Court Opinion

ID: 9363794
Source: CourtListenerOpinion
Date Created: 2023-01-17 18:02:07.408863+00
Date Added: 2024-06-11T17:15:34.233281
License: Public Domain

IN THE

    SUPREME COURT OF THE STATE OF ARIZONA

          SOUTHERN ARIZONA HOME BUILDERS ASSOCIATION,
                        Plaintiff/Appellant,
                                   v.
                          TOWN OF MARANA,
                          Defendant/Appellee.

                          No. CV-21-0211-PR
                         Filed January 17, 2023

            Appeal from the Superior Court in Pima County
                 The Honorable Paul E. Tang, Judge
                           No. C20184411
                   REVERSED AND REMANDED

             Opinion of the Court of Appeals, Division Two
                        252 Ariz. 83 (App. 2021)
                              VACATED

COUNSEL:

Kevin E. O’Malley, Mark A. Fuller (argued), Gallagher & Kennedy, P.A.,
Phoenix, Attorneys for Southern Arizona Home Builders Association

Andrew J. Petersen (argued), Humphrey & Petersen, P.C., Tucson, and
Frank Cassidy, Frank Cassidy, P.C., Tucson, Attorneys for Town of Marana

Eileen Dennis GilBride, Jones, Skelton & Hochuli, P.L.C., Phoenix,
Attorneys for Amicus Curiae Home Builders Association of Central
Arizona

Nancy L. Davidson, General Counsel, League of Arizona Cities and Towns,
Phoenix, Attorney for Amicus Curiae League of Arizona Cities and Towns

                            ______________
JUSTICE BOLICK authored the Opinion of the Court, in which CHIEF
JUSTICE BRUTINEL, VICE CHIEF JUSTICE TIMMER and JUSTICES
LOPEZ, BEENE, MONTGOMERY, and PELANDER (RETIRED) joined.*
                        _______________

JUSTICE BOLICK, Opinion of the Court:

¶1             We hold in this case that the Town of Marana violated A.R.S.
§ 9-463.05 by assigning the entire cost of upgraded and expanded
wastewater treatment facilities to future homeowners through
development impact fees. Because the statute governing development fees
was substantially changed following our seminal decision applying its
prior provisions, Home Builders Association of Central Arizona v. City of
Scottsdale, 187 Ariz. 479 (1997), we interpret the statute afresh in light of the
revised statute’s significant constraints on and requirements for the
imposition of such fees.

                              BACKGROUND

¶2             Before approving new development, municipal governments
must assure they have an adequate 100-year water supply. A.R.S.
§ 45-576(B), (L).

¶3             Until 2012, Pima County provided sewer and water service to
residents of the Town of Marana (“Town”). That year, the Town obtained
operational control over a wastewater reclamation facility (“WRF”) from
Pima County, assuming the approximately $16.4 million outstanding debt
on the facility. As acquired, the WRF’s tertiary treatment system’s capacity
was 3.5 million gallons-per-day (“gpd”). 1 However, the WRF’s functional
capacity was limited by the secondary treatment system’s maximum
capacity of 380,000 gpd.

1 The tertiary treatment stage, which consists of a sand filtration and
ultraviolet disinfection system, is used to further treat the wastewater
following the secondary treatment.
________________________
*    Justice King is recused from this matter. Pursuant to article 6, section
3 of the Arizona Constitution, Justice John Pelander (Ret.) of the Arizona
Supreme Court was designated to sit in this matter.

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  SOUTHERN AZ HOME BUILDERS ASSOC. V. TOWN OF MARANA
                  Opinion of the Court

¶4            In 2013, the Town acquired legal title to the WRF, including
the infrastructure, land, and exclusive rights to the facility’s effluent. As
acquired, the Town’s residents fully utilized WRF’s operational capacity of
380,000 gpd. The Town improved the secondary treatment system to
expand the WRF’s output to 500,000 gpd.

