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HomeMy WebLinkAbout10 - Annual Reporting on Development Impact Fees and Development AgreementsQ �EwPpRT CITY OF O � z NEWPORT BEACH <,FORN'P City Council Staff Report November 10, 2020 Agenda Item No. 10 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Carol Jacobs, Assistant City Manager / Interim Finance Director - 949-644-3313, cjacobs@newportbeachca.gov PREPARED BY: Rukshana Virany, Accounting Manager rvirany@newportbeachca.gov PHONE: 949-644-3146 TITLE: Annual Reporting on Development Impact Fees and 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 this 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 this action will not result in a physical change to the environment, directly or indirectly; and b) Receive, review and file the Annual Reports on Development Impact Fees (Attachment A), and Development Agreements (Attachment B). 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 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 a portion of such funds. 10-1 Annual Reporting on Development Impact Fees and Development Agreements November 10, 2020 Page 2 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 one reportable Development Agreement, the Uptown Newport Development Agreement. The first deposit for the Uptown Newport Development Agreement was received during Fiscal Year 2016-17 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. 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). The annual reports were also made available to the public and the Building Industry Association of Southern California, Orange County Chapter, prior to the Council Meeting. 10-2 Annual Reporting on Development Impact Fees and Development Agreements November 10, 2020 Page 3 ATTACHMENTS: Attachment A — City of Newport Beach Development Impact Fee Report Fiscal Year 2019-2020 Attachment B — City of Newport Beach Development Agreements Report Fiscal Year 2019-2020 10-3 Attachment A City of Newport Beach Development Impact Fee Report Fiscal Year 2019-2020 10-4 City of Newport Beach Development Impact Fee Report Fiscal Year 2019-2020 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, 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, and park -in -lieu fees. 1 10-5 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 $225.64 per trip for Fiscal Year 2019-2020. 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: There were no public improvement projects constructed in the fiscal year. 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: There were no public improvement projects constructed in the fiscal year. 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: There were no interfund transfers or loans during the fiscal year. 2 10-6 8) The amount of refunds or any allocation made pursuant to subdivision (f) of Section 66001: There were no refunds during the fiscal year. Financial Report Fair Share Revenues, Expenditures & Changes in Fund Balance FY 2019-2020 Total Project % Costs Fair Share (FY Only) Funded Revenues: Fair Share Fees $ 299,380 Investment Income 92,786 Total Revenues 392,167 Expenditures: Capital Improvement Projects - Net Change in Fund Balance 392,167 Fund Balance, Beginning $2,244,795 Fund Balance, Ending $2,636,961 Description of Projects Not Applicable. 3 10-7 Attachment B City of Newport Beach Development Agreements Report Fiscal Year 2019-2020 e. City of Newport Beach Development Agreements Report Fiscal Year 2019-2020 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, because the development will not be subject to subsequent changes in regulations. The 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. 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 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. 1 10-9 Annual Report To comply with Government Code §66006, the following information regarding DA Fees is presented: 1) A brief description of the type of public benefit fee in the account or fund: a) Uptown Newport Development Agreement — On March 12, 2013 the City Council adopted Ordinance No. 2013-6 approving the Development Agreement for the development of a 25 -acre, mixed-use residential project consisting of 1,244 residential dwelling units, two one -acre public parks, and 11,500 square feet of retail use located at 4311-4321 Jamboree Road. On April 28, 2015 the City Council approved the First Amendment to the Development Agreement that delayed the timing of payment of public benefit fees and park in -lieu fees. The DA specifies the term, permitted uses, public benefits fees, park in -lieu fees, dedication of park land and open space. Public benefit fees were required to be paid by Uptown Newport, LP as part of the DA approval, and are accounted for in the Facilities Financing Replacement Fund. 2) The amount of the DA fees: a) Uptown Newport Development Agreement — $34,826 per residential unit for 462 units at the issuance of building permits for construction. Total of $16,089,612 was received in May 2017, of which $15,874,455 has been spent to date to fund various public facilities like Marina Park, Fire Stations, and Junior Lifeguard Station among others. 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. 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: 2 10-10 Uptown Newport development agreement funds are expected to be expended by fiscal year 2021-2022. 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: No interfund transfers or loans were made during the fiscal year. 8) 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. Financial Reports 3 10-11 Uptown Newport Development Agreement FY 2019-2020 Total Project Developer Costs Agreement (FY Only) Funded Revenues: Interest Income $ 57,467 Total Revenues 57,467 Expenditures: - Transfers In/(Out): Misc. FFP Projects (29,149) (29,149) 100.0% Junior Lifeguards (50,000) (100,509) 49.7% Sunset Ridge (3,995) (3,995) 100.0% Total Transfers (83,144) (29,149) Net Change in Fund Balance (25,677) Fund Balance, Beginning 1,741,903 Fund Balance, Ending $ 1,716,226 3 10-11