Sec. 29-12. Impact fee credits and credit agreements.
A. Eligibility of contributions. Eligible contributions include facilities that have been constructed, dedicated, paid for, or otherwise provided by private development, subject to the following:
1. Capital facilities for which an impact fee is being collected must be identified in an approved infrastructure financing plan (IFP) and must be accepted by the City, unless otherwise approved pursuant to subsection (B)(5) of this section;
2. Lands for which an impact fee is being collected must be identified in an approved IFP and must be dedicated to the City;
3. Financial contributions that have been paid to the City or other account approved by the City that is dedicated to fund eligible capital facility construction or land acquisition in lieu of providing capital facilities or dedicating land for which an impact fee is being collected.
B. Calculation of impact fee credit. Credit will be calculated subject to the following:
1. If credit is granted for an eligible capital facility or land contribution, then the value of the impact fee credit will be based on the estimated cost of the contribution as provided in the approved IFP (the "plan cost"), unless otherwise specified in a development agreement.
2. If credit is granted for a financial contribution, the credit will be valued at a one-to-one dollar value of the contribution.
3. Credit may be valued on the basis of the actual costs incurred by a developer if specified in a development agreement that has been executed prior to constructing the facility or acquiring the land, and sufficient documentation of actual costs has been provided to the City.
4. If the City participates in the construction of eligible capital facilities, or the acquisition of eligible lands, the available impact fee credit will be adjusted proportionately to reflect the City’s contribution.
5. The City may elect to approve an alternative credit value for an eligible capital facility, if the capital facility is accepted by the City prior to ultimate completion or if the plan cost for a specific type and/or size of the capital facility is not identified available in the approved IFP, using one or more of the following methods:
a. Using values interpolated from the plan cost identified in the approved IFP for the facility; or
b. Using actual costs incurred by the developer. Documentation of actual costs must be provided to the City.
6. Proportional credit values. In the event that the impact fee schedules adopted in Appendix A of this chapter utilize a net fee per EDU which is less than the recommended net fee per EDU calculated in the approved impact fee study, credits based on costs identified in the infrastructure improvements plan will be provided in a manner proportionate with the adopted fee schedule. For example, if the adopted net fee per EDU is only 50 percent of the recommended net fee per EDU, the maximum credit value for facilities provided against that fee will be 50 percent of the estimated costs included in the IIP for that type of facility. Credits calculated using other methods permitted by this chapter are not subject to the provisions of this subsection.
7. If an eligible facility for which credit is requested is also included in a repayment agreement, then the impact fee credit available to the developer will be limited to that portion of the facility that the repayment agreement allocates to the developer. Credit will not be provided for that portion of the facility that the repayment agreement will require neighboring parcels to pay prior to developing.
C. Application for impact fee credit. It is the responsibility of the developer to complete and file an application for impact fee credit pursuant to the following requirements, unless otherwise specified in a development agreement:
1. An application for credit must include, at a minimum, the following information and documentation:
a. The applicant’s contact information;
b. A description of the development for which an eligible contribution is a condition of development approval, including:
(1) A map that clearly identifies the location and boundaries;
(2) Description of proposed land uses;
(3) Estimated total land area (acreage) and the number of residential dwellings or square footage of nonresidential structures;
(4) Estimated water meter specifications (size/type);
(5) If in a storm drainage impact fee area, a map that depicts portions of the development that will be improved, graded, or otherwise modified;
c. A description of the eligible contribution for which credit is being requested, including:
(1) A map identifying the approximate location of the facility;
(2) A description of the type of facility;
(3) Estimated size (e.g., pipe diameter, pump capacity, road cross-section, etc.) of the facility;
(4) Estimated actual cost of the facility, if known;
(5) Estimated plan cost from the IIP for the facility;
d. The estimated credit balance;
e. Credit allocation instructions. The applicant must provide written credit allocation instructions that identify specifically where the credit will be allocated. If the credit will be allocated to multiple developments and/or developers, the allocation instructions must specify the amount of credit to allocate to each development and/or developer. In addition, if the total estimated credit is less than the estimated applicable impact fee liability, then the allocation instructions must specify if the credit will be divided equally among all planned EDUs within a development, or if the credit will be issued at the maximum amount per EDU; which cannot exceed the net impact fee in effect at the time the permit is obtained. A separate credit agreement will be executed for each developer to which the credit is allocated in accordance with the allocation instructions. Credit may only be allocated within the boundaries of the impact fee area that will benefit from the contribution;
2. Eligibility to receive a credit as a refund. Credit provided in the form of a refund will not be applied toward any permits that are issued prior to receiving an application for credit, unless otherwise specified in a development agreement.
