TO: Mayor and Town Council
FROM: Jill Keimach, Town Manager
Andrew Miller, Town Attorney
DATE: December 5, 2019
CONTACT:
Staff Contact
Andrew Miller, 480-348-3691
End
AGENDA TITLE:
Title
Adoption of Ordinance No. 2019-13; Cost Recovery Ordinance
Body
RECOMMENDATION:
Recommendation
Adopt Ordinance Number 2019-13.
Background
BACKGROUND: The Town Council has requested that the Town staff research how other municipalities assess costs for street, sidewalk, drainage, and other public improvements to new development. The staff had recommended one such approach and a draft ordinance that was prepared for the Council to consider at its study session on November 21, 2019. The Council decided to not discuss the draft ordinance and the matter was carried over to the December 5, 2019 Council Meeting for discussion and for a public hearing on a draft ordinance. The Town staff has now revised the draft ordinance to be more in keeping with the mechanisms used by other municipalities, such as the City of Surprise.
The revised draft ordinance relies on the authority found in Arizona Revised Statute § 9-500.05 (the “DA Statute”) which provides that the Town Council may adopt resolutions or ordinances providing for development agreements that incorporate conditions, terms, restrictions and requirements for public infrastructure and the financing of public infrastructure and subsequent reimbursements over time, including for the construction of streets and sidewalks. The Ordinance uses the approach taken by many cities to provide that if the Council determines that certain public improvements (including streets, sidewalks, water lines, sewer lines, storm sewer lines and systems, curb, gutter, street lights, traffic signals and public landscaping) are necessary before the development of a “benefitted” property, the Council may either order these improvements to be constructed by the Town at its expense or by a developer (who enters into a repayment agreement) and to thereafter assess the expense against the benefitted property.
Key Concepts of Ord. No. 2019-13:
• Creates a concept of a “Special public improvement,” that is, a public improvement within a specified assessment boundary that the Town Council has determined is eligible for repayment because the improvement is either:
1) in excess of those normal and customary improvements necessary to develop and support the project for which they are being constructed; or
2) deemed necessary by the Town for the orderly development of property in the Town
• Distinguishes between a property that is a
o “Benefited party,” that is, a person or entity creating a demand for or otherwise utilizing special public improvements resulting in a special benefit for which the benefited party has not specifically contributed to the costs in providing such special public improvements; and a
o “Developer,” who will typically pay for the special public improvements and then enter into a repayment (development) agreement with the Town that sets the parameters of what the Developer will be repaid at a later time
• Provides that upon the determination of the Town Engineer or designee that the public health, safety, welfare and/or convenience requires the construction of special public improvements prior to the development of the adjacent property but for which the adjacent property will receive a benefit, a map establishing the boundaries of the benefited parties' parcels and indicating each benefited party's reimbursement share of the special public improvement shall be prepared by the Town Engineer and filed in the office of the Town Clerk.
• The map for the special public improvement shall contain:
(1) A description of the special public improvement.
(2) A general description of the estimated total cost and cost per frontage foot or cost per acre of the proposed special public improvement.
(3) A description of the special public improvement project area and a map and list of the benefited parcels and lots.
(4) A determination of that portion of the costs of the special public improvement that shall be allocated to the general public benefit, if any.
(5) A preliminary estimate of the portion of the special public improvement which will be financed with general obligation bonds, development fees, or other public funding sources and the portion which will be financed with repayments for special public improvements.
• The benefited parties shall receive notice in writing of the proposed charges for special public improvements.
• The map for the special public improvement (inclusive of parcel numbers) shall be recorded with the Maricopa County Recorder.
• A Benefitted Party shall be assessed a “Reimbursement share,” that is, a benefited party's share of the reimbursement amount based on one of the following:
(1) A cost apportioned by traffic volume generated as the result of the special public improvement;
(2) The cost apportioned per frontage foot of the special public improvement;
(3) The cost apportioned per acre of all properties that utilize a special public improvement;
(4) The cost apportioned by demand of the special public improvements; or
(5) The cost apportioned based on the assessed valuation of all properties that receive a special benefit from the special public improvement.
• The “Costs” that are included in the benefitted parties’ reimbursement share include the actual cost of:
(1) Right-of-way or easement acquisition.
(2) Construction of the special public improvements as determined by the actual costs, such construction to include, but shall not be limited to, construction and installation of water lines, sewer lines, storm sewer lines and systems, asphaltic and concrete paving, curb, gutter and sidewalks, street lights, traffic signals and public landscaping.
(3) Inspection, testing and permit fees.
(4) Engineering and design fees required for preparation of plans and specifications.
(5) Incidental fees, expenses and charges, including but not limited to capitalized interest required to complete the improvements.
(6) Financing costs to Town, where applicable.
• The “Costs” to be assessed against a benefitted party for the special public improvements will be repaid either through a repayment agreement with the Developer who has fronted the costs;
• Or, if the Town paid for the special public improvements from its own funding sources, the Town may require the benefitted parties to reimburse the Town:
o prior to the benefitted party connecting to the special public improvement
o and/or prior to the Town Council approval of
§ a rezoning,
§ special use permit (or a major or intermediate amendment to a special use permit) or
§ a final plat
• The Ordinance makes it unlawful for any benefited party to extend service from a special public improvement to its property without first paying its reimbursement share and obtaining a permit issued by the engineering division or final plat approval by the Town.
• The repayment obligation for a reimbursement share will remain in effect during the term established in a repayment agreement, which can be for up to 20 years.
• The repayment obligation shall terminate upon the termination of the repayment agreement; or in the case of special public improvements constructed with Town funds, the obligation to pay the reimbursement share does not terminate until it is repaid.
In conclusion, the draft “cost recovery” ordinance, No. 2019-13, is similar to the means other cities use for recovering the costs of public infrastructure that are necessary for the orderly development of land before the development of a “benefitted” property occurs. The benefitted property does not typically have to repay the assessed costs of the special public improvements until such time as the benefitted property connects to the special public improvements or otherwise “develops.” Ordinance No. 2019-13 provides a means for the Town to provide for the construction of the public improvements in a timely manner (by the Town or a private developer) and to recapture those cots when a benefited property develops; and adoption of Ordinance No. 2019-13 is recommended by the staff.
ATTACHMENTS:
Ordinance No. 2019-13
PowerPoint