A.R.S Section 9461.05 D.4. – Cost of
Development Element
A cost of development
element that identifies
policies and strategies
that the municipality will
use to require
development to pay its
fair share toward the
cost of additional
service needs
generated by new
development, with
appropriate exceptions
when in the public
interest.
This element shall
include:
1. A component that
identifies various
mechanisms that are
allowed by law and that
can be used to fund and
finance additional public
services necessary to
serve the development,
including bonding,
special taxing districts,
development fees, in
lieu fees, facility
construction,
dedications and service
privatization.
2. A component that
identifies policies to
ensure that any
mechanisms that are
adopted by the
municipality under this
element result in a
beneficial use to the
development, bear a
reasonable relationship
to the burden imposed
on the municipality to
provide additional
necessary public
services to the
development and
otherwise imposed
according to law.

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10 – COST OF DEVELOPMENT ELEMENT
The Cost of Development Element identifies the various methods by
which infrastructure is paid for and how new development participates in
the provision of needed services. The timely and cost effective provision
of public services is an issue being addressed all across the fast growing
state of Arizona. State Law was amended to require communities to plan
for the cost of development within their General Plan. This change
occurred as part of the Growing Smarter amendments. As a result, State
law provides guidance on the issues and policies that should be defined
within this element as noted in the box to the left. This element also
incorporates the Smart Growth Principle to make development decisions
predictable, fair and cost effective by identifying the means by which
development pays its fair share of the costs of growth and encouraging
growth in areas where excess utility capacity is present.
The Element is structured in the following format. The Background
section identifies the city’s existing infrastructure financing methods. The
Evaluation and Analysis section discusses the legal mechanisms for
infrastructure construction and identifies a mix of preferred methods for
use in Yuma, based on development and community needs. The Goals,
Objectives and Policies section identifies community goals and objectives
to ensure development participates in the cost and construction of new
infrastructure. The Action Plan identifies a list of projects with a general
timeline to meet the identified goals.

BACKGROUND AND EXISTING CONDITIONS
The limited resources available to construct infrastructure must be
balanced with the resources needed to maintain that infrastructure. For
every mile of water line, for each new park and for other new public
infrastructure there is an increase in the City budget to maintain those
facilities. That increase can have a minimal impact, such as the
installation of a single residential sewer line, or it can have a major impact
with the need for additional staff and regular facility maintenance, such as
the development of the Desert Dunes Water Reclamation Facility. These
impacts have to be considered when addressing the needs of new
development. The discussion on the fair share participation by new
development for new services must include a review of City resources to
be dedicated to future operations and maintenance.
There has been a long-standing, consistent policy in Yuma that new
development participates in the provision of new services required for that
development. The City of Yuma has developed two methods to achieve
this: Developer Construction/In-Lieu Fees and Development Fees.

