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HomeMy WebLinkAbout1982-11-09; City Council; 7069-11; Park-In-Lieu fees- 10 - i3-: CIT't 3F CARLSBAD - AGENDA dILL IRB#7&9'// TITLE: MTG. 11/9/82 PARK-IN-LIEU FEES DEPT. CM DEPT. HD. CITY ATTYm CITY MG R.& RECOMMENDED ACTION: Consider asking City Attorney to prepare documents to allow payment of Park-In-Lieu Fees when building permits are taken out. ITEM EXPLANATION: Municipal Code currently requires a developer to pay the Park-In-Lieu Fee at the time the final subdivision map goes to Council for approval. Because of the high rate of interest, many builders have objected to paying at that early time. To save carrying costs, builders have asked that payment be made when a building permit is taken out. Other fees such as public facilities, sewer, plan checking drainage are levied at the time the building permit is taken out. There are various considerations which have been raised by staff on whether or not the City should collect the fee with building permits or at an earlier time. A key concern seems to be that a lot purchaser would not be aware that a Park-In-Lieu Fee would have to be paid with a building permit. If the Council feels that some type of warning or guarantee needs to be provided, there are several options that can be discussed by the City Attorney and the Director of Building and Planning. Attached are copies of staff responses on this proposal. FISCAL IMPACT: The City would lose some interest earnings on the funds. it is about 6 - 12 months between recording the Final Map and taking out building permits. The proposed change would reduce the cost of construction by a small amount. Usually, EXHIBITS : 1. Two memo's from Assistant City Manager/Developmental Services 2. Memo from Finance Director dated November 1, 1982. 3. 4. Letter from Davidson Company dated October 12, 1982. dated October 25, 1982. Memo from Parks and Recreation Director dated October 25, 1982. I .- OCTOBER 25, 1982 TO: CITY MANAGER FROM: Assistant City Manager/Developmental Services PARK-IN-LIEU AND GRADING BOND DEFERRAL The attached letter from the Davidson Company requests they be allowed to defer payment of their park-in-lieu fees until construction commences and that they not be required to post a grading bond until issuance of a grading permit . Deferral of park fees, as a matter of general city policy, is the subject of a separate memo. Pending modification of city policy, the Davidson Company could defer paying their fees now by including the condition of future payment prior to issuance of building permits as part of their subdivision agreement. The amount of their park fees would have to be guaranteed by a surety bond or some other suitable form of security. Based on the wording in your October 13 memo attached to Mr. Davidson's letter, I will instruct the city engineer to proceed to modify the developer's agreement and bonding requirements to allow the deferral of payment of park fees. Grading regulations (Chapter 11.06, Carlsbad Municipal Code) require that a grading bond be posted prior to issuance of a grading permit. There is no requirement that it be posted prior to recording of the final map. have discussed this issue with the city engineer. complying with our code; i.e., waiting for grading bond until the grading permit is issued. He will contact Mr. Davidson and so inform him. I He sees no problem in - RONALD A. BECKMAN RAB:pab Attachments c: City Engineer w/attachments 3 OCTOBER 25, 1982 TO: CITY KANAGER FROM: Assistant City Manager/Developmental Services PARK-IN-LIEU FEES In response to your request for review and comment of the draft park-in-lieu fee agenda bill, I offer the following. State law does not require the collection of park-in-lieu fees. a permissive one, allowing cities to collect the fees as part of the sub- division map approval process. It is our own ordinances that require the collection of park-in-lieu fee as a condition of approval for a tentative map. Since all conditions of a tentative map must be met prior to the map finaling, our custom has been to require the payment of park-in-lieu fees. We can, by modification of our own policies, change that. can sign a subdivision agreement obligatinq payment of park-in-lieu fees at the time building permits are issued. such as a surety bond. The law is The developer This must be backed by a security, Another alternative, though not a recommended one, could be the elimination of park-in-lieu fees and the collection of an additional amount as a business license tax based upon the value of the building permit (this is the process the city attorney is proposing as part of the public