REPORT TO THE CITY COUNCIL
December 8, 2016
FROM: SCOTT L. MOZIER, PE, Director
Public Works Department
BY: ANDREW J. BENELLI, PE, City Engineer / Assistant Director
Public Works Department
SUBJECT
Title
Actions Pertaining to Development Impact Fees
1. HEARING - Regarding amendment to the City of Fresno’s Master Fee Schedule to increase the existing citywide impact fees for traffic signals, streets, fire facilities, and park facilities
2. Adopt a Finding of Statutory Exemption per staff determination, pursuant to Section 15273 of the California Environmental Quality Act (CEQA) Guidelines for the impact fee update, Environmental Assessment No. EA-16-038 Accept and Adopt the Public Review Draft Nexus Study Reports for the Impact Fee Programs associated with Citywide Regional Streets, New Growth Area Major Streets, Traffic Signals, Police Facilities, Fire Facilities, Park Facilities and Quimby Parkland Dedication Fees; and adopt associated Findings pursuant to the Mitigation Fee Act
3. ***RESOLUTION - 529th Amendment to the Master Fee Schedule Resolution No. 80-420 to increase and decrease various Development Impact Fees
4. ***RESOLUTION - Amending the Implementing Policies for the Citywide Regional Street and New Growth Area Major Street Impact Fees as previously adopted by Resolution No. 2007-291 and as amended by Resolutions No. 2007-347, 2007-348, 2008-278, 2008-349 and 2013-27
5. BILL - (for Introduction) Amending Fresno Municipal Code Section 12-4.705 pertaining to developer dedication and construction of park facilities
Body
RECOMMENDATIONS
1. Staff recommends the Council adopt a Finding of Statutory Exemption pursuant to Section 15273 of the California Environmental Quality Act (CEQA) Guidelines for the impact fee update.
2. Staff recommends the Council accept and adopt the Public Review Draft Nexus Study Reports for the Impact Fee Programs associated with Citywide Regional Streets, New Growth Area Major Streets, Traffic Signals, Police Facilities, Fire Facilities, Park Facilities and Quimby Parkland Dedication Fees; and adopt the associated Findings set forth herein pursuant to the Mitigation Fee Act.
3. Staff recommends the Council adopt the 529th Amendment to the Master Fee Schedule Resolution No. 80-420 to increase and decrease various Development Impact Fees.
4. Adopt a Resolution amending the Implementing Policies for the Citywide Regional Street and New Growth Area Major Street Impact Fees as previously adopted by Resolution No. 2007-291 and as amended by Resolutions No. 2007-347, 2007-348, 2008-278, 2008-349 and 2013-27.
5. Introduce the attached Ordinance amending Fresno Municipal Code Section 12-4.705 pertaining to developer dedications and construction of park facilities.
EXECUTIVE SUMMARY
On October 23, 2014, the Council approved a professional services agreement with Economic & Planning Systems, Inc., to prepare nexus study updates for the City’s development impact fee program. The studies have been completed and several development community stakeholder meetings have been held to discuss the recommended increases and decreases. The Council conducted a workshop on November 3, 2016 regarding the proposed fee updates. Key components of the impact fee updates include a detailed demographic and land use analysis, capital facilities analysis, review of the planned project list and cost estimates, cost allocation associated with impacts generated by various land use types and the final fee calculations. These nexus studies establish the required legal nexus between new development and the proposed fees. The existing impact fee programs covered by the proposed Master Fee Schedule amendment are Major Streets, Traffic Signals, Fire, Police and Park Facilities. Although the City’s proposed Water Capacity Fees are addressed in a separate and related agenda item being considered concurrently by the Council, the fee comparisons for comparable jurisdictions (attached) include the new water fees. Staff recommends that the Council adopt the updated development impact fees and associated environmental findings. The increased and decreased fees will become effective 60 calendar days after Council approval.
