After unanimously raising sewer fees by 3.6% on Aug. 13 and indicating that further increases next year may be expected, the Sedona City Council then moved on to a public hearing on a set of proposed increases in development impact fees.

Tischler Bise consultant Ben Griffin, who is based in Washington, D.C., stated that development impact fees are a cost that the city charges a builder or developer at the time building permits for a new project are issued in order to recompense the city for having acquired additional taxpayers.

Griffin said that in Sedona, unlike most cities in Arizona, these fees are based on the square footage of each residential unit instead of the type of dwelling “as a way to make the small units more affordable.”

Examples of the proposed fee increases include:

• For units less than 700 square feet in size, an increase from $3,273 to $7,381, or 126%
• For units of 1,500 square feet, an increase from $5,832 to $12,018, or 106%
• For units of 2,500 square feet, an increase from $7,419 to $17,228, or 132%
• For lodging units, an increase from $3,702 to $8,863 per unit, or 139%. As an example of how this would apply, the planned Oak Creek Heritage Lodge would be charged $620,410 for development fees, while the proposed Ambiente Creekside resort would be charged $443,150, exclusive of permitting, development review and other associated costs.

“Since 2020, you’re averaging about 25 single-family units a year and you’re averaging about 33 multi-family units per year,” Griffin said of ongoing development.

Between 2000 and March 2023, the city issued a total of 23 multifamily building permits. The city of Sedona’s 2020 housing study estimated that the total number of additional housing units needed by 2025 would be between 1,480 and 1,515.

“To charge $7,100 for this tiny little unit just seems … outrageous to me,” Vice Mayor Holli Ploog said.

“These proposed fees are breathtaking,” Councilman Brian Fultz said. “We’ve all received considerable concerned feedback.”

Councilwoman Kathy Kinsella said that the proposed fees appeared to be “actually discouraging” the construction of smaller units.

Ploog and outgoing Councilwoman Jessica Williamson previously suggested the city introduce pre-approved building plans for singlefamily homes in order to reduce construction costs. Yavapai County already offers such plans through the Home of My Own program, and county officials have estimated the cost of a professionally-built 607-square-foot home through the program to be $65,000, which would be considerably lower for an owner-builder.

Councilman Pete Furman asked whether it would be possible for city staff to look into the possibility of charging higher fees for homes that were going to become shortterm rentals, perhaps by looking for “maybe more bedrooms than has been the standard in the past.”

Griffin clarified that it would not be legally possible for the city to charge lower fees for building smaller residential units in order to encourage their development. Compared to flat fees for single-family as opposed to multi-family construction, “it does incentivize smaller development,” Griffin, said.

“This model is insane enough as it is,” Williamson said. “There has to be other ways to incentivize smaller units.”

In response to a question from Furman, City Manager Anette Spickard said that the city collected $615,000 in development impact fees in the previous fiscal year.

“Not much,” Ploog commented.

“How far would $615,000 get us in shared-use path length?” Fultz asked.

“If it was concrete, it would be half a mile,” Deputy City Manager J. Andy Dickey replied.

“So why are we spending so much time on this?” Williamson asked.

As part of his analysis, Griffin predicted additional Sedona Police Department spending over the next 10 years of $2.1 million on facilities, $570,000 on vehicles and $394,000 on radio equipment. Griffin also noted that Flagstaff and Kingman are the closest cities to Sedona that collect development impact fees, and added that Flagstaff does not collect as many fee components as Sedona.

“Does Cottonwood have development impact fees?” Furman asked.

“I don’t think so,” both Griffin and City Attorney Kurt Christianson replied.

“What do they do, then?” Ploog asked.

Spickard suggested that other cities are likely negotiating fees for each project with each developer on a case-by-case basis, but said that staff could gather more information on the topic prior to the next public hearing.

“I want to know what our neighboring communities are doing,” Kinsella said. “I need to know for sure … Also the county.”

Yavapai County formerly charged a development impact fee for road development, which was repealed in 2020.

Coconino County does not charge impact fees.

On its town website, Clarkdale states its lack of fees are an incentive to development.

Cottonwood documents indicate that the town has charged sewer and water impact fees only.

Camp Verde’s website makes no mention of development impact fees.

Christianson also said council cannot waive development fees as a housing incentive; council may, however, pay the fees themselves on behalf of a developer whom they wish to encourage to build housing.

Spickard said that March 31 would be the first day new development fees could go into effect due to the statutory requirements applicable to the process.