Sec. 23A-82. Development impact fee credits and credit agreements.

   A.   Eligibility of capital facility. All development impact fee credits must meet the following requirements:

   1.   One of the following is true:

   a.   The capital facility, or the financial contribution toward a capital facility that will be provided by the developer and for which a credit will be issued, must be identified in an adopted infrastructure improvements plan and fee report as a capital facility for which a development impact fee was assessed; or

   b.   The applicant must demonstrate to the satisfaction of the city that, given the class and type of improvement, the subject capital facility should have been included in the infrastructure improvements plan in lieu of a different capital facility that was included in the infrastructure improvements plan and for which a development impact fee was assessed. If the subject capital facility is determined to be eligible for a credit in this manner, the city shall amend the infrastructure improvements plan to:

   i.   include the subject replacement facility, and

   ii.   delete the capital facility that will be replaced.

   2.   Credits shall not be available for any infrastructure provided by a developer if the cost of the infrastructure will be repaid to the developer by the city through another agreement or mechanism. To the extent that the developer will be paid or reimbursed by the city for any contribution, payment, construction, or dedication from any city funding source including an agreement to reimburse the developer with future collected development impact fees pursuant to section 23A-83, any credits claimed by the developer shall be:

   a.   deducted from any amounts to be paid or reimbursed by the city, or

   b.   reduced by the amount of the payment or reimbursement.

   B.   Eligibility of subject development. To be eligible for a credit, the subject development must be located within the service area of the eligible capital facility.

   C.   Calculation of credits. Credits will be based on that portion of the costs for an eligible capital facility identified in the adopted infrastructure improvements plan for which a development fee was assessed pursuant to the fee report. If the gross impact fee for a particular category of necessary public service is adopted at an amount lower than the plan-based cost per SU, the amount of any credit shall be reduced in proportion to the difference between the plan-based cost per SU and the gross impact fee adopted. A credit shall not exceed the actual costs the applicant incurred in providing the eligible capital facility.

   D.   Allocation of credits. Before credits can be issued to a subject development (or portion of it), credits must be allocated to that development as follows:

   1.   The developer and the city must execute a credit agreement including all of the following:

   a.   The total amount of the credits resulting from provision of an eligible capital facility.

   b.   The estimated number of SUs to be served within the subject development.

   c.   The method by which the credit values will be distributed within the subject development.

   2.   It is the responsibility of the developer to request allocation of development impact fee credits through an application for a credit agreement (which may be part of a development agreement entered into pursuant to section 23A-83).

   3.   If a building permit is issued, and a development impact fee is paid prior to execution of a credit agreement for the subject development, no credits may be allocated retroactively to that permit or connection. Credits may be allocated to any remaining permits for the subject development in accordance with this article.

   4.   If the entity that provides an eligible capital facility sells or relinquishes a development (or portion of it) that it owns or controls prior to execution of a credit agreement or development agreement, credits resulting from the eligible capital facility will only be allocated to the development if the entity legally assigns such rights and responsibilities to its successor(s) in interest for the subject development.

   5.   If multiple entities jointly provide an eligible capital facility, both entities must enter into a single credit agreement with the city, and any request for the allocation of credit within the subject development must be made jointly by the entities that provided the eligible capital facility.

   6.   Credits may only be reallocated from or within a subject development with the city's approval of an amendment to an executed credit agreement, subject to the following conditions:

   a.   The entity that executed the original agreement with the city, or its legal successor in interest and the entity that currently controls the subject development are parties to the request for reallocation.

   b.   The reallocation proposal does not change the value of any credits already issued for the subject development.

   7.   A credit agreement may authorize the allocation of credits to a non-contiguous parcel only if all of the following conditions are met:

   a.   The entity that executed the original agreement with the city or its legal successor in interest, the entity that currently controls the subject development, and the entity that controls the non-contiguous parcel are parties to the request for reallocation.

   b.   The reallocation proposal does not change the value of any credits already issued for the subject development.

   c.   The non-contiguous parcel is in the same service area as that served by the eligible capital facility.

   d.   The non-contiguous parcel receives a necessary public service from the eligible capital facility.

   e.   The credit agreement specifically states the value of the credits to be allocated to each parcel and/or SU, or establishes a mechanism for future determination of the value of the credits.

   f.   The credit agreement does not involve the transfer of credits to or from any property subject to a development agreement.

