HomeMy WebLinkAbout11-21-2017 Item 09 - Capital Facilities Fee Program Update/Nexus Study (AB 1600) Resolution
Meeting Date: 11/21/2017
FROM: Michael Codron, Community Development Director
Prepared By: Xzandrea Fowler, Deputy Director – Long Range Planning
SUBJECT: RESOLUTION OF INTENT TO APPLY THE PENDING CAPITAL
FACILITIES FEE PROGRAM AND WATER AND WASTEWATER
CAPACITY AND CONNECTION FEE PROGRAM TO NEW
DEVELOPMENT
RECOMMENDATION
Adopt a Resolution (Attachment A) that requires applicable development projects to participate
in the pending Capital Facilities Fee Program and the Water and Wastewater Capacity and
Connection Fee Program should those projects be issued building permits on or after the
publication of the updated development impact fee program.
DISCUSSION
On October 17, 2017, the City Council participated in a study session on the preliminary results
of the Capital Facilities Fee Program Nexus Study and the Water and Wastewater Capacity and
Connection Fee Program Study (e.g. development impact fees). The Council provided staff with
guidance regarding policy considerations and directed staff to return with more analysis of the
fee burden with respect to project feasibility, impacts to affordable housing objectives,
identification of alternative infrastructure funding sources, refinement of the project
improvement lists, implementation phasing and additional community outreach.
With any new or proposed increase in development impact fees, agencies typically encounter a
“rush the planning counter” by developers in order to secure project approval or vested rights
status,1 before the new fees take effect. To address this concern, staff is recommending the
adoption of a resolution that provides notice that it is the City’s intent to adopt updated
development impact fee programs by March 2018, and that it is the expectation that all
applicable development projects that are issued building permits once those impact fees have
been established will be expected to pay those fees, since they will benefit from the
improvements, facilities, and services that will be covered by those fees. In addition, staff
recommends that the following condition of approval language be added to applicable
development projects to provide additional clarification as to which fees that development
project will be subject to:
In accordance with Resolution No. _______ (2017 Series), the Developer shall
1 There are different ways a property owner can obtain a vested right. Under common law, an owner has a vested
right “if [the owner] has performed substantial work and incurred substantial liabilities in good faith reliance upon a
permit issued by the government.” Certain State laws also convey vested rights status. For example, Gov. Code §
66474.2 requires agencies to ordinances, policies, and standards in effect at the date the local agency has determined
that the application is deemed complete per the Permit Streamlining Act, but provides a caveat that the agency can
impose pending policy or rules if the agency provides certain notice.
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pay any and all development impact fees, including water and wastewater
capacity charges, in the amount in effect at the time of issuance of a building
permit.
Background
The City is in the process of updating the fees charged to new development for a range of
transportation, parks, general government, public safety, and water and wastewater capital
facilities that are important to meeting service expectations and maintaining quality of life in the
City. The economic vitality of the City is linked to critical investment in its urban infrastructure
system. While the current configuration of the existing development impact fee programs has
served an important role in funding infrastructure improvements throughout the City over the last
twenty years, changing economic circumstances, new Specific Plans, and the City’s recently
adopted public financing policies warrant an update of these programs.
Implementation
The pending facility and infrastructure impact fees for general government, public safety, parks
and recreation, transportation, and water and wastewater capacity and connection would be
collected at the time of building permit issuance. Therefore, staff is recommending that
applicable development projects be conditioned to pay the new fees if they are place afte r the
project has been approved but before building permits have been issued. The intent of this
condition is to provide the development community with some certainty regarding which impact
fees may be levied on their project.
1. Applicable Development Projects
In general, all discretionary development review projects that have received approval, are
currently in process, or will be in process between now and the adoption of the updated
development impact fee programs will be subject to the updated fees if building permits are
issued for development of those projects on or after the updated fees have been published (which
is anticipated to occur in January 2018).
The following are some exceptions:
• Development projects that are entitled under a vesting tract map that specified when and
which development impact fees would be applied to the project;
• Ministerial development review projects that receive building permit issuance prior to the
adoption of the updated development impact fees (which is anticipated to occur in March
2018); and
• Discretionary development review projects that have received approval or are currently in
process and will have building permits issued for that development prior to the
publication of the updated fee programs (which is anticipated to occur in January 2018).
