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HomeMy WebLinkAbout08/20/1991, 3 - WATER AND WASTEWATER DEVELOPMENT IMPACT FEES I�i��ll�ll►��IUIIIIIIIII II MEETING y ATE: ► ����� city of San Luis OBIspo COUNCIL AGENDA REPORT ITEM NUMBER:/J FROM: William C. Statler, Director of Finance Prepared by: Linda Asprion, Revenue Manager SUBJECT: WATER AND WASTEWATER DEVELOPMENT IMPACT FEES CAO RECOMMENDATION Introduce an Ordinance to print establishing water and wastewater development impact fees and adopt a resolution establishing fee amounts to be effective November 2, 1991. REPORT-IN-BRIEF Implementing water and wastewater development impact fees has been the subject of in- depth discussion over the past four years and is consistent with recommendations from various Council adopted financial documents and community groups. The proposed fees have been calculated under the stringent requirements of AB 1600, which requires that a "reasonable relationship" must exist between the need and the cost for a public facility and the development on which the fee is imposed. The recommended fee for a single family residence is $2,628 for water facilities and $2,218 for wastewater facilities. These fees will be deposited into separate water and wastewater development impact fee accounts and will be used only to pay for facilities and improvements identified in the Impact Fee Study. DISCUSSION Background The implementation of water and wastewater development impact fees ensures that new development pays for itself, which will prevent existing residents and businesses from subsidizing new developments. The need to address the implementation of development impact fees has been under serious discussion since 1987 when the City's long-term financial health was identified as a major objective during the 1987-89 Financial Plan process. In response to this objective, a Comprehensive Financial Management Plan (CFMP) was prepared which addresses the City's financial needs through the year 2000. Implementing the development impact fees was identified in the CFMP as a key source of new revenue to support the City's long-term financial health. In January 1990, the Council identified the need for citizen participation and involvement in developing programs to ensure the City's long-term financial health. The Citizens' Advisory Committee (CAC) was assigned this task and they have completed their extensive review and evaluation of the City's long-term financial needs. The CAC's report, which was submitted to Council on their February 5, 1991 meeting, recommends that the City establish development impact fees at sufficient levels to ensure that new development pays its fair share of the cost of constructing necessary community facilities. This recommendation was subsequently adopted in the City's 1991-93 Financial Plan (page B-5). Implementing the recommended water and wastewater development impact fees is consistent with the CAC's recommendation and the 1991-93 Financial Plan as well as with existing Water and Wastewater Master Plans and Council adopted revenue programs. °''Pd�l►i+�iflllll►�' iIIIIU city of san LaIs OBISp0 smoze COUNCIL AGENDA REPORT i Assembly Bill 1600 On January 1, 1989, the Legislature enacted AB 1600 which addresses the development and implementation of local impact fees. Although AB 1600 does not limit local governments' ability to impose regulatory fees, it does impose substantive procedural requirements related to the calculation, adoption, administration and enforcement of impact fee ordinances. AB 1600 requires that a "reasonable relationship" must exist between the need and the cost for i a public facility and the development on which the fee is imposed. This requires documentation for capital improvements attributable to new growth, which must be consistent with applicable general plans and adopted specific plans. t In February 1991, David M. Griffith and Associates, Ltd. (DMG) was hired to prepare a comprehensive analysis of specific water and wastewater projects and their costs required to support future development in the City, as well as to perform a compliance review of the allocation policies and "reasonable relationship" requirements as stipulated in AB 1600. This study has been completed and is provided under separate cover accompanying this j agenda report. Methodology for the Development Impact Fees The water and wastewater impact fee study prepared by DMG comprehensively details the analysis performed to determine the amount of the fees to be charged, and the direct relationship of the fees to the capital improvement projects, or portions thereof, required to support future development. AB 1600 establishes certain requirements that must be met by any local agency establishing, increasing, or imposing fees which are imposed as a condition of development project approval. To satisfy these requirements the City must: 1. Identify the purpose of the fee 2. Identify the use of the fee 3. Determine that there is a reasonable relationship between the: i a. Use of the fee and the development type on which it is imposed. b. Need for the facility and the type of development on which the fee is imposed. C. Amount of the fee and the facility cost attributable to the development project. j Each of these key requirements is specifically addressed in the accompanying impact fee study. The development impact fees must be reviewed annually to account for any changes in the cost of the capital improvement projects or any other considerations affecting the "reasonable relationship" between the fees and the cost of facilities and improvements on which the fees are based. �r��ifuillllilll��� ij��;�l city of San Luis OBIspo COUNCIL AGENDA REPORT The following projects are included in the proposed fees: I Water Services ■ Salinas Reservoir expansion ■ Water treatment plant improvements Wastewater Services ■ Wastewater treatment plant improvements i ■ Infiltration and Inflow (I&I) improvements i Excluding the relief sewer project as funded under the State low interest loan program, no distribution or collection system improvements were considered in calculating the fees. This j is based on the following assumptions: I ■ The existing "backbone" infrastructure is adequate to support non-expansion areas. Any ongoing maintenance and replacements to the existing system are appropriately financed by all customers through monthly water and sewer rates. ■ Any major extensions or upgrades required to accommodate"expansion areas" will be paid directly by new development. To accommodate timing or capacity issues, the City may consider reimbursement agreements or special benefit districts. However, existing customers will not be required to finance these facility expansions through monthly water and sewer rates. i Who Pays Development Impact Fees? The proposed development impact fees will be paid by the developer when the building permit is issued. The developer includes the fees in calculating the cost of the house/facility and applies their profit margin accordingly. Implementing these fees appropriately recognizes that new development should pay for its fair share of capital j improvements in the water and wastewater systems. Production of affordable housing requires infrastructure of water and wastewater. Overall, it is difficult to determine the effect of the impact fees on affordable housing as there are examples of cities with high impact fees which have affordable housing and examples of other cities with low impact fees and little or no affordable housing. How Do We Compare With Other Cities? In January 1991, Black & Veatch, an environmental consulting firm, conducted a water and sewer impact fee survey of California cities. The following chart summarizes these charges for a single family residence in cities that are comparable, or within the County: -3 llllll11111111 city of san LUIs OBispo IWAGe COUNCIL AGENDA REPORT City Water Wastewater Total Paso Robles $ 817 $1,444 $29261 Santa Barbara $ 900 $1,700 $2,600 I Atascadero $ 650 $2,033 $2,683 Monterey $2,780 $1,760 $4,540 j Simi