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HomeMy WebLinkAbout2000.1030.TCSM.Minutes TOWN OF FOUNTAIN HILLS MINUTES OF THE SPECIAL SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL October 30,2000 Mayor Morgan called the Special Session of the Town Council to order at 6:00 p.m. with a roll call taken. ROLL CALL - Present for roll call were the following members of the Fountain Hills Town Council: Mayor Sharon Morgan,Vice Mayor Sharon Hutcheson and Councilmembers Leesa Fraverd,John Wyman,John McNeill, John Kavanagh, and Susan Ralphe. Also present were Town Attorney Bill Farrell, Director of Administration/Town Clerk Cassie Hansen,and Director of Community Development Jeff Valder. AGENDA ITEM#1 - PUBLIC HEARING ON THE DRAFT DEVELOPMENT FEE PLAN PREPARED BY RICK GIARDINA & ASSOCIATES FOR THE TOWN OF FOUNTAIN HILLS. Mayor Morgan recessed the special session of the Town Council and opened the public hearing at 6:01 p.m. Town Attorney Bill Farrell expressed that the public hearing was being held in order to be in compliance with the Arizona Revised Statute (A.R.S.) § 9-463.05. He stated that a municipality must give at least 30-days advance notice of its intention to assess a new or increased development fee and release to the public a written report including all documentation that supported the assessment of a new or an increased development fee. A municipality must conduct a public hearing on the proposed new or increased development fee. It must be held any time after the expiration of the 30-day notice of intention to assess a new or increased fee and at least 14- days prior to the scheduled date of adoption. He explained that when the draft material was presented to the Council at a prior Council meeting, the Council had indicated that they would like to consider adopting kilo., development fees at the November 16th, 2000, Town Council meeting. He said that he had worked with staff and the consultant to accommodate the specific time frame. It was reported to the Council that the public hearing would have to be held October 30 or October 31. The Council had chosen October 30 for the public hearing. He confirmed that the public hearing was announced in the local paper and that the materials were available for public review. He said that normally he would suggest to the Council that the consultant make a presentation with public participation to follow. He suggested that the consultants' presentation be postponed until the November 16th Council meeting since there were very few members of the public present tonight. That would allow the consultant's presentation to be recorded for broadcast on Channel 11 and an opportunity for a larger group of public to be present that might be interested in this issue. He proposed that the Mayor ask the public present tonight if they wanted to comment. He said that he, the consultant, and staff would be happy to answer any questions that might result at the close of the public hearing. In an effort to conserve everyone's time and give the public plenty of opportunity to speak if they would like to, he suggested that the Council forego the presentation until November 16th and now open this matter for public comment. At the close of public comment, if the Council would like to ask questions or answer those responses, he would be more than happy to do that. Councilman Kavanagh asked if the public presentation were to be delayed until November 16th, would the public still be able to ask questions following that public presentation. Mr. Farrell said yes, although it would not be the statutorily required hearing, as that would be finished at the close of this evening's meeting. He pointed out that the normal procedure for ordinance adoptions and agenda items was to have the presentation made to the Council, have Council make a motion, and then have the Mayor call for public comment. He pointed out this would not be the traditional public hearing that was anticipated, as the Council would not be voting on anything this evening. Mayor Morgan requested that Mr. Rick Giardina make his presentation. Mr. Giardina said that he was the President of Giardina and Associates and the lead firm in conducting the impact fee study for the Town of Fountain Hills. He said that members of the research and consulting firm of BBC had assisted him on this Town Council Special Session 10/30/00 Page 1 of 8 project. He apologized for their representative not being present at this point, but he had been delayed due to the weather. Mr. Giardina briefly shared the methodology employed when conducting the study to assure the Council that they had met the letter of the law as it related to Arizona Revised Statutes. He reviewed that impact fees were one-time capital charges that were assessed to new development or expanding development occurring in a community, which increased its demand for services. Mr. Giardina said that the basic requirement for an impact fee was to maintain a linkage between the new service being demanded by development and the cost of that service as provided by the community. The overall intent in developing fees was to capture or calculate the unit cost of providing that next capacity