Chapter 15.68 DEVELOPMENT IMPACT FEES
15.68.010 Fire protection facilities development impact fee.
A. Findings and Intent.
1. New residential and nonresidential development in the city has attracted and will continue to attract employees and residents to the city, and there is a causal connection between such development projects and the increased need for fire protection facilities.
2. Failure to enhance the ability of the city's fire protection facilities system to accommodate additional service calls will make it more difficult for residents, employers, and employees to obtain the fire services they need.
3. Sources of city revenue other than fire protection facilities development impact fees, including tax revenues that will be paid by new residential and nonresidential development, will be needed for many public purposes and therefore will not be sufficient to offset the burdens on fire facilities created by new development.
4. It is the intent of the city to require every person or organization that develops land to mitigate the impacts of that development on the city's fire facilities system. The city may therefore require developers to mitigate fire protection facilities impacts caused by their development and to pay a fire protection facilities development impact fee that will be used to mitigate those impacts by constructing fire facilities pursuant to the most current fire facilities plan, the most current capital improvement plan, or the annual budget process, as applicable.
5. The amount of fire protection facilities development impact fees collected pursuant to this section shall be limited to the cost of fire protection facilities necessary to mitigate the impact attributable to new development. The amount of fire protection facilities development impact fees collected shall not include the cost of fire protection facilities necessary to address the impacts of existing development.
B. Residential Fire Protection Facilities Fee Required.
1. Except as provided in subsection D of this section, the required fire protection facilities development impact fee for a residential building shall be paid in an amount established by resolution of the city council. The required fire protection facilities development impact fee shall be due and paid on a lumpsum basis on the date the first dwelling in the development or development phase receives its final building inspection, or of the issuance of certificate of occupancy, whichever occurs first.
2. The community development director, or his or her designee, shall be responsible for calculating the amount of the fire protection facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the fire protection facilities development impact fee. In calculating such fee, the community development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection B, "final building inspection" shall mean the physical inspection of the building by the building and safety division of the community development department of the city for compliance with all applicable building codes and the issuance by all applicable city, county, regional, state, and federal agencies of their respective clearances for occupancy.
4. For the purposes of this subsection B, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms with all the applicable provisions of this Code, ordinances, and conditions of approval.
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C. Nonresidential Fire Protection Facilities Fee Required.
1. Except as provided in subsection D of this section, the required fire protection facilities development impact fee for a nonresidential development shall be paid in an amount established by resolution of the city council. The required fire protection facilities development impact fee shall be due and paid on a lump-sum basis upon issuance of the building permitcertificate of occupancy.
2. The community development director, or his or her designee, shall be responsible for calculating the amount of the fire protection facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the fire protection facilities development impact fee. In calculating such fee, the community development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection C, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms to all the applicable building codes, this Code, and conditions of approval.
D. Fire Protection Facilities Fee—Exemption or Reduction.
1. The following uses and types of developments may be exempted from the payment of fire protection facilities development impact fees:
a. Any residential development that does not increase the number of permanent housing units on the parcel where the construction takes place, such as remodeling or rebuilding existing units. b. Accessory dwelling units and second units as defined in section 17.04.070. c. The remodeling or rebuilding of an existing nonresidential structure, provided the remodeling or rebuilding does not do any of the following:
i. Increase the square footage of the structure by more than fifty percent above that of the previously existing structure;
ii. Change the use to which the property or structure is to be put; or iii. Increase the average daily trips generated from the property above the amount generated by the prior use of the property.
d. Publicly owned facilities, including, without limitation, public libraries, public administration facilities, public parks, public utilities, schools, and related facilities. e. Facilities serving the health and safety of the public, including, without limitation, hospitals, police, fire, and safety facilities.
2. A developer may be exempted or allowed a reduction in fees from the fire protection facilities development impact fee requirements of subsections B and C of this section if the developer enters into a development agreement with the city pursuant to which fire protection facilities development impact fees are assessed to the developer, or equivalent or comparable fire protection facilities improvements are implemented by the developer.
3. A developer may be entitled to a reduction in the amount of the fire protection facilities development impact fee required by subsections B and C of this section if the developer constructs fire protection facilities improvements pursuant to the most current fire facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The fire protection facilities development impact fee may be reduced by the amount of fire protection facilities improvement costs that would be reasonably incurred by the city in building those same fire protection facilities improvements. The amount of such reduction shall be subject to the approval of the community development director, with concurrence from the fire chief, prior to construction of the fire protection facilities improvement.
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4. A developer may be entitled to a reduction in the amount of the fire protection facilities development impact fee required by subsections B and C of this section if the development is located in an assessment district that has been formed to construct facilities pursuant to the most current fire facilities plan, the most current capital improvement plan, or the annual budget process, as applicable.
The fire protection facilities development impact fee may be reduced by the amount of the total assessment placed upon the development for the costs of fire protection facilities improvements. The amount of such reduction shall not exceed the amount of the fire protection facilities development impact fee required by subsections B and C of this section.
5. If a fee exemption or a fee reduction is granted pursuant to this subsection D, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption or fee reduction, and the applicant shall be subject to the fire protection facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
E. Appeals.
1. A developer subject to the fire protection facilities development impact fee required by this section for a particular project may apply to the city manager, or his or her designee, for: (a) a fee adjustment based upon a showing of substantial evidence of a lesser impact upon the fire protection facilities level of service; or (b) a land use category adjustment based upon a showing of substantial evidence that another land use category is more appropriate for a particular development. The application shall be made in writing and filed with the city manager, or his or her designee, prior to the issuance of building permit. If a development review is not required for the development, then the application shall be made in writing and filed not later than the time at which the building permit is issued. The application shall state in detail the factual basis for the request for reduction.
2. The city manager, or his or her designee, shall make a decision on the application for adjustment within thirty calendar days after the application has been filed. Notice of the city manager's, or his or her designee's, decision shall be mailed to the applicant.
3. The decision of the city manager, or his or her designee, may be appealed to the city council by filing an application for appeal with the city clerk. The application must be filed within fifteen calendar days after notice of the city manager's, or his or her designee's, decision has been mailed to the applicant.
4. The city council shall consider the appeal at a public hearing to be held within sixty calendar days after the appeal application has been filed. The decision of the city council shall be final. The decision of the city council shall be in writing and shall be mailed to the applicant.
5. If a fee exemption, a fee reduction or a land use category adjustment is granted pursuant to this subsection E, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption, fee reduction or land use category adjustment, and the applicant shall be subject to the fire protection facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
6. If a fee exemption, fee reduction or land use category adjustment is not granted pursuant to this subsection E, then upon the payment of the required fees, the city shall, pursuant to Government Code Section 66020, provide the applicant a written notice of the amount of the fees or a description of the dedications, reservations, or other exactions, and shall also provide notification that the ninety-day protest period has begun.
F. Use of Funds. Pursuant to California Government Code Section 66006, all fire protection facilities development impact fees paid and collected pursuant to this section shall be placed into one or more separate account(s) established for such fee and used solely for the purpose of constructing fire protection facilities improvements pursuant to the most current fire facilities plan, the most current capital improvement plan, or the annual budget process, as applicable; provided, however, that if the community 817
development director authorizes minor alterations, with the concurrence of the fire chief, to such plans or budget, then those alterations shall not affect the ability of the city to use fire protection facilities development impact fees collected pursuant to this section for the purpose of constructing fire protection facilities improvements in accordance with the most current fire facilities plan, the most current capital improvement plan, or the annual budget process, as applicable, and as altered or amended.
G. Fee Amount Applicable to Pending Projects. Except as may otherwise be provided in the resolution that adopts the fire protection facilities development impact fee amount, an applicant subject to the payment of fire protection facilities development impact fees required by subsections B or C of this section must pay the amount of the fee that is in effect when the fee becomes due as provided in subsection B.1 of this section for residential fire protection facilities development impact fees or subsection C.1 of this section for nonresidential fire facilities development impact fees. The amount of the fee is the amount specified by resolution of the city council, as amended from time to time. The fee imposed on a development project for which vested rights have been acquired through a vesting tentative subdivision map shall be the fee in effect at the time the rights became vested, plus any adjustment for inflation made between that date and the date the fee becomes due.
H. Periodic Adjustment to Fee Amount. The amount of the fire protection facilities development impact fee may be adjusted annually for inflation on July 1st of each year by the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U): Riverside-San Bernardino-Ontario (or any successor index)Construction Cost Index as published in the Engineering News-Record (or successor publication), as specified in the resolution that adopts the fee amount or by the periodic preparation of a new fire facilities plan, capital improvement plan, or city budget, as applicable, and required studies prepared and adopted pursuant to the Mitigation Fee Act (Government Code Section 66000 et seq.).
15.68.020 Police facilities development impact fee.
A. Findings and Intent.
1. New residential and nonresidential development in the city has attracted and will continue to attract employees and residents to the city, and there is a causal connection between such development projects and the increased need for police facilities.
2. Failure to enhance the ability of the city's police facilities system to accommodate additional service calls will make it more difficult for residents, employers, and employees to obtain the police services they need.
3. Sources of city revenue other than police facilities development impact fees, including tax revenues that will be paid by new residential and nonresidential development, will be needed for many public purposes and therefore will not be sufficient to offset the burdens on police facilities created by new development.
4. It is the intent of the city to require every person or organization that develops land to mitigate the impacts of that development on the city's police facilities system. The city may therefore require developers to mitigate police facilities impacts caused by their development and to pay a police facilities development impact fee that will be used to mitigate those impacts by constructing police facilities pursuant to the most current police facilities plan, the most current capital improvement plan, or the annual budget process, as applicable.
5. The amount of police facilities development impact fees collected pursuant to this section shall be limited to the cost of police facilities necessary to mitigate the impact attributable to new development. The amount of police facilities development impact fees collected shall not include the cost of police facilities necessary to address the impacts of existing development.
B. Residential Police Facilities Fee Required.
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1. Except as provided in subsection D of this section, the required police facilities development impact fee for a residential building shall be paid in an amount established by resolution of the city council. The required police facilities development impact fee shall be due and paid on a lump-sum basis on the date the first dwelling in the development or development phase receives its final building inspection, or of the issuance of certificate of occupancy, whichever occurs first.
2. The community development director, or his or her designee, shall be responsible for calculating the amount of the police facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the police facilities development impact fee. In calculating such fee, the community development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection B, "final building inspection" shall mean the physical inspection of the building by the building and safety division of the community development department of the city for compliance with all applicable building codes and the issuance by all applicable city, county, regional, state, and federal agencies of their respective clearances for occupancy.
4. For the purposes of this subsection B, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms with all the applicable provisions of this Code, ordinances, and conditions of approval.
C. Nonresidential Police Facilities Fee Required.
1. Except as provided in subsection D of this section, the required police facilities development impact fee for a nonresidential development shall be paid in an amount established by resolution of the city council. The required police facilities development impact fee shall be due and paid on a lump-sum basis upon issuance of the building permitcertificate of occupancy.
2. The community development director, or his or her designee, shall be responsible for calculating the amount of the police facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the police facilities development impact fee. In calculating such fee, the community development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection C, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms to all the applicable building codes, this Code, and conditions of approval.
D. Police Facilities Fee—Exemption or Reduction.
1. The following uses and types of developments may be exempted from the payment of police facilities development impact fees:
a. Any residential development that does not increase the number of permanent housing units on the parcel where the construction takes place, such as remodeling or rebuilding existing units. b. Accessory dwelling units and second units as defined in section 17.04.070. c. The remodeling or rebuilding of an existing nonresidential structure, provided the remodeling or rebuilding does not do any of the following:
i. Increase the square footage of the structure by more than fifty percent above that of the previously existing structure;
ii. Change the use to which the property or structure is to be put; or 819
iii. Increase the average daily trips generated from the property above the amount generated by the prior use of the property.
d. Publicly owned facilities, including, without limitation, public libraries, public administration facilities, public parks, public utilities, schools, and related facilities. e. Facilities serving the health and safety of the public, including, without limitation, hospitals, police, fire, and safety facilities.
2. A developer may be exempted or allowed a reduction in fees from the police facilities development impact fee requirements of subsections B and C of this section if the developer enters into a development agreement with the city pursuant to which police facilities development impact fees are assessed to the developer, or equivalent or comparable police facilities improvements are implemented by the developer.
3. A developer may be entitled to a reduction in the amount of the police facilities development impact fee required by subsections B and C of this section if the developer constructs police facilities improvements pursuant to the most current police facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The police facilities development impact fee may be reduced by the amount of police facilities improvement costs that would be reasonably incurred by the city in building those same police facilities improvements. The amount of such reduction shall be subject to the approval of the community development director, with concurrence from the police chief, prior to construction of the police facilities improvement.
4. A developer may be entitled to a reduction in the amount of the police facilities development impact fee required by subsections B and C of this section if the development is located in an assessment district that has been formed to construct facilities pursuant to the most current police facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The police facilities development impact fee may be reduced by the amount of the total assessment placed upon the development for the costs of police facilities improvements. The amount of such reduction shall not exceed the amount of the police facilities development impact fee required by subsections B and C of this section.
5. If a fee exemption or a fee reduction is granted pursuant to this subsection D, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption or fee reduction, and the applicant shall be subject to the police facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
E. Appeals.
1. A developer subject to the police facilities development impact fee required by this section for a particular project may apply to the city manager, or his or her designee, for: (a) a fee adjustment based upon a showing of substantial evidence of a lesser impact upon the police facilities level of service; or (b) a land use category adjustment based upon a showing of substantial evidence that another land use category is more appropriate for a particular development. The application shall be made in writing and filed with the city manager, or his or her designee, prior to the issuance of building permit. If a development review is not required for the development, then the application shall be made in writing and filed not later than the time at which the building permit is issued. The application shall state in detail the factual basis for the request for reduction.
