Development Impact Fees

Infrastructure Financing Plans and Calculating Fees

• How are Infrastructure-Financing Plans prepared?
• What other documents are used in the calculation of Impact Fees?
• How are credits applied?

3.1 How are Infrastructure-Financing Plans prepared?

Infrastructure-Financing Plans are prepared by the Planning Department with assistance from all of the other departments that are involved in planning and managing the construction of capital facilities. Each department provides estimates of future facility needs and costs. These are used by the Planning Department to calculate impact fees for different land uses in the various impact fee areas.An inventory of capital facilities in each of the fee areas is maintained and updated by the Planning Department, with new information provided by the other departments as future infrastructure projects are altered, initiated or eliminated. The Planning Department is also responsible for developing the land use and population projections that will allow future infrastructure costs to be allocated to all uses at the time the development is complete (generally 2020 or beyond). Infrastructure-Financing Plans are essentially compilations of the best information available on future population growth, land use development and capital facility requirements. View a diagram showing the process of calculating impact fees (12 KB, PDF¹).

What types of infrastructure are included in the plans?

Only capital facilities and related equipment inventories that directly benefit future residential and nonresidential development are included in the Infrastructure-Financing Plan. The facilities are all permanent City of Phoenix facilities that will last at least one year and generally have life cycles of more than twenty years. They must also meet minimum size or capacity requirements. For example, only arterial roads are included in the Plans because of the assumption that the construction of collector streets is the responsibility of developers. Similarly, only water transmission mains of 16" diameter and larger are included in capital facility costs.Capital facilities that are owned and operated by entities other than the City of Phoenix are not included in the inventories used to prepare the Infrastructure-Financing Plans. Facilities required by school boards, State or Federal agencies, or other public or government agencies, for example, are excluded. In some cases, such as the construction of interchanges or bridges involving both Phoenix and the Maricopa County Department of Transportation or Phoenix and the Arizona Department of Transportation, impact fees may be used to jointly fund facilities that are theoretically state or county responsibilities.The specific capital facilities included in the plans are:

• Equipment repair facilities
  

• Fire protection facilities
  

• Libraries
  

• Major streets and bridges
  

• Parks and recreational facilities
  

• Police facilities
  

• Solid waste facilities
  

• Storm drainage facilities
  

• Wastewater facilities
  

• Water facilities

How are infrastructure costs included in the plans?

If the facility has not yet been built, current, present-value estimates of design, construction, land acquisition and other costs are utilized. These estimates are based on recent experience with construction bids or land acquisition costs, or on information provided by consultants. Most of these estimates are documented in detail in Facility Descriptions, Standard Service and Unit Costs that is produced by the Planning Department.If the facility has already been built and was designed and built with excess capacity to provide services for future development, and if bond debt for the facility remains, this debt is allocated to the future users. Generally, the remaining principal and interest payments on the bond debt are included in the impact fee calculations. An existing capital facility without bond debt would not be included in impact fee calculations.

What types of projections are used to prepare Infrastructure-Financing Plans?

Infrastructure-Financing Plans use projections on how undeveloped land will eventually be used, based on seven categories defined in the City Code:

• Single-family housing
  

• Multifamily housing
  

• Retail
  

• Office
  

• Industrial
  

• Public and quasi-public
  

• Other nonresidential

3.2 What other documents are used in the calculation of Impact Fees?

• Facility Descriptions, Standard of Service and Unit Costs provides breakdowns of cost estimates that are used in the various Infrastructure-Financing Plans, and describes the standard types of infrastructure that are used throughout the City.
  
  

• Offsets for Alternative Revenue Sources: Derivations and Calculation identifies and quantifies sources of funding such as the Arizona Highway User Revenues provided to municipalities, property taxes used to support capital expenditures and debt repayment, and water and sewer user fees that contribute to funding infrastructure projects.
  
  

• Derivation of Equivalent Dwelling Unit Factors contains background information and calculations on the way costs and fees are standardized across many land use categories.
  
  

• Long Range Capital Facilities Plan contains detailed lists of needed capital facilities and associated specifications and costs.
  
  

• Population, Housing Unit and Square Footage Preparation Procedure and Data describes the data and procedures used in projecting future development and its attributes in the impact fee areas

3.3 How are credits applied?

If a developer builds facilities that are in the infrastructure-financing plan, he/she can apply for credit against his/her impact fees. Credits are based on costs identified in the Infrastructure Plan, not actual costs incurred by the developer in building the facility. Street, water and wastewater credits are the most common types of credits claimed be developers of large commercial or residential projects because such projects often require significant expansions to the road network and water and wastewater networks. Credits for equipment repair, fire, police, library and solid waste facilities are more rarely obtained.