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Glendale, AZ Biennial Certified Audit of Land Use Assumptions (LUA), Infrastructure Improvements Plan (IIP) and Development Impact Fees (DIFs) over July 1, 2018 – June 30, 2020 May 25, 2021 Andrew Rheem, Senior Manager CITY OF Agenda • Overview of Arizona Revised Statutes (ARS) Requirements for Biennial Audit • Bounds of the Audit and Resources • Approach and Process Followed • Findings › LUA › IIP › DIF Revenues › DIF Expenses 2 ARS 9-463.05 Audit Requirements (1) In lieu of creating an advisory committee pursuant to paragraph 1 of this subsection, provide for a biennial audit of the municipality’s LUA, IIP and development fees. An audit pursuant to this paragraph shall be conducted by one of more qualified professionals who are not employees or officials of the municipality and who did not prepare the IIP. The audit shall review the progress of the IIP, including collection and expenditures of development fees for each project in the plan and evaluate any inequities in implementing the plan or imposing the development fee. The municipality shall post the findings of the audit on the municipality’s website or the website of an association of cities and towns if the municipality does not have a website and shall conduct a public hearing on the audit within sixty days of the release of the audit to the public. 3 (1) Subsection G, paragraph 2. Bounds of the Audit and Resources Audit Period of July 1, 2018 through June 30, 2020 Programs Audited • DIFs are assessed for Fire Protection, Police, Parks & Recreation, Streets, Library, Water and Wastewater necessary public service Resources • Development Impact Fee Annual Reports for Fiscal Year (FY) 2018- 19 and FY 2019-20 • 2019 LUA, IIP and DIF Study • 2014 LUA, IIP and DIF Study • City permits and actual results 4 Audit Areas of Focus Review and Compare LUAs Projected to Actual Development by Land Use Classification and Service Area over two-year Audit Period Audit of DIF Revenues Assessed as Authorized by DIF and WRAF Category and/or Service Area to Match Adopted DIFs and WRAF Audit of Expenditures or Use of Funds from DIFs by Fee Category and/or Service Area as Identified Within the 2014 and 2019 LUA, IIP, and DIF Reports 5 Audit Approach Followed by Raftelis LUA Audit to Review Audit Period Growth by Land Use Classification Compared to LUA IIP Audit to Confirm Actual Uses of DIF revenues were consistent with identified improvements by fee category and/or service area Review DIF Revenues Reported Against Independently Calculated Amounts to Check for Accuracy of Actual Assessments • Using the adopted DIF schedules and criteria during Audit Period • Reflecting any assessment subject to the “grandfathering” clause of ARS 9-463.05 (1) Compare Actual Expenditures Reported of Audit Period Against the DIF Report to Verify that Funded Projects were DIF Eligible 6 (1) 24-month period where DIFs may not increase following final approval for commercial, industrial or multi-family development or the date of the first building permit issued for a residential development. Findings 1. The difference between growth forecasted in the LUA and actual growth should be monitored but is not an area of immediate concern . A. Growth often occurs less linearly as certain developments may occur more rapidly than others influenced by several external factors. B. If actual growth continues to be significantly below the LUA forecast, the City should consider updating the LUA forecast and initiating an update to the IIP and DIFs 7 Findings Continued 2. Revenue audit did not find any material discrepancies when compared to DIFs identified in the LUA, IIP and DIF Reports A. Over 3,700 records tested by Raftelis to verify fees were calculated correctly B. 160 records or 4% of records were identified for additional review with City staff A. Results of the additional review resolved most of the flagged charges. C. 6 of the over 700 permits over the Audit period were assessed the incorrect DIFs. I. 1non-residential non-utility permit totaling $106,899 II. 1 non-residential utility permit totaling $34,427 III. 1 non-residential non-utility DIF totaling $323 IV. 1 non-residential non-utility DIF totaling $407 V. 1 residential non-utility permit totaling $64 VI. 1 residential non-utility permit totaling $3,332 8 Findings Continued 3. Expenditures within Audit Period are consistent with those listed within DIF Reports funding DIF eligible improvements 9 Fee Category FY 2018-19 Projects FY 2018-19 Expenditures FY 2019-20 Projects FY 2019-20 Expenditures Fire 0 $0 0 $0 Library 5 3,332,724 1 1,417 Parks 14 1,351,851 10 603,953 Police 0 0 2 78,064 Streets 4 1,289,388 4 2,961,241 Water 0 0 1 1,347,518 Wastewater 0 0 1 1,040,717 Total 23 $5,973,963 19 $6,032,910 10 Contacts: Andrew Rheem 303 305 1137 / arheem@raftelis.com