Valley $2,317 $2,278 $4,595 Oxnard $1,457 $4,241 $5,698 Morro Bay $3,575 $2,750 $6,325 Thousand Oaks $3,040 $3,600 $6,640 Napa $1,320 $5,320 $6,640 San Luis Obispo (Current) $ 333 $ 0 $ 333 San Luis Obispo (Proposed) $2,628 $2,218 $4,846 The chart shows that the proposed development impact fees for San Luis Obispo are within an average range of fees charged by other cities. When Will the Increase Be Implemented? Pursuant to the Government Code, the Ordinance may go into effect 60 days after its final passage. Therefore, it is recommended that the fees become effective on November 2, 1991. How Will the Fees be Used? i AB 1600 requires the City to "earmark" the development impact fees by category of capital improvement. The funds may be invested, with any interest earned added to the fees, and can be expended only for the purpose for which the fee was collected. This has been i interpreted to mean that a specific capital project on which the fee was based can be changed, but the funds must be used for the general stated purpose, i.e. water or wastewater. The Director of Finance must annually report on the fees collected and related expenditures. After five years, if the fee has not been expended or committed, and the City cannot establish a reasonable relationship between the fee remaining and the purpose for which it was charged, the unexpended or uncommitted fees (together with any interest accruing) must be refunded to the current recorded owner of the property. COMMUNITY PARTICIPATION As discussed above, the Citizens' Advisory Committee has comprehensively reviewed the City's long-term financial health, including the appropriate use of development impact fees. In concluding their review, the CAC has recommended the implementation of water and wastewater development impact fees to (1) ensure that development pays their fair share of constructing community facilities and (2) as a piece of the bigger picture, to help ensure the City's long-term financial health. To ensure communication with affected industry groups, a joint meeting with representatives from the Chamber of Commerce, the Building Industry Association, and the Contractor's Associatiori, was held with City Staff on June 24, 1991, to discuss the proposed water and 3- IIGI��►�►iiliIIIIIIIIP�' �II�III city of San LUIS OBISPO NNIMS COUNCIL AGENDA REPORT wastewater development impact fees and other proposed future fee increases. The primary concern expressed by these industry representative was how retrofitting would affect the proposed water and wastewater impact fees. It was suggested that since the developer must retrofit for twice the amount of water the new development is anticipated to use, that ultimately more water is being saved than will be used by the development, and as such, the demand for water and wastewater facilities is less. Therefore, a credit based upon some retrofitting cost ratio should be issued to reduce the development impact fees. Staff disagrees. Retrofitting is a temporary, discretionary situation, whereas the proposed fees are intended to meet the City's capital needs over a long period. The proposed water and wastewater impact fees will be implemented for the purpose of paying for the long- term capital improvements attributable to new growth, and have been calculated accordingly. CONCURRENCES The Utilities and Community Development Department staffs have reviewed the proposed fees, and they concur with the recommendation. FISCAL IMPACT Previous reports to Council on water and wastewater rates have noted the need for appropriate development impact fees. The proposed impact fees are consistent with the estimated levels indicated in these reports. The four year sewer revenue program adopted by Council on June 12, 1990 assumed the implementation of development impact fees. As indicated in the final project report prepared by Brown and Caldwell (consultants for the wastewater treatment plant upgrade), the sewer impact fees were estimated to provide approximately $532,200 annually. As such, if the sewer impact fees are not adopted at the i recommended levels, the Council adopted sewer rate program will need to be revisited in order to offset the lost revenues. Under the City's current residential growth management plan (1% annually), the following revenues will be generated annually from the proposed fees: i I Water Fees Wastewater Fees Residential $ 444,000 $ 339,300 Non-Residential $ 244,400 S 243.90 Total $ 688,400 $ 583,200 I As detailed in the accompanying study, impact fees for residential uses (per dwelling unit) are recommended as follows: Water Fees Wastewater Fees Single Family Residential $ 2,628 $ 2,218 Multi-Family Residential $ 2,102 $ 1,774 Mobile Homes $ 1,577 $ 1,331 �!��I�Idiflfllll I10i��Ih city or San LUIS OBISpo ffiii% COUNCIL AGENDA REPORT Using the' concept of "Single Family Dwelling Unit Equivalents", the accompanying report also details the methodology for assessing impact fees for non-residential uses. As further described in Attachment A, the following summarizes the impact of the proposed fees (water and wastewater combined) on non-residential development by using some recently completed projects to show what fees would have been, had they been in place at the time of building permit issuance. Calculated Fee Credits' Net Due The Crossroads $ 81,400 $ 29,100 $ 52,300 O'Leary Building $ 27,600 $ 8,200 $ 19,400 Walters' Brothers $ 31,000 $ 0 $ 31,000 Margie's Diner $ 32,700 $ 32,700 $ 0 i Included in the resolution is a provision which credits the developer for existing water and sewer uses when remodels or new construction occurs, or when existing water acreage fees have already been collected. i ALTERNATIVES There are two basic alternatives available to the Council: ■ Approve Fees Which Are Less than Recommended The Council could approve fees that are less than those supported by the impact fee study. However,with the "reasonable relationship"being established within the study and the costs directly apportioned, this alternative would be inconsistent with adopted City policy, and as such, it is not recommended. ■ Do Not Implement Development Impact Fees Based upon the City's long-term financial needs and adopted Council policy regarding the responsibility for new development to pay its fair share of constructing necessary public facilities, this alternative is not recommended. SUMMARY I Implementing water and wastewater development impact fees has been the subject of in- depth discussion over the past four years. The proposed fees will be set at competitive levels with similar communities while generating funds that will assist in meeting the financial needs for water and wastewater capital improvements. As such, it is recommended that the Council adopt an ordinance implementing the water and wastewater development impact fees and adopt a resolution establishing fee levels effective November 1, 1991. Attachments ■ Ordinance implementing water and wastewater development impact fees ■ Resolution establishing amounts for water and wastewater development impact fees ■ Attachment A - Fee calculations for non-residential developments Enclosure 0 Water and Wastewater Impact Fee Study, David M. Griffith, June 1991 .���i ORDINANCE NO. (1991 SERIES) AN ORDINANCE OF THE CITY OF SAN LUIS OBISPO AMENDING CHAPTER 4 .20. 040, WATER SERVICE TO THE SAN LUIS OBISPO MUNICIPAL CODE PROVIDING FOR WATER AND WASTEWATER CONNECTION FEES FOR ALL NEW DEVELOPMENT WITHIN THE CITY OF SAN LUIS OBISPO WHEREAS, the City Council has held a hearing to consider the proposed connection fees to mitigate the impacts of new development on water and wastewater facilities serving the City of San Luis Obispo; and, WHEREAS, the connection fees are to be used to implement the goals and objectives, policies and programs, and standards of the San Luis Obispo General Plan, and are consistent therewith; and, WHEREAS, the Community Development Director has determined that this ordinance is exempt from the provisions of the California Environmental Quality Act pursuant to Article 18, Sections 15061 (a) and 15273 (a) (4) of the California Environmental Quality Act Procedures and Guidelines; and, WHEREAS, the proposed ordinance promotes the public health safety and general welfare; WHEREAS, the proposed ordinance complies with the provisions of Government Code Section 66000, et seq; NOW THEREFORE BE IT ORDAINED by the City Council of the City of San Luis Obispo as follows: SECTION 1. Chapter 4 . 