April 13, 2005 - One week after Mayor Bobby Sutton Jr. emphatically declared Marana would set the highest impact fees in Southern Arizona, the Marana Town Council followed up on that promise by adopting two new ordinances.

The council unanimously approved impact fees totaling almost $9,000 per house in northwest Marana at its April 5 meeting. That money will be used to cover the cost of parks and roadway improvements as the town grows over the next several decades, specifically in the northwest area.

"This council, this town, this community will implement the highest impact fees in Southern Arizona, not to stifle growth, but to ensure the residents of this community get everything they need and deserve without the taxpayers subsidizing development," Sutton said in his March 30 State of the Town speech. "Growth will pay for itself."

A new fee of $2,884 for a house built anywhere in Marana will pay for park improvements as the town grows. A fee of $5,941 for any house built in a specified benefit area will pay for future improvements to the town's arterial and collector roadways in northwest Marana.

Both fees combined amount to $8,825 per home within the Northwest Marana Transportation Benefit Area, which is defined by the town's border on the north, the Santa Cruz River on the south, the Central Arizona Project canal on the east and the town's western limits.

By 2030, the benefit area is expected to support 26,000 dwelling units, both houses and apartments, and to have grown to an expected population of about 70,000 residents.

All new developments in Marana will be affected by the fees when they take effect July 4, said Jim DeGrood, executive assistant to the town manager.

"It's something that, 90 days from now, we'll start seeing some benefit from," he said. "Projects that haven't contributed to parks or roads in northwest Marana, those will begin paying."

The fees are the second and third of their kind to be introduced in Marana, which already has an impact fee of $2,435 for every home built south of Avra Valley Road in the South Marana Transportation Benefit Area. Funds collected from that fee are dedicated solely to construction of the Twin Peaks Road interchange, a $57 million project expected to begin in 2006.

"We have an expectation that growth will pay for itself," DeGrood said. "That's what we wanted to do, and these impact fees are, in our minds, creating an incentive to have developers build infrastructure in a timely fashion."

Alex Jácome, a government liaison for the Southern Arizona Home Builders Association, said the impact fees are near and dear to his heart and could affect affordable housing in Marana, but "if it makes sense, it makes sense to SAHBA."

"We wish to remain a partner with the town, and a part of the solution rather than the problem," Jácome said, commending Marana on its vision and cooperation with the development community. "The result is a plan that is fair."

Paving the way to 2030

The roads in northwest Marana, originally built to support an agricultural community, were never designed to handle the increased growth the town will see in the coming years.

Because the growth will have an impact on the community's infrastructure, the town is taking steps to make sure it isn't left struggling to upgrade roads to meet the demands of development.

"If this hastens the construction of a roadway, that, in our minds, is the best thing possible," DeGrood said. "That's far better than us having to wait until we collect enough money."

Roadway improvements can be costly after development occurs because of right-of-way, utility relocations and drainage improvements that can be impeded by the development that created the demand.

Marana and home builders agree that developers can do road improvements far more cheaply than the town can, which is why the town ideally would hope not to collect money from the impact fees at all, DeGrood said. Instead developers would contribute to road and park improvements as part of their projects and receive credit for that work.

"It's far more efficient for everyone and, what's more, when they're selling their homes, there's a nice road that's well-built and landscaped, and same thing with parks," he said. "We would just assume we not collect a single dollar."

Excluding the cost of regional roadways, the town expects to spend $182.8 million by 2030 on arterial and collector road improvements in northern Marana. That includes $47.5 million in Interstate 10 interchange-related costs and $135.3 million in surface street improvements.

Projects identified as "regional" road improvements will not be funded by the impact fee.

The fee calculation in the Northwest Marana Benefit Area calls for the total cost of improvements divided by the total number of housing units, minus credits. As such, the impact fee, along with contributions from nonresidential developments to fund interchange improvements, should cover all $182.8 million in road improvements through 2030, DeGrood said.

"All of those projects, with the exception of trying to find funding by nonresidential uses, that would all be funded by the impact fee," he said. "That's the cost to turn on this area."

The improvement of Tangerine Farms Road would be one of the first road projects to be funded by the impact fee. That includes the extension of a four-lane roadway from the Tangerine Road interchange that goes past Gladden Farms, taking the burden off the interstate's frontage road.

