Prescott committee reviews workforce-housing policy draft, weighing fee relief, density bonuses and city support

The Prescott City Workforce Housing Committee discussed a draft workforce‑housing policy and several implementation options, with staff presenting a cost scenario showing that development impact fees—not permit or zoning fees—are the largest barrier to a hypothetical multifamily project.

Chelsea Walton, the city’s community development director, walked the committee through a fictional example of a 6.08‑acre parcel proposed for a 92‑unit apartment project and said the numbers show where relief would be most meaningful. "Development impact fees are statutorily regulated, so they cannot be simply waived or forgiven," Walton told the committee, adding that the city can consider other approaches such as deferral or development agreements.

Walton’s scenario assumed an eight‑building project (about 24 units per building) with a permit valuation of roughly $3,000,000 per building and a total project valuation of about $25,000,000. In that example, she said permit fees would total about $275,000 (a 25% reduction would save roughly $69,000), while development impact fees would total about $1,200,000 and construction cost at current market rates would be on the order of $46,000,000. Walton summarized that waiving non‑impact fees would represent only about 0.6% of the theoretical project cost in that scenario.

Committee members pressed on how the city might cover or offset any reduction in impact fees. Walton said any city participation to offset impact fees would be a council decision and noted several available approaches: deferring impact‑fee payment until certificate of occupancy through development agreements, the city partnering on infrastructure to offset fees, or case‑by‑case negotiation tied to project scope. She also recommended removing a detailed fee table from the draft policy and, instead, directing council to set a percentage waiver or an approach that staff could apply consistently.

Members discussed creating a dedicated set‑aside to provide predictable up‑front relief to developers so decisions at the counter would not be purely speculative. One member urged consideration of using city‑owned, buildable parcels or in‑kind contributions (for example, design or expedited review) to reduce developer up‑front costs and accelerate projects. Staff and members noted that such measures would still require council authorization and budget decisions.

The committee also discussed density bonuses as an incentive. Walton said density bonuses would require changes to the Land Development Code; as currently drafted, the policy can reference density bonuses, but implementing them would be a follow‑on code amendment. Staff suggested a sliding scale for bonuses tied to the number of workforce units offered and indicated other elements such as setbacks or height limits would need codification.

Members asked the finance director be asked for data showing how recent impact‑fee increases affect both city revenue and project economics. Walton said she would request the finance director provide data the committee could use to evaluate realistic subsidy levels.

Committee members received an update on two related items: a follow‑up meeting with Flagstaff staff (scheduled as a hybrid meeting so Flagstaff can join virtually) to learn from that city’s experience, and the status of an Arizona Department of Housing grant and associated consultant contract with Pollock and Company to complete a housing needs assessment and strategic plan. Staff said a cleaner draft of the policy with editorial edits will be circulated before the Flagstaff session.

Next steps: staff will clean up the draft, circulate edits to the committee, request financial impact data from the finance director and continue the discussion with Flagstaff at the scheduled follow‑up meeting.