¶5            Owning a facility’s effluent contributes to the 100-year
assured water supply required for new development, as it can be used to
“recharge” the aquifer. Recharging, or replenishing, qualifies the Town to
obtain “recharge credits” that help demonstrate an adequate long-term
water supply. A.R.S. § 45-855.01 (“the director shall include the amount of
long-term storage credits . . . in determining . . . whether to designate the
city, town or private water company as having an adequate water supply”);
A.R.S. § 45-852.01(C)(1) (laying out a framework for the director to grant
water storage credits for recharging an aquifer under certain conditions).
Effluent rights to recharge the aquifer are so valuable to the Town, in fact,
that it had been trying to acquire the WRF since 2007. The acquisition here
provided a more efficient closed loop water system because reclaimed
water is added back to the aquifer rather than purchased from Central
Arizona Project. The Town estimated this would produce $350,000 in
annual savings as early as 2018.

¶6            In 2013, the Town issued twenty-year bonds with an annual
debt service of $1.8 million to finance the acquisition of the WRF. The Town
also commissioned two infrastructure improvement plans (“IIPs”). An IIP
is required before a municipality may assess fees like the ones at issue here.
See § 9-463.05. Pursuant to the IIPs, half the acquisition costs were assigned
to future water customers and half to future sewer customers in the form of
development impact fees. Infra ¶ 10. None of the costs were assigned to
existing users.

¶7            In 2017, the Town approved a Capital Improvement Project
encompassing “multi-phase expansion and upgrades” to the water and
sewer systems. At issue here is Phase 1, which was completed and became
operational in 2018. The Town contends that the ultimate cost of Phase 1
was higher than projected in the Master Plan—around $23 million, not
including design—however, the Town used the projected cost of $17.5
million as the basis for assessing the impact fees being challenged here.

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                  Opinion of the Court

¶8             Phase 1 encompassed multiple components. To increase the
WRF’s capacity to 1.5 million gpd to serve both existing residents and
anticipated development, a new influent sewer main, a new headworks
facility, and higher capacity influent pumps were installed at a projected
cost of $982,800. Other new facilities built during the Phase 1 expansion
included a new secondary treatment system at a projected cost of
$4,047,600, two secondary clarifiers at a projected cost of $3,047,300, and a
new solids handling facility at a projected cost of $1,615,700.

¶9             The upgraded secondary treatment system was necessary to
bring the Town into compliance with the Class B+ water quality standard
required by its Aquifer Protection Permit. In 2017, the proposal for the new
upgraded secondary treatment system triggered an Arizona Department of
Environmental Quality (“ADEQ”) requirement that the Town produce the
highest quality water, Class A+, based on the best available technology.
The new system included two secondary clarifiers that settle out the solids
in the liquid after the secondary treatment and send treated effluent to the
existing downstream processes of final filtration and disinfection, which
helps the system operate more efficiently. The new solids handling facility
also eliminated the need to pay a third-party contractor to haul away
sludge, saving residents about $400,000 annually. Through these upgrades,
the new system improved water quality from barely meeting the Class B+
standard to Class A+ quality. The Class A+ water has re-use possibilities
that Class B+ water did not have, such as improved crop irrigation,
residential landscape irrigation, fire protection systems, and vineyard spray
irrigation.

¶10           In 2017, the Town adopted new water and sewer impact fees
in conjunction with the Capital Improvement Project, effectively replacing
the 2013 development fees. The Town again assigned 100% of the debt
service to future water and sewer customers via development impact fees.
To account for the contributions made by the then-current customers for
the existing utilized capacity, the Town contributed $3.2 million, which it
received from a refund from an unrelated 2004 bond offering, toward
financing the WRF and Phase 1.

