Title
Public Hearing to Consider Introduction of Ordinance Amending Alameda Municipal Code Chapter XXVII, Section 27-3 Concerning Citywide Development Impact Fees. (City Manager 2110)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
On July 1, 2014, the City Council adopted a Citywide Development Impact Fee Ordinance (Ordinance) (See Alameda Municipal Code (AMC) Section 27-3 Development Impact Fees) consistent with the requirements of the California Mitigation Fee Act, Government Code sections 66000 et seq. Since adoption, the City of Alameda (City) has been implementing AMC Section 27-3 and evaluating the relationship between the public facility demands imposed on the City by new development, the amount of the fees, and the relationship of the fees to City policy objectives.
Based upon that evaluation, staff is recommending that the City Council amend Section 27-3 to:
• Reduce the park and recreational facility impact fee (the “park fee”) based upon an updated 2019 Parks and Recreation Facilities Development Impact Fee Nexus Study (2019 Nexus Study Update);
• Establish a park fee credit for projects that provide park land accessible to the public in excess of a property owner’s AMC open space requirements;
• Establish a Development Impact Fee exemption for deed restricted affordable housing and permitted accessory dwelling units;
• Establish a transportation impact fee reduction for eligible transit oriented residential projects; and
• Correct and clarify provisions related to the applicability of the Ordinance, the definitions within the Ordinance, and the timing of payment provisions.
BACKGROUND
The intent and purpose of the City’s Development Impact Fee Ordinance is to mitigate the impacts of new development on transportation, parks and recreation, general public facilities, and public safety. Relying on a 2014 Nexus Study, the Ordinance establishes a number of fees. There is a transportation impact fee to fund needed transportation improvements required by increased use of the public roadway network, such as traffic signals, street overlays, handicap ramps at intersections, and other traffic safety improvements. The parks and recreation fee funds a share of the cost to construct additional parks and recreational facilities to serve the additional population from new development. The general public facilities fee funds a portion of the capital costs associated with library improvements and collections, seismic upgrades, and other improvements to existing public facilities and equipment. The public safety facilities and improvements fee funds a portion of the costs associated with construction of public safety facilities and the purchase of public safety equipment.
DISCUSSION
In 2019, staff completed a review of the Ordinance and an update of the parks and recreation facilities portion of the 2014 Nexus Study. As required by Government Code Section 66000 et seq., a nexus study establishes the “fair share” of the costs to improve public facilities that should be paid by new development. The 2019 review of the parks portion of the Nexus Study was informed by a court decision finding that the 2014 Nexus Study miscalculated the total costs to develop additional park lands in the City. Based on that court decision, an internal staff review of the entire Ordinance, and the updated Nexus Study, staff is recommending that the City Council approve the following amendments to the Ordinance:
Reduce the Park Impact Fee. The 2019 Nexus Study Update corrects the deficiencies in the 2014 Nexus Study that the court identified. As a result of these corrections, the park fee will be reduced. Under the revised fee structure, a developer of a single family home will pay a total fee per dwelling unit of $15,375 (which reflects a reduced park fee of $9,636) and a developer of a multifamily home will pay a total fee per dwelling unit of $11,555 (which reflects a reduced park fee of $7,040).
Establish Park Fee Credit. Although not required by the court decision, staff is recommending an amendment to the Ordinance to clarify how a residential project may be eligible for a park fee credit. The park fee represents the “fair share” financial contribution that new residential development should pay towards the cost of additional public park lands and facilities needed to maintain existing levels of service in the City. The Ordinance and updated 2019 Nexus Study Update recognize that current service levels are based upon the fact that the average existing household enjoys and relies on a combination of private on-site open space (backyards, front yards, balconies and terraces) and public off-site City parks and public recreational facilities.
Therefore, the 2019 Nexus Study Update assumes that new development will continue to provide the private open space areas required under the City’s zoning requirements (the private open space), and identifies the amount of money that should be charged for each new unit to pay for its “fair share” of the additional public park land needed (the City parks and facilities).
The recommended credit allows for a park fee credit for projects that provide public park land and facilities accessible to the public on-site in excess of the on-site open space required for the project by the Alameda Municipal Code (AMC). The recommended fee credit recognizes that if a project provides its on-site open space requirements as required by the AMC and then provides additional publicly accessible park space, then that additional publicly accessible park land reduces the need for the City to provide the additional public park land that the Ordinance would fund. The amount of the credit would be determined by subtracting the cost to the developer to provide the additional park land acreage from the amount of the fee.
For example, if the AMC requires that the residential project must provide one acre of open space, and the project provides one acre of open space and one additional acre of publicly accessible open space, than the cost to provide the additional acre may be credited against the park fee to be paid by the project developer.
Establish Affordable Housing and Permitted Accessory Dwelling Unit Exemption. Since 2014, the City and all of the cities in the Bay Area have been confronted by an unprecedented housing affordability crisis. The City Council has consistently discussed and taken actions to do what it can to address this regional and local crisis. In 2016 and 2017, California adopted legislation streamlining approval of accessory dwelling units and clarifying that accessory dwelling units should be considered “accessory” to the main use of the property. Since 2017, staff has not been collecting development impact fees on accessory dwelling units that are in compliance with California Law.
