4.1.2.c New Development Costs Discussion
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As Surprise continues to grow at a rapid pace, and when the growth slows, it is important to ensure new development and redevelopment efforts pay their “fair share.” Typically this fair share is provided by: land donations or in lieu fees for emergency services, schools, and parks; offsite development of streets and infrastructure (directly connected to the site); impact fees; and in some cases development of necessary regional capital improvements (water and sewer facilities). In cases where the development has special offsite needs (additional road and sewer connections) the developer will provide a limited first phase construction of these to serve the initial development.
Once these new services are built, the city must then provide for the remainder of the expenses. After the development is built the city will ensure it provides police and fire protection as well as parks and other recreational opportunities. This may be as little adding additional waste service routes to hiring additional personnel or building a new facility. On top of the new services and maintenance, the city must also determine what additional services it will be required to provide to the area. Items that should be considered during development to reduce the cost to the city are: scalloped streets, connections to other developments (pedestrian, bike, and vehicle), does this development create the need for additional buildings, services, schools, or hospitals.
There are several methods Surprise can use to ensure a complete development from the beginning or to minimize the future costs of expanding services to new developments. Some of these include sharing construction costs with developers, incentivizing developers to bring necessary services through development agreements, building services and infrastructure in advance to prevent future rising costs, and targeting development to areas that are ready to receive it.
Shared Costs
As a new development is created in Surprise and services outside the initial scope of the development are needed, the city can team up with other developers and cities to share the burden of making the improvements. An example of this is to create a service with the help of the new development such as libraries or community centers. The costs will be reduced by sharing costs among the parties and having the buildout completed prior to construction costs increasing further from inflation. As other developers build nearby and use the service, they can repay the city for their share of the cost. The end result is a lower cost service built by city funds upfront and repaid to the city at a future date. When considering this option it is important to analyze the service to ensure the maintenance and operational cost is not higher than the savings generated by creating the service before buildout of the area.
Incentivizing Development
In some cases it may be beneficial to the city to incentivize growth through development agreements. These agreements may include items such as tax reduction, waiver of fees, and capital improvements by the city. The cases typically arise when a service cannot be provided by the city (retail and employment). When considering development incentives the city must analyze the case to ensure the return, timing of the return, or benefit to the citizens outweighs the improvements or other arrangements made by the city.
Development may also be given an incentive to locate to an area of the city where growth is more desirable by placing infrastructure in advance of actual development. Through providing service to targeted areas and having developers pay their “fair share” when they build, the city can target growth and influence employers and retailers to the market by reducing infrastructure concerns. When planning for advance infrastructure the city must analyze the amount of service to be provided based on desired development and the size of development. Once determined the city must also look at maintenance costs, repayment costs, and timing to decide if this is the best course of action.
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