of service. The overall scope of their research had included looking at fees for the Town Marshal, Street Expansion and Development, Parks and Recreation Fees, Open Space Fees, Library Fees, and General Government Fees. Mr. Giardina stated that they had used a variety of methodologies to compute these fees based upon the availability of data as well as projections of costs available from the Town as it related to services in the future. Mr. Giardina referred to the report that they had produced and submitted to the Council. He drew their attention to the recommended fee schedule, which was listed on the last page of their report in Exhibit 9-1. He said that the fees had been calculated based upon the methodology employed. He said it was their recommendation that these were the maximum allowable fees. He noted that the Council was free to adopt any fee up to the maximum amount that they had calculated. There was no requirement under Arizona law that the Council had to adopt the full-calculated fee. He said it was their opinion these fees represented the unit costs of providing the indicated services to new development as it occurred in the Town. Mr. Giardina pointed out that the total maximum fee for a single-family residential development was $3,495. He reminded the Council that this was a one time capital fee that would be paid up front when the development occurred. He said that for multi-family development an adjustment had been made to recognize the reduced demand that multi-family placed on streets as related to trip generation and other related data. The multi-family fee would be approximately $3,200. He said that commercial fees would be assessed on per square foot basis, Le which would be $2.25 per square foot and for industrial development the fee would be $.88 per square foot. He explained that these fees represented the total costs as related to the six service areas for which they had computed impact fees. Councilwoman Ralphe asked, with an eye towards the future, how could the Town pay for future land acquisition. Mr. Giardina said that impact fees could be used for future expansions of an existing system. He explained that to the extent that there wasn't a service level already defined, the ability to assess a fee for something in the future that the municipality was thinking of doing was rather limited. In fact, until those purchases were made and there was an equity interest in those kinds of assets, it would very difficult to implement an impact fee. Mr. Giardina further explained that if there had been an open space program with the master plan, identifying specific parcels of land that the Town was acquiring for open space, then those future acquisitions would be necessary to maintain the current level of open space held per capita. Then there might be a basis for implementing such an impact fee. But to the extent that future land acquisitions were being discussed, it would be difficult to implement such an impact fee at this point. It was his opinion that as they got a better handle on those potential acquisitions three or four years down the road, there might be a better opportunity to look at implementing fees then. Councilman McNeill questioned if the Town offices were to become an owned facility could that asset be rolled into the impact fee analysis. Mr. Giardina said yes and explained that because the Town would own the facilities and would have an equity interest in them that would be an asset that could be included in the impact fee. But if the buildings were financed 100%, those assets purchases would not be an equity interest and no impact fee could be calculated. But as the debt was paid down and equity was developed, then it would be appropriate to include those assets in the impact fee analysis. Town Council Special Session 10/30/00 Page 2 of 8 Gordon Pittsenbarger, 15620 E. Cholla He said the builders were opposed to the implementation of impact fees and the monetary size of the impact (1100, fees. He said the builders in Town, after meeting with Mr. Valder and the consultants, had come away with the feeling that the implementation of the impact fees was a "done deal". He explained that was why there weren't more builders in attendance at this public hearing as they felt it was a waste of their time. He questioned why the Town needed to impose impact fees when the Town had a budget surplus. He noted that the builders would not object to an impact fee if the money were going to the schools. He said that the Town needed to address other priorities such as a sidewalk on Palisades Blvd. for the safety of the children who walk to school. He asked that the Council address this and other safety issues in the Town. He commented that the fee on multi- family residences was a ploy to kill that type of development. Bruce Hansen, 15716 E. Sunburst Mr. Hansen was opposed to the fees as he felt in-fill and new lots in new subdivisions should be treated differently. He did not think that this issue had been looked at or addressed. He explained that if someone owned a lot in Fountain Hills, they had already paid a good sum of money for property taxes per year. He noted that individuals owned most