facility fee.) This method has its problems in that it does not have the authority of a state law specifically authorizing it (Quimby Act, Subidivision Map Act.) Furthermore, if collected as a business license tax it would count against our Proposition 4 tax revenue limitation amount. The park-in-lieu fee, as presently adthorized by state law, requires! that the improvements for which the fees will be spent must be scheduled and the fees used within a five-year period from the time the requirement is leveled. us problems with park project scheduling and revenue allocation. Therefore, any delay in the collection of the fee could cause As you pointed out in your draft agenda bill, a fiscal impact will be the loss of interest earned on park-in-lieu fees paid at the time the sub- division is finaled. This has the potential of impacting our future maintenance and operations budget in that interest on park-in-1 ieu fees can legitimately be spent on operational expenses for parks. klhile this is not critical now, it may be in future years when we get a much larger parks system which will be in more competition for limited operational funds . One of the biggest problems with delaying collection of park-in-lieu fees would relate to those projects where the developer does not propose to build the actual development but sell an approved subdivision, or portions of it, to somebody else. The purchaser of the land or project may not be fully aware that the sales price is not the full burden being assumed and that park-in-lieu fees must be paid at the time building permits are issued. This could become particularly acute if the proposed project is a land sales project. In this instance individual lots would be sold at whatever City Manager -2- October 25, 1982 the market would bear -- a private individual might buy the lot at the same price that another lot might be purchased for, but the lot in question would, in addition, require the purchaser to pay park-in-lieu fees. in park-in-1 ieu payments could be given a potential "windfall profit" and an unfair advantage over those developers who had paid their park-in-lieu fees. A way of dealing with this could be to: 1) put a note on the subdivision map that park-in-lieu fees are due and payable on issuance of building permits; 2) impose an escrow process wherein title to the lots could not be transferred until park-in-lieu fees have been paid; or, 3) the city could take a second trust deed on the land and not release the deed until fees are paid. The holding of the second trust deed would give us a point of legal leverage in collecting the fees when property transfer occurs. In other words, the person who would take advantage of the delay The last problem that occurs to me is that a delay in payment of park-in-1 ieu fees will create an additional administrative procedure, resulting in slowing down the permit approval process. Each and every application for a building permit will need to be carefully checked to insure that park-in-lieu fees have been paid, or to determine the amount due, if payable. This will also increase the probability that errors will be made and fees missed. Completion and implementation of computer assisted parcel file tracking system will go a long way to alleviating this potential problem. RONALD A. BECKMAN RAB:pab c: City Engineer Building & Planning Director Parks & Recreation Director Finance Director d MEMORANDUM TO: City Manager Assistant City Manager-Development Parks and Recreation Director FROM: Finance Director RE: Proposed Park-In-Lieu Fees Revision DATE: November 1, 1982 In response to the proposed revision of the Park-In-Lieu Ordinance, I have the following comments: 1. There is, in effect, very little difference between the park-in- lieu fees and the public facilities' fees collected by the city. Public facilities'fees are deferred to the time of building permit issue through the signing and recording of an agreement between the owner and/or developer. This agreement binds the owner/developer to pay the city all public facilities'fees upon issuance of a building permit. A similar proceduxe could be used for park-in-lieu fees. An agreement similar to the public facilities' fees agreement, or an additional paragraph or paragraphs within the public facilities'fees agreement could suffice. The city could accept a second trust deed on the property or accept the assignment of other security as a guarantee of compliance. 