HomeMy WebLinkAbout23 - Annual Reporting on Development Impact Fees & Development Agreements�EWPR CITY OF
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<,FoR�P City Council Staff Report
November 22, 2016
Agenda Item No. 23
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Dan Matusiewicz, Finance Director - 949-644-3123,
dmatusiewicz@newportbeachca.gov
PREPARED BY: Rukshana Virany, Accounting Manager
rvirany@newportbeachca.gov
PHONE: 949-644-3146
TITLE: Annual Reporting on Development Impact Fees & Development
Agreements
ABSTRACT:
Pursuant to the Mitigation Fee Act (Government Code Section 66000, et seq.), the City
is required to report on the receipt and use of development impact fees.
Regarding Development Agreements (Government Code Section 65865(e)), the City is
required to comply with the reporting requirements in Government Code Section 66006
with respect to any fee the City receives or cost it recovers.
RECOMMENDATION:
a) Determine that the action is exempt from the California Environmental Quality Act
(CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines
because it will not result in a physical change to the environment, directly or
indirectly; and
b) Staff recommends that the City Council receive, review and file the Annual Reports
on Development Impact Fees and the Development Agreements.
FUNDING REQUIREMENTS:
There is no fiscal impact related to this item.
DISCUSSION:
The Mitigation Fee Act (hereafter "the Act") requires each agency that imposes
development impact fees to submit annual and five-year reports providing specific
information about the receipt and use of such fees. Fees collected must be placed in
separate accounts and not commingled with other sources of general revenues. Interest
on each account must be credited to that account and used only for the purpose for
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Annual Reporting on Development Impact Fees & Development Agreements
November 22, 2016
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which the fees were collected. The Act also requires that the City make periodic findings
in order to justify continued receipt of unexpended funds, or possibly be subject to
refunding portion of such funds.
Although the Act does not apply to Developer Agreements, the reporting requirements
on both the Development Impact Fee and Developer Agreements are the same and fall
under Government Code Section 66006.
Section 66006(b) of the Act requires that within 180 days after the close of the fiscal
year, the City must make available to the public a brief description of the fee, amount of
the fee, beginning and ending balances of the account or fund for the fiscal year, and
amount of fees collected and the interest earned. The Act also requires identification of
each public improvement on which the fees were expended and the amount of the
expenditures on each improvement, an approximate date by which the construction of
the public improvement will commence, a description of each inter -fund transfer or loan
made from the account or fund, and the amount of any refunds made due to the inability
to expend impact fees. Section 66001(d) provides that, for the fifth fiscal year following
the first deposit into the account or fund and every five years thereafter, the City shall
make findings with respect to any portion of the fee remaining unexpended, whether
committed or uncommitted.
The City is in conformance with the Act, is not subject to any refunding requirements,
and the City has Fair Share Fees as the only source of reportable impact fees.
Regarding Development Agreements, the City has three sources of reportable
Development Agreements, the North Newport Center Development Agreement, the
New Home Company Development Agreement and the Newport Beach Country Club
Development Agreement. Finally, with the exception of the transfers to the Public Art
and Cultural Facilities Fund, all funds have been expended in the last year and, as a
result, the City has nothing to report under the five-year reporting requirement.
Attachments A and B provide additional narrative and all the required information
related to the annual review and accounting of applicable development impact fees and
Development Agreements, as well as periodic findings concerning unexpended funds.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
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Annual Reporting on Development Impact Fees & Development Agreements
November 22, 2016
Page 3
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — City of Newport Beach
2015-2016
Attachment B — City of Newport Beach
2015-2016
Development Impact Fee Report Fiscal Year
Development Agreements Report Fiscal Year
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Attachment A
City of Newport Beach Development Impact Fee Report Fiscal Year 2015-2016
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City of Newport Beach
Development Impact Fee Report
Fiscal Year 2015-2016
Background
The City's Fair Share Fee program was originally adopted in 1984, updated in 1994 and adjusted
periodically based upon the consumer price index. The purpose of the Fair Share Fee program is
to equitably distribute the cost of traffic congestion reduction improvements to the future
development that generates the need for such projects. The fair share traffic contribution is
based upon the unfunded portion of the estimated construction cost of the total circulation
system roadway improvements necessary to implement the master plan of streets and
highways (net roadway costs), and the total number of vehicle trips anticipated as a result of
trend growth.
