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HomeMy WebLinkAbout2012-09-11; City Council; 21006; Impact Fee Deferral ReportCITY OF CARLSBAD - AGENDA BILL 8 AB# 21.006 DEVELOPMENT IMPACT FEE DEFERRAL REPORT DEPT. DIRECTOR ^— MTG. 9/11/12 DEVELOPMENT IMPACT FEE DEFERRAL REPORT CITY ATTORNEY K<, DEPT. CED DEVELOPMENT IMPACT FEE DEFERRAL REPORT CITY MANAGER kA-^ RECOMMENDED ACTION: Receive the report regarding the deferral of development impact fees and direct the city attorney to return with implementing documents. ITEM EXPLANATION: Development impact fees are imposed by the City on new development for the purpose of funding the construction of various public facilities. Fees are required by ordinances, resolutions, or policies of the City Council. They are generally collected at the time of final map recordation, grading permit issuance, or building permit issuance for all development projects. The Building Industry Association of San Diego (BIA) has requested that the City consider developing and implementing a development impact fee deferral program to assist new construction and to encourage economic development during the current economic climate. At the May 15, 2012 City Council workshop, staff provided information in the form of a detailed memorandum relative to the issues associated with the proposed development impact fee deferral program (Exhibit 1). The memorandum included an overview of the BlA's request, a description of the types of development impact fees typically paid in Carlsbad, an overview of the state law regulating development impact fees, an overview of the programs other San Diego County cities have implemented, and an analysis of the pros and cons of implementing a deferral program in Carlsbad. Information was also provided by the BIA and its staff. Additionally, other members of the development community provided additional comments. At the workshop, staff was directed to return to the City Council with a recommendation on which development impact fees couid reasonably be considered for deferral and, after input from the City Council on that issue, to develop ordinance amendments for future City Council consideration that would allow for the deferral of the recommended development impact fees. It is important to note that the contemplated development impact fee deferral program represents a significant departure from long-established policy and practice of the city. Since the adoption of the city's Growth Management Program in 1986, it has been the standard practice of the city to require that adequate public facilities, sen/ices, and improvements meeting city standards are available concurrently with the need created by new development. To guarantee that this standard is met, current city ordinances require that all development impact fees be paid prior to issuance of a building permit. This helps ensure that adequate funds will be available to construct needed public facilities, services, and improvements in a timely manner concurrent with the need created by new development. In addition, implementation of a new development impact fee deferral program will require significant staff resources and time to complete the necessary amendments to city ordinances, implement changes to the city's permit tracking computer software to accommodate the new fee program, changes to standard staff operating procedures, and re-training of appropriate development counter staff. DEPARTMENT CONTACT: Mike Peterson 760-602-2721 mike.peterson(a>carlsbadca.gov FOR CITY CLERKS USE ONLY. COUNCIL ACTION: APPROVED • DENIED • CONTINUED • WITHDRAWN • AMENDED • CONTINUED TO DATE SPECIFIC CONTINUED TO DATE UNKNOWN RETURNED TO STAFF OTHER-SEE MINUTES COUNCIL RECEIVED THE REPORT/PRESENTATON • _ • • • Council also directed the City Attomey to return with implementing documents Page 2 As directed by City Council at their May 2012 workshop, staff has compiled the list of development impact fees and has identified which of these impact fees might be appropriate for deferral consideration (Exhibit 2). The development impact fees recommended for deferral consideration have been identified as such as the impact which the particular fee is intended to mitigate does not generally occur until the construction is actually completed. Staff is recommending that the City Council consider deferring the following development impact fees: Park In Lieu - Utilized for the development and construction of new or the rehabilitation of existing public park and recreational facilities. Local Facilities Management Plan - Utilized for the construction of improvements or facilities identified in a local facilities management plan and which are not otherwise financed by any other fee. Traffic Impact - Utilized to construct or finance various circulation road improvements. Master Drainage (PLDA) - Utilized for constructing planned local drainage facilities. Sewer Connection - Utilized for the construction of improvements to the sewer system. Sewer Capacity & Benefit Area - Utilized for the construction of improvements to the sewer system. Housing Impact & In Lieu - Utilized for the affordable housing needs of lower-income households. In addition to the development impact fees recommended for deferral consideration, staff has also identified some key elements that staff would recommend be included as part of the fee deferral program that staff will bring forward for City Council consideration at a later date. The proposed ordinance amendments would allow a developer the option to defer specific identified development impact fees from the final map recordation, grading permit issuance, or building permit issuance stage, to the request for final building inspection stage. The development impact fee deferral program would only be available to the following types of projects and under the following conditions: • Residential projects of five or more dwelling units. • New commercial, office, or industrial buildings or building additions (but not Tl's). • All deferred fees shall be paid prior to requesting a final inspection for each individual building permit. • Fees shall be calculated and paid at an amount based on the City Council adopted fee schedule in effect at the time of requesting a final inspection. • This development impact fee deferral program would sunset two years from the effective date of the new ordinances, unless extended by action of the City Council. • Would apply only to the development impact fees recommended. FISCAL IMPACT: Implementation of the contemplated development impact fee deferral program will delay the actual collection of fees which could impact the city's ability to ensure that adequate funds will be available to construct needed public facilities, services, and improvements in a timely manner concurrent with the need created by new development. Additional costs will also be incurred relative to completing amendments to city ordinances, implementing changes to the city's permit tracking computer software, changes to standard staff operating procedures, and re-training of appropriate development counter staff. These additional costs cannot be estimated at this time. Page 3 ENVIRONMENTAL IMPACT: Pursuant to Public Resources Code section 21065, this action does not constitute a "project" within the meaning of CEQA in that it has no potential to cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and therefore does not require environmental review. EXHIBITS: 1. BIA Request to Defer Impact Fees Memo 2. City of Carlsbad Development Impact Fee List 3 <^0^ CITY OF ^ CARLSBAD EXHIBIT 1 Memorandum March 7, 2012 To: Lisa Hildabrand, City Manager From: Gary T. Barberio, Community and Economic Development Directorf Re: BIA REQUEST TO DEFER IMPACT FEES Overview. The Building Industry Association (BIA) has requested local governments across California consider measures it believes will stimulate construction activity. Among these measures is the deferral of payment of development impact fees for both residential and non- residential projects. In Carlsbad