Development Impact Fees are assessed by the City of Peoria to help pay for the one-time capital infrastructure costs resulting from new developments in the City. These fees are assessed at the time of building permit and are currently collected for the following categories:

In areas of the City where little or no development exists, significant infrastructure requirements are required and carry considerable costs to provide that infrastructure. Substantial capital investments for public safety facilities, roads, parks, water and wastewater facilities will be necessary to service new growth demands at the existing levels of service. With this in mind, the revenues generated from impact fees are a significant source to support these demands.

For the past eighteen months, the City has been working with TischlerBise, to update the General Government and Utility impact fee study. During this time, City staff has put forth efforts to keep stakeholders involved in the review and update to development plans and growth projections, discuss service areas and fine tune the capital infrastructure needs and project cost estimates.

Growth Projections (LUA)

Growth projections are used to estimate development fee revenue and to indicate the anticipated need for growth-related infrastructure. State statute requires that the Infrastructure Improvement Plans identify improvement needs for a period not to exceed 10 years, (15 years for Utility projects). Therefore, a 10-year timeframe was used for both the LUA and the IIPs.

Housing projections were developed collaboratively with a number of the City’s development stakeholders. Estimates were calculated by reviewing past permit data and growth rates, along with evaluating planned residential development and US Census and American Community Survey data for defined areas. Commercial growth projections are based on employment projections and square foot per employee ratios as identified in the MAG 2020-2025 employment projections.

Over the next ten years, the development fee study assumes there is a projected growth of 20 percent, a growth of 40,450 residents and 17,600 housing units with 70 percent being single family units and 30 percent being multifamily units.  For non-residential, the assumption is 7,000 new jobs and the addition of 3.3 million square feet of non-residential floor area.

Service Areas 

Service areas are a key requirement for impact fees under state statute.  Growth projections and IIPs must be prepared for each service area. Multiple service areas are not mandated as long as it can be shown that developments located within a service area will be served by (or benefit from) improvements anywhere in the area.  Below is a summary of the service area recommendations by fee category: 

Public Safety (Police and Fire)

Given the nature of public safety services, the current and recommended service areas for police and fire facilities are citywide.  Most police facilities are centralized in the Public Safety Administration Building and police protection is provided throughout the City from roving patrol cars.  Fire protection and emergency response is provided by response units located in eight stations, supported by central facilities in the Public Safety Administration Building. The City participates in a regional Automatic Aid System with 22 other municipalities that dispatches apparatus to an incident from the closest location, even when the apparatus is not at its assigned station.  The City’s fire facilities and equipment form an integrated system and therefore, a citywide service area is proposed.

Transportation

This study proposes to maintain the existing three transportation service areas; South (south of Deer Valley Road), Central (North of Deer Valley and east of the Agua Fria River) and North (west of the Agua Fria River). Differential impact fees are charged between the three zones. However, as there are no growth-related transportation projects identified south of Deer Valley Road, there are no transportation fees calculated for this service area.

Parks

The City currently charges a neighborhood park fee. Amenities at neighborhood parks provide a benefit to a smaller zone and neighborhood park facilities are attributed to the service area in which they are located.  This study proposes to add a fourth neighborhood park service area.  The four Neighborhood Park Service Areas are Zone 0 (South of Bell Road), Zone 1 (1/2 mile north of Bell Road to Happy Valley Road, Zone 2 (north of Happy Valley Road and east of the Agua Fria River), Zone 3 (west of the Agua Fria River), and Zone 4 (representing the Saddleback Heights Master Plan Community). As there are no new neighborhood parks planned for Zones 0 and 1, there are no neighborhood park fees calculated for these service areas.

This study also proposes the addition of a community park fee. Community parks provide a citywide benefit, and the community park facilities are attributed to citywide demand. Therefore, a citywide community park service area is proposed.

Water

This study proposes to maintain the existing three water service areas; South (south of Bell Road), North (North of Bell Road and east of the Agua Fria River) and West (west of the Agua Fria River). Differential impact fees are charged between the three zones.

Wastewater

This study proposes to maintain the existing two wastewater service areas; East (east of the Agua Fria River) and West (west of the Agua Fria River).  Differential impact fees are charged between the two zones. 

Water Resources

This study proposes to maintain the existing two water resources service areas based on the Salt River Project (SRP) On-Project and Off-Project (Central Arizona Project or CAP) lands within the City’s service area.   No fees are charged for development occurring in the On-Project lands as the Property owners of On-Project land own the “rights” to the SRP water allocation associated with that land.

Infrastructure Improvement Plans (IIP) 

Over the next ten years, the City plans to make a number of capacity-expanding improvements to public safety facilities, major roadways, parks, and utility systems.  The timing of individual improvements will be dependent on the pace and location of development that actually occurs. Therefore, it is possible that not all of the planned improvements will be needed in the next ten years. Moreover, some of the improvements may be constructed by developers in return for credits to their impact fees.

Staff has spent a considerable amount of time working with stakeholders to review proposed projects, make amendments to the infrastructure improvement plans and fine tune the timing and cost estimates for each project. The most updated infrastructure improvement plans are available on the City’s Impact Fee webpage.

Adoption procedures outlined in the Development Impact Fee Statute require the City to update Land Use Assumptions and Infrastructure Improvement Plans developed as part of the 2024 Development Impact Fee update. A Public Hearing was held on May 7, 2024, to provide an opportunity for those interested in the calculation and assessment of impact fees to provide public comment on the proposed land use assumptions, service areas and infrastructure plans. Once adopted, these documents will serve as the basis for calculating the maximum supportable impact fees for each fee category. Updated fees, once calculated, will be brought back to council in the form of a fee ordinance, which has similar public hearing and adoption requirements.

February 20, 2024 - Developer Stakeholder Meeting #1 was held to review planned methodologies, discuss projects included within the proposed IIPs and review the LUA.  Multiple stakeholders attended and provided feedback.

March 7, 2024 - The draft Land Use Assumptions, Infrastructure Improvements Plan and Development Fee Report was made available on the City’s Impact Fee webpage.  This report includes all the required components to provide a full understanding of the assumptions, projects and fees associated with the update.

March 7, 2024 - Published Notice of Intent and Public Hearing in the Peoria Times. 

April 8, 2024 - Developer Stakeholder Meeting #2 was held for further discussion on planned methodologies, projects included within the proposed IIPs and review the LUA. Again, multiple stakeholders attended and provided feedback.

April 16, 2024 - City Council Study Session to provide an overview on the Development Impact Fee update. 

May 7, 2024 - Public Hearing on proposed Land Use Assumptions and Infrastructure Improvement Plans.

Staff recommends adoption of the Land Use Assumptions and Infrastructure Improvement Plans developed as part of the 2024 Development Impact Fee update.

Impact fees are an important source for funding one-time capital infrastructure related to growth.  Adjustments in fees are necessary and required to address changes in land use assumptions, development patterns and project costs. Funding options for growth related infrastructure is affected by the type and amount of fee revenue generated.