¶11        In 2018, Southern Arizona Home Builders Association
(“SAHBA”) filed this declaratory judgment action against the Town.
SAHBA argued that the development fees violated § 9-463.05 because they

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  SOUTHERN AZ HOME BUILDERS ASSOC. V. TOWN OF MARANA
                  Opinion of the Court

disproportionately imposed 100% of the cost of the WRF and Phase 1
expenses on new development despite those facilities also benefitting
current residents by enabling a higher level of service and saving taxpayer
money. The Town argued the development fees were valid because the
expansion and improvements were undertaken to serve future
development.

¶12            The trial court granted summary judgment in favor of the
Town. Applying City of Scottsdale, 187 Ariz. at 482, the court ruled that the
development impact fees bear “a presumption of validity, such which may
be overturned only if SAHBA establishes the restrictions to be ‘arbitrary and
without a rational relation to a legitimate state interest.’” The court
concluded that “the Town’s chief goal in acquiring the WRF was to obtain
its effluent as a water resource in order to secure recharge credits towards
water rights as a means for sustaining growth by having access to a 100-year
designated water supply.” Although acknowledging that “[t]here can be
no question that this goal benefits current residents along with those
arriving in the future,” the court concluded that § 9-463.05 was satisfied
because the development fees “result in a beneficial use to the
development.” (citing § 9-463.05(B)(1)).

¶13            The court of appeals affirmed. S. Ariz. Home Builders Ass’n v.
Town of Marana, 252 Ariz. 83, 84 ¶ 1 (App. 2021). Like the trial court, the
court of appeals applied City of Scottsdale and its presumption of validity,
id. at 86 ¶ 10 & n.2, and concluded that SAHBA “has not shown” that the
project increased the level of service to existing development. Id. ¶ 11. The
court held that because the “upgrades and modernization to the WRF,” id.
at 88 ¶ 16, were “undertaken for the existential benefit of new
development,” id. at 89 ¶ 18, the fact that the project also “happens to serve
existing development as well” does not render the imposition of the entire
cost upon new development unlawful under § 9-463.05, id. at 88 ¶ 16.

¶14          We granted review of whether the Town violated § 9-463.05
by (1) making future development bear 100% of the cost of acquiring the
WRF facility; (2) making future development bear nearly all the cost of
upgrading, modernizing, and improving the facility; and (3) failing to take
into account what could or could not be included in development fees
under that statute, and to make any proportionate allocation of costs

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    SOUTHERN AZ HOME BUILDERS ASSOC. V. TOWN OF MARANA
                    Opinion of the Court

between existing and future development. Because these issues present
overlapping facts, issues, and legal principles, we consider them together.

¶15           This case presents unresolved issues of statewide importance.
We have jurisdiction under article 6, section 5(3) of the Arizona
Constitution.

                               DISCUSSION

¶16           We review de novo a grant of summary judgment, “viewing
the evidence in the light most favorable to the party against whom
summary judgment was entered.” Dabush v. Seacret Direct LLC, 250 Ariz.
264, 267 ¶ 10 (2021). We also review matters of statutory interpretation de
novo. State v. Jones, 246 Ariz. 452, 454 ¶ 5 (2019). “Our task in statutory
construction is to effectuate the text if it is clear and unambiguous.” BSI
Holdings, LLC v. Ariz. Dep’t of Transp., 244 Ariz. 17, 19 ¶ 9 (2018). “Words in
statutes should be read in context in determining their meaning.”
Stambaugh v. Killian, 242 Ariz. 508, 509 ¶ 7 (2017).

    A.    A.R.S. § 9-463.05, Old and New.

¶17           Section 9-463.05 was first enacted in 1982, authorizing
municipal governments to “assess development fees to offset costs to the
municipality associated with providing necessary public services to a
development.” A.R.S. § 9-463.05(A) (2011). The main constraint was that
the development fees “shall result in a beneficial use to the development,”
§ 9-463.05(B)(1), and that “[t]he amount . . . must bear a reasonable
relationship to the burden imposed on the municipality to provide
additional necessary public services to the development,” § 9-463.05(B)(4). 2