and many cities, impact fees are generally paid before a final map is recorded or a building permit is Issued. These fees are used to cover the cost that growth will have on public infrastructure. In the attached August 2009 position paper, "Making the Case for Development Impact Fee Deferrals/' the BIA recommends that jurisdictions, instead of collecting fees prior to final map recordation or permit issuance, delay collection until the end of construction. This means fees would be collected before final inspection or certificate of occupancy. Doing so, the BIA notes, allows builders to eliminate financing the impact fees and avoid paying interest while building is underway, which in turn would help stimulate the economy and create jobs. Depending on a project's size and complexity, the impact fees charged can range from several thousand to hundreds of thousands of dollars and the deferral period (length of construction) can vary from several months to well over a year. This memo considers the development impact fees Carlsbad charges and how and when it requires and collects them. Along with examples of fees collected for different projects, the memo reports lengths of time fee payment would be delayed if collection were changed from final map or building permit issuance to final inspection. Also provided are the relevant sections of state law and other cities' experiences with deferring fees. Finally, the memo concludes with a recommendation. In addition to the BIA position paper, attachments include (1) a detailed breakdown of development impact fees for a variety of projects, (2) a bullet point list of points and counterpoints summarizing the merits of deferring Impact fees or maintaining the current fee collection system, and (3) a former City of Vista council policy adopted to stimulate commercial development. Types of Fees Carisbad Developers Pay. Fees charged developers may be separated into the following three categories: o Development-related service fees are charged to recover the cost of staff time and materials spent reviewing applications, performing inspections, etc. Community & Economic Development 1635 Faraday Ave. I Carlsbad, CA 92008 760-602-2710 760-602-8560 fax City Manager March 7, 2012 BIA Request to Defer Impact Fees Page 2 o Miscellaneous fees include state-mandated fees, "pass-throughs" (e.g., fees collected by the city on behalf of another agency), and costs related to the purchase of equipment installed during construction, such as water meters. o Development impact fees are payments made to cover the cost of mitigating the impacts that growth will have on city infrastructure. Only development impact fees, the third fee category, are the subject of BlA's request. Development impact fees are defined and identified in the city's Master Fee Schedule, the latest of which was adopted with the FY 2011-12 Budget. Carlsbad's development impact fees, per the Schedule, are listed below. Table 1 - Development Impact Fees • Assessment District • Bridge and Thoroughfare District • Community Facilities District • Habitat In Lieu Mitigation • License Tax on New Construction • Local Facilities Management Plan (LFMP) • Master drainage ("PLDA") • Park (per LFMP) • Quimby Act ("Park In Lieu") • Public Facilities • Sewer Benefit Area • Traffic Impact/Sidewalk • Water, reclaimed water, and sewer connection Other fees not identified in the Master Fee Schedule as development impact fees could also be considered for deferment. These include affordable housing fees (impact, in lieu, and credits), and agricultural conversion mitigation fees, both of which are paid before maps are recorded or permits are issued. Fees collected to offset habitat loses include the Habitat In Lieu Mitigation fee listed in Table 1. Developers may also need to establish endowments for management and maintenance of habitat they need to preserve. Staff believes it is critical these fees and costs remain developer obligations to satisfy before a final map is recorded or a grading permit is issued. To do so otherwise would create CEQA and HMP/lmplementation Agreement compliance issues. Fee Amounts Carlsbad Developers Pay. Development impact fees vary due to project location, land use, valuation, and other particulars. Further, not all impact fees are paid by all projects. For example, while many projects pay Traffic Impact fees and sewer and water connection fees, many do not pay fees related to Bridge and Thoroughfare Districts or Park In Lieu because of their location or type of construction. The variable nature of impact fees, in combination with less robust construction activity over the past several years, makes identifying a representative average fee difficult. However, the following table shows ranges of development impact fees paid at building permit issuance for City Manager March 7, 2012 BIA Request to Defer Impact Fees Page 3 three types of construction in Carlsbad. Only the fees listed jn Table 1 above are reflected; more details can be found In Attachment 1. Table 2 - Range of Development Impact Fees Paid Type of Development Projects Surveyed Year Building Permit Issued Range of Development Impact Fees Paid Single family home 4 2010 $20,143-$38,860 Commercial building 4 2010, 2011 $17,022 - $1,306,286 Industrial building 3 2009, 2010 $54,609 - $566,838 Application of Fees and Timing of Fee Collection. Development impact and other fees are applied as conditions of approval to discretionary actions (e.g., the approval ofthe Hilton Hotel) or ministerial permits (e.g., a building permit for a single family home). The City currently requires payment of development impact fees before the recordation of a final map (necessary before grading permits are issued) or the issuance of a building permit. Payment of fees by these milestones is generally mandated by ordinance. Whether these fees are paid prior to recording ofthe final map or issuance ofthe building permit is explained below: Table 3 - Timing of Fee Collection Fees Paid before Final Map Recordation Fees Paid before Building Permit Issuance • Park In Lieu • Habitat Management Plan in Lieu Mitigation • Other fees paid at this stage: o Agricultural Conversion Mitigation Fees o Habitat Endowments • All other fees identified in Table 1 • Other fees paid at this stage: o Affordable Housing Fees If a project does not require a final map, fees typically paid before final map recordation are instead collected before issuance of a building permit. If grading is required, some development impact fees and "other fees or costs" identified below Table 1 may also be collected before the developer pulls a grading permit. For example, if not collected before final map recordation, fees mitigating destruction of habitat and conversion of agricultural lands would be collected before a grading permit is Issued. Carlsbad's development regulations and conditioning of projects recognize collection of development Impact fees before a map is recorded or a building permit is issued. The city's permit tracking software and its overall review and permit procedures recognize and support this longstanding system. Construction Time Frames. If development impact fees were deferred from final map recordation or building permit issuance to final inspection, how long would the deferment City Manager March 7, 2012 BIA Request to Defer Impact Fees Page 4 typically last? Based on the three different projects below, the deferment from final map recordation would vary from several months to over two years. Table 4 -Construction Time Frames for Select Projects Project • Final Map Recorded • Building Permit Issued < Final Inspection Approved Total Time One single family dwelling at The Tides > May 2011 > August 2011 > December 2011 ±7 months One single family dwelling at Blossom Grove (Robertson Ranch) > April 2008 > January 2010 > October 2010 ±30 months Hilton Hotel > N/A > March 2011 > June 2012 (est) ±15 months Focusing solely on the timeframe between building permit issuance (when the bulk of fees are collected) to final inspection, the table