2. Benefits of Resolution and Condition of Approval Language
There are benefits associated with providing the development community with additional clarity
regarding the City’s intent to apply updated development impact fees to new development
projects.
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Greater certainty up front as to the impact fee amount and any other requirements can be of
substantial benefit to a developer in saving time and costs as opposed to the situation with little
clarity and ad hoc negotiations. Since development impact fees offer a mechanism for paying a
development’s fair share of costs it can be of benefit to a developer compared to a situation
where the largest project or the first project in an area must pay the full cost of improvements
serving the larger surrounding area while subsequent projects pay less.
CONCURRENCES
The proposed resolution and condition of approval language has been reviewed by the Public
Works, Utilities, Fire, Administration, and Parks and Recreation departments for concurrence.
ENVIRONMENTAL REVIEW
Modification of rates and charges by public agencies is statutorily exempt from the California
Environmental Quality Act (CEQA) under Section 15273 of the Public Resources Code because
changes in fees is not intended to fund expansion of capital projects not otherwise evaluated
under CEQA.
FISCAL IMPACT
The adoption of the proposed resolution and the use of the proposed condition of approval
language will help the City to accurately forecast the maximum amount of developmen t that
could contribute to the potential impact fee revenue generation. This tool will provide some
assurance that applicable development projects will contribute to their fair share of the cost to
provide infrastructure/facility/service benefits that are necessary to serve that new development.
Accurate forecasting of potential impact fee revenue generation also helps the City identify the
amount of funding that will need to come from other funding sources in order to fully fund the
identified facilities, improvements, and services that are covered under the development impact
fee programs. When those potential impact fee revenues fall short additional pressure is put on
the General Fund to cover the funding gap.
ALTERNATIVES
The Council could elect to:
1. Option 1: Don’t adopt the resolution or apply the condition of approval language to
discretional development review projects.
Attachments:
a - Resolution of Intent
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R _______
RESOLUTION NO. _____ (2017 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, SETTING FORTH INTENT TO APPLY THE
PENDING CAPITAL FACILITIES FEE PROGRAM AND WATER AND
WASTEWATER CAPACITY AND CONNECTION FEE PROGRAM TO
NEW DEVELOPMENT
WHERAS, in October 2012, the City Council adopted an Economic Development
Strategic Plan (EDSP). The EDSP was updated in 2015. The primary goal of the plan is to help
create head of household jobs, and the Plan recognizes how important infrastructure financing is
to accomplish this goal; and
WHEREAS, in April 2013, the City Council authorized staff to hire a consultant to
undertake an infrastructure financing analysis that would include a series of study session with the
Council, as an implementation measure of the EDSP. The purpose of these study sessions was to
provide the Council and the community with information, context and tools to support informed
decision making and direction as many as needed; and
WHEREAS, on January 21, 2014, the City Council held Study Sesssion#1: Introduction
and Background. This session covered the current trends in municipal infrastructure financing,
gave an overview of development impacts fee and reviewed the development of the City’s existing
fee programs; and
WHEREAS, on February 18, 2014, the City Council held Study Session #2: Economic
and Policy Implications of Development Impact Fees. This session highlighted the tools available
to the City and the policy implications and trade-offs associated with the various options; and
WHEREAS, on March 18, 2014, the City Council held Study Session #3: Direction for
updating the City’s Development Impact Fees. This session focused on the path forward, and City
Council provided direction to staff, based on the first two sessions and accompanying documents,
to proceed with the update of the City’s development impact fees, to integrate fees into and
prioritize projects in the City’s Capital Improvement Program, and to explore new infrastructure
funding strategies to support the objectives of the Economic Development Strategic Plan with
particular focus on creating head of household jobs in San Luis Obispo; and
WHEREAS, on August 16, 2016, the City Council held a fourth Study Session: Public
Infrastructure Financing Framework and Draft Policies. This session provided a framework for a
comprehensive approach to funding the City’s public facilities and infrastructure improvements
and recommended draft policies for City Council consideration. The Framework provides a
systematic way of considering funding and financing options so that the City is able to construct
needed public facilities and infrastructure in a manner that funds facilities and infrastructure
needed to maintain and enhance the City’s quality of life for current and future residents,
employees and visitors, makes efficient use of available funding sources and financing