2. The city manager, or his or her designee, shall make a decision on the application for adjustment within thirty calendar days after the application has been filed. Notice of the city manager's, or his or her designee's, decision shall be mailed to the applicant.
3. The decision of the city manager, or his or her designee, may be appealed to the city council by filing an application for appeal with the city clerk. The application must be filed within fifteen calendar days after notice of the city manager's, or his or her designee's, decision has been mailed to the applicant. 820
4. The city council shall consider the appeal at a public hearing to be held within sixty calendar days after the appeal application has been filed. The decision of the city council shall be final. The decision of the city council shall be in writing and shall be mailed to the applicant.
5. If a fee exemption, a fee reduction or a land use category adjustment is granted pursuant to this subsection E, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption, fee reduction or land use category adjustment, and the applicant shall be subject to the police facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
6. If a fee exemption, fee reduction or land use category adjustment is not granted pursuant to this subsection E, then upon the payment of the required fees, the city shall, pursuant to Government Code Section 66020, provide the applicant a written notice of the amount of the fees or a description of the dedications, reservations, or other exactions, and shall also provide notification that the ninety-day protest period has begun.
F. Use of Funds. Pursuant to California Government Code Section 66006, all police facilities development impact fees paid and collected pursuant to this section shall be placed into one or more separate account(s) established for such fee and used solely for the purpose of constructing police facilities improvements pursuant to the most current police facilities plan, the most current capital improvement plan, or the annual budget process, as applicable; provided, however, that if the community development director authorizes, with concurrence from the police chief, minor alterations to such plans or budget, then those alterations shall not affect the ability of the city to use police facilities development impact fees collected pursuant to this section for the purpose of constructing police facilities improvements in accordance with the most current police facilities plan, the most current capital improvement plan, or the annual budget process, as applicable, and as altered or amended.
G. Fee Amount Applicable to Pending Projects. Except as may otherwise be provided in the resolution that adopts the police facilities development impact fee amount, an applicant subject to the payment of police facilities development impact fees required by subsections B or C of this section must pay the amount of the fee that is in effect when the fee becomes due as provided in subsection B.1 of this section for residential police facilities development impact fees or subsection C.1 of this section for nonresidential police facilities development impact fees. The amount of the fee is the amount specified by resolution of the city council, as amended from time to time. The fee imposed on a development project for which vested rights have been acquired through a vesting tentative subdivision map shall be the fee in effect at the time the rights became vested, plus any adjustment for inflation made between that date and the date the fee becomes due.
H. Periodic Adjustment to Fee Amount. The amount of the police facilities development impact fee may be adjusted annually for inflation on July 1st of each year by the percentage change in the Construction Cost Index as published in the Engineering News-Record (or successor publication) Consumer Price Index for All Urban Consumers (CPI-U): Riverside-San Bernardino-Ontario (or any successor index), as specified in the resolution that adopts the fee amount or by the periodic preparation of a new police facilities plan, capital improvement plan, or city budget, as applicable, and required studies prepared and adopted pursuant to the Mitigation Fee Act (Government Code Section 66000 et seq.).
15.68.030 General city facilities development impact fee.
A. Findings and Intent.
1. New residential and nonresidential development in the city has attracted and will continue to attract employees and residents to the city, and there is a causal connection between such development projects and the increased need for general city facilities. 821
2. Failure to enhance the ability of the city's general city facilities system to accommodate additional service calls will make it more difficult for residents, employers, and employees to obtain the general city services they need.
3. Sources of city revenue other than general city facilities development impact fees, including tax revenues that will be paid by new residential and nonresidential development, will be needed for many public purposes and therefore will not be sufficient to offset the burdens on general city facilities created by new development.
4. It is the intent of the city to require every person or organization that develops land to mitigate the impacts of that development on the city's general city facilities system. The city may therefore require developers to mitigate general city facilities impacts caused by their development and to pay a general city facilities development impact fee that will be used to mitigate those impacts by constructing general city facilities pursuant to the most current general city facilities plan, the most current capital improvement plan, or the annual budget process, as applicable.
5. The amount of general city facilities development impact fees collected pursuant to this section shall be limited to the cost of general city facilities necessary to mitigate the impact attributable to new development. The amount of general city facilities development impact fees collected shall not include the cost of general city facilities necessary to address the impacts of existing development.
B. Residential General City Facilities Fee Required.
1. Except as provided in subsection D of this section, the required general city facilities development impact fee for a residential building shall be paid in an amount established by resolution of the city council. The required general city facilities development impact fee shall be due and paid on a lumpsum basis on the date the first dwelling in the development or development phase receives its final building inspection, orof the issuance of certificate of occupancy, whichever occurs first.
2. The community development director, or his or her designee, shall be responsible for calculating the amount of the general city facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the general city facilities development impact fee. In calculating such fee, the community development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection B, "final building inspection" shall mean the physical inspection of the building by the building and safety division of the community development department of the city for compliance with all applicable building codes and the issuance by all applicable city, county, regional, state, and federal agencies of their respective clearances for occupancy.
4. For the purposes of this subsection B, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms with all the applicable provisions of this Code, ordinances, and conditions of approval.
C. Nonresidential General City Facilities Fee Required.
1. Except as provided in subsection D of this section, the required general city facilities development impact fee for a nonresidential development shall be paid in an amount established by resolution of the city council. The required general city facilities development impact fee shall be due and paid on a lump-sum basis upon issuance of the building permitcertificate of occupancy.
2. The community development director, or his or her designee, shall be responsible for calculating the amount of the general city facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the general city facilities development impact fee. In calculating such fee, the community 822
development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection C, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms to all the applicable building codes, this Code, and conditions of approval.
D. General City Facilities Fee—Exemption or Reduction.
1. The following uses and types of developments may be exempted from the payment of general city facilities development impact fees:
a. Any residential development that does not increase the number of permanent housing units on the parcel where the construction takes place, such as remodeling or rebuilding existing units. b. Accessory dwelling units and second units as defined in section 17.04.070. c. The remodeling or rebuilding of an existing nonresidential structure, provided the remodeling or rebuilding does not do any of the following:
i. Increase the square footage of the structure by more than fifty percent above that of the previously existing structure;
ii. Change the use to which the property or structure is to be put; or iii. Increase the average daily trips generated from the property above the amount generated by the prior use of the property.
d. Publicly owned facilities, including, without limitation, public libraries, public administration facilities, public parks, public utilities, schools, and related facilities. e. Facilities serving the health and safety of the public, including, without limitation, hospitals, police, fire, and safety facilities.
2. A developer may be exempted or allowed a reduction in fees from the general city facilities development impact fee requirements of subsections B and C of this section if the developer enters into a development agreement with the city pursuant to which general city facilities development impact fees are assessed to the developer, or equivalent or comparable general city facilities improvements are implemented by the developer.
3. A developer may be entitled to a reduction in the amount of the general city facilities development impact fee required by subsections B and C of this section if the developer constructs general city facilities improvements pursuant to the most current general city facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The general city facilities development impact fee may be reduced by the amount of general city facilities improvement costs that would be reasonably incurred by the city in building those same general city facilities improvements. The amount of such reduction shall be subject to the approval of the community development director, with concurrence from the public works director, prior to construction of the general city facilities improvement.
4. A developer may be entitled to a reduction in the amount of the general city facilities development impact fee required by subsections B and C of this section if the development is located in an assessment district that has been formed to construct facilities pursuant to the most current general city facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The general city facilities development impact fee may be reduced by the amount of the total assessment placed upon the development for the costs of general city facilities improvements.
The amount of such reduction shall not exceed the amount of the general city facilities development impact fee required by subsections B and C of this section. 823
5. If a fee exemption or a fee reduction is granted pursuant to this subsection D, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption or fee reduction, and the applicant shall be subject to the general city facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
E. Appeals.
1. A developer subject to the general city facilities development impact fee required by this section for a particular project may apply to the city manager, or his or her designee, for: (a) a fee adjustment based upon a showing of substantial evidence of a lesser impact upon the general city facilities level of service; or (b) a land use category adjustment based upon a showing of substantial evidence that another land use category is more appropriate for a particular development. The application shall be made in writing and filed with the city manager, or his or her designee, prior to the issuance of building permit. If a development review is not required for the development, then the application shall be made in writing and filed not later than the time at which the building permit is issued. The application shall state in detail the factual basis for the request for reduction.
2. The city manager, or his or her designee, shall make a decision on the application for adjustment within thirty calendar days after the application has been filed. Notice of the city manager's, or his or her designee's, decision shall be mailed to the applicant.
3. The decision of the city manager, or his or her designee, may be appealed to the city council by filing an application for appeal with the city clerk. The application must be filed within fifteen calendar days after notice of the city manager's, or his or her designee's, decision has been mailed to the applicant.
4. The city council shall consider the appeal at a public hearing to be held within sixty calendar days after the appeal application has been filed. The decision of the city council shall be final. The decision of the city council shall be in writing and shall be mailed to the applicant.
5. If a fee exemption, a fee reduction or a land use category adjustment is granted pursuant to this subsection E, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption, fee reduction or land use category adjustment, and the applicant shall be subject to the general city facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
6. If a fee exemption, fee reduction or land use category adjustment is not granted pursuant to this subsection E, then upon the payment of the required fees, the city shall, pursuant to Government Code Section 66020, provide the applicant a written notice of the amount of the fees or a description of the dedications, reservations, or other exactions, and shall also provide notification that the ninety-day protest period has begun.
F. Use of Funds. Pursuant to California Government Code Section 66006, all general city facilities development impact fees paid and collected pursuant to this section shall be placed into one or more separate account(s) established for such fee and used solely for the purpose of constructing general city facilities improvements pursuant to the most current general city facilities plan, the most current capital improvement plan, or the annual budget process, as applicable; provided, however, that if the community development director authorizes minor alterations to such plans or budget, with the concurrence of the public works director, then those alterations shall not affect the ability of the city to use general city facilities development impact fees collected pursuant to this section for the purpose of constructing general city facilities improvements in accordance with the most current general city facilities plan, the most current capital improvement plan, or the annual budget process, as applicable, and as altered or amended.
G. Fee Amount Applicable to Pending Projects. Except as may otherwise be provided in the resolution that adopts the general city facilities development impact fee amount, an applicant subject to the payment of general city facilities development impact fees required by subsections B or C of this section must pay the 824
amount of the fee that is in effect when the fee becomes due as provided in subsection B.1 of this section for residential general city facilities development impact fees or subsection C.1 of this section for nonresidential general city facilities development impact fees. The amount of the fee is the amount specified by resolution of the city council, as amended from time to time. The fee imposed on a development project for which vested rights have been acquired through a vesting tentative subdivision map shall be the fee in effect at the time the rights became vested, plus any adjustment for inflation made between that date and the date the fee becomes due.
H. Periodic Adjustment to Fee Amount. The amount of the general city facilities development impact fee may be adjusted annually for inflation on July 1st of each year by the percentage change in the Construction Cost Index as published in the Engineering News-Record (or successor publication)Consumer Price Index for All Urban Consumers (CPI-U): Riverside-San Bernardino-Ontario (or any successor index), as specified in the resolution that adopts the fee amount or by the periodic preparation of a new general city facilities plan, capital improvement plan, or city budget, as applicable, and required studies prepared and adopted pursuant to the Mitigation Fee Act (Government Code Section 66000 et seq.).
15.68.040 Traffic control facilities development impact fee.
A. Findings and Intent.
1. New residential and nonresidential development in the city has attracted and will continue to attract employees and residents to the city, and there is a causal connection between such development projects and the increased need for traffic control facilities.
2. Failure to enhance the ability of the city's traffic control facilities system to accommodate increased traffic will make it more difficult for residents, employers, and employees to access residences and places of employment and could cause unacceptable harm to the quality of life in the city.
3. Sources of city revenue other than traffic control facilities development impact fees, including tax revenues that will be paid by new residential and nonresidential development, will be needed for many public purposes and therefore will not be sufficient to offset the burdens on traffic control facilities created by new development.
4. It is the intent of the city to require every person or organization that develops land to mitigate the impacts of that development on the city's traffic control facilities system. The city may therefore require developers to mitigate traffic control facilities impacts caused by their development and to pay a traffic control facilities development impact fee that will be used to mitigate those impacts by constructing traffic control facilities pursuant to the most current traffic control facilities plan.
5. The amount of traffic control facilities development impact fees collected pursuant to this section shall be limited to the cost of traffic control facilities necessary to mitigate the impact attributable to new development. The amount of traffic control facilities development impact fees collected shall not include the cost of traffic control facilities necessary to address the impacts of existing development.
B. Residential Traffic Control Facilities Fee Required.
1. Except as provided in subsection D of this section, the required traffic control facilities development impact fee for a residential building shall be paid in an amount established by resolution of the city council. The required traffic control facilities development impact fee shall be due and paid on a lumpsum basis on the date the first dwelling in the development or development phase receives its final building inspection, or of the issuance of the certificate of occupancy, whichever occurs first.
2. The community development director, or his or her designee, shall be responsible for calculating the amount of the traffic control facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the traffic control facilities development impact fee. In calculating such fee, the community 825
development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection B, "final building inspection" shall mean the physical inspection of the building by the building and safety division of the community development department of the city for compliance with all applicable building codes and the issuance by all applicable city, county, regional, state, and federal agencies of their respective clearances for occupancy.
4. For the purposes of this subsection B, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms with all the applicable provisions of this Code, ordinances, and conditions of approval.
C. Nonresidential Traffic Control Facilities Fee Required.
1. Except as provided in subsection D of this section, the required traffic control facilities development impact fee for a nonresidential development shall be paid in an amount established by resolution of the city council. The required traffic control facilities development impact fee shall be due and paid on a lump-sum basis upon issuance of the building permit certificate of occupancy.