   8.   Public funding credits. Credits for public funding sources shall be provided as follows:

   Where all or a portion of the construction of a development is directly funded with appropriated public funds duly authorized by a local, state or federal government, a public funding credit shall be deducted from the development impact fee calculated in the fee schedules contained in section 23A-90, or in the calculation of the fee pursuant to section 23A-81(D), prior to the assessment and payment of the fee. The public funding credit shall be a percentage of the development impact fee and shall apply equally to all development impact fees. The percentage shall be determined based upon the amount of public monies as a percentage of the total cost of the construction of the development project utilizing public funding. The public funding credit shall not apply to guaranteed loans, tax credits or other indirect government financing.

   E.   Credit agreement. Credits shall only be issued pursuant to a credit agreement that conforms to the requirements set forth in section 23A-82(D). The development impact fee administrator is authorized by this article to enter into a credit agreement with the controlling entity of a subject development, subject to the following:

   1.   The developer requesting the credit agreement shall provide all information requested by the city to allow it to determine the value of the credit to be applied.

   2.   An application for a credit agreement shall be submitted to the city by the developer within one (1) year of the date on which ownership or control of the capital facility passes to the city.

   3.   The developer shall submit a draft credit agreement to the development impact fee administrator for review in the form provided to the applicant by the city. The draft credit agreement shall include, at a minimum, all of the following information and supporting documentation:

   a.   A legal description and map depicting the location of the subject development for which the credits are being applied. The map shall depict the location of the capital facilities that have been or will be provided.

   b.   An estimate of the total SUs that will be developed within the subject development depicted on the map and described in the legal description.

   c.   A list of the capital facilities associated physical attributes, and the related costs as stated in the infrastructure improvements plan.

   d.   Documentation showing the date of acceptance by the city, if the capital facilities have already been provided.

   e.   The total amount of the credits to be applied within the subject development and the calculations leading to the total amount of the credits.

   f.   The credits to be applied to each SU within the subject development for each category of necessary public services.

   4.   The credit agreement shall be approved by the development impact fee administrator prior to its execution. The city's determination of the credits to be allocated is final.

   5.   Upon execution of the credit agreement by the city and the applicant, credits shall be deemed allocated to the subject development.

   6.   Any amendment to a previously approved credit agreement must be initiated within two (2) years of the city's final acceptance of the eligible capital facility for which the amendment is requested.

   7.   Any credit agreement approved as part of a development agreement shall be amended in accordance with the terms of the development agreement and section 23A-83.

   F.   Issuance of credits. Credits allocated pursuant to section 23A-82(D) may be issued and applied toward the gross impact fees due from a development, subject to the following conditions:

   1.   Credits issued for an eligible capital facility may only be applied to the development impact fee due for the applicable category of necessary public services, and may not be applied to any fee due for another category of necessary public services.

   2.   Credits shall only be issued when the eligible capital facility from which the credits were derived has been accepted by the city or when adequate security for the completion of the eligible capital facility has been provided in accordance with all terms of an executed development agreement.

   3.   Where credits have been issued pursuant to section 23A-82(F)(2), an impact fee due at the time a building permit is issued shall be reduced by the credits stated in or calculated from the executed credit agreement. Where credits have not yet been issued, the gross impact fee shall be paid in full, and a refund of the credits shall be due when the developer demonstrates compliance with section 23A-82(F)(2) in a written request to the city.

   4.   Credits, once issued, may not be rescinded or reallocated to another permit or parcel, except that credits may be released for reuse on the same subject development if a building permit for which the credits were issued has expired or been voided and is otherwise eligible for a refund under section 23A-85(A)(2)(a).

   5.   Notwithstanding the other provisions of this section, credits issued prior to January 1, 2012, may only be used for the subject development for which they were issued. The credits may be transferred to a new owner of all or part of the subject development in proportion to the percentage of ownership in the subject development to be held by the new owner.

(Ord. No. 11203, § 1, 10-9-14, eff. 12-23-14)

Sec. 23A-83. Development agreements.