¶18            In City of Scottsdale, the Court considered a challenge to a
water resources development fee on the basis that the city’s plans to acquire
new water were too speculative to confer a beneficial use upon new
development, as required by the then-operative version of § 9-463.05. 187
Ariz. at 480, 483. This Court noted that the adoption of the fee “was a
legislative act that came to the court cloaked with a presumption of
validity.” Id. at 482. As applied by the Court, the presumption meant “first,

2
  References to § 9-463.05 in paragraphs 17 through 20 are to the statute as
it existed in 2011; all other references are to the current version.
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  SOUTHERN AZ HOME BUILDERS ASSOC. V. TOWN OF MARANA
                  Opinion of the Court

that the factual underpinning for the city council’s decision, i.e., that the city
needed more water, must stand unless shown to be without factual
support”; and second, “that the wisdom of Scottsdale’s choice of methods
of meeting its water needs is a legislative, not a judicial, question.” Id. The
Court rejected plaintiff Home Builders Association’s argument that
Scottsdale’s water plans were too speculative, holding that “it need only
develop such plans as will indicate a good faith intent to use development
fees to provide those services within a reasonable time.” Id. at 484.

¶19           Turning to the statute’s “reasonable relationship”
requirement, the Court stated that the plaintiff had “the burden of showing
that Scottsdale’s fee bore no reasonable relationship to the public burden
created by the proposed development.” Id. at 485. The Court applied a
two-part test for assessing the validity of these fees: (1) that “the exaction
imposed on the developer be factually related to the need for public services
created by the proposed development”; and (2) that “the nature and extent
of the exaction must bear a reasonable relationship to that portion of the
public burden created by the proposed development.” Id. at 483. But the
Court concluded that because the plaintiff did not challenge the amount of
the fee, remand to the trial court to apply this standard was unnecessary.
Id. at 485.

¶20             The Court decided the case against the backdrop of Dolan v.
City of Tigard, 512 U.S. 374 (1994), in which the United States Supreme Court
had held that under the takings clause of the Fifth Amendment, an exaction
imposed upon an individual landowner as a condition of development
must be related both in nature and extent to the proposed development’s
burden on the community. Id. at 391. The necessary relationship required
by the Fifth Amendment is “rough proportionality.” Id. The City of
Scottsdale Court noted that the Supreme Court’s term “rough
proportionality” was adopted rather than a reasonable relationship test
because the term “reasonable relationship” is confusingly similar to the
term “rational basis,” which describes a standard of minimum scrutiny.
187 Ariz. at 485; Dolan, 512 U.S. at 391. But this Court held that Dolan was
inapplicable because Home Builders Association did not argue that “there
was no reasonable relationship between the amount of the fee and the
community burden.” City of Scottsdale, 187 Ariz. at 485–86.

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  SOUTHERN AZ HOME BUILDERS ASSOC. V. TOWN OF MARANA
                  Opinion of the Court

¶21            In 2011, the legislature largely transformed § 9-463.05,
amending all but two subparagraphs of the then-existing statute, and
adding more than ten pages of new provisions. 2011 Ariz. Sess. Laws
ch. 243, § 1 (1st Reg. Sess.). The new statute is about four times as long as
the previous version and consists primarily of procedural requirements and
substantive limits on the imposition of development fees.

¶22           Perhaps the most noteworthy statutory changes were the
removal of the “reasonable relationship” standard from the previous
§ 9-463.05(B)(4), and the new requirement that development fees must not
be “used to impose on new residents a burden all taxpayers of a
municipality should bear equally.” § 9-463.05(M).

¶23            The current statute carries over from its predecessor that
“[d]evelopment fees shall result in a beneficial use to the development.”
§ 9-463.05(B)(1). But, adopting terminology from Dolan, it adds that the fee
“shall not exceed a proportionate share of the cost of necessary public
services, based on service units, needed to provide necessary public
services to the development.” § 9-463.05(B)(3). It further states that “[c]osts
for necessary public services . . . shall be based on the same level of service
provided to existing development in the service area.” § 9-463.05(B)(4).
The statute does not define “level of service.”