2. The community development director, or his or her designee, shall be responsible for calculating the amount of the traffic control facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the traffic control facilities development impact fee. In calculating such fee, the community development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection C, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms to all the applicable building codes, this Code, and conditions of approval.
D. Traffic Control Facilities Fee—Exemption or Reduction.
1. The following uses and types of developments may be exempted from the payment of traffic control facilities development impact fees:
a. Any residential development that does not increase the number of permanent housing units on the parcel where the construction takes place, such as remodeling or rebuilding existing units. b. Accessory dwelling units and second units as defined in section 17.04.070. c. The remodeling or rebuilding of an existing nonresidential structure, provided the remodeling or rebuilding does not do any of the following:
i. Increase the square footage of the structure by more than fifty percent above that of the previously existing structure;
ii. Change the use to which the property or structure is to be put; or iii. Increase the average daily trips generated from the property above the amount generated by the prior use of the property.
d. Publicly owned facilities, including, without limitation, public libraries, public administration facilities, public parks, public utilities, schools, and related facilities. e. Facilities serving the health and safety of the public, including, without limitation, hospitals, police, fire, and safety facilities.
2. A developer may be exempted or allowed a reduction in fees from the traffic control facilities development impact fee requirements of subsections B and C of this section if the developer enters into a development agreement with the city pursuant to which traffic control facilities development 826
impact fees are assessed to the developer, or equivalent or comparable traffic control facilities improvements are implemented by the developer.
3. A developer may be entitled to a reduction in the amount of the traffic control facilities development impact fee required by subsections B and C of this section if the developer constructs traffic control facilities improvements pursuant to the most current traffic control facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The traffic control facilities development impact fee may be reduced by the amount of traffic control facilities improvement costs that would be reasonably incurred by the city in building those same traffic control facilities improvements. The amount of such reduction shall be subject to the approval of the community development director, with concurrence from the public works director, prior to construction of the traffic control facilities improvement.
4. A developer may be entitled to a reduction in the amount of the traffic control facilities development impact fee required by subsections B and C of this section if the development is located in an assessment district that has been formed to construct facilities pursuant to the most current traffic control facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The traffic control facilities development impact fee may be reduced by the amount of the total assessment placed upon the development for the costs of traffic control facilities improvements.
The amount of such reduction shall not exceed the amount of the traffic control facilities development impact fee required by subsections B and C of this section.
5. If a fee exemption or a fee reduction is granted pursuant to this subsection D, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption or fee reduction, and the applicant shall be subject to the traffic control facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
E. Appeals.
1. A developer subject to the traffic control facilities development impact fee required by this section for a particular project may apply to the city manager, or his or her designee, for: (a) a fee adjustment based upon a showing of substantial evidence of a lesser impact upon the traffic control facilities level of service; or (b) a land use category adjustment based upon a showing of substantial evidence that another land use category is more appropriate for a particular development. The application shall be made in writing and filed with the city manager, or his or her designee, prior to the issuance of building permit. If a development review is not required for the development, then the application shall be made in writing and filed not later than the time at which the building permit is issued. The application shall state in detail the factual basis for the request for reduction.
2. The city manager, or his or her designee, shall make a decision on the application for adjustment within thirty calendar days after the application has been filed. Notice of the city manager's, or his or her designee's, decision shall be mailed to the applicant.
3. The decision of the city manager, or his or her designee, may be appealed to the city council by filing an application for appeal with the city clerk. The application must be filed within fifteen calendar days after notice of the city manager's, or his or her designee's, decision has been mailed to the applicant.
4. The city council shall consider the appeal at a public hearing to be held within sixty calendar days after the appeal application has been filed. The decision of the city council shall be final. The decision of the city council shall be in writing and shall be mailed to the applicant.
5. If a fee exemption, a fee reduction or a land use category adjustment is granted pursuant to this subsection E, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption, fee reduction or land use category adjustment, and the applicant shall be subject to the traffic control facilities development 827
impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
6. If a fee exemption, fee reduction or land use category adjustment is not granted pursuant to this subsection E, then upon the payment of the required fees, the city shall, pursuant to Government Code Section 66020, provide the applicant a written notice of the amount of the fees or a description of the dedications, reservations, or other exactions, and shall also provide notification that the ninety-day protest period has begun.
F. Use of Funds. Pursuant to California Government Code Section 66006, all traffic control facilities development impact fees paid and collected pursuant to this section shall be placed into one or more separate account(s) established for such fee and used solely for the purpose of constructing traffic control facilities improvements pursuant to the most current traffic control facilities plan, the most current capital improvement plan, or the annual budget process, as applicable; provided, however, that if the community development director authorizes, with the concurrence from the public works director, minor alterations to such plans or budget, then those alterations shall not affect the ability of the city to use traffic control facilities development impact fees collected pursuant to this section for the purpose of constructing traffic control facilities improvements in accordance with the most current traffic control facilities plan, the most current capital improvement plan, or the annual budget process, as applicable, and as altered or amended.
G. Fee Amount Applicable to Pending Projects. Except as may otherwise be provided in the resolution that adopts the traffic control facilities development impact fee amount, an applicant subject to the payment of traffic control facilities development impact fees required by subsections B or C of this section must pay the amount of the fee that is in effect when the fee becomes due as provided in subsection B.1 of this section for residential traffic control facilities development impact fees or subsection C.1 of this section for nonresidential traffic control facilities development impact fees. The amount of the fee is the amount specified by resolution of the city council, as amended from time to time. The fee imposed on a development project for which vested rights have been acquired through a vesting tentative subdivision map shall be the fee in effect at the time the rights became vested, plus any adjustment for inflation made between that date and the date the fee becomes due.
H. Periodic Adjustment to Fee Amount. The amount of the traffic control facilities development impact fee may be adjusted annually for inflation on July 1st of each year by the percentage change in the Construction Cost Index as published in the Engineering News-Record (or successor publication)Consumer Price Index for All Urban Consumers (CPI-U): Riverside-San Bernardino-Ontario (or any successor index), as specified in the resolution that adopts the fee amount or by the periodic preparation of a new traffic control facilities plan, capital improvement plan, or budget, as applicable, and required studies prepared and adopted pursuant to the Mitigation Fee Act (Government Code Section 66000 et seq.).
15.68.050 Parkland and park facilities development impact fee.
A. Findings and Intent.
1. New residential development in the city has attracted and will continue to attract residents to the city, and there is a causal connection between such development projects and the increased need for parkland and park facilities.
2. Failure to enhance the ability of the city's parkland and park facilities system to accommodate increases in residents will make it more difficult for residents to access parks and could cause unacceptable harm to the quality of life in the city.
3. Sources of city revenue other than parkland and park facilities development impact fees, including tax revenues that will be paid by new residential development, will be needed for many public purposes and therefore will not be sufficient to offset the burdens on parkland and park facilities created by new development.
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4. It is the intent of the city to require every person or organization that develops land to mitigate the impacts of that development on the city's parkland and park facilities system. The city may therefore require developers to mitigate parkland and park facilities impacts caused by their development and to pay a parkland and park facilities development impact fee that will be used to mitigate those impacts by constructing parkland and park facilities pursuant to the most current parkland and park facilities plan, the most current capital improvement plan, or the annual budget process, as applicable.
5. The amount of parkland and park facilities development impact fees collected pursuant to this section shall be limited to the cost of parkland and park facilities necessary to mitigate the impact attributable to new development. The amount of parkland and park facilities development impact fees collected shall not include the cost of parkland and park facilities necessary to address the impacts of existing development.
B. Residential Parkland and Park Facilities Fee Required.
1. Except as provided in subsection C of this section, the required parkland and park facilities development impact fee for a residential building shall be paid in an amount established by resolution of the city council. The required parkland and park facilities development impact fee shall be due and paid on a lump-sum basis on the date the first dwelling in the development or development phase receives its final building inspection, orof the issuance of certificate of occupancy, whichever occurs first.
2. The community development director, or his or her designee, shall be responsible for calculating the amount of the parkland and park facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the parkland and park facilities development impact fee. In calculating such fee, the community development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection B, "final building inspection" shall mean the physical inspection of the building by the Building and Safety Division of the community development department of the city for compliance with all applicable building codes and the issuance by all applicable city, county, regional, state, and federal agencies of their respective clearances for occupancy.
4. For the purposes of this subsection B, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms with all the applicable provisions of this Code, ordinances, and conditions of approval.
C. Parkland and Park Facilities Fee—Exemption or Reduction.
1. The following uses and types of developments may be exempted from the payment of parkland and park facilities development impact fees:
a. Any residential development that does not increase the number of permanent housing units on the parcel where the construction takes place, such as remodeling or rebuilding existing units. b. Accessory dwelling units and second units as defined in section 17.04.070. c. Publicly owned facilities, including, without limitation, public libraries, public administration facilities, public parks, public utilities, schools, and related facilities. d. Facilities serving the health and safety of the public, including, without limitation, hospitals, police, fire, and safety facilities.
2. A developer may be exempted or allowed a reduction in fees from the parkland and park facilities development impact fee requirements of subsection B of this section if the developer enters into a development agreement with the city pursuant to which parkland and park facilities development 829
impact fees are assessed to the developer, or equivalent or comparable parkland and park facilities improvements are implemented by the developer.
3. A developer may be entitled to a reduction in the amount of the parkland and park facilities development impact fee required by subsection B of this section if the developer constructs parkland and park facilities improvements pursuant to the most current parkland and park facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The parkland and park facilities development impact fee may be reduced by the amount of parkland and park facilities improvement costs that would be reasonably incurred by the city in building those same parkland and park facilities improvements. The amount of such reduction shall be subject to the approval of the community development director, with concurrence from the parks and recreation director, prior to construction of the parkland and park facilities improvement.
4. A developer may be entitled to a reduction in the amount of the parkland and park facilities development impact fee required by subsection B of this section if the development is located in an assessment district that has been formed to construct facilities pursuant to the most current parkland and park facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The parkland and park facilities development impact fee may be reduced by the amount of the total assessment placed upon the development for the costs of parkland and park facilities improvements. The amount of such reduction shall not exceed the amount of the parkland and park facilities development impact fee required by subsection B of this section.
5. If a fee exemption or a fee reduction is granted pursuant to this subsection D, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption or fee reduction, and the applicant shall be subject to the parkland and park facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
D. Appeals.
1. A developer subject to the parkland and park facilities development impact fee required by this section for a particular project may apply to the city manager, or his or her designee, for: (a) a fee adjustment based upon a showing of substantial evidence of a lesser impact upon the parkland and park facilities level of service; or (b) a land use category adjustment based upon a showing of substantial evidence that another land use category is more appropriate for a particular development. The application shall be made in writing and filed with the city manager, or his or her designee, prior to the issuance of building permit. If a development review is not required for the development, then the application shall be made in writing and filed not later than the time at which the building permit is issued. The application shall state in detail the factual basis for the request for reduction.
2. The city manager, or his or her designee, shall make a decision on the application for adjustment within thirty calendar days after the application has been filed. Notice of the city manager's, or his or her designee's, decision shall be mailed to the applicant.
3. The decision of the city manager, or his or her designee, may be appealed to the city council by filing an application for appeal with the city clerk. The application must be filed within fifteen calendar days after notice of the city manager's, or his or her designee's, decision has been mailed to the applicant.
4. The city council shall consider the appeal at a public hearing to be held within sixty calendar days after the appeal application has been filed. The decision of the city council shall be final. The decision of the city council shall be in writing and shall be mailed to the applicant.
5. If a fee exemption, a fee reduction or a land use category adjustment is granted pursuant to this subsection D, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption, fee reduction or land use category adjustment, and the applicant shall be subject to the parkland and park facilities 830
development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
6. If a fee exemption, fee reduction or land use category adjustment is not granted pursuant to this subsection D, then upon the payment of the required fees, the city shall, pursuant to Government Code Section 66020, provide the applicant a written notice of the amount of the fees or a description of the dedications, reservations, or other exactions, and shall also provide notification that the ninetyday protest period has begun.
E. Use of Funds. Pursuant to California Government Code Section 66006, all parkland and park facilities development impact fees paid and collected pursuant to this section shall be placed into one or more separate account(s) established for such fee and used solely for the purpose of constructing parkland and park facilities improvements pursuant to the most current parkland and park facilities plan, the most current capital improvement plan, or the annual budget process, as applicable; provided, however, that if the community development director, with concurrence from the parks and recreation director, authorizes minor alterations to such plans or budget, then those alterations shall not affect the ability of the city to use parkland and park facilities development impact fees collected pursuant to this section for the purpose of constructing parkland and park facilities improvements in accordance with the most current parkland and park facilities plan, the most current capital improvement plan, or the annual budget process, as applicable, and as altered or amended.
F. Fee Amount Applicable to Pending Projects. Except as may otherwise be provided in the resolution that adopts the parkland and park facilities development impact fee amount, an applicant subject to the payment of parkland and park facilities development impact fees required by subsection B of this section must pay the amount of the fee that is in effect when the fee becomes due as provided in subsection B.1 of this section for residential parkland and park facilities development impact fees. The amount of the fee is the amount specified by resolution of the city council, as amended from time to time. The fee imposed on a development project for which vested rights have been acquired through a vesting tentative subdivision map shall be the fee in effect at the time the rights became vested, plus any adjustment for inflation made between that date and the date the fee becomes due.
G. Periodic Adjustment to Fee Amount. The amount of the parkland and park facilities development impact fee may be adjusted annually for inflation on July 1st of each year by the percentage change in the Construction Cost Index as published in the Engineering News-Record (or successor publication)Consumer Price Index for All Urban Consumers (CPI-U): Riverside-San Bernardino-Ontario (or any successor index), as specified in the resolution that adopts the fee amount or by the periodic preparation of a new parkland and park facilities plan, capital improvement plan, or city budget, as applicable, and required studies prepared and adopted pursuant to the Mitigation Fee Act (Government Code Section 66000 et seq.).