in-fill lots and not developers. To assess him, the lot owner, the same impact fee as paid on a new lot was wrong. Randy Beggar, 15751 Kipling Drive. He said he would be an owner builder within the next six months and he was opposed to implementing impact fees. He questioned the rationale of paying the Barclay Group to come into Fountain Hills and then turn around and impose impact fees. George Post, 17041 E. Rand Road He was glad to see impact fees being considered. He asked that the Council close any loopholes so those large projects did not come in quickly to avoid paying the impact fees. He hoped that the Council would figure out ways to include school and sewer issues into the impact fee analysis to help defray those costs. Councilwoman Fraverd asked Mr. Farrell what was the status of the Apache Junction (AJ) school impact fee issue. Mr. Farrell replied that the City of AJ had lost at the Court of Appeals. He reviewed that last Friday AJ had filed a motion for reconsideration of the appeal with the Arizona Court of Appeals. If necessary, he said AJ was prepared to take the case to the State Supreme Court. He said that he would be less than candid if he did not tell the Council that AJ was also carrying on negotiations with the homebuilders regarding a peaceful settlement of the issue. He said that the AJ Council might look at statewide initiative in 2002, as it appeared there was no help at the state legislature level and little help at the court level. He noted that it was the opinion of a vast number of people impacted by the rapid growth in the schools that a well-written state initiative might be the best way to go. Mr. Farrell was not recommending that Fountain Hills adopt a school development fee, but stated that Fountain Hills would be the second to learn if AJ was successful in their appeal. Councilman Kavanagh asked why did the court say it was OK to levy an impact fee to buy a police car but not build a school. Mr. Farrell responded by quoting the first part of A.R.S. § 9-463.05: "A municipality may assess development fees to offset costs to the municipality associated with providing necessary public services to a development." He said the trial court had found that public services included schools and that there was clearly a cost to the municipality associated with providing that service. The Court of Appeals had replied that in their review of Title 9 they could not find that the municipality was responsible for the construction of schools. The statutes gave the municipality permission to have police, fire, water, sewer, public buildings, and parks and recreation but they did not find anything that allowed the municipality to build schools. He said that it was pointed out to the courts that many communities didn't directly provide those services. He said it was noted that the children were citizens of the community also and a school was considered the children's absolute need. Children could care less about the water, sewer, and streets but wanted to have schools. He stated that the Court of Appeals in Tucson had taken a very strict viewpoint that unless there was a statute that stated the community must build schools that schools could not be included in the analysis of development fees. Town Council Special Session 10/30/00 Page 3 of 8 Councilman Kavanagh asked Mr. Farrell to respond to Mr. Hansen's comments about differentiating between in-fill and new lot development fees. Mr. Farrell replied that raw non-subdivided land was taxed at a lower rate than subdivided lands, which paid a higher property tax. He explained that Mr. Giardina had taken the taxes into consideration when putting the methodology of the development ordinance together. He reiterated that the fundamental idea behind the fee was that the fee was not charged until the building permit was pulled. Mr. Farrell explained that at the time of occupancy the theory was that those residents impacted the community to a degree. To maintain the level of service for all other citizens,a portion of the costs of that level of service had to be attributed to that new home. He acknowledged that not everyone uses all the community's services, but to keep the community at the same level of service the municipality would have to take monies from the general fund or supplement that service in some other Way. Otherwise the community would have to reduce the level of service. He stated that the idea was to have a fee paid by new development that would allow the municipality to maintain, through capital facilities, that level of service that had been given to all of the citizens so that it could be given to those new residents. He pointed out that it really didn't make any difference where the home was located, if it was a newer or older home, it only mattered when the home was occupied for the first time. Mr. Farrell pointed out that the development fee would not affect resells or existing structures — only new development at the time when the building permit was issued. He acknowledged that was the only time the fee could be collected. The theory behind it was that was the moment when the legislative body could determine the impact or the permission to