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2020-02-25; City Council; ; Authorize execution of an agreement for purchase of the remaining Gnatcatcher Core Area conservation credits
Meeting Date: To: From: Staff Contact: Subject: Feb.25,2020 Mayor and City Council Scott Chadwick, City Manager Rosanne Humphrey, Senior Program Manager rosanne.humphrey@carlsbadca.gov, 760-602-4689 CA Review ,llv(__ Au t horize execution of an agreement for purchase of the remaining Gnatcatcher Core Area conservation credits. Recommended Action Adopt a Resolution authorizing execution of an agreement between the city, U.S. Fish and Wildlife Service, California Department of Fish and Wildlife Service and the Center for Natural Lands Management for purchase of the remaining Gnatcatcher Core Area conservation credits and authorizing an advance for this purchase from the General Fund in an amount not to exceed $1,104,114. Executive Summary The City of Carlsbad's Habitat Management Plan (HMP) obligates the city to conserve 307 .6 acres of high-quality coastal sage scrub in an area designated as the Gnatcatcher Core Area . The city has obtained and conserved 294.67 acres of this requirement. The remaining 12.93 acres must be acquired by November 2054. The city was recently approached by the U.S. Fish and Wildlife Service and the California Department of Fish and Wildlife with an opportunity to buy the remaining 12.93 acres of the Gnatcatcher Core Area in the form of conservation credits. Staff recommends that the City Council execute the Agreement Regarding Conservation Credits and provide funding for the purchase from the Habitat Mitigation Fee Fund and make an advance from the city's General Fund . Discussion One of the city's main goals in adopting the HMP was to allow "incidental take" of the federally threatened coastal California gnatcatcher in the city through adequate preservation of coastal sage scrub, the preferred habitat of this species. Incidental take refers to any harm caused to any threatened or endangered species by otherwise lawful activity, such as construction or development. When the plan was developed, the U.S. Fish and Wildlife Service and California Department of Fish and W ildlife determined there was less coastal sage scrub habitat in the City of Carlsbad than the total acreage required to be conserved for the gnatcatcher. Feb. 25, 2020 Item #11 Page 1 of 36 Because of that limitation, the city was required to preserve 307 .6 acres of gnatcatcher habitat in the Gnatcatcher Core Area, a large block of high-quality habitat southeast of the city that is regionally important for the long-term survival of the gnatcatcher (see Exhibit 2). The city was recently approached by the federal and state wildlife agencies about an opportunity to purchase credits for the remaining 12.93 acres of the Gnatcatcher Core Area requirement on the Luchia property (see Exhibits 2 and 4). The per-acre cost of credits would be the total cost of acquisition and long-term management divided by the total number of acres. Therefore, the total cost to purchase the remaining 12.93 credits would be $1,104,114. Land prices are likely to increase significantly faster than inflation and may outpace the fee structure for land purchases within the Gnatcatcher Core Area. In addition, there will be fewer undeveloped properties with coastal sage scrub available for purchase as the area continues to be developed. Purchase of the Gnatcatcher Core Area credits on the Luchia property (shown in Exhibit 2) would enable the city to fulfill its requirement to conserve gnatcatcher habitat and take advantage of a state and federal grant funding partnership. A portion of the funding approved for the Luchia property would be used to establish an endowment to pay for long-term management of the entire Luchia property by the Center for Natural Lands Management. This will cost $755,273. The amount of the endowment is based on the terms and conditions of a Property Analysis Record dated Nov. 4, 2019. The remaining funds, $348,840, would be deposited into an escrow account and would contribute to the cost of acquiring the property (these numbers do not add up to the cost of credits presented in this staff report due to rounding). The remaining acquisition costs are to be provided by grants from the state and federal agencies, with the U.S. Fish and Wildlife Service providing $1,447,003 and the California Department of Fish and Wildlife providing $779,156. The Habitat Mitigation Fee Fund is a funding mechanism to cover the expenses for the required acquisition of coastal sage scrub habitat in the Gnatcatcher Core Area. Private developers pay a fee to mitigate the impacts to certain types of habitat. It was envisioned that the Gnatcatcher Core Area acquisitions would occur once a sufficient balance had accumulated in the fund. The city is required to complete this Gnatcatcher Core Area preservation by November 2054. As described in the 2019 HMP Mitigation Fee Analysis and Core Area Requirem~nts Report (Exhibit 3), a fee study was conducted in 2010 to determine if the HMP mitigation fee program would be sufficient to cover the cost of the remaining Gnatcatcher Core Area requirement. At that time, a total of 93.1 acres of the Gnatcatcher Core Area requirement in the form of conservation credits remained to be acquired by the city at an estimated cost of $3,906,184. Since then, the following Gnatcatcher Core Area credits have been purchased: • 50.13 acres of credit on the Alemir property purchased at a cost of $1,353,510 in January 2011 (City Council Resolution No. 2011-011) • 30.09 acres of credit on the Perkins property purchased at a cost of $868,302 in July 2011 (City Council