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DEVELOPER CONSTRUCTION/IN-LIEU FEES
The first method of participation involves direct developer construction or
monies in-lieu of construction for all necessary infrastructure, both within
the project and for off-site facilities necessary for the project. For
example, if a new subdivision were proposed, the developer would be
responsible for all interior infrastructure, including but not limited to
transportation facilities, water and sewer services and stormwater control.
In addition, the developer would be responsible to upgrade or install
connecting infrastructure for which the new development will be
accessing the project. This includes arterial and collector roads and
water transmission or distribution lines or sanitary sewer collection lines.
In-lieu fees are generally paid by the developer to the City for the
installation of a site-generated need, i.e. a turn lane, where complete
construction of the roadway is anticipated in the near future, rather than
have the site generated need constructed by the developer and then
removed by the City once overall construction commenced. Additionally,
developer construction/in-lieu fees minimize the costs borne by all City
residents and taxpayers for new development. This methodology places
the burden of new construction on the first developer in an area.
Construction of water and sewer facilities that are above and beyond the
need of the specific development can provide the developer the ability to
recoup a portion of that infrastructure cost through an agreement allowing
the developer to receive a payback from later construction that connects
to water and sewer transmission lines and appurtenances such as pump
stations.
DEVELOPMENT FEES
The second method is development fees which are one-time payments
used to construct system improvements needed to accommodate new
development. A development fee represents new growth’s fair share of
capital facility needs. By law, development fees can only be used for
capital improvements, not operating or maintenance costs. Development
fees are subject to rigorous legal standards, which require fulfillment of
three key elements: demand, benefit and proportionality. First, to justify a
fee for public facilities, it needs to be demonstrated that new development
will create a demand for capital improvements. Second, new development
must derive a benefit from the payment of the fees (i.e., in the form of
public facilities constructed within a reasonable timeframe). Third, the fee
paid by a particular type of development should not exceed its
proportional share of the capital cost for system improvements.
In 2005, the City of Yuma adopted the following Development Fees under
the Citywide Development Fee Ordinance:
• Parks & Recreation;
• Art & Cultural Facilities;
• Sanitation;
• Police;
• Fire/EMS;
• General Government;
• Public Works;
• Transportation.
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Recently, Spring 2011, legislative changes to the State Statutes that allow
development fees have prompted the City of Yuma to review, revise and
update the Citywide Development Fee Ordinance. It is anticipated that
the fee categories will be modified within the next year as a result of this
update.
INFRASTRUCTURE FINANCING
Developer Construction/In-Lieu Fees and Development Fees are two
methods by which development participates in new infrastructure
construction. Another issue to look at is how public infrastructure is
financed and maintained when new development is not directly involved.
The overriding issue in addressing new services is balancing financing
and resources between ongoing maintenance and new facility
construction.
Schools and Libraries - Area school ongoing operations are financed
through a combination of state and local property taxes. New school
construction may be financed through voter approved bond financing or
through state funding. The City of Yuma is not the financing authority for
school facilities but as this is a community wide need, identification of the
financing has been included.
Library operations are funded through the Yuma County Free Library
District. New facility construction in recent history has been
accomplished through either a joint venture of a community and the
Library District, such as the Somerton Library - built with City of Somerton
and Yuma County Community Development Block Grants, or through
allocated funds from the County budget, such as the development of the
Foothills Library. Before the creation of the Yuma County Free Library
District, library development was the responsibility of individual
communities. The City of Yuma built, owned and operated the Yuma
Library. The City of San Luis operated a library for their residents. Upon
the creation of the district in 1987, the respective city facilities and related
equipment were deeded to the District.
General Administration - Public administration and a majority of
department operations are financed and maintained through the General
Fund. The General Fund is made up of 1% of the City sales tax and
property taxes, state shared revenues and fees paid. State shared
revenues are derived from state income taxes and sales taxes and
apportioned to communities based on population. A limited amount of
General Fund money is available for new facility construction as this fund
is dedicated to staffing operations and maintenance of City facilities. As
the City has continued to grow the need to provide sufficient space for
staff and anticipate future needs has prompted the construction of a new
City Hall. The new City Hall centralizes a number of City operations. The
City’s Municipal Property Corporation (MPC) issued bonds for this new
facility. The General Fund will pay for debt service costs through lease
payments to the MPC until 2025.

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Public Safety - Public safety operations and maintenance (O&M) are
financed through the General Fund. New facility construction of the
Police Department Headquarters, the Municipal Court Facility, Fire
Stations #2, #3, #5 and #6 have all been funded through a restricted
revenue bond financed by the Public Safety Tax. This is a voter
approved .2% addition to the sales tax, which specifically repays the
bonds issued for the construction of the public safety facilities. Currently
under construction using this fund source is the Fire Department Training
Facility and the Police Department Training Track. The Police
Department has also been successful in obtaining federal grants to fund
specific operations. As noted in the Public Services Element, facility
plans have been developed for the Police and Fire Departments. New
urban development has not participated in the funding for construction of
these facilities through the payment of Development Fees.
Stormwater - Regional Stormwater Control facility maintenance and new
construction are funded through the Yuma County Flood Control District
and financed by property taxes. The City of Yuma supplements the
efforts of the Flood Control District for projects within the City of Yuma.
These facilities typically are to provide for shortfalls within developed
areas. There is no dedicated stormwater control fund for the City
activities. The source of funding for stormwater projects is from the Road
Tax. The reason being many stormwater needs cross over into street
related issues. Another source of funding is the General Fund when
projects cross over into recreation needs. New urban development
contributes to the provision of stormwater control activities by providing
stormwater retention on-site or directing on-site stormwater flows to
drains but does not contribute to funding for regional stormwater needs.
Parks and Recreation - Parks operations and maintenance are funded
through the General Fund. New facility construction is funded through a
combination of General Fund monies, the 2% Hospitality Tax and grants.
New retention basin maintenance is temporarily funded through a
development-required fee. Specifically the retention basin maintenance
fee is to support three years of maintenance by the Utilities Department
for new subdivision retention basins. These facilities are typically jointly
used as recreation areas. The 3-year maintenance deposit offsets the
dollar impact on the City to maintain these facilities and allows the
neighboring properties to develop and start contributing property taxes to
the General Fund. Existing retention basins are maintained through the
Road Tax.
Transportation - Roadway construction is primarily financed through the
Road Tax. The Road Tax is a .5% addition to the sales tax that is
specifically used to construct roadways. This tax was approved by the
voters and provides a constant revenue stream for roadway construction.
Core arterial and collector roadway projects were identified for phased
construction. New urban development contributes to the provision of a
roadway network through the construction of roadways necessary to the
development, including local roads. A limited amount of arterial and