The Implementing Policies for the Major Street Impact Fee Program need to be amended to reflect proposed minor changes in the fee program. These changes have been reviewed in detail with the Building Industry Association (BIA) and development community, having come from joint recommendations of staff and private development engineers over the past several years. Council adoption of the resolution will allow the street fee program to cover median island landscaping, trails paralleling major streets, and curb and gutter construction.
The package also includes an amended ordinance for the Citywide Park Facilities Fee to modify how pocket parks are addressed. Lastly the recommended action will delegate authority for the City Manager to administratively adjust these impact fees annually, beginning July 1 of 2018, to incorporate any increases in the industry standard ENR 20-City Construction Cost Index on an annual basis.
BACKGROUND
The current development impact fees for major streets, traffic signals, fire facilities, police facilities and parks were originally adopted between 2004 and 2007. The Citywide impact fees for Fire, Police and Parks have not been adjusted since their original adoption by the Council in September 2005. The major street impact fees were adopted in 2007 with a longer phase-in plan for some land uses; the last adjustment occurred on July 1, 2015. The Citywide Traffic Signal Mitigation Impact Fee was adopted in 2004 and has been reviewed and updated by the Council in January 2006, March 2007 and October 2008. These impact fees all replaced the older Urban Growth Management (UGM) fees which the City had begun implementing in 1976. The dozens of different UGM fees were each limited to small geographic areas, resulting in a more costly and cumbersome administration of the program, as well as a lack of ability to mitigate Citywide impacts from each development.
Each of the impact fee programs (streets, traffic signals, fire, police, parks) serves to mitigate the impacts from new development upon City services. The impact fees charged to any new development represents the development’s proportionate share of the capital cost for new infrastructure and facilities, which in turn provide capacity to serve growth in population and employment. Impact fees do not pay for any ongoing operational or maintenance costs, which are instead funded through either Community Facilities Districts (CFDs) or Homeowners Associations (HOAs). In addition to ensuring that each development pays only its proportionate share of the cost of new facilities, the impact fee programs also serve to facilitate cost-sharing between developers who construct more than their share of new infrastructure and those who benefit from the earlier installation of infrastructure such as streets, bridges, traffic signals, sewer or water facilities. The City has an active developer reimbursement program where the impact fees collected within a specific fee program are utilized every April and October, in accordance with the Fresno Municipal Code, to reimburse developers on a first-in, first-out basis. Developers are reimbursed from impact fee revenue for any eligible costs they have incurred which goes beyond their fee obligation (i.e. proportionate fair-share).
On November 3, 2016, the Council held a workshop regarding the proposed Impact Fee Update. The workshop provided background on existing development impact fees, an overview of the Mitigation Fee Act as contained in Assembly Bill 1600 (AB1600) and the nexus studies prepared by the City’s consultant team. The nexus studies have been shared with the development community in stakeholder meetings and made available through the City Clerk’s web site as indicated in the published notice of public hearing.
NOTICE AND PUBLIC HEARING
Pursuant to the Mitigation Fee Act (specifically, Gov. Code § 66016), the City provided notice of a public hearing regarding the proposed increases to Citywide impact fees, including by publication in The Business Journal on November 21 and 28, 2016, both of which are more than ten days prior to today’s public hearing. In addition, this Staff Report, the proposed Resolution, and attachments were available as part of the City Council meeting Agenda at least 72 hours prior to the meeting in accordance with the Brown Act.
As described in the notice, at least 10 days before the public hearing, the City made available to the public data indicating the amount of cost, or estimated cost, required to provide the service for which the fee or service charge is levied and the revenue sources anticipated to provide the service, including General Fund revenues.