Resolution No. 2011-178) Feb. 25, 2020 Item #11 Page 2 of 36 The purchase of these credits required an advance from the General Fund of $230,755 for the Alemir property credits and of $755,521 for the Perkins property credits. Habitat mitigation fees continue to be collected and will be used to offset this account shortfall. Currently, the fund has a remaining advance from the General Fund of $169,600. Fiscal Analysis The city would pay a total of $1,104,114 to purchase 12.93 acres of Gnatcatcher Core Area credit. As described in the Agreement Regarding Conservation Credits, these funds would be used as follows: $755,273 would be used to establish a long-term management endowment, and $348,840 would go toward the acquisition of the Luchia property (these numbers do not add up to the cost of credits presented in this staff report due to rounding). HOW GNATCATCHER CORE AREA CREDIT FUNDING WILL BE USED City's Core Area Credit Funding $1,104,114 1. Long-term Management for Luchia Property $755,2731 2. City's Share of Acquisition Cost for Luchia Property $348,8401 1 These numbers do not add up to the cost of credits presented in this report due to rounding. The remaining undeveloped properties in the city are estimated to generate about $2,186,828 in fees, which would be sufficient to pay back the remaining previous advance from the General Fund ($169,600} plus the Gnatcatcher Core Area credit from the Luchia property ($1,104,114}, leaving a remaining balance of about $926,960 when the city is built out. Any such remaining balance would be used to augment management and monitoring in the HMP preserve. GNATCATCHER CORE AREA CREDIT FUNDING Current Balance of HMP Mitigation Fee Account -$169,600 Estimated Future HMP Mitigation Fees $2,186,828 TOTAL ESTIMATED HMP MITIGATION FEES $2,017,228 Cost of 12.93 acres of Gnatcatcher Core Area Credit $1,104,114 ESTIMATED REMAINING HABITAT MITIGATION FEE FUND BALANCE $926,960 Next Steps Once agreement documents are fully executed, staff will coordinate with the federal and state wildlife agencies to provide funding to establish the long-term management endowment account and cover the city's share of the cost of the Luchia property. Environmental Evaluation (CEQA) The project is exempt from the California Environmental Quality Act (CEQA) per State CEQA Guidelines Section 15307 -Actions by regulatory agencies for protection of natural resources. Public Notification and Outreach This item was noticed in accordance with the Ralph M . Brown Act and was available for public viewing and review at least 72 hours prior to the scheduled meeting date. Exhibits 1. City Council Resolution 2. Map of Gnatcatcher Core Area and Luchia Property 3. 2019 HMP Mitigation Fee Analysis and Core Area Requirement Report 4. Letter of support from Wildlife Agencies Feb. 25, 2020 Item #11 Page 3 of 36 RESOLUTION NO. 2020-043 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING EXECUTION OF AN AGREEMENT BETWEEN THE CITY, U.S. FISH AND WILDLIFE SERVICE, CALIFORNIA DEPARTMENT OF FISH AND WILDLIFE SERVICE AND THE CENTER FOR NATURAL LANDS MANAGEMENT FOR PURCHASE OF THE REMAINING GNATCATCHER CORE AREA CONSERVATION CREDITS, AND AUTHORIZING AN ADVANCE FOR THIS PURCHASE FROM THE GENERAL FUND IN AN AMOUNT NOT TO EXCEED $1,104,114. WHEREAS, the City Council of the City of Carlsbad, California, has determined that the city is obligated to conserve 307.6 acres of high-quality coastal sage scrub habitat within the Gnatcatcher Core Area pursuant to the city's Habitat Management Plan (HMP), approved by the City Council on Nov.9,2004;and WHEREAS, the Gnatcatcher Core Area is located southeast of the city boundary as identified in the Multiple Habitat Conservation Plan; and WHEREAS, the city has fulfilled 294.67 acres of the Gnatcatcher Core Area conservation requirement; and WHEREAS, the U.S. Fish and Wildlife Service and California Department of Fish and Wildlife Service have proposed that the city purchase the remaining 12.93 conservation credits on the Luchia property, located in the Gnatcatcher Core Area; and WHEREAS, the total purchase price ofthese conservation credits is $1,104,114; and WHEREAS, the funding for the conservation credits will be used to establish a long-term management endowment for the entire Luchia property in the amount of $755,273 and as a contribution toward the purchase of the property in the amount of $348,840; and WHEREAS, the city's cost for Gnatcatcher Core Area conservation is funded by revenue from the Habitat Mitigation Fee Fund; and WHEREAS, the Habitat Mitigation Fee Fund currently has a General Fund advance of $169,600 from previous conservation credit purchases; and WHEREAS, $1,104,114 shall be advanced from the General Fund as an interest-bearing loan to the Habitat Mitigation Fee Fund; and WHEREAS, the General Fund has sufficient funds to loan for acquisition of said conservation credits, and the loan would be repaid with future Habitat Mitigation Fee Fund revenues. Feb. 25, 2020 Item #11 Page 4 of 36 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the mayor is authorized to execute the Agreement Regarding Conservation Credits, attached hereto as Attachment A, and any and all other documents associated with the purchase of conservation credits as necessary, as approved by the City Attorney. 3. That the deputy city manager, administrative services, is authorized to appropriate funds for purchase of conservation credits from the Habitat Mitigation Fee Fund and advance funds from the city's General Fund per the details of the Agreement Regarding Conservation Credits. 4. That the deputy city manager, administrative services, is authorized to reimburse the amount loaned to the Habitat Mitigation Fee Fund back to the General Fund as funds become available in the Habitat Mitigation Fee Fund. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 25th day of February 2020, by the following vote, to wit: AYES: Hall, Blackburn, Bhat-Patel, Schumacher. NAYS: None. ABSENT: None. M ALL, Mayor ~{~ecdrf{,--,;fYJt, De vi- '" ~ ENG~ty Clerk I Cl s ':J (SEAL) {) f/u Feb. 25, 2020 Item #11 Page 5 of 36 AGREEMENT REGARDING CONSERVATION CREDITS CITY OF CARLSBAD HABITAT MANAGEMENT PLAN OFFSITE CORE AREA This Agreement Regarding Conservation Credits, City of Carlsbad Habitat Management Plan Offsite Core Area ("Agreement") is entered into on ATTACHMENT A March 6, 2020, by and among the City of Carlsbad ("City") a municipal corporation, the Center for Natural Land Management ("CNLM"), a California 501 (c)(3) nonprofit corporation, the United States Fish and Wildlife Service ("USFWS"), and the California Department of Fish and Wildlife ("CDFW'), collectively referred to as "Parties" herein. RECITALS A. Under the Federal Endangered Species Act section 10 permit for the City of Carlsbad, the USFWS is responsible for approving the location and adequacy of mitigation for impacts to federally listed species and candidate species. Under the California Endangered Species Act, CDFW is responsible for approving the location and adequacy of mitigation for impacts to State listed species, candidate species, and Species of Special Concern. CDFW and USFWS are collectively referred to as the "Wildlife Agencies". B. In cooperation with the Wildlife Agencies, on November 9, 2004, the City adopted the Habitat Management Plan for Natural Communities in the City of Carlsbad ("HMP"), a comprehensive city-wide program to identify how the City can preserve the diversity of habitat and protect sensitive biological resources within the City while allowing for additional development under a city- wide permit and authorization for the incidental take of species in conjunction with private development projects, public projects and other activities which are consistent with the HMP. The City's HMP is a subarea of the Regional Multiple Habitat Conservation Plan ("MHCP") adopted in March 2003 by San Diego Association of Governments. C. Pursuant to the HMP, the City's total core area conservation requirement is 307.6 acres, 294.67 of which has been satisfied as acknowledged by the Wildlife Agencies in the letter attached as Exhibit A. The City's remaining conservation balance is 12.93 acres. D. R.S.F Road, LLC, a California Limited Liability Company and James G. Vangelis, an individual, (together "Owners"), own approximately 38.99- acre of property (APN 222-030-50) in the County core area commonly known as the Luchia Property ("Luchia Property") as depicted in the legal description and map attached as Exhibit B. The Wildlife Agencies approved the City's funding for the acquisition and long-term management of a portion of the Luchia Property in exchange for 12.93 acres of core area conservation credits (see Exhibit A). Upon - 1 - Feb. 25, 2020 Item #11 Page 6 of 36 2. Credit Confirmation. Within twenty-four (24) hours of the close of Escrow, CNLM will provide the following individuals and organizations with written confirmation of the closing ("Closing"): Scott Sobiech Field Supervisor United States Fish and Wildlife Service Carlsbad Fish and Wildlife Office 2177 Salk Avenue, Suite 250 Carlsbad, CA 92008 Edmund J. Pert Regional Manager, South Coast Region California Department of Fish and Wildlife 3883 Ruffin Road San Diego, CA 92123 Isabella Gelmi Corporate Secretary Center for Natural Lands Management 27259 Via lndustria, Suite B Temecula, CA 92590 Celia Brewer City Attorney City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Matt Hall Mayor City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Within 30 calendar days of receipt of notice that the City has made the Payment, USFWS and CDFW will provide written confirmation to City and CNLM that the City has been credited with the 12.93 acres of conservation credit towards fulfillment of its HMP requirement. 3. Management of Luchia Property and Endowment. CNLM will (a) manage the Luchia Property in accordance with the Rancho La Costa Habitat Conservation Area Management Plan 2016-2020 ("Management Plan") (revised February 23, 2018) approved by the Wildlife Agencies, and (b) hold, invest and manage the Endowment received from the City pursuant to this Agreement. - 3 - Feb. 25, 2020 Item #11 Page 7 of 36 4. Further Assurances. Whenever requested to do so by another party, each party shall execute, acknowledge, and deliver any further instruments or documents that are reasonably necessary to document the transactions contemplated by this Agreement. 5. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same document. 6. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to principles of conflicts of laws. 7. Successors. The Luchia Property (including any portion of it or any interest in it) shall not be sold, transferred, exchanged, or otherwise conveyed without the written approval of the CDFW and USFWS and each successor-in-interest assumes and agrees in a writing to be bound by the terms of this Agreement. CNLM agrees to give written notice of this Agreement to each prospective transferee of all or any portion of the Luchia Property at least 30 days prior to the proposed transfer and (unless the City and the Wildlife Agencies otherwise agree in writing) to cause such transferee to assume this Agreement concurrently with its acquisition of such property. In addition, CNLM agrees to give written notice of any proposed transfer of the Luchia Property or any portion of it to the Parties at least 30 days prior to the proposed transfer. Any such notice shall describe the proposed handling of the Endowment upon the transfer. 