20, Section 4 . 20. 40, Additional charges for service, is hereby deleted. 4.20. 040 Additional eharges for service The fellew-ing additlenal eharges fer water serylee are as Eellewse Apse—Theusand nine hundred dellars per ae=e-- —eharge i4neteen dellars per €rem meet. SECTION 2. A new Chapter 4 .20, Section 4.20. 040 is hereby added to read as follows: 4. 20. 040 Water and Wastewater Development Impact Fees A. Purpose. In order to implement the goals and objectives of the San Luis Obispo General Plan, and to provide adequate water supply and treatment facilities, and wastewater collection and treatment facilities, to serve new development in the City of San Luis Obispo and to mitigate the impacts of that new development, certain public J -7 Ordinance No. (1991 Series) Page 2 facilities and improvements must be, or had to be, constructed. The City Council has determined that connection fees are needed in order to finance these facilities and improvements and to pay for new development's fair share of the construction costs of these facilities and improvements. In establishing the fee described in the following sections, the City Council has found the fee to be consistent with the City' s General Plan Land Use Ordinance and policies and, pursuant to Government Code Section 65913 .2 , has considered the effects of the fee with respect to the City's housing needs as established in the Housing Element of the said General Plan Land Use Ordinance. B. Water and Wastewater Connection Fees. 1. A water connection fee and a wastewater connection fee is hereby established as a condition of any new development for which any of the following approvals or permits is required: (a) Approvals of land divisions pursuant to Title 16 of the San Luis Obispo Municipal Code, including approval of lot line adjustments, certificates of compliance, parcel maps, tract maps and condominium conversions; (b) Land use approvals pursuant to Title 17 of the San Luis Obispo Municipal Code, including rezonings or the approval of development plans, site plans, minor use permits, variances, but excepting approval of San Luis Obispo General Plan/Land Use Ordinance amendments; (c) For the issuance of any building permit, and (d) All other approvals of real property development, which approvals are subject to the jurisdiction of the City of San Luis Obispo and which approvals are subject to the exercise of the discretion of the City Council, Planning Commission, or Community Development Director. For purposes of this chapter, new develop- ment includes any change of use or occupancy which increases the water or wastewater service requirements of a development. 2. The said water and wastewater connections fees are established in order to pay for needed facilities and improvements reasonably related to new development within the City. From time Q Ordinance No. (1991 Series) Page 3 to time, the City Council shall, by resolution, set forth the specific amount of the connection fees, the specific public improvement to be financed and their estimated cost, describe the reasonable relationship between the fees and the various types of new developments, and set forth the time of payment of the fees. Said resolution shall provide for a method of adjusting the amount of the connection fees, on an annual basis to account for changes in the cost of construction or other considerations affecting the reasonable relationship between the fees and the cost of facilities and improvements on which the fees are based. (a) For any development other than residential, the resolution shall provide for payment of fees at the. time of building permit issuance. (b) For residential .development, the resolution shall provide for the payment of fees at the time of building permit issuance, except where the provisions of Section 66007 of the California Government Code require the collection of fees to be delayed until the time of final inspection or issuance of a certificate of occupancy. 3 . The City Council shall, at least once every five years, review the basis for water and wastewater connection fees to determine whether said fee is still reasonably related to the impacts of development, and whether the facilities and improvements for which the fees are charged are still needed. C. Limited Use of Fees. The revenues raised by payment of the water and wastewater connection fees shall be placed in a separate account along with any interest earnings on that account, shall be used solely to: 1. Pay for the design and construction, including construc- tion management, of water and wastewater facilities described in resolutions adopted pursuant to Section B, or to reimburse the City for funds advanced from other sources to pay for said design and construction. 2. Reimburse developers who have been required or permitted to install portions of said facilities or improvements pursuant to J-9 Ordinance No. (1991 Series) Page 4 section D, hereof. See Section 16.44 . 091 and chapter 4 . 18 for appropriate procedure. D. Developer Construction of Facilities. Whenever a developer is required, as a condition of approval of a development permit, to construct a public facility, which facility is determined by the City to have supplemental size, length or capacity over that needed for the impacts of that development, and when such construction is necessary to ensure efficient and timely construction of the facilities network, a reimbursement agreement with the developer or a credit against the fee which would otherwise be charged pursuant to this ordinance on the development project shall be offered. The reimbursement amount shall not include the portion of the improvement needed to provide services or mitigate the need for the facility or the burdens created by the development. E. Fee Adjustments. 1. Any new development which is subject to water connection fees, and for which water acreage fees have been previously paid to the City prior to the effective date of this Chapter, shall have the amount of the current water connection fee reduced on a pro rata basis by an amount equal to six (6) single family dwelling unit equivalents per acre. 2 . When any new development replaces an existing develop- ment, the connection fees shall be based on the service require- ments of the new development, less the service requirements of the development which it replaces. If the site of the new development was previously occupied by a development which no longer exists, and for which a demolition permit was issued by the City within the previous five years, the connection fees shall be reduced in the same manner, provided that the service requirements of the previous development can be verified on the basis of building permits, utility billings or similar documentary evidence. 3 . Each, development is independent and no reductions to connection fees will be transferrable to another development nor will an excess be refunded. 4 . Any person whose new development is subject to water or /0 Ordinance No. (1991 Series) Page 5 wastewater connection fees may appeal to the City Council for a reduction or adjustment of those fees, ,or a waiver of those fees, based on the absence of any reasonable relationship between the impacts of that new development and either the amount of the fees or the type of facilities or improvements funded by the fees. The appeal shall be made in writing and filed with the City Clerk, together with any required appeal fee, within ten (10) days following notification that the fees are to be imposed. The appeal shall state in detail the factual basis for the claim of waiver, reduction or adjustment. The City Council shall consider the appeal at an appeal hearing to be held within sixty (60) days after the filing of the appeal. The hearing may be continued from time to time. The decision of the City Council on the appeal shall be final. If a reduction, adjustment or waiver is granted, any change in the permitted type or intensity of land use within the approved development project shall invalidate the reduction, adjustment, or waiver of the fees. F. Unexpended Connection Fee Revenues. 