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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
exactions; individualized determinations; appeal
Purpose
Prohibits a municipality or county from imposing an exaction on an applicant for any proposed project to use or develop real property without a written notice to the applicant of any required exaction. Allows an applicant to request an individualized determination for the required exaction prior to an appeal.
Background
A property owner may appeal the requirement of a municipality or county dedication or exaction as a condition of the granting of or approval for the use, improvement or development of the owner's real property. The municipality or county must notify the property owner that the property owner has the right to appeal the municipality's or county's action and must provide a description of the appeal procedure. The municipality or county must not request the property owner waive the right of appeal or trial de novo at any time during the consideration of the property owner's request.
The appeal must be in writing and filed with or mailed to a hearing officer designated by the municipality or county within 30 days after the final action is taken. The municipality or county must submit a takings impact report to the hearing officer. A fee must not be charged for filling an appeal. After receipt of an appeal, the hearing officer must schedule a time for the appeal to be heard no later than 30 days after receipt. The property owner must be given at least 10 days' notice of the time when the appeal will be heard unless the property owner agrees to a shorter time period. In all proceedings, the municipality or county has the burden to establish that there is an essential nexus between the dedication or exaction and a legitimate governmental interest and that the proposed dedication or exaction is roughly proportional to the impact of the proposed use, improvement or development. The hearing officer must decide the appeal within five working days after the appeal is heard. If the municipality or county does not meet its burden to establish an essential nexus, the hearing officer must modify or delete the requirement of the dedication or exaction appealed.
If the hearing officer modifies or affirms the requirements of the dedication or exaction, a property owner aggrieved by a decision of the hearing officer, at any time within 30 days after the hearing officer renders a decision, to file a complaint for a trial de novo in the superior court on the facts and the law regarding the issues of the condition or requirement of the dedication or exaction (A.R.S. §§ 9-500.12 and 11-832).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Prohibits a municipality or county from imposing an exaction on an applicant for any proposed project without a written notice to the applicant of the required exaction.
2. Allows an applicant, on receipt of the written notice of the exaction, to request an individualized determination that demonstrates the basis for the exaction being imposed on the proposed project.
3. Requires the individualized determination to include:
a) the methodology, supporting data and any information that is used to determine the adverse impact that is anticipated to result from the proposed project; and
b) the method of calculating the exaction amount based on that identified adverse impact.
4. Requires the municipality or county to pay for the individualized determination.
5. Requires the municipality or county to provide the completed individualized determination within 60 days after receiving the request from the applicant for the individualized determination.
6. Requires the individualized determination to be the final determination unless an applicant files an appeal.
7. Deems the exaction excessive and waived if the individualized determination is not completed and delivered to the applicant within 60 days after receiving the request for the individualized determination.
8. Allows an applicant, if the applicant objects to the methodology, supporting information or conclusions in the individualized determination, to appeal directly to the Attorney General.
9. Requires the Attorney General to treat the appeal as a request made in accordance with statutory requirements for investigating a county, city or town for an alleged violated of state law or the Arizona Constitution.
10. States that, in an appeal, the municipality or county has the burden of proof to demonstrate that the exaction is roughly proportional to the adverse impact of the proposed project.
11. Requires the Attorney General, if an applicant is successful in an appeal, to deem the exaction excessive and waive the exaction.
12. Requires the Attorney General, if the applicant is successful in an appeal after proceeding under protest to satisfy an exaction, to direct the municipality or county to compensate the applicant for any costs that the applicant has expended in furtherance of the excessive exaction.
13. Allows an applicant to elect to proceed under protest and satisfy a required exaction while the exaction is being appealed.
14. Prohibits any satisfaction of an exaction under protest from being construed as a waiver of any objections or appeals or right to judicial review of the exaction.
15. Prohibits a municipality or county from requiring the applicant to satisfy the exaction as a prerequisite to appeal the validity of the individualized determination.
16. Allows an applicant to bring an action in an appropriate court to challenge the validity of the individualized determination or the exaction.
17. Requires the court to review the exaction de novo.
18. States that the municipality or county has the burden of proof to demonstrate that the exaction is roughly proportional to the adverse impact of the proposed project.
19. Required the court to award compensatory damages and attorney fees to a prevailing applicant that brings an action.
20. Defines exaction as any fee, dedication or condition that is imposed by a municipality or county on an applicant or property owner as a condition of granting a permit or other approval for the proposed project.
21. Excludes, from the definition of exaction:
a) development fees collected in accordance with statute;
b) fees for municipal or county services; or
c) regular permit application fees.
22. Defines individualized determination as a written analysis that is specific to the proposed project to assess whether an exaction, including a development mitigation fee, is roughly proportional in nature and extent to the adverse impacts of the proposed project.
23. Defines proposed project as any application for use or development of residential real property.
24. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Specifies that an applicant may appeal directly to the Attorney General if objecting to the methodology, supporting information or conclusions in an individualized determination.
2. Requires the Attorney General to treat an appeal as a request made in accordance with statutory requirements for investigating a county, city or town for an alleged violation of state law or the Arizona Constitution.
3. Removes the specification that an appeal may be filed at the time the applicant receives the individualized determination.
4. Removes the authorization for an applicant to file an appeal with other matters that arise in the permit review process that is related to the application.
5. Requires the Attorney General, if an applicant is successful in an appeal, to deem the exaction excessive and waive the exaction.
6. Requires the Attorney General, if the applicant is successful in an appeal after proceeding under protest to satisfy an exaction, to direct the municipality or county to compensate the applicant for any costs that the applicant has expended in furtherance of the excessive exaction.
7. Excludes development fees from the definition of exaction.
8. Narrows the definition of proposed project to any application for use or development of residential real property.
9. Makes conforming changes.
Senate Action
RAGE 2/18/26 DP 5-1-1
Prepared by Senate Research
February 26, 2026
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