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collector roadway funding and construction are through the previously
identified Citywide Development Fees or developer construction.
Sanitation - Solid Waste Facilities are funded from the General Fund and
residential use fees. New urban development participates in Solid Waste
needs by providing centralized on-site disposal areas and containers.
Water and Wastewater - Ongoing water and wastewater operations and
facilities are funded from a number of restricted funds and revenue funds.
Restricted funds are those that are applied to new utility connections.
They are specifically adopted by ordinance. These include:
ƒ Water Capacity Fund, which is collected from fees paid at the time of
water connection;
ƒ Water System Development Charge, which is a separate fee paid at
the time of water permit issuance and is based on the acreage of the
property;
ƒ Sewer Capacity Fund, which is collected from fees paid at the time
of building permit issuance; and
ƒ Sanitary Sewer Interceptor Charge, which is collected from fees paid
at the time of building permit issuance and is based on the acreage
of the property.
Revenue funds for operations are collected from utility billings. These
include:
ƒ Water Utility Fund; and
ƒ Sewer Utility Fund.
The Water Capacity Fund and the Water Utility Fund are the primary
funds to pay for treatment and collection staff operations respectively.
The Water Utility Fund and the Water System Development Charge Fund
are the primary funds to maintain the water system and construct new
facilities. The System Development Charge is used for the replacement
or installation of major transport lines, with diameters of at least 10
inches. The Water Utility Fund also funds the construction upgrades to
water lines and system enhancements. New development provides new
water facilities through construction of on-site and connecting water lines
and the payment of water system development charges.
The Sewer Utility Fund is the primary fund for wastewater treatment staff
operations. The Sewer Utility Fund and the Sanitary Sewer Interceptor
Charge are the primary funds to maintain the wastewater system and the
installation of new lines. The Sewer Capacity Fund is utilized only to
upgrade or construct new wastewater treatment plants. New
development participates in the provision of wastewater facilities through
construction of on-site and connecting sewer lines and the payment of
system enhancement fees.
On November 6, 2001, City of Yuma voters approved the use of a statefinancing program (WIFA) for the construction of a number of water and
wastewater projects. These new facilities provide needed system
upgrades and support the urban development of the City. The facilities
include but are not limited to:

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Water Projects
1. Main Street Zone 2 Booster Pump Station
2. Zone 1 Water Transmission Line
3. 8th Street Water Transmission Line
4. Avenue A Water Transmission Line
5. Avenue B Water Transmission Line
6. Avenue 9E Water Transmission Line
7. Main Street Safe Drinking Water Act Upgrade
8. 16th Street Booster Pump Station
9. 24th Street Ground Storage Tank
10. East Mesa Water Treatment Plan
Wastewater Projects
1. Phase 1 1994 Figueroa Water Pollution Control Facility Needs
2. East Mesa Water Pollution Control Facility
3. 36th Street and 40th Street Sanitary Sewer
4. Jackrabbit Mesa Water Pollution Control Facility Upgrades
5. Figueroa Water Pollution Control Facility Aerator Upgrades
Private Utilities - Typically, the installation of private utilities (phone,
electricity, cable) are determined between the developer and the utility
company. The maintenance of those facilities is the responsibility of the
utility. Financing is through user fees. The City of Yuma authorizes the
use of city right-of-way for placement of utility equipment. This
authorization includes a franchise fee paid by the utility to the city by
Arizona Public Service, Time Warner and Southwest Gas. Also utility
companies may pay a fee to another utility for use of their equipment,
such as when the cable or telephone provider place there equipment on
electric utility power poles.