1. Notwithstanding Section B.3 . , whenever any connection fee, or portion of a connection fee, remains unexpended or uncommitted five (5) or more years after deposit of the fee, the City Council shall make findings once each fiscal year with respect to the unexpended amount. The City Council shall identify the purpose for which the fee is to be used, and demonstrate a reasonable relation- ship between the fee and the purpose for which it was charged. The findings required by this section need be made only for monies in the possession of the City, and need not be made with respect to any letters of credit, bonds or other items given to secure payment of the fee at a future date. 2 . The City shall refund to the then-current owner or owners of the new development project or projects, on a prorated basis the unexpended or uncommitted portion of the connection fees for which need cannot be demonstrated pursuant to this section. The City may refund the unexpended or uncommitted revenue by direct payment, by providing a temporary suspension of connection fees or by any other Ordinance No. (1991 Series) Page 6 means consistent with the intent of this section. The determina- tion of the means by which those . fees are to be refunded is a legislative act. 3 . If the City Council determines that the administrative costs of refunding unexpended or uncommitted connection fees pursuant to this section exceed the amount to be refunded, the City Council, after a public hearing, notice of which has been published pursuant to section 6061 of the California Government Code and posted in three prominent places with the area of the new develop- ment project, may determine that the said fees. shall be allocated for some other purpose for which connection fees are collected and which serves the new development project on which the fees were originally imposed. SECTION 3 . This ordinance, together with the names of Councilmembers voting for and against, shall be published once in full, at least three (3) days prior to its final passage, in the Telegram-Tribune, a newspaper published and circulated in the City. Pursuant to Government Code 66017, the ordinance shall go into effect at the expiration of sixty (60) days after its final passage. INTRODUCED AND PASSED TO PRINT by the Council of the City of San Luis Obispo at its meeting held of the day of 1991, on motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: MAYOR ATTEST: CITY CLERK APPROVED: City Ad innistrative Officer I ,r 4 C.ca J City A orney Community Develo nt Director Utilities Director Finance Director 7 RESOLUTION NO. (1991 SERIES) SETTING FORTH THE AMOUNT OF WATER AND WASTEWATER CONNECTION FEES, PROVIDING FOR THE COLLECTION AND ADJUSTMENT OF SAID CONNECTION FEES, IDENTIFYING THE FACILITIES AND IMPROVEMENTS TO BE FUNDED BY THE FEES, AND ESTABLISHING A REASONABLE RELATIONSHIP BETWEEN THE FEES AND VARIOUS TYPES OF NEW DEVELOPMENT WHEREAS, Chapter 4 . 20. 040 of the City of San Luis Obispo Municipal Code establishes water and wastewater connection fees, and provides for the setting of fee amounts and other matters by resolution of the City Council; and, WHEREAS, the City of San Luis Obispo has prepared engineering studies to determine the need for facilities and improvements to serve new development; and, WHEREAS, a study entitled City of San Luis Obispo Water and Wastewater Impact Fee Study, dated June 14, 1991, by David M. Griffith & Associates, Ltd. (hereinafter called "Impact Fee Study") , which is incorporated herein by reference, has analyzed the relationship between future development and the cost of needed water and wastewater facilities and improvements; and, WHEREAS, that study was made available for public inspection and review ten (10) days prior to a public hearing held on this matter on August 20, 1991; and public notice was provided fourteen (14) days prior to the public hearing; WHEREAS, this Resolution shall become effective sixty (60) days from final passage of Ordinance No. NOW, THEREFORE, the City Council of the City of San Luis Obispo finds and resolves that: 1. Findings. A. The purpose of the water and wastewater connection fees is to protect the public health safety and general welfare by providing adequate water treatment and distribution and wastewater collection and treatment facilities to satisfy the needs of new development and to mitigate the impacts of new development on the City's water and wastewater facilities and improvements. B. The water and wastewater fees collected pursuant to this Resolution No. (1991 Series) Page 2 resolution shall be used only to pay for facilities and improve- ments identified in the Impact Fee Study and shall not be in lieu of any other fee or tax as may be required by this code. C. There is a reasonable relationship between the types of development on which the fees are imposed and (1) the use of the fees and (2) the need for the facilities and improvements. All development requires water supply and wastewater facilities and improvements to protect the public health and safety. D. There is a reasonable relationship between the amount of the fee and the cost of the facilities and improvements attribut- able to the developments on which the fees are imposed. The estimated costs of facilities and improvements, including financing costs, to be paid for by connection fees is shown in the Impact Fee Study. Those costs have been allocated to new development on the basis of dwelling unit type (residential) or water meter size and estimated strength of sewer system discharge (non-residential) , which are reasonably related to the water and wastewater facility capacity consumed by a development project. 2. Cost Estimates. At any time that the actual or estimated costs of facilities identified in the Impact Fee Study changes, the Finance Director shall review the connection fees and determine whether the change affects the amount of the fees. If the fees are affected, the Finance Director shall, within thirty (30) days, recommend to the city council a revised fee to be incorporated into this resolution. 3 . Amount of Connection Fees. The amount of the water and wastewater connection fees for the 1991-92 fiscal year is set forth in Exhibit A attached hereto. Wastewater impact fees shown in Table A-2 will be multiplied by the strength factors shown in Table A-3 to determine the total wastewater impact fee. Unless otherwise acted upon by the City Council, the amount of the fees will automatically be adjusted on July 1 of each subsequent year by the percentage change in the U. S. Bureau of Labor Statistics consumer price index for all urban consumers (CPI-U) , all-cities average for V -/Soo Resolution No. (1991 Series) . Page 3 the prior calendar year.' Since the facilities and improvements for which connection fees are charged will be financed through bonds or other form of debt, the annual adjustments are indexed to consumer prices rather than construction costs. 