below shows how many months elapsed for different types of development over the past 12 years. Table 5 - Construction Time Frames in Carlsbad, 2000 - 2011 Type of Development Time from Building Permit to Final Inspection (In months, with year noted) Type of Development Low High Average Single family dwelling 6.5 (2000) 13(2007) 9.5 Apartment 7 (2000) 23 (2006) 13 Commercial building 7 (2000) 15 (2008) 12 Industrial building 9 (2000) 22.5 (2010) 13 Overall average, a 1 development types: 9.5 months Once a permit is pulled, the time it takes to construct a building is determined by the builder and the complexity ofthe development. While the city performs multiple inspections during the course of construction, by ordinance a building permit remains active as long as an Inspection is performed at least once every six months. State Law. Government Code Section 66000 et seq. regulates the charging of development impact fees and defines their purpose as "... defraying all or a portion ofthe cost of public facilities related to the development project " Section 66000(d) states "public facilities. includes public improvements, public services, and community amenities." For residential projects only. Section 66007(a) states jurisdictions shall not require payment of development impact fees until the date of final inspection or certificate of occupancy. 1 City Manager March 7, 2012 BIA Request to Defer Impact Fees Page 5 whichever occurs first. Section 66007(g) further clarifies that local agencies may defer fee collection up to the close of escrow. However, Section 66007(b) allows agencies to charge fees at an earlier time if the fees (1) reimburse the local agency for expenditures previously made or (2) are for improvements for which an account has been established, funds have been appropriated and a proposed construction schedule or plan has been adopted. Carlsbad can collect development Impact fees prior to final map recordation or building permit issuance because the fees it collects either reimburse the city for previous expenditures or fund Improvements planned and scheduled through its annual Capital Improvement Program Budget. Impact Fee Deferral in Other Cities. According to the August 2009 BIA position paper on the subject, more than 80 California jurisdictions. Including several in San Diego County, allow fee deferrals and other stimulus measures. In its research, Carlsbad staff contacted Chula Vista, Encinitas, Escondido, and Vista to help determine what experience, if any, these cities had with deferring impact fees, and, if so, whether deferral (1) appeared to stimulate development and (2) created any problems. Below are the results of our conversations with each city's staff. o Chula Vista. In 2008, Chula Vista gave applicants the option to defer the bulk of development impact fees by entering into an agreement with the city. The city recorded the agreement against the property as a lien and released it upon payment of fees. In late 2010, responding to BIA concerns regarding the costs and time associated with processing the deferral agreements, Chula Vista approved an ordinance that delayed the trigger for the bulk of development fees from building permit issuance to final inspection. The ordinance has a sunset clause of December 31, 2012; unless the ordinance is extended because of economic conditions, deadlines for payment of fees will revert to prior to building permit or final map approval. Chula Vista's ordinance does permit the City Manager to collect fees at an earlier time upon a change of property ownership, a determination that a risk exists with fee collection at a date later than permit issuance, or upon a determination that fees are necessary based on an adopted facilities program in accordance with state law. Chula Vista staff comments on the deferral of impact fees follow: • Deferral has not had a significant impact on construction activity; • Potential impacts to the city's cash flow due to delaying fee payment has been insignificant because development has been light; • Deferral has actually backfired on a few builders since the amount of development impact fees automatically adjusts for inflation every October and the amount due under the deferral program Is the amount of the fee when actually paid; City Manager March 7, 2012 BIA Request to Defer Impact Fees Page 6 • The cit/s permit tracking software erroneously identified one project as "finaled" before fees were paid; fortunately, the problem was caught early and impact fees were collected; and • Overall, Chula Vista indicated no significant issues with delaying fee payment to final inspection. o Encinitas. According to city staff, Encinitas allows payment prior to final inspection of all but two of its impact fees. The two impact fees, flood control and fire mitigation, are collected at building permit issuance because that is when the impacts they offset - creation of impervious surfaces such as concrete and placement of flammable building materials - begin to occur. Although city regulations on when fees are collected address or are oriented to residential development, as a matter of practice the city allows payment prior to final Inspection for non-residential projects as well. Priorto scheduling a final inspection, departments sign a form (a "blue card") indicating the fees they administer have been paid. It is the responsibility ofthe developer seeking the final inspection to request the required signatures from each department. The Building Division will schedule a final inspection only upon receipt of a completed form. Payment of impact fees at final inspection in Encinitas is not new; in fact, words such as "deferral" and "delay" do not appear in relevant city ordinances. The city passed an ordinance allowing for fee collection at final inspection soon after its 1986 incorporation. Because of its long and routine history of collecting impact fees at final inspection and the city's lack of transition from an earlier to later fee collection point In the building process, it is difficult to determine if collecting fees at final inspection has favorably impacted development activity. Comments from Encinitas staff in this regard are inconclusive. r For residential projects of more than one unit, Encinitas ordinances also permit impact fees forthe construction of public improvements or facilities to be satisfied on a pro-rata basis for each dwelling when the dwelling receives its final occupancy. Further, standards also recognize the city's right to collect fees earlier than final inspection as permitted by the state law described above. As with Chula Vista, Encinitas identified no significant problems with allowing payment of impact fees at final inspection. o Escondido. The city has no ordinance addressing deferral of development impact fees. According to staff, fee deferral has been permitted only through development agreements approved by the City Council. o Vista. Through last year. Vista had a formal council policy to spur commercial development, Including deferral of traffic impact fees and other, broader economic incentives available to select projects (Policy 500-1, "Vista Economic Stimulus Package," attached). Vista staff City Manager March 7, 2012 BIA Request to Defer Impact Fees Page 7 believes the policy was unsuccessful in spurring construction. As explained below, Vista's experience provides worthwhile information. In August 2008, the Vista City Council adopted Policy 500-01 to improve the overall economy for residents and businesses within the city. Along with the policy, the council also approved an ordinance amendment enabling development impact fees to be collected "in accordance with written policies adopted by the City Council." Previous wording required fees to be collected at the time of building permit issuance only. The program was put into place at the request of Vista's former redevelopment director, who wanted to spur development. The policy, which expired last year and was not renewed, applied only to new commercial development. Its