The Town of Fountain Hills has a development fee structure attached to every dwelling constructed within the community. The recent dispute between Park Place Developer N-Shea group and the Town of Fountain Hills has gotten some residents asking how, exactly, that system works.

The system allows the town to collect revenue upfront on new development so money is available to upgrade infrastructure to offset the impacts of community growth.

There is nothing arbitrary about how the system is put together. State law outlines the process and has very strict rules related to what the community can collect fees for and how that money is used after it is received.

The process is complex enough that most municipalities, such as Fountain Hills, have had to hire experts to develop an infrastructure improvement plan, which the funds are applied to. Those funds are audited on a regular basis.

The town just completed a biennial audit of its development fee program, and it was found to be consistent with the collections and expenditures outlined in a 10-year IIP developed in 2014, and it is consistent with state statute.

It can be fairly complex to determine whether a project is eligible for development fee funds. According to Town of Fountain Hills Finance Director Craig Rudolphy, “development fees can only be used for projects identified in the land use assumptions and infrastructure improvement plan adopted by the Town Council, most recently in March 2014.

“If a new project is identified that is not in the same category of necessary public services and for the benefit of the same service area, then a new study would be needed in order to begin collecting development fees for that project.”

As an example, the town currently collects fees in two categories, Fire and Emergency and Parks/Recreation. These are the areas the council determined were most likely to need expansion due to growth over the current 10-year planning term. If, for instance, a large development were to begin construction the town might decide there is a need for a transportation element to expand infrastructure to accommodate additional traffic including pavement expansion or traffic control equipment.

A street category could be added with an amended program, but currently there is none.

Currently development fees for residential are a total of $1,601 per unit. That includes $1,301 for Parks and Recreation and $300 for Fire and Emergency.

All non-residential – which includes commercial, office, hotel and industrial – is calculated on a per square-foot basis and the amount is $0.243 per square foot. The town does not collect non-residential fees for Parks and Recreation.

The 2014 Land Use Plan and Infrastructure Improvement Plan were both focused on the potential development of the State Trust Land at the north end of Fountain Hills. Due to the delay in development of that property there were no parks and recreation or fire and emergency services expansion projects needed. None of the development fee money has been spent.

The just completed audit recommends the town consider an update of the IIP to reflect development consistent with the delay in developing the State Trust Land.