Loading...
HomeMy WebLinkAbout2013-01-08; City Council; 21098; Municipal Code to Allow Defferal Impact FeesCITY OF CARLSBAD - AGENDA BILL 20 AB# IVITG. DEPT. 21.098 1/8/2013 CED AlVIENDMENTS TO THE CARLSBAD MUNICIPAL CODE TO ALLOW FOR THE DEFERRAL OF IDENTIFIED DEVELOPMENT IMPACT FEES DEPT. DIRECTOR CITY ATTORNEY CITY MANAGER RECOMMENDED ACTION: Introduce Ordinance No. CS-200 amending Title 13 (Sewers), Chapter 13.10; Title 15 (Grading and Drainage), Chapter 15.08; Title 18 (Building Code and Regulations), Chapter 18.42; Title 20 (Subdivisions), Chapter 20.44; Title 21 (Zoning), Chapters 21.85 and 21.90 regarding fees and fee deferrals. ITEM EXPLANATION: On September 11, 2012 City Council received a report on the deferral of development impact fees and directed the city attorney to return with the implementing documents. The proposed Carlsbad Municipal Code amendments are necessary to implement this direction. Development impact fees are imposed by the City on new development for the purpose of funding the construction of various public facilities. They are generally collected at the time of final map recordation, grading permit issuance, or building permit issuance for all development projects. Two of the Titles proposed for modification are part of the City's Zoning Ordinance and therefore require review and recommendation by the Planning Commission prior to City Council approval. On December 5, 2012 the Planning Commission recommended approval voting 6-0 (Commissioner Scully absent). One speaker gave public testimony in support of the amendments (minutes attached). 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 BIA's request, a description of the types of development impact fees typically paid in Carlsbad, an overview ofthe 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. On September 11, 2012 City Council received a report with a recommendation on which development impact fees could reasonably be considered for deferral and, after input from the City Council on that issue the City Council directed staff, 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 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, services, 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. As directed by City Council at their September 11, 2012 meeting, staff has identified which of these impact fees are appropriate for deferral and provided the required documents. The development impact fees proposed for deferral 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 DEPARTMENT CONTACT: Mike Peterson 760-602-2721 mike.peterson(S)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 • Page 2 completed. Staff is recommending that the City Council adopt the proposed ordinance amendments to allow deferring the following development impact fees: Park In Lleu - 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 identified for deferral, staff has also identified some key elements that staff will implement as part of the fee deferral program. 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 ofthe City Council. • Would apply only to the development impact fees recommended. FISCAL IMPACT: Implementation of the development impact fee deferral program will delay the actual collection of fees which could minimally 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 have and will 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. ENVIRONMENTAL IMPACT: Minor Municipal Code amendments that do not involve physical modifications or that clarify existing land use standards are exempt from the California Environmental Quality Act pursuant to Municipal Code Section 19.04.070 A.1.C.1 This section exempts from environmental review projects "where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment." EXHIBITS: 1. City Council Ordinance No. CS-200 2. BIA Request to Defer Impact Fees Memo 3. Excerpts of Planning Commission Minutes, dated December 5, 2012. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDINANCE NO. CS-200 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AMENDING TITLE 13, CHAPTER 13.10; TITLE 15, CHAPTER 15.08; TITLE 18, CHAPTER 18.42; TITLE 20, CHAPTER 20.44; TITLE 21, CHAPTERS 21.85 AND 21.90, REGARDING FEES AND FEE DEFERRALS. CASE NAME: DEVELOPMENT IMPACT FEE DEFERRAL The City Council of the City of Carlsbad ordains as follows: SECTION I: That Title 13, Chapter 13.10 ofthe Carlsbad Municipal Code is hereby amended by the addition of Section 13.10.100 to read as follows: 13.10.100 Fee Deferral Notwithstanding anything in Chapter 13.10 to the contrary, for the period March 1, 2013 to March 1, 2015, all Sewer Capacity and Sewer Benefit Area fees for any residential development that consists of five or more dwelling units and for all new commercial, office, and industrial buildings or building additions shall only be paid prior to building permit issuance, or, at the request of the applicant, deferred until all work required for final inspection has been completed and all department approvals required for final inspection have been obtained by the applicant. If the applicant chooses to defer the payment of fees to prior to the request for final inspection, then the amount of the fees shall be based on the fees in effect at the time of the request for final inspection. In the event that the city, for any reason, fails to collect any or all fees prior to final inspection, such fees shall remain the obligation ofthe developer and/or the property owner. SECTION II: That Title 15, Chapter 15.08 of the Carlsbad Municipal Code is hereby amended by the addition of Section 15.08.110 to read as follows: 15.08.110 Fee Deferral Notwithstanding anything in Chapter 15.08 to the contrary, for the period March 1, 2013 to March 1, 2015, all Planned Local Drainage Area fees for any residential development that consists of five or more dwelling units and for all new commercial, office, and industrial buildings or building additions shall only be paid prior to building permit issuance, or, at the request of the applicant, deferred until ali work required for final inspection has been completed and all department approvals required for final inspection have been obtained by the applicant. If the applicant chooses to defer the payment of fees to prior to the request for final inspection, then the amount of the fees