Fountain Hills staff, consultant warn rising construction costs could sharply raise development impact fees

The Town of Fountain Hills held a work session in which town staff and consultant Ben Griffin of TischlerBice reviewed a draft update to the town’s land use assumptions and infrastructure improvements plan that will determine development impact fees for the next five years. Paul (town staff) and Ben told council the update is required under Arizona law and that rising construction costs—plus a recent increase in the Shea Boulevard widening estimate—could result in substantially higher fees for new development.

“This is your opportunity to ask questions,” Rachel (town manager) told council, stressing no formal action would be taken at the work session. Ben Griffin described the basics of impact fees and three required legal showings—need, benefit and proportionality—and explained the three common fee methodologies (cost recovery, incremental, plan‑based). “Development fees are a 1 time payment, for growth related infrastructure,” Ben said, noting fees are generally collected at permit issuance and cannot fund routine maintenance.

The consultants presented examples of how costs translate into per‑unit fees. Using the draft plan assumptions, Ben said a proposed new fire facilities component would add about $1,300 to a single‑family fee; a parks amenities component would add about $4,000; and the streets component—largely driven by the Shea Boulevard widening—could add roughly $7,000 to a single‑family unit. Ben showed a Shea Boulevard plan cost of about $29.3 million, of which roughly $8.8 million was attributed to growth after accounting for MAG shares and existing fund balances; the adjusted per‑lane‑mile figure used in the draft is roughly $2.0 million per lane mile compared with the town’s current IIP figure of roughly $800,000 per lane mile.

Council members pressed staff and the consultant on methodology, the town’s limited remaining developable land, and whether the town could readopt current fees instead of updating. Ben said the town could readopt the existing documents for another five years if the council determined assumptions and costs were unchanged, but that large increases in construction costs would mean holding fees steady shifts more growth costs to existing taxpayers. Paul noted the town has tracked impact‑fee fund balances and said streets impact fees have been collected for five to six years and are intended for the Shea Boulevard project.

Consultants recommended stakeholder outreach during the statutorily required advertisement window, and the timetable shown would advance the update through public hearings this fall with adoption potentially in late 2025 or early 2026 and an effective date in April 2026 if the schedule remains on track.

Councilmembers asked for more detail on historical permit trends and the town’s development projections; Ben said the land use section of the advertised report will include census and historical permit trends and the 10‑year housing and employment projections used in the draft.

The work session closed with staff saying the draft and public‑hearing schedule will return to the council in coming months for formal action.