Title
Recommendation to Accept the Development Impact Fee and Fleet Industrial Supply Center (FISC)/Catellus Traffic Fee Report. (Finance 10024051)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
Local agencies are required to report annually on the collection and use of Development Impact Fees (DIF). For Fiscal Year (FY) 2021-22, the combined beginning balance of the DIF Funds (340.xx) was $3,288,387. During the fiscal year, $6,024,085 of DIF fees were collected. The funds earned $39,055 in interest. Expenditures of $295,231 were incurred for eligible transportation projects. The ending balance in the DIF Funds as of June 30, 2021, was $9,056,295.
The FISC/Catellus Development was approved prior to the adoption of the DIF and, therefore, is not required to pay DIF. However, payment of a Traffic Fee (TF) is required as part of the development's traffic mitigation measures. For FY 2020-21, the beginning balance of the TF account was $195,189. During the fiscal year, $227 was earned in investment income. There were no expenditures made during the fiscal year. The ending balance in the TF account is $195,416.
BACKGROUND
The California Government Code Section 66006 requires local agencies with 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) 2021-22, the beginning balance of the combined DIF accounts was $3,288,387. During the fiscal year, $6,024,085 of DIF fees were collected. The funds earned $39,055 in interest. Expenditures of $295,231 were incurred for eligible transportation projects. The ending balance in the DIF Funds as of June 30, 2021, was $9,056,295. For additional details refer to Exhibit 1.
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 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 November 2021, the loan has not been paid in full yet.
Refunded Unexpended Revenues - No unexpended revenues were refunded during FY 2020-21.
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 2020-21, the beginning balance of the TF account was $195,189. During the fiscal year, $227 was earned in investment income. There were no expenditures made during the fiscal year. The ending balance in the TF account is $195,416.
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 2020-21.
Refunded Unexpended Revenues - No unexpended revenues were refunded during FY 2020-21.
ALTERNATIVES
• Accept the report.
• Request additional information from staff.
FINANCIAL IMPACT
There is no financial impact from acceptance of these reports.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code.
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 IMPACT
There are no identifiable climate impacts or climate action opportunities associated with acceptance of this report.
RECOMMENDATION
Accept the Development Impact Fee and Fleet Industrial Supply Center (FISC)/Catellus Traffic Fee Report.
CITY MANAGER RECOMMENDATION
The City Manager recommends acceptance of the Development Impact Fee and FISC traffic fee report.
Respectfully submitted,
Annie To, Finance Director
By,
Jennifer Tell, Budget Manager
Financial Impact section reviewed,
Annie To, Finance Director
Exhibits:
1. Development Impact Fees Annual Report
2. Traffic Fee Annual Report
cc: Eric Levitt, City Manager