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HomeMy WebLinkAbout09 - Annual Reporting on Development Impact Fees and Development AgreementsTO: FROM CITY OF NEWPORT BEACH City Council Staff Report December 11, 2018 Agenda Item No. 9 HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL 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 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 and file the Annual Reports on Development Impact Fees and 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 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. 9-1 Annual Reporting on Development Impact Fees and Development Agreements December 11, 2018 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 for traffic mitigation 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, as a result, the City has nothing to report under the five-year reporting requirement. On March 26, 2013, Council adopted Policy 1-13, which established a funding source for and the creation of the Public Arts and Cultural Facilities Fund. Two percent of all public benefit fees received pursuant to future Development Agreements would be transferred to this fund, for the acquisition, installation and maintenance of art structures in public places throughout the City. On August 8, 2017, the City Council approved Resolution No. 2017-55 which rescinded Policy 1-13. The attached report covers the period of financial activity from July 1, 2017 through June 30, 2018. On September 12, 2017, the City Council authorized the transfer of the total remaining balance of funds in the Public Arts and Cultural Fund to the Fire Station capital improvement fund. The Public Arts and Cultural Fund is currently no longer active. 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. 9-2 Annual Reporting on Development Impact Fees and Development Agreements December 11, 2018 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 2017-2018 Attachment B — City of Newport Beach 2017-2018 Development Impact Fee Report Fiscal Year Development Agreements Report Fiscal Year 9-3 Attachment A City of Newport Beach Development Impact Fee Report Fiscal Year 2017-2018 City of Newport Beach Development Impact Fee Report Fiscal Year 2017-2018 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, public art -in -lieu fees and park -in -lieu fees. 1 9-5 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 $208.37 per trip for Fiscal Year 2017-2018. 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: Fiscal Year 2017-2018 public improvement projects are underway and expected to be completed in 2019. 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 2 WO 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 or any allocation made pursuant to subdivision (f) of Section 66001: No refunds were made during the fiscal year. Financial Report Fair Share Revenues, Expenditures & Changes in Fund Balance FY 2017-2018 Revenues: Fair Share Fees Investment Income Total Revenues Expenditures: Capital Improvement Projects Newport Blvd. Traffic Signal Synchronization (15T08) Traffic Signal Modernization Phase 6 (15T10) Corona del Mar Bypass Plan Studies (16T11) Total Expenditures Net Change in Fund Balance Fund Balance, Beginning Fund Balance, Ending Description of Projects Total Project Costs (FY Only) $ 179,273 o� Fair Share Funded $ (13,935) (34,055) 40.9% (14,898) (26,535) 56.1% (16.580) (16.580) 100.0% 143,400 F 4 - An Newport Boulevard Traffic Signal Synchronization (Project 15T08) This project enhances traffic signal coordination and reduces travel -time delay on Newport Boulevard and Balboa Boulevard with upgrades to traffic signal control hardware at eight 3 9-7 intersections as well as improved traffic signal timing, fiber optic gaps, and a real-time traffic response system. Traffic Signal Modernization Phase 6 (Project 1ST10) Traffic Signal Modernization is a multi-year, multi -phased program to update the City's traffic signal system. Phase 6 includes installation of new hardware, fiber optic cable upgrades, and CCTV cameras to intersections along San Joaquin Hills Road and Newport Coast Drive. Corona del Mar (CDM) Bypass Plan Studies (Project 16T11) This project studies traffic patterns and routes around Corona del Mar to reduce congestion on East Coast Highway. The study also reviews infrastructure and tolling information on SR73 to encourage alternate routes around Corona del Mar. 4 .; Attachment B City of Newport Beach Development Agreements Report Fiscal Year 2017-2018 City of Newport Beach Development Agreements Report Fiscal Year 2017-2018 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. 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 were originally established to provide for the acquisition and maintenance of permanent art structures and installations as identified in the Newport Beach Master Arts and Culture Plan. On August 8, 2017, the City Council approved Resolution No. 2017-55 which deleted, among others, Policy 1-13. The attached report covers the period of financial activity from July 1, 2017 through June 30, 2018. On September 12, 2017, the City Council authorized the transfer of the total remaining balance of funds in the Public Arts and Cultural Fund to the Facilities Financing Plan Fund. The Public Arts and Cultural Fund is currently no longer active. 1 9-10 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. 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. Two percent of this, $321,792, was transferred to the Public Arts and Cultural Facilities Fund. 3) The Beginning and Ending balance of individual DAs: See attached Financial Report. 2 9-11 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: Uptown Newport development agreement funds are expected to be expended by 2019. The portion of funds transferred to the Public Art and Cultural Facilities Funds was expended in 2018. 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. 3 9-12 Financial Reports Uptown Newport Development Agreement FY 2017-18 Total Project Developer Costs Agreement (FY Only) Funded Revenues: Developer Fees $ - Interest Income 39,004 Total Revenues 39,004 Expenditures: $ - Transfers In/(Out): Transfer In - Marina Park Fund $ 1,347,067 Transfer Out - Fire Stations Fund (3,684,830) (6,435,092) 57.3% Transfer Out - Parks and Community Centers Fund (200,000) (199,993) 100.0% Total Transfers (2,537,764) (6,635,085) Net Change in Fund Balance (2,498,760) Fund Balance, Beginning 9,846,892 Fund Balance, Ending $ 7,348,132 Fiscal year 2016-17 expenditures for Marina Park came in under budget. This was transferred out to the Fire Station project. 4 9-13 New Home Company Development Agreement FY 2017-18 Total Project Developer Costs Agreement (FY Only) Funded Revenues: Developer Fees $ - Interest Income - Total Revenues - Expenditures: $ - Transfers In/(Out): Transfer In - Lifeguard Headquarters Fund $ 17,776 Transfer Out - Fire Stations Fund (17,776) (6,435,092) 0.3% Total Transfers - (6,435,092) Net Change in Fund Balance - Fund Balance, Beginning - Fund Balance, Ending $ - In fiscal year 2015-16 the Facilities Financing Plan Fund transferred $138,585 to the Lifeguard Headquarters project. Fiscal year 2015-16 expenditures in the Lifeguard Headquarters project came in under budget. In fiscal year 2017-18 this was transferred out for the Fire Station project. 5 9-14 Public Arts And Cultural Facilities FY 2017-18 Revenues: Developer Fees $ - Interest Income - Total Revenues - Expenditures: $ - Transfers In/(Out): Transfer Out - Fire Stations Fund $ (804,578) Total Transfers (804,578) Net Change in Fund Balance (804,578) Fund Balance, Beginning 804,578 Fund Balance, Ending $ - On September 12, 2017, the City Council authorized the transfer of the total remaining balance of funds in the Public Arts and Cultural Fund to the Fire Station Fund per the Facilities Financing Plan. These funds will be used in part for the purchase of land to build the new Lido Fire Station 2. The Public Arts and Cultural Fund is currently no longer active. 0 9-15