Development impact fees are supposed to be a legal method of charging new residents and new businesses up-front for government infrastructure they will need, instead of putting an additional burden on current residents who already contribute their fair share.
But a lawsuit filed against Mesa last week asks if some impact fees have become discriminatory property taxes with little direct benefit to the people who pay them. Nearly every community has rapidly escalated the types and costs of such fees charged to construct a new home or business in the past 10 years. In each case, city officials can point to a consultant study that claims such huge increases are needed to make sure growth pays its own way.
But many developers argue impact fees have been raised far too high to subsidize government activities that properly should be funded from general taxes.
Clint Bolick, litigation director for the Goldwater Institute, filed a lawsuit on behalf of the Home Builders Association of Central Arizona against a development impact fee used by Mesa to fund two museums and other cultural facilities. Tribune writer Jason Massad reported Sept. 6 that Mesas cultural fee has risen from $59 per single-family unit to $218 since it was first collected a decade ago. Bolick has two challenges to the cultural fee.
First, the lawsuit argues impact fees can only be assessed for necessary government services, and museums and art facilities dont count as necessary. That is a traditional libertarian argument, since private groups and foundations frequently fund museums, performance halls and other cultural items.
But Bolick admits the state law that authorizes impact fees doesn't define what qualifies as necessary. The Legislature left that decision solely up to a community's leaders and voters.
Bolick's second point seems far more valid. Officially, Mesa's cultural fee is supposed to support places such as the Mesa Arts Center and the Arizona Museum for Youth. But these places already have been constructed, and Mesa officials told Massad they have no concrete plans to spend the fees currently being collected.
Its going to be pretty hard for Mesa to convince a court that the cultural impact fee is legal if the city doesn't have a valid plan to spend the funds on a service directly connected to new growth.
The cultural fee makes up a relatively small portion of Mesas development fees, which average $8,300 for a single-family home.
But if Mesa insists on taking this issue to trial, Arizona homebuilders and the Goldwater Institute are likely to establish some new limits on the use of impact fees as a substitute for general taxes to fund government.