8. Amendment. This Agreement can only be amended in a writing signed by all of the Parties. 9. Notices. Any notice, request or other communication under this Agreement shall be in writing and addressed as set forth in Section 2. A party shall give notice of change of address by written notice to the other Parties in accordance with this section. 10. Exhibits. The following Exhibits are attached to this Agreement and incorporated by reference in it as though set forth in full: A-Letter from Wildlife Agencies acknowledging Mitigation Credit B -Map and Legal Description of Luchia Property 11. Interpretation. This Agreement shall be construed as if all Parties prepared it. IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their duly authorized representatives as of the date set forth above. -4- Feb. 25, 2020 Item #11 Page 8 of 36 DATED: aa l:Jt I aaao I I CITY OF CARJ..SBAD;,1;/J/_ By. 1d10(~ Name: Mart J-la11 Title: M'!f r - 5 - Feb. 25, 2020 Item #11 Page 9 of 36 DATED: ------- UNITED STATES FISH AND WILDLIFE SERVICE By: ~ ------------ Name: Scott A. Sobiech ------------ Title: __ h_'f_e-=..,;/J __ Si_v~f.;__f''_.-1_·_s ,_r __ -6- Feb. 25, 2020 Item #11 Page 10 of 36 CALIFORNIA bEPARTMENT OF FISH AND DATED: -------WILDLIFE . ) .• . ?/, __ By: <. es,' ;-;;;;r-- Name: eD rf K_ 1 Title: ~.~G;-\ONkl-t->--A-1'-JAG-1:fL - 7 - Feb. 25, 2020 Item #11 Page 11 of 36 DATED: 02/27/2020 CENTER FOR NATURAL LANDS MANAGEMENT By:~ s~~ Name: Isabella Gelmi Title: Corporate Secretary - 8 - Feb. 25, 2020 Item #11 Page 12 of 36 Exhibit A Acknowledgement of Mitigation Credit Letter (12/19/2019) - 9 - Feb. 25, 2020 Item #11 Page 13 of 36 EXHIBIT A U.S. FISH AND WILDLIFE SERVICE Carlsbad Fish and Wildlife Office 2177 Salk Avenue, Suite 250 Carlsbad, California 92008 In Reply Refer To: FWS/CDFW-18B029 I -20CPA0070 Ms. Rosanne Humphrey Senior Program Manager Habitat Management Program 1635 Faraday A venue Carlsbad, Cali fornia 92008 CALIFORNIA DEPARTMENT OF FISH AND WILDLIFE South Coast Region 3883 Ruffin Road San Diego, California 92123 December 19, 20 19 Sent Electronically Subject: Acknowledgement of Mitigation Credit for 12.93 Acres of the Luchia Property, City of Carlsbad, California Dear Ms. Humphrey: The U.S. Fish and Wildlife Service (Service) and California Department of Fish and Wildlife (Department) received your request ( electronic mail dated December 13, 2019) for our concurrence that the City of Carlsbad's (City) contribution to the acquisition, conservation, and funding for the long-term management of the approximately 39-acre Luchia property would fulfill the City of Carlsbad Habitat Management Plan (Carlsbad HMP) Northwest San Diego County Multiple Habitat Conservation Program's remaining conservation requirement of 12.93 acres. The City's conservation requirements are identified in Section 0.5 of the Carlsbad HMP and Section 11.5 of the associated Implementing Agreement. The Center for Natural Lands Management (CNLM) has completed a Property Analysis Record for the nearly 39-acre Luchia acquisition to determine the cost to monitor and manage the propetty in perpetuity. We concur that the City's monetary contribution towards the acquisition, conservation, and funding for the long-term management of the Luchia property would fulfill the City's obligations associated with the Carlsbad HMP and result in 12.93 acres of credit for the C ity. If you have any questions or comment regarding this letter, please contact Mary Beth Woulfe of the Service at (760) 431-9440, extension 294 or David Mayer of the Department at (858) 467-4234. SCOTT SOBIECH Scott A. Sobiech Field Supervisor Digitally signed by SCOTT SOBIECH Date: 2019.12.1914:18:21 -08'00' U.S. Fish and Wildlife Service Sincerely, :l)~~ for Gail K. Sevrens Environmental Program Manager California Department of Fish and Wildlife Feb. 25, 2020 Item #11 Page 14 of 36 Exhibit B Legal Description and Map of Luchia Property -11 - Feb. 25, 2020 Item #11 Page 15 of 36 EXHIBIT B (Legal Description) THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 20, TOWNSHIP 12 SOUTH, RANGE 3 WEST, SAN BERNARDINO MERIDIAN, IN THE CITY OF SAN MARCOS, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF. APN(s): 222-030-50-00 Feb. 25, 2020 Item #11 Page 16 of 36 0 0 ~ N N N l, s: ► ""O ► (/) (/) rn (/) (/) 0 ;o 0 a. CD 7 (,) 0 0 N a, --.J --.J ""O ru co CD ;o CD .0 C CD U> cii C. Ill "."'i (') 5· C. '< '-CD Cl: ""O S· cii C. 13 " ' " ... --0 ·, ' " ~ ,. THIS MAP WAS PREPARED FOR ASSESSUENT PURPOSES ONLY NO LIABILITY IS ASSUMED FOR THE ACCURACY OFTHE DATA SHOWN. ASSESSOl'!S PARCELS MAY NOT COWLY l'o!TH LOCAL SUBDMSION OR BUILDING ORDINANCES. @ BOY. l .~!\I ~~ @ "lJ 5 OPEN SPACE e 16.35 AC e 20.88 AC 1• ... 0 N "' "' " :i CONDO /JJ/ 27 VARADERO PHASE 5 DOG05-579332 (SEE SHT3) CONDO VARADERO PHASE6 DOG05-579329 (SEE SHT3) CONDO VARADERO-PHASE 1 DOC04-1182500 D0C05-0246336 (SEE SHT 3) @j CONDO 30.67 AG VARADERO-PHASE 3 D0C05-0243616 (SEE SHT4) OPEN SPACE .. @··-... 21.80 AC CONDO VARADERO-PHASE 4 DOC05-0256016 OPEN SPA~~ -l?~E_SHT 4) OPEN SPACE ® 66.86AC .¢ l*S.0.G.&E. TRANSMISSION LINE SAN Gm Qy MARCOS /"'LS'\ ~ SAN DIEGO COUNTY ASSESSOR'S MAP EB BOOK 222 PAGE 03 SHT 1 OF 2 rim @ SHT 1 ® SHT 1 SHT 2 MAP 14852-CO OF SD TCT 5131-1 "1 p ( i ; N . "' -" '" ·., :i :•, ® 20.42 AC ~f-. 13.99AC . ~~~ '@ 222-03 SHT 1 OF 4 1 1"=400' ~ EB 576 08 1317 " '"' SHT 4 t--+--+---<1-4---1 1/4 Feb. 25, 2020 Item #11 Page 17 of 36 . EZj ----✓ ·. //,, ~ ~~(#> I / ~ ~{~ 0 • . . 