benefits ranged from limited to expansive depending on project location and type. For all new commercial construction regardless of location and type, the policy made only one benefit available: deferral of traffic impact fees for three years after occupancy. Regular payments toward the fee were required based on certain milestones, such as upon receiving certificate of occupancy. Payments due after occupancy were to be secured by the property; non-payment of fees would be recorded as a tax lien against the property. For specific projects, reduced or eliminated traffic impact fees (in addition to deferral) and off-site improvements and permit fast tracking were among the additional incentives the formal policy offered. Specific projects benefitting from these Incentives included those within and positively impacting the Vista Redevelopment Area and new uses such as auto dealerships and restaurants that generate sales tax and create local jobs. Another specific project example included developments that could demonstrate a "payback" over three years, through sales tax and property tax/tax increment, of reduced or eliminated offsite construction requirements. In ail cases, fee payment over time applied only if fees were not immediately necessary due to construction timing. In Vista staffs opinion, the Council's formal policy did not encourage development (construction remained light during the policy term), and only one project took advantage of its provisions. Unfortunately, that one project, allowed by the policy to repay its traffic impact fee over a three year period after opening, is now unable to make the payments due to lack of anticipated business. To complicate matters. Vista is the leaseholder through its redevelopment agency. Recommendation Attachment 2 summarizes in a point/counterpoint fashion several considerations regarding the deferral of development impact fees. As the attachment and this memo report, Carlsbad's current practices ensure collection of development impact fees before construction begins. Only if a developer has paid the necessary funds can construction begin. While safeguards can ID City Manager March 7, 2012 BIA Request to Defer Impact Fees Page 8 be put in place, risk remains if fees are instead collected at the end of construction. Furthermore, the experience of cities surveyed suggests that collecting fees prior to final inspection has had a neutral effect and has not accomplished the benefits promoted by the BIA, such as increased construction activity and fee revenues. Therefore, staff recommends against revising Carlsbad's current regulations and procedures to collect development impact fees before final inspection. Instead, the city's current system of collecting impact fees prior to recording a map or issuing a building permit should be maintained. Simply put, the potential and slight benefits of deferring development impact fee collection do not appear worth the possible risk. If it is the desire to further study or implement fee deferral in Carlsbad, staff recommends the following considerations: • As a first step, determine the modifications necessary to the current method of applying, tracking, and collecting impact fees before building permits are issued. This will require software enhancements, staff retraining, and an extra step in the permit and inspection process to ensure fees are collected in a timely, complete fashion. • Amend the Municipal Code to provide the option of either collecting fees as per current deadlines (prior to recording of a final map/issuing of a building permit) or according to City Council Policy. This policy could establish Council's preferences, including how to apply fee deferral to approved, unbuilt projects. A policy would be more easily modified than an ordinance. • Under a Council Policy, consider allowing Impact fee deferral based on certain parameters and at staff's discretion. Staff could then allow deferral for only certain projects that are important to the city, are being constructed by experienced developers, etc. • Whether fee deferral is allowed by policy or ordinance, include provisions to sunset or suspend the practice if conditions warrant and as determined by the City Council. • Do not defer impact fees for impacts created immediately upon construction, such as habitat clearing. GTB:SD:lt Attachments 1. Details of development impact fees paid for select projects 2. Considerations regarding deferral of development impact fees 3. "Making the Case for Development Impact Fee Deferrals," BIA, August 2009 4. City of Vista City Council Policy 500-1, "Vista Economic Stimulus Package" Attachment 1 Development Impact Fees Paid for Select Projects* Type of Development Quadrant Fees Paid Year permit issued Residential Single family dwelling (2,700 square feet (sf)) NW $20,143 2009 Single family dwelling (3,600 sf) SW $38,860 2010 Single family dwelling (3,950 sf) $20,231 2010 Single family dwelling (2,822 sf) NE $20,818 2010 Commercial Hilton Hotel SW $1,306,286 2011 Daybreak Church expansion SE $17,022 2010 Bressi Ranch shopping center building SE $120,625 2010 Grand Pacific Resort timeshare building NW $111,526 2010 Industrial Isis Pharmaceuticals (shell) NE $566,838 2010' ^ Isis Pharmaceuticals (Tl) NE $352,864 2010 Magellan Aviation NW $54,609 2009 *Notes: • Listings in /ta//cs feature expanded fee details below • As a religious institution. Daybreak Church is exempt from paying Public Facilities Fees » ''Shell" is a building before a "Tl'' (tenant improvement) is completed Expanded Description of Development Impact Fees Development Impact Fee Type of Development Development Impact Fee 3,600 sf home* Hilton Hotel Isis Pharmaceuticals (Shell) Assessment District -- Bridge and Thoroughfare Districts (1, 2, and 3) $15,130 -- Community Facilities Dist. $2,865.28 $270,068.70 $131,052.61 Habitat In Lieu Mitigation --- License Tax --- Local Facilities Management Plan (LFMP) --- Master Drainage -$70,084.44 Park In Lieu $5,728 -- Park (per LFMP) -$68,335 Public Facilities $6,902.86 $316,681.60 $106,727.67 Sewer Benefit Area - -• Traffic Impact/Sidewalk $2,286.80 $373,563.48 $76,586.72 Water, reclaimed water, and sewer connection $5,947 $275,887.40 $184,135.52 TOTAL $38,859.94 $1,306,285.62 $566,837.72 *Note: Home fees listed do not reflect payment of a $12,250 Housing Credit Fee Attachment 2 Deferral of Develo pment Impact Fees Point Counterpoint • Carlsbad may be seen as taking a pro-active step to stimulate construction • Based on cities surveyed, fee deferral has minimal if any impact on construction activity • Deferring fees may reduce developer costs • Minimal cost savings may occur if actual fees paid reflect adjustments for inflation • The city may realize a loss of interest • Loss may be offset if actual fees paid reflect adjustments for inflation • Chula Vista and Encinitas cited no significant issues with collecting fees at final inspection • Vista noted a use unable to pay a deferred fee due to lack of anticipated business • If collection is an issue, deferral may place the city between a developer and an anxious homebuyer or business owner • The current requirement of collecting fees before building permit: • Assures fees are collected before construction occurs * Provides the city greater control * Eliminates concern about the inability to pay some or all of fees due should the developer encounter financial difficulties • Avoids the potential of derelict buildings due to a builder's inability to pay fees and obtain a final inspection • Deferring fees leaves little or no opportunity to correct missed or underpaid fees • Various options exist to help assure payment of deferred fees: (1) No scheduling of final inspections until fees are paid; (2) Require the developer to obtain acknowledgment of fee payment before scheduling the inspection, and; (3) Record an agreement against property as a lien and release it only if fees are paid • Deferred fees would be paid at a time closest to impact (e.g., traffic impacts attributed to a use do not occur until that use