ARIZONA HOUSE OF REPRESENTATIVES

57th Legislature, 2nd Regular Session

Majority Research Staff

House: RED DPA 4-1-2-0 | Third Read 31-21-7-0-1

Senate: RAGE DPA 5-0-2-0 | Third Read 27-0-3-0-0

☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note

HB 2946: municipalities; counties; development fees

Sponsor: Representative Powell, LD 14

Senate Engrossed

Overview

Revises development fee requirements for municipalities.

History

Statute allows local governments to assess development fees to offset costs associated with providing necessary public services to new developers.

Developers of residential dwelling units are required to pay development fees when construction permits are issued or later, if specified in a development agreement to allow deferral.  The deferred fees shall be paid no later than 15 days after the issuance certificate of occupancy. The development agreement shall provide for the value of any deferred fees to be supported by appropriate securities, including a surety bond, letter of credit or cash bond.

Statute prohibits local governments from assessing new or increased fees for 24 months after a project receives final approval or its first building permit, if the site plan remains unchanged. Developers are prohibited from extending the 24-month fee-lock through renewals or amendments of their site plans or subdivision plats. Additionally, property owners are only eligible for a refund on excess development fees if the actual infrastructure costs are at least 10% lower than the original forecast. If the cost difference is less than 10%, the local government is not required to issue a refund (A.R.S. §§ 9-463.05, 11-1102).

Development agreement is a voluntary, legally binding contract between a municipality or county and a landowner or developer that establishes the rules, regulations and financial commitments for a project over a specified period (A.R.S. § 9-500.05).

Provisions

Municipal Development Fees

1.   Prohibits a municipality from distinguishing between single-family residential developments on the basis of the size of the residential dwelling unit or number of bedrooms in determining the amount of the development fee. (Sec. 1)

2.   Restates that a new development fee or an increased portion of a modified development fee cannot be assessed against a residential, commercial, industrial or multifamily development for 24 months after the effective date of the development fee ordinance that imposes a new or increased development fee if no subsequent changes are made to the approved site plan or final subdivision plat that increase the number of service units. (Sec. 1)

3.   Stipulates a municipality may assess development fees for water and wastewater necessary public services on the development of a detached accessory dwelling unit if the addition of one or more detached accessory dwelling units would have required the installation of a larger utility meter. (Sec. 1)

4.   Provides for calculating the proportionate share of the development fee for water and wastewater. (Sec. 1)

5.   Limits the amount of total development fees that are assessed on the development of a detached accessory dwelling unit for all necessary public services other than water and wastewater, to the lesser of:

a.   20% of the total development fees for those same necessary public services for a single-family home; or

b.   the detached accessory dwelling unit's proportionate share of those fees.

6.   Defines accessory dwelling unit. (Sec. 1)

7.   Modifies the definition of service area. (Sec. 1)

Miscellaneous

8.   Adds that a municipality is prohibited from increasing any water or wastewater rate or rate component, fee or service charge unless, for the portion of a water or wastewater fee that is adopted or increased after December 31, 2026, to fund capital improvements to water or wastewater facilities that serve new growth, the municipality adopts growth-related fees as prescribed by statute. (Sec. 3)

9.   Makes a clarifying change. (Sec. 2)

Senate Amendments

1.   Specifies that a municipality may not distinguish between single-family residential developments on the basis of the size of the residential dwelling unit or number of bedrooms unless the municipality adopted such development fees before the effective date.

2.   Allows the municipality to continue to make the prescribed distinction on unit size and number of bedrooms in subsequent updates to the assessed development fees if a municipality adopted the development fees before the effective date.

3.   Removes the stipulation allowing a municipality to assess development fees for water and wastewater necessary public services on the development of a detached accessory dwelling unit relating to installing a larger utility meter.

4.   Deletes language relating to calculating the proportionate share of development fees.

5.   Removes the definition of accessory dwelling unit.

6.   Restates that a municipality may assess development fees on the development of accessory dwelling units, as follows:

a.   for water and wastewater, the water and wastewater development fees assessed for such accessory dwelling unit cannot exceed the incremental increase in demand caused by the development of each accessory dwelling unit whether served by the same water meter as the primary dwelling or by a separate water meter; and

b.   for all necessary public services other than water and wastewater, the development fees assessed for such accessory dwelling unit cannot exceed the lesser of 25% of the total development fees or the proportionate share for those same necessary public services applicable to a single-family home.

 

 

 

 

 

---------- DOCUMENT FOOTER ---------

Initials PB                 HB 2946

4/9/2026          Page 0 Senate Engrossed

 

---------- DOCUMENT FOOTER ---------