EVALUATION AND ANALYSIS
Options for funding methodologies are available to communities for
infrastructure construction. As allowed under the Arizona Revised
Statutes, the funding mechanisms range from direct developer
construction to improvement districts to bonding for facilities. Below is a
brief overview of those mechanisms.
TAXES
The General Fund is the primary fund to operate City functions. The
source of the General Fund is from fees paid, the 1% sales tax, property
taxes, state shared income and sales taxes, fines and similar
governmental fees. It is used to pay salaries, purchase equipment,
maintain facilities and infrastructure and to a limited extent fund capital
improvements.
Another funding source implemented by the City is the use of voterapproved sales taxes for specific types of projects. The citizens of Yuma
have approved three individual sales tax increases to support
transportation, tourism and public safety.
9 Road Tax: Approved 12/7/93, this .5% increase on the City sales

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tax provides a permanent funding stream for the design and
construction of roadway projects. Funds have been used for the
purpose of funding street and roadway improvements, including
but not limited to widening, constructing, paving, repaving and
reconstructing such streets and roadways and all appurtenances.
9 Hospitality Tax: This 2% increase in the City sales tax applies only
to restaurants, hotels and motels. Funds collected are used for
O&M at the James P. Deyo Complex, park and recreation
development and maintenance and to support tourism activities of
the Convention & Visitors Bureau. The tax was re-approved by
the citizens of Yuma on 5/19/09 and concludes on 6/30/24.
9 Public Safety Tax: Approved 11/8/94 and re-approved 11/2/10,
this .2% increase in the City sales tax is dedicated to support bond
repayment for the new construction of public safety facilities. This
funding source has been used to support the construction of the
Police and Municipal Court complex, and a number of fire stations.
The remaining sales tax in Yuma County is composed of 5.6% dedicated
to the State of Arizona and 1.1% dedicated to Yuma County.
DEVELOPMENT FEES
The types of development fees the City collects that are dedicated to
specific infrastructure include: Parks & Recreation, Art & Cultural
Facilities, Sanitation, Police, Fire/EMS, General Government, Public
Works, Transportation, Water and Sewer system development charges
applied area wide.
Citywide Development Fees –
Parks and Recreation: Development fees for parks and recreation are
calculated using the incremental expansion methodology. The
components included in the fee consist of parkland and park
improvements, recreation facilities, paths/trails, and support facilities,
vehicles and equipment. All capital costs have been allocated to
residential development only. Average household size is used to
differentiate the development fees by type of housing.
Arts and Cultural Facilities: Capital costs for the Art & Cultural Facilities
Development Fee have been allocated to residential development only
and standards have been shown on a per capita basis. Average
household size was used to differentiate the development fees by type of
housing. The Art & Cultural Development Fees are calculated using an
incremental expansion methodology for the portion of the Yuma Civic
Center and Yuma Art Center used for public purposes. Capital costs are
based on existing level of service.
Sanitation: Development fees for Sanitation are calculated using the
incremental expansion methodology. Components of this fee include
facilities, vehicles, and equipment. The City plans to provide residential
sanitation services to all future residential growth. Thus, all capital costs
have been allocated to residential development only and standards are