mechanisms, implements General Plan policy, is fair and equitable with respect to incidence of
burden (who pays), and is consistent with economic development objectives; and
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Resolution No. _____ (2017 Series) Page 2
R ______
WHEREAS, on August 16, 2016, the City Council held a public hearing and authorized
staff to issue a Request for Proposal (RFP) for the preparation of a Public/Capital Facilities Impact
Fee Program Nexus Study. The preparation of a Nexus Study was identified in the 2015 -17
Financial Plan as an Objective that supports Major City Goals in Housing, Multi-Modal
Transportation, as well as supports the other important objective of Downtown. It also continues
implementation of the EDSP strategy to reduce barriers to job creation, which was part of the
Major City Goal in Economic Development in the 2011-13 Financial Plan; and
WHEREAS, on November 23, 2016, the City requested proposals for consultant services
to prepare the City’s Capital Facilities Fee Program Nexus Study per Specification No. 91356. The
scope of work for the Study included a Citywide Capital Facilities Fee Program with supplemental
area-specific fees as needed and only if supported by nexus logic. The Capital Faciliti es Fee
Programs scope of work also included categorical subcomponents for Transportation, Parkland
and Park Improvements, General Government, and Public Safety; and
WHEREAS, on April 21, 2017, pursuant to said request Economic & Planning Systems.
Inc. submitted a proposal that was accepted by the city for said project; and
WHEREAS, on June 29, 2017, the City conducted outreach with stakeholders in the
development community at a Developer’s Roundtable meeting. At this meeting the study
objectives and approach were discussed; and
WHERAS, on October 5, 2017, the City conducted outreach with stakeholders in the
community at the San Luis Chamber of Commerce, Economic Development Committee meeting,
and with stakeholders in the development community at a Developer’s Roundtable meeting. At
these meetings the preliminary maximum fees calculated as part of the Capital Facilities Fee
Program Nexus Study were discussed; and
WHEREAS, on October 11, 2017, the Planning Commission held a study session to
review the preliminary results of the Capital Facilities Fee Program Nexus Study and the Water
and Wastewater Capacity and Connection Fee Program Study. During the study session the
development community expressed concern that the pending changes to the City’s development
impact fee programs would create uncertainty for the development community which could result
in unanticipated impacts to the fiscal feasibility for development projects; and
WHEREAS, On October 17, the City Council held a study session to review the
preliminary results of the Capital Facilities Fee Program Nexus Study and the Water and
Wastewater Capacity and Connection Fee Program Study. During the study session, the
development community expressed concern that the pending changes to the City’s development
impact fee programs would create uncertainty for the development community which could result
in unanticipated impacts to the fiscal feasibility for development projects. The City Council
provided staff with guidance regarding policy considerations and directed staff to return with more
analysis of the fee burden feasibility, impacts to affordable housing objectives, identification of
alternative infrastructure funding sources, refinement of project improvement lists,
implementation phasing and additional community outreach; and
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Resolution No. _____ (2017 Series) Page 3
R ______
WHEREAS, with any new or proposed increase in development impact fees, agencies
typically encounter a “rush the planning counter” by developers to secure project approval or
vested rights status before the new fees take effect. To address this concern, staff recommended
the adoption of this Resolution that provides notice that it is the City’s intent to adopt updated
development impact fee programs by March 2018, and that it is the expectation that all applicable
development projects that are issued building permits once those impact fees have been established
will be expected to pay those fees, since they will benefit from the improvements, facilities, and
services that will be covered by those fees. In addition, staff recommends that the following
condition of approval language be added to applicable development projects to provide additional
clarification as to which fees that development project will be subject to:
In accordance with Resolution No.______ (2017 Series), the Developer shall pay
any and all development impact fees, including water and wastewater capacity and
connection fees, in the amount in effect at the time of issuance of building permit.
The following is a list of development review projects that would be exempt from the resolution:
a) Development projects that are currently entitled under a vesting tract map that specified
which development impact fees would be applied to the project;
b) Ministerial development review projects that receive building permit issuance prior to
the adoption of the updated development impact fee programs; and
c) Discretionary development review projects that are currently in process and will have
building permits issued for that development prior to the establishment of the updated
development impact fee programs.