   A.   General. Development agreements containing provisions regarding development impact fees, development impact fee credits, and/or disbursement of revenues from development impact fee accounts shall comply with the requirements of this section.

   B.   Development agreement required. A development agreement is required to authorize any of the following:

   1.   To issue credits prior to the city's acceptance of an eligible capital facility.

   2.   To allocate credits to a parcel that is not contiguous with the subject development and that does not meet the requirements of section 23A-82(D)(7).

   3.   To reimburse the developer of an eligible capital facility using funds from development impact fee accounts.

   4.   To allocate different credit amounts per SU to different parcels within a subject development.

   5.   For a single family residential dwelling unit, to allow development impact fees to be paid at a later time than the issuance of a building permit as provided in section 23A-83(H).

   C.   General requirements. All development agreements shall be prepared and executed in accordance with A.R.S. § 9-500.05 and any applicable requirements of the City Code. Except where specifically modified by this section, all provisions of section 23A-82 shall apply to any credit agreement that is authorized as part of a development agreement.

   D.   Early issuance of credits. A development agreement may authorize the issuance of credits prior to acceptance of an eligible capital facility by the city when the development agreement specifically states the form and value of the security (i.e. bond, letter of credit, etc.) to be provided to the city prior to issuance of any credits. The city shall determine the acceptable form and value of the security to be provided.

   E.   Non-contiguous allocation of credits. A development agreement may authorize the allocation of credits to a non-contiguous parcel only if all of the following conditions are met:

   1.   The non-contiguous parcel is in the same service area as that served by the eligible capital facility.

   2.   The non-contiguous parcel receives a necessary public service from the eligible capital facility.

   3.   The development agreement specifically states the value of the credits to be allocated to each parcel and/or SU, or establishes a mechanism for future determination of the credits.

   F.   Uneven allocation of credits. The development agreement must specify how credits will be allocated amongst different parcels on a per-SU basis, if the credits are not to be allocated evenly. If the development agreement is silent on this topic, all credits will be allocated evenly amongst all parcels on a per-SU basis.

   G.   Use of reimbursements. Funds reimbursed to developers from impact fee accounts for construction of an eligible capital facility must be utilized in accordance with applicable law for the use of city funds in construction or acquisition of capital facilities, including A.R.S. § 34-201, et seq.

   H.   Deferral of fees. A development agreement may provide for the deferral of payment of development impact fees for a residential development beyond the issuance of a building permit; provided that a development impact fee may not be paid later than fifteen (15) days after the issuance of the certificate of occupancy for that dwelling unit. The development agreement shall provide for the value of any deferred development impact fees to be supported by appropriate security, including a surety bond, letter of credit, or cash bond.

   I.   Waiver of fees. If the city agrees to waive any development impact fees assessed on development in a development agreement, the city shall reimburse the appropriate development impact fee account for the amount that was waived.

   J.   No obligation. Nothing in this section obligates the city to enter into any development agreement or to authorize any type of credit agreement permitted by this section.

(Ord. No. 11203, § 1, 10-9-14, eff. 12-23-14)

Sec. 23A-84. Appeals.

   A.    Mayor and council appeal. A development impact fee or credit determination by the development impact fee administrator may be appealed in accordance with the mayor and council appeal procedure set forth in the Unified Development Code (UDC), Chapter 23B, Section 3.9.2, and in conformance with the procedures set forth in this section.

   B.   Limited scope. An appeal shall be limited to disputes regarding the calculation of the development impact fees or credits for a specific development and/or permit and calculation of SU's for the development.

   C.   Form of appeal. Appeals shall be filed in writing with the city clerk's office with a copy to the development impact fee administrator, within fourteen (14) days of a decision and no later than fourteen (14) days after the determination of the final development impact fee to be charged or credit to be issued for a project.

   D.   Final decision. The mayor and council's decision regarding the appeal is final.

   E.   Fees during pendency. Notwithstanding UDC, Chapter 23B, Section 3.9.2.B, building permits may be issued during the pendency of an appeal if the applicant pays the full development impact fee at the time the appeal is filed.   

   Upon final disposition of an appeal, the development impact fee shall be adjusted in accordance with the decision rendered and a refund shall be made, if applicable.

