Kaila White

The Republic | azcentral.com

A new library in Glendale; expansion of a water-treatment plant in Scottsdale; Avondale's trail system and a fire-training facility in Gilbert. All have become victims of recent changes in state funding laws.

Across the Valley, big plans for new city projects — some going back more than a decade — are being shelved and stripped out of budgets as officials lose money they had earmarked to pay for them.

Glendale has stopped any progress on a new municipal court.

Legislation that passed in 2011, and which went into full effect in August, changed the way cities collect what are known as development-impact fees from builders and developers and redefined what they can build with that money.

The Legislature passed the law at the urging of the homebuilding industry, which argued that passing the fees on to homebuyers was unfair and a drag on their business, particularly during the Great Recession. Cities opposed the changes.

Now, many cities' officials are grappling with how to find funding for new parks, libraries and more without the fees they've used for decades.

Development had already slowed because of the economic downturn, which limited cities' ability to issue bonds and reduced property-tax revenue, another common source of funding for city projects. The changes to the fees were a double whammy, and many cities have even less money and more restrictions for new projects.

"Timing couldn't be worse," said George Flores, Buckeye's development-services director. "There's a lot of unforeseen issues down the road."

Impact fees are a one-time charge that developers pay to municipalities on new single-family homes, apartments and other construction. They are intended to pay for the new roads, water lines and other infrastructure near the development, so existing residents don't have to.

The legislation required complicated changes to the fees and redefined "necessary public services" that could be funded with the money. Fees for sanitation, landfill, general government, arts and culture and administrative buildings were eliminated by January 2012.

The biggest changes, many city officials say, are limits on the sizes of parks and buildings. The fees can be used to fund no more than 10,000 square feet of a new library, 3,000 square feet of a new community center and 30 acres of a new park. In addition, projects funded by the fees must be completed within 10 years, except for water infrastructure, which can take 15 years.

Parks, libraries take a hit

Those limitations have hit parks, libraries and trails especially hard.

The money can't be spent for auditoriums, arenas, arts and cultural facilities, aquariums, clubhouses, environmental education, golf courses, museums, zoos and more, though swimming pools are allowed. Library fees cannot be used to buy books, furniture or equipment.

"If you think about a community center at 3,000 square feet, that's the size of a large house," said Dawn Buckland, Gilbert's management and budget director. A 10,000-square-foot library would be about two basketball courts, and a 30-acre park would be slightly larger than the Amazon warehouse in southwest Phoenix.

The limitations are a big problem for Glendale's plans for a $27 million library at Glendale Heroes Regional Park. The city spent $1.2 million for design plans totaling 33,500 square feet in 2008.

"You can build four walls and a roof, but you still have to populate it with computers and magazines and furniture and carpet," said Erik Strunk, director of Glendale's Community Services Department.

The library was put on hold in 2010 because of the recession, but city officials decided to completely scrap it once they saw that it would have to be built and operating within a decade or else the fees would have to be refunded.

They can't fund it in that time, Strunk said, and now the plans they commissioned are obsolete.

"We basically had to go back and strip out a lot of capital-improvement projects in my budget and the library is one of those," Strunk said. "We've gotta go back to the drawing board."

Fees are now collected for and used in specific zones of each city, so in some cases, fees actually rose in one zone and fell in another. But in the case of libraries, many cities eliminated the development fee collected specifically to fund libraries, including in Glendale, Peoria, Mesa and Surprise.

Cities weren't raking in money from the fees, but it was a steady stream that, over time, played a big part in financing a new project.

Peoria collected about $200,000 from library fees last year. Mesa collected more than $1.3 million in library-fee revenue in the last three years, which it used to pay off debt from building the Red Mountain Branch of the Mesa Public Library in 1995.

In Gilbert, the town has historically created fewer but larger parks, said Dawn Buckland, Gilbert's director of the Office of Management and Budget. The town has already bought large parcels of land with plans to develop them into parks, but officials will have to find another source of money.

"I think parks down in the southern part of the city are going to be some of our largest concerns because there are some legitimate needs down there," she said.

Looking forward

Arizona homebuilders have lauded the legislation, which they say ensures that fees pay for projects near development and that those projects are done quickly, said Jackson Moll, deputy director of municipal affairs for the Home Builders Association of Central Arizona.

It's not fair to charge a fee for a park that ends up being built across the city, he said, and if an amenity benefits more than just the new people in the development, then cities should find another source of money.

While costs for developers have fallen in many cities, some local officials think that will be only temporary.

In Scottsdale, a major expansion of a water treatment center was put on hold because the need is forecasted in 11 years, outside the necessary 10-year limit.

"We are going to come back in the near future and propose to raise our fees because of these timing issues," said Gina Kirklin, Scottsdale's enterprise finance manager.

ON THE BEAT

Kaila White covers Glendale City Hall, the Glendale Municipal Airport, homeowner associations, public safety and other municipal issues

How to reach her

kaila.white@arizonarepublic.com

Phone:602-444-6914

Twitter: @kailawhite