Title
Adoption of Resolution Receiving and Filing the Fiscal Year 2018-19 Development Impact Fee (DIF) Report and Five-Year Report, Containing Both Development Impact Fees and Fees Otherwise Subject to Development Agreements, and Making Certain Findings as Required by Government Code Sections 66000 et seq. (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The purpose of this report is for the City Council to receive and accept the annual and five-year Development Impact Fee Report, containing both Development Impact Fees and fees otherwise subject to Development Agreements, prepared and filed in accordance with the California Government Code Sections 66000 et seq.
BACKGROUND
The California Government Code Section 66006 (b) 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.
The annual report for the period ending June 30, 2019 containing the prescribed information for each of the City of Alameda’s (City) impact fees is attached as Exhibit 1. The attached annual report was prepared in accordance with Government Code Sections 66000 et seq. and made available to the public on December 2, 2019. The law requires the report be presented to the City Council at the next regular meeting not less than 15 days after it is made available to the public.
For informational purposes, the attached report also contains fee information for the prior five years. This information may be updated for consideration and to support the findings of the City Council at the appropriate time. Additionally, to the extent particular fees herein, if any, are received or recovered pursuant to a development agreement authorized under Government Code section 65864, such fees are reported solely for purposes of compliance with Government Code section 65865(e).
DISCUSSION
Presently, the City collects the following impact fees: Public Safety Facilities, Parks, Public Facilities, Transportation, and Police and Fire Fees. In addition, the City collects a FISC/Catellus Traffic Fee (TF). The TF is not part of the DIF and is not a fee under the Mitigation Fee Act.
Public Safety Facilities, Parks, Public Facilities, Transportation and Alameda Point Development Impact Fees (Fund 340.xx)
The Public Safety Facilities, Parks, Public Facilities, Transportation and Alameda Point Development Impact Fees were approved by the City Council on July 1, 2014, after completion of a nexus study. The DIF was adopted by Ordinance No. 3098 (Ordinance) and became effective September 15, 2014. 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.
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. The study also shows 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.
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, City Council approved amendments to the Ordinance by reducing the Parks impact fees, establishing Parks fee credit, establishing affordable housing and permitted accessory dwelling unit exemption and establishing transit oriented housing transportation fee reduction.
Of note, as of the close of Fiscal Year 2018-19, the Parks DIF Fund continued to experience a deficit balance of $2,070,351. The deficit was caused by not meeting revenue projections as a result of developers delaying to pull building permits and refunding fees back to a developer as part of a settlement agreement. Staff anticipates that the deficit will be cured with future Parks DIF revenue as construction begins on future development projects. The deficit was not incurred to cure existing parks deficiencies. The deficit resulted from the construction of two eligible parks projects: Estuary Park and Jean Sweeney Open Space Park. Both of these projects will mitigate the impacts of new development on availability of park facilities.
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. Projects identified in the 2014 nexus study and 2019 nexus study update for Parks are included in the deferred Capital Improvement Program (CIP) budget until such time as sufficient funds have accumulated to cover the costs.
Police and Fire Impact Fee (Fund 161)
On March 21, 1990, the City Council adopted the Police and Fire Fee Ordinance, which established the City’s Police and Fire Services Fee requirements as Section 27-2 of the Alameda Municipal Code (AMC). The AMC requires that this fee be imposed on all new construction. These fees serve to mitigate the impacts caused by new construction on Police and Fire facility demands. The original fee was 12 cents per square foot. In 1991 the fee was increased to 14 cents per square foot, and in February 1995 it was increased to 15.5 cents per square foot.
Effective September 15, 2014, the Police and Fire Services Fee was incorporated into the new DIF ordinance. However, the City continues to collect the Police and Fire Fees per the development agreement with TriPoint Homes since it was entered into prior to the establishment of the DIF. The last construction phase under the development agreement was assigned to Pulte Homes, which is planned to be completed by 2021. Collection and reporting of these fees will cease after the completion of the TriPoint Homes and Pulte Homes development agreement.
Under the Police and Fire Fee Ordinance, at the time of final inspection or date of the Certificate of Occupancy, whichever occurs first, the developer/builder must pay the Police and Fire Services Fee. The ordinance allowed for an appeal process whereby the developer/builder may apply for an adjustment or waiver of the Police and Fire Services Fee. No adjustment or waiver has been requested.
FISC/Catellus Traffic Fee (Fund 310.1)
The FISC/Catellus Development was approved prior to the adoption of the DIF and therefore is not required to pay DIF. However, payment of the TF is required as part of the development's traffic mitigation measures. The TF mitigates the transportation impacts identified in the Environmental Impact Report (EIR) for the Catellus project.
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. These two projects were consolidated into Oakland/Alameda Access project. 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.
ALTERNATIVES
• Accept the annual and five-year Development Impact Fee Report.
• While state and local law requires that an annual and five-year reports be prepared and accepted, the Council may modify the report prior to acceptance and adoption of a resolution making the required findings.
FINANCIAL IMPACT
There is no financial impact from acceptance of the annual and five-year report. The various impact fees provide funds to the City for the construction of specific capital improvements within the City, based on new developments’ 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.
Detailed information on the various City DIFs is included in Exhibit 1.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This annual review is consistent with the requirements of Section 27 - Development Impact Fee of the AMC and California Government Code Sections 66000 et seq.
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.
CLIMATE IMPACTS
There are no climate impacts from accepting the Development Impact Fee Report.
RECOMMENDATION
Accept the Annual and Five-Year Development Impact Fee Report for fees collected as of June 30, 2019; and adopt a resolution making required findings pursuant to Government Code Sections 66000 et seq.
CITY MANAGER RECOMMENDATION
The City Manager recommends acceptance of the Annual and Five Year Development Impact Fee Report for fees collected as of June 30, 2019 and adopt a resolution.
Respectfully submitted,
Elena Adair, Finance Director
Exhibits:
1. Annual and Five-Year DIF Report