Non-profits, builders not exempt

Only schools not subject to development fees, city attorney says

KINGMAN - Churches and other non-profit organizations in Kingman will not be getting a break on the city's Development Investment Fees, and neither will local developers.

Howard Pennington, senior pastor at Praise Chapel Church, and several other local ministers voiced concern over how the development fees would impact the growth of local churches during a City Council meeting in September.

Local developers also voiced concerns about the impact fees and how they would hinder the housing and commercial development market. Demand for new homes and businesses has slowed in the past few months.

Development investment fees are charged to developers of new commercial and residential properties and builders who add onto older properties. According to the ordinance, any new development that increases demand on city services like water, sewer, safety services, etc., is assessed the fee when the developer applies for a building permit. The amount of the fee is based on the type of development.

The fees are used to pay for improvements to city services that are necessary to accommodate the increased growth in the community.

Praise Chapel would like to add around 55,000 square feet to their current facilities on Harrison Street.

Pennington said the city building department told him that it would cost the church between $250,000 and $350,000 in development fees to add on to the church. Those fees are in addition to the cost of a building permit.

Pennington argued during the meeting that the church is a non-profit organization, and it shouldn't have to pay the fee. Non-profit organizations, like churches are often exempt from certain fees and taxes due to the free services they render the community. They help feed the needy and provide counseling services to those in need. Pennington argued that this has helped keep crime and the cost of the city providing these services down.

During the meeting, Council decided to impose a moratorium on imposing fees on churches while Carl Cooper, the city's assistant attorney, looked at the state statute that governs the fees.

On Oct. 2, Cooper sent the mayor, Council, city manager, finance director and Development Services director a letter concerning the moratorium. The letter quotes Arizona Revised Statutes, which state that all development fees must be applied in a non-discriminatory manner. They must be applied to all developers. The only developers exempt from the fees are school districts and charter schools.

"The statutes are silent on churches or other non-profit organizations," Cooper's letter states. According to the letter, Cooper found only one court case that dealt with applying the fees, and in that case, the court upheld the language of the statute.

"The statutes are not ambiguous and are clear in that only the school district and charter schools are absolved from these development fees," Cooper's letter states.

Therefore the city could not place a moratorium on development fees for churches.

The results of Cooper's research into the statutes was quietly announced during the Oct. 2 City Council meeting.

During that meeting, local developers and ministers voiced their disappointment in the ruling.

During a phone conversation Monday, Pennington said he is working on a plan to change the situation. He declined to comment on his plan.

City Manager Paul Beecher said Tuesday that the city has to follow state statutes. The only way to avoid the fees is to change the state statute.

He said he suggested to church leaders that the city and churches combine forces to try and change the statute, but church leaders weren't interested.