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City Council Chambers December 7, 2023 System Development Fee Update, 2022-2032 Land Use Assumptions & Infrastructure Improvements Plan Public Hearing Agenda • System Development Fees background • Program requirements • Fee Categories / Service Areas • Land Use Assumptions (LUA) • Infrastructure Improvements Plan (IIP) • Public Outreach • Remaining Project Timeline SDFs have allowed Chandler to keep taxes low over the years. Provided a capital funding source in lieu of selling bonds. Examples of arterial streets, fire stations, police facilities, libraries, parks, and utilities projects completed with SDFs: Why Charge System Development Fees (SDFs)? One of the 1st cities to implement the full range of SDFs or “Impact Fees” in 1997 in an effort to ensure growth pays for growth. SDF’s funded growth related infrastructure through the years, which was and still is paid by developers at the time of permitting. If not for SDFs, Chandler would have had to find an alternative revenue source (e.g. additional bond elections & related taxes, etc.) to fund needed infrastructure as the city grew and continues to grow. Desert Breeze Police Substation; Tumbleweed, Snedigar, Arbuckle, Roadrunner, Chuparosa, and Espee parks, Fire Stations 2-11, Mesquite Groves Aquatic Center, Water/Wastewater Mains, Wells, and Other Infrastructure, and all Major Arterial Street widenings. • SDF process governed by A.R.S. §9-463.05 • Developers pay SDFs during the building permit process • One-time funding for growth-related capital infrastructure • Cannot be used to fund repairs or operations & maintenance • Cannot be used for capital that is not directly attributed to growth • Must be infrastructure that is a necessary public service and that directly provides a beneficial use to the development Background Program Requirements A.R.S. requires the following to ensure transparency and oversight • Complete the LUA and IIP report as a precursor to Fee Updates based on methodology outlined in A.R.S.* • Requires update every five years – legally required by January of 2024 • Last LUA & IIP Adoption - January of 2019 • Includes an updated fee schedule • Public outreach and Council approval process • Prepare an “Annual Report” and post online • Includes actual results for the previous year • Complete Biennial Audit* • Results require a Public Hearing * Must be Prepared by a Qualified Professional Water Fire Reclaimed Water Wastewater Police Arterial Streets Building Permits Parks - Three Service Areas Public Buildings Fees Charged by Equivalent Dwelling Unit (EDU) or SQ FT Fees by Meter Size Fee Category Summary Arterial Streets Service Area (Excludes northwest area of city limits where arterial streets were funded with Improvement Districts) Parks Service Areas Land Use Assumptions (LUA) LUA’s are updated to reflect the General Plan, zoning changes and development patterns • Greater densities = increased EDU’s EDU’s which include Housing Units and Non- Residential Sq Ft are updated based on city projections Build-Out EDU’s are updated with Maricopa Association of Governments (MAG) development projections 2018 2022 Total Residential Existing Average Equivalent Dwelling Units (EDUs) 107K 114K Build-Out Average EDUs 122K 130K Total Non- Residential Existing Sq Ft 74M 85M Build-Out Sq Ft 119M 113M Land Use Assumptions Citywide Comparison 2018 2022 Total Residential Existing Average EDUs 54K 69K Build-Out Average EDUs 58K 74K Total Non- Residential Existing Sq Ft 33M 44M Build-Out Sq Ft 66M 66M Land Use Assumptions Arterial Streets Comparison Infrastructure Improvements Plan (IIP) Update remaining growth projects and related costs Update Outstanding debt for each category Update 10-year Revenue Forecast and estimated financial need for each category Remaining Future Growth Projects in Parks *Mesquite Groves Community Park (30 acres) *Lantana Ranch Community Park (30 acres) Remaining Future Growth Projects in Arterial *Alma School: Germann – Queen Creek (2-4 lanes) and Frye – Pecos (4-6 lanes) *Chandler Heights: Gilbert – Val Vista (2-4 lanes) *Lindsey: Ocotillo – Hunt Hwy (2-4 lanes) All other categories collecting fees to repay debt Pledged Outstanding Internal Debt as of June 30, 2022 Total Outstanding Debt $329.2M Streets $34.5M Parks $8.7M Public Buildings $1.8M Fire $3.6M Police $2.0M Water $113.3M Wastewater $140.9M Reclaimed Water $24.4M Annual SDF Permit Revenue collected fluctuates between $15.5M to $23M over the last 5 years Held a stakeholder meeting on 10/11/2023, including representation from every development category Included a presentation of the updated LUA, IIP and SDF Fees There was one request for a follow up meeting with the Central Arizona Homebuilders Assoc., which was held on 10/23/2023 Public Outreach Both in person and online formats were available Provided multiple notices of meeting to builders, developers, and others with an economic interest in ongoing development and construction within the City of Chandler Project Timeline Public Outreach – Oct. 2023 & Council Work Session Dec. 4, 2023 COMPLETE Public Hearing – LUA & IIP Report Dec. 7, 2023 TONIGHT Adopt LUA and IIP Report January 11, 2024 Adopt Notice of Intent to modify SDF fees January 11, 2024 Public Hearing on Proposed SDF fees & First Read of Ordinance February 22, 2024 Final Adoption of Ordinance to modify SDF fees April 4, 2024 New Fees Effective Date July 1, 2024 Thank you Questions?