is occupied) • Triggers to pay fees earlier could be required if necessary based on ownership change or risk as done in Chula Vista • If construction activity increases, fee deferral may be unnecessary • Fee deferral regulations could be temporary and, if conditions warrant, renewable • Deferral could extend to fees other than those identified as "development impact fees" in Table 1; the decision to do so could be discretionary • As a general rule, fees should be collected before the impact occurs • Deferral of HMP-related fees could hinder HMP and CEQA compliance and result in uncompensated habitat loss • Affordable housing fees are likely not considered development impact fees per state law since such housing is not a "public facility" per Government Code Section 66000(d) • Allowing fee deferral would require: (1) amendment to the Municipal Code; (2) revisions to standard findings and conditions, and; (3) determinations about how to apply deferral to approved, unbuilt projects « While revisions would be unavoidable, reference could be made to a Council Policy that establishes the parameters for fee deferral, making subsequent changes easier • Fee deferral would require changes to how the city processes permits • Systems in place to track and collect fees would need alteration; this will require a software reconfiguration and revisions to and additional steps in the permitting process 3 / Attachment 3 MAKING THE CASE FOR DEVELOPMENT IMPACT FEE DEFEItRALS Moving Economie Recovery Forward SAMonsecQUKnr AUGUST 2009 BIA SAN DIEGO-*MAKH^ THE CASE PORPEVSLOPM5NT IMPACT BEB D3^KRALS'' ''Constmction is at its heart a mamrfacturing industry that employs a highly diversified and skilled workforce. Construction is the physical infrastructure for economic prosperity. It is the backbone of a strong econorny* Local government as a direct benefactor shouia foster and embrace a healthy constmction industry/' i5 m SAN DIEC3Q -^MAKING THE CASE POR.PBVELOPMENT IMPACT FEB mPSRRA.lff' The constmcHon in^stry «?. in need Q/ a Jumpstart io regain its role as a pnmary eixmomic engine of -Gte reghtt. The recoveiy of ttie ccmsiraclion industry requires a proactive wid effective approach by local gpYemment to sfjmulate constructtozi acfxvi(y. ^mple,, easily implemented axid unifonnly applied econoznic stimulus meastares are-required to get con^tractiojEj acliviiy Qcarij^ again. Ths^ meBStaes xadude petntut and entiflemeiU: extensions, permit jprocess reforov and developmexit impact £ee defexrals. These specific meastires have no adverse fbscal impact on local govemiyient. Instead, they wiU stimulate permit and constmction activity, stimulate job growlfh in the construction industry, and reanvigorate fee revenue streams to local government This document focuses on a simple, effective, and essential stimulus measure that local government can implemenb the deferral of payment of development impact fees. The payment deferral of development impact fees to the end of (She constracfion process but sUH prior to the Jmpact •occxnxing> will save fens of thousands of dollars in financing costs for a typical project giving new projects that are otherwise stalled jBnandal viability, once again. Fee Deferrals are a Key Economk Strnmlus MieasTire The deferred collection of impact fees means a simple change in fiie timing of when development impact fees, sudi as traffic fees, park fees, school fees, water and se'wer capacity feeSil ct cetera, are collected. Typfcalty, development Impact fees are collected at the Knal Map or building permit application process. Hie total' bill of devdopm^t impact fee's for a typical project can reach hundreds of titiousands to millions of dollars id^ending on the type and size of the project A typical'50-unit housing project would pay on average between $2.5 and $3 miHiort in impact fees. . The deferral of developmentimpact fees simply moving the collection of the fees to a later point in the process, such as the Certificate of Occupancy, Filial Inspection/ or Close of Escrow." The cotlecUon of the impact fees at this later stage in no way reUevea the builder ftotii pfrying the full fees fh^ are due. It simply allows the builder to construct the project piior to financmgHiie impact £ees, ihereby eliminafing six months to a year or more pf financing costs for impact fees. A lOO-unit project with SSmfllion in impact fees and a constxuctiQn loartat 10.% would incur ^00,000 in interest charges to finance that fee burden for a year. Deferrmg liie payment of fiiose fees to the end of the construction process beconifis a substantial savings &at can mean the difference in wheiiier a project moves forward or not. To date more than 80 jurisdictiona around the state have-implemented development impact fee deferrals and other key ecowsroic stimulus measures to stimulate' coiiBtruction aciivity, indiiding several local San diego jccosdiclions; • County of San IDie^o • • Qty of Encinitas • aty of Chijaa Vista • • CityofVista • Qfy of San Diego • City of Oceanside (Pending) Page2of9 • BIA SAN DlEGO-->^MAKING THE CASE TOR DEVELOPMBNT IMPACT FEB DE^ Chula Vista is an example of how fee deferrals can create immediate stimulus. The City, adopted a fee Referral policy in Mardti of 2009. The previous two montihs saw no housing staaet activity, Wtthsn. days of emeit^nt of the neio fee deferral policyr three major builders stfbpiUted buiUing permit appUcaiicftts for a total of 84 new home&r . According to our most recent fiee study, these 84 homes will now generate more than $3 miBionin impact fees to iiie City of Chula Visla. . The reason underlying, the change in behavior is'basic economics. When tiie fee payment!^ deferred for sixio eigjit months (the average period between permit issuance arid, dhe completion of cozvstruction) the buildear does not require allocation of scarce capital to pay izrrpact fees and does not incur th^ financing cost of capital for that period of time. This financial respite has proven to move projects forward resulting in new capital expenditures and a restoration of permit activity and xiltimately fee revenues for Ioc<d government. Consirttctjoaa Benefits Local Goimnxmities The single largest benefactor of construction activity is local public infiiastmctdre. In a post-Proposition.l3 fiscal ^nvironntent, cities, water districts and sdhool districts rely on development impact fees as a major financing mechanism for capital infrastructure projects. In addition to offsite infrastructure improvement, the tjrpical residential project contributes between $40,000 and $60,000 in development impact fees per home, Wifh normal levels of residentfal construction in San Diego County being around 15,000 hoixies per year, that equaieS to -$600 fo $900 million a year ih infrastnicture funding from residffitial constmction alone. When impact fee revenue from otiier forms of construction is added, tiie total is well over a $1 bilKon a year in new hafraslmcture funding, i It is important-to recognize that tiiese impact fee revenues typically include a • 1 to 2% adiainistrative , cqmponeni;r or roughly $10 to 20 million annually for iSan Diego Gourity in revenue which helps to fund public works and ofher government depaiimaits which administer Capital Jmprovement Piograms. • SAN DIEGO COUNTY > $IZ41>i!fioninGDP > Ovec^lbiiUDnin infzauMruciure J^m^ing y $45 million in new tasc revenue feomiioiiring constractloR alone > ^0-20 million in govti aiiministTafive fondlng In addition to ixt&astnicture fanding, construction also generates substantial tax revenues, directly and indirectiy, iot local govermnent In. feet, in the first year alone each newly constructed home generates around $16,000 in new tax revenue for the state and $3,000 in new fax revenue for tiie city where it is Built This equates to around $45 million annually in new tax revenue for San Diego County just from new housing construction. ^ ' Pag^3of9 n • BIA SAN DISGO-'^MAKING THE CASS FOR PEVBLOPMENT IMPACT PEE DSFBRRALS" Construction accounts directiy for between 4 and 5% of annual Gross Domestic Product (GDP). In 2007, tii^ CaUfomia's Ca>P was approximately $1.8 SaHion with tiie state's construction industry accounting directiy for ^proximatdy $70. biUion in GDF. ' In 2007, San Diego's Gixjss Regional Product (ORP) was appioximatdy $163 billion witii the region's constmction industty accounting directiy for approximately $6.5 billion in annual GRP.