2,000 /il®Cl S.D. COUNTY ( SAN MARCOS @' :) Luchia Property EXHIBIT 2 CJ Gnatcatcher Core Area (per MHCP Vol. 1) ~ Habitat Management Plan Conserved Lands ◊□ ,:., ~&)@aCl@ t ~~ ~------~ ___ _j__ ________ _J F SOURCE: SanG\S; City of Carlsbad Luchia Property Feb. 25, 2020 Item #11 Page 18 of 36 HMP Mitigation Fee Analysis and Core Area Requirements Report December 10, 2019 1.0 Background EXHIBIT 3 One of the city's main goals in adopting the Habitat Management Plan (HMP) was to allow incidental take of the federally threatened coastal California gnatcatcher (gnatcatcher) in the city through adequate preservation of coastal sage scrub, the preferred habitat ofthis species. During the preparation of the HMP, the Wildlife Agencies determined there was not enough coastal sage scrub habitat within the city to achieve the necessary acreage for coverage of the gnatcatcher. Therefore, the city was required to cause the preservation of 307.6 acres of gnatcatcher habitat southeast of the city, within the Multiple Habitat Conservation Plan1 (MHCP) Gnatcatcher Core Area (Core Area) (Figure 1). The HMP and associated Implementing Agreement (IA) identified the HMP Habitat In-Lieu Mitigation Fee program (also known as the HMP Mitigation Fee) as a funding mechanism to cover the expenses related to this out-of-city habitat preservation. As described in the HMP, the fee can be paid to mitigate impacts to certain habitat types in lieu of preservation at different mitigation ratios. These habitat types and mitigation ratios, listed below, are noted in Table 11 of the HMP (page D-113): Group D -Unoccupied coastal sage scrub, coastal sage/chaparral mix, chaparral (excluding southern maritime chaparral) -mitigation ratio of 1:1; Group E -Annual (non-native) grassland -mitigation ratio or 0.5:1; and Group F -Disturbed lands, eucalyptus, and agricultural lands -mitigation ratio of 0.1:1. The fee is not applicable to properties that preserve at least 67 percent of the onsite habitat, parcels subject to the Coastal Zone Agricultural Conversion Mitigation Fee, or sites that were graded within five yea rs prior to the establishment of the fee in January 2007. The fee does not apply to city projects that impact Group D, E, or F habitats; instead, such impacts will be mitigated by deducting credits from the Lake Calavera Mitigation Parcel. It was envisioned that the fee, once established by City Council, would be collected over time and the Core Area acquisitions would occur once a sufficient fee account balance had accumulated. The city is required to complete this Core Area preservation prior to the end of the HMP Take Authorization Permit period, or by November 2054. 1 The Multiple Habitat Conservation Plan (MHCP) is the regional framework document that guides the development of city-specific Habitat Management Plans (HMPs) for incorporated North County cities. Feb. 25, 2020 Item #11 Page 19 of 36 2.0 Previous Fee Studies 2.1 2000 Fee Stud y The HMP was first approved by the Wildlife Agencies in December 1999. That approval triggered the development of an HMP Mitigation Fee Study to determine the appropriate fee amounts for the three habitat types. Planning and GIS staff developed a list of parcels that would be potentially subject to the fee, and Onaka Planning & Economics was contracted to prepare a fee nexus study based upon the list of parcels and the estimated cost of Core Area property acquisition and management. Some assumptions were needed to estimate the amount of acreage that would be subject to the fee. For example, it was assumed that 25 percent of all coastal sage scrub habitat would be occupied by gnatcatcher, therefore, the estimated fee revenue from coastal sage scrub habitat was reduced by 25 percent. The amount of onsite preservation also needed to be estimated to determine the amount of potential fee. As mentioned below, the estimated on-site preservation had a major influence on the total estimated fee revenue. Based upon the list of properties, assumptions, estimates, and mitigation ratios, the "Fee Study Report for Habitat Management Plan Mitigation Fee Program" was prepared by Onaka Planning and Economics in May 2000. The fees needed to capture enough revenue to cover the expenses of the required Core Area habitat preservation were set as follows: Group D -$7,897 pe r acre (mitigation ratio of 1:1); Group E -$3,949 per acre (mitigation ratio of 0.5:1, fee 1/2 of Group D); Group F -$790 per acre (mitigation ratio of 0.1:1, fee 1/10 of Group D). This HMP Mitigation Fee was adopted by the City Council in July 2000 and all subsequent development projects were conditioned to pay the fee prior to issuance of grading permit or building permit, whichever occurred first. Since the HMP was not approved by the Coastal Commission and not fully implementable, collection of the fee was deferred until the HMP received final approval. 2.2 2005 Fee Study The final approval of the HMP by the Coastal Commission and subsequently Wildlife Agencies and City Counci l did not occur until November 2004. During the four-year lapse between initial and final approval, many projects that may have paid the fee received grading and/or building permits and therefore avoided payment of the fee. Also during that time, additional coastal sage scrub acreage was identified for preservation within the City limit thus lowering the total amount.of additional habitat preservation requi~ed for gnatcatcher coverage. This loss of potential fee revenue and reduction in the outstanding Co re Area acquisition requirement necessitated the revision of the original fee study. In September 2005, Onaka Planning and Economics prepared an updated fee study for the HMP Mitigation Fee. Of the original 307.6 acres of Core Area preservation required, approximately 150 acres was provided and funded t hrough project related mitigation (e.g. Municipal Golf Course, Bressi Ranch, Ca rrillo Ranch). The City also received credit for an additional 64.19 acres of preservation within the City, leaving an outstanding requirement of 93.15 acres of coastal sage scrub habitat in the Core Area. Of this 93.15 acres, 43.02 was to be acquired Feb. 25, 2020 Item #11 Page 20 of 36 by the City and 50.13 acres were to be secured through reimbursement to the developer of the Villages of La Costa Master Pl<jn for already-preserved Core Area habitat. According to the 2005 fee study, the expenses related to the acquisition and preservation of the required Core area, and therefore required fee revenue, were estimated as follows: 43.02 acres acquisition at $49,500 per acre= $2,129,500 . 