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shown on a per capita basis. Average household size is used to
differentiate the development fees by type of housing.
Police: The incremental expansion approach is used to determine costs
for police facilities, court facilities, police vehicles, and police
communications equipment. Police Development Fees use different
demand generators for residential and nonresidential development.
Residential development fees are calculated on a per capita basis and
then converted to an appropriate amount by type of housing using
household size multipliers. To calculate nonresidential development fees,
nonresidential vehicle trips are the indicator for police facilities, vehicles,
and equipment. Nonresidential vehicle trips are the best measure of the
presence of people at nonresidential land uses in that they include
employees, shoppers, and visitors. Also, the Police Department responds
to all traffic accidents, which are directly related to trip generation rates.
A future revenue credit for the Public Safety Sales Tax has also been
calculated in order to avoid double payment for capital facilities.
Fire/EMS: The plan-based methodology is used to calculate the fire
station and training facility components of the Fire/EMS Development
Fee. The incremental expansion methodology is used for calculating the
level-of-service standards for apparatus and communications equipment.
Capital costs are applied per person to residential development and per
employee to nonresidential development because the vast majority of
calls are EMS-related and are a function of people. A future revenue
credit for the Public Safety Sales Tax has also been calculated in order to
avoid double payment for capital facilities.
General Government: This fee uses the buy-in methodology for the
Municipal Complex and the incremental expansion methodologies for
vehicles, and equipment. This development fee is allocated on a per
capita basis for residential development. For nonresidential development,
the fee methodology allocates the capital cost on a per employee basis.
Public Works: This fee uses the incremental expansion methodology for
facilities, vehicles, and equipment. This development fee is allocated on
a per capita basis for residential development. For nonresidential
development, the fee methodology allocates the capital cost on a per
employee basis.
Transportation: The plan-based methodology is used for improvements to
arterial streets as shown in the City’s ten year Capital Improvements
Program (CIP). The incremental expansion methodology is used for
support facilities, vehicles, and equipment. Trip generation rates by type
of development are multiplied by the capital cost per vehicle miles of
travel (VMT) to yield the Transportation Development Fees. The
methodology includes trip adjustment factors for commuting patterns,
pass-by trips and average trip length variation by type of land use. A
future revenue credit for the Road Sales Tax has also been calculated in
order to avoid double payment for capital facilities.

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A recent concern to the community is the proliferation and visibility of
above ground electrical distribution and transmission lines. Within the
construction of new subdivisions, utility undergrounding has been
required. The issue appears to be the undergrounding of electrical
transmission lines and the associated costs. A more detailed study on
the viability of undergrounding distribution lines and how the costs can be
allocated or shared community wide would be appropriate.
Water and Sewer System Fees - The City of Yuma has been developing
strategies to address the gap between water and wastewater revenues
and the high cost of utility system upgrades and maintenance. The 2006
Water and Wastewater Utility Rate and Fee Study was completed in
September 2006. The results of the study identified that there would not
be sufficient funds to maintain the system and provide for future growth.
Therefore a change in the rate structure and connection fees was
recommended and adopted by the City Council. The rate structure
balanced the cost of service to existing customers through an increase in
rates with needed revenues from new customers through an increase in
connection fees.
State law also allows the application of development fees for a range of
public services provided that any mechanisms that are adopted by the
municipality result in a beneficial use to the development and bear a
reasonable relationship to the burden imposed on the municipality to
provide additional necessary public services to the development. For the
City of Yuma this includes the collection of fees to cover the cost of
review and approval for development plans. This includes subdivision
review and approval, engineering oversight, rezoning review and
approval, and construction plan review and inspection. The user fees
collected for these activities are applied to the General Fund or Road Tax
fund and intended to supplement staff costs. Through this method new
development participates in a portion of the cost of new construction.
Attempts have been made by the City to equate the cost of this review
with the fees collected. Many user fees have kept pace with the cost of
business, such as building review and permitting, but only a fraction of the
cost of community planning functions are covered. Over the course of
fiscal year 2000-2001 user fees offset approximately 3% of operation and
maintenance costs for the Community Planning Division. As a result, the
General Fund is supplementing the development of the community. A
detailed study of user fees with an effort to reduce the negative impact on
the general fund is recommended.
BOND FINANCING
Revenue Bonds are a means by which the City borrows money by selling
a bond for the construction of general use facilities, such as a Fire
Station. The sum is to be repaid over a number of years, typically 20
years. This creates a source of funds in the current year that is available
for those specific projects, such as the construction of a major arterial
roadway. The repayment of the bond is from the fund which directly
relates to the specific projects identified in the bond. Revenue Bonds may
require voter approval, depending on the repayment method. A second