¶24           The statute lists examples where development fees may not
be used. These include the “[c]onstruction, acquisition or expansion of
public facilities” if they are not necessary public services or facility
expansions identified in the IIP, § 9-463.05(B)(5)(a), and “[u]pgrading,
updating, expanding, correcting or replacing existing necessary public
services to serve existing development in order to meet stricter safety,
efficiency, environmental or regulatory standards,” § 9-463.05(B)(5)(c), or
“to provide a higher level of service to existing development,” § 9-
463.05(B)(5)(d). “Necessary public service” is defined to include municipal
water and wastewater treatment facilities. § 9-463.05(T)(7)(a)–(b).

¶25           In assessing development fees, municipalities must use
“qualified professionals” to calculate the fees in an IIP based on “projected
demand for necessary public services or facility expansions required by
new service units for a period not to exceed ten years.” § 9-463.05(D)(2),
(E)(6).

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  SOUTHERN AZ HOME BUILDERS ASSOC. V. TOWN OF MARANA
                  Opinion of the Court

¶26            Finally, the statute instructs that “[i]n any judicial action
interpreting this section, all powers conferred on municipal governments
in this section shall be narrowly construed to ensure that development fees
are not used to impose on new residents a burden all taxpayers of a
municipality should bear equally.” § 9-463.05(M).

   B.     Applying A.R.S. § 9-463.05.

¶27           We first articulate our decisional framework. The trial court
and court of appeals applied the deferential treatment toward municipal
authority to impose development fees from City of Scottsdale, which
predated the significant statutory changes that were made after that
decision. Those changes were tantamount to a repeal-and-replacement of
the prior statute rather than minor revisions. Supra ¶ 21. As non-charter
municipalities have no inherent powers and derive their authority solely
from statute, 1 McQuillan Mun. Corp. § 2:10 (3d ed.); see State ex rel. Brnovich
v. City of Tucson, 242 Ariz. 588, 607 ¶ 81 (2017) (Bolick, J., concurring),
development fees are valid only if the municipality complies with the
express statutory requirements of § 9-463.05 in implementing such fees.

¶28           By its own terms, City of Scottsdale is largely inapplicable here.
The Court there explained that the legislative acts at issue that were
“cloaked with a presumption of validity” were the city’s decision that it
needed more water and its choice of methods to accomplish that goal.
187 Ariz. at 482. That presumption of validity does not apply here at all,
given that the Town’s policy decisions regarding the need for new and
improved facilities are unchallenged.

¶29          As to the amount of the development fees, which the Court
concluded were not at issue, City of Scottsdale also applied a highly
deferential “reasonable relationship” standard and assigned to those
challenging the fees the “burden of showing that Scottsdale’s fee bore no
reasonable relationship to the public burden created by the proposed
development.” Id. at 485. That standard was removed from the statute in
2011 and replaced with a proportionality standard. § 9-463.05(B)(3) (“The
development fee shall not exceed a proportionate share of the cost of
necessary public services, based on service units, needed to provide
necessary public services to the development.”).

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  SOUTHERN AZ HOME BUILDERS ASSOC. V. TOWN OF MARANA
                  Opinion of the Court

¶30           In applying § 9-463.05 as amended, the court of appeals
committed two principal errors. First, it applied from City of Scottsdale a
presumption of validity to the Town’s assessment of development fees.
S. Ariz. Home Builders Ass’n, 252 Ariz. at 86 ¶ 10. Second, it credited the
Town’s intent that the project was “entirely for purposes of new
development.” Id. at 87 ¶ 13; id. at 89 ¶ 18 (emphasizing the “larger
context” that “the acquisition of the WRF and the various upgrades put in
place were undertaken for the existential benefit of new development”).
The Town’s intent is irrelevant; we determine whether the fees are
permissible solely on the basis of the Town’s compliance with statutory
requirements.