shall be based on the fees in effect at the time of the request for final inspection. /// /// 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In the event that the city, for any reason, fails to collect any or all fees prior to final inspection, such fees shall remain the obligation ofthe developer and/or the property owner. SECTION III: That Title 18, Chapter 18.42, Section 18.42.050 of the Carisbad Municipal Code is hereby amended to read as follows: 18.42.050 Fee (a) A traffic impact fee of two hundred sixty-five dollars for each average daily trip generated by a residential project and a traffic impact fee of one hundred six dollars for each average daily trip generated by a commercial or industrial project, pursuant to Section 18.42.020(e), shall be paid by the owner or developer prior to issuance of any building permit or occupancy permit for a project. The traffic impact fee shall be adjusted annually as part of the Capital Improvement Program budget process, by two percent or the annual percentage change in the Caltrans Construction Cost Index (12-month index), whichever is higher. (b) In lieu of payment of all or part of the fee the project owner or developer may offer to construct or fund circulation improvements to the satisfaction of the city council, other than circulation improvements required by any other law, approval or city action. If such offer is accepted by the city council, any amount expended by the project owner or developer shall be credited against the fee. If the offer is rejected the fee shall be paid. The offer shall be made at the time of consideration of any discretionary planning or subdivision permit or approval, or if no such permit or approval is required then before building permit application is filed. (c) The city council shall give a credit toward the fee imposed by this chapter for properties within the boundaries of and subject to taxation by community facilities district number one. The amount of such credit shall be determined by the city council and established by resolution. (d) Notwithstanding 18.42.050(a), forthe period March 1, 2013 to March 1, 2015, all Traffic Impact fees for any residential development that consists of five or more dwelling units and for all new commercial, office, and industrial buildings or building additions shall only be paid prior to building permit issuance, or, at the request of the applicant, deferred until all work required for final inspection has been completed and all department approvals required for final inspection have been obtained by the applicant. If the applicant chooses to defer the payment of fees to prior to the request for final inspection, then the amount of the fees shall be based on the fees in effect at the time of the request for final inspection. In the event that the city, for any reason, fails to collect any or all fees prior to final inspection, such fees shall remain the obligation ofthe developer and/or the property owner. SECTION IV: That Title 20, Chapter 20.44 of the Carisbad Municipal Code is hereby amended by the addition of Section 20.44.140 to read as follows: 20.44.140 Fee Deferral Notwithstanding anything in Chapter 20.44 to the contrary, for the period from March 1, 2013 to March 1, 2015, all Park In-lieu fees for any residential development that consists of five or more dwelling units shall only be paid prior to building permit issuance, or, at the request of the applicant, deferred until all work required for final inspection has been completed and all department approvals required for final inspection have been obtained by the applicant. If the applicant chooses to defer the payment of fees to prior to the request for final inspection, then the amount of the fees shall be based on the fees in effect at the time of the request for final inspection. In the event that the city, for any reason, fails to collect any or all fees prior to final inspection, such fees shall remain the obligation of the developer and/or the property owner. SECTION V: That Title 21, Chapters 21.85 and 21.90 of the Carisbad Municipal Code is hereby amended by the addition of Sections 21.85.195 and 21.90.195 to read as follows: 21.85.195 Fee Deferral Notwithstanding anything in Chapter 21.85 to the contrary for the period from March 1 2013 to March 1 2015, all Housing In-Lieu and Housing Impact fees for any residential development that consists of five or more dwelling units shall only be paid prior to building permit issuance or at the request of the applicant, deferred until all work required for final inspection has been completed and all department approvals required for final inspection have been obtained by I the applicant. The amount of the fees shall be based on the fees in effect at the time of the request for the final inspection, not the time of building permit issuance. In the event that the city, for any reason, fails to collect any or all fees prior to final inspection, such fees shall remain the obligation of the developer and/or the property owner. 2190.195 Fee Deferral Notwithstanding anything in Chapter 21.90 and any resolution ofthe City Council to the contrary for the period between March 1, 2013 to March 1, 2015, all fees subject to this Chapter for any residential development that consists of five or more dwelling units and all new commercial, office, and industrial buildings or building additions shall only be paid prior to building permit issuance, or, at the request of the applicant, deferred until all work required for final inspection has been completed and all department approvals required for final inspection have been obtained by the applicant. The amount of the fees shall be based on the fees in effect at the time of the request for the final inspection, not the time of building permit issuance. In the event that the city, for any reason, fails to collect any or all fees prior to final inspection, such fees shall remain the obligation ofthe developer and/or the property owner. EFFECTIVE DATE: This ordinance shall be effective thirty days after its adoption; and the city clerk shall certify the adoption of this ordinance and cause the full text of the ordinance or a summary of the ordinance prepared by the City Attomey to be published at least once in a newspaper of general circulation in the City of Carisbad within fifteen days after its adoption. /// /// 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 INTRODUCED AND FIRST READ at a regular meeting of the Carlsbad City Council on the 8**^ day of January, 2013, and thereafter PASSED AND ADOPTED at a regular meeting of the City Council of the City of Carisbad on the day of , 2013, by the following vote, to wit: AYES: NOES: ABSENT: APPROVED AS TO FORM AND LEGALITY JANE MOBALDI, Interim City Attorney MATT HALL, Mayor ATTEST: KAREN R. KUNDTZ, Assistant City Clerk (SEAL) -4- EXHIBIT 2 J^%v CITY OF V CARLSBAD Memorandum March 7, 2012 To: Lisa Hildabrand, City Manager From: Gary T. Barberio, Community and Economic Development Director:. 