WHEREAS, the City Council finds that the condition of approval language is consistent
with the objectives, policies, and strategies specified in the Economic Development Strategic Plan
and the General Plan of the City of San Luis Obispo, as described below, and as further detailed
in the accompanying City Council staff report prepared for this action:
a) Costs of Growth – Land Use Policy 1.13.9: The city shall require the costs of public
facilities and services needed for new development to be borne by the new
development, unless the community chooses to help pay the costs for certain
development to obtain community-wide benefits. The City shall consider a range of
options for financing measures so that new development pays its fair share of costs of
new service and facilities which are required to serve the project, and which are
reasonably related to the new growth attributable to the development.
b) Economic Development Strategic Plan Policy 1.4: Ensure that the fair-share structure
includes appropriate percentages for each party bearing a portion of the infrastructure
costs. Utilize a consultant to lead a series of study sessions with the City Council on
the City’s impact fee stricture guided by existing policies and options for the City to
consider related to how impact fees are determined, calculated, and applied.
c) Furthermore, the condition of approval language is consistent with the Land Use and
Circulation Element overall land use policies by preserving a funding source for city-
wide community benefits, including but not limited to, financial support for
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Resolution No. _____ (2017 Series) Page 4
R ______
transportation, parks and recreation, multi-modal infrastructure, public safety, and
water and wastewater infrastructure in the City.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. Recitals. The above recitals are true and correct and are incorporated herein
by this reference.
SECTION 2. Action. Unless exempt as set forth below, all building permits for new
development within the City shall be subject to the new or increased development impact fees as
described in the Recitals above. The condition of approval language is hereby approved and shall
be added to all discretionary development review projects that are currently in process or will be
in process between the date of this resolution and the adoption of updated development impact fee
programs. Projects exempt from this requirement are as follows:
a) Development projects that are currently entitled under a vesting tract map;
b) Ministerial development review projects that receive building permit issuance prior to
the adoption of the updated development impact fee programs; and
c) Discretionary development review projects that are currently in process and will have
building permits issued for that development prior to the establishment of the updated
development impact fee programs.
SECTION 3. Upon the effective date of this Resolution, the Community Development
Director is hereby authorized and directed to apply the condition of approval language to all
applicable discretionary development review projects that are currently in process or will be in
process between now and the adoption of the updated development impact fee programs, unless
exempt from this Resolution as described above. In accordance with Government Code §
66474.2(b)(2), the City Clerk is hereby directed to publish notice of this Resolution per
Government Code section 65090(a) describing the nature of the proposed changes to the City’s
development impact fee program. The notice shall be subject to the approval of the City Attorney.
SECTION 3. CEQA determination. The City Council herby finds that the modification of
rates and charges by public agencies is statutorily exempt from the California Environmental
Quality Act (CEQA) under section 15273 of the Public Resources Code because changes in fees
is not intended to fund expansion of capital projects not otherwise evaluated under CEQA.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2017.
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Resolution No. _____ (2017 Series) Page 5
R ______
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Carrie Gallagher
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, _________.
____________________________________
Carrie Gallagher
City Clerk
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TENewspaper of the Central Coast
MBUNE
NOV 15 2017
3825 South Higuera • Post Office Box 112 • San Luis Obispo, California 93406-0112 • (805) 781-7800
In The Superior Court of The State of California
In and for the County of San Luis Obispo
AD #3384412
CITY OF SAN LUIS OBISPO
OFFICE OF THE CITY CLERK
STATE OF CALIFORNIA
ss.
County of San Luis Obispo
I am a citizen of the United States and a resident of the
County aforesaid; I am over the age of eighteen and not
interested in the above entitled matter; I am now, and at
all times embraced in the publication herein mentioned
was, the principal clerk of the printers and publishers of
THE. TRIBUNE, a newspaper of general Circulation,
printed and published daily at the City of San Luis
Obispo in the above named county and state; that notice
at which the annexed clippings is a true copy, was
published in the above-named newspaper and not in any
supplement thereof — on the following dates to wit;
NOVEMBER 11, 2017 that said newspaper was duly
and regularly ascertained and established a newspaper of
general circulation by Decree entered in the Superior
Court of San Luis Obispo County, State of California, on
June 9, 1952, Case #19139 under the Government Code
of the State of California.
I certify (or declare) under the penalty of perjury that the
foregoing is true and correct.
