Title
Report regarding a resolution approving the Annual Impact Fee and Sewer Capacity Charge Report for Fiscal Year 2023-24. (Karen Chang, Director of Finance)
label
RECOMMENDATION
Recommendation
It is recommended that the City Council adopt a resolution approving the Annual Impact Fee and Sewer Capacity Charge Report for Fiscal Year 2023-24 and making findings regarding the continuing need for unexpended balances of impact fees as of June 30, 2024 as required by the Mitigation Fee Act.
Body
BACKGROUND/DISCUSSION
Under state law (Government Code Section 66000 et seq.), the City is authorized to collect fees from new development to fund necessary improvements to public facilities to mitigate the impacts of that new development. In Fiscal Year (FY) 2023-24, the City administered 12 distinct impact fees along with one (1) sewer capacity charge. These programs support new development’s share of certain capital infrastructure projects. The impact fees charged are based upon a pro-rata share of estimated costs for necessary public improvements. The sewer capacity charge is a cost recovery charge based on the proportional benefit to the person or property being charged. It is associated with providing collection and treatment capacity through the existing infrastructure available and future capital projects.
Government Code Section 66000 et seq. requires the City to review the status of collected impact fees and sewer capacity charges annually. The impact fee and sewer capacity charge report for fiscal year ending June 30, 2024 (“AB 1600 Report”) is provided as Exhibit A to the resolution associated with this staff report. The table below is a summary of each fund’s ending balances as of June 30, 2024:
|
Fees and Charges |
Area |
Ending Balance |
|
Bicycle and Pedestrian Impact Fee (1) |
Citywide |
$253,176 |
|
Childcare Impact Fee |
Citywide |
15,156,949 |
|
Commercial Linkage Impact Fee (Affordable Housing) |
Citywide |
14,362,362 |
|
Library Impact Fee |
Citywide |
43,938 |
|
Park Construction Fee |
Citywide |
12,022,604 |
|
Park Land Acquisition Fee |
Citywide |
3,120,024 |
|
Public Arts Fee |
Citywide |
462,465 |
|
Public Safety Impact Fee |
Citywide |
2,242,706 |
|
Citywide Transportation Impact Fee |
Citywide |
13,703,614 |
|
Oyster Point Interchange Impact Fee (2) |
Oyster Point |
56,052 |
|
Sewer Impact Fee |
Plan Area |
6,363,070 |
|
Traffic Impact Fee (1) |
East of 101 |
16,119,693 |
|
Sewer Capacity Charges |
Plan Area |
13,607,647 |
|
Total |
|
$97,514,300 |
(1) The fees have been superseded by the Citywide Transportation Impact Fee through Resolution 120-2020 adopted in October 2020. The fees are still in use for projects that received entitlements and are vested prior to November 22, 2020.
(2) The ending balance does not include a loan balance of $1,166,152 from the former Redevelopment Agency, which is now the Successor Agency, for dollars advanced by the former RDA to complete the interchange before all impact fees had been collected.
Aside from fund balances, under the requirements of AB 1600, the Report also needs to show the planned projects for the upcoming fiscal year (FY 2024-25) using the various impact fees or sewer capacity charges. This information can also be found in Exhibit A. The Report was also published on the City’s website on November 26, 2024.
Report’s URL:
<https://www.ssf.net/Departments/Finance/Financial-Reports/Development-Impact-Fee-Report-AB1600>
UNEXPENDED FUND(S) REMAINING FOR MORE THAN FIVE YEARS
One of the provisions in the State law regulating development fees is to regularly review funds collected and held for more than five years and to make certain findings to continue to hold those funds. Given the multi-year nature of the capital projects to be financed, it is expected that funds will be accumulated and used based on the timing of construction. Below are the funds with unexpended collections remaining for more than five years.
|
|
Bicycle & Pedestrian Impact Fee Fund |
Childcare Impact Fee Fund |
Park Construction Fee Fund |
Sewer Impact Fee Fund |
Traffic Impact Fee Fund |
|
Beginning Fund Balance 7/1/2019 |
$51,273 |
$5,536,727 |
$2,116,514 |
$4,436,134 |
$20,593,456 |
|
Total Expenditures |
- |
690,844 |
1,971,714 |
2,357,068 |
16,628,253 |
|
Unexpended Fees Subject to 5-Year limitation at 6/30/24 |
$51,273 |
$4,845,883 |
$144,800 |
$2,079,066 |
$3,965,203 |
Bicycle and Pedestrian Impact Fee Fund (Fund 822)
The unexpended funds are committed to Oyster Point & East Grand Corridor Improvement (tr1602).
Childcare Impact Fee Fund (Fund 830)
The unexpended funds are committed to two projects:
>West Orange Library Preschool Conversion Project (total cost ~$12-$15 million)
The West Orange Library was relocated to the Civic Campus in Fall 2023. The City has set a goal to create 100 new preschool spaces in the former main library building. Remodeling and seismic retrofitting of the existing main library facility into a licensed preschool center is estimated to cost $15 million dollars of which $ 4 million is expected to be funded by Childcare Impact fee.
>Westborough Preschool (budgeted at $9 mil)
The City is constructing a new licensed preschool facility to serve the growing need in the Westborough neighborhood. Childcare Impact Fees would fund the design and construction of a new facility, which the Parks and Recreation Department would operate. Staff is projecting the site would serve 40 children; however, design will confirm the size and scope of the building. This work will be prioritized after the West Orange Library Preschool Conversion Project.
Park Construction Fee Fund (Fund 806)
The unexpended funds of $144,800 are committed to various projects such as Linden Park (pk2305), Orange Park Sports Field Renovation (pk1402) and Sellick Park Renovation (pk1803).
East of 101 Sewer Impact Fee Fund (Fund 810)
The unexpended funds of $2.08 million are committed to Oyster Point Sewer Main Update (ss2401). The project aims at reconstructing the existing sanitary sewer main on Oyster Point Boulevard from Gull Drive to Pump Station #2 at Gateway Boulevard. The Sewer Impact Fee Fund is budgeted to provide $6.1 million for this project.
East of 101 Traffic Impact Fee Fund (Fund 820)
The unexpended funds of $3.96 million are committed to numerous on-going streets and traffic improvement projects, such as US-101 Produce Ave Interchange (tr1404), Oyster Pt & East Grand Corridor Improvement (tr1602) and Utah & Harbor Intersection Improvement (tr2101). The SSF Shoreline Projection & Connectivity (sd2402) is another new project to be funded by East 101 Traffic Impact Fee Fund to determine preventative measures to mitigate risk of coastal flooding from sea level rises in the bay.
FISCAL IMPACT
This informational report is used to satisfy the annual reporting requirements. There is no financial impact related to this report, as impact fee revenues and expenditures have already been approved as part of the City’s budget. Reporting of this information satisfies the regulatory requirements for the City to continue to impose impact fees on new development.
RELATIONSHIP TO STRATEGIC PLAN
Adoption of the resolution supports the City’s strategy on financial stability.
CONCLUSION
The City’s impact fee program has helped fund important City infrastructure to accommodate growth from new development, which ultimately supports the City Council’s efforts to build better neighborhoods that can integrate new development while preserving the City’s existing character. The information contained in this report demonstrates the City’s current use of impact fee funds and the continued need for impact fee funding per the requirements of Government Code Section 66000 et seq.