50.13 acres reimbursement at $27,000 per acre= $1,353,510 Fee program administration= $186,574 Total Expenses $3,669,584 Given the amount of development in the intervening period between the initial and revised fee studies, the list of eligible parcels necessitated revision. This revision reduced the acreage of available habitat. Based upon the total expenses needed to cover the outstanding Core Area acquisition and an estimate of the amount of acreage remaining within the City that would be subject to the fee, the HMP Mitigation Fee was adjusted as follows: Group D -$25,683 per acre (mitigation ratio of 1:1); Group E -$12,842 per acre (mitigation ratio of 0.5:1, fee 1/2 of Group D); Group F -$2,569 per acre (mitigation ratio of 0.1:1, fee 1/10 of Group D). The City Council adopted the HMP Mitigation Fee with an automatic escalation to adjust for inflation. Therefore, unless City Council takes action to not adjust for inflation for a particular year, the fee increases annually. The HMP Mitigation Fee has been collected since its approval in January 2006 and kept in an interest-bearing account. 2.3 2010 Fee Study 2.3.1 Purpose During the early stages of HMP Mitigation Fee implementation, questions arose about which properties were subject to the fee, and some projects paid significantly lower fees than estimated. Based upon the questions of fee applicability and the discrepancy between estimated and actual fees paid, Planning staff initiated a follow up fee analysis in 2010 to determine if the total anticipated fee revenue amount would cover the expenses of Core Area property acquisition. Consistent with the previous fee studies, the following assumptions were used: • Onsite habitat is based on the City's 1992 vegetation GIS data layer; • The applicability requirements of the fee are as stated in the HMP (i.e. all privately owned undeveloped property that was not graded within five years prior to fee adoption and does not provide 67% on site habitat conservation) and the 2005 Onaka Fee Study; • Approximately 25 percent of coastal sage scrub Citywide is presumed to be occupied by gnatcatcher and therefore not eligible for the fee; • All parcels will develop within the SO-year HMP Take Authorization Permit period (or before November 2054). Feb. 25, 2020 Item #11 Page 21 of 36 The following additional assumptions were also made: • The developers of all parcels five acres or less in area will not provide onsite conservation due to the difficulty and expense in obtaining a Preserve Manager and providing a non-wasting endowment for conservation in perpetuity and, therefore, opt for payment of the fee. • Property owners will maximize conservation on site to lower fee amount; therefore, some undeveloped properties will not pay a fee. • The HMP Mitigation Fee used to calculate the fee revenue was based upon the FY 2009/10 fee and did not incorporate the annual automatic fee escalation. This provided a more conservative estimate of fee revenue generated over the life of the program. While the cost of reimbursement and fee program administration remained the same, the value of Core Area property increased to an estimated $55,000 per acre, approximately 11.1% higher than in 2005. Therefore, the total expenses related to acquisition and preservation was estimated to be: 43.02 acres acquisition at $55,000 per acre= $2,366,100 50.13 acres reimbursement at $27,000 per acre= $1,353,510 Fee program administration= $186,574 Total Expenses $3,906,184 2.3.2 2010 Analysis Methods The methodology used for this analysis mimicked the previous HMP Mitigation Fee studies. Using the City's GIS tools, all undeveloped parcels were identified -undeveloped parcels were defined as properties with assessed improvement value of less than $1,000 with developable Zoning and General Plan designations. As stated above, all parcels subject to the Coastal Zone Agricultural Mitigation fee were also eliminated, which included many of the HMP Standards areas within Local Facilities Management Zone 20. Once the undeveloped parcels were identified, aerial photography from 2008 was used to verify that the parcels were indeed undeveloped and had development potential. Several parcels were eliminated during this step in the process. The undeveloped parcels were grouped into three categories: parcels containing HMP Standards Areas; parcels currently under development permit review or approved projects that have not yet pulled grading permits or paid a fee; and undeveloped parcels outside of the HMP and not under development review. The latter category constituted the largest number of parcels in the study; however most of these parcels were less than five acres in size and contained agriculture or disturbed lands (i.e. Group F habitats). This process netted over 200 additional parcels not used in the two previous studies. Once the undeveloped parcels were identified, the different habitat types within the parcel were identified and their acreage