The Mitigation Fee Act, Government Code §66000 et seq., (the "Act"), the bulk of which were
adopted as 1987's AB 1600 and contains what are commonly referred to as "AB 1600
requirements". The Act governs the establishment and administration of development impact
fees paid by new development projects for public facilities needed to serve new development.
Fees must be separately accounted for and used for the specific purpose for which the fee was
imposed.
Annual Reporting
The Act requires that the City prepare an annual report detailing the status of collected
development impact fees as defined in the Act. The annual report must be made available to
the public and presented to the City Council not less than fifteen (15) days after it is made
available to the public at the next regularly scheduled City Council meeting. The meeting before
the City Council must be held within one hundred eighty (180) days of the end of the fiscal year.
The report must include the type of fee, beginning and ending balances, the amount of fees
collected and interest earned, expenditures by type, a description of interfund transfers or
loans, and the amount of any refunds made.
Excluded from this report are types of developer fees that are not subject to the reporting
requirements of the Act. For example, fees collected pursuant to the City's zoning powers,
rather than pursuant to the Act, are in -lieu housing fees, public art -in -lieu fees and park -in -lieu
fees.
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Annual Report
To comply with Government Code §66006, the following information regarding AB 1600 fees is
presented:
1) A brief description of the type of fee in the account or fund:
Fair Share Fees - These fees provide funding to accommodate traffic generated
by future development within the City and are separately accounted for in the
Circulation & Transportation Fund.
2) The amount of the Fair Share Fee:
Fair Share rate is $203.29 per trip for Fiscal Year 2015-2016.
3) The Beginning & Ending balance of the account or fund:
See attached Financial Report.
4) The amount of fees collected and interest earned:
See attached Financial Report.
5) An identification of each public improvement on which fees were expended and the
amount of the expenditures on each improvement, including the total percentage of the
cost of the public improvement that was funded with the fees:
See attached Financial Report.
6) An identification of an approximate date by which the construction of the public
improvements will commence if the City determines that sufficient funds have been
collected to complete financing on an incomplete public improvement, as identified in
the City's master plans, and the public improvement remains incomplete:
New Fiscal Year 2015-2016 public improvement projects are underway and
expected to be completed in the near future.
7) A description of each interfund transfer or loan made from the account or fund,
including the public improvement on which the transferred or loaned fees will be
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expended, and in the case of an interfund loan, the date on which the loan will be
repaid, and the rate of interest that the account or fund will receive on the loan:
The City entered into a Circulation Improvement and Open Space Agreement
(CIOSA) with a developer whereby the City received a loan of $14,395,572 to be
used only for certain transportation and circulation improvements. The City
agreed to match the contribution (without interest) by pledging 50 percent of
future Fair Share fees (developer impact fees), which are recorded in the
Circulation and Transportation special revenue fund. During the year ended
June 30, 2016, the City received $1,123,949 of Fair Share Fees of which
$382,796 was collected through February 20, 2016, the sunset date for the 50
percent pledge. Of this $382,796 collected, $191,398 was paid to the CIOSA
Construction capital projects fund. Through June 30, 2016, $5,226,841 of fair
share fees has been paid to date. No additional liability has been recorded
because any future repayment is uncertain; any amount not contributed by
February 20, 2016, is forgiven.
8) The amount of refunds or any allocation made pursuant to subdivision (f) of Section
66001.
No refunds were made during the fiscal year.