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 Carisbad 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 Carlsbad 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 I 760-602-2710 I 760-602-8560 fax 1 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 Developn^}ent 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 BIA'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. Carisbad'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 Carisbad. Only the fees listed in 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 of the 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 of the final map or issuance of the 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. Carisbad'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 of the 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. City Manager March 7, 2012 BIA Request to Defer Impact Fees Pages 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 eariier 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. Carisbad 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, Carisbad 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; ll City Manager March 7, 2012 BIA Request to Defer Impact Fees Page 6 • The city's permit tracking software erroneously identified one project as "finaled" before fees were paid; fortunately, the problem was caught eariy 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. Prior to scheduling a final inspection, departments sign a form (a "blue card") indicating the fees they administer have been paid. It is the responsibility of the 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 eariier 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. For residential projects of more than one unit, Encinitas ordinances also permit impact fees for the 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 eariier 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 Escondicio. 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 all cases, fee payment over time applied only if fees were not immediately necessary due to construction timing. In Vista staff's 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, Carisbad'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 IS 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 Carisbad'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 Carisbad, 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 staffs 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) SE $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 Resorttimeshare 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 1 2009 •Notes: • Ustings in /to//c5 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 Development 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 / Attachment 3 MAKING THE CASE FOR DEVELOPMENT IMPACT FEE DEFERRALS Moving Economic Recoveiy Torward SJMHtMCXMMrr AUGUST 2009 BTASAN DIEGO^^MAKING THE CASE POP T^HVSLOPMBNTIMPACTgEBDHFBRRALS^' ''Constmction is at its heart a manufacturing industry that employs a highly diversified and skilled workforce. Construction is the physical infrastructure for economic prosperity. It is the backbone of a strong econotny. Local govemment as a direct benefactor should foster and embrace a healthy construction industry." Page lof 9 BIA SAN DIHGQ - "MAKING THE CASE POR.DBVELOPIvIENT IMPACT FEB DEP5RKAIS" Tke construction industry is in iteei of a jumpstart io regain its role as a primary economic engine of the region. The recovery of iihe constniction industry requires a proactive and effecdye approach by local government fo stpnulate construction activity. Simple, easily implemented and uniformly applied economic stimulus measures are-required to get construction actlvify going again. These measures include permit and eatiflement extensions, permit jprocess reform, and development impact £ee defeirals. These specific measures have no adverse jfecal impact on local government Instead, they wiU stimulate permit and construction activity, stbcnukte job growth 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 govecnment can implement: the deferral of payment of development impact fees. The payment deferral of development impact fees to the end of the construction process but sUH prior to the impact occuixing, wiU save tans of thousands of dollars irx financing costs for a typical projecl^ giving new projects that are otherwise stalled finandal viability once again. Fee Deferrals area Key Economic Stixnulus Measure The deferred collection of impact fees means a simple change in the timing of when development impact fees, su<i as traffic fees, pari; fees, school fees, water and sewer capacity fees, et cetera, are collected. Typically, development impact fees are collected at the jRnal Map or building pqrmit application process. The total' bill of development impact fee's for a typical project can reach hundreds of thousands to millions of dollars •depending on the type and size of the project A lypical SO^unit housing project would pay on average between $2.5 and $3 million in impact fees. . The deferral of development impact fees is simply moving the coHection of the fees to a later point in the process, such as the Certificate of Occupancy, Firtal Inspection, or Close of Escrow,- THe collection of the impact fees at this later stage in no way relieves the builder f^om paying fh& full fees ikaf are due. It simply allows the builder to construct the project prior to finandnglhe impact fees, thereby eliminating six montihs to a year or more pf financing costs for impact fees, A 100-unit project with $5million in impact f ees and a construclion loam at 10.