quantified using the city's vegetation GIS layer. The habitat types on some properties were adjusted according to more detailed knowledge of the site, including recent site-specific biological reports or field visits. Each habitat type was then assigned its appropriate fee value based the current HMP fee structure. The next step involved an evaluation of the amount of anticipated development and conservation on the property. As mentioned above, all parcels less than five acres in size were assumed to have no on- site conservation and, therefore, 100 percent of all eligible habitat types and their respective values Feb. 25, 2020 Item #11 Page 22 of 36 were included. Also, as mentioned above, all coastal sage scrub habitat on properties with five or more acres was reduced in value by 25 percent based upon the assumption that one quarter of coastal sage scrub citywide is occupied by gnatcatcher. For parcels exceeding five acres, staff used site conditions and pending project site design to estimate the amount of development and conservation that would occur on the property. 2.3.3 2010 Results Based upon the methods described above, and the 2010 fee amounts, the total anticipated fee generation was calculated. The 2010 evaluation concluded that the current fee schedule, even with the automatic annual adjustment factor, was inadequate to cover the full cost of its Core Area obligation. Based on the estimated cost of land acquisition at that time, the shortfall was estimated to be $691,570. 3.0 Current Status of HMP Fee Account and Remaining Credits Since the 2010 fee analysis was conducted, the city has purchased a total of 80.22 credits (acres) as follows: • In January 2011 city purchased 50.13 acres of credit on the Alemir property at a cost of $1,353,510 (Council Resolution 2011-011). • In June, 2011, 30.09 acres of credit was purchased on the Perkins property at a cost of $868,302 (Council Resolution 2011-159). The purchase of these credits required an advance from the General Fund of $230,755 and $755,521, respectively. HMP fees continue to be collected and used to offset this account shortfall. Currently, the account has a shortfall of $155,754. A total 12.93 acres of Core Area credit remains to be acquired. The 2010 fee study estimated the cost of the remaining credits to be approximately $55,000/acre, which is $64,910 when adjusted for inflation to 2019 dollars. The cost of credits includes land acquisition and long-term management. Actual costs depend on current land prices and long-term management, both of which can vary considerably from site to site. Recent appraisals on land that would qualify for Core Area credit vary from $35,469 per acre to $138,000 per acre, as described below. Note that these estimates do not include the cost of long-term management. • Denk Mountain properties (28 acres total), outside of Carlsbad just east of city boundary, within MHCP Core Area: $35,469 per acre, $37,597 per acre and $42,76 per acre (adjusted for inflation to 2019 dollars). Properties consist of high quality coastal sage scrub and chaparral habitat. Appraisal date -July 2017. This property has been purchased by Center for Natural Lands Management. • Luchia property (39 acres), outside of Carlsbad just east of city boundary, within MHCP Core Area: $66,026/acre. Consists of high quality coastal sage scrub and chaparral habitat. Appraisal date -November 2019. Feb. 25, 2020 Item #11 Page 23 of 36 • Aura Circle property (15 acres), in Carlsbad, $138,000/acre. Consists of 5.6 acres of high quality coastal sage scrub; the remainder is mostly disturbed habitat. Appraisal date -December 2019. The cost for this property is much higher than the other properties because it has development entitlements, which would impact only a portion of the property and leave the rest as protected open space. The city was recently approached by the Wildlife Agencies about an opportunity to purchase credits for the remaining 12.93 acres of Core Area credit on the Luchia property. The per-acre cost of credits would be the total cost of acquisition and long-term management ($2,575,000 + $755,273) divided by the total number of acres (39) = $85,392 per acre. Therefore, the total cost to purchase the remaining 12.93 credits would be $1,104,119 ($85,392 x 12.93). The 2010 fee study estimated the cost of the 93.15 credits that were remaining at that time to be $3,906,184 (see Section 2.3.1). If the Lucha property credits are purchased, the actual total cost for the remaining Core Area credit since 2010 would be $3,325,931. Land prices are likely to increase significantly faster than inflation and may outpace the HMP Fee structure. In addition, there will be fewer undeveloped properties with coastal sage scrub available for purchase as the area continues to build out. Therefore, it would be prudent to purchase the Core Area credits on the Luchia property now rather than wait until the HMP fee account builds up sufficiently. Based on the 2010 fee study, the remaining undeveloped properties (including Cantarini Ranch, Holly Springs, Dos Colinas, Rancho Milagro, Villagio, HMP Standards Area properties within Local Facilities Management Zone 15, and vacant parcels outside of the HMP) are estimated to generate approximately $2,186,828 in fees. This would more than cover the estimated shortfall in the HMP fee account, which would be approximately $1,259,873 ($1,104,119 for the remaining credits plus the current remaining liability of $155,754). Feb. 25, 2020 Item #11 Page 24 of 36 U.S. FISH & WILDLIFE SERVICE ~ ~ ~o..