SUMMARY OF CHANGES TO IMPACT FEES PURSUANT TO NEXUS STUDIES
Attached to this report are presentation materials which summarize the proposed increases and decreases by land use types, along with a fee burden comparison for comparable cities. Key components of the impact fee updates include a detailed demographic and land use analysis consistent with the 2035 General Plan Update, capital facilities analysis, review of the planned project list and cost estimates, cost allocation associated with impacts generated by various land use types and the final fee calculations. These nexus studies establish the required legal nexus between new development and the proposed fees. The proposed adjustments in the fees by percentage are summarized below for Streets, Traffic Signals, Fire, Police and Parks:
|
|
Single-Family (Low-Med) |
Multi-Family (Med-High/ High) |
Commercial Retail |
Commercial Office |
Light Industrial |
Heavy Industrial |
|
Street Fee - Infill Area |
(9%) |
(6%) |
(33%) |
(7%) |
+12% |
(2%) |
|
New Growth Area Street Impact Fee |
+5% |
+6% |
(27%) |
(0%) |
+32% |
+15% |
|
Traffic Signals |
+5.8% |
+5.8% |
+5.8% |
+5.8% |
+5.8% |
+5.8% |
|
Fire Facilities |
+41% |
+30% |
+12% |
+29% |
+1% |
+1% |
|
Police Facilities |
(6%) |
(13%) |
(6%) |
(11%) |
(30%) |
(30%) |
|
Park Facilities |
+12% |
+4% |
n/a |
n/a |
n/a |
n/a |
(%) signifies a proposed decrease in the fee.
The consultant has prepared a comparison with comparable cities for total impact fee burdens on various types of new development. For new single-family homes, the updated City of Fresno impact fees would be $24,094 per home in the New Growth Area including the new Water Capacity Fee. This would be $11,341 less per home than the City of Clovis in Area 1 (Shepherd to Herndon, east of Willow). The City of Fresno infill fees per single-family home would be $13,934 per home, which is $3,619 less per home than the City of Clovis in Area 3 (south of Herndon, west of Fowler). The updated single-family residential fees would be 1% lower than the City of Bakersfield’s non-core area, 34% higher than Visalia and 66% lower than Modesto. The graphs for industrial and retail sectors show the City of Fresno growth area fees to be significantly lower than Clovis, Modesto and Visalia, with the infill and Downtown/BRT corridors offering dramatically greater discounts on fees.
The Council has also adopted several development incentive programs which currently serve to further reduce the amount of development impact fees to be paid by certain types of new development. These programs include:
• iDEFER Industrial incentive
• BUILD Act
• Commercial BUILD Act
• Incentive within Economically Disadvantaged Neighborhoods
• Economic Expansion Act
• Businesses Impacted by High-Speed Rail Condemnation
SUMMARY OF NEXUS FINDINGS
After considering the Nexus Studies for the fee updates, the facility standards, the cost of facilities, supporting documents, the 2035 General Plan, all correspondence received and any public testimony received during the public hearing held on December 8, 2016, (“the Record”), the City Council is encouraged to approve and adopt the Public Review Draft of the 2016 Park Impact Fee Nexus Study Update, the 2016 Fresno Major Street Impact Fee Program Nexus Study Update, the Fire and Police Impact Fee Programs Nexus Study Update and the Citywide Traffic Signal Mitigation Impact Fee Nexus Analysis, which are provided as an attachment hereto. In approving and adopting the nexus studies, the Council makes the following findings:
1. PURPOSE OF THE FEES: The Record demonstrates the purposes of the proposed impact fees to be updated. The Fire and Police Fee programs will fund the new fire and police facilities, vehicles and equipment necessary to serve new residential and non-residential development in the City. New development in the City will increase the service population and, therefore, the need for new fire and police capital improvements to adequately serve the new residents and employees. The park fees developed through this Nexus Study would fund the park improvements necessary to serve new residential development in the City, based upon the City’s 2035 General Plan Service Level Goals. New development in the area will increase park users generating the need for new facilities to serve the increased service population.
The purpose of the Major Street Impact Fees and Citywide Traffic Signal Mitigation Impact Fees is to provide a funding mechanism to maintain adequate levels of service on its major street system and to mitigate traffic impacts through the funding of traffic signal improvements that serve new development. The fees fund the construction of new streets and the widening or improving of existing streets. The streets included in the program are expressways, super arterials, arterials and collector streets.
