implementing sb 1525: an update cheyenne walsh squire sanders (us) llp government finance officers...
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Implementing SB 1525: An Update
Cheyenne WalshSquire Sanders (US) LLP
Government Finance Officers Association of ArizonaWinter ConferencePrescott, Arizona
February 20, 2014
Dec. 21, 2013 Publish IIP *no more than 60 days
Feb. 17, 2014First Public Hearing (IIP)
Mar. 19, 2014 Adopt IIP/Notice of Intent to Assess DIF
Apr. 18, 2014Second Public Hearing (DIF’s)
May 18, 2014Final Action on DIF
Aug. 1, 2014Effective Date
60 Day Notice
30 Day Waiting Period*
Min.30 Day Notice Period
30 Day Waiting Period*
75 Day Delayed Effective Date
TIMELINE TO IMPLEMENT SB 1525 BY AUGUST 1, 2014 DEADLINE
Phase III
Phase IV
Where You Should Be Today
• At this point, you should have completed the following:Phase I:
– Update development fee ordinance to reflect the new requirements of SB 1525 (required as of Jan. 1, 2012)
Phase II:– Develop land use assumptions and Infrastructure Improvements Plan
(“IIP”)– This includes determining which fee categories will be assessed, defining
service areas, calculating need and growth assumptions, etc.– IIP published and ready for first public hearing
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Then What?
• Assuming your IIP is complete:Phase III:
– Land use assumptions and IIP must be published for public comment within 60 days of completion (on your website)
– Put together your Advisory Committee (if you choose this option)
– First public hearing (on the IIP)– Adopt land use assumptions and IIP
Phase IV– Notice of intent to assess a Development
Impact Fee (“DIF”) posted– Advisory committee– Second public hearing (on DIF)– Adopt DIF
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Phase III- The IIP Adoption Process
• Publish land use assumptions and IIP
• 60 day waiting period
• Advisory committee comments
• First public hearing
• 30-60 day waiting period
• Formally adopt land use assumptions and IIP
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Phase IV- The DIF Adoption Process
• Notice of intent to adopt a DIF Cannot be published until the IIP is adoptedCan be done on the same day as IIP adoption
• Minimum 30 day waiting period
• Advisory committee comments
• Second public hearing
• 30-60 day waiting period
• Formal adoption
• 75 day delayed effective date
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Advisory Committee
• The advisory committee is a stakeholder group required by statute to be made up of:
Five members50% from the real estate, development, or building community
– At least one homebuilder
No municipal employees
• Must be appointed and procedural rules for the committee must be adopted prior to:
Proposed or updated land use assumptions IIP and/orNew or modified development fees
• Alternative: biennial audits of land use assumptions, IIP, and development fees
Must be done by qualified professionalsCannot be same professional that created the fee studyPublic comment and public hearing required
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Grandfathering
• Timing:Commercial, industrial, or multifamily developments: 24 months from
final development approval (site plan or subdivision plat)Residential developments: 24 months from the date the first building
permit is issued under an approved site plan or subdivision plat
• No new fees or increases in existing fees may be assessed during the grandfathering period
Decreases in fees must be applied, however
• Automatic fee indexing is prohibited Instead, can include expected inflation in fee calculations
• Tracking applicable fees by developmentSuggested approach: Issue written “frozen” fee schedule to developer
at the time of the grandfathering period trigger with the 24 month expiration date clearly noted
If number of service units increases, the increased or new fees may be applied to those additional units
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Notice and Reporting
• All notices, reports, and documentation relating to DIFs must be published on the municipality’s website
If the city does not have a website, it may publish with the League of Arizona Cities and Towns
• Annual ReportsThe annual reporting requirement was expanded to include:
– Each service area addressed – Debt service obligations for any facility for which DIFs are a source of
funding, and the time frame to repay these obligations– Funds advanced by the municipality that will be repaid from DIFs, including
the source of funds and the terms of repayment
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Other Considerations
• Right to immediate serviceUse of development agreements and IIP
• RefundsFor DIFs collected after July 31, 2014, fees must be refunded for
infrastructure not completed within the time frame specified in the IIP, not to exceed 10 years (15 years for water infrastructure)
• CreditsRequired whenever a developer provides NPS that was included in
the IIP or will substitute for infrastructure in the IIPTransferable credits are not required
• OffsetsOnly “new” requirement is offsets for certain portions of construction
sales taxMust continue to offset taxes, fees, assessments, or other revenues
attributable to new growth that will be used to pay for NPS included in the IIP
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Using Existing Fee Revenues
• For fees collected for a purpose no longer authorized by the statute:
Continue to spend for the purpose for which the fee was collectedSpend in the same “category” of NPS
• If not expended by January 1, 2020, the statute requires that the monies be distributed equally among the remaining fee categories
This is likely unconstitutional- so spend the money!
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Changing Course without Amending IIP
• Can alter planned infrastructure without amending the IIP where:The alteration addresses only infrastructure in an existing IIP AND
– Changes will not, individually or cumulatively with other amendments, increase the level of service in a service area; OR
– Cause an increase in the DIF greater than 5% when a new or modified fee is assessed as a result of the changes to the IIP
Notice of such amendments must be published 30 days prior to adoption, and the advisory committee must be informed.
• IIP and land use assumptions must be reviewed or updated at least every five years
If an update is necessary, the public hearing process must be utilized before the expiration of the five-year period
If an update is determined to be unnecessary, notice of this determination must be given, and the city or town must provide a process for written objections to be filed
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