4 . Time of Payment. A. Water and wastewater connection fees for any development project or portion thereof shall be payable prior to issuance of building permits required for that development, and shall be collected by the Building Official. Under Government Code, Section 66007 (b) , the City is authorized to collect the fees at the time of building permit issuance because the fees are for public facilities and improvements for which an account has been es- tablished and funds appropriated, and for which the City has adopted a proposed construction schedule; or the fees are to reimburse the City for expenditures previously made. B. For any development project or portion thereof, impact fees shall be assessed at the time of application and remain valid for as long as the application is proceeding through valid processing as per the Uniform Administrative Code. 5. Exemptions. A. FIRE PROTECTION - Upgrading of existing water services and/or meters for the sole purpose of providing new or improved fire protection facilities shall be exempt from any water impact fee provided for in this resolution. B. LANDSCAPE IRRIGATION - Any water services and/or meters installed solely for landscape irrigation purposes for properties with existing water service shall be exempt from any water or sewer impact fees provided for in. this resolution. However, if an increase in water demand is required, the Utilities Director shall impose a water impact fee. 6. Separate Accounts. The Finance Director shall deposit fees collected under this resolution in separate water connection fee and wastewater connection fee accounts as required by Government Code Section 66006. Within sixty (60) days of the close of each fiscal year, the Finance Director shall make available to the public an accounting of the fund, and the City Council shall review that information at its next regular public meeting. NOW, THEREFORE, BE IT RESOLVED, the City Council of San Luis Obispo on motion of , seconded by and on the follow- ing roll call vote: AYES: NOES: ABSENT: MAYOR ATTEST: CITY CLERK APPROVED: n TY/� M/I�NISTRATIVE OFFICER r CITY ATTORN l U/ 'DI11REnnC^TO..R OF FINAINICE UTILITIES D RECT COMMU Y DEVELOPMENT DIRECTOR 4 EXHIBIT A TABLE A-1 RESIDENTIAL CONNECTION FEE SCHEDULE WATER WASTEWATER UNIT SERVICE CONNECTION CONNECTION TYPE UNITS' FEE FEE Single Family Dwelling 1.00 $2,627.60 $2,217.50 Duplex, Townhouse Condominium, Apartment 0.80 $2,102.08 $1,774.00 Mobile Home 0.60 $1,576.56 $1,330.50 Service Units for residential uses based on 1990 population per household ratios as follows: Single Family Dwelling -2.7 persons per household Duplex, Townhouse, Condominium, Apartment -2.2 persons per household Mobile Home - 1.7 persons per household TABLE A-2 NON-RESIDENTIAL CONNECTION FEE SCHEDULE WATER WASTEWATER METER SERVICE CONNECTION CONNECTION SIZE UNITS FEE FEE 5/8 - 3/40 1.00 $2,627.60 $2,217.50 1" 2.00 $5,255.20 $4,435.00 11/2" 4.00 $10,510.40 $8,870.00 2" 6.40 $16,816.64 $14,192.00 3" 14.00 $36,786.40 $31,045.00 4" 22.00 $57,807.20 $48,785.00 6" 45.00 $118,242.00 $99,788.00 Fees will be calculated by the City of San Luis Obispo Utilities Director for larger meter sizes EXHIBIT A TABLE A-3 WASTEWATER STRENGTH FACTORS TYPE OF USE STRENGTH FACTOR Bakery/Restaurant 2.50 Mortuary 2.00 Market 2.00 School 0.75 Industrial (Non-regulated) 1.00 Industrial (Regulated) Determined by Utilities Director Other Uses 1.00 Wastewater connection fees will be calculated as follows: Service Unit Fee X Strength Factor=Connection Fee For example, the wastewater connection fee for a restaurant with a 1 inch meter would be$11,087.50 computed as follows: SERVICE UNIT FEE ISTRENGTH FACTOR I FEE $4,435.00 2.50 $11,087.50 1 Attachment_ FEE CALCULATIONS FOR NON-RESIDENTIAL DEVELOPMENT ■ The Crossroads - A commercial center developed on property that was previously zoned residential with six single family meters. None of the businesses in the center require a wastewater strength factor. EDU' Water Fee Wastewater Fee Two 2" meters 12.8 $ 33,600 $ 28,400 Two 1" meters 4.0 10.500 8.900 Total $ 449100 $ 37,300 Credit for six residential meters (15,800) 13,300) Total impact fees due $ 28,300 $ 24,000 ■ O'Leary Building - Office complex developed behind an existing structure in the downtown. Wastewater strength factor of 2.5 is applicable to the Restaurant. EDU' Water Fee Wastewater Fee One 1 1/2" meter - Office 4.5 $ 10,500 $ 8,900 One 5/8" meter - Rest. 1.0 2,600 5.600 Total $ 13,100 $ 14,500 Credit for existing restaurant meter 12-6001 ( 5,600) Total impact fees due $ 10,500 $ 8,900 ■ Walters' Brothers Building - Office complex on South Higuera development with no existing water or wastewater service. No on-site business requires a wastewater strength factor. EDU' Water Fee Wastewater Fee One 2" meter 6.4 $ 16.800 S 14,200 Total impact fees due $ 16,800 $ 14,200 ■ Margies' Diner - Remodel of existing restaurant. Wastewater strength factor of 2.5 times fee is applicable. EDU` Water Fee Wastewater Fee One 1 1/2" meter 4.0 $ 10,500 $ 22,200 Credit for existing restaurant meter (10,500) 22,200) Total impact fees due $ 0 $ 0 EDU - Single Family Dwelling Unit Equivalent I 1 . CITY OF SAN LUIS OBISPO i WATER AND WASTEWATER EMPACT FEE STUDY JUNE 269 '1991 1 1 1 L c David M. Griffith & Associates, Ltd. 5715 Marconi Avenue, Suite A Carmichael, CA 94608 1 1 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER MPACT FEE STUDY EXECUTIVE SUMMARY This report analyzes proposed water and wastewater capital improvement projects to determine what costs should be imposed on future development projects in the form of impact fees. ' Facilities covered by this analysis are: • existing wastewater treatment facilities • wastewater treatment plant improvements • wastewater collection system improvements • Salinas Reservoir expansion ' • water treatment plant expansion and upgrading Sections 66000, et seq. of the California Government Code (also known as AB 1600) require certain findings to support the establishment, increase or imposition of fees which are required as a condition of approval for development projects. The primary purpose of this study is to determine how the costs of capital improvements should be allocated to future users, and to document that there is a "reasonable relationship" between the amount of the fees and the cost of facilities, or portions of facilities needed to serve future developments. 1 This analysis uses a capacity-based approach to the calculation of impact fees for water and ' wastewater facilities. That is, the fees are computed in terms of units of capacity, such as gallons per day, rather than units of development, such as acres or dwelling units. That allows. fees to be applied to development projects on the basis of their specific consumption characteris- tics rather than on the basis of"average" requirements for all projects in a certain land use type. ` However, there is nothing to prevent capacity-based fees from being restated in terms of June 26, 1991 David M. Griffith & Aerates, Ltd. Page 1 1 1 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER UYIIPACT FEE STUDY standardized units of service, such as single-family dwelling unit equivalents (SFDUE), and that restatement does not diminish their inherent flexibility. The following table shows existing and proposed impact fee rates in terms of SFDUE's- A more detailed schedule of proposed water and wastewater facility impact fees is included in Section 4 of this report. TABLE ES-1 , EXISTING AND PROPOSED MPACT FEES FEE COMPONENTS EXISTING FEE PROPOSED FEE PER SFDUEr PER SFDUEr WASTEWATER FACILPTIFS NO FEE $29218 , WATER FACILITIES $333.00 $29628 TOTAL $333.00 $49846 `Capacity equal to one Single-Family Dwelling Unit ' Equivalent(SFDUE). i June 26, 1991 David M. Griffith & Associates, Ltd. Page 2 r ' CITY OF SAN LUIS OBLSPO WATER AND WASTEWATER UYIPACT FEE STUDY ' 1. INTRODUCTION REQUIREMIIVTS OF AB 1600 ' AB 1600(California Government Code, Sections 66000, et seq.)establishes certain requirements that must be met by any local agency establishing, increasing or imposing fees which are im- posed as a condition of development project approval. Those requirements that relate to the amount and types of fees are pertinent to this study. To satisfy those requirements the City must: 1. Identify the purpose of the fee; ' 2. Identify the use of the fee; and 3. Determine that there is a reasonable relationship between: a. The use of the fee and the development type on which it is imposed; b. The need for the facility and the type of development on which the fee is imposed; and C. The amount of the fee and the facility cost attributable to the development project. ' Each of those points is addressed below. PURPOSE OF THE FEES Development impact fees are