2. USE OF FEES: The Record demonstrates how each proposed fee to be updated will be used.
• Fire and Police fee revenue will be used to construct new development’s proportionate share of fire and police buildings and equipment, as well as to acquire fire and police vehicles and equipment necessitated by new development. It will also be used to plan for and design fire and police facilities and fund the studies and administration needed to support the programs.
• The proposed Park Facilities Fees will be used to develop approximately 121 acres of Community Parks and 296 acres of Neighborhood Parks. The increased service population resulting from new development between 2014 and 2035 is approximately 208,181 for all parks and recreational amenities. In addition, the Park Facilities Fees will be used to repay outstanding debt service attributable to future development resulting from the 2008 Lease Revenue Bond sales, excluding land acquisition costs. The Quimby Land Acquisition Fee component will be used to acquire sufficient park land to maintain the service level of 2.4 acres of neighborhood and community parks per 1,000 residents, by assessing a fee on residential development subject to the Quimby Ordinance. All fee programs, through an administrative fee, will fund the studies and administration to support development of park land and recreational facilities.
• The Major Street Impact Fee Program includes two distinct Street Fees that will be used to fund different street improvements needed to serve new development. The street improvements funded by each fee are detailed in the City’s Street CIP which is included with and attached to the nexus study. The Citywide Regional Street Fee is used to fund larger regional transportation improvements with Citywide use and benefit. The New Growth Area fee is used to fund major roadway improvements located in the New Growth Area and designed primarily to accommodate new development in the New Growth Area. These improvements typically facilitate trips either starting or ending in the New Growth Area.
• The Traffic Signal Fee revenue is used throughout the City to construct new traffic signals at unsignalized intersections, install protected left turn phasing and expand intersections with additional turn lanes to maintain Level of Service per the 2035 General Plan.
3. RELATIONSHIP BETWEEN USE OF FEES AND TYPE OF DEVELOPMENT: The Record demonstrates the direct and cumulative impacts of new development upon existing infrastructure and facilities. The development of new residential and non-residential land uses in the City will generate the need for additional fire and police personnel, facilities, vehicles and equipment.
• The Fire and Police Fee revenue will be used to construct and expand facilities and to acquire vehicles and equipment needed to serve new residents and employees.
• The development of new residential land uses will generate additional demand for park and recreational facilities and the associated need for development of such facilities. The proposed Park Impact Fees will be used to acquire land and to develop neighborhood and community parks at the levels required to meet the demand generated by new development.New residential and non-residential development in the City will result in increased roadway trips on the major streets and additional vehicle movements through major intersections. The Street Fees will be used to complete major street improvements needed to ensure that the greater traffic volume on the City’s street network as caused by new development does not result in unacceptable service levels or increased public safety hazards.
• The Traffic Signal Fees will be used to install traffic signals and modify existing traffic signals to mitigate the traffic impacts from new development and to install traffic signals as new development caused signal warrants to be met.
4. RELATIONSHIP BETWEEN NEED FOR FACILITY AND TYPE OF PROJECT: The Record demonstrates the demand generated by new development for each type of infrastructure or facility.
• Each new residential and non-residential development project will generate additional demand for fire and police services and personnel. Additional personnel will be housed in future fire and police station, requiring support vehicles and equipment to serve additional demand generated by new residents and employees.
• Each new residential development project will generate additional demand for park and recreation services and an associated need for park and recreation facilities. To maintain the City’s Service Level Goals, the City must develop a commensurate number of acres and facilities to serve the population generated by new development, scaled to the number of new residents generated by the typical unit in each residential land use calculation.Each new residential and non-residential development project in the City will add to the incremental need for roadway and signalized intersection capacity, and each new project will benefit from the new street and traffic signal network capacity.
• As projected new development occurs, the major street and traffic signal improvements funded by the Street and Traffic Signal Fees will be needed to ensure that acceptable levels of service and traffic flows are maintained on the City’s street system.