construct a residence occurred. Councilman Kavanagh reiterated that there was no legal basis for differentiating between in-fill and new lot construction development fees. Mr. Farrell explained that the rate could be different on a service level, if the capital project could be connected to a specific zone or a geographical area,but that was not the case before Fountain Hills. Vice Mayor Hutcheson stated she did not know how Fountain Hills could maintain or increase the level of services without implementing development fees. She noted that Fountain Hills was one of the few cities or towns that did not have impact fees. She did not think anyone was advocating depleting the general fund to improve the level of services. The only other alternative was to decrease the level of service and not meet these needs because development was not paying its own way. She said that the Council was trying to find a way to kits., help the Town and have development pay their way in order that the residents could keep their quality of life and their current level of services or expand them. She felt that was how it could be accomplished. It was her opinion that the Town had been delinquent by not implementing these fees a long time ago. Mayor Morgan said she understood there was no way to differentiate in the fee schedule between in-fill and new lots. She did not feel the fees should be the same if someone was only moving from one street to another as that the resident would not be getting any new services. Mr. Giardina responded that by building a new house it would increase the service demand in the city. He agreed that if an existing resident were to move to a new house down the street, that the size of the original family had not been increased. He pointed out that when a new family moved into the town to buy the old house that it would be the new family that would increase the service level. So by virtue of the fact that another dwelling unit in the community was made available, there was a net increase in the number of trips generated, for park service/open space, for marshals services, etc. He also addressed in-fill lots. He said that if a new house was built in the core of the town there were streets to serve that house. Those streets were oversized for that incremental capacity so it was appropriate for in-fill development to pay their proportionate share of that street capacity. Even though a new street was not built for that in-fill lot, there was an oversized existing street that would be used by growth in the community. It should be paid for by the growth in the community. Mayor Morgan said she understood what was being said though she did not agreed with it. Councilman Kavanagh questioned that if the developer had paid for that street, which was already in existence, then why was the Council concerned about that issue. Director Valder clarified that there were two streets that the Town would be charging a fee to expand the capacity of the street: Shea and Fountain Hills Boulevard. The fee would be charged to increase the capacity of those streets because of the added traffic generated by new growth. He stated that many of the currently constructed and occupied residential streets had been constructed by the developer. The road district had constructed some streets, which were in essence then paid for by the taxpayer. Director Valder explained that Mr. Hansen's new house would be assessed the new development fee Town Council Special Session 10/30/00 Page 4 of 8 because it would create an added traffic load on Shea and Fountain Hills Blvd. He stated that staff could show that at one point or another there was an extremely high percentage of traffic that used Shea and Fountain Blvd. Mayor Morgan asked why not just say that everyone paid the fee and be done with it. Mr. Giardina confirmed that was what was being proposed. Director Valder reminded the Council that not all new growth paid for all fees. He pointed out on Table 9-1, commercial and industrial growth did not pay parks and recreation or open space fees because the consultants had determined that development was not creating that need. Mayor Morgan felt that the impact fees would be focused more on the residential and in-fill growth. She had a problem with in- fill lot development fees and new lot development fees being the same rate. Mr. Giardina introduced Mr. Jim Carpenter of BBC Research and Consulting. Mr. Carpenter asked the Council to keep in mind that all of the fees were calculated on a system wide basis. He explained that the Town's streets operated as a street network system. Whether or not a house was built on an in-fill lot or built in subdivision, all of those houses would be adding cars to the Town's street network. He said the network would have to bear and support those trips. He confirmed that the impact fees would be paying for needed improvements identified by the Street Department and would truly serve the entire system. He explained that no matter where someone built their house,they were likely to impose some burden on those two streets. Mr. Carpenter explained there was a certain standard of service for the parks with a certain number of acreage of