In addition, although not required by the court decision or California law, staff is recommending that the City Council exempt deed-restricted affordable housing units from payment of all development impact fees that otherwise would be collected pursuant to AMC Section 27-3.
For example, under the proposed exemption, if a 100-unit residential project includes 15 deed-restricted affordable housing units, the developer would only pay development impact fees for the 85 market rate units. If the project is 100% affordable, then the entire project would be exempt from paying the development impact fees.
Establish Transit Oriented Housing Transportation Fee Reduction. Consistent with the requirements of Government Code Section 66005.1, staff is recommending that the Ordinance be clarified to state that the transportation impact fee may be reduced for transit oriented residential projects that:
• Are located within one-half mile of a ferry terminal or a “bus hub,” which is defined as the intersection of three (3) or more bus routes with a minimum route headway of 10 minutes during peak hours;
• Are located on a barrier-free walkable path not exceeding one-half mile in length with direct access to the ferry terminal or bus hub;
• Are located within one-half mile of convenience retail uses, including a store that sells food; and
• Provide either the minimum number of parking spaces required by the City’s Ordinance, or no more than one on-site parking space for zero to two-bedroom units, and two on-site parking spaces for three or more bedroom units, whichever is less.
For example, projects meeting this requirement would provide a trip generation analysis comparing the automobile trip generation of the project to housing developments in the City without these characteristics. If the analysis shows that the trip generation is 25% less for the project compared to the other projects, then the project would be eligible for a 25% reduction in the transportation impact fee portion of the development impact fees.
Clarifying Clean Up Amendments. Implementation of this Ordinance over the last five years revealed a number of provisions which were confusing or unclear. Staff is proposing a number of text changes to the Ordinance to clarify the original intent and purpose of these provisions and minimize future confusion or disputes. The clarifying text primarily relates to applicability, definitions, and the timing of payments.
For example, the revisions clarify that rehabilitation of an existing structure that has been vacant for over two years is subject to the Ordinance provisions. The revisions clarify and better define different housing types that are subject to or exempt from the Ordinance requirements, and the revisions clarify, consistent with California law, that residential projects may delay payment of the fees until final inspection or the issuance of a certificate of occupancy.
ALTERNATIVES
Several of the recommended changes to the Development Impact Fee Ordinance described above are required to ensure compliance with California Government Code Section 66000. The other staff recommended changes, such as the exemption for affordable housing units, are not required by California law.
The City Council could continue the item and request further changes or consideration of portions of the proposed Development Impact Fee Ordinance.
The City Council could also direct staff to remove the recommended text regarding transit oriented housing, the park credit, and accessory dwelling units, but if requested, the City would need to grant these waivers and credits to an eligible development, even if the Ordinance does not specifically describe the waivers and credits, in order to remain in compliance with California Law. Staff does not recommend this alternative because it could result in the over payment of fees by some property owners.
The City Council could direct staff to prepare an Ordinance to rescind the entire Development Impact Fee Ordinance or a portion of the Ordinance. California Law does not require that cities adopt such Ordinances. The City Council is free to rescind the entire Ordinance or eliminate certain fees from the Ordinance. Staff does not recommend this alternative because the development impact fees provide an important source of funds to ensure and maintain the high quality of life in the City for existing and future City residents and businesses.
FINANCIAL IMPACT
Adoption of a proposed amendments will allow the City to collect fees for construction of new public parks to support anticipated growth in the City. The collection of these fees will reduce the demand on the General Fund for park expansion.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
Guiding Policies 2.4.q, 2.5.zzz, 2.7.f and 2.8.i of the City's General Plan Land Use Element "require that all new development pay appropriate development impact fees."
ENVIRONMENTAL REVIEW
Adoption of this ordinance is exempt from review under the California Environmental Quality Act pursuant to the following, each as a separate and independent basis: CEQA Guidelines, Section 15378(b)(4), which excludes from the definition of Project “the creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment”, Section 15061(b)(3) (where it can be seen with certainty that the proposed ordinance does not have the potential to significantly impact the environment), and Section 15273(a) (rates, tolls, fares and charges).
CLIMATE IMPACTS
Fees collected under the subject Ordinance fund the construction of public facilities, such as roadways, parks, public facilities and public safety facilities. These new facilities will be designed to comply with regional and local climate change needs, standards, and requirements, which will assist the City in its efforts to meet its climate change goals and objectives. Fee exemptions for affordable housing and transit oriented housing also facilitate and promote achievement of local climate action objectives.
RECOMMENDATION
Hold a Public Hearing and approve introduction of Ordinance amending Alameda Municipal Code Chapter XXVII, Section 27-3 (Citywide Development Fees) and approve City of Alameda Development Impact Fees Update and Nexus Study, dated June 2019.
CITY MANAGER RECOMMENDATION
The City Manager recommends approval of the introduction of the Development Impact Fee Ordinance.
Respectfully submitted,
Andrew Thomas, Interim Planning, Building and Transportation Director
Amy Wooldridge, Recreation and Parks Director
By,
Andrew Thomas, Interim Planning, Building and Transportation Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibit:
1. Development Impact Fees Update and Nexus Study
cc: Eric Levitt, City Manager