-'f\\:i,~ U.S. FISH AND WILDLIFE SERVICE Carlsbad Fish and Wildlife Oftice 2177 Salk Avenue, Suite 250 Carlsbad, California 92008 In Reply Refer To: FWS/CDFW-l 8B029 l-20CP A0070 Ms. Rosanne Humphrey Senior Program Manager Habitat Management Program 1635 Faraday Avenue Carlsbad, California 92008 EXHIBIT 4 CALIFORNIA DEPARTMENT OF FISH AND WILDLIFE South Coast Region 3883 Ruffin Road San Diego, California 92123 December 19, 2019 Sent Electronically Subject: Acknowledgement of Mitigation Credit for 12.93 Acres of the Luchia Property, City of Carlsbad, California Dear Ms. Humphrey: The U.S. Fish and Wildlife Service (Service) and California Department of Fish and Wildlife (Department) received your request (electronic mail dated December 13, 2019) for our concurrence that the City of Carlsbad's (City) contribution to the acquisition, conservation, and funding for the long-term management of the approximately 39-acre Luchia property would fulfill the City of Carlsbad Habitat Management Plan (Carlsbad HMP) Northwest San Diego County Multiple Habitat Conservation Program's remaining conservation requirement of 12.93 acres. The City's conservation requirements are identified in Section D.5 of the Carlsbad HMP and Section 11.5 of the associated Implementing Agreement. The Center for Natural Lands Management (CNLM) has completed a Property Analysis Record for the nearly 39-acre Luchia acquisition to determine the cost to monitor and manage the property in perpetuity. We concur that the City's monetary contribution towards the acquisition, conservation, and funding for the long-term management of the Luchia property would fulfill the City's obligations associated with the Carlsbad HMP and result in 12.93 acres of credit for the City. If you have any questions or comment regarding this letter, please contact Mary Beth Woulfe of the Service at (760) 431-9440, extension 294 or David Mayer of the Department at (858) 467-4234. SCOTT SOBIECH Scott A. Sobiech Field Supervisor Digitally signed by SCOTT SOBIECH Date: 2019.12.19 14:18:21 -08'00' U.S. Fish and Wildlife Service Sincerely, 7)~-~ for Gail K. Sevrens Environmental Program Manager California Department of Fish and Wildlife Feb. 25, 2020 Item #11 Page 25 of 36 ... --,,-~--·---~---~-~--.,·-·-·-North County Advocates 7668 EI Camino Real, Suite 104-258, Carlsbad CA 92009 Monday, February 24, 2020 Honorable Mayor and City Council Regarding City Council agenda item# 11 for Feb. 25th meeting North County Advocates supports the city's staff report recommending purchasing gnatcatcher core area conservation credits using HMP in lieu fees from the general fund and applying those fees toward the acquisition/management costs for the Luchia Trust property. At the request of the Wildlife Agencies North County Advocates initiated the effort to acquire this property several years ago. After completing the appraisal and getting tentative acquisition funds in place we passed the baton on to others with more technical expertise. We appreciate the efforts of all involved, including city staff, in bringing this pending acquisition to this point. In fact, I spoke in favor of the acquisition · of the Luchia Trust property at the Feb 11 th city council meeting and expressed our gratitude. Your approval of this item is the next key step to make the acquisition actually happen. This acquisition is a great example of how, by working together, we can leverage local dollars with other funding sources and help preserve some of the critical remaining natural lands in coastal north San Diego county. Dr. Howard Krausz On Behalf of North County Advocates North County Advocates is a non-profit 501© 3 public benefit corporation. TIN 27-3158348. www.northcountvadvocates.com Feb. 25, 2020 Item #11 Page 26 of 36 Gnatcatcher Core Area Credit James Wood, Environmental Manager Rosanne Humphrey, Senior Program Manager Feb. 25, 2020 1 Feb. 25, 2020 Item #11 Page 27 of 36 Habitat Management Plan •Citywide conservation plan approved in 2004 •Only such plan in North County •Conserves native species, habitats and wildlife movement corridors •Preserve system and land management follow current scientific standards •Compliance with state and federal laws 2 Feb. 25, 2020 Item #11 Page 28 of 36 Gnatcatcher Core Area Requirement •307.6 acres of coastal sage scrub –294.7 acres acquired –12.9 acres remaining •By 2054 3 Feb. 25, 2020 Item #11 Page 29 of 36 Gnatcatcher Core Area 4 ( SAN MARCOS Feb. 25, 2020 Item #11 Page 30 of 36 Challenges in Finding Land •Within Core Area OR undergo separate evaluation and approval by agencies •High quality coastal sage scrub habitat •Willing seller •Availability of land at fair market value 5 Feb. 25, 2020 Item #11 Page 31 of 36 Other Considerations •Cost of habitat restoration (if needed) •Cost of long-term management •Staff time to find, negotiate, and purchase land 6 Feb. 25, 2020 Item #11 Page 32 of 36 Current Opportunity •Partner with Wildlife Agencies •Purchase remaining Core Area obligation •City’s total cost: $1,104,114 •To be paid back by Habitat Mitigation Fee Fund 7 Feb. 25, 2020 Item #11 Page 33 of 36 Luchia Property 8 SAN MARCOS Feb. 25, 2020 Item #11 Page 34 of 36 •Fulfills our commitment to conserve the gnatcatcher •Wildlife Agency partnerships •Prudent use of tax dollars •Why now?–Avoid future escalating land costs –Diminishing availability of land in Core Area Benefit to the City 9 Feb. 25, 2020 Item #11 Page 35 of 36 Recommended Action Adopt a Resolution authorizing execution of an agreement between the city, U.S. Fish and Wildlife Service, California Department of Fish and Wildlife and the Center for Natural Lands Management for purchase of the remaining Gnatcatcher Core Area conservation credits, and authorizing an advance for this purchase from the General Fund in an amount not to exceed $1,104,114. 10 Feb. 25, 2020 Item #11 Page 36 of 36