imposed under the police power delegated to local governments by the State of California. As with any police power regulation, their purpose must be to further some aspect of the public health, safety and general welfare. It is the responsibility of the local June 26, 1991 David M. Griffith & Associates, Ltd. Page 3 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER IMPACT FEE STUDY governing body to decide what regulations are required to protect public health, safety and welfare. The imposition of development impact fees as a means of providing adequate public facilities to support orderly development has been upheld as a legitimate exercise of police power in a number of court cases. More specifically, the fees addressed in this study will be used to , pay for for water supply and treatment facilities and wastewater collection and treatment facilities which are essential to the safe and orderly development of the City of San Luis Obispo. , In addition, the wastewater treatment facilities are required to satisfy effluent quality standards and receiving waters limits imposed under the federal Clean Water Act. USE OF THE FEES AB 1600 provides that if the use of a fee subject to its requirements is to finance public facilities, those facilities must be identified. The specific facilities to be funded by the proposed fees are: • A portion of the cost of the City of San Luis Obispo wastewater treatment plant upgrade and sewer line replacements described in the March, 1990, final project report by Brown and Caldwell Consultants. , • Recoupment of costs for available capacity in the existing City of San Luis , Obispo wastewater treatment plant • A portion of the cost of expanding the Salinas Reservoir to increase its capacity , from 4,800 acre feet per year to 6,450 acre feet per year. ' • A portion of the cost of expanding and upgrading the City of San Luis Obispo , water treatment plant from 11.5 million gallons per day to 16 MGD. June 26, 1991 David M. Griftith & Associates, Ltd. Page 4 ' CITY OF SAN LUIS OBISPO WATER AND WASTEWATER MACT FEE STUDY REASONABLE RELATIONSHIP REQUIREMENT AB 1600 requires that a reasonable relationship be demonstrated between: [1] the use of the fee and the type of development on which it is imposed (herein referred to as "benefit"); [2] the need for a facility and the type of development on which the fee for that facility is imposed ' (herein referred to as "impact"); and [3] the amount of the fee and the facility cost attributable to the project on which the fee is imposed (herein referred to as "proportionality"). All new development in a community creates impacts on some or all public facilities and ' services provided by local government, by increasing the demand for those facilities or services. If the supply of services is not increased to meet that new demand, the quality .of service declines for the existing community. When the City provides facilities or services to satisfy the demand created by new development, it is producing a benefit corresponding to the impact. The other dimension of this relationship, proportionality, depends on the fees being calculated in a way that fairly apportions costs according to the relative impacts of various types of development. ' IMPACT RELATIONSHIP The impact of development on water and sewer facilities is direct and measurable. Each development project requires a water supply and produces wastewater which must be collected and treated. The extent of the impact depends on the type of development, but water and ' wastewater impacts can be projected with considerable accuracy, given the information usually required as part of the application for development approval. BENEFIT RELATIONSHIP AA reasonable benefit relationship is present as long as the facilities for which fees are collected actually satisfy the needs of new development for that type of facility. Since no project can be June 26, 1991 David.M. Griffith & associates, Ltd. Page 5 1 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER IMPACT FEE STUDY ' constructed without the benefit of water and wastewater facilities, there is no question that the benefit relationship exists in this case. , PROPORTIONALITY RELATIONSHIP A reasonable proportionality relationship must be established through the procedures used in , calculating impact fees for various type of development. The first step is to identify the facility costs attributable to future development. The second step is to establish fee rates that allocate ' those costs in proportion to the demands created by future development projects. In this study a capacity-based approach will be used. The distribution of costs between existing , and future users is based on capacity utilization. The capacity of facilities is analyzed to determine how much is needed by existing users, and how much is available for new users. Fee rates are defined in terms of cost per unit of capacity. That ensures that costs are allocated in proportion to demand because the fee applied to a project depends on the particular capacity utilization characteristics of that project. , Juni 26, 1991 David M. Griffith & Associates, Ltd. Page 6 1 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER INIPACT FEE STUDY 1 ' 2. WASTEWATER COLLECTION AND TREATMENT FACILITIES 1 NEW WASTEWATER FACILITIES This analysis is based on recommended wastewater treatment and collection facility improve- ments described in the March 1990 final project report entitled "Wastewater Treatment Plant Upgrade and Sewer Line Replacements, which was prepared for the City of San Luis Obispo ' by Brown and Caldwell Consultants. The City is undertaldng improvements to its wastewater treatment plant in large part because. the existing facilities have been inadequate to meet the ' conditions of its discharge (NPDES) permit with respect to effluent quality and receiving water limits. The improvements would also resolve certain operational problems and replace some ' deteriorated components. The proposed Unit 3 facilities would expand the plant's capacity to accommodate wet weather peak flows and would upgrade treatment to reduce levels of BOD, ' suspended solids and ammonia-nitrogen in the effluent. Unit 4 facilities are intended to satisfy receiving water limits for temperature, color and turbidity. Improvements to the collection ' system will be discussed below. ' Treatment Plant Capacity. The recommended project would not increase the nominal capacity of the treatment plant in terms of either average dry weather flow (ADWF) which is 5.1 million ' gallons per day (MGD), or peak wet weather flow (PWWF) which is 22 MGD. These design parameters represent the capacity required to serve existing requirements, plus projected growth in the City through the year 2000. The proposed project would also increase the nominal ' preliminary treatment capacity of the plant to 32 MGD which is adequate to accommodate projected buildout (2015) flows for the service area and would eliminate the need to store ' untreated wastewater in the flow equalization pond during high flow periods. ' June 26, 1991 David M. Griffith & Associates, Ltd. Page 7 1 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER IMPACT FEE STUDY ' 1 Costs to be Included. In.order to establish impact fees which meet the requirements of AB 1600, it is necessary to identify the costs of facilities, or portions of facilities, which are , reasonably related to future development. The cost of facilities needed to correct existing deficiencies must be excluded from the fee calculations. Therefore, proposed improvements ' must be evaluated to determine what portion of capacity can be attributed to future users. The , facility costs used in this analysis are shown in Table 1, in the costs allocation section of this report. ' Both ADWF AND PWWF are used in determining capacity requirements for various , components of the plant. ADWF approximates the avenge daily volume of wastewater produced by system users. It largely determines the required capacity of major process units , in the plant to remove