parks allowed per person. If someone moved into an in-fill lot they would probably use the parks and open space. He said one of two things would happen. Either the Town would build more parks and open space and maintain the service standard or by not expanding the parks and open space the level of service would decline. He said it was really was a system wide perspective at which the consultants were looking. Mayor Morgan reiterated that to have a current resident pay the same development fee for a home being built on an in-fill lot seemed to be a punishment for not moving into an existing house because someone coming into their house would not pay this fee. She pointed out that a resident would save money by not building and purchasing an existing house. Mr. Carpenter agreed that buying a new house could cause more residents to live ,.. in Fountain Hills even though you might not be the new residents. Mayor Morgan said she understood the concept even though she did not agree with it. Councilman McNeill said that the Council was stuck with a system with which they might not enjoy the consequences in all respects. He reminded the Council that the Town had one point in time to assess this fee and that was when the building permit was issued. He agreed with Mr. Post's comment that this fee should have been in place a long time ago. He acknowledged that if the Town had implemented those fees long ago, the Town's infrastructure might be in better shape today. He hoped that the Council would proceed with implementation of the impact fees now under consideration. He said his initial reaction to the issue of in-fill lots had been that although property taxes had been paid, those taxes were not largely associated with the fees that the Council was now thinking about levying. He explained that what the Council was trying to do was to have new growth pay for the increased services. Councilman Kavanagh said he was struggling with equity issues. He asked if there were comparisons compiled from surrounding communities that included not only their total impact fees but also how the community assessed those fees between residential, commercial, and industrial. Director Valder said that those studies had already been made. Councilman Kavanagh expressed concern with regard to the Parks and Preservation impact fees because it had been calculated as an extra expense that the new residents would impose on the Town based upon an existing level of service. He pointed out that Town residents never paid for part of the existing level of service for those two items because some of the land and facilities had come from grants and donations. He was having a fairness problem in that new people would be billed for things for which the old resident never paid. He said that if it that were not bad enough, if future donations were obtained in these two areas, the new residents would not be credited for the extra they were paying. L,, Mr. Carpenter clarified that it was their estimation that the calculations were the maximum legally allowable fees that the Council could charge. It was within the law to count assets that were donated to the Town as part Town Council Special Session 10/30/00 Page 5 of 8 of the current service standard. He noted that the Council currently had a certain amount of acreage for parks and open space. However, that number had been arrived at by creating the current service standard and the Council could impose impact fees to maintain that service standard. He acknowledged that there was a separate policy question. He said the Council would have to decide if they wanted to charge the residents that fee amount if past residents had not paid that amount of money. As this was a legitimate policy question, he reminded the Council of the flexibility in their recommendation that the Council could choose to charge any amount up to the maximum amount. Councilman Kavanagh asked if staff or the consultants could recalculate those two areas using the cost basis of what residents had paid for rather than including donations and grants. Mr. Carpenter answered that it would depend on how easy it was to determine which assets were paid for by the Town and which were donated. Director Valder said that as it related to open space that would be easily done, but with regard to parks and recreation it was more complicated because of the improvements. Councilman Kavanagh proposed deducting the grant monies and such. Director Valder stated that those calculations could be made for the Council prior to November 16t'. Councilman Kavanagh asked what would happen if a new grant for$1 million was received. Would the impact fees be proportionately reduced to take that into account or do the people continue to pay based upon the proposed schedule? Mr. Farrell replied that when the Council adopted the fees, the ordinance had a number of interesting sections. He suggested that the Council familiarize themselves with these sections: the offset, appeals, exemption, and usage sections. He gave an example of how the process would work. If the Town had a development fee account and the Town decided they had all that they would ever need, then the Town would refund