Fair Share Revenues, Expenditures & Changes in Fund Balance
FY 2015-2016
Total Project
Costs
(FY Only)
Revenues:
Fair Share Fees
$ 1,123,949
Investment Income
12,396
Total Revenues
1,136,345
Expenditures:
Capital Improvement Projects
Dover Dr/West Cliff Dr, Street Rehab (14001-980000-15R15) $ (397,251) (3,246,376)
Traffic Signal Modernization Phase 8 (14001-980000-15T11) (20,280) (534,843)
Total Expenditures (417,531) (3,781,219)
Transfers In/(Out):
Transfer In -Measure M Competitive $ 93,916
Transfer Out - CIOSA Fund (Pledged Fair Share Fees) (191,398)
Total Transfers (97,482)
Net Change in fund balance 621,332
Fund Balance, beginning' $ 688,120
Fund Balance, ending $ 1,309,452
1 Beginning balance adjusted for prior year revenues not reported
3
Fair Share
Funded
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Description of Projects
Dover Drive Westcliff Drive Pavement Rehab (Project 15R15)
This project rehabilitated asphalt pavement and existing landscaped medians on Dover Drive
and Westcliff Drive. Deteriorated sidewalk and curb and gutter were removed and
reconstructed. Construction was completed in the summer of 2016.
Traffic Signal Modernization Phase 8 (Project 15T11)
Traffic Signal Modernization is a multi-year, multi -phased program to update the City's traffic
signal system. Phase 8 is the final phase of the improvement program. It includes installation of
new hardware, fiber optic cable upgrades and CCTV cameras to intersections. The project will
also complete gaps in the fiber optic communication network and is expected to be completed
by the end of 2016.
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Attachment B
City of Newport Beach Development Agreements Report Fiscal Year 2015-2016
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City of Newport Beach
Development Agreements Report
Fiscal Year 2015-2016
Background
A Development Agreement ("DA") is a contract between a local jurisdiction and a person who
has ownership or control of property within the jurisdiction. The purpose of the agreement is to
specify the standards and conditions that will govern development of the property. The
development agreement provides assurance to the developer that he/she may proceed to
develop the project subject to the rules and regulations in effect at the time of approval - the
development will not be subject to subsequent changes in regulations.
DA should also benefit the local jurisdiction. The city or county may include conditions
(mitigation measures) that must be met to assure that a project at a specific location does not
have unacceptable impacts on neighboring properties or community infrastructure. The
agreement may clarify how the project will be phased, the required timing of public
improvements, the developer's contribution toward funding system -wide community
improvements, and other conditions. The agreement can also facilitate enforcement of
requirements, since it is a contract that details the obligations of the developer and local
jurisdiction.
In March 2013, the City Council adopted Council Policy 1-13 establishing a Public Art and
Cultural Facilities Fund, and a funding source for the acquisition, installation, management and
maintenance of Public Art without adopting or imposing new fees or charges. With the
adoption of the policy, the council authorized the deposit of two percent of the unallocated
public benefit fees received by the City from development agreements into the Public Arts and
Cultural Facilities Fund. These funds will provide for the acquisition and maintenance of
permanent art structures and installations as identified in the Newport Beach Master Arts and
Culture Plan.
Annual Reporting
For DAs entered into or after January 1, 2004, Government Code §65865 (e) requires that the
City shall comply with the reporting requirements pursuant to Government Code §66000, with
respect to any fee the City receives or cost it recovers. Government Code §66006 requires the
City to submit annual and five-year notices detailing the status of collected public benefit fees,
and be placed on the agenda for review at a public meeting not less than fifteen (15) days after
the report is made available to the public. The meeting before the City Council must be held
within one hundred eighty (180) days of the end of the fiscal year. The report must include the
beginning and ending balances, the amount of fees collected and interest earned, expenditures
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by type, a description of interfund transfers or loans, and the amount of any refunds made.
Excluded from this report are types of developer fees that are not subject to the reporting
requirements under Government Code §65865(e). For example, these include fees collected
pursuant to the City's zoning powers, such as in -lieu housing fees, and park -in -lieu fees.