5. RELATIONSHIP BETWEEN AMOUNT OF FEES AND COST OF OR PORTIONS OF FACILITY ATTRIBUTED TO DEVELOPMENT ON WHICH FEE IS IMPOSED: The Record demonstrates the City’s 2035 General Plan and associated MEIR identified improvements necessary to serve new development.
• The costs of fire and police facilities, vehicles and equipment needed to serve new development were split between residential and non-residential uses based on service call activity. Using this split, separate fire and police costs per resident and costs per employee were estimated. These costs were converted to costs per dwelling unit and per thousand square feet of non-residential buildings, using an appropriate common use factor for each land use. For each land use, the base Fire and Police Fees are equal to the allocated cost per dwelling unit or per thousand square feet of non-residential building space.
• The amount of park and recreation facilities needed to meet new resident demand for each residential land use category has been estimated by applying the park cost per user to the appropriate number of persons per household for single-family and multi-family units.
• For each of the two Street Fees and the Traffic Signal Fees, the City’s CIP identifies the transportation improvements necessary to serve new development and estimates the cost of these improvements. The total costs to be funded by new development in the City are allocated to the benefitting land uses using Vehicle Miles Traveled (VMT) per acre factors for the Street Fees, and Average Daily Trip (ADT) factors for the Traffic Signal Fees, to measure each land use’s relative impact on the street system. The VMT factors account for average number of daily trips generated and average trip length. The ADT factors utilize industry-standard trip generation rates from the Institute of Transportation Engineers (ITE) publications. For each land use, the base Citywide Regional and New Growth Fees are equal to the allocated costs per acre of development.
ASSOCIATED CHANGES BEING RECOMMENDED IN THE MAJOR STREET FEE IMPLEMENTING POLICIES AND THE PARK FEE ORDINANCE
As part of the nexus studies and outreach efforts with the development community, staff is bringing forward a recommendation for two policy changes in the fee programs. For the Major Street Impact Fee Program, staff recommends the Council adopt a resolution amending the Implementing Policies for the program. Adoption of the resolution will allow for the expansion of the street fee program to provide fee credits and reimbursement for curb and gutter construction, which was previously considered outside of the fee program and was required as a non-reimbursable exaction from new development. The amended policies also will provide for fee credits and/or reimbursement for median island landscaping, which provides a more equitable approach than fully burdening one developer with the entire median island irrigation and planting treatment. Lastly the amended policies reflect the nexus study which include trails that parallel major streets as a transportation facility eligible under the street fee program, rather than a park facility. The trails paralleling major streets are built in place of the sidewalk that is otherwise required. In discussions with the development community, staff was able to reach consensus with the industry on these recommended changes.
The Park Impact Fee Nexus Study Update achieves the General Plan goal of 3 acres of open space per 1,000 new residents through a combination of impact fees to achieve 2.4 acres of neighborhood and community parks per 1,000 residents; and 0.6 acres of pocket parks to be provided by new residential subdivisions of more than 50 lots, outside of the fee program. The combination of these two components will yield 3 acres of pocket, neighborhood and community parks per 1,000 new residents. In order to implement the 0.6 acres of pocket parks per 1,000 new residents, the City must amend the existing Park Fee Ordinance in Section 12-4.705 of the Fresno Municipal Code to require the dedication of pocket parks to achieve the 0.6 acres per 1,000 residents, or 0.1884 acres per every 100 homes. The open space for pocket parks as required of new subdivisions over 50 lots will receive no credit against Park Facility Impact Fees or Quimby Fees, as the fee revenue will be dedicated to neighborhood and community parks. The draft ordinance requires the pocket parks to be developed with standard frontage improvements including curb, gutter, sidewalk and street lighting, as well as on-site landscaping, irrigation and park benches subject to the approval of the Director of the Parks, After-School, Recreation and Community Services (PARCS) Department. Any additional improvements desired by the City such as tot lots, picnic tables or barbeque pits would be eligible for fee credits or reimbursement through a subdivision agreement or development agreement to be offered by the City. In similar manner, any pocket park acreage the City agrees to accept in excess of the 0.6 acres per 1,000 new residents will be eligible for fee credits or reimbursement, as would any neighborhood or community parks the City agrees to accept from a developer. Any credits or reimbursements shall be included in the subdivision agreement or development agreement.