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bond financing method for facility construction is a General Obligation
Bond, in which a secondary property tax is the financing method for the
bond. The Bond monies are used for a specific project and require voter
approval. The City does not currently have bonds of this type but this
method was successfully implemented for a major upgrade to the water
treatment plant. This bond had the full faith and credit of the City of
Yuma, was approved by the voters and was repaid from water revenues.
A third type is a Special Assessment Bond. These bonds are secured by
a tax levied against property within a special district. The revenue from
these bonds is used to fund projects that benefit taxpayers within that
special district. Special Assessment Bonds require voter approval. A
fourth type of bond is a Municipal Property Corporation Bond. Municipal
Property Corporation (MPC) Bonds are issued by a non-profit corporation
that is wholly owned by a political subdivision of the state, such as a
municipality. Proceeds from the bond sale are used to build or acquire
government projects or buildings that may be leased back to the political
entity. Revenues or the lease payments guarantee the bonds. MPC
bonds do not require voter approval. The City has been very successful
in facility construction through this program and has an excellent credit
rating.
LEASE FINANCING
There are two types of lease financing methods authorized by the State of
Arizona. The first is called a Certificate of Participation (COP). COPs are
multi-year leases that would typically be viewed as long-term debt. They
avoid this designation, however, because the annual lease payments are
not guaranteed and are subject to cancellation if the annual payment is
not provided or appropriated. COPs have been used extensively for the
construction of state office buildings. Certificates of Participation do not
require voter approval. The second lease method is Lease Purchase.
Lease purchase agreements have been used for almost every type of
capital use in Arizona communities, including the acquisition of office
equipment and construction of office buildings. This method allows the
cost of the item to be spread over the life of the equipment or use of the
facility. Lease purchases do not require voter approval.
SPECIAL TAXING DISTRICTS
State law allows the use of Assessment, Improvement or Enhancement
Districts for new facility construction funding or facility maintenance.
These districts can be used to fund the construction or maintenance of a
variety of projects and purposes including parking maintenance districts,
sewer improvement districts, street lighting improvement districts, etc.
They are used for defined small areas and are not used for general use
facilities. An example of a maintenance district is the Downtown Mall
Maintenance Fund, wherein downtown property owners contribute
through property taxes toward a portion of the cost of maintenance of
downtown landscaping and parking facilities. Additionally, the General
Fund supplements mall maintenance activity. The districts function in the
following manner. Property owners may request or municipalities may
impose on a defined land area a special taxing district, the purpose of
which is to fund the construction of needed infrastructure or maintenance

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in that defined area. The cost of the improvement is shared amongst the
property owners of the defined area. Payment for the facility is assessed
through property taxation or as a separate fee. The municipality may
bond for any new construction to be completed. The municipality may
expend no funds for completion of the projects and uses it’s favorable
credit rating to obtain advantageous financing for the property owners
within the district. This method is typically used in developed areas
where the needed infrastructure was not installed when the properties
were developed. This methodology places the cost burden on the users
of the infrastructure but in some cases this cost burden can be a
significant financial hardship, which the current property owners may not
have considered.
A significant concern in implementing this type of funding mechanism is
when it is applied to major infrastructure installation in an area that is
largely undeveloped, as opposed to small infrastructure installation in a
stable economically viable neighborhood. The development of a large
parcel for urban uses would implement this funding mechanism for the
construction of roads, water and sewer facilities as well as other needed
infrastructure. As the subdivision develops, the number of property
owners increases and the taxes for the improvement district are spread
across all the property owners. This method works when the subdivision
fully develops and the property owners are able to maintain their property
taxes. This method doesn’t work when the subdivision doesn’t develop
and only a few property owners are responsible for all the infrastructure
improvements. The few property owners may be faced with significant
costs, which they are unable to support. This financial difficulty may
result in home abandonment or loan defaults. Ultimately the municipality
may become responsible for the cost of the infrastructure, thereby
transferring the cost of a developer responsibility onto all the taxpayers of
the municipality.
IN-LIEU PAYMENT FOR FACILITIES
In-lieu payments are another method of having new development
participate in facility funding. This method is applied to a specific area
and does not consider the impacts of the new development area wide.
As mentioned previously, in-lieu payments are collected when a
development is responsible for the construction of a needed facility but
due to timing the facility is not ready for construction. This could be due
to a lack of immediate need for the facility. Therefore the construction is
postponed so that it doesn’t deteriorate prematurely or because
construction would be replaced before the useful life of the new facility is
realized. The developer would then be asked to provide fees “in-lieu-of”
construction. For example, a new development fronts on a roadway that
has no curb, gutter or sidewalk. The developer would be responsible for
providing those improvements in the course of construction of their
facility. But the municipality has scheduled rebuilding of the roadway in
two years. Rather then construct a facility that will be removed in the
near future and to insure the developer participates in their fair share of
the facility improvement, the developer is asked to provide in-lieu
payments instead of construction. This methodology assures that new

