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6:52 AM Wed, Dec. 19th

City suggests changes in annex fee

PRESCOTT ­ A move that would take some of the financial risk out of large-scale annexations generated debate among Prescott City Council members this week.

At their Tuesday study session, council members considered adjusting the city's two-year-old annexation fee to allow for a refund if the annexation bid fails to get the required council support.

Community Development Director Tom Guice kicked off the discussion by pointing out that ­ as the annexation fee currently stands ­ annexation applicants must pay a $750-per-acre fee upfront, before the council considers the annexation. Should the annexation fail for some reason, the annexation fees are non-refundable.

Under the existing scenario, a landowner would pay $187,500 upfront for a 250-acre annexation. Also, because of the terms of the recently approved Reasonable Growth Initiative, such an annexation would require a super-majority (three-fourths vote) of the council members in order to win approval.

Conceivably, officials pointed out, if two council members were to vote against an annexation, it would fail, and the landowner would lose the annexation fee.

Several council members questioned the fairness of that.

"To have a clause saying we keep that whole $750 per acre is robbery," Councilman Bob Bell said. "It's just not fair."

Mayor Rowle Simmons maintained that the non-refundable status of the fee could cause developers and landowners to think twice about applying to annex into Prescott city limits. "With Proposition 400 (the Reasonable Growth Initiative) hanging over them and all of the additional obstacles, this could affect (developers' decisions)," he said. "Let's not discount the possible effects."

However, other council members noted that the original purpose of the annexation fee was to allow the city to recoup some of its expenses and time spent on annexation attempts.

"Those labors don't go away," Councilman Jim Lamerson said of the city's preliminary work on annexations. "The City of Prescott should be reimbursed for the cost. We still did the work. Where does the money come from if you give it all back?"

Members of the audience also voiced concerns about changing a policy that they said the city designed to ensure that the developers pay their fair share of the administration costs.

Local resident Howard Mechanic, for instance, maintained that the city attorney's office originally proposed the fee as a way to make up for the hundreds of hours that employees have spent on annexations. He added: "If (developers) come with a good project, it will get (the necessary super-majority from the council)."

While Guice agreed that city employees do preliminary preparations before an annexation, he said that work is only a small percentage of the total involved with the process. "The vast majority of the work comes after the fact," he told the council.

That led officials to suggest coming up with a different way of charging the annexation fee. One option would involve refunding a percentage of the fee if the annexation fails. Another would involve having the developer pay the fee at the time of council approval.

City Manager Steve Norwood stressed that officials are not suggesting eliminating the fees. "We're not talking about waiving a fee; we're not talking about reducing it," he said. "But if and when we annex, they would pay the fee."

The council will discuss the matter again at its voting session on June 13.

Contact the reporter at cbarks@prescottaz.com