15.68.060 Wastewater facilities development impact fee.
A. Findings and Intent.
1. New residential and nonresidential development in the city has attracted and will continue to attract employees and residents to the city, and there is a causal connection between such development projects and the increased need for wastewater facilities.
2. Failure to enhance the ability of the city's wastewater facilities system to accommodate additional service calls will make it more difficult for residents, employers, and employees to obtain the wastewater services they need.
3. Sources of city revenue other than wastewater facilities development impact fees, including tax revenues that will be paid by new residential and nonresidential development, will be needed for many public purposes and therefore will not be sufficient to offset the burdens on wastewater facilities created by new development.
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4. It is the intent of the city to require every person or organization that develops land to mitigate the impacts of that development on the city's wastewater facilities system. The city may therefore require developers to mitigate wastewater facilities impacts caused by their development and to pay a wastewater facilities development impact fee that will be used to mitigate those impacts by constructing wastewater facilities pursuant to the most current wastewater facilities plan, the most current capital improvement plan, or the annual budget process, as applicable.
5. The amount of wastewater facilities development impact fees collected pursuant to this section shall be limited to the cost of wastewater facilities necessary to mitigate the impact attributable to new development. The amount of wastewater facilities development impact fees collected shall not include the cost of wastewater facilities necessary to address the impacts of existing development.
B. Residential Wastewater Facilities Fee Required.
1. Except as provided in subsection D of this section, the required wastewater facilities development impact fee for a residential building shall be paid in an amount established by resolution of the city council. The required wastewater facilities development impact fee shall be due and paid on a lumpsum basis on the date the first dwelling in the development or development phase receives its final building inspection, orof the issuance of certificate of occupancy, whichever occurs first.
2. The public workscommunity development director, or his or her designee, shall be responsible for calculating the amount of the wastewater facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the wastewater facilities development impact fee. In calculating such fee, the public workscommunity development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection B, "final building inspection" shall mean the physical inspection of the building by the building and safety division of the community development department of the city for compliance with all applicable building codes and the issuance by all applicable city, county, regional, state, and federal agencies of their respective clearances for occupancy.
4. For the purposes of this subsection B, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms with all the applicable provisions of this Code, ordinances, and conditions of approval.
C. Nonresidential Wastewater Facilities Fee Required.
1. Except as provided in subsection D of this section, the required wastewater facilities development impact fee for a nonresidential development shall be paid in an amount established by resolution of the city council. The required wastewater facilities development impact fee shall be due and paid on a lump-sum basis upon issuance of the building permitcertificate of occupancy.
2. The public workscommunity development director, or his or her designee, shall be responsible for calculating the amount of the wastewater facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the wastewater facilities development impact fee. In calculating such fee, the public workscommunity development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection C, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms to all the applicable building codes, this Code, and conditions of approval.
D. Wastewater Facilities Fee—Exemption or Reduction.
1. The following uses and types of developments may be exempted from the payment of wastewater facilities development impact fees:
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a. Any residential development that does not increase the number of permanent housing units on the parcel where the construction takes place, such as remodeling or rebuilding existing units. b. Accessory dwelling units and second units as defined in section 17.04.070. c. The remodeling or rebuilding of an existing nonresidential structure, provided the remodeling or rebuilding does not do any of the following:
i. Increase the square footage of the structure by more than fifty percent above that of the previously existing structure;
ii. Change the use to which the property or structure is to be put; or iii. Increase the average daily trips generated from the property above the amount generated by the prior use of the property.
d. Publicly owned facilities, including, without limitation, public libraries, public administration facilities, public parks, public utilities, schools, and related facilities. e. Facilities serving the health and safety of the public, including, without limitation, hospitals, police, fire, and safety facilities.
2. A developer may be exempted or allowed a reduction in fees from the wastewater facilities development impact fee requirements of subsections B and C of this section if the developer enters into a development agreement with the city pursuant to which wastewater facilities development impact fees are assessed to the developer, or equivalent or comparable wastewater facilities improvements are implemented by the developer.
3. A developer may be entitled to a reduction in the amount of the wastewater facilities development impact fee required by subsections B and C of this section if the developer constructs wastewater facilities improvements pursuant to the most current wastewater facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The wastewater facilities development impact fee may be reduced by the amount of wastewater facilities improvement costs that would be reasonably incurred by the city in building those same wastewater facilities improvements. The amount of such reduction shall be subject to the approval of the public works director prior to construction of the wastewater facilities improvement.
4. A developer may be entitled to a reduction in the amount of the wastewater facilities development impact fee required by subsections B and C of this section if the development is located in an assessment district that has been formed to construct facilities pursuant to the most current wastewater facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The wastewater facilities development impact fee may be reduced by the amount of the total assessment placed upon the development for the costs of wastewater facilities improvements.
The amount of such reduction shall not exceed the amount of the wastewater facilities development impact fee required by subsections B and C of this section.
5. If a fee exemption or a fee reduction is granted pursuant to this subsection D, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption or fee reduction, and the applicant shall be subject to the wastewater facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
E. Appeals.
1. A developer subject to the wastewater facilities development impact fee required by this section for a particular project may apply to the city manager, or his or her designee, for: (a) a fee adjustment based upon a showing of substantial evidence of a lesser impact upon the wastewater facilities level of service; or (b) a land use category adjustment based upon a showing of substantial evidence that another land use category is more appropriate for a particular development. The application shall be 833
made in writing and filed with the city manager, or his or her designee, prior to the issuance of building permit. If a development review is not required for the development, then the application shall be made in writing and filed not later than the time at which the building permit is issued. The application shall state in detail the factual basis for the request for reduction.
2. The city manager, or his or her designee, shall make a decision on the application for adjustment within thirty calendar days after the application has been filed. Notice of the city manager's, or his or her designee's, decision shall be mailed to the applicant.
3. The decision of the city manager, or his or her designee, may be appealed to the city council by filing an application for appeal with the city clerk. The application must be filed within fifteen calendar days after notice of the city manager's, or his or her designee's, decision has been mailed to the applicant.
4. The city council shall consider the appeal at a public hearing to be held within sixty calendar days after the appeal application has been filed. The decision of the city council shall be final. The decision of the city council shall be in writing and shall be mailed to the applicant.
5. If a fee exemption, a fee reduction or a land use category adjustment is granted pursuant to this subsection E, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption, fee reduction or land use category adjustment, and the applicant shall be subject to the wastewater facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
6. If a fee exemption, fee reduction or land use category adjustment is not granted pursuant to this subsection E, then upon the payment of the required fees, the city shall, pursuant to Government Code Section 66020, provide the applicant a written notice of the amount of the fees or a description of the dedications, reservations, or other exactions, and shall also provide notification that the ninety-day protest period has begun.
F. Use of Funds. Pursuant to California Government Code Section 66006, all wastewater facilities development impact fees paid and collected pursuant to this section shall be placed into one or more separate account(s) established for such fee and used solely for the purpose of constructing wastewater facilities improvements pursuant to the most current wastewater facilities plan, the most current capital improvement plan, or the annual budget process, as applicable; provided, however, that if the public works director authorizes minor alterations to such plans or budget, then those alterations shall not affect the ability of the city to use wastewater facilities development impact fees collected pursuant to this section for the purpose of constructing wastewater facilities improvements in accordance with the most current wastewater facilities plan, the most current capital improvement plan, or the annual budget process, as applicable, and as altered or amended.
G. Fee Amount Applicable to Pending Projects. Except as may otherwise be provided in the resolution that adopts the wastewater facilities development impact fee amount, an applicant subject to the payment of wastewater facilities development impact fees required by subsections B or C of this section must pay the amount of the fee that is in effect when the fee becomes due as provided in subsection B.1 of this section for residential wastewater facilities development impact fees or subsection C.1 of this section for nonresidential wastewater facilities development impact fees. The amount of the fee is the amount specified by resolution of the city council, as amended from time to time. The fee imposed on a development project for which vested rights have been acquired through a vesting tentative subdivision map shall be the fee in effect at the time the rights became vested, plus any adjustment for inflation made between that date and the date the fee becomes due.
H. Periodic Adjustment to Fee Amount. The amount of the wastewater facilities development impact fee may be adjusted annually for inflation on July 1st of each year by the percentage change in the Construction Cost Index as published in the Engineering News-Record (or successor publication)Consumer Price Index for All Urban Consumers (CPI-U): Riverside-San Bernardino-Ontario (or any successor index), as specified in the resolution that adopts the fee amount or by the periodic preparation of a new wastewater facilities plan, 834
capital improvement plan, or city budget, as applicable and required studies prepared and adopted pursuant to the Mitigation Fee Act (Government Code Section 66000 et seq.).
15.68.070 Water facilities development impact fee.
A. Findings and Intent.
1. New residential and nonresidential development in the city has attracted and will continue to attract employees and residents to the city, and there is a causal connection between such development projects and the increased need for water facilities.
2. Failure to enhance the ability of the city's water facilities system to accommodate additional service connections will make it more difficult for residents, employers, and employees to obtain the water services they need.
3. Sources of city revenue other than water facilities development impact fees, including tax revenues that will be paid by new residential and nonresidential development, will be needed for many public purposes and therefore will not be sufficient to offset the burdens on water facilities created by new development.
4. It is the intent of the city to require every person or organization that develops land to mitigate the impacts of that development on the city's water facilities system. The city may therefore require developers to mitigate water facilities impacts caused by their development and to pay a water facilities development impact fee that will be used to mitigate those impacts by constructing water facilities pursuant to the most current water facilities plan, the most current capital improvement plan, or the annual budget process, as applicable.
5. The amount of water facilities development impact fees collected pursuant to this section shall be limited to the cost of water facilities necessary to mitigate the impact attributable to new development. The amount of water facilities development impact fees collected shall not include the cost of water facilities necessary to address the impacts of existing development.
B. Residential Water Facilities Fee Required.
1. Except as provided in subsection D of this section, the required water facilities development impact fee for a residential building shall be paid in an amount established by resolution of the city council. The required water facilities development impact fee shall be due and paid on a lump-sum basis on the date the first dwelling in the development or development phase receives its final building inspection, or of the issuance of certificate of occupancy, whichever occurs first.
2. The public workscommunity development director, or his or her designee, shall be responsible for calculating the amount of the water facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the water facilities development impact fee. In calculating such fee, the public workscommunity development director director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection B, "final building inspection" shall mean the physical inspection of the building by the building and safety division of the community development department of the city for compliance with all applicable building codes and the issuance by all applicable city, county, regional, state, and federal agencies of their respective clearances for occupancy.
4. For the purposes of this subsection B, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms with all the applicable provisions of this Code, ordinances, and conditions of approval.
C. Nonresidential Water Facilities Fee Required.
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1. Except as provided in subsection D of this section, the required water facilities development impact fee for a nonresidential development shall be paid in an amount established by resolution of the city council. The required water facilities development impact fee shall be due and paid on a lump-sum basis upon issuance of the building permit certificate of occupancy.
2. The public workscommunity development director, or his or her designee, shall be responsible for calculating the amount of the water facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the water facilities development impact fee. In calculating such fee, the public workscommunity development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection C, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms to all the applicable building codes, this Code, and conditions of approval.
D. Water Facilities Fee—Exemption or Reduction.
1. The following uses and types of developments may be exempted from the payment of water facilities development impact fees:
a. Any residential development that does not increase the number of permanent housing units on the parcel where the construction takes place, such as remodeling or rebuilding existing units. b. Accessory dwelling units and second units as defined in section 17.04.070. c. The remodeling or rebuilding of an existing nonresidential structure, provided the remodeling or rebuilding does not do any of the following:
i. Increase the square footage of the structure by more than fifty percent above that of the previously existing structure;
ii. Change the use to which the property or structure is to be put; or iii. Increase the average daily trips generated from the property above the amount generated by the prior use of the property.
c. Publicly owned facilities, including, without limitation, public libraries, public administration facilities, public parks, public utilities, schools, and related facilities. d. Facilities serving the health and safety of the public, including, without limitation, hospitals, police, fire, and safety facilities.
2. A developer may be exempted or allowed a reduction in fees from the water facilities development impact fee requirements of subsections B and C of this section if the developer enters into a development agreement with the city pursuant to which water facilities development impact fees are assessed to the developer, or equivalent or comparable water facilities improvements are implemented by the developer.
3. A developer may be entitled to a reduction in the amount of the water facilities development impact fee required by subsections B and C of this section if the developer constructs water facilities improvements pursuant to the most current water facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The water facilities development impact fee may be reduced by the amount of water facilities improvement costs that would be reasonably incurred by the city in building those same water facilities improvements. The amount of such reduction shall be subject to the approval of the public works director prior to construction of the water facilities improvement.
4. A developer may be entitled to a reduction in the amount of the water facilities development impact fee required by subsections B and C of this section if the development is located in an assessment 836
district that has been formed to construct facilities pursuant to the most current water facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The water facilities development impact fee may be reduced by the amount of the total assessment placed upon the development for the costs of water facilities improvements. The amount of such reduction shall not exceed the amount of the water facilities development impact fee required by subsections B and C of this section.
5. If a fee exemption or a fee reduction is granted pursuant to this subsection D, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption or fee reduction, and the applicant shall be subject to the water facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
E. Appeals.
1. A developer subject to the water facilities development impact fee required by this section for a particular project may apply to the city manager, or his or her designee, for: (a) a fee adjustment based upon a showing of substantial evidence of a lesser impact upon the water facilities level of service; or (b) a land use category adjustment based upon a showing of substantial evidence that another land use category is more appropriate for a particular development. The application shall be made in writing and filed with the city manager, or his or her designee, prior to the issuance of building permit. If a development review is not required for the development, then the application shall be made in writing and filed not later than the time at which the building permit is issued. The application shall state in detail the factual basis for the request for reduction.