% would icicur $500,000 in interest charges to finance that fee burden for a year. Deferring the payment of fiiose fees to the end of the constmction process becomes a substantial savings that can mean the difference in whether a project moves forward or not To date more than 80 jurisdictions around the state have-implemented development impact fee deferrals and other key economic stimulus measures to stimulate' construction activity, induding several local San Eiiego jjutisdictions: • County of San Die^o . • CityofBndnitas • aty of Chiila Vista » Oty of Vista • Q<y of San Diego • City of Oceanside (Pending) Page2of9 • BIA SAN DIEGO-"Kf AKING THE CASE JOR DEVELOPMBNT IMPACT FEB DEPBRRAiy^ Chula Visla is an example of how fee deferrals can create immediate stimulus. The Cily. adopted a fee deferral poHcy in March of 2009. The previous two months saw no housing start activity. Within, days of enactment of the new fee deferral policy, three major huiJders submitted building permit applications for a total of 84 new homes. According to our most recent fee study, these 84 homes will now generate more than $3 million'in impact fees to the City of Chula Vista. inhe reason underlying, the change in behavior is basic economics. When the fee payment is deferred for six^ to eight months (flie average period between permit issuance and Sie completion of construction) ihe builder does not require allocation of scarce capital to pay impact fees and does not incur the financing cost of capital for that period of time. This finandal respite has proven to move projects forward resulting in new capital expenditures and a restoration of pennit activity and intimately fee revenues for local govemment . Consfrticticm Benefits Local Goinmtmittes The single largest benefactor of constmction activity is local public infcastructure. In a post-Proposition.l3 fiscal environment, dties, water districts and sdiool districts rely on • development impact fees as a major financing mechanism for capital infrastructure projects. In addition .to offsite infrastmcture improvement, the typical residential project contributes between $40,000 and $60,000 in development impact fees per home. With normal levels of residential construction TJX San Diego County beihg around 15,000 homes per year, that equates to $600 to $900 million a year ih infrastructiire funding from residaitial construction alone. When impact fee revenue from other forms of consfaruction is added, the total is well over a $1 biUion a year in new infrastructure funding, ^ It is important to recognize that these unpact fee revenues typically include a 1 to 2% administiative . component or roughly $10 to 20 million annually for San Diego Covnty in revenue whida helps to fund public works and other govemment depariroents which administer Capital Improvement Frograms. • lx\ addition to infrastmctxire funding, construction also generates substantial tax revenues, directly and indirectly, for local govermnent In fact in the first year alone each newly constructed home generates around $16,000 in new lax revenue for the state and $3,000 in new tax revertue for tiie dty where it is Built This equates to around $45 million annually in new tax revenue for San Diego County just from new housing cohstmctiorL ^ CONSTRUCTION COlSfSTRIBUTIGN TO SAN DIEGO cpujsmr > $ 32.4WIHouin GDP > Ov«;$ll>illioaitt infxaisteactwre fian^Ung >• $45 DoiUion in new tajc reveanue from Jiousing construction alone > $ip-20 million in govt admloisftatxve fuadtag Page3of9 .mARAMDIEG6-"MAKmGTHRrA.qKyORPEVRr.OPMENTII^AC:ri^EDEI^RR^ Constmction accounts directiy for between 4 and 5% of annual Gross Domestic Product (GDP) In 2007, the California's GDP was approximately $1.8 ftillion with tiae state s construction industry accounting directiy for approximately $70. WUwiJij GDP.' ^ 2007 San Diego's Gross Regional Product (GKP) was approxhriately $163 bilhon witiv the region's constiiiction industry accounting directiy for approximately $6.5 bilhon in annual GRP.* When accounting for thB economic .output of related iodustides resulting from consfa^ction, industries like real estate, finance, manufacturings transportation, trade, Mvemment, etc., it is estimated :that an additional 90 cents of economic activity is eeneraled for every dollar spent on construction- s By that account, the constmction lidustnTs direct, indirect and induced economic contHbution to GDP is approximately $133 billion statewide and $32A billion in GBP for the San Diego region. Construction is at its heart a manufaf^turing industry that employs a highly diversified cmd skilled workforce, Constmction is the physical infrastructure for economic prospeHty, It is the backbone of a strong economy. Local govemment as a dtreut ben^actor should foster and embrace a healthy constmction industn/. Coiistniciion Standstill Leads to Tob Loss and More Poreclosttres In the current economic climate, constmction activity is at a near standstill Building permit totals for the San Diego Region tiradsed by the Constmction Xndusixy Research Board show that new home construction is at an all-time low. The drop oft m constmction. activity has come at a heavy price: spirating unemployment an economic recession and dedining tax base. In San Diego County, beginning in the summer of 2006 and throu^ February 2009, tile consfaixction industry lost 2730 jobs. The finance, insurance and real estate industries have lost an additional 10,500 jobs and tixe total job loss for fhe region is a daunting 121,200 jobs. Most of these job losses 'can be attributed to the economic recession caused hy the collapse of the housmg industiy witii nearly 40,000 jobs lost (l/3«^ of the total) in the constmction, finance and real estate industries. * • In a rezion of more than 3 million people covering more than 4,000 square miles, around 3 OVO homes will he luilt this year, an unsustainable number for an industry already reeling Wil^out a course change, the region zptll see more unemployed, more foreclosures, and mare govemment agencies stmggling to provide basic seroices under dwindling fax reoemes. The lack of construction will also have long-term impacts on ti\e region's economy as a lack of new housing supply will push local businesses out of . the San Diego.region, stifling Job growtii and harming the region's economy. SAN.prBGO comTY TblBLOSS (Summer "06.