Pinal County agrees to fair impact fee, developer agrees to pay fees and not litigate; RLG represents developer
By Brian Wright
Casa Grande Dispatch
A special meeting of the Pinal County Board of Supervisors Friday had a very similar result regarding the Rancho Sierra development as when it came before the board Dec. 5.
At the board’s earlier meeting, the supervisors approved reduced development impact fees for TOUSA, the company building Rancho Sierra; the fees were reduced by 53 percent.
Rancho Sierra is a proposed development just south of the Ak-Chin Indian Community near Maricopa that could be home to an estimated 51,000 people, roughly the size of Casa Grande, at full build-out. The board voted 2-1 to approve the reduced impact fees at the Dec. 5 meeting, with Supervisors Pete Rios and Clark Smithson voting for and Chairman David Snider voting no.
Friday’s meeting, which concerned a 10-year extension of the county’s development agreement with TOUSA for a large portion of Rancho Sierra (1,650 of 3,662 total acres), ended much the same way, with Snider the lone voice of dissension in a 2-1 vote. As with the Dec. 5 vote, Rios and Smithson voted in favor of TOUSA, despite recommendations of denial from county staff.
The agreement, which already had 10 years remaining, now extends to Dec. 31, 2032. The alternate development fees approved at the Dec. 5 meeting will increase by 10 percent in 10 years and by an additional 10 percent in 15 years.
Court Rich, an attorney for Rose Law Group in Scottsdale, represented TOUSA at the board’s meeting Friday. He said TOUSA agreed to development fees that were not “reduced” but “fair” based upon the county’s development fee ordinance. He also contended the development agreement imparts equal risk on the part of the county and the developer.
Smithson asked Rich if TOUSA was amenable to an increase of 10 percent after five years in addition to the 10 percent increases after 10 and 15 years and also asked if TOUSA would be open to an extension of less than 10 years. But Rich stood firm and said he and TOUSA were not willing to make those concessions.
“In recognition of the fact that we didn’t go down that litigation path, we’re asking for that extra 10 years, and at the same time … we’re paying for that extra 10 years,” he said.
Rich said the extension allows the county and the developer to have “certainty” and added the developer needs the certainty of an extra 10 years due to the long amount of time needed to complete the project.
If the economy improves and construction prices go up, Smithson said it would hurt the county, but he admitted that if prices dropped, it would hurt TOUSA because both sides are locked into the development fees for the duration of the agreement.
“We think it’s a fair sharing of the risk by both parties,” Rich said. “If impact fees go down, that’s our loss. If they went up, it’s an issue (for the county).”
While Rich said TOUSA would end up paying nearly $63 million to the county in development fees, Snider said by his calculations, it should be much more and said an ongoing court case that will affect Pinal County development fees in general made him question why there was such a rush to have the extension approved.
Rich argued that the message sent by the county to developers was the most important aspect of the agreement. He said it shows if developers are willing to pay alternate development fees (instead of not paying any fees) and not threaten the county with legal action, agreements can be reached with the county and development can happen.
Snider said his biggest concern was the county taxpayers, adding the agreement would have consequences for future boards and taxpayers for the next 20 years.
“We are leaving $80 million on the table,” he said. “(TOU- SA) said 63 (million), and our figures come in at significantly larger than that.”
The agreement, Snider said, will lock in an “incredible advantage” for TOUSA during
the next 20 years.
Rios asked County Manager Fritz Behring, who was heavily involved in the negotiations with TOUSA and Rose Law Group about the development fees, to give his opinion on the matter.
Behring said Pinal County has long had a problem with poorly written development agreements.
“I’ve never seen such poorly one-sided documents in my life … but that’s the past,” he said. “I truly believe that trying to find solutions between the private sector and the public sector is a better option than going into court, and from a policy point of view, I don’t see (this agreement) as a problem.”
But Behring said any time the board makes a policy decision, there will be positive and negative consequences.
Rios said he felt good about the agreement from a policy perspective, despite uncertainty at the legal level with another case affecting impact fees still tied up in the courts.
“At the end of the day, I think we need to continue to try to move forward in the best interest of Pinal County,” he said. “I suspect that this particular issue with Rancho Sierra at least is a step in that direction.”
Rios said the decision sends a good message — the county is willing to work with the busi- ness community, developers and homebuilders to resolve development fee issues instead of facing costly litigation.