2. The city manager, or his or her designee, shall make a decision on the application for adjustment within thirty calendar days after the application has been filed. Notice of the city manager's, or his or her designee's, decision shall be mailed to the applicant.
3. The decision of the city manager, or his or her designee, may be appealed to the city council by filing an application for appeal with the city clerk. The application must be filed within fifteen calendar days after notice of the city manager's, or his or her designee's, decision has been mailed to the applicant.
4. The city council shall consider the appeal at a public hearing to be held within sixty calendar days after the appeal application has been filed. The decision of the city council shall be final. The decision of the city council shall be in writing and shall be mailed to the applicant.
5. If a fee exemption, a fee reduction or a land use category adjustment is granted pursuant to this subsection E, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption, fee reduction or land use category adjustment, and the applicant shall be subject to the water facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
6. If a fee exemption, fee reduction or land use category adjustment is not granted pursuant to this subsection E, then upon the payment of the required fees, the city shall, pursuant to Government Code Section 66020, provide the applicant a written notice of the amount of the fees or a description of the dedications, reservations, or other exactions, and shall also provide notification that the ninety-day protest period has begun.
F. Use of Funds. Pursuant to California Government Code Section 66006, all water facilities development impact fees paid and collected pursuant to this section shall be placed into one or more separate account(s) established for such fee and used solely for the purpose of constructing water facilities improvements pursuant to the most current water facilities plan, the most current capital improvement plan, or the annual budget process, as applicable; provided, however, that if the public works director authorizes minor alterations to such plans or budget, then those alterations shall not affect the ability of the city to use water facilities development impact fees collected pursuant to this section for the purpose of constructing water 837
facilities improvements in accordance with the most current water facilities plan, the most current capital improvement plan, or the annual budget process, as applicable, and as altered or amended.
G. Fee Amount Applicable to Pending Projects. Except as may otherwise be provided in the resolution that adopts the water facilities development impact fee amount, an applicant subject to the payment of water facilities development impact fees required by subsections B or C of this section must pay the amount of the fee that is in effect when the fee becomes due as provided in subsection B.1 of this section for residential water facilities development impact fees or subsection C.1 of this section for nonresidential water facilities development impact fees. The amount of the fee is the amount specified by resolution of the city council, as amended from time to time. The fee imposed on a development project for which vested rights have been acquired through a vesting tentative subdivision map shall be the fee in effect at the time the rights became vested, plus any adjustment for inflation made between that date and the date the fee becomes due.
H. Periodic Adjustment to Fee Amount. The amount of the water facilities development impact fee may be adjusted annually for inflation on July 1st of each year by the percentage change in the Construction Cost Index as published in the Engineering News-Record (or successor publication)Consumer Price Index for All Urban Consumers (CPI-U): Riverside-San Bernardino-Ontario (or any successor index), as specified in the resolution that adopts the fee amount or by the periodic preparation of a new water facilities plan, capital improvement plan, or city budget, as applicable and required studies prepared and adopted pursuant to the Mitigation Fee Act (Government Code Section 66000 et seq.).
15.68.080 Electric facilities development impact fee.
A. Findings and Intent.
1. New residential and nonresidential development in the city has attracted and will continue to attract employees and residents to the city, and there is a causal connection between such development projects and the increased need for electric facilities.
2. Failure to enhance the ability of the city's electric facilities system to accommodate additional service connections will make it more difficult for residents, employers, and employees to obtain the electric services they need.
3. Sources of city revenue other than electric facilities development impact fees, including tax revenues that will be paid by new residential and nonresidential development, will be needed for many public purposes and therefore will not be sufficient to offset the burdens on electric facilities created by new development.
4. It is the intent of the city to require every person or organization that develops land to mitigate the impacts of that development on the city's electric facilities system. The city may therefore require developers to mitigate electric facilities impacts caused by their development and to pay an electric facilities development impact fee that will be used to mitigate those impacts by constructing electric facilities pursuant to the most current electric facilities plan, the most current capital improvement plan, or the annual budget process, as applicable.
5. The amount of electric facilities development impact fees collected pursuant to this section shall be limited to the cost of electric facilities necessary to mitigate the impact attributable to new development. The amount of electric facilities development impact fees collected shall not include the cost of electric facilities necessary to address the impacts of existing development.
B. Residential Electric Facilities Fee Required.
1. Except as provided in subsection D of this section, the required electric facilities development impact fee for a residential building shall be paid in an amount established by resolution of the city council.
The required electric facilities development impact fee shall be due and paid on a lump-sum basis on the date of the issuance of certificate of occupancy.
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2. The community development director, or his or her designee, shall be responsible for calculating the amount of the electric facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the electric facilities development impact fee. In calculating such fee, the community development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
4. For the purposes of this subsection B, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms with all the applicable provisions of this Code, ordinances, and conditions of approval.
C. Nonresidential Electric Facilities Fee Required.
1. Except as provided in subsection D of this section, the required electric facilities development impact fee for a nonresidential development shall be paid in an amount established by resolution of the city council. The required electric facilities development impact fee shall be due and paid on a lump-sum basis upon issuance of the certificate of occupancy.
2. The community development director, or his or her designee, shall be responsible for calculating the amount of the electric facilities development impact fee required for each development project based on the applicable land use category and corresponding rate specified in the resolution that adopts the electric facilities development impact fee. In calculating such fee, the community development director shall utilize the fee rate that is assigned to the land use category that is most applicable to the development project.
3. For the purposes of this subsection C, "certificate of occupancy" shall mean a document issued by the proper authority allowing the occupancy or use of a building and certifying that the structure, building or development conforms to all the applicable building codes, this Code, and conditions of approval.
D. Electric Facilities Fee—Exemption or Reduction.
1. The following uses and types of developments may be exempted from the payment of electric facilities development impact fees:
a. Any residential development that does not increase the number of permanent housing units on the parcel where the construction takes place, such as remodeling or rebuilding existing units. b. Accessory dwelling units and second units as defined in section 17.04.070. c. The remodeling or rebuilding of an existing nonresidential structure, provided the remodeling or rebuilding does not do any of the following:
i. Increase the square footage of the structure by more than fifty percent above that of the previously existing structure;
ii. Change the use to which the property or structure is to be put; or iii. Increase the average daily trips generated from the property above the amount generated by the prior use of the property.
c. Publicly owned facilities, including, without limitation, public libraries, public administration facilities, public parks, public utilities, schools, and related facilities. d. Facilities serving the health and safety of the public, including, without limitation, hospitals, police, fire, and safety facilities.
2. A developer may be exempted or allowed a reduction in fees from the electric facilities development impact fee requirements of subsections B and C of this section if the developer enters into a development agreement with the city pursuant to which electric facilities development impact fees are 839
assessed to the developer, or equivalent or comparable electric facilities improvements are implemented by the developer.
3. A developer may be entitled to a reduction in the amount of the electric facilities development impact fee required by subsections B and C of this section if the developer constructs electric facilities improvements pursuant to the most current electric facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The electric facilities development impact fee may be reduced by the amount of electric facilities improvement costs that would be reasonably incurred by the city in building those same electric facilities improvements. The amount of such reduction shall be subject to the approval of the public works director prior to construction of the electric facilities improvement.
4. A developer may be entitled to a reduction in the amount of the electric facilities development impact fee required by subsections B and C of this section if the development is located in an assessment district that has been formed to construct facilities pursuant to the most current electric facilities plan, the most current capital improvement plan, or the annual budget process, as applicable. The electric facilities development impact fee may be reduced by the amount of the total assessment placed upon the development for the costs of electric facilities improvements. The amount of such reduction shall not exceed the amount of the electric facilities development impact fee required by subsections B and C of this section.
5. If a fee exemption or a fee reduction is granted pursuant to this subsection D, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption or fee reduction, and the applicant shall be subject to the electric facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid.
E. Appeals.
1. A developer subject to the electric facilities development impact fee required by this section for a particular project may apply to the city manager, or his or her designee, for: (a) a fee adjustment based upon a showing of substantial evidence of a lesser impact upon the electric facilities level of service; or (b) a land use category adjustment based upon a showing of substantial evidence that another land use category is more appropriate for a particular development. The application shall be made in writing and filed with the city manager, or his or her designee, prior to the issuance of building permit. If a development review is not required for the development, then the application shall be made in writing and filed not later than the time at which the building permit is issued. The application shall state in detail the factual basis for the request for reduction.
2. The city manager, or his or her designee, shall make a decision on the application for adjustment within thirty calendar days after the application has been filed. Notice of the city manager's, or his or her designee's, decision shall be mailed to the applicant.
3. The decision of the city manager, or his or her designee, may be appealed to the city council by filing an application for appeal with the city clerk. The application must be filed within fifteen calendar days after notice of the city manager's, or his or her designee's, decision has been mailed to the applicant.
4. The city council shall consider the appeal at a public hearing to be held within sixty calendar days after the appeal application has been filed. The decision of the city council shall be final. The decision of the city council shall be in writing and shall be mailed to the applicant.
5. If a fee exemption, a fee reduction or a land use category adjustment is granted pursuant to this subsection E, any subsequent change or intensification of the use or uses of the property or any expansion of the structures on the property, shall invalidate the fee exemption, fee reduction or land use category adjustment, and the applicant shall be subject to the electric facilities development impact fee requirement applicable to the entire development based on the fee in effect at the time of the change or expansion, less any amount previously paid. 840
6. If a fee exemption, fee reduction or land use category adjustment is not granted pursuant to this subsection E, then upon the payment of the required fees, the city shall, pursuant to Government Code Section 66020, provide the applicant a written notice of the amount of the fees or a description of the dedications, reservations, or other exactions, and shall also provide notification that the ninety-day protest period has begun.
F. Use of Funds. Pursuant to California Government Code Section 66006, all electric facilities development impact fees paid and collected pursuant to this section shall be placed into one or more separate account(s) established for such fee and used solely for the purpose of constructing electric facilities improvements pursuant to the most current electric facilities plan, the most current capital improvement plan, or the annual budget process, as applicable; provided, however, that if the public works director authorizes minor alterations to such plans or budget, then those alterations shall not affect the ability of the city to use electric facilities development impact fees collected pursuant to this section for the purpose of constructing electric facilities improvements in accordance with the most current electric facilities plan, the most current capital improvement plan, or the annual budget process, as applicable, and as altered or amended.
G. Fee Amount Applicable to Pending Projects. Except as may otherwise be provided in the resolution that adopts the electric facilities development impact fee amount, an applicant subject to the payment of electric facilities development impact fees required by subsections B or C of this section must pay the amount of the fee that is in effect when the fee becomes due as provided in subsection B.1 of this section for residential electric facilities development impact fees or subsection C.1 of this section for nonresidential electric facilities development impact fees. The amount of the fee is the amount specified by resolution of the city council, as amended from time to time. The fee imposed on a development project for which vested rights have been acquired through a vesting tentative subdivision map shall be the fee in effect at the time the rights became vested, plus any adjustment for inflation made between that date and the date the fee becomes due.
H. Periodic Adjustment to Fee Amount. The amount of the electric facilities development impact fee may be adjusted annually for inflation on July 1st of each year by the percentage change in the Construction Cost Index as published in the Engineering News-Record (or successor publication), as specified in the resolution that adopts the fee amount or by the periodic preparation of a new electric facilities plan, capital improvement plan, or city budget, as applicable and required studies prepared and adopted pursuant to the Mitigation Fee Act (Government Code Section 66000 et seq.). 841
City of Banning DIF Analysis
2019 Development Impact Fee Schedule
Resolution 2019-112, Adopted 9/10/19
1 EDU = $5,061
Residential Uses (Fees assessed on a PER DWELLING UNIT basis) Single Family $ 746.00 $ 521.00 $ 3,840.00 $ 1,200.00 $ 5,061.00 3/4" $ 5,847.00 Multi-Family $ 610.00 $ 426.00 $ 3,142.00 $ 892.00 $ 5,061.00 1" $ 9,744.00 1-1/2" $ 19,488.00
2" $ 31,181.00
Non-Residential Uses (Fees assessed on a PER 1000 SF basis) 3" $ 58,464.00 Commercial $ 486.00 $ 492.00 $ - $ 351.00 p/EDU 4" $ 97,441.00 Office $ 633.00 $ 643.00 $ - $ 458.00 p/EDU 6" $ -
Industrial $ 236.00 $ 239.00 $ - $ 170.00 p/EDU 8" $ -
Traffic Impact Fee Schedule
Residential Uses Non-Residential Uses
Ranch/Ag 1 DU/10 AC $ 3,410.05 General Commercial p/1000 SF $ 8,317.72 Ranch/Ag - Hillside 1 DU/10 AC $ 3,411.98 Highway Serving Com. p/1000 SF $ 8,323.33 Rural 1 DU/10 AC $ 3,410.08 Downtown Com. p/1000 SF $ 8,319.00 Rural - Hillside 1 DU/10 AC $ 3,409.78 Professional Office p/1000 SF $ 3,518.23 VLDR 0-2 DU/AC $ 3,409.95 Business Park p/1000 SF $ 4,493.57 LDR 2-5 DU/AC $ 3,409.87 Industrial p/1000 SF $ 1,791.69 MDR 5-10 DU/AC $ 2,644.10 Airport Industrial p/1000 SF $ 1,419.54 HDR 10-28 DU/AC $ 2,644.17 Ind. Mineral Resources p/1000 SF $ 630.09 Mobile Home Park $ 1,807.98
Based on
Detail Land
Use in Traffic
Fee Study
Land Use
Water Facilities
Fees Based on Meter
Size
Police
Facilities
Fire Protection
Facilities
Parkland and
Parks
General City
Facilities
Traffic Impact
Fees
Wastewater
Facilities
842
City of Banning DIF Analysis
2026 Development Impact Fee Schedule
Workshop
Max.