2. Mr. Beckman suggested that the fee could be collected as an additional business license fee. I recornend against this procedure. Here are a few reasons why I feel this would not be effective: o There is better control at the building permit level. We presently lack license enforcement capabilities to insure compliance. o According to Mr. Beckman, the assessment of this fee as a business license fee would require deposit'of these funds in the general fund. Although I do not totally agree with this, if this were to occur, we loose the defense of the fee under the Quimby Act. o The Quimby Act specifically allows the assessment of the park o The development processing "folks" are more likely to have access fees. Why not use that authority? to files involving the amount of fee due at permit time. 3. Revenue loss due to decreased interest income will be minor but should be noted. At an annual income of about $300,000 per year from PIL fees, if all projects are delayed 6 months for approval to building permit, interest loss would amount to about $15,000 per year. This interest is used to finance operations not additional capital operations. I do not feel this should be a key point in the decision. .. - .- Proposed Park-In-Lieu Fee Revision November 1, 1982 Page 2 4. Mr. Beckman also states that delaying park-in-lieu payments will slow development processing. intimately involved in the development process, is that this should not be any more difficult than the PFF process. My opinion, offered as one who is not I would recommend that we defer the collection of PIL fees,providedwe can create a reasonably simple monitoring process. JE:dm OCTOBER 25, 1982 TO: CITY MANAGER FROM: Parks 8 Recreation Director COLLECTING P.I.L. FEES AT BUILDING PERMIT STAGE RATHER THAN AT FINAL MAP STAGE Land or in lieu of land,fees are collected at the final map stage so that cities can, in a timely fashion, plan and schedule the parks development program. Collecting land or in lieu of land, fees at the building permit stage may well extend the park development schedule. Recommendation Collect fees or land at final map stage. A1 ternatives 1. For developers, take out a trust deed paying interest only up front with the P.I.L. fee due and payable at the building permit stage. 2. Require residential developments larger tha Developments sma at the master plan stage. fees at the building permit stage. Di scuss 1 on Collecting fees or in lieu of fees, land at bui the following: 1. Extend the planned park development schedule 200 acres to dedicate land ler than 200 acres dedicate ding permit stage may cause 2. If City revises the P.I.L. fees in mid-stream, it may cause problems down the line when the landowner sells the property to different builders. (An example would be the Calavera Hills park land issue.) This also may cause developers to complain to Council regarding the increased fees. 3. The P.I.L. fees are computed at the raw land value. building permit stage, we should compute the fees at the developed land value. If we collect at the 4. The City may lose some interest earnings. 5. Traditionally, cities throughout California collect at final map stage. %23 DAVID BRADSTREET DB:jm TH€ DRVlDSON COMPRNY October 12, 1982 9555 Genesee Avenue San Diego, California 92121 (71 4) 450-1 999 Mr. Frank Aleshire City Manager City of Carlsbad 1200 Elm Avenue Carlsbad, California 92008 RE: ALICANTE HILLS (CT 81.29) 38-Unit PUD Dear Mr. Aleshire, Thank you for our meeting and discussing the financial difficulties in processing our Final Map with The City of Carlsbad. economy I am requesting the City re-adjust the timing of collection of certain fees and bonds. As we discussed, because of the slow In order to finalize our map, a $33,440 Park-In-Lieu fee must be paid. to pay that fee at a point in which I secure a construction loan to build the 38-unit PUD. Grading Permit which, because of the economy might not be until 1984. That bond at Final Map will cost $7,510 per year and has to be passed on to future home buyers. That $7,510 represents just the bonding fee, payable to a bonding company, not The City of Carlsbad. I would like I am also requesting that I not have to bond for the grading until I request a My agreement with Daon Corp., is that I process the Final Map within this year, so I am requesting the City's help in the finalizing of the map. In reality, I won't start building the project until the 3rd quarter of 1983, depending on the economy. Thank you again for meeting with me and I hope that this request can be granted so I might continue my processing. call me. If you have any questions please do not hesitate to Very truly yours, T E DAVIDS COMPANY, INC. kJ&b/& William A. Davidson President WAD/j ml cc : Mary Casler-Mayor Claude A. Lewis-Vice Mayor Girard W. Anear-Council Ann Kulchin-Council Richard Chick-Council Bob Stockton-Rick Engineering