3. An application for credit is deemed approved when:
a. If the contribution for which credit is being requested is a capital facility or a land dedication, then the application for credit will be deemed approved once the applicant provides verification that the capital facility has been accepted by the City, or that the title to land has been transferred to the City.
b. If the contribution is a financial contribution, then the application will be deemed approved once the payment has been received and the deposit has cleared to the designated fund.
4. Time limitation. An application for credit must be approved within two years of the date of acceptance of a capital facility or the closing date of a land title transfer.
D. Credit agreement. A credit agreement must be executed between the City and a developer that is entitled to receive impact fee credit. The City Manager is authorized by this chapter to enter into a credit agreement upon acceptance of a complete credit application.
1. The credit agreement will include, at a minimum, the following information and documentation:
a. Application. All information required for the application for impact fee credit under subsection C of this section must be reviewed for accuracy. Any items that changed subsequent to the application for credit must be updated and resubmitted with the best available information at the time the credit agreement is executed. The developer will also provide documentation of actual costs, provided in a manner acceptable to the City, which will be used in the estimation of facility costs in future.
b. Allocation instructions. The allocations instructions letter described under subsection (C)(1)(e) of this section will be incorporated in the credit agreement as an exhibit.
c. Map of subject development. A detailed map identifying where the credit is allocated in accordance with the allocation instructions described under subsection (C)(1)(e) of this section will be incorporated in the credit agreement as an exhibit.
d. Credit tracking and balance statement. A table specifying the available credit balance will be incorporated in the credit agreement as an exhibit.
2. Issuance of credit. Credit will only be issued against permits obtained within a subject development after the contribution has been accepted by the City and a credit agreement has been executed, unless otherwise specified in a development agreement. Credit may be issued prior to executing a credit agreement, if all the following conditions are met:
a. The applicable contribution has been accepted by the City; and
b. Impact fees have been paid on permits obtained within the subject development prior to the City accepting the applicable contribution; and
c. The impact fees paid prior to the City accepting the applicable contribution are eligible for a refund upon execution of a credit agreement. The total amount of credit issued prior to executing a credit agreement will be capped at the amount of the refund owed.
3. Issuance of a refund. Refunds resulting from credit issued will be remitted to the permittee within 60 days of executing a credit agreement, unless otherwise specified in a development agreement.
4. Acceptance of security. Credit may only be issued after the eligible contribution for which the credit has been established is accepted by or transferred to the City. The City may issue credit prior to accepting a capital facility if adequate security for the completion of the facility has been provided, such as an irrevocable letter of credit or similar type of security acceptable to the City, or in accordance with the applicable terms and conditions of an executed development agreement.
5. Credit balance adjustment. Credit balances may be adjusted to reflect changes that occur when applicable sections of the IFP are updated or amended, according to the following:
a. If a gross impact fee increases or decreases because of inflation or deflation in facility costs, then the aggregate percent increase or decrease may be applied to the remaining credit balance.
b. If a gross impact fee decreases because specific facility types or components have been eliminated from the fee calculation, and credit was provided for the eliminated facility type or component, then the remaining credit balance may be reduced by the percentage that the eliminated facility type or component contributed toward the original credit balance.
c. If a gross impact fee increases or decreases because of changes in the methodology for calculating the fee, then the remaining credit balances will not be adjusted, notwithstanding credit balance reductions in accordance with subsection (D)(5)(b) of this section.
d. If a development is not subject to a fee increase because of the grandfathering provision of Section 9-463.05, Arizona Revised Statutes, then the remaining credit balance will not be adjusted until the grandfathering period has expired.
6. Reallocation of credit. A credit agreement must be amended to reallocate available credit to developments located within the boundaries of the applicable impact fee area.
7. Limitation on credit reissuance. 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 permit for which the credits were issued has expired or been voided and is otherwise eligible for a refund under this section.
8. Nontransferability to other fees. Credit may only be issued to reduce the applicable impact fee for which the eligible contribution was provided. Credit will not reduce any other fees charged by the City, including other impact fees or administrative charges associated with the impact fee program.
9. No reimbursement. Credit may not be reimbursed from City funds, unless otherwise specified in a development agreement.
10. Expiration of a credit agreement. Credit agreements expire 20 years from the effective date of the agreement. (Ord. No. G-5984, 2015; Ord. No. G-6666, § 1, 2020)