* When accounting for tiie economic output of related indusfdes resulting &om consfruction/ industries like real estate, finance, manufactuiing> tran^ortatton, trade, government, etc., it is estimated :tbat an additional 90 cents of economic activity is generated for every dollar spent on construction, s By that account, ihe construction industry's direct, indirect and induced econoinic contribution to QDF is approximately $233 billion statewide and $22.4 Umon in GSJPfor the San Viego region. Construction is at its heart a manrtfactttringindustry that employs a highly dioersifipd and skilled worJiforce,, Construction is the physical it^astructure for econoinic prosperity. It is ihe backbone of a strong economy. Local government as a direct benefactor should foster and embrace a healthy construction indusiry. Constmction Standstill Leads to Tob loss and More Foreclosures In tiie current economic dimate, constmction activity is at a near slandstilL Building pennit totals fbr iiic San Diego Region tracked by tiie Constmction Industry Research Board show that new home constmction is at an all-lime low. • The drop of£ in constrttclion. activity has come at a heavy price: spiraling unemployment, an econondc recession and dedioing tax hase. In San Diego Coimiy, begiiming In the summer of 2006 ' and tiirou^ February 2009, the' constmction industry lost ^,200 jobs. The finance, insurance and real estate industries have lost an additional 10,500 jobs and die total job loss for the region is a daunting 121,200 jobs. Most of these job losses 'can be attributed to the econoitoic recession caused hy die collajrae of tiie housing industry with nearly 40,000 jobs lost (l/S"* of the total) in the "construction, feiance and real estate industries. < . SAN JPIEGO COPMTY TCRgLOSS fStittimer '06.- Peb.'^09) ' .dS,!P%)0job9lostin construction, real estate and finance (approx. "i/d total jobless) Xn a region of more than 3 million people covering more than 4^000 square uiiles, around 3,000 homes wUl be. built this year, an unsustainable number for an industry already reeling. Without a course change, the region will see more unemployed, more foreclosures, and more government agencies struggling to provide basic sero'ices under dwindling tax revetmes. The ^adc of construction will also have long-term impacts on the region's economy as a lack of new housing supply will push local businesses out of - ihe San Diego.regioiv stiflang Job growth and harming tiie region's economy. Page4of9 BIA SAN PTEGO-^'WTaNG THE CASB FOR DEVELOPMENT IMPACTBEE PEI^RRALS'^ Pee Def enrals Save Pinancing Costs The acute problem the industty faces is two-fold; In many markets^ the market value of a home leaves prqects teetering on infeasibility as constmction costs match or exceed resale values set by the marketplace for both built and proposed projects. The industry also feces imprecedented challenges in acquiring construction feiancing, its lifeblood working capifaL The tinandnjg that is available comes at a very Mgh interest rate as a direct consequence of the very tight credit markets, Eee deferrals ovearcome tins fcciandal hurdle by allowing intpacl fees to be paid at the end of tiie constcurttbn process, avoiding the fimncing costs for mfllions iniees for the typical project tiiat woidd othenyisd need to be financed upfront in combination wltij the material and labor costs of constmctioiu This simple sHmulue measure means the d^erence between projects sitting idle and projects moving forward; the difference between more unemployment and job grorolSf, Mo-yitig Recovery Forward iii Time 'witfa BconomiG Stimttltts Moving economic recovery forward in Hme means impact fee cashftoxu recovers sooner, jobs are created and tax f eoenaes rise. In an effort to jumpstart construction activity and help restore revenue streams to local government, 80+' jurisdictions^ including dties, counties atid school districts, have implemented local economic stimulus measures for the construction industry, indudiiig irnpact fee deferrals, map and entitiement extensions, and impact fee reductions. The chart below shows how moving economic recovery forward aids the recovery of revenues of local government. CONSTRUCTION ACnVITV/PBE KEVJINUE PERMIT ACTCVITy/FJEB REVENUE >VITH NO ECONOMIC STIMULUS FEE REVENUE WITH ECONOMIC STIMUI.US PERMIT ACTIVITY WITH ECONOMIC SUmSLVS TIME Page5of9 ,9 BIA SAN PTEGO-^'MAKING THE CASE K)R DBVELOPMENT IMPACT. PEE PSFSRRAIg" Common Miscoriceptions About Fee Deferrals "State law does not alloto us to defer development impact fees,^ Local governments charge Devcloi>er Jmpact Fees {^EF") under Government Code Section 66000 et seq. Section 66007(a) states thaf, notwithstanding any otiier provision of the law, a local agency "shall not require file payment of those fees ox charges until the date of the final inspection or the date the certificate of occupancy is issuei whichever occurs flxst.". Contrary to commcm practice and wth few exceptions, state law actually requires fite collection of devdopment impact fees at Cteetificate d£ Occupancy or Haal Inspection. Additionally, State Assembly Bill 2604, signed aiid made effective August 1, 2008, authorizes the defenal of impact fees to the close of escrow. ''By deferring deoeiopment impact fees, xoe'are losing the interest collected on fees held in. advance their expenditure,'^ It is important to recognize that theinterest rate that local government may be receiving on any fees collected is around a marginal 1 to 2% annually. Presentiy, impact fee revenues have dropped so precipitously that interest collected on new f6e revenue is insignificant. The benefit of implementing fee deferrals at the bottom of tiiB market is that it helps the constmction industry, and likewise, fee revenues, recover sooner (see chart above). Once fee revenues are restored to normal levels, cash reserve levels stabUize, Witii the implementation of fee defetyals bringing about an earlier lecovety, the total interest earned on cash reserves would actually be greater over time as cash reserves stabilize soorier. Instead of losing interest, a jurisdiction is likely to earn niore interest • . '"By deferring impact fees to Certificate of OcaipuHcy (COO) or Close ofBscrow, how do we ensure-that the fees are paid?"^ There are several ways to ensure tiiat the fees are paid. The .city should use a simple checklist of the various fees that must be paid (the same dxecklist cuirentiy used for building permit issuance). Including school fees, sewer aind water fees, pt cetera, before a COO or Final Inspection will be issued. K tiie fees are not paid, the city's project tracking system-wiE show a hold on final infection or issuance of OOO, The hold cannot be released until the fees are paid. The diy can reqidre written verification from the other agencies (e.g., water and school districts) as proof that fees collected by outside agencies have been paid. Please see Attachment A for a sample fee deferral ordinance: As it relates to the Close of Escrow, a lien is placed on the property and the fees are paid automatically out of escrow. Close of Escrow works best for f or-sale residential whereas "COO or Pinal Inspection works best for nqn-iesidential. Attachment B contains a full and current list of jurisdictions in Galifoxnia'tiiat implemented fee defencals. page 6 of 9 pIA SAN PIEGO-^'MAKIWG THE CASE FOR DBVELOPME^JT IMPACT PEE PEFERRAIS'' "We (the City) do wt want to be a position of telling a homebuyer they canTtmove into their homebecaiise the impact fees havenotheen paid.