(Signa Ie of Principal Clerk)
DATE: NOVEMBER 11, 2017
AD COST: $169.36
crff OF
simLialsoomm
SAN LUIS OBISPO CITY COUNCIL
NOTICE OF PUBLIC HEARING
The San Luis Obispo City Council invites
all interested persons to attend a public
hearing on Tuesday, November 21, 2017,
at 6:00 p.m. in the City Hall Council
Chamber, 990 Palm Street, San Luis Obi-
spo, California, relative to the following:
RESOLUTION OF INTENT TO APPLY
Tl1E PENf]ING C&pCfAL FAClLjn igs
FEE PROGRAM ALIO WATER AND
WASTEWATER CAPACTLANY] CON-
NECTION FEE PROGRAM TO NEW DE-
VELOPMENT
Public hearing to consider adopting a reso-
lution that requires applicable development
projecls to participate in the pending Capi-
tal Facilities Fee Program and the Water
and Wastewater Capacity and Connection
Fee Program should those projects be is-
sued building permits on or after the publi-
cation of the updated development impact
tee program.
For more information, you are invited to
contact Xxandrea Fowler of the City's
Community Development Department at
(805) 781-7274 or by email atxfowler@slo
cltY,om-
The City Council may also discuss other
hearings or business items before or after
the items listed above. If you challenge the
proposed project in court, you may be limit-
ed to raising only those issues you or
someone else raised at the public hearing
de=ibdd in this notice, or in written corre-
spondence delivered to the City Council at,
or prior to, the public hearing.
Reports for this meeting will be available
for review in the City Clerk's Office and on-
line at www.slocity.org on November 15,
2017. Please call the City Clerk's Office at
(805) 781-7100 for more information. The
City Council meeting will be televised live
on Charter Cable Channel 20 and live
streaming on www.slocity.org.
Carrie Gallagher
City Clerk
City of San Luis Obispo
November 11, 2017 3384412
Capital Facilities Fee Program &Water and Wastewater Capacity and Connection Fee ProgramResolution of Intent November 21, 2017Presented by the Community Development Department11/21/2017 Item 9, Staff Presentation
Recommendation2Council adopt a Resolution that requires applicabledevelopment projects to participate in the pendingCapital Facilities Fee Program and the Water andWastewater Capacity and Connection Fee Programshould those projects be issued building permits on orafter the publication date of the updated developmentimpact fee program(s).11/21/2017 Item 9, Staff Presentation
Background & PurposeBackgroundUpdate of impact fees charged to new development is underway for capital facilities associated with transportation, parks, general government, public safety, water, and wastewaterPurposeProvide transparency in this process through formal notification of the City’s intent to adopt updated impact fees by March 2018Clarify the expectation that all applicable new development will be expected to pay those updated impact fees, since they will benefit from the associated improvements, facilities, and services Clarify which type and when development projects will be subject to the updated impact fees 311/21/2017 Item 9, Staff Presentation
Applicable Development ProjectsDiscretionary Development ReviewProjects that have already received approval, are currently in process, or will be in process between now and the adoption of the updated impact fees will be subject to those updated fees if building permit(s) are issued on or after the date the updated impact fees have been published411/21/2017 Item 9, Staff Presentation
ExceptionsExceptionsDevelopment projects that are currently entitled under a vesting tract map Ministerial development review project that received building permit issuance prior to the adoption of the updated impact feesDiscretionary development review projects that have received approval or are currently in process and will have building permits issued prior to the publication of the updated impact fees511/21/2017 Item 9, Staff Presentation
Implementation ToolCondition of Approval languageIn accordance with Resolution No. xxxx (2017 Series), the Developer shall pay any and all development impact fees, including water and wastewater capacity charges, in the amount in effect at the time of issuance of building permit.611/21/2017 Item 9, Staff Presentation
Recommendation/ Next Steps7Council adopt a Resolution that requires applicabledevelopment projects to participate in the pending CapitalFacilities Fee Program and the Water and WastewaterCapacity and Connection Fee Program should thoseprojects be issued building permits on or after thepublication date of the updated development impact feeprogram(s).Council directs the City Clerk to publish notice ofResolution per government Code section 65090(a)describing the nature of the changes to the City’sdevelopment impact fee program.11/21/2017 Item 9, Staff Presentation