fluctuations possible in land prices, it would be prudent to plan on adjusting the impact
fee annually using an index measure, and less frequently to address land prices and/or
changes in the scope of improvements to be constructed.
6
Engineering News Record (ENR), a well respected national publication for the
construction industry, has tracked construction costs since 1967 for 20 cities across the
United States. This index, the ENR 20-City Construction Cost Index (ENR CCI) is
available through regular articles in the magazine and on its website at
www.enr.construction.com
For 2005, the ENR CCI reported a 5.0% increase in construction costs. From the date of
adoption of the impact fee for the South Transportation Benefit Area to the fourth quarter
of 2005, the ENR CCI increased 20.4%. This compares favorably with the estimated
increase in the cost estimate for the Twin Peaks interchange project.
7
Trends in Land Use
The Town is currently considering a major revision to the General Plan for the land uses
in the Northwest Transportation Benefit Area. The revision will likely increase the
residential development densities in this benefit area, as well as increase the
infrastructure requirements within the benefit area. With this overall change in intensity
of land use, an increase in non-residential land uses can also be anticipated.
Upon approval of the General Plan change for the area, an update
infrastructure requirements and development impact fees will b
adequate infrastructure funding and the equitable treatment
the area.
f the traffic,
anted to ensure both
rs of new homes in
8
Affordable Housing
Housing affordability is an emerging issue in Northwest Marana. Existing low income
housing is being eliminated to make way for new master planned communities, as well as
by relocation programs aimed at removing housing from the floodway of the Santa Cruz
River. The Town also recognizes that the new growth occurring in Northwest Marana
will include retail and hospitality businesses which will employ low to moderate income
wage earners that will increase the demand for affordable housing. To address this
problem, the town has put into place a low income housing progr to develop
additional housing units in the community to address this need.
In 1998, the Town of Marana identified seven existing 10
qualified for designation as Colonias. These neighborh
1989, and had to have substandard water, sewer, drainage, r roadw
The Town is committed to reinvesting in these neighborhoods, and has
making improvements in all of them. These neighborhood~ are also wher
been building homes in its affordable housing program.
neighborhoods that
e existed prior to
astructure.
e or IS
own has
The Town and private individuals wiU...continue to build small numbers of new homes in
these neighborhoods. It is estimated t to 38 new homes could be built in these
existing low income communities, and l,11es either have been acquired or are
being sought for acquisition under the Pi odprone Lands Acquisition
Program. A net potential increase in housi",g wi 1 ghborhoods of 22 dwellings
can therefore be anticipat_~
Should the Town housing within the existing Colonias be given a
waiver from the imposl es, it will be necessary to ensure that the other
home builders within the urdened as a result. Options to ensure that
this occurs include providing pact fee credit to builders outside ofthe Colonias and
using existing accumulated gen s to reimburse the Northwest Marana
Transportation Benefit Area and impact fee funds for waivers granted. The
anticipated maximum amount of reimbursement is $210,000.
9
Recommendations
Based upon the foregoing information, it is recommended that the impact fees for the
Town of Marana be modified for implementation in the beginning of Fiscal Year 2006-
2007:
1. That the impact fee amounts for the South Transportation Benefit Area,
Northwest Transportation benefit Area and the Parks Benefit Area be indexed to the
Engineer News Record 20-City Construction Cost Index, (ENR CCI)with fee adjustments
taking place on July 1 st of each year. The index adjustment shall be made between the
date of the impact fee report preparation and the new fiscal year.
It is recommended that the Parks and Northwest Marana T~ahsportation fees be increased
by 5.0% and that the South Transportation Benefit Ar a fee increase by 20.4% for fiscal
year 2006-2007. The resulting fees will be:
South Transportation Benefit Area
Northwest Transportation Benefit Area
Parks
2. That impact fees be waived for new housing constru . ... the Colonias
established in the Town of Marana by ResolutiotlOftlJ,y Mar Town Council and the
Pima County Board of Su ervisors. Applicable impactfee funds shall be reimbursed by
general fund reserves.
at the Northwest Marana Transportation Benefit Area
ded UpOl.1 revision of the Marana General Plan.
Furthermore, it is to
impact fee report be up
10
Impact Fee Revision Timeline
Adoption Timeline, assuming Study Session prior to report release
Hold Study Session February ih
Release Report February 10th
Hold Public Hearing April 18th
Adopt Ordinance May 2nd
Begin Collections August 1 st
AFFIDAVIT OF PUBLICATION
STATE OF ARIZONA
COUNTY OF PIMA
ss.
Audrey Smith, being first duly sworn, deposes and says that (s)he is the legal
Advertising Manager of THE DAilY TERRITORIAL, a daily newspaper printed and
published in the County of Pima, State of Arizona, and of general circulation in the City of
Tucson, County of Pima, State of Arizona and elsewhere, and the hereto attached:
NOTICE OF RELEASE OF REPORT ANNUAL REPORT AND
RECOMMENDATIONS FOR IMPACT FEES IN MARANA:
SOUTH & NORTHWEST TRANSPORTATION & PARKS
BENEFIT AREAS
was printed and published correctly in the regular and entire issue of said THE DAilY
TERRITORIAL for 4 issues; that was first made on the 10th day of February 2006
and the last publication thereof was made on the 15th day of February 2006;
that said publication was made on each of the following dates, to-wit:
02/10/06
02/13/06
02/14/06
02/15/06
at the Request of:
Town of Marana
N ary Public in and for the County of Pima, State of Arizona
My commission expires: '~-, 0t - ~
JAMIE C. MACIAS
Notary Public - Arizona
Pima County
Expires 02/04/08
NOTICE OF RELEASE OF REPORT
ANNUAL REPORT AND RECOMMEN-
DATIONS FOR IMPACT FEES IN
MARANA: So;,JTH TRANSPORTATION
BENEFIT AREA: NORTHWEST
TRANSPORTATION BENEFIT AREA;
AND PARKS BENEFIT AREA
The Town of Marana hereby gives no-
tice pursuant to A.R.S. S 9-463.05 of its
release of a technical report recom-
mending the Increase of develop men!
impact tees due to Increases in con-
struction costs. The report recom-
mends increasing the South Transpor-
tation Benefit Area impact tee by
20.4%, and me Northwest Transporta-
tion Benefit Area impact fee and Parks
impact tee by 5.0%. The report aiso re-
ports collections to date, disbursements
to date and credit agreements for oftse1-
ting Improvements constructed as well
as proposing waivers of fees for hous-
ing In existing Colonla neighborhoods
The Marana Town Council may conduct
a public heanng 10 consider the pro-
posed impact fee increases anytime on
or atter April 18, 2006. Copies of thiS
report are available tor review in the aT-
tice of the Marana Town Clerk, 11555
W. Civic Center Drive, Building A1,
Marana, AZ 85653. For turther infor-
mation, call the Town of Marana at
520-382-1906
PUBLISH: The Daily Territorial
February 10, 13, 14, 15, 2006
pnreleasereport a.s