EXISTING DEBT SERVICE OBLIGATIONS AND EXISTING DEFICIENCIES
The City of Fresno previously issued bonds to finance the construction of various Police, Fire and Parks Facilities. These annual bond debt service obligations have been analyzed in the respective nexus studies to establish the share which can be allocated to future development versus existing development up to this time. The existing bond debt annual payments for Fire and Police facilities are $1.4 million and $1.9 million respectively. The nexus study identifies that the same split is to be utilized as was identified in the original 2005 nexus study, wherein 49% of the cost can be allocated to new development (i.e. Citywide Fire and Police Facilities Impact Fees) and the General Fund shall be utilized for 51% of the cost.
The updated nexus study for the Citywide Park Facilities Impact Fees analyzed the 2008 Parks Lease Revenue Bond Debt Service, which is approximately $2.2 million per year. Based upon the 2035 General Plan, associated land use updates, updated open space policies associated with the General Plan and the facilities previously constructed, the nexus study has determined that future development should be responsible for 51% of the annual debt service payment. Existing development should be responsible for 49% of the annual debt service payment. The 49% figure could be funded by development impact fees collected prior to December 2016 or by the General Fund. The annual cost of the payment to be funded by future development impact fees would be 51% of $2.2 million, with existing development (i.e. previously paid fees or General Fund) responsible for 49% of $2.2 million.
There is no annual debt service on the Major Street or Traffic Signal Impact Fees, due to these programs being “pay as you go” for City capital improvement projects and primarily serving as developer reimbursement programs.
While new development will provide 3 acres per 1,000 residents of new neighborhood, community and pocket parks, the existing population of approximately 515,000 residents has only 1.09 acres per 1,000 residents of neighborhood, community and pocket parks. This represents an existing deficiency of 1.91 acres per 1,000 residents, or 984 acres of park land as described in the 2035 General Plan. Based upon the current estimated cost of an average of $150,000 per acre for land and $450,000 per acre for park improvements, the estimated cost in 2016 dollars to acquire and construct these 984 acres would be $590 million. The development impact fee revenue cannot be utilized to address existing deficiencies. Funding options to work toward address the existing deficiencies of park land would be future State grants, Community Development Block Grant (CDBG) funds, Enhanced Infrastructure Financing Districts (EIFDs), General Fund or a special ballot measure.
ENVIRONMENTAL FINDINGS
Staff has performed a preliminary environmental assessment of the impact fee update and has determined that it falls within the Statutory Exemption set forth in CEQA Guidelines Section 15273, which exempts rates tolls, fares, and charges because the action proposed modifies existing development impact fees. Furthermore, Staff has determined that none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, section 15300.2 apply to this project.
LOCAL PREFERENCE
Not applicable for adjustment of development impact fees.
FISCAL IMPACT
Adoption of the Master Fee Schedule amendment will provide for current impact fees, which will facilitate having adequate debt service coverage and improve the City’s ability to reimburse developers for infrastructure improvements made above and beyond their proportionate fee obligation. Should construction costs continue to increase in their historic patterns, the adjustment clauses built into the Master Fee Schedule will provide for increases in the fees consistent with the industry standard ENR 20-City Construction Cost Index on an annual basis.
Attachments:
- Presentation Materials: Summary of Fee Adjustments, Comparison of Comparable Cities
- CEQA Finding of Statutory Exemption
- 529th Amendment to the Master Fee Schedule
- 2016 Fresno Major Street Impact Fee Program Nexus Study Update
- 2016 Citywide Traffic Signal Mitigation Impact Fee Nexus Analysis
- 2016 Fire and Police Impact Fee Programs Nexus Study Update
- 2016 Park Impact Fee Nexus Study Update
- Resolution - Implementing Policies for the Major Street Impact Fee Program
- Ordinance - Amending Fresno Municipal Code Section 12-4.705