with interest the development fees that had been paid and not dispersed within a seven-year period. Or the Town could exempt people from the payment. To make the process a floating target would make it difficult, because at the end of the first year chances would be that the Town had not accumulated enough in any account to make an expenditure for a capital improvement. He proposed that if a $1 million donation forever stopped the need for any additional parks, then the Council could repeal that part of the development fee and refund the money along with the interest earned. He did not feel that any individual grant, gift, donation would put the Town in the position of not ever needing more. Councilman Kavanagh asked if it could be written into the ordinance that any future donations would be rebated based on the portion that could be attributed to the new people. Mr. Farrell said anything could be written in but he explained that it would become very difficult to compute. Councilman Kavanagh summarized that it would be simpler to correct this before and not after in terms of what the initial fees were versus trying to make adjustments. Mr. Farrell agreed and restated that assumed that a particular gift or donation ended the need. Councilman Wyman asked if the fees were collected for the specific areas and escrowed by area. Mr. Farrell responded that the fees were segregated by the specific account and lumped for the purpose of investment in the local government investment pool. He stated that each month the Town's accountant would segregate the interest. He confirmed that the each fee would have a separate interest component, which would contain the name and address of each person who paid it. Councilman Wyman said that if that method was utilized, the money would be going back proportionally to those who had paid it. Mr. Farrell said the ordinance said that the refund would be paid in the seventh year to whomever the property owner of record was on the day of the refund. Councilman Wyman again pointed out that the refund would be paid with interest. Councilman Wyman noted that on October 14th the Council had received a listing of the 25 municipalities in Maricopa County that collect impact fees. He stated that Fountain Hills was the only one that didn't. He noted that Fountain Hills was approximately 2/3 built out and those costs, regardless of how the costs were defined, would vary with the number of people coming to Fountain Hills. Regarding equity, if someone gave the Town some type of an asset it would become part of the Town's equity. He felt that the current residents had an equity position in all of the things that the Town owned, whether or not it was obtained through grants or gifts with Town Council Special Session 10/30/00 Page 6 of 8 each of these people owning a piece of that equity. As additional people moved in and built homes, they would be buying a piece of the Town's equity in the form of a development fee. He felt that this was as fair as it could be. 41610, Bruce Hansen, He reminded everyone that the Town provided no essential services to the people of Fountain Hills with the possible quasi contract with the Sheriffs office for police protection. There were no sanitary or water services provided. He said that both of these services had large impact fees. If Councilman Wyman looked at his listing of the 25 municipalities who had impact fees, he would guess that a good portion of the fees would be for sewer and water. He said that most community assessed impact fees for sewer and water, and Fountain Hills did not because those services were not provided. Councilman Wyman said that the impact fee analysis to which he had referred contained four cities/towns that did not have water/sewer fees. He clarified his prior point that Fountain Hills was the only town on the listing that did not impose impact fees other than water and sewer fees. George Post, 17041 E. Rand He did not feel that the Town would collect more than the Town could spend. He said the Town would find they had not collected enough. Councilman Wyman reiterated that the fees collected could not be utilized for anything other than for what they were marked. The fees were to be escrowed and must be paid back to the extent that they were not utilized. Mayor Morgan reconvened the special session at 6:56 p.m. AGENDA ITEM#2- CALL TO THE PUBLIC. No one came forward AGENDA ITEM#3- ADJOURNMENT. Councilwoman Fraverd MOVED to adjourn the meeting and Councilman Wyman SECONDED the motion, which CARRIED unanimously. Mayor Morgan adjourned the meeting at 6:57 p.m. TOWN OF OUNTAI (ILLS By: Sharon Morgan,Mayo ATTEST: Cassie B. Hansen, Director of Administration/Town Clerk PREPARED BY: Bev Bender,Executive Assistant 41111, Town Council Special Session 10/30/00 Page 7 of 8 CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Special Session Meeting held by the Town Council of Fountain Hills on the 30th day of October 2000. I further certify that the 1/4101, meeting was duly called and that a quorum was present. DATED this 16th day of November 2000. Cassie B. Hansen, Director of Administration/Town Clerk �1rr Town Council Special Session 10/30/00 Page 8 of 8