Annual Report
To comply with Government Code §66006, the following information regarding DA Fee is
presented:
1) A brief description of the type of public benefit fee in the account or fund:
New Home Company Development Agreement — On January 10, 2006, the City
Council adopted Resolution No. 2006-2 permitting the development of 79
condominiums (Santa Barbara Condominium project) on a 4.25 -acre site located at
900 Newport Center Drive. Subsequently the City Council adopted a new Housing
Element and approved the Affordable Housing Implementation Plan on August 14,
2007, per Resolution No. 2007-058. The resolution also approved the Memorandum
of Understanding ("MOU") between the City and the Developer establishing an
understanding that a development agreement would be prepared outlining the
provisions to be included in the development agreement. On February 28, 2012, the
City Council adopted Resolution No. 2012-19 approving a Memorandum of
Agreement ("MOA") between the City Council and New Home Company, waiving the
requirement of a development agreement for the Santa Barbara Condominium
project. The MOA specifies the term, permitted uses, public benefits fee, in addition
to the housing and park fees. Public benefit fees were required to be paid by New
Home Company as part of the MOA, and are accounted for in the Facilities Financing
Replacement Fund.
2) The amount of the DA fees:
$63,291 per residential unit for 79 units concurrent with certificate of occupancy.
Total of $3,354,434 was received in September 2015. Two percent of this, $67,089,
was transferred to the Public Arts and Cultural Facilities Fund.
3) The Beginning and Ending balance of individual DAs:
See attached Financial Report.
4) The amount of DA fees collected and interest earned:
See attached Financial Report.
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5) An identification of each public improvement on which fees were expended and the
amount of the expenditures on each improvement, including the total percentage of the
cost of the public improvement that was funded with the fees:
See attached Financial Report.
6) An identification of an approximate date by which the construction of the public
improvements will commence if the City determines that sufficient funds have been
collected to complete financing on an incomplete public improvement, as identified in
the City's master plans, and the public improvement remains incomplete:
Newport Home Company Development Agreement funds, and the portion of
funds transferred to the Public Art and Cultural Facilities Fund, are expected to
be expended by 2017.
7) A description of each interfund transfer or loan made from the account or fund,
including the public improvement on which the transferred or loaned fees will be
expended, and in the case of an interfund loan, the date on which the loan will be
repaid, and the rate of interest that the account or fund will receive on the loan:
Two percent of the public benefit fees, $67,089, were transferred to the Public
Arts and Cultural Facilities fund. There were no interfund loans made during the
fiscal year.
The amount of refunds made pursuant to subdivision (f) of Government Code §66001
any allocation pursuant to subdivision (f) of Government Code §66001.
No refunds were made during the fiscal year.
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Financial Reports
New Home Company Development Agreement
FY 2015-16
Fund Balance, beginning
Fund Balance, ending
Revenues:
Developer Fees
Interest Income
Total Revenues
$ 2,761,324
Public Arts And Cultural Facilities Revenues
FY 2015-16
Expenditures:
Transfers In/(Out):
Transfer In - New Home Company DA
Total Transfers
Net Change in Fund Balance
Fund Balance, beginning 1
Fund Balance, ending
1 Beginning ba Ian re a dj us ted for FY15 expenditures overlooked last year
4
5,861
5,861
$ 67,089
67,089
72,950
$ 408,180
$ 481,130
Developer
Agreement
Funded
100.0%
27.6%
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Total Project
Costs
(FY Only)
Revenues:
Developer Fees $
3,354,434
Interest Income
163,859
Total Revenues
3,518,293
Expenditures: $
-
Transfers In/(Out):
Transfer Out -Lifeguard Headquarter fund $
(138,585)
(138,585)
Transfer Out - Facilities Maintenance fund
(551,295)
(1,999,426)
Transfer Out - Public Arts & Cultural Facilities fund
(67,089)
Total Transfers
(756,969)
(2,138,011)
Net Change in Fund Balance
2,761,324
Fund Balance, beginning
Fund Balance, ending
Revenues:
Developer Fees
Interest Income
Total Revenues
$ 2,761,324
Public Arts And Cultural Facilities Revenues
FY 2015-16
Expenditures:
Transfers In/(Out):
Transfer In - New Home Company DA
Total Transfers
Net Change in Fund Balance
Fund Balance, beginning 1
Fund Balance, ending
1 Beginning ba Ian re a dj us ted for FY15 expenditures overlooked last year
4
5,861
5,861
$ 67,089
67,089
72,950
$ 408,180
$ 481,130
Developer
Agreement
Funded
100.0%
27.6%
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