¶31             Statutory interpretation requires us to determine the meaning
of the words the legislature chose to use. We do so neither narrowly nor
liberally, but rather according to the plain meaning of the words in their
broader statutory context, unless the legislature directs us to do otherwise.
Matthews v. Indus. Comm'n, 520 P.3d 168, 175 ¶ 35 (Ariz. 2022). Here, the
legislature did just that, expressly directing that “all powers conferred on
municipal governments in this section shall be narrowly construed to
ensure that development fees are not used to impose on new residents a
burden all taxpayers of a municipality should bear equally.” § 9-463.05(M).
Thus, instead of the deference exhibited by the courts below and in City of
Scottsdale, 187 Ariz. at 484 (“We would be reluctant to deprive the city of
the flexibility needed to deal with these projects unless the legislature made
it clear that it intended no such flexibility.”), the legislative rewrite of § 9-
463.05 greatly constrained municipal authority to assess development fees.
To be clear, our role is not to second-guess the Town’s policy judgments
regarding what facilities are needed to assure a safe and secure 100-year
water supply, but to narrowly construe the Town’s authority to assess
development fees, as § 9-463.05(M) instructs, so as to ensure that new
residents do not bear a disproportionate share of the costs of necessary
public services.

¶32             As a threshold matter, most if not all of the acquired, new,
improved, and expanded facilities clearly provide necessary public
services. The statute defines “necessary public services” as including both
water and wastewater facilities and the functions performed by those
facilities. § 9-463.05(T)(7)(a)–(b). We also readily conclude that the facilities
confer a beneficial use on new development, § 9-463.05(B)(1), given that

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  SOUTHERN AZ HOME BUILDERS ASSOC. V. TOWN OF MARANA
                  Opinion of the Court

“[w]ithout the assurance of a water supply, developers would be unable to
develop and market their land.” City of Scottsdale, 187 Ariz. at 482
(construing an unchanged provision of the prior statute). But this only
begins the statutory inquiry.

¶33            The court of appeals, trial court, and the Town all
acknowledge that the acquisition and improvement of the Town’s water
facilities benefit both new and existing development. The court of appeals
concluded, however, that although “the upgrades and modernization to the
WRF incidentally improve[d] the processes serving existing residents,”
they “[did] not make the development fees unlawful when such upgrades
were only undertaken so that the WRF would have the capacity to provide
necessary public services to new development.” S. Ariz. Home Builders
Ass’n, 252 Ariz. at 88 ¶ 16. To the contrary, the statute requires proportional
allocation of costs between existing and future residents for necessary
public services that serve both, regardless of the municipality’s motivation.
§ 9-463.05(B)(3)–(4), (B)(5)(a)–(b), (M). Nor is any exception made to the
proportionality requirement for “incidental” benefits.

¶34            The acquisition of the WRF to obtain the effluent and recharge
credits to assure a renewable and reliable water supply, the ability to create
a closed-loop water system thereby eliminating the need to purchase CAP
water and lowering costs, and the improvement in water quality all benefit
existing as well as future users. Thus, the costs should be allocated
proportionately.

¶35           Section 9-463.05(B)(5)(d) excludes from development fees the
cost of “[u]pgrading, updating, expanding, correcting or replacing existing
necessary public services to provide a higher level of service to existing
development.” The term “level of service” is undefined, but by its plain
meaning the adjective “higher” suggests not a new or different service but
a better service. Higher is defined as “of greater degree, amount, cost,
value, or content than average, usual, or expected.”                 Higher,
Merriam-Webster Dictionary, https://www.merriam- webster.com/dictio
nary/higher (last visited Jan. 11, 2023); Ariz. State House Summary for S.B.
1525, 50th Leg., 1st Reg. Sess. (Mar. 15, 2011) (using development fees for
“upgrading . . . existing infrastructure improvements to provide better
service to existing development” is prohibited (emphasis added)). The
Town contends that the level of service for existing residents is the same:

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  SOUTHERN AZ HOME BUILDERS ASSOC. V. TOWN OF MARANA
                  Opinion of the Court

“They get tap water. They flush the toilet and it goes away.” But the
uncontroverted evidence demonstrates that the improvement in water
quality from B+ to A+, which ADEQ mandated as a condition of the project,
provides healthier water that may be used for a wider variety of purposes—
to the entire community’s benefit. Construing the statute narrowly to
achieve a fair allocation of costs, as § 9-463.05(M) requires, the Town may
not impose the entire cost of the facilities necessary to improve water
quality on new residents. To the contrary, § 9-463.05(B)(4) requires that
new development costs shall be based on the same level of service provided
to existing development. Therefore, the task is identifying the cost to
provide B+ quality water to new residents and allocating proportionally the
increased costs of improving water quality.

¶36            In its answer to the complaint, and through its witnesses, see
Ariz. R. Civ. P. 30(b)(6), the Town admitted that the remaining Phase 1
projects and improvements—accounting for approximately 90% of the
estimated Phase 1 project costs—would benefit both existing and future
residents; and despite present disagreement between the parties, the Town
is bound by those admissions. See, e.g., Answer to Plaintiff’s Complaint ¶ 30
(stating that “upgrading and modernizing the Marana WRF benefited and
provided, and continues to benefit and provide, a higher level of service to
current and future Town residents”). Examples of those projects and
improvements include replacement of the Biolac® system to reduce
nitrogen levels; replacement of the secondary treatment system, including
secondary clarifiers, to achieve ADEQ compliance and improve water
quality; and adding a solids handling facility, which will eliminate reliance
on a third-party contractor and reduce costs. Again, such costs should be
proportionally distributed.

¶37           At no time did the Town and its consultants calculate what
should be included or excluded in the development fee, apart from
assigning 100% of the costs to new development. As previously noted, the
Town contributed roughly $3.2 million, or approximately 15% of the
Phase 1 costs. However, that contribution was untethered to any
calculation regarding the relative proportion of costs of necessary services
attributed to new development and existing users. Rather, the IIPs
allocated the full cost of all Phase 1 expenditures to new development,
although that was ultimately partly offset by the Town’s contribution.

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  SOUTHERN AZ HOME BUILDERS ASSOC. V. TOWN OF MARANA
                  Opinion of the Court

¶38            In sum, we conclude that the Town violated § 9-463.05 by
making future development bear 100% of the cost of acquiring the WRF; by
making future development bear nearly all the cost of upgrading,
modernizing, and improving the facility; and by failing to determine what
could or could not be included in development fees or to make any
proportionate allocation of costs between existing and future development.
Our conclusion, however, does not absolve new development from paying
its proportionate share of costs that may properly be included under the
statute. Nor do we second-guess the Town’s determination of what
facilities or services are needed to serve the needs of its residents. The
statutory violation consists of requiring new residents to bear the entire cost
of the new, expanded, and improved services and facilities. Under the
statute, the proper allocation of costs requires discrete, evidence-based
findings of fact and careful adherence to the narrow statutory authority
conferred upon municipalities.

¶39            SAHBA asks us to remand to the trial court with instructions
to grant summary judgment in its favor. But because the trial court never
made the determinations set forth in the preceding paragraph, we remand
for it to do so consistent with the decisional framework set forth in this
opinion. SAHBA remains free to argue that certain expenses may not be
included in development fees at all. The Town may argue that certain
expenses pertain exclusively to new development, and the Town may count
its $3.2 million contribution in the calculation. Alternatively, the trial court
may determine that the Town should recalculate the development fees in
the first instance.

                               CONCLUSION

¶40          For the foregoing reasons, we vacate the court of appeals’
opinion, reverse the trial court’s judgment, and remand to the trial court for
further proceedings consistent with this opinion.

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