- Peb.^fiSI) • 521,200 jobs lost * . SS/S'OO fobs lost in couptmctiorv r««i^ eetale and finance (approx-1/5 total jot loss) Page4of9 Of BIA SAN DTFr:n-^"MAlCTNG THE CASE FOR T^KVELOPMENT IMPACTgEE DEPBRI^LS: Pee Deferrals Save financing Costs The acute problem tiie industry feces is two-fold; In many markets, tiie market value of a home leaves prqecls teetering on infeasibiHty as consfanjction costs match or exceed resale values set by tiie marketplace for both built and proposed projects. The industiy also faces unprecedented challenges in acquirbig construction finandng, its lifeblood working capital The finandnjE; that is available comes at a very Mgh iaterest rate as a direct consequence of fiie very %ht credit markets. • Fee deferrals overcome this finandal hurdle by aUowing impact fees to be paid at.the end of ttie construction process, avoiding tiie financing costs for millions in fees for tiie typical project that would otherwise need to be financed upfront in combination wifti thfrnaferii and labor costs of constiructioa This simple stimulus measure means the difference between projects sitting idle and projects moving forward} the difference hetive&n more vnemployment and job growth, Mn\dtvg Recovery Forward in Time with Bcorioimc Stimtilus Moving economic recovery forward in timz means impact fee cashflow, recovers sooner, jobs are created and tax revenues rise. In an effort lo jumpstart construction activity and help restore revenue sti-eams to local government 80+ jurisdictions, including cities, cotmties and school districts, have implemented local economic stimulus measures for tiie construction industry, induditig impact 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 REVENUE PERMIT ACXrVITY/FEE REVENUE WITH NO ECONOMIC STIMULUS • FEE IctEVENUE WITH ECONOMIC STIMULUS PERMIT ACTrVITY WITH ECONOMIC STIMULUS TIME Page5of9 BL^. SAN DIHGO-'^MAKING THB CASE FOR DEVELOPMENT IMPACT FEE PEPBRRAIS'^ Common Misconceptions About Fee Deferrals "State law does not allow ns to defer development impact fees.^ Local governments charge Developer Impact Fees ("DrF") under Govemment Code Section 66000 et seq. Section 66007(a) states tirnf, notwithstanding any otiier provision of the law, a local agency "shall liot require tiie payment of those fees or charges until tiie date of the final inspection or tiie date the certificate of occupancy is issued, whichever occurs first.". Confarary to common practice and with few exceptions, state law actualiy requires the collection of development impact fees at Certificate oJf Occupancy or Final Inspection. AdditionaUy, State Assembly Bill 2604, signed and made effective August 1, 2008, authorises the deferral of impact fees to the dose of esafow. "By deferring deoelopment impact fees, we'are losing the interest collected on fees held in advance of iheir expenditure." It is important to recognize that the-interest rate tiiat local govemment may be receiving on any fees coUected is around a marginal 1 to 2% annually. Presentiy, impact fee revenues have dropped so precipitously that interest collected on new fee revenue is insignificant The benefit of hnplementing .fee deferrals at the bottom of ihe market is tiiat it helps tiie constraction industiy, and likewise, fee revenues, recover sooner (see chart above). Once fee revenues are restored to normal levels, cash reserve levels stabilize. With tiie implementation of fee defei^ls bringing about an earlier recovery, ihe total interest earned on cash reserves would actually be greater over time as cash reserves stabilize sooner, instead of losing interest a jurisdiction is likely to earn m:ore interest. " . '"By deferring impact fees to Certificate of Occupahcy (COO) or Close of Escrow, how doweensurethatthefeesarepaid?" There are several ways to ensure tiiat the fees are paid. The .city should use a simple checklist of the various fees tiiat must be paid (the same cheddist currently used for bmlding permit issuance), induding school fees, sewer and water fees, pt cetera, before a COO or Final Inspection will be issued. If tiie fees are not paid, fiie city's project tracking system will show a hold on final inspection or issuance of COO, The hold cannot be released until tiie fees are paid. The dty can reqixbre written verification firom the otiier agendes (e.g., water and school disticts) 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 tiie Upse of Escrow, a lien is placed on tiie property and tiie fees are paid automatically out of escrow- Close of Escrow works best for for-sale residential whereas COO of Final Inspection works best for non-residential. Attachment B contains a fall and current list of jurisdictions in California tiiat implemented fee deferrals. Page6of9 ^lA SAN PIFGn-^'MAKING THE CASE FOR DBVBLOPMBNT IMPACT FEB PHFERRA^ "Wc (the City) do not want to be a position of telling a homebuyer they can't move into theirhomebecausetheimpactfeeshavenotbeenpaid."- It is standard practice in the lending industry to require proof of Final Inspection and Certificate of Occupancy for new constuction as part of tiie appraisal package. Now more tiian ever banks are ensuring that aU documentation is complete prior to completing titie loan approval process. If tiie 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 fulfiSed prior to ttie appraisal being approved, showing clearly tiiat ttie builder must obtain Final Inspection and COO. However, even following tiie provision of these documents and a complete appraisal, the lender still has not approved tiie loan. This step may take ahotiier week or more, espedally in the current climate. Thus, His highly unlikely that a homebuyer would be allowed to m<n>e in prior to the payment of impact fees with these checks and balances in place, Page7of9 BIA SAN DEGO-"MAKJNG IttB CASE FOR DEVELOPMENT IMPACT FEE DBFBRRAUS^^ Footnotes: 1 Building hiduaby Assodation of San Diego Coimty 2007-2008 Annual Fee Survey. 2 Califomia Building. Industry Assodation, "Housing Builds Jobs: Economic Recovery Starts with Housings" 2009,' 3 U.S, Department of Commerce, Bureau of Economic Analysis, California Gross Domestic Product, January 2009. 4 San Diego Regional EDC, "San Diego County Economic Overview," September 2008. 