Title
Recommendation to Accept the Development Impact Fee and Fleet Industrial Supply Center (FISC)/Catellus Traffic Fee Report. (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
From: David L. Rudat, Interim City Manager
EXECUTIVE SUMMARY
Accept the Development Impact Fee and Fleet Industrial Supply Center (FISC)/Catellus Traffic Fee Report filed in accordance with the California Government Code Section 66006.
BACKGROUND
The California Government Code Section 66006 requires local agencies with Development Impact Fees (DIF) to submit a report on the collection and use of these fees for public review within 180 days after the end of each fiscal year. The annual review must include the following information:
• A brief description of the fee;
• The amount of the fee;
• The beginning and ending balance of the account or fund;
• The amount of the fees collected and the interest earned;
• An identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with fees;
• An identification of an approximate date by which the construction of the public improvement will commence, if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement;
• A description of each interfund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid, and the rate of interest that the account or fund will receive on the loan; and
• The amount of unexpended revenues refunded.
DISCUSSION
The Public Works Department oversees the administration of two development impact fees: the Development Impact Fee (DIF) and the FISC/Catellus Traffic Fee (TF).
Development Impact Fee (Fund 340.xx)
Description - The Development Impact Fees were approved by the City Council on July 1, 2014, after completion of a nexus study. The DIF became effective on September 15, 2014. The DIFs are imposed on all new or expanded existing commercial development, new residential development, and upon uses which intensify the use of existing commercial or residential structures.
Amount of the Fee - The DIF was adopted by Ordinance No. 3098 and became effective September 15, 2014. The fees, based on a nexus study, are set such that they shall not exceed the estimated reasonable cost of providing the facility, equipment, or improvement for which the fee is imposed. The fees are based on the proposed development use and are collected at the time of the permit issuance.
The nexus study and supporting documentation, presented as part of the resolution noted above, identified the public improvements that those fees will be used to finance. These studies also show that there is a reasonable relationship between a) the fees’ use and the type of development project on which the fee is imposed, and b) the need for the public facility and the type of development project on which the fee is imposed.
Financial Information - For Fiscal Year (FY) 2017-18, the beginning balance of the combined DIF accounts was $3,021,726. During the fiscal year, $387,252 of DIF fees were collected. The funds earned $44,400 in interest. Expenditures of $2,217,475 were incurred for eligible transportation, parks and recreation projects and borrowing cost on previously approved interfund loans. The ending balance in the DIF Funds as of June 30, 2018, was $1,235,903. For additional details refer to Exhibit 1.
As of the close of Fiscal Year 2017-18, the Parks DIF Fund experienced a deficit balance of $2,118,832. The deficit was caused by not meeting revenue projections resulting from developers delaying to pull building permits. The Parks DIF Fund received loans from the Transportation DIF of $900,000 and from the General Fund and FISC Fund for the remaining balance. Staff anticipates that the deficit will be cured with future Parks DIF revenue as construction begins on future development projects. The two eligible parks construction projects were Estuary Park and Jean Sweeney Open Space Park.
Expenditure of Fees - The DIF Program identified 36 separate capital improvement projects distributed among four categories for a total cost of $125.3 million, based on 2013 costs. The categories of capital improvements covered by the DIF are public safety, transportation, parks and recreation, and public facilities.
The projects are identified in the Alameda DIF Nexus Study dated June 2014, and available on the City of Alameda’s website at <http://alameda.gov/finance/development-impact-fees>. The DIF funds may only be used for new improvements and the City is required to use other funds to pay for any remaining share of the improvement costs attributed to existing development. Until sufficient funds are available to cover the cost of these large capital projects, the fund balances will continue to grow. These projects are included in the deferred Capital Improvement Program (CIP) budget until such time as sufficient funds have accumulated to cover the costs.
Interfund Transfer or Loan - In June 2017, the City Council approved an interfund loan from the Transportation Development Impact Fee Fund to the Parks Development Impact Fee Fund in an amount of $900,000. The purpose of the loan is to fund construction of the Cross Alameda Trail through Jean Sweeney Open Space Park. The loan bears simple interest at an annual rate equivalent to the Local Agency Investment Fund rate in effect at the time. The loan matures on June 30, 2022. As of October 2018, the loan is paid in full.
Refunded Unexpended Revenues - No unexpended revenues were refunded during FY 2017-18.
FISC/Catellus Traffic Fee (Fund 310.1)
Description - The FISC/Catellus Development was approved prior to the adoption of the DIF and, therefore, is not required to pay DIF. As part of the development's traffic mitigation measures, however, payment of a Traffic Fee (TF) is required. The TF mitigates the transportation impacts identified in the Environmental Impact Report (EIR) for the Catellus project.
Amount of the Fee - A fee of $2,674 is charged per residential unit. The amount is based upon the percentage share of Phase 1 residential 2020 trips as determined in the EIR.
Financial Information - For FY 2017-18, the beginning balance of the TF account was $182,022. During the fiscal year, $1,117 was earned in investment income. There were no expenditures made during the fiscal year. The ending balance in the TF account is $183,139.
Expenditure of Fees - The FISC/Catellus EIR identified 18 separate traffic mitigation measures included in the Mitigation Monitoring and Reporting Program for a total of $18 million, of which $1,296,804 is due to impacts from Phase 1 residential development. Phase 2 mitigations are under construction at this time. Remaining projects include funding a pro rata share of improvements to the Jackson/5th Street and Harrison/7th Street intersections in Oakland. Until sufficient funds are available from the forthcoming FISC/Catellus development and from existing West End developments to cover the cost of these large capital projects, these mitigation fund balances will continue to increase. These projects are included in the deferred CIP budget until such time as sufficient funds become available.
Construction Commencement Date - In accordance with state law, the local agency must first determine that sufficient funds have been received to complete the public improvement before a construction commencement date is provided.
Interfund Transfer or Loan - There were no interfund transfers or loans made during FY 2017-18.
Refunded Unexpended Revenues - No unexpended revenues were refunded during FY 2017-18.
FINANCIAL IMPACT
The DIF and TF provide funds to the City for the construction of specific capital improvements within the City, based on new development's proportionate share of impacts to the required improvement. The City is required to provide funding to cover the existing development's share of the improvements. These funds may be obtained from the City’s General Fund, other City funding sources, or grants. The DIF and TF monies received from developers are deposited into special funds, which can only be used for eligible purposes as specified when the fee was created.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This annual review is consistent with the requirements of Section 27 - Development Impact Fee of the Alameda Municipal Code and California Government Code Section 66006.
ENVIRONMENTAL REVIEW
This activity is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to section 15378(b)(4) of the CEQA Guidelines, because it involves governmental fiscal activities, which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
RECOMMENDATION
Accept the Development Impact Fee and Fleet Industrial Supply Center (FISC)/Catellus Traffic Fee Report.
Respectfully submitted,
Elena Adair, Finance Director
Exhibits:
1. Development Impact Fees
2. Traffic Impact Fees