pollutants from the wastewater. PWWF, on the other hand, determines the hydraulic capacity of pumps, channels and inlet and outlet structures needed to handle the , much greater peak flows that occur during wet weather, when storm water enters the system through infiltration and inflow. Since ADWF and PWWF vary roughly in proportion to each , other either variable could be used in the cost allocation ratios without significantly altering the result. However, since ADWF more directly relates capacity requirements to wastewater flows , actually produced by users, it will be used in the subsequent analysis. Since the design capacity of proposed improvements was based on year 2000 flows, the cost of ' capacity in excess of current flows can reasonably be attributed to future users, and fees can be based on costs per unit of capacity. By determining the ratios of existing flows to design capacity, and applying them to the cost of various treatment plant improvements, we can fairly allocate the costs of those improvements between existing users and future development. Another factor that must be considered is excess infiltration/inflow from deteriorated portions , of the existing collection system. The cost of facilities needed to accommodate that flow should June 26, 1991 David M. Griffith & Associates, Ltd. Page 8 ' CITY OF SAN LUIS OBISPO WATER AND WASTEWATER MPACT FEE STUDY not be charged to future users, so those costs should be excluded from the analysis before the ' ratios are applied. ' Excess Infiltration/Inflow. Brown and Caldwell analyzed the cost effectiveness of rehabilitating the existing collection system as opposed to providing capacity to treat the excess infiltra- tion/inflow. It was determined that the treating the additional flow was more cost effective than ' upgrading the collection system to eliminate excess I/I. As part of that analysis, B&C noted that only preliminary treatment facilities (influent pumps, screening, aerated grit removal) were ' designed with capacity to accommodate the excess flow. Other units of the plant were not affected. Since the cost of facilities needed to handle that excess flow are related to existing deficiencies in the collection system, they should not be included in the impact fee calculations. In Table 1, below, those costs are excluded from the allocations. ' Collection System Improvements. In addition to upgrading treatment facilities, there is a need ' to construct relief sewers and otherwise upgrade the collection system to accommodate increased flows and eliminate maintenance problems. Since the decision was made not to do extensive ' rehabilitation of existing sewer lines for the purpose of eliminating infiltration/inflow, the costs of improvements to collection system are primarily needed to increase capacity. However, ' unlike the treatment plant, the collection system is being sized for projected 2015 buildout demand. Therefore the costs must be adjusted to provide a consistent basis for the allocations. Although the collection system is actually sized on the basis of peak flows, it is useful to allocate the costs on the same basis used for treatment facilities. Since we have already accounted for excess III flows due to deterioration of existing sewer lines, it is reasonable to assume, as we ' did above, that the remaining wet weather flows are proportional to dry weather flows, and to use ADWF as the basis for cost allocations. The projected ADWF for 2015 is 5.8 MGD, ' June 26, 1991 David M. Griffith & Associates, Ltd. Page 9 e 1 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER IIdPACT FEE STUDY , compared with 5.1 MGD for 2000. Therefore the amount of collection system costs to be included, based on total costs of$3,925,800 is: $3,925,800 x (5.1/5.8) _ $394519997 ' Cost Allocation. Costs to be allocated are summarized in Table 1, below. They are based on cost estimates contained in the Brown and Caldwell report, adjusted as discussed above. TABLE 1 NEW WASTEWATER FACILITY COSTS ' COMPONENTS COMPONENT ADJUSTED ' COSTS COSTS Unit 3 Cost' 139800,000.00 , Less Excess I/I Facilities' -39869,324.00 SUBTOTAL $9,930,676.00 Unit 4 Costa 14,000,000.00 , SUBTOTAL $14,000,000.00 Collection System° 39451,997.00 , $3,451,997.00 TOTAL $27,382,673.00 1 Source: City of San Luis Obispo Utilities Department 'Based on construction bids. ' =Based on Brown and Caldwell cost estimates. 'Based on current cost estimates. `Adjusted to include only capacity needed to 2000. , June 26, 1991 David M. Griffith & Associates, Ltd. Page 10 1 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER IMPACT FEE STUDY 1 The next step in allocating facility costs is to determine the ratio of existing flow to design capacity. The design capacity of the plant in terms of ADWF is 5.1 MGD. The Brown and ' Caldwell report shows the 1990 ADWF to be 4.6 MGD and the projected 1995 ADWF to be 4.8 MGD. Interpolating, we find that the approximate 1991 ADWF would be 4.68 MGD, ' leaving 0.42 MGD available for future development. Therefore the cost of the facilities attributable to future users would be: ' $27,382,673 x (0.42!5.1) _ $2,255,044. ' Financing Costs. Normally, for debt-financed facilities, it would be appropriate to increase the impact fees by some amount to reflect the interest cost associated with financing. In this case, however, the Brown and Caldwell report assumes that the City will obtain a 20-year, 3.5% loan ' from the State of California to construct these improvements. Because that interest rate does not exceed the anticipated rate of inflation over the term of the bonds, the net present value of debt service payments on the bonds would not exceed the actual cost of the project. ' EXISTING WASTEWATER FACILITIES The foregoing does not account for the value of existing facilities which will be used to serve ' future development. This section will analysis will establish that figure. Brown and Caldwell gives the 1991 replacement value of the existing wastewater facilities as$35,828,236. However, ' to establish a fair basis for impact fees, a depreciated value must be determined. According to Brown and Caldwell, some components of the plant have reached the end of their useful life and are being replaced as part of the project described above. Those components include electrical ' systems, controls and instrumentation, certain pumps and an effluent pipeline. Based on information in the B & C report, the replacement cost for those components is estimated to be ' $2,229,500. The remaining facilities would then have a replacement value of $33,598,736. 1 June 26, 1991 David M. Griffith & Associates, Ltd. Page 11 " 1 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER IMPACT FEE STUDY ' 1 Those more durable facilities will be assumed to have a useful life of sixty years, and to be an ' average of 30 years old. Thus using straight-line depreciation, the remaining value would be: $33,598,736 x (30/60) = $16,799,368 ' Because the capacity allocation for existing facilities is the same as for new facilities, the share t of value attributable to future development can be calculated in the same way: ' $16,799,368 x (.42/5.1) = $1,384,268 ' WASTEWATER FACMM MPACT FEES , The total value of capacity available for future users is the sum of allocated shares of(1) the cost of new facilities, and (2) the depreciated value of existing facilities, both of which are discussed , above. To convert those amounts into fees we divide each by the available capacity to arrive at a unit cost for each gallon per day (GPD) of capacity. ' TABLE 2 ' WASTEWATER FACILITY IMPACT FEE COMPONENTS COMPONENTS ALLOCATED COST CAPACITY(GPD) FEE/GPD ' EXISTING FACILITIES $ 1,384,268 420,000 $3.30 NEW FACELXIiFS $ 2,255,044 420,000 $5.37 ' TOTAL $ 396399312 4209000 June 26, 1991" David M. Gri1Fth & Associates, Ltd. Page 12 1 1 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER IMPACT FEE STUDY 1 The total fee is $8.87 per gallon per day of capacity required by a user. Thus, if a typical single family.dwelling unit produces 250 gallons per day of wastewater, the 