5 Sacramento Regional Research Institite, "The Economic Benefits of Housing in • Califomia," August 2008. 6 Center for Policy Initiatives, "San Diego County Hits Highest Unemployment on Record," March 20,2009. Page8of9 BIA SAN PIEGO--"MAKING THE CASE FOR DBVBLOPMBlsrr IMPACT FEE DBPBKRALS" ATTACHMENT A MODEL DEVELOPMENT IMPACT FEE DEFERRAL ORDINANCE AN ORDINANCE OF THE COUNaL OF THB CITY OF AMENDING THE CITY'S DEVELOPMENT IMPACT FEE (DH) PROVISIONS, §100.00 Purpose (a) The purpose'of this ordinance is to implement developnient impact fee deferrals for new construction, §100.10 Paymeiit of Development hnpact Fees (a) The payment of Development Impact Fees (as defined in paragraph (b) of California Govemment Code Section 66000) shaH be reqmred upon ttve issuance of Certificate of Occupancy. The Development Impact Fees due shall be the amount in effect upon the issuance of Building Permit or, where applicable, as those fees established in a Development Agreement (b) NotwiUistandiiig the above, the City Manager is authorized to defer title collection of Development Impact Fees for a maximum period of two years or until request for Certificate of Occupancy, whidiever is shorter. The Certificate of Occupancy siiall not be issued until the applicable Development Impact Fees are paid. (c) In the case of projects that do not recdve Certiticate of Occupandes, the City Manager is authorized to defer the collection of Development Impact Fees for a maximum period of two years or until request for Final Inspection, whichever is . shorter. Ihe Final inspection shall not be approved until tiie applicable Development Impact Fees are paid. (d) Notwithstanding paragrajihs (a), (b), and (c) above, a waiver, adjusfcoient or reduction of the Development Impact Fees due may be requested and dedded based on the findings contained in paragraph (e) below. An appHcation for a waiver, adjustment or reduction shafl be filed in accordance with Section and shaU indude financial and otiier infoimation tiie Qty Manager determines necessary to perform an indqjendent evaluation of the applicant's rationale for the waiVer, adjustment or reduction. (e) No waiver, adjustment or reduction of the Development impact Fees due shall be issued unless fhe City Council finds tiiere is no reasonable relationship or nexus between the impact of the development and the' amount of the Development Impact Fee, Page9of9 Attachment 4 Vista Gity Council Policy 500-01 VISTA ECONOMIC STIMULUS PACKAGE PURPOSE To establish a policy tliat 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 iob creators that also commit to keeping jobs in Vista. If a company can demonstrate that they wiil 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) J)1 Vista City Council Policy empioyees 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 result 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. CITY WIDE 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 - Redevelopment Area 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 construction of future off-site improvements do not require the ^ See footnote 1 above. ^ Conceptual approval of a project or use/amenity/site will be made by the Redevelopment and the Economic Development departments. All developments to be granted benefits under the 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; the 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 will 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 appropnate with regard to specific desirable amenities/ developments. 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) P9 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 buiidtng 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 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) 30 Vista City Council Policy Attachment 1 Additional Amenities and Sites* DESIRED AMENITIES: Books • Barnes and Noble • Borders Restaurants • Ruth Chris Steak House • Rain Waters • 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 comer of La Tortuga and Hacienda ^ This list of prospective businesses in not meant to be prescriptive or all inclusive. Rather, it is intended to provide examples of the 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: $4Q0K 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 determine the net benefit to the City of Vista of the proposed new project that would take its place. 500-01 (6) 3^ Planning Commission Minutes Decembers, 2012 EXHIBIT 3 Page 3 MOTION ACTION: Motion by Commissioner Siekmann, and duly seconded, that the Planning Commission continue this item to a future date subject to renoticing. VOTE: 6-0 AYES: Chairperson Schumacher, Commissioner Arnold, Commissioner Black, Commissioner L'Heureux, Commissioner Nygaard and Commissioner Siekmann NOES: None ABSENT: Commissioner Scully ABSTAIN: None Chairperson Schumacher closed the public hearing on Agenda Item 1 and asked Mr. Neu to introduce the next agenda item. 3- CDP 12-18 - MUSTAFA RESIDENCE - Request for approval of a Coastal Development Permit to allow for the construction of a new 2,545 square foot single family residence with an attached two-car garage on a vacant 0.10-acre lot located on the west side of Garfield Street between Sycamore Avenue and Chestnut Avenue, within the Mello ll Segment of the Local Coastal Program and Local Facilities Management Zone 1. Mr. Neu stated Agenda Item 3 would normally be heard in a public hearing context; however, the project appears to be minor and routine in nature with no outstanding issues and Staff recommends approval. He recommended that the public hearing be opened and closed, and that the Commission proceed with a vote as a consent item. Staff would be available to respond to questions if the Commission or someone from the public wished to pull Agenda Item 1. Mr. Neu stated the Commission received an errata sheet for this item as well as an updated Disclosure Statement indicating the new property owner. Chairperson Schumacher asked if any member of the audience wished to address Agenda Item 1. Seeing none, he opened and closed public testimony. MOTION ACTION: Motion by Commissioner Siekmann, and duly seconded, that the Planning Commission adopt Planning Commission Resolution No. 6934 approving Coastal Development Permit CDP 12-18 based upon the findings and subject to the