Town Council Strategic Planning Session Funding the Town’s Transportation Infrastructure Improvement Plan (IIP) – A Summary of Funding Sources Town Council Strategic Planning Session February 25, 2017

Purpose of Presentation Identify Frequently Used Funding Sources Comparison of Other Cities How is the Town Different? Review Impact Fees Why are they Different?

1. Funding Sources

Frequently Used Funding Sources Comparative Matrix on Next Slide Each City Uses Multiple Funding Sources Combination of Sources Vary Sources are Paid By Existing Residents and Businesses Future Residents and Businesses Visitors

Comparison of Frequently Used Funding Sources Queen Creek Chandler Gilbert Mesa Operating Budget Yes Impact Fees No Dedicated Construction Sales Tax Proposition 400 Gas Tax (HURF) Voter Approved G.O. Bonds (paid from Property Taxes) Dedicated General Sales Tax

How is the Town Different? Operating Budget Capacity Opportunity for Town $6.5M Placeholder for: Debt Payments / Pay-As-You-Go Project Funding Operating Costs for New Roads Constructed by the Town and Private Development Other Uses (i.e. Parks Master Plan)

How is the Town Different? (concluded) Dedicated Construction Sales Tax (vs. Dedicated General Sales Tax) Town: 2% on all Construction Activity (Narrow Base) Mesa: 0.3% on all Taxable Activity (Broader Base) Dedicated Construction Sales Tax Revenues are a Direct Reduction from Impact Fees (discussed later)

How is the Town Different? (concluded) Proposition 400 0.5% Dedicated Transportation Sales Tax in Maricopa County Most Cities in Maricopa County Receive Prop 400 Funding – QC Does Not Represents Significant Funding for Projects Mesa: $47M Peoria: $15M

How is the Town Different? (concluded) Gas Tax (HURF) The Town uses 100% of our Revenues for Operations and Pavement Preservation - Not New Projects Because Street Expenses Exceed Revenues Its Not an Issue whether Used for Operations or Projects

How is the Town Different? (concluded) Voter Approved G.O. Bond (Paid from Property Taxes) Approach Citizen Bond Committee Formed to Develop a List of Projects Project List to Ballot for Vote Property Taxes Set to Cover Annual Debt Service Payment

2. Impact Fees

Impact Fees City Comparison on Next Slide Our Current Fee is Low in Relation to Others at $1,263 Fees Vary Widely for Multiple Reasons Remainder of Presentation Discusses the Reasons for the Variety

Comparison of Impact Fees (Single Family)

Pinal County (North Central) is a Good Comp to QC Single Family Fee is $7,978 Same Level of Service as QC 91 New Lane Miles $90M Total Cost 49% Growth Related

Why Do Impact Fees Vary? Major Reasons are: Amount of Infrastructure Remaining to be Built (Age of City) Credits (Fee Reductions) Included Costs Number of Service Areas All Other

1. Amount of Infrastructure Remaining to be Built “Younger” Cities Tend to Have Higher Fees because they are Still Building a Transportation System “Young Cities”: Queen Creek, Apache Junction, Pinal County

2. Credits (Fee Reductions) With new Legislation in 2012, Impact Fees Must be Reduced by Other Sources (Credits) which include: Dedicated Construction Sales Tax Prop 400 Gas Tax (HURF)

Dedicated Construction Sales Tax Direct Reduction of Growth Costs Before Impact Fees Calculated Illustrated Below $25M Reduction to QC’s Impact Fees over 10-Year Period Previous Method Current Total Growth Costs $115M Less Dedicated Construction Sales Tax - $0 - $25 M Amount From Impact Fees $115 M $90M

Prop 400 0.5% Dedicated Transportation Sales Tax in Maricopa County All Cities in Maricopa County Receive Prop 400 Funding Except QC Represents Significant Funding for Projects Mesa: $47M Peoria: $15M

Gas Tax (HURF) Many Cities Use a Portion of Their Annual Gas Tax Revenues for Growth Related Projects either as Pay-As-You-Go or for Debt Service Payments Example: Phoenix, Gilbert, Mesa, Chandler

3. Included Costs Comparative Matrix on Next Slide Types of Costs Included in Fee Vary Most Include Arterial Streets Exception: Gilbert (Traffic Signals Only) Mixed Results re. Inclusion of Right-of-Way Costs

3. Included Costs (concluded) Major Arterials Collector Streets Traffic Signals Right-of-Way Support Facilities Apache Junction Yes No Chandler Gilbert Peoria Phoenix Pinal County Queen Creek

4. Number of Service Areas Comparative Matrix on Next Slide The larger the Geographic Size, the More Likely Multiple Service Areas Exist (Nexus) Examples: Phoenix, Peoria, Pinal County Pinal County: Excluded Eastern Portion due to Low Population and Insignificant Development

4. Number of Service Areas (concluded) Apache Junction 1 Chandler Gilbert Peoria 3 Phoenix Pinal County 4 Queen Creek

5. All Other Other Factors that Affect Impact Fees Include: Large Projects Funded by Alternative Methods such as Community Facility Districts Improvement Districts Developer Agreements Developer Contributions

5. All Other (continued) Stormwater Impact Fee Includes Drainage Facilities, Culverts, and Bridges that are Otherwise Included in the Transportation Impact Fee Example: City of Phoenix Stormwater Utility: Flagstaff, Oro Valley

5. All Other (concluded) Project Inflation Included Timing of Last Update Method Used to Calculate Fee Set at Legally Maximum Amount

How Will the Town Pay for the IIP? Street Operating and Replacement Costs Feb 1 Cash Flow Projections Feb 15 Funding Options Comparison to Other Cities Feb 25 Calculating the Updated Impact Fee March 1

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