^'' It is standard practice'in the lending industry to require proof of Pinal Inspection and •Certific?ite of Occupancy for new construction as part of the appraisal package. Now more tiikn ever banks are ensuring that all documentation is complete prior to completung the loan approval process. If the builder has not paid tiie necessary impact fees, the appraisal process cannot be completed. The lender will provide documentation to tiie buyer(s) of the necessary conditions tiiat must be foifilled prior to the appraisal being approved, showing cleariy that the builder must obtain Final inspection and COO. Howev^, even following the provision of these documents and a complete appraisal, the lender still has riot approved the loan. This step may take another week ox more, especially in the current climate. Thus, it is highly unlikely that a homebuyer would be allowed to move in prior to ihe payment of impact fees with these checks and balance inplace. Page7of9 BIA SAN DlEGO-^^MAKiNG TOE CASE TOIL PBVELOPMHtvn' IMPACTPEE D£FBRRAIJS'^ Footnoless 1 Building Induahy Association of San Diego County 2007-2008 Annual Pee Survey. 2 Califomia Building. Industry ^sedation, "Housing Builds Jobs: Economic Rrcovery Starts with Housing," 2009.' 3 U.S, Departm^t of Commerce, Bureau of Economic Analysis, California Gross Domestit Product, Januaiy 2009. 4 San Diego Regional EDC, "San Diego County Economic Overview,"' September 2008. 5 Sacramento Regional Research Institute, "The Economic Benefits of Housing in • Califoinia," August 2005. 6 Center for Policy Initiatives, "San Diego County Hits Highest Unemployment on . Record,^'March 20,2009. Page8of9 BIA SAN DlEiGO-'TvIAKING THE CASEPORDBVELOPMBNTT IMPACT EBB DBPBRRALS^ ATTACHMBNTA MODEL DEVELOPMENT IMPACT FEE DEFERRAX ORDINANCE AN ORDINANCE OF THE COUNaL OF THE CITY OF ' AMENDING THE CTTY^S DEVELOPMENT IMPACT PEE (DO) PROVISIONS. §100.00 purpose (a) The purpose'of this ordinance is to implement de'velopment impact fee defenrals for new constmction, §100.10 Paynieiit of Developniient Impact Fees (a) The payment of Devclopmomt Impact Fees (as defined in paragraph (b) of Catifarnia Govermnent Code Section 66000) shaH be required upon the issuance of Ceridficate of Occupan<y» The Development Impact Fees due shall be the amoimt in effisct upon the issuance of Building Permit or, where applicable, as those fees established hi a Development Agreement .(b) Notwithstanding the above, the City Manager is authorized to defer the collection of Development Impact Fees for a maximum period of two years or until request for Certificate of Occupancy, whichever is shorter. The Certificate of Occupancy shall riot be issued until the applicable Development Impact Fees are paid. (c) In the case of projects that do not receive Certificate of Occupancies, tiie Qiiyr Manager is authorized to defer the coHection of Development Impact Fees for a maximum period of two years or until request for Final Inspection, whichever is . shorter. The Final Inspection shall not be approved until the applicable Development Impact Fees are paid (d) Notwithstanding patagrapihs (a), (b), and (c) above, a waiver, adjustment, or reduction of tiie Development Impact Fees duet may be requested and decided based on the findings contained in paragraph (e) below. An application for a waiver, adjustment, or reduction shall be filed in accordance with Section and shall include financial and otiier infoxmationtiie Qiy Manager determines necessary to perform an independent evaluation of the applicant's rationale for the waiver, adjustment, or reduction. (e) No waiver, ad^usfmentr or reduction of the Development Impact Fees diie shall be issued unless the Qty Council iinds tiiere is no reasonable relationship or nexus between the impact of the development and Sie" amount of the Development Impact Fee, Page9of9 ^3 Attachment 4 Vista City Council Policy 500-01 VISTA ECONOMIC STIMULUS PACKAGE PURPOSE To establish a policy that will improve the overall economy for residents and businesses within Vista. To achieve this objective the City has developed the Vista Economic Stimulus Package. The goals are to induce the type of development beneficial to the City and create jobs for Vista residents. Project specific benefits under this package will be outlined in an agreement between the City and the developer prior to issuance of a building permit. POUCY REDEVELOPMENT AREA DEVELOPMENTS The stimulus package benefits identified in Section A are available to the following types of new commercial development if completed and granted occupancy before December 31, 2011:^ 1. Developments within and positively impacting the Vista Redevelopment Area (includes the existing and expanded areas); or 2. Developments, limited to those outlined in Attachment 1, that may be outside the Vista Redevelopment Area (includes the existing and expanded areas) but have a positive impact on the Redevelopment Area; or 3. Developments which can accommodate a three-year payback to the City based on the Value Added Formula in Attachment 2. Examples of projects that will positively Impact the Redevelopment Area include: 1. Sales tax producers which produce more than $100,000 in sales tax annually for the City based on a fiscal analysis. 2. Local job creators that also commit to keeping jobs in Vista. If a company can demonstrate that they will hire 30 percent of their workforce from Vista and maintain this level for a period of three years, they will be eligible for benefits of the Economic Stimulus Package. A development qualifying under this section must have a minimum of 20 full time equivalent ^ Projects that were originally approved to be part of this program, but are not completed and granted occupancy before December 31, 2011, may still qualify for benefits under this program, but they will be dealt with on a case-by-case basis and modifications to their original agreements will be required to determine a new occupancy date and any reduction in benefits. 500-01 (1) vista City Council Policy employees and provide quarterly verification of Vista residents working for the employer. 3. Mixed-use development projects, those with a residential and retail and/or office component are eligible. Projects under this section must work with City staff to create an end resuH that is consistent with the City's vision and goals for the specific area in which the project is proposed. 4. Additional amenities and/or sites as listed on Attachment 1. CITYWIDE DEVELOPMENTS The stimulus package benefits identified in Section B are available to all new commercial development within the City of Vista if completed and granted occupancy before December 31, 2011 ECONOMIC STIMULUS PACKAGE BENEFITS^ Section A - Redevelopnnent Area Benefits 1. Chance to traffic impact fees scheduie This benefit will allow participating developments to pay for their traffic impact fees over a period of three years. Fees will be due according to the following scheduie: 10% - Upon approval of project building plans 15% - Upon certificate of occupancy 25% - By the first year anniversary of certificate of occupancy 25% - By the second year anniversary of certificate of occupancy 25% - By the third year anniversary of certificate of occupancy This benefit will apply only to projects where it can be determined that timing of construction of future off-site improvements do not require the ^ See footnote 1 above. ^ Conceptual approval of a project or use/amenity/stte will be made by the Redevelopment and the Economic Development departments. All developments to be granted benefits under tiie Vista Economic Stimulus Package must be brought to the City Council/Community Development Commission for approval, and City Council approval fOr program benefits must be granted before any grading or building permit is issued. Any direct financial support or funding required to provide the benefits under this section will come from Community Development Commission. Developers must consult with their own legal counsel to determine if prevailing wage requirements might apply to their project; tiie City Attorney will offer no legal advice or opinion on this issue. If projected goals are not met a repayment of unearned Incentives will be required as part of any project agreement 500-01 (2) Vista City Council Policy immediate payment of traffic impact fees. Developers may choose to prepay all traffic impact fees If they prefer. Payment of these fees following occupancy will be secured by the property, and any non-payment of fees or principal will be recorded as a tax lien against the property. 