conditions contained therein including the errata sheet. VOTE: 6-0 AYES: Chairperson Schumacher, Commissioner Arnold, Commissioner Black, Commissioner L'Heureux, Commissioner Nygaard, and Commissioner Siekmann NOES: None ABSENT: Commissioner Scully ABSTAIN: None Chairperson Schumacher closed the public hearing on Agenda Item 3 and asked Mr. Neu to introduce the next item. 2. ZCA 12-01 - DEVELOPMENT IMPACT FEE DEFERRAL - A request for a recommendation of approval to amend Zoning Ordinance chapters 21.85 (Inclusionary Housing) and 21.90 (Growth Management) by adding sections regarding deferral of development impact fees. 33 Planning Commission Minutes December 5,2012 Page 4 Mr. Neu introduced Agenda Item 2 and gave a brief overview of the proposed amendment. Mr. Neu stated Development Services Manager Mike Peterson was in attendance this evening and is available to answer any questions. Chairperson Schumacher opened the public hearing on Agenda Item 2. Chairperson Schumacher asked if there were any questions of Staff. Seeing none, he asked if there were any members of the audience who wished to speak on the item. Chairperson Schumacher opened public testimony on Agenda Item 2. Michael McSweeney, representing the Building Industry Association, 9201 Spectrum Center Boulevard, Suite 110, San Diego, gave a brief presentation and urged the Commission to approve this project. Commissioner Black asked why this is coming before the Commission at this time. Mr. McSweeney stated that he asked the City Council to consider this program a year ago. Chairperson Schumacher asked if there were any other members of the audience who wished to speak on the item. Seeing none, he closed public testimony. Commissioner Nygaard asked if there is a downside if the City adopted this plan. As proposed, Mr. Neu stated that the ordinance has a trial period of two years then it would sunset. The downside is that the City would need to create internal processes to ensure the City can handle the fee payment at a later date as well as making sure the fee is collected. There are a group of fees that are being recommended for deferral which are fees in which the impact occurs closer to the time of occupancy of the housing unit or non-residential space. Mr. Neu stated Staff did not identify any significant downside to deferring fees other than internal processes having to be modified. He further commented that the ordinance is intended to give the potential builder or applicant an option to continue as currently is the practice to pay prior to the issuance of a building permit or to have an opportunity to elect to pay the fees at a later date. Commissioner Nygaard asked if the fees were to be increased prior to a building permit being pulled would an applicant or builder have to pay the increased fees. Mr. Neu stated that currently an applicant or builder pays the fees in effect at the time a building permit is pulled. With the option to defer certain fees to prior to final inspection, the ordinance is structured that an applicant or builder would pay the fees in effect at the time the balance due is paid. The applicant or builder would then pay the increased fee and that is something to take into consideration when determining when to pay the fees. Commissioner Siekmann inquired about the sunset clause in the ordinance. Mr. Neu stated that the ordinance will automatically sunset unless the City Council takes action to extend it. Commissioner Black asked what happens to the fees should building permits never be issued for a project. Mr. Neu stated that if an applicant paid fees and a project never starts, the applicant can request a refund. In the instance where an applicant chooses to defer the payment of fees, the fees would be deferred until the time of final inspection. DISCUSSION Commissioner Arnold commented that this project is an example of how to make it easier to conduct business in the city. He stated his support of the project. Commissioner L'Heureux agrees with the project and feels the risks to the City are minimal. He stated he can support the project. Commissioner Black stated he can support the project. Commissioner Siekmann stated she can support the project. Chairperson Schumacher also stated his support of the project. 3*^ Planning Commission Minutes December 5,2012 Page 5 MOTION ACTION: Motion by Commissioner Siekmann, and duly seconded, that the Planning Commission adopt Planning Commission Resolution No. 6935 recommending approval of ZCA 12-01 to amend the Zoning Ordinance by adding Sections 21.85.195 and 21.90.195 based on the findings contained therein. VOTE: 6-0 AYES: Chairperson Schumacher, Commissioner Arnold, Commissioner Black, Commissioner L'Heureux, Commissioner Nygaard, and Commissioner Siekmann NOES: None ABSENT: Commissioner Scully ABSTAIN: None Chairperson Schumacher closed the public hearing on Agenda Item 2 and asked Mr. Neu to introduce the next item. 4- GPA 12-03/ZC 12-02 & GPA 12-04/ZC 12-03/ZCA 12-02/LCPA 12-03 - HOUSING ELEMENT PROGRAM 2.1 - BARRIO - Request for 1) a recommendation of approval of an addendum to the previously adopted Mitigated Negative Declaration for the 2005- 2010 Housing Element; 2) a recommendation of approval of an amendment to the General Plan Land Use Element and Zoning Ordinance Chapter 21.90 to create a new residential land use designation; and 3) a recommendation of approval of amendments to the General Plan Land Use and Open Space Elements, Zoning Ordinance and Local Coastal Program to change land use designations and zoning on various properties throughout the Barrio, which is generally located north of Tamarack Ave., south of Oak Ave., east of the railroad and west of lnterstate-5. Mr. Neu introduced Agenda Item 4 and stated Senior Planner Jennifer Jesser would make the staff presentation. Chairperson Schumacher opened the public hearing on Agenda Item 4. Ms. Jesser gave a detailed presentation and stated she would be available to answer any questions. Chairperson Schumacher acknowledged receipt of a letter from Lola's Market dated November 29, 2012. Chairperson Schumacher asked if there were any questions of Staff. Commissioner Arnold asked how many more dwelling units could be built in the Barrio with this new proposal. Ms. Jesser stated that in addition to what is currently built