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Compromise between cities, builders reflects ‘real world’

The final compromise on impact fees contained several big provisions, but it mostly hinged on the definition of “necessary public services” that development fees would be used to pay for.

Arizona law never defined “necessary public services.” The city of Mesa, for example, has been collecting an impact fee for cultural facilities, such as museums, since the late 1990s.  

Critics called that an egregious abuse of impact fees.

The Mesa fee became the subject of litigation in 2007, when the Home Builders Association of Central Arizona argued that cultural facilities were not “necessary public services,” that the cultural impact fee did not fall within the defined powers of cities to impose, and that the fee wasn’t reasonably related to the burden imposed on the city to provide additional service to a new development. 

The courts, however, sided with the city, which was, for the builders, a stinging defeat that deepened the animosity between the two parties. 

It was no wonder, then, that the builders pushed hard this session for a bill that, if passed in its original version, would have hurt the cities. 

“That was the keystone to the agreement,” Mesa Mayor Scott Smith said of the new definition, adding that the agreed-upon definition is much more inclusive than what homebuilders wanted, but it’s also more restrictive than what cities can do now.   

There is long-standing common ground that necessary services include roads, sewer, and fire and police infrastructure. The new definition affirms those services while limiting others.

For example, wastewater plants are necessary. Golf courses are not. Flood control systems are necessary. Amusement parks are not. 

Also not necessary: aquatic centers, auditoriums, bandstands, boathouses, clubhouses, community centers bigger than 3,000 square feet, greenhouses, lakes, and zoos.   

“The rules are much clearer now than they were before, and so it should be easier for cities to stay within their limits,” said Clint Bolick, who heads the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation, which joined the homebuilders’ challenge to Mesa’s fees. He earlier said the list “reflects the real world.” 

“Impact fees should only be used for services that benefit new residents. That was the fundamental key point in the debate,” said Spencer Kamps, who lobbies for the Home Builders Association of Central Arizona. “If you’re building any facilities that serve existing residents, that’s OK. But those existing residents need to pay for that service — not new growth.” 

 — Reporter Gary Grado contributed to this article.

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