HomeMy WebLinkAbout20 - Annual Reports on Development Impact Fees and Development AgreementsQ SEW Pp�T
CITY OF
z NEWPORT BEACH
c�<,FORN'P City Council Staff Report
November 19, 2024
Agenda Item No. 20
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Jason AI -Imam, Finance Director/Treasurer - 949-644-3126,
jalimam@newportbeachca.gov
PREPARED BY: Trevor Power, Accounting Manager - 949-644-3125,
tpower@newportbeachca.gov
TITLE: Annual Reports on Development Impact Fees and Development
Agreements
ABSTRACT:
Pursuant to the Mitigation Fee Act (Government Code Section 66000, et seq.), the City
of Newport Beach 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.
RECOMMENDATIONS:
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 and
development agreements.
DISCUSSION:
The Mitigation Fee Act (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.
Although the Act does not apply to development agreements, the reporting requirements
on both the development impact fees and development agreements are the same and fall
under California Government Code Section 66006.
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Annual Reports on Development Impact Fees and Development Agreements
November 19, 2024
Page 2
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, 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 interfund 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. These findings must identify the purpose to which the fee is to be put,
demonstrate a reasonable relationship between the fee and the purpose for which it is
charged, identify all sources and amounts of funding anticipated to be utilized to complete
incomplete improvements, and designate the approximate dates on which the anticipated
funding is expected to be received. A five-year report is not required at this time.
The only fees collected by the City that are subject to the Act are the Fair Share Fees
collected from developers for transportation improvements, which are an Orange County
Transportation Authority requirement to participate in the Measure M2 funding program.
Relative to these fees, the City is in conformance with the Act and is not subject to any
refunding requirements. Regarding development agreements, the City has one reportable
Development Agreement, the 20 Corporate Plaza Development Agreement. The first
deposit for the 20 Corporate Plaza Development Agreement was received during Fiscal
Year 2023-24 and no balance remained at the end of Fiscal Year 2023-24.
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.
FISCAL IMPACT:
Compliance with the Act is required to avoid the possibility of a requirement to refund fees
paid by developers.
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).
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Annual Reports on Development Impact Fees and Development Agreements
November 19, 2024
Page 3
ATTACHMENTS:
Attachment A — Development Impact Fee Report Fiscal Year 2023-24
Attachment B — Development Agreements Report Fiscal Year 2023-24
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Attachment A
City of Newport Beach Development Impact Fee Report Fiscal Year 2023-24
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City of Newport Beach
Development Impact Fee Report
Fiscal Year 2023-24
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., (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 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 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, interest earned, expenditures
by type, a description of interfund transfers or loans, and the amount of any refunds made.
The Act also requires that in the fifth fiscal year following the first receipt of a development
impact fee and at least every five years thereafter the City must make certain findings with
respect to any portion of the fee remaining unexpended, whether committed or uncommitted.
These findings must identify the purpose to which the fee is to be put, demonstrate a reasonable
relationship between the fee and the purpose for which it is charged, identify all sources and
amounts of funding anticipated to be utilized to complete incomplete improvements, and
provide the approximate dates on which the anticipated funding is expected to be received.
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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.
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 $261.30 per trip for Fiscal Year 2023-24.
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:
The public improvements listed in the attached Financial Report were completed
in Fiscal Year 2023-24. A future project related to traffic signal synchronization is
expected to commence in Fiscal Year 2024-25.
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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.
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
Fiscal Year 2023-24
Total Project
Costs
(FY Only)
Revenues:
Fair Share Fees $ 299,476
Investment Income 35,196
Net decrease in fair value of investments* 23,346
Total Revenues 358,018
Expenditures:
Capital Improvement Projects
Lower Sunset View Park (15T09) - Pedestrian/Bicycle Bridge (1,093,629) (7,218,549)
Net Change in Fund Balance (735,611)
Fund Balance, Beginning $1,653,760
Fund Balance, Ending $ 918,149
o�
Fair Share
Funded
15%
*Financial Reporting standards require the City's investments to be reported at fairvalue. As such, the City allocates to this
fund the fair value fluctuations due to the changing interest rate environment.
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Attachment B
City of Newport Beach Development Agreements Report Fiscal Year 2023-24
K:
City of Newport Beach
Development Agreements Report
Fiscal Year 2023-24
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 15 days after the report
is made available to the public. The meeting before the City Council must be held within 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.
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Annual Report
To comply with Government Code §66006, the following information regarding Development
Agreement (DA) Fees is presented:
1) A brief description of the type of public benefit fee in the account or fund:
a) 20 Corporate Plaza Development Agreement — On February 13, 2024 the City
Council adopted Ordinance No. 2024-3 approving the Development Agreement to
convert a portion of a subterranean parking garage into a 5,081-square-foot
medical office and make other improvements including reconfiguration of the
property to accommodate an office entrance from both ground level and parking
garage level, widening the driveway access ramp, and restriping the parking
garage. Public benefit fees were required to be paid by Baldwin Bone Properties,
LLC as part of the DA approval, and are accounted for in the Facilities Financial
Planning Fund.
2) The amount of the DA fees:
a) 20 Corporate Plaza Development Agreement — $37,954 after the issuance of the
project's first building permit.
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:
The commitment and use of funding received from development agreements are
analyzed annually and are utilized in conformance with the long-term Facilities
Financial Plan. Multiple projects on the Facilities Financial Plan are expected to
commence over the next few fiscal years.
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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:
See attached Financial Report for interfund transfers. No 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 Report
20 Corporate Plaza Development Agreement
Fiscal Year 2023-24
Revenues:
Developer Fees
Interest Income
Net decrease in fair value of investments*
Total Revenues
Expenditures:
$ 37,954
58
38
38,050
o�
Total Project Developer
Costs Agreement
(FY Only) Funded
Transfers In/(Out):
Miscellaneous Facilities - City Yard Fueling Station (38,050) (4,940,281)
Total Transfers (38,050) (4,940,281)
Net Change in Fund Balance -
Fund Balance, Beginning -
Fund Balance, Ending $ -
*Fin anci a I Reporting standards require the Ci ty's investments to be reported at fair va I ue. As such, the City
allocates to this fund the fair value fluctuations due to the changing interest rate environment.
C
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