   F.   Takings appeal. Any assertion that the assessment of the development impact fee on an individual development constitutes an unconstitutional taking may be appealed in accordance with the takings appeal procedure pursuant to UDC, Chapter 23B, Section 3.9.3. Building permits may be issued during the pendency of a takings appeal as set forth under section 23A-84(E) above.

   G.   Interpretations. Any dispute or challenge to the interpretation of this article shall be determined by the development impact fee administrator.

(Ord. No. 11203, § 1, 10-9-14, eff. 12-23-14)

Sec. 23A-85. Refunds of development impact fees.

   A.   Refunds. A refund (or partial refund) will be paid to any current owner of property within the city who submits a written request to the development impact fee administrator and demonstrates that:

   1.   The permit that triggered the collection of the development impact fee has expired or been voided prior to the commencement of the development for which the permit was issued and the development impact fees collected have not been expended, encumbered, or pledged for the repayment of financing or debt; or

   2.   The owner of the subject real property or its predecessor in interest paid a development impact fee for the applicable capital facility on or after August 1, 2014, and one of the following conditions exists:

   a.   The capital facility designed to serve the subject real property has been constructed, has the capacity to serve the subject real property and any development for which there is reserved capacity, and the service which was to be provided by that capital facility has not been provided to the subject real property from that capital facility or from any other infrastructure.

   b.   After collecting the fee to construct a capital facility the city fails to complete construction of the capital facility within the time period identified in the infrastructure improvements plan, as it may be amended, and the corresponding service is otherwise unavailable to the subject real property from that capital facility or any other infrastructure.

   c.   For a category of necessary public services, any part of a development impact fee is not spent within ten (10) years of the city's receipt of the development impact fee.

   d.   The development impact fee was calculated and collected for the construction cost to provide all or a portion of a specific capital facility serving the subject real property and the actual construction costs for the capital facility are less than the construction costs projected in the infrastructure improvements plan by a factor of ten percent (10%) or more. In such event, the current owner of the subject real property shall, upon request as set forth in this section, be entitled to a refund for the difference between the amounts of the development impact fee charged for and attributable to such construction cost and the amount the development impact fee would have been calculated to be if the actual construction cost had been included in the fee report. The refund contemplated by this subsection shall relate only to the costs specific to the construction of the applicable capital facility and shall not include any related design, administrative, or other costs not directly incurred for construction of the capital facility that are included in the development impact fee as permitted by A.R.S. § 9-463.05.

   B.   Earned interest. A refund of a development impact fee shall include any interest actually earned on the refunded portion of the development impact fee by the city from the date of collection to the date of refund. All refunds shall be made to the record owner of the property at the time the refund is paid.

   C.   Refund to government. If a development impact fee was paid by a governmental entity, any refund shall be paid to that governmental entity.

(Ord. No. 11203, § 1, 10-9-14, eff. 12-23-14)

Sec. 23A-86. Oversight of development impact fee program.

   A.   Annual report. Within ninety (90) days of the end of each fiscal year, the city shall file with the city clerk an unaudited annual report accounting for the collection and use of the fees for each service area and shall post the report on its website in accordance with A.R.S. § 9-463.05 (N) and (O).

   B.   Biennial audit. In addition to the annual report described in section 23A-86(A), the city shall provide for a biennial, certified audit of the city's land use assumptions, infrastructure improvements plan and development impact fees.

   1.   An audit pursuant to this subsection shall be conducted by one (1) or more qualified professionals who are not employees or officials of the city and who did not prepare the infrastructure improvements plan.

   2.   The audit shall review the collection and expenditures of development fees for each project in the plan and provide written comments describing the amount of development impact fees assessed, collected, and spent on capital facilities.

   3.   The audit shall describe the level of service in each service area, and evaluate any inequities in implementing the infrastructure improvements plan or imposing the development impact fee.

   4.   The city shall post the findings of the audit on the city's website and shall conduct a public hearing on the audit within sixty (60) days of the release of the audit to the public.

   5.   For purposes of this section a certified audit shall mean any audit authenticated by one (1) or more of the qualified professionals conducting the audit pursuant to section 23A-86(B)(1).

(Ord. No. 11203, § 1, 10-9-14, eff. 12-23-14)