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development participates in needed infrastructure and minimizes the
overall cost to the taxpayers of Yuma.
FACILITY CONSTRUCTION
This funding mechanism involves direct developer construction for all
necessary infrastructure, both within the project and for nearby off site
facilities necessary for the project. For example, if a new subdivision
were proposed, the developer would be responsible for all interior
transportation facilities, installation of water and sewer services and
stormwater control. The developer would also be responsible to upgrade
or install connecting infrastructure necessary to the new development.
This is the primary method by which the City of Yuma requires developers
to participate in the provision of new infrastructure.
DEDICATION OF LAND
A dedication occurs when a property owner conveys land to a
municipality at no cost. Rights-of-way for local streets are typically
provided in this manner. Retention basins in residential subdivisions that
are jointly used for recreation areas are also typically dedicated. This is
done in situations where there is a reasonable relationship or nexus
between the public service needs generated as a result of the new
development and the municipality’s need for land or right-of-way in order
to provide that service. This methodology allows for the participation of
the new development in the provision of infrastructure for localized needs.
SERVICE PRIVATIZATION
Service Privatization occurs when a private entity provides a public
service, such as water treatment and delivery or electrical power
generation that was previously supplied by a public agency. This method
allows the direct users of a facility to provide the revenues to run that
service. In some cases this can be more cost productive than having a
municipality provide the service. However, costs to customers can be
higher and service quality may vary from levels expected from public
agencies. The City of Yuma has allowed commercial sanitation to be
provided by a private entity and reallocated resources and staff to higher
need areas. This methodology isolates the costs of providing specific
services to the users of that service.
JOINT USE AGREEMENTS
A Joint Use Agreement allows the City and a public agency to share in
the use, maintenance or construction of a facility. The City currently has
two types of shared/joint use agreements: Stormwater Retention Facilities
and School facilities. In order to maximize open space opportunities and
contain costs, the City should continue to jointly use stormwater retention
facilities as park facilities. A park added to the City inventory that
successfully provides this joint use is Kiwanis Park. Another joint purpose
facility includes the future enhancements to Smucker Park that will
provide not only an urban lake but also stormwater retention for a portion
of the southwest mesa area. As stormwater facilities are installed in new
subdivisions those facilities can be landscaped and include walking paths
or play equipment. The second type of joint use agreement is with the

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area schools. The City has been successful in sharing the cost of
developing and maintaining recreation facilities. The school districts
develop the recreation facility and City maintains them in exchange for
public use and access to those facilities. This practice should continue
and be expanded to provide recreation opportunities to areas with no
other City park and recreation facilities.
PRIVATE/PUBLIC FUNDING OPTIONS
There are a number of other public and private funding options available
to private development or public agencies. These range from low interest
loans to favorable tax status to full grants for specific projects. Although
not all specifically related to how new development pays for itself, the
inclusion of these fund sources helps identify the constraints and
possibilities faced by local municipalities.
Industrial Development Authority – The IDA of the City of Yuma was
formed in 1983. This body has state and federal authority to issue taxexempt bonds. The IDA issues the tax-exempt bonds and lends the
proceeds directly to a private enterprise, which owns the facility to be
financed. Bonds may be issued for industrial and manufacturing
enterprises and residential development. The credit of the IDA or
municipality does not support the bond. Repayment is the obligation of
the private user.
Empowerment Zones and Enterprise Communities – The EZ/EC program
is under the authority of the United States Department of Agriculture.
Rural communities that have been given the Empowerment Zone
designation enjoy a number of federal benefits, which range from
technical assistance, to grants to significant tax incentives for private
enterprise. The purpose of the program is to revitalize rural communities
with an infusion of economic development as a result of major tax
incentives to private enterprise.
Arizona Enterprise Zones – The primary goal of the Arizona enterprise
program is to improve the economies of distressed areas in the state.
The program does this by enhancing opportunities for private investment
in certain areas that are called enterprise zones. The state and local
communities provide incentives to foster investment in those areas, and
to reduce or remove unnecessary governmental barriers to economic
development. Yuma County is within a state enterprise zone.
Tax Increment Financing – Another tax incentive program that was
previously allowed in the State of Arizona but is currently not available is
tax increment financing. This funding mechanism is allowed in many
states. In this funding methodology, bonds are issued for infrastructure
improvements that will be installed in a specific district. The repayment of
the bond is pledged from the increase in property taxes within the district
as a result of the infrastructure improvements. Repayment of the bond is
dependent on favorable economic conditions. Although this funding
method is not currently available there is the possibility that it will be
revised and re-incorporated into State law at some future date.