Developers of Rancho Marana 154, a large residential development near Sandario and Moore roads, are contributing a sizable amount of property to the town for parks and roads, including the four-lane Tangerine Farms Road, which goes through the middle of their property, DeGrood said.

This is one example of how developers who contribute to the community's infrastructure can receive credit against their impact fee liabilities.

"If you look at the value of construction divided by the number of lots, it will be above the impact fee, so they won't have to pay anything," DeGrood said.

Most of new home construction in the area is expected to occur, initially, with Gladden Farms Master Planned Community and, near the Marana interchange, with San Lucas and Sanders Grove.

Commercial projects are expected to be developed in the northern Marana area, but that's mostly because of the demands of such residential developments.

An earlier report from EPS Consultants, a Sacramento-based public finance firm hired by SAHBA to do a peer review of the town's impact fee, cited concerns that there was a lack of consideration of commercial and other nonresidential land uses in the formulation of impact fee amounts.

The EPS report suggested the town consider the transportation impacts that nonresidential land uses impose, primarily concerning interchange-related expense.

Town officials say the nonresidential uses projected to occur in northwest Marana will occur predominantly near interchanges. After careful review, town staff chose to include nonresidential uses in the determination of the impact fee amount associated with interchange improvements.

"We know that commercial that is regional … will attract people outside the area to use our roads," DeGrood said. "And we shouldn't make the local residents subsidize the impact of people outside the community that aren't paying those fees."

A construction sales tax for capital improvements to the town's roadways also has been collected since fiscal year 1998-99, amounting to $19 million. As of February, about $4.3 million of that remains in the town's transportation fund.

Meeting public park demands

Town studies show a deficiency in the developed park areas required for the existing Marana population. The town will be responsible for closing that gap with its own money, DeGrood said, but the park impact fees collected will make sure park demands are met as the town continues to grow.

Marana has committed to national parks and recreation standards that call for active recreational parks at a rate of 6 acres per 1,000 residents. Currently, the town has a population of about 24,000 people but has only 111 acres of developed public parks at nine locations, equaling a rate of 4.6 acres per 1,000 residents.

The town has acquired 114 acres for future park development, including a 48-acre district park site and 66 acres of developable park along the Santa Cruz River levee. This exceeds the amount of land needed to meet the deficiency, but it has development costs that are only partially funded so far.

"We've got a lot of acreage that we've acquired for future parks, we just need to get them developed," DeGrood said. "The only thing we would not pay for with impact fee is the deficiency."

Including linear parks, other specialty parks and land recently obtained from Pima County, the town's park deficiency is 33 acres, DeGrood said.

The town estimates it will cost $6.8 million for construction of the 33 acres necessary to satisfy the park deficiency. The 48-acre Silverbell District Park, being developed by the town near the intersection of Cortaro and Silverbell roads, will be used to meet that deficiency, DeGrood said.

By 2025, the town is expected to reach 90,000 residents, which will increase park demand from 144 acres to 540 acres. The cost of new parks to support that growth is estimated to be $89.1 million, which will be paid for by the parks impact fee.

Reports show that parks being contributed to the town by Gladden Farms, Saguaro Springs and San Lucas developments have not been factored in yet. Those parks will be privately developed and conveyed to the town in exchange for future impact fee abatement, DeGrood said.

Because the town has based the impact fees on judgments of how the community will look more than two decades from now, it is a living document that will be reviewed each year by June 30, he said.

Development impact fees are allowed by state statute to ensure equitable cost allocation for needed improvements with the goal being equity between current and future residents.

The town released its initial report on the impact fee Sept. 30, recommending a park fee of $3,095 and a transportation fee of $6,315. After review with SAHBA, those proposed figures have now been lowered to their current amounts.

The town's initial proposal was presented at a developers' roundtable Oct. 6 and specifically to SAHBA on Oct. 19. A public hearing was held Dec. 7. Comments were received from four organizations, including a review of the proposed fees by EPS Consultants on behalf of SAHBA.

"It does cost money to develop in a new area, and we're just ensuring that the contributions and improvements are equitable," DeGrood said. "This is a more of leveling the playing field than anything else."

With the fees taking effect in July, SAHBA's concerns about affordable housing in Marana could become an issue, town officials admit, especially combined with stringent residential and commercial design standards that are on the way.

"Now that we've helped raise the price of housing, one of the emerging issues is going to be the affordability of housing," DeGrood said. "But I'd argue that the market is having more of an impact on affordable housing than our impact fees."

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