1991/92 impact fee for wastewater facilities to serve that dwelling unit would be: ' $8.87 x 250 = $2,217.50 ' Because of the manner in which the costs were allocated, fees should be assessed on the basis of actual wastewater flow, without adding an allowance for infiltration/inflow. ' It should be noted that the fees should be adjusted annually. The component for existing ' facilities should be adjusted to account for changes in replacement value and for further depreciation. The component for new facilities should be increased by 3.5% annually to match ' the interest rate on the State Revolving Fund loan. 1 1 1 June 26, 1991 David M. Griffith& Associates, Ltd. Page 13 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER UvIPACT FEE STUDY ' e 3. SALINAS RESERVOIR EXPANSION AND WATER TREATMENT PLANT EXPANSION ' The City of San Luis Obispo plans to expand Salinas Reservoir and the City water treatment ' plant, both to take care of existing deficiencies and to provide for future water users as the City , grows. The portion of facility costs attributable to future users must be determined as a basis for imposing impact fees for those facilities. It should be noted that, for purposes of impact fee ' calculations, we will use allocate costs for Salinas Reservoir based on average annual consumption, and costs for the water treatment plant expansion on the basis of peak day ' consumption. That approach is consistent with the criteria used to determine capacity requirements for those facilities. For convenience, it is useful to state the impact fees for both ' types of water facilities in the same units. For that reason a standardized service unit such as a single family dwelling unit equivalent (SFDUE) is often used. It should be remembered , though that a SFDUE is defined in different units for reservoir fees than for treatment plant fees. Table ES-1, which is contained in the executive summary, shows both water and wastewater ' impact fees in terms of SFDUE equivalents. SALINAS RESERVOIR , The current safe yield of Salinas Reservoir is 4,800 Acre Feet per Year (AFY). The proposed expansion would increase the safe yield by 1,650 AFY to 6,450 AFY. Of the increased yield, ' it is estimated that 600 AFY will be needed to satisfy the requirements of existing users, so that 19050 AFY would be available for new users. The estimated cost of the reservoir expansion , project is $7,019,000 or $4,254 per AFY of capacity. 1 June 26, 1991 David M. Griffith & Associates, Ltd. Page 14 ' 1 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER IMPACT FEE STUDY 1 t Financing Costs. In addition to the direct costs of project development, the cost of financing must be include to determine the total project cost. Historically, the real interest rate, that is, ' the difference between inflation and nominal interest, has averaged approximately 3%. For this analysis, we will adjust the project cost to reflect a 3% annual.rate of real interest over the term ' of the bonds. That will increase the project cost by $2,416,741 to a total of$9,435,741. Salinas Reservoir Impact Fees. Of the total project cost, the amount attributable to future ' users, based on their share of the water produced is: $9,435,741 x (1,050 AY / 1650 AFY) _ $6,004,563 ' Therefore, the impact fee rate for expansion of the Salinas Reservoir,would be the cost of the improvements divided by the capacity in MGD: ' $6,004,563 / 1,050 AFY = $5,719 per AFY ' Assuming that the average annual water consumption for a single family residence 0.4 AFY, the fee for a single family dwelling unit equivalent would be: $59719 x 0.4 = $2,287.60 WATER TREATMENT PLANT EXPANSION ' The impact fee analysis for the water treatment plant expansion will follow the procedure used for the Salinas Reservoir expansion. The City plans to expand the capacity of the water 1 June 26, 1991 David M. Griffith & Associates, Ltd. Page 15 1 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER EVIPACT FEE STUDY treatment plant from 11.5 MGD to 16 MGD, and to upgrade the level of treatment. The cost ' of the project is estimated at $8,533,000. The City estimates that the share of cost attributable to added capacity is one-third of the total, or $2,844,333. ' Financing Costs. Financing costs for the water treatment plant expansion will be treated the , same as for Salinas Reservoir, above, using a 3% real interest rate. That will increase the total project cost from $ 8,533,000 to $11,470,912. Of that total, the amount attributable to future , users, based on their one-third share of the cost is: $11,4709912 / 3 = $3,823,637 ' Water Treatment Plant Impact Fees. ' The impact fee rate for the water treatment plant, in terms of gallons per day would be the future users' share of total project costs divided by the future users' share of added capacity in ' the treatment plant, which is 4.5 MGD. That calculation is: $398239627 / 4,500,000 GPD = $0.85 Therefore, assuming that the peak day water consumption for a single family residence is 400 GPD, the single family dwelling unit equivalent impact fee would be: , $0.85 x 400 = $340 , June 26, 1991 David M. Griffith & Associates, Ltd. Page 16 , 1 1 I CRY OF SAN LUIS OBISPO WATER AMD WASTEWATER MIPACT FEE STUDY SUMMARY OF WATER FACILITY FEES The total impact fee for new water users will include the charges for both the Salinas Reservoir and the water treatment plant expansion. Table 3 summarizes the fee rates for both water. facilities. ' TABLE 3 WATER FACILITY IMPACT FEE COMPONENTS ' COMPONENTS ALLOCATED COST CAPACITY FEE RATE SALINAS RESERVOIR $69004,563 1,050 AFY $51719/AFY TREATMENT PLANT $3,823,627 4.5 MGD $0.85/GPD ' Indexing. The fee calculations contained in this analysis are based on the assumption that all fees are in current dollars. Therefore, the impact fee rates should be indexed to inflation and ' adjusted annually based on the Consumer Price Index or another convenient indicator of inflation rates. 1 1 1 June 26, 1991 David M. Griffith & associates, Ltd. Page 17 CITY OF SAN LUIS OBISPO WATER AND WASTEWATER IMPACT FEE STUDY ' t 4. FEE SCHEDULES ' For purposes of applying the fees to development projects other than single family residential ' developments, we have converted the single family dwelling unit equivalent (SFDUE) fees calculated in this report into fee schedules based on residential unit type or, for non-residential , uses, water meter size. A 5/8" x 3/4" or 3/4" water meter is assumed to be equivalent to one SFDUE of consumption. Table 4A shows the recommended 1991-92 residential fee schedules. ' Table 4B shows the recommended non-residential fee schedules for the 1991-92 fiscal year. It should be noted that the wastewater impact fees are based on flow only and would require ' adjustment to account for biochemical oxygen demand (BOD) and suspended solids (SS)loading that exceeds residential concentrations. ' TABLE 4A RESIDENTIAL IMPACT FEE SCHEDULE ' UNIT SERVICE WATER WASTEWATER , TYPE UNITS' FACELrr E'S FACILITIES EMPACT FEE IMPACT FEE Single Family Dwelling 1.00 $2,627.60 $27217.50 , Duplex, Townhouse, 0.80 $2,102.08 $19774.00 Condominium, Apartment 1 Mobile Home 0.60 $1,576.56 $19330.50 'Service Units for residential uses based on 1990 population per household ratios. ' Jame 26, 1991 David M. Griffith & Associates, Ltd. Page 18 , ' CITY OF SAN LUIS OBISPO WATER AND WASTEWATER BOACT FEE STUDY ' TABLE 4B NON-RESIDENTIAL IMPACT FEE SCHEDULE ' METER SERVICE WATER WASTEWATER SIZE UNITS FACHITIES FACILITIES IMPACT FEE IMPACT FEE' 5/8"-3/4" 1.00 $2,627.60 $2,217.50 1" 2.00 $5,255.20 $49435.00 1 1/2" 4.00 $10,510.40 $85870.00 2" - 6.40 $16,816.64 $14,192.00 3" 14.00 $369786.40 $319045.00 4" 22.00 $57,807.20 $48,785.00 45.00 $118,242.00 $999788.00 'Fee applies to residential strength wastewater only. 1 TABLE 4C ' WASTEWATER STRENGTH FACTORS ' TYPE OF USE STRENGTH FACTOR Bakery/Restaurant 2.50 Mortuary 2.00 ' Market 2.00 School 0.75 ' Industrial (Non-regulated) 1.00 Industrial (Regulated) Determined by Utilities Director ' Other Uses 1.00 ' June 269 1991 David AL Griffith & Associates, Ltd. Page 19 1