2. Reduced traffic impact fees Traffic impact fees may be reduced for a development based on its benefit to the City of Vista Redevelopment Area. This will be reviewed on a case- by-case basis and developments must demonstrate they can meet the three-year payback requirement. See Attachment 2 for the three-year payback formula. 3. Offsite improvement requirements Suitable projects may be allowed to forgo some or all of their off-site improvement requirements. This will be reviewed on a case-by-case basis. Participating developments must demonstrate they can meet the three-year payback requirement outlined in Attachment 2. 4. Bond requirement elimination This benefit will eliminate the requirement for bonds and other securities for on-site improvements, with the exception of grading, drainage, and landscaping. 5. Occupancv Provided that the public right-of-way and access to buildings are free and clear of construction activities, early occupancy will be considered on a case-by-case basis. 6. Fast-tracking Projects that are eligible wilt be given priority during the planning and building review process. In addition, these projects will receive a written outline of the City review timeline following submittal of a planning application. 7. Proiect facilitators Projects that are eligible will be assigned one City staff person to facilitate that specific project. 8. Other support as deemed appropriate There may be additional support and financial assistance which the City deems appropriate with regard to specific desirable amenities/ develophients. Such assistance will be determined on a case-by-case basis. Qualifying developments must be able to meet the three-year payback requirement as outlined in Attachment 2. 500-01 (3) Vista City Council Policy Section B - Citywide Benefits 1. Change to traffic Impact fees schedule This benefit will allow participating developments to pay for their traffic impact fees over a period of three years. Fees will be due according to the following schedule: 10% - Upon approval of project building plans 15% - Upon certificate of occupancy 25% - By the first year anniversary of certificate of occupancy 25% - By the second year anniversary of certificate of occupancy 25% - By the third year anniversary of certificate of occupancy This benefit will apply only to projects where it can be determined that timing of constmction of future off-site improvements do not require the immediate payment of traffic impact fees. Developers may choose to prepay all traffic impact fees if they prefer. Payment of these fees following occupancy will be secured by the property, and any non-payment of fees or principal will be recorded as a tax lien against the property. HISTORY Adopted August 26, 2008, City Council Resolution 2008-173 500-01 (4) Vista City Council Policy Attachment 1 Additional Amenities and Sites^ DESIRED AMENITIES; Books • Barnes and Noble • Borders Restaurants • Ruth Chris Steak House • Rainwaters • Brigantine • Roppongi • Houston's Restaurant • Roy's Auto Sales • BMW • Honda • Toyota Hotels • Marriott • Hyatt • Hampton Inn • Sheraton Clothing Stores • Anne Taylor • Chico's • Coldwater Creek ADDITIONAL SITES TO BE INCLUDED: 1. Two vacant lots at the NW and NE corners of Melrose and Sycamore 2. Vacant lot at the SW corner of Faraday and Melrose 3. Vacant lot at the SW corner of La Tortuga and Hacienda ^ This list of prospective businesses in not meant to be proscriptive or all inclusive. Rather, it is intended to provide examples ofthe types of quality projects the City would consider for receipt of benefits under the Vista Economic Stimulus Package. The list of additional sites outside of the Redevelopment Project Area Is expressly limited to the three listed, however. 500-01 (5) Vista City Council Policy Attachment 2 City of Vista Value Added Formulas for Three-year Payback Sales tax producers. Mixed Use Developments & Other Amenities Listed In Attachment 1 Amount of Stimulus Package Benefit < to Sales tax + Property Tax/Tax Increment the City Receives Over Three Years Example of a qualifying project: $400K Reduction in Offsite Improvements < to $300K in Three-Year Sales Tax + $120K in Three-Year Property Tax/Tax Increment. Local Jobs Creators Amount of Stimulus Package Benefit < to 10 percent of Total Salary Provided to VIsta Employees (must live in Vista) Over Three Years + Property Tax/Tax Increment the City Receives Over Three Years Example of a qualifying project: $400K Reduction in Offsite Improvements < to $337,500 Total Salary Provided to Vista Employees (must live in Vista) Over Three Years + $120K in Three-Year Property Tax/Tax Increment. (Assumes 25 employees x $45K average annual salary = $1,125,000 X 3 years x .10 = $337,500.) ^ Projects not meeting their projected goals will be required to repay a prorated portion of the reduced fees and/or benefits. Each agreement will provide how the repayment of benefits will be made In the event the development is not able to achieve their stated goals. In detennining if a project meets the three-year payback, calculations of will deduct the existing sales tax. property tax and number of employees when determining the benefit to the City of Vista. For example, a vacant lot would have no sales tax in its undeveloped state, but an existing retail center would. The baseline calculation to determine the net benefit for the vacant lot will show no sales tax; however, the retail center's existing sales tax will be deducted to detennine the net benefit to the City of Vista of the proposed new project that would take its place. 500-01 (6) P9 EXHIBIT 2 CITY OF CARLSBAD DEVELOPMENT IMPACT FEES DUE AT FINAL MAP, GRADING, OR BUILDING PERMIT ISSUANCE Impact Fees Recommended by Staff as OK for Deferral Park In Lieu Local Facilities Management Plan (LFMP) Traffic Impact Master Drainage (PLDA) Sewer Connection Sewer Capacity & Benefit Area Housing Impact & In Lieu Impact Fees Not Recommended by Staff for Deferral Assessment Districts Agricultural Conversion Mitigation Bridge and Thoroughfare Districts 1, 2, & 3 Community Facilities District 1 Habitat In Lieu Mitigation License Tax on New Construction (PFF) Potable Water Connection Reclaimed Water Connection Water Meter Impact Fees Collected by Other Outside Agencies San Diego County Water Authority (SDCWA) School Fees (Carlsbad, San Marcos, Encinitas, San Dieguito Districts) Vallecitos and Olivenhain Water Fees Vallecitos and Leucadia District Sewer Fees Development Impact Fee Deferral Mike Peterson September 11, 2012 Background •BIA request to defer impact fees •City Council workshop - May 2012 –Identify fees for possible deferral –Draft necessary ordinance amendments Development Impact Fees Four categories of impact fees •Governed by state law •Impact occurs at issuance •Voted on by property owners or residence •Legally permissible to defer and impact doesn’t occur until occupancy 3 Impact Fees Recommended For Deferral •Park in Lieu •Local Facilities Management Plan •Traffic Impact •Master Drainage (PLDA) •Sewer Connection •Sewer Benefit Area •Sewer Capacity •Housing Impact & In lieu 4 Development Impact Fee Deferral Criteria •Defer fee payment until request for final inspection •Residential projects of 5+ dwelling units •New commercial or industrial square footage •Fee amount paid based on fee in effect at the time of final inspection request •Program would sunset two years from effective date unless extended by City Council 5 Next Steps •Draft ordinance and return to future City Council meeting •Development of implementation plan –Changes to the city’s permitting software –Change staff operating procedures –Training of appropriate development staff 6 Questions? 7