Phoenix council adopts $1.6 billion impact-fee update to pay for water, roads and public-safety capacity
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Summary
After a yearlong study and public comment, the Phoenix City Council voted unanimously to adopt a revised development impact fee program that phases in higher charges for new development to fund roughly $1.6 billion in infrastructure. Council directed staff to track costs and pursue outside funding for water treatment projects.
Phoenix City Council on Tuesday voted unanimously to adopt a package of development impact fee actions intended to make new development pay for associated capital needs, including water and wastewater treatment, roads, bridges and public-safety facilities.
The council adopted a resolution of the development impact fee report and approved two ordinances to insert the new fee schedules into city code (items 99, 100 and 101). Deputy City Manager Alan Stevenson and Adam Miller, deputy director of planning and development, told the council the package funds about $1.6 billion of infrastructure investment planned over the next 10 years and extends water/wastewater treatment fees across more of the city to support long-term water resiliency.
Why it matters: The update is intended to pay for large, up-front capital projects required to serve growth so that existing residents and businesses are not the sole source of those funds. Council members and advisory committees stressed that the increases are triggered by large rises in construction costs since the last update in 2019 and by capacity constraints in northern Phoenix that prevent additional development until new wastewater and water-reuse facilities are built.
Council and staff emphasized limits under state law. City staff told the council the law requires fees to be based on actual infrastructure cost and prevents the city from waiving impact fees for affordable-housing projects unless an alternative funding source is provided.
Details and debate: Adam Miller presented the methodology: the update defines 15 fee areas across the city, and fees vary by area (higher in newer-growth northern areas where infrastructure is lacking). Miller told the council the update modifies public-safety fee methodology and focuses a larger share of street-fee revenue on bridge funding.
Water resources advisor Dr. Max Wilson said the fees support investments that increase drought resilience, notably advanced treated water reuse that will relieve northern wastewater constraints. He told the council that single-family household water use is driven by landscaping, pools and household size, which makes per-unit adjustments difficult to predict at permit time.
Advisory committees and public comment: Heidi Kimball, chair of the Transportation, Infrastructure and Planning advisory committee, and Dave White, chair of the Water and Wastewater Rate Advisory Committee, both spoke in support of the process and the recommendations. Patrick McDaniel of Phoenix Community Alliance and other speakers urged the council and staff to keep looking for ways to reduce fees’ impact on affordable-housing production and to consider offsets, credits and permitting improvements.
Council direction: The council vote included a motion (Transportation, Infrastructure and Planning chair) approving the report and directing staff to (a) continue pursuing outside funding to reduce the cost of advanced water treatment infrastructure, (b) track actual inflationary costs and amend the infrastructure financing plan if projections prove significantly overstated, and (c) evaluate actual project delivery and administrative costs to inform future updates.
Vote: All three items passed 8–0.
What’s next: The ordinances include phased effective dates consistent with state statute; some fee increases are phased for up to 24 months to allow projects already in process to advance. Staff said they will publish implementation timelines, continue community outreach and return to council if changes are warranted by actual cost experience.
