The members of the Sedona City Council heard an update on how Sedona’s development impact fees compare to those of neighboring municipalities during the council’s Sept. 24 meeting, and they weren’t happy with the results.
Council members had requested the comparison after consultant Ben Griffin, of Maryland-based TischlerBise, had presented them with a proposal for revised development impact fees on Aug. 13 that would more than double the city’s current rates.
“It is hard to have this sort of comparison,” Griffin noted during his presentation. Coconino and Yavapai counties, as well as Clarkdale, Cottonwood and Camp Verde, do not charge development impact fees, so in order to provide data for council to consider, Griffin had prepared a comparison of all development-related, rather than development impact, fees for Sedona in comparison to Flagstaff, Prescott, Cottonwood, Camp Verde and Payson.
A development impact fee is a fee charged by the city for the generalized purpose of compensating itself for having acquired additional taxpayers, unlike fees charged to support specific municipal programs such as utilities or libraries. City Manager Anette Spickard clarified for council that Sedona uses its development impact fees to finance portions of its police, parks and streets programs. Griffin’s comparison included all separate fees charged by municipalities for fire, library, park, police, street, water and wastewater services.
For single-family homes, Griffin found that Payson and Camp Verde had the lowest total fees, a flat $3,391 and $4,000, respectively; both municipalities only charge for water service. Cottonwood, which also charges for sewer service, came in at $5,626. For Prescott Valley, which charges a wide range of fees, the total was $10,719, while for Prescott, total fees would be $13,712 for a 2,000-square-foot house. A three-bedroom house in Flagstaff would run $13,834.
Sedona’s current total fees for a 2,000-square-foot house are $18,595. The proposed development impact fee increase would raise that to $26,617. The development impact fee itself would increase from 36% of the total to 55% of the total.
Griffin also presented his estimates for multi-family fees on the basis of a 46-unit apartment development with 600- and 900- square foot units, which would be similar to the one that the Baney Corporation will build as a part of Saddlerock Crossing and to the Sunset Lofts project, which the city of Sedona has not built since first proposed three years ago.
Griffin concluded that the total per-unit fee in Camp Verde for such a project would be $521. In Cottonwood, it would be $652; in Payson, it would rise to $2,140. Prescott Valley would be $4,653, Flagstaff would be $5,217 and Prescott would be $5,816.
Sedona’s current per-unit fee is $11,680. Total per-unit fees after the proposed impact fee increase would be $16,163 — or $743,482 for the entire 46-unit project.
“You’re currently at the top in the comparison, and you would stay at the top,” Griffin summarized.
Council members were not reassured by this presentation.
“I don’t think it provides us this comparison to get a sense of benchmarking,” Councilman Brian Fultz said, and asked for still more information, a request seconded by his colleagues.
“There’s no magic way that somebody else’s money, who no one ever has to worry about, pays for all of this stuff,” outgoing Councilwoman Jessica Williamson said. “We were highest to begin with and we are three times higher after the proposed fees.”
“When you look at this stuff, it sure looks like we’re trying to prevent housing,” Councilman Pete Furman said.
“There will be reaction out there to those numbers,” Councilwoman Kathy Kinsella said.
“Our whole DIF program is a small amount of money into the city,” Vice Mayor Holli Ploog said. “It’s not saying you’re welcome to develop multi-family housing in this city … I’m not sure that I can support this methodology.”
“We are so out of line with everybody else on wastewater,” Ploog added, and also pointed out that Sedona charges a higher streets fee than Prescott does.
City Attorney Kurt Christianson said that a reason for Sedona’s higher streets rate was that “we don’t have the same number of workers here in Sedona. It’s harder to get people here and materials.”
“I have a hard time buying that Prescott … costs that much less than Sedona,” Ploog said.
Williamson proposed that the council could cut the city’s proposed capital projects at the next priority retreat to eliminate the need to raise impact fees, while Furman suggested that the increase in fees was merely the inevitable consequence of growth and development.
“They must have projects,” Furman said of other local municipalities.
“Sedona has a lot more projects going on than Camp Verde,” Deputy City Manager Andy Dickey said.
“If we’re talking about building more affordable housing, then I think we have to talk about, in that case, mechanisms to reduce, or us pay for out of some other fund, those fees,” Williamson said. “I’m not interested in reducing these fees so we can have more short-term rentals.”
“We don’t have a property tax, but we could always have one,” Williamson said.
“I do understand the council’s sensitivity that we publish something that looks really, really large,” Spickard said, but explained that doing so was a consequence of the statutory review process.
The discussion ended without council reaching a conclusion on whether they were prepared to support some, all or none of the proposed increases. A public hearing on the increases is tentatively scheduled for November.