today, at the proposed growth control points, there could potentially be an additional 759 units built. Commissioner Arnold asked how many units currently exist. Mr. Jesser stated there are 1,272 units existing. Mr. Barberio clarified that the 759 potential units would be considered the worst case scenario and would happen if every property owner moved forward to maximize development on their property. Commissioner Nygaard asked if this item was bringing into conformance what has already been approved by Council and Commission. Ms. Jesser stated the amendments reflect what the Commission previously considered when reviewing the Envision Carlsbad preferred plan. Chairperson Schumacher asked if there were any questions of Staff. Seeing none, he asked if there were any members of the audience who wished to speak on the item. Ofie Escobedo, 1611 James Drive, Carlsbad, commended the Envision Carlsbad group for their work and efforts towards the Barrio. She would like to see the completion of Pine Park, an overpass at Chestnut over the train tracks, and a traffic circle at Roosevelt and Walnut. She does not support the name change as proposed by others in the community. PROOF OF PUBLICATION (2010 & 2011 C.C.P.) This space is for the County Clerk's Filing Stamp STATE OF CALIFORNIA County of San Diego I am a citizen of the United States and a of the County aforesaid: I am over tht eighteen years and not a party to or inte the above-entitled matter. I am the princ of the printer of North County Times Formerly known as the Blade-Citizen Times-Advocate and which newspapers hi adjudicated newspapers of general circu the Superior Court of the County of Sa State of California, for the City of Ocean the City of Escondido, Court Decree 171349, for the County of San Diego, notice of which the annexed is a printed c in type not smaller than nonpariel), published in each regular and entire issue newspaper and not in any supplement th the following dates, to-wit: Proof of Publication of December 28*^ 2012 NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN to you, because your interest may be affected, that the City Council of the City of Carlsbad will hold a public hearing at the Council Chambers, 1200 Carlsbad Village Drive, Carlsbad, California, at 6:00 p.m. on Tuesday, January 8, 2013, to consider approval of an amendment to Zoning Ordinance chapters 21.85 (Inclusionary Housing) and 21.90 (Growth Management) by adding sec- tions regarding deferral of development impact fees. Whereas, on December 5, 2012 the City of Carlsbad Planning Commission voted 6-0 (Scully absent) to recommend approval of an amendment to Zoning Ordinance chap- ters 21.85 (Indusionary Housing) and 21.90 (Growth Management) by adding sections regarding deferral of development impact fees. Those persons wishing to speak on this proposal are cordially invited to attend the public hearing. Copies ofthe agenda bill will be available on and after January 4, 20.13. If you have any questions, please contact Mike Peterson in Community & Economic Development at (760) 602-2721 or mike.peterson@carlsbadca.gov. If you challenge the Zone Code Amendment in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice or in written correspondence delivered to the City of Carlsbad, Attn: City Clerk's Office, 1200 Carlsbad Village Drive, Carlsbad, CA 92008, at or prior to the public hearing. CASE FILE: ZCA 12-01 CASE NAME: DEVELOPMENT IMPACT FEE DEFERRAL PUBLISH: December 28, 2013 CITY OF CARLSBAD CITY COUNCIL I certify (or declare) under penalty of perj==p5^ the foregoing is true and correct. Dated at Escondido, California On This 28!5l. day December 2012 Jane Allshouse NORTH COUNTY TIMES Legal Advertising AMaAV-O9-008-|. uio:>'AjaAe'AAAAM CARLSBAD UNIF SCHOOL DIST 6225 EL CAMINO REAL CARLSBAD CA 92011 [ Midn-dod pjoqai 3| jai^A^J I ap uj^e djnqaeii e| ^ zanday ap SU3S • SAN MARCOS SCHOOL DISTRICT STE 250 255 PICO AVE SAN MARCOS CA 92069 ®09kS ©AMiAV IMBqeti 3| zasi|!;n ja|ad f saipe^ sauanbiip ENCINITAS SCHOOL DISTRICT 101 RANCHO SANTA FE RD ENCINITAS CA 92024 SAN DIEGUITO SCHOOL DISTRICT 710 ENCINITAS BLVD ENCINITAS CA 92024 LEUCADIA WASTE WATER DIST TIM JOCHEN 1960 LA COSTA AVE CARLSBAD CA 92009 OLIVENHAIN WATER DISTRICT 1966 OLIVENHAIN RD ENCINITAS CA 92024 CITY OF ENCINITAS 505 S VULCAN AV ENCINITAS CA 92024 CITY OF SAN MARCOS 1 CIVIC CENTER DR SAN MARCOS CA 92069-2949 CITY OF OCEANSIDE 300jSIORTH COAST HWY OCEANSIDE CA 92054 CITY OF VISTA 200 CIVIC CENTER DR VISTA CA 92084 VALLECITOS WATER DISTRICT 201 VALLECITOS DE ORO SAN MARCOS CA 92069 I.P.U.A. SCHOOL OF PUBLIC ADMIN AND URBAN STUDIES SAN DIEGO STATE UNIVERSITY SAN DIEGO CA 92182-4505 STATE OF CALIFORNIA DEPT OF FISH AND GAME 3883 RUFFIN ROAD SAN DIEGO CA 92123 REGIONAL WATER QUALITY STE 100 9174 SKY PARK CT SAN DIEGO CA 92123-4340 SD COUNTY PLANNING STE 310 5510 OVERLAND AVE SAN DIEGO CA 92123-1239 SAN DIEGO LAFCO STE 200 9335 HAZARD WAY SAN DIEGO CA 92123 AIR POLLUTION CONTROL DISTRICT 10124 OLD GROVE RD SAN DIEGO CA 92131 SANDAG STE 800 401 B STREET SAN DIEGO CA 92101 U.S. FISH & WILDUFE 6010 HIDDEN VALLEY RD CARLSBAD CA 92011 CA COASTAL COMMISSION ATTN KANANI BROWN STE 103 7575 METROPOLITAN DR SAN DIEGO CA 92108-4402 AIRPORT LAND USE COMMISSION SAN DIEGO COUNTY AIRPORT AUTHORITY PO BOX 82776 SAN DIEGO CA 92138-2776 CARLSBAD CHAMBER OF COMMERCE 5934 PRIESTLEY DR CARLSBAD CA 92008 BIA Borre Winckel 9201 Spectrum Center Blvd. Suite 110 San Diego, CA 92123-1407 CITY OF CARLSBAD PUBLIC WORKS/ENGINEERING DEPT- PROJECT ENGINEER CITY OF CARLSBAD PROJECT PLANNER MICHAEL MCSWEENEY - BIASD STE 110 9201 SPECTRUM CENTER BLVD SAN DIEGO CA 92123-1407 T i wid6p3 dn-dod asodxa jaded P^H ®091S a;B|dujai @AjaAV asn Development Impact Fee Deferral Mike Peterson January 8, 2013 Background •BIA request to defer impact fees •City Council workshop - May 2012 –Identify fees for possible deferral •City Council Meeting – September 2012 –Draft necessary ordinance amendments •Planning Commission – December 2012 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 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 Recommendation Introduce Ordinance CS-200 amending Title 13, Chapter 13.10; Title 15, Chapter 15.08; Title 18, Chapter 18.42; Title 20, Chapter 20.44; Title21, Chapters 21.85 and 21.90, regarding fees and fee deferrals. Questions?