PICOR Connect | Trends in Commercial Real Estate

Economic Stimulus: Fee Credits for New Development in Pima County

Posted on Fri, Jun 22, 2012

On Wednesday, Metropolitan Pima Alliance (MPA) announced Pima County's approval of fee credits for prior new development. When considered with last month's change in connection fee structure for new construction, the comprehensive changes that MPA was able to negotiate with Pima County will certainly save Tucson-area commercial real estate owners and investors substantially when doing new ground-up construction or completing tenant improvements.  These actions are well-timed, as we hope to see increased momentum in the volume of new construction and commercial real estate transactions.

MPA's press announcement

TUCSON (June 20, 2012) - The Pima County Board of Supervisors approved a recommendation by the Metropolitan Pima Alliance (MPA) to provide $1.8 million in sewer connection fee credits to new development that has occurred prior to the hearing date.

This credit is a direct result in a change of methodology in collecting sewer connection fees. These fees are used to pay for the demand of sewer treatment for new connections while user fees recover the costs of operation and maintenance of the sewer plant. In May, the Board approved a change in connection fee methodology switching from a fixture unit equivalent calculation to a flat fee based on water meters. This, in combination with new technology, lower interest rates and the Regional Optimization Master Plan (ROMP) coming in under budget, directly results in lower connection fees for most new development. 

MPA made the argument that a portion of the surplus of revenue generated from past sewer connection fees should be returned to the fee applicants in the form of a sewer connection fee credit due to the lower cost of sewer treatment.  This credit is a direct economic stimulus that will help grow the rate base, produce jobs and generate property tax revenue. Supervisor Sharon Bronson remarked, "My top priority as a member of the Pima County Board of Supervisors is to rebuild and stabilize our local economy by protecting and creating jobs. I believe the credit makes good economic sense because it does just that which is why I voted for it." Board of Supervisor Chairman Ramon Valadez and Supervisors Sharon Bronson, Ann Day and Ray Carroll each voted in support of the motion with Supervisor Richard Elias the only dissenting vote. 

Executive Director Amber Smith remarked, "This is an unprecedented move by Pima County. This action clearly is an example of the County working to create a more equitable fee system.  Recognizing that the building and land use industry is an asset to the business community, this is one of the most significant, positive actions the Board has taken in recent history." 

To find out if you qualify for the credit, please contact MPA at Amber@mpaaz.org

About MPA: Metropolitan Pima Alliance is dedicated to advocating responsible development in the Pima County metropolitan area and furthering the interests of the real estate and development industry through education, public policy advocacy and networking.

MPA leads the charge in encouraging constructive partnerships between government, community and the real estate industry.Unique to the region, MPA is an alliance of business, government and non-profit organizations. MPA strongly believes in the positive participation and contributions of the private business sector working in collaboration with local jurisdictions. 

Tom Nieman PICOR Tucson office broker
Tom Nieman, specializing in commercial real estate since 1977, possesses a diverse background in brokerage, development, and management. He joined Cushman & Wakefield | PICOR in 1995, focusing on the office, medical and investment markets, becoming a Principal in 2001. He excels in providing the best solutions to the real estate requirements of developers, landlords, tenants and investors. 

Photo credits: BendOregonPlumbing.com, Lyn Sims

Topics: Tucson, Commercial real estate, Economic development, Development, Construction