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Greater Arizona Development Authority – GADA was created by the
Arizona Legislature in order to assist local and tribal governments in
obtaining favorable financing for infrastructure projects. Low interest
loans are available through GADA to local communities by pooling state
resources to obtain favorable loan rates. Loans are only available to
public entities. Projects that can be financed in this method include
streets, municipal and public safety facilities, wastewater, stormwater
drainage, and water systems and park facilities.
Water Infrastructure Finance Authority of Arizona – Under the authority of
the State of Arizona, WIFA offers eligible borrowers low interest rate
loans and reduced closing costs. As a “bond bank”, WIFA is authorized
to issue Water Quality Bonds on behalf of communities for water and
wastewater infrastructure by pooling different entities financing needs.
Loans are available to private and public entities for drinking water
infrastructure through the Drinking Water Revolving Fund and to public
agencies for wastewater needs through the Clean Water Revolving Fund.
The use of this loan source requires voter approval if the population is
over 50,000 persons. City of Yuma voters approved the use of this
funding option, November 6, 2001, for the purpose of constructing a
number of water and wastewater projects.
Grant Funding – Both the state and federal government have funds
available to pay for new infrastructure. Typically, these funding programs
are only available to public agencies. Determining factors for funding
range from low-income areas to meeting a significant localized
infrastructure need. These funds include: the federal Community
Development Block Grants for low income areas, the federal Safe,
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for
Users (SAFETEA-LU) grants for transportation needs, the federal
Heritage Area grant for restoration and revitalization of the Colorado
River, the state Economic Strength Project grant for meeting immediate
transportation needs to promote economic development, as well as a
limited number of state and federal grants for recreation facilities and
wildlife habitat enhancements.
Coordinated Border Infrastructure Fund (CBI) – A component of
SAFETEA-LU, the CBI is to be used to improve the safe movement of
motor vehicles at or across the land border between the U.S. and Canada
or Mexico. Administered by the State, funds may be used for projects
within 100 miles of an international land border with Canada or Mexico.
Eligible projects include improvements to existing transportation and
supporting infrastructure, construction of highways and related safety and
safety enforcement facilities related to international trade, operational
improvements, including those related to electronic data interchange and
use of telecommunications, modifications to regulatory procedures and
international coordination of transportation planning, programming, and
border operation with Canada and Mexico.

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GOALS, OBJECTIVES AND POLICIES
Goal 1.0: Utilize financing mechanisms to pay for the cost of new
development that do not place an unreasonable financial burden on the
entire community.
Objective 1.1: Ensure that new development pays its fair share of
growth.
Policy 1.1.1: The City shall periodically update the comprehensive
Development Fee Ordinance that incorporates annual
adjustments of construction costs.
Policy 1.1.2: The City shall continually research additional funding
sources. This includes additional development fees, creation
of improvement districts and grants.
Policy 1.1.3: The City shall regularly audit development fees to
determine if service levels and amounts collected are meeting
needs.
Objective 1.2: Invest funds accruing in development fee accounts to
enhance funding capacity.
Objective 1.3: Maximize public/private partnerships in infrastructure
development.
Objective 1.4: Maximize the community’s utilization of existing
investment in infrastructure and services
Policy 1.4.1: The City shall encourage growth in areas that have
excess capacity in existing infrastructure.
Goal 2.0: Determine and manage monetary and facility impacts as a
result of new development.
Objective 2.1: Ensure that the cost of new infrastructure is fairly
distributed and new development fees provide a reasonable nexus
between the proposed development and the use of the facility.

ACTION PLAN
Phase

Project

1-5
Years

Periodically review and modify the
Citywide Development Fee
Structure to ensure current cost
estimates and fairness.
Periodically review and modify the
Facility Fee Structure for water
and sewer infrastructure.
Periodically review and modify the
Citywide Development Fee
Structure to ensure current cost
estimates and fairness.
Periodically review and modify the
Facility Fee Structure for water
and sewer infrastructure.

6+
Years

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Responsible
Department/Agency
Engineering

Funding
Sources
Development
Fees

Utilities

Water &
Sewer
Funds
Development
Fees

Engineering

Utilities

Water &
Sewer
Funds

COST OF DEVELOPMENT ELEMENT