Justifiable
Rate
Final Max.
Justifiable
Rate
Workshop
Max.
Justifiable
Rate
Final Max.
Justifiable
Rate
Final Max.
Justifiable
Rate
Final Max.
Justifiable
Rate
Final Max.
Justifiable
Rate
Workshop
Max.
Justifiable
Rate
Final Max.
Justifiable
Rate
Workshop
Max.
Justifiable
Rate
Final Max.
Justifiable
Rate
Workshop
Max.
Justifiable
Rate
Final Max.
Justifiable
Rate
Residential Uses (Fees assessed on a PER SQUARE FOOT basis) Single Family $ 1.24 $ 0.99 $ 1.26 $ 1.21 $ 1.23 $ 3.80 $ 0.90 $ 1.23 $ 1.19 $ 6.82 $ 3.25 3/4" $ 11,251 $ 6,094 Multi-Family $ 1.16 $ 0.93 $ 2.18 $ 2.11 $ 2.13 $ 6.59 $ 1.57 $ 1.03 $ 1.00 $ 4.62 $ 2.20 1" $ 18,751 $ 10,156 1-1/2" $ 37,503 $ 20,312
2" $ 60,004 $ 32,500
Non-Residential Uses (Fees assessed on a PER SQUARE FOOT basis) 3" $ 112,508 $ 60,937 Commercial $ 2.95 $ 2.36 $ 0.67 $ 0.65 $ 0.47 $ 0.48 $ 10.37 $ 10.06 $ 4.79 $ 2.29 4" $ 187,513 $ 101,562 Office $ 2.77 $ 2.21 $ 0.88 $ 0.85 $ 0.62 $ 0.63 $ 3.39 $ 3.29 $ 1.68 $ 0.80 6" $ 375,025 $ 203,123 Industrial $ 1.58 $ 1.27 $ 0.33 $ 0.32 $ 0.23 $ 0.23 $ 1.65 $ 1.60 $ 1.82 $ 0.87 8" $ 1,050,071 $ 568,745 Resolution 2026-24, Adopted 2/24/26. Effective 3/26/26 (Fire, General Facilities, Parks, Police, Traffic, Wastewater, Water) Resolution 2026-24, Adopted 2/24/26. Effective 4/9/26 (Electric) 2019 Banning
DIF
2026 Banning
DIF
2024
Beaumont DIF
(100%)*
1530 S.F. SFR $ 23,756 $ 29,388 $ 34,188 1" water meter 2024 S.F. SFR $ 23,756 $ 35,598 $ 41,251 1" water meter 2625 S.F. SFR $ 24,522 $ 43,152 $ 49,780 1" water meter 950 S.F. MFR $ 18,622 $ 21,798 $ 21,828 3/4" ind. meter 25000 S.F. Com $ 279,941 $ 440,250 $ 649,010 2" water meter 30000 SF Office $ 187,177 $ 272,312 $ 485,590 1.5" water meter 750000 S.F. Ind $ 1,893,573 $ 3,450,937 $ 5,361,330 3" water meter *Beaumont DIF is shown for comparative purposes only. DIF is calculated solely on City of Banning specific facilities, equipment, and infrastructure needs caused by new development.
Sample Projects
Land Use
Water
Fees Based on Meter Size
Electric Fire Parks Police Wastewater
General
Facilities Traffic
843
February 10, 2026
Honorable Mayor and City Council
City of Banning
99 E. Ramsey Street
Banning, CA 92220
RE: Item 9.1 2025 Development Impact Fee Nexus Study
Dear Honorable City Mayor and City Council Members:
On behalf of the Riverside County Chapter of the Building Industry Association of Southern California and our hundreds of home builders, trade partners, and suppliers throughout our region we are submitting this letter regarding our concerns after review of the December 2025 Development Impact Fee Nexus Study (“DIF Study”) prepared by Matrix Consulting Group (“Matrix”) for the City of Banning (“City”). This DIF Study drastically increases the fees for new developments well beyond any inflationary changes or other index increases, and will have negative financial effects, as prior budgeting efforts or valuations of projects will no longer be remotely valid. This will make new home construction in Banning economically infeasible.
Additionally, the DIF Study has not accomplished some of the main goals intended with AB 602: Impact fees are to be more transparent, a justification for the need for the proposed level of service is to be provided, and housing is supposed to be made more affordable. Yet the DIF Study calculates a total impact fee for a typical unit within the city that is nearly 99% larger than the existing fee (approximately $24,520 to approximately $48,770). These new fees are not in line with other jurisdictions and represent an unreasonably major outlier in comparison.
The Riverside County Chapter of the BIA respectfully requests that you continue Item 9.1 2025 Development Impact Fee Study and related new fees. Attached below is a summary of the significant concerns and flaws from our review of the DIF Study. Approval of this study, without consideration of our comments and related appropriate revisions to the DIF Study and proposed new fees would be inappropriate.
As noted in our letter of January 13, 2026, we would welcome the opportunity to meet with your staff and consultants to work through our concerns.
Sincerely,
Doug Grove
President, Riverside County Chapter
Building Industry Association of Southern California
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Building Industry of Southern California-Riverside County Chapter Comments:
1. It appears the conversion from a per unit fee to a per square foot fee for the Electric, Fire, General Facilities, Parks, and Police sections is using a 1,000 SF home instead of 1,900 SF as the DIF Study states.
o Additionally, how are single family and multifamily classified or differentiated? o Is 1,900 SF on average for single family reasonable? The DIF Study indicates that 1,900 SF is representative of what has historically been built in the City, but it does not seem to be representative of what has been built in the last few years or what is currently being built in the City.
o The Atwell project, the Canterbury project, and the Vista Robles project which represent effectively all the City’s current residential development have an average unit size of 2,111 SF across their approximately 2,193 proposed units.
2. Projected Growth and Development:
o Can backup be provided for where the buildout projections in the General Plan were sourced from?
o Future Non-Residential square footage seems drastically understated. o Why isn’t existing square footage for each Non-Residential land use shown? o How is there anticipated to be an approximately 350,000 SF reduction in both Office and Industrial land uses, especially given the fact that an industrial project was recently approved for 1.3 million square feet?
3. Electric Impact Fee:
o Is the Banning Substation Upgrade needed solely to serve new development? o Similarly, are the Midway Substation Upgrades needed solely to serve new development?
o The DIF Study references a cost-of-service and rate study that was recently prepared. In looking at the staff report from October 14, 2025, it was stated that the rate increase would generate sufficient revenue to cover all of Banning Electric Utility’s expenses, which included additions and betterments to the utility system as well as debt service for construction or extension of the electrical utility system. Why is a new impact fee needed?
4. Fire Impact Fee:
o Weighting factor for Non-Residential land uses is only based on acreage and does not take into account number of calls to each land use, impacts to fire facilities, or inherent risk of fire that is generated by each land use. Many studies we have reviewed utilize calls for service data.
o As an example, the City of Beaumont’s recent nexus study utilized a NonResidential weighting factor of 0.69 for Fire Facilities based on County of Riverside data. The City of Banning 2019 study also utilized 0.69. 845
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o The DIF Study includes a future facility in the calculation of the existing standard.
Should the total costs be divided by total weighted population in 2040 so that they are being allocated between new and existing development? The City currently doesn’t have a fire station south of the freeway, so it seems part of the need for this facility could be to cure an existing deficiency.
o Are costs for the Equipment Inventory reasonable? There was a significant jump in estimated cost from the 2019 study and research online indicates the actual costs are much less.
o Is the Fire Station on 5261 W. Wilson being utilized? If not, why is it included as part of the existing inventory?
5. General Facilities Impact Fee:
o Should the weighting factor for Non-Residential be based on the number of nonwork hours in a week? (40 hours / 128 non-working hours = 0.31 weighting factor). This is what the 2019 study assumed.
o Does the City have an animal shelter anymore? Research online seems to indicate it was closed.
o Is the Corporation Yard 41,842 square feet? It seems much smaller from both aerial and street views.
o Is the Chamber of Commerce a public facility? Research online indicates Chamber of Commerce entities are not governmental agencies funded by taxpayers, and are instead independent non-profit organization.
6. Parks Impact Fee:
o What is being calculated in each of Tables 42-44? We typically see Park DIF calculated as both cost to acquire parkland and cost to improve parkland, but the DIF Study seems to include a 3rd component.
o Should planned infrastructure costs be divided by total population at buildout? o Is $864,537/acre reasonable for the cost of developing parkland? The City of Beaumont used $847,200/acre for a fully amenitized community park and $438,600/acre for a neighborhood park.
o Can a listing of parks be provided to support the 0.00226 acres per resident? o The 2019 study had a Facilities Inventory cost of $4,910,550. Now the cost is $17,414,800, and only a $4,320,000 facility was added. Did costs actually go up
2.66x?
o Costs in the Park Improvements category should be the responsibility of existing development. New development will pay to acquire and develop the necessary acreage to maintain the existing level of service, but should not be required to rehabilitate existing parks.
o Is the methodology used in the DIF Study effectively requiring new development to pay to acquire and develop parkland at a level equal to the existing standard, in addition to paying for projected infrastructure costs?
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7. Police Impact Fee:
o Weighting factor for Non-Residential land uses is only based on acreage and does not consider number of calls to each land use. Many studies we have reviewed utilize calls for service data.
8. Traffic Impact Fee:
o All of these projects were included in the 2019 study. Costs are being allocated between new and existing development, but should some of these be more heavily weighted towards the responsibility of existing development at this point? o Is there any grant funding already obtained or anticipated to be obtained? Some of the projects may have TUMF contributions, state funding, or are a shared responsibility with Beaumont.
9. Wastewater Impact Fee:
o Is the multifamily Average Flow Generation per DU reasonable? The City of Beaumont utilized a value that is approximately twice as high as the value shown in the DIF Study.
o Many of the projects identified in the CIP were anticipated to be fully funded prior to 2026. A few, but not all, are listed below:
▪ WWGM-15 (anticipated to be fully funded by 2022)
▪ WWGM-17 (anticipated to be fully funded by 2024)
▪ WWGM-18 (anticipated to be fully funded by 2025)
o Are all of the projects identified in the facilities list of approximately $130,000,000 needed solely to serve new development? It seems odd that for a population growth of 5,651 residents (approximately 17.7%) there would be a need for $130,000,000 in Wastewater facilities.
o Where was the cost of $85,000,000 for WWTP-5 derived from? In the CIP it was listed as $27,000,000 and was anticipated to be funded by 2021. o It was stated that no new projects were added to the infrastructure list. However, the following don’t appear to be in the 2019 study:
▪ WWFM-5 Force Main Creek Crossing
▪ WWLS-6 Bluff Street Lift Station
o Is there any grant funding?
10. Water Impact Fee:
o Is multifamily flow generation reasonable? It seems low compared to flow rates we have seen from water districts and other Cities.
o Are all of the projects identified in the facilities list of approximately $187,000,000 needed solely to serve new development? It seems odd that for a population growth of 5,651 residents (approximately 17.7%) there would be a need for $187,000,000 in Water facilities, or $33,092 per person. o Many of the projects identified in the CIP were anticipated to be fully funded prior to 2026. A few, but not all, are listed below:
▪ PWP-1 (anticipated to be fully funded by 2020)
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5 | P a g e
▪ PWP-2 through 4 (anticipated to be fully funded by 2022) ▪ PWPU-2 (anticipated to be fully funded by 2022)
▪ PWS-1 (anticipated to be fully funded by 2022)
▪ PWW-1 (anticipated to be fully funded by 2020)
o PWPU-3 New Mountain 2 Booster Pump Station, PWPU-6 New Upper Butterfield Zone Pump Station (Zone 1), PWPU-7 New Loma Linda Pump Station, and RWV-1 BCVWD Co-Owned Wells and Interconnect Buildings all had significant cost increases compared to other projects. Can backup for this be provided?
o Where were costs for PWPU 2, 3, 6, and 7 derived from? o It was stated that no new projects were added to the infrastructure list. However, the following don’t appear to be in the 2019 study:
▪ PWP-1 New Transmission Main for Proposed Lower Main Well C-9 ▪ PWP-4 New Transmission Main for Proposed Development in Main Zone (RSG)
▪ PWP-7 New Transmission Main for Proposed Development in Mountain North
▪ PWP-11 New Transmission Main for Proposed Development in Upper Butterfield (Zone 1)
▪ PWP-12 New Transmission Main for Proposed Upper Butterfield Reservoir (Butte (Zone 1)
▪ PWPU-1.a Upgrade Existing Mountain Booster Pump Station ▪ PWPU-1.b Demolish Existing Mountain Booster Pump Station ▪ PWPU-2 New Foothill West Pump Station
▪ PWPU-5 Add VFD to Well C-5
▪ PWS-5 Proposed Upper Butterfield Reservoir (Zone 1)
▪ PWV-3 Foothill West to Upper Main Zone Pressure Reducing Station ▪ PWV-4 C2 PRVs 1 & 2
▪ Title 22 Improvements
o In the 2019 study, many projects had an allocation between existing and new development. It seems logical that as time goes on, this allocation percentage would either remain the same or shift more towards existing development. The following projects increased their allocation to new development. ▪ PWP-2 New Transmission Main for Upper Main Reservoir 1 (RSG) ▪ PWP-6 New Transmission Main from Mountain Booster PS to Existing Mountain North
o Is there any grant funding?
# # # # #
848
BIA RESPONSE
MATRIX CONSULTING GROUP 1
BIA OF SOUTHERN CALIFORNIA LETTER DATED FEBRUARY 10, 2026, RESPONSE REGARDING BANNING DEVELOPMENT IMPACT FEE STUDY:
SINGLE-FAMILY AND MULTI-FAMILY:
- The study does use the 1,900 sq. ft. for Single-Family and 1,000 sq. ft. for multi-family. As pgs. 11-12 of the report show, we take the # of people per unit, and divide it by that average sq. ft. to come up with the # of ppl per 1,000 sq. ft., which is then used as the basis of the calculation. So the 1,900 sq. ft. is being used.
- Single-Family refers to 1 or 2 units, whereas multi-family refers to a development with 3+ units. - The 1,900 average sq. ft. reflects the current and projected trend in single-family development the City has seen and anticipates.
PROJECTED GROWTH AND DEVELOPMENT:
- No General Plan Buildout information is utilized in the report - Future Non-Residential square footage is based on the same assumptions as utilized in the City’s 2019 report, as this is an update of that report.
- Existing Sq. Ft. for the non-residential land uses that are relevant to the study are shown, consistent with the 2019 report.
- It is not necessarily a “reduction”, just stating that by 2040, there would be fewer sq. ft. attributable to those types compared to other areas, again consistent with what has been developed since the 2019 study, but keeping the same 2040 projections as the 2019 study.
ELECTRIC IMPACT FEE:
- Yes, the upgrade is needed due to new development.
- The Midway substation upgrade project has been removed. - The rate revenue from the study covered the cost of maintenance of existing infrastructure or existing system improvements project that are not associated with new development.
FIRE IMPACT FEE:
- Yes, the original intent was to use calls for service, but unfortunately, that information was unavailable; as such, the land acreage was used in its place. In discussions with Fire staff, the 33% seems to be the appropriate allocation of calls to service to “commercial” addresses. This is also consistent with other jurisdictions that also see between 30-40%. 849
BIA RESPONSE
MATRIX CONSULTING GROUP 2
- The DIF study accounts for all current and future facilities and allocates them to the existing service population to determine the current cost-per-capita standard. This actually minimizes the impact on future development and states that any existing and new facilities would be borne by both groups, as both would benefit.
- Costs for equipment were provide by CalFire based on recent purchases of equipment in Riverside County.
- Yes, that station is currently being renovated to return to active service.
GENERAL FACILITIES:
- No, the traditional methodology is to weight it based on working hours relative to total hours available to all residents, so that would be 24%. This is consistent with other studies approaches. - The City still maintains an animal shelter building. There is not currently an operator for that facility, but a study is being completed to return that building to active service. This project is a City Council priority.
- The total footprint of enclosed spaces at the City Yard ‘campus’ which includes 3 separate facilities is the area included in the study.
- The Chamber of Commerce occupies a City Owned facility under a lease agreement. As City needs expand, that facility is likely to house City staff.
PARKS IMPACT FEE:
- Tables 42-44 show those two components – park facilities (Facilities + CIP) and then the parkland cost as well.
- Same explanation as Fire, that the total cost is being attributed over the existing population to understand what the proportionate impact is associated with new development. So it is not based on the buildout.
- Yes, the $865,537 is simply taking the value from 2019 study and applying the annual inflationary factor.
- Here is the list of the parks inventory:
Category Quantity Unit
Parkland Inventory
Dysart Equestrian Park - 2101 W Victory Ave 20.00 acres Lions Park - 955 S Hargrave St 16.12 acres
Repplier Park - 671 N. San Gorgonio Ave. 14.39 acres
Sylvan Park - 2801 W. Nicolet Street 7.80 acres
Roosevelt Williams Park - 1101 E George St 5.50 acres
Richard Sanchez Park - 3758 Cypress St 3.32 acres
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BIA RESPONSE
MATRIX CONSULTING GROUP 3
Carpenter Hamilton Park - 99 E Ramsey St 0.33 acres
Armory 2.50 acres
- All the same facilities as the 2019 study were used; the only difference was the Armory facility, which was newly added since then. The only difference is that the cost per sq. ft. in the 2019 study was $150 per sq. ft., and in the 2026 study, it is $400 per sq. ft. The $400 better reflects current cost assumptions.
- The park improvements are due to both existing and new development, as they are needed to accommodate the new growth and development, which is why there is a proportionality requirement.
- It is standard practice to retain the existing standard of park acreage per 1,000 residents, as well as pay for the proportionate impact associated with new development utilizing city recreation facilities.
POLICE:
- Similar to fire, unfortunately, the City did not have the ability to break it out by land use type. As such, rather than utilizing incorrect information, it was assumed that the proxy of zoned use in the city would be a good approximation. The percentage would roughly still be consistent with what the staff sees as the breakdown of calls between residential and commercial properties.
TRAFFIC:
- The cost of transportation infrastructure is being split across all trips (existing and new) so that it is fairly apportioned to the impact associated with those traffic projects, and again using the cost per trip to proportionately have new development bear the burden associated with those trips. - Traffic projects were evaluated. There are 2 projects on Highland Springs with a reduced percentage due to share with City of Beaumont. Other project on Highland Springs have been removed as they are completed. A project at Highland Home Road and Sun Lakes Boulevard was reduced as the through lanes will be completed as part of the Sun Lakes Boulevard project. TUMF improvements at I-10/Hargrave are for bridge work only, and the City DIF includes intersection improvements, and therefore remain on the capital list.
WASTEWATER:
- The $130 million in projects is for City buildout, and not for 2040 buildout, as such only the proportion of population that is expected in 2040 compared to buildout, has been used in the revised analysis.
- The multi-family ADF was obtained from the 2018 Integrated Master Plan, and the density/acre was taken from the General Plan. We cannot comment on the City of Beaumont system. 851
BIA RESPONSE
MATRIX CONSULTING GROUP 4
- The projects were listed for planning purposes. The only projects completed have been DIF credit eligible projects at the Atwell project. Insufficient DIF has been collected from other projects in the City to fund the anticipated work in the CIP and have been delayed as such. - Costs for CIP work has increased at a rate greater than CPI. Please see the first response for how this was re-evaluated in the revised study.
- The current cost estimate for the WWTP project is $100 million for replacement only of the existing 3.6 MGD plant. The upgrade to accommodate growth to 6.3 MGD is an additional $75 million in today’s dollars. From there, the existing methodology was applied on the $75 million capacity enhancement that allocated $61 million to new development, and 14 million to existing users.
- The projects questioned are on page 34 of the 2019 DIF - Grant funding will be applied if/when received, as grant awards are unknown and not predictable.
WATER:
- Multi-family ADF was obtained from the 2018 Integrated Master Plan, primarily from metered consumption, and the density/acre from the General Plan. We cannot comment on the BeaumontCherry Valley Water District system. - The $187 million in projects is for City buildout, and not for 2040 buildout, as such only the proportion of population that is expected in 2040 compared to buildout, has been used in the revised analysis.
- The projects were listed for planning purposes. The only projects completed have been DIF credit eligible projects at the Atwell project. Insufficient DIF has been collected from other projects in the City to fund the anticipated work in the CIP and have been delayed as such. - Cost estimates in the 2019 DIF for booster pump stations and interconnects were found to be less than a quarter of actual costs incurred to deliver these similar infrastructure projects. Actual costs received for project completed over the last 3 years were used in this assumptions. - The projects listed were included in the 2019 DIF, pages 38-40. 852
CITY OF BANNING
NOTICE OF PUBLIC HEARING
BEFORE THE CITY COUNCIL
TO CONSIDER ADOPTION OF ORDINANCE NO. 1616
(AMEND BMC CHAPTER 15.68 DEVELOPMENT IMPACT FEES),
AND ADOPTION OF RESOLUTION NO. 2026-24
APPROVING THE DEVELOPMENT IMPACT FEE NEXUS STUDY AND ADOPTING NEW AND/OR
UPDATEDDEVELOPMENT IMPACT FEE RATES
NOTICE IS HEREBY GIVEN that the City Council of the City of Banning, California, will conduct a public hearing at its meeting of February 24, 2026. The City Council meeting begins at 5:00 p.m., in the Council Chambers at City Hall, 99 East Ramsey Street, Banning, CA 92220. The public hearing will be held at 5:00 p.pm or as soon thereafter as the matter may be heard. To observe the live meeting through your personal computer or smart phone enter the following link: https://banninglive.viebit.com or view on the Banning Government Channel on Cable Television.
Banning Municipal Code Chapter 15.68 Development Impact Fees. The purpose of the public hearing is to consider amendments to Banning Municipal Code Chapter 15.68 Development Impact Fees to modify existing development impact fees, adopt new development impact fees for electric facilities, approve the development impact fee nexus study, and adopt updated development impact fee rates.
ENVIRONMENTAL DETERMINATION: The Ordinance is not a project under the California Environmental Quality Act (CEQA) pursuant to section 15378(b)(4), as the action relates to the creation of government funding mechanisms or other governmental fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. The Ordinance is statutorily exempt from CEQA under section 15273(a)(4) to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, and other charges by public agencies which the public agency finds are for the purpose of obtaining funds for capital project, necessary to maintain service within existing service areas. The capital projects described in the Development Impact Fee (DIF) Study will maintain the level of service currently provided by the City’s existing electric, fire, general facilities, parks, traffic, wastewater, and water facilities by ensuring that the impacts of new development will not negatively impact existing service levels within existing service areas.
REVIEW OF PROJECT INFORMATION: The proposed ordinance, the development impact fee nexus study, and related documents are available for public review by contacting the Public Works Department during normal business hours (Monday – Friday, 8:00am to 5:00pm) by telephone at (951) 922-3130.
COMMENT ON THIS APPLICATION: Response to this notice may be made verbally at the Public Hearing and/or in writing before the hearing:
• You may provide oral comments at the in-person hearing. Agendas are available at least 72 hours in advance of the meeting online: https://banningca.granicus.com/ViewPublisher.php?view_id=1 • Written comments may be submitted to the City Council by email at [email protected] or letter to the address below. Transmittal prior to the start of the meeting is required. Any correspondence received during or after the meeting will be distributed to the City Council as soon as practicable and retained for the official record.
City Clerk’s Office
PO Box 998
99 E. Ramsey St
Banning, CA 92220
Any challenge of the proposed project in court may be limited to raising only those issues raised at the public hearing described in this notice, or in written correspondence delivered to the City Clerk at, or prior, to the public hearing (Government Code Section 65009[b][2]). 853
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the Office of the City Clerk at 951-822-3125. Notification 48 hours prior to the meeting Will enable the City to make reasonable arrangements to ensure accessibility to this meeting.
Si necesita ayuda con esta carta, por favor llame a la Ciudad de Banning y puede hablar con Sandra Calderon, teléfono (951) 922-3125.
BY ORDER OF THE DEPUTY DIRECTOR OF PUBLIC WORKS, CITY ENGINEER, OF THE CITY OF BANNING, CALIFORNIA.
Nathan Smith, PE Dated: February 2, 2026
Deputy Director Public Works Publish: February 6, 2026
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AFFIDAVIT OF PUBLICATION
Record Gazette
218 N. Murray St., Banning, CA 92220
Proof of Publication
(2015.5 C.C.P.)
PHN CC Meeting 2-24-2026 TUMF
___________________________________________________
State of California )
County of Riverside ) SS.
I am a citizen of the United States and a resident of the State of California; I am over the age of eighteen years, and not a party to or interested in the above matter. I am the principal clerk of the printer and publisher of Record Gazette, a newspaper published in the English language in the City of Banning, County of Riverside, and adjudicated a newspaper of
general circulation as defined by the laws of the state of California by the Superior Court of the County of Riverside, under the date October 14, 1966, Case No. 54737.
That the notice, of which the annexed is a copy, has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to-wit:
Feb 13, 2026
Executed on: ____________________
At City of Banning, California
I ceritfy (or declare) under penalty of perjury that the foregoing is true and correct.
___________________________________________________
Signature
PHN CC Meeting 2-24-2026 TUMF | Page 1 of 1
February 13, 2026
855
CITY OF BANNING
STAFF REPORT
TO: CITY COUNCIL
FROM: Art Vela, Interim City Manager
PREPARED BY: Marisol Lopez, Economic Development Manager Bonnie Johnson Interim Finance Director
MEETING DATE: February 24, 2026
SUBJECT: Review of Sales Tax Sharing and Operating Agreement between City of Banning and Dalia Auto Group, LLC and Khan Properties and Holdings, LLC (Diamond Chevrolet GMC)
RECOMMENDATION:
Receive and file the update on the Sales Tax Sharing and Operating Agreement and provide direction to staff as appropriate.
BACKGROUND:
The City of Banning has maintained a long-standing operating and sales tax-sharing partnership with Diamond Hills Auto Group, now operating as Diamond Chevrolet GMC, to retain and strengthen one of the City’s largest sales tax generators.
(Pursuant to California Revenue and Taxation Code Section 7056, specific quarterly sales tax amounts and individual business rankings are confidential and may not be publicly disclosed.) On June 12, 2012, the City Council adopted Resolution No. 2012-59 entering into an Economic Development Assistance Program and Amended Operating Covenant with Diamond Hills Auto Group to support continued dealership operations within the City.
Agreement and Approval Timeline
January 12, 2012 – Original Operating Covenant Agreement executed with Diamond Hills Auto Group, Inc.
November 9, 2015 – Property acquired by Dalia Auto Group, LLC and Khan Properties & Holdings, LLC.
October 25, 2016 – City Council adopted Resolution No. 2016-080 approving transfer and amendment of the agreement to Dalia Auto Group, LLC and Khan Properties & Holdings, LLC.
June 13, 2017 – Sales Tax Sharing and Operating Agreement Effective Date.
June 13, 2032 – Scheduled expiration of 15-year term (if reimbursement cap is not reached earlier).
On October 25, 2016, the City Council adopted Resolution No. 2016-080 approving a 15-year Sales Tax Sharing and Operating Agreement with Dalia Auto Group, LLC and Khan Properties and Holdings, LLC, operating as Diamond Chevrolet GMC. The agreement became effective on June 13, 2017.
The agreement was approved to retain a major regional automobile dealership within the City, prevent relocation to neighboring jurisdictions, support modernization improvements, preserve employment, and protect long-term General Fund revenue.
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Key Agreement Terms
Term: 15 years (June 13, 2017 – June 13, 2032)
Annual Base: City retains 100% of the first $150,000.00 in local sales tax revenue Revenue Share Above Base
85% to the Dealership
15% retained by the city
Maximum Reimbursement Cap: $3,200,000.00
Payment Structure: Quarterly, performance-based payments after receipt of sales tax from the State
Continuous Operation Requirement: Dealership must remain open and in good standing during the term
Current Status
Maximum Reimbursement Cap: $3,200,000.00
Total Paid to Date: $2,401,439.08
Remaining Balance: $798,560.92
Approximately 75% of the total reimbursement cap has been reached. Based on historical trends, staff estimates completion within approximately 2 to 3 years (estimated 2028–2029), assuming consistent dealership performance. Upon the $3,200,000 cap is reached, the City will retain 100% of the dealership’s local sales tax revenue.
JUSTIFICATION:
The agreement has successfully retained one of the City’s largest sales tax generators, supported significant capital reinvestment and facility modernization, preserved local employment opportunities, and maintained positive General Fund revenue throughout the incentive period.
FISCAL IMPACT:
There is no new fiscal impact associated with this update. Payments are performance-based and tied solely to actual sales tax received. Once the cap $3,200,000, is reached, the City will retain 100% of the dealership’s local sales tax revenue.
ALTERNATIVES:
Not applicable.
BUDGETED?:
No
CONTRACT/AGREEMENT:
No
ATTACHMENTS:
1. Agreement - Tax Sharing - Dalia Auto Group, LLC_6-13-17 (1).pdf
2. CC Resolution No. 2016-080.pdf
3. CC Agenda Packet - Special Meeting - 10_25_2016 2_00 PM.pdf
4. CC Resolution No. 2012-059_Diamond_Hills_Auto_Group_Banning_06-12-2012.pdf 857
SALES TAX SHARING AND OPERATING AGREEMENT
between
THE CITY OF BANNING,
a California municipal corporation
and
DALIA AUTO GROUP, LLC and KIIAN PROPERTIES AND IIOLDINGS, LLC doing business as
DIAMOND HILLS CHEVROLET BUICK GMC
a Limited Liability company
858
This Sales Tax Sharing Agreement (" Agreement") is entered into between ( i) the CITY OF BANNING (" Banning or "City"), a municipal corporation, and (ii) DALIA AUTO GROUP, LLC and KHAN PROPERTIES AND HOLDINGS, T. i.C, limited liability companies, doing business as DIAMOND HILLS CHEVROLET BUICK GMC (" Dealership"). Banning and Dealership are each individually referred to as a " party" and collectively as the ' parties."
1. EFFECTIVE DATE
This Agreement will not become effective until it (i) has been duly executed by the authorized officers of the Dealership and delivered to Banning, and ( ii) has been duly approved by the City Council of the City of Banning (the " Effective Date").
2. RECITALS AND REPRESENTATIONS
2. 1 The Dealership represents and warrants to the City that it has the legal right to use and occupy that certain real property ( the " Property") located within the City of Banning, and commonly known as 4545 W. Ramsey Street and 4661 W. Ramsey Street, Banning, California.
2. On January 12, 2012, the City and Diamond Hills Auto Group, Inc. entered into a transferrable " Agreement Regarding Operating Covenant" ( the " Amended Original Agreement") whereby the City agreed to ( i) Pay Diamond Hills Auto Group, Inc. $2, 000,00 over a ten year period, or until September 2015; (ii) Provide both parties an option to extend the Original Agreement by ten years, or until September 2025, and create a new ceiling of 5, 000,00ifDiamond Hills Auto Group, Inc. added a maximum of two new dealer franchises to their existing dealership; and ( iii) Pay Diamond Hills Auto Group, Inc. a sliding percentage scale of sales tax as long as the City maintained a minimum threshold of S 100, 00per year in sales tax by the Dealer. The percentage split was 50% in Year 7. The Amended Original Agreement contemplated a tax -sharing arrangement between Banning and Diamond Hills Auto Group, Inc. by which both parties would eventually split the City' ssales tax revenue generated from the operations on a 50/0 basis beyond the City' s minimum threshold.
2. 3 On November 9, 2015 Dalia Auto Group, LLC and Khan Properties and Holdings, LLC purchased and assumed rights to the Property in the Asset Purchase Agreement and on October 25, 2016 the Banning City Council approved the transfer of Operating Covenant and authorized its amendment on the terms and conditions stated herein.
2. 4 Dealership continues to operate the existing automobile dealership commonly known as " Diamond Hills Chevrolet Buick GMC." Dealership has approximately 63 employees, which has increased from approximately 50 employees at time of purchase. In 2016, Ref: Resolution 2016- 80
859
Dealership anticipates that it will produce approximately $ 332, 700in sales tax revenue to the City, placing it among the City' slargest sources of sales tax revenue.
2. 5 Dealership anticipates increases in revenues and growth in its automobile sales and service that require it to expand its facilities. Dealership has considered relocating to nearby cities to acquire larger facilities; were that to happen the City would lose a significant share of its total sales tax revenues.
2. 6 The City Council, in order to assist in the re -construction, improvement and expansion its facility, determined that providing economic incentive payments to Dealership, in an amount equal to a percentage of the Sales Tax as defined below, would: ( i) enhance the quality of the facilities, goods, and services that Dealership makes available to the public and City' sresidents; (ii) provide desirable and attractive shopping experiences for City' sresidents and its visitors; (iii) enhance local employment opportunities; and (iv) increase sales tax revenue to the City.
2. 7 Dealership represents to City that the Dealership improvements ( as defined below) will result in an increase in sales of both new and used automobiles, automobile parts and services and are anticipated to result in sales tax increment.
2. 8 By adoption of Resolution No. 2016- 80, the City Council desires to assist the Dealership in the form of annual Economic incentive Payments, reimbursed on a quarterly basis under the provisions of this Agreement for a term of fifteen ( 15) years for the cost ofDealership Improvements paid by Dealership, up to a maximum reimbursement of three million two hundred thousand dollars ($ 3, 200, 000).
3. TERMS OF SALES TAX SHARING
NOW, THEREFORE, in consideration of the mutual promises and covenants of the Parties set faith herein, and for other good and valuable consideration, the value and receipt of which are hereby acknowledged 'by the Parties, the Parties agree as set forth hereinafter.
3. 1 Incorporation of Recitals.
The Parties agree that each of the foregoing Recitals is true and correct and incorporate each of the Recitals in this Agreement by reference thereto.
3. 2 Definitions. The terms used in this Agreement shall be given the meaning expressly defined in this Agreement.
a) "Economic Incentive Payment" shall mean payments by City to Dealership implementing Sales Tax Sharing as provided for in this agreement. The Economic Ref: Resolution 2015- 80
860
Incentive Payment is an amount equal to eight -five percent ( 85%) of the Sales Tax after the City has received one -hundred percent ( 100%) of the first one hundred fifty thousand dollar ($ 150, 00) in tax revenue per year, for a term of fifteen ( 15) years, and up to a maximum payment of three million two hundred thousand dollars S3, 200, 000.). Payments shall be made quarterly by City to Dealership at a rate of eighty- five (85%) of sales tax revenue received by City, above the first thirty- seven thousand five hundred dollars ( S37, 500).
b) "Effective Date" shall mean the date upon which all of the following have occurred:
i) City' s City Council has approved the Agreement; (ii) City Manager has executed the Agreement; and (iii) Dealership' s
authorized representatives( s) have executed the
Agreement.
c) "Existum Retail Business" shall mean the Dalia Auto Group, LLC doing business as Diamond Hills Chevrolet Buick GMC located at 4545 W. Ramsey Street and 4661 W. Ramsey Street, Banning, California that is owned and operated by Dalia Auto Group, LLC and Khan Properties, LLC, and consists of new and used car sales, auto parts sales, and automobile service facilities on the Property. d) "Improved Business" means the Existing Retail Business as improved by the completed Dealership Improvements.
e) "Maximum Payment" . Dealership shall not be entitled to payments from City beyond the fifteen ( 15) year term, or in excess of the Maximum Payment consistent with this agreement.
f) "Prouerty" shall mean that parcel or parcels of real property upon which Dealership operates the Existing Retail Business.
g) Sales Tax" on an annual basis, the sales tax actually generated by Dealership and received by City from the State Board of Equalization over the Sales Tax Base. For purposes of this Agreement, the Sales Tax Basc is the first one hundred fifty thousand dollars ($ 150, 00.) of sales tax revenue generated by Dealership per tax year of which the City shall retain 100%.
h) "Sales Tax Base" shall be the first one hundred fifty thousand dollars ($ 150, 00.) of sales tax revenue generated by Dealership per tax year of which the City shall retain 100%.
i) "Total Maximum Expense" shall mean Payments by Dealership for Dealership Improvements reimbursed by the City shall not exceed the Total Maximum Expense of three million two hundred thousand dollars ($3, 200, 000.). j) Dealership improvements" shall mean the expansion, remodeling. renovation and improvement of the Existing Retail Business by (i) enlarging or remodeling the new Ref: Resolution 2016- 80
861
car showroom; or ( ii) renovating the facility per GM corporate imaging; and ( iii) adding a new freeway frontage sign to the newly acquired property adjacent to the facility and identified by Assessor Parcel Numbers 537- 100- 027- 7, 537- 100- 028- 8, and 537- 100- 029- 9.
3. Dealership Dbli2ations The following are conditions precedent to City' sobligation to provide the Economic Incentive Payment to Dealership:
a) Completion of Dealership Improvements. Dealership shall timely undertake all work reasonably necessary to timely complete the Dealership Improvements as provided herein
I) Deadline. Dealership agrees to begin the Dealership Improvements not later than eighteen ( 18) months alter the Effective Date ofthis Agreement unless such deadline is extended by approval of City Council. ii) Completion Date. Completion of the Dealership Improvements shall be deemed to have occurred on the date where Dealership has substantially completed all Dealership Improvements and City reviews documentation supporting such.
iii) Improvement Standards. The Dealership Improvements shall be constructed in accordance with all City zoning and building requirements and Dealership shall have procured all necessary permits from City and any other local governmental entity having jurisdiction over the Dealership Improvements or any material aspect thereof. Dealership is solely responsible for undertaking and completing the Dealership Improvements and obtaining all necessary permits at its sole cost.
iv) Sign Improvement. Dealership shall provide the option to the City to display a message on the freeway frontage sign, including but not limited to Welcome to Banning."
b) Confirmation of Payments for Dealership Improvements. i) Confirmation of Payments for Dealership Improvements. Dealership agrees to provide to City documentation reasonably acceptable to City, including without limitation, invoices,
actual
lien releases, and other evidences of Dealership' s
payment, confirming payments to contractors, subcontractors, and vendors.
ii) City Shall Reimburse up to the Total Maximum Expense. Payments by Ref: Resolution 2010- 8
862
Dealership for Dealership Improvements shall be reimbursed by the City up to the Total Maximum Expense of three million two hundred thousand dollars 3, 200, 000.). If the accepted documentation evidences payments by Dealership of more than the Total Maximum Expense, then City shall have the right to terminate Economic Incentive Payments as per Section 2. 8. For example, if Dealership pays four million dollars ($ 4, 000,0) for Dealership Improvements, the City shall not reimburse more than three million two hundred thousand dollars ($3, 200, 000.) to Dealership.
iii) City' s right to audit Dealership Operations and Documentation of Dealership improvements. City shall have the right to audit the operations, sales data, and dealership expansion and renovation documentation. c) Continued Operation. Dealership shall remain in continuous operation during current normal business hours and days for the duration of the fifteen (15) - year period or until receipt of the Maximum Payment, whichever occurs first.
Dealership will be considered to be in continuous operation, even if closed on all recognized California and federal holidays, and during times of temporary closure for planned repairs or renovations for which Dealership notified City in writing at least thirty (30) days in advance. No closureshall operate to extend the period during which Dealership may be entitled to receive the Economic Incentive Payment from City.
d) Good Standing. Dealership shall otherwise remain in good standing and not in default ofitsperformance ofthis Agreement. Ifdealership does not remain in good standing and in operation, this agreement shall terminate as defined in Section 3.6.
3. 4 City' sObligation to Make the Economic Incentive Payment a) Obligation of City. City shall be obligated to make Economic incentive Payments to Dealership, at the times and as provided in this Section, provided Dealership has satisfied the conditions precedent to payment set forth in Section 3. of this Agreement and otherwise remains in good standing and is not in default under this Agreement.
h) Sales Tax Sharing Period. Calculation of the Sales Tax sharing shall commence on the Effective Date of this Agreement. The period during which City shall receive Sales Tax which forms the basis of the Economic Incentive Payment shall commence on the Effective Date and shall continue for a period Ref: Resolution 2016- 80
863
of not to exceed fifteen ( 15) years thereafter or until Dealership has received the Maximum Payment. In the event that Sales Tax received by City during the fifteen ( 15) year period is insufficient to yield the Maximum Payment to Dealership, then Dealership shall not be entitled to further payments or assistance from City. The Parties acknowledge that sales will continue on the Property during the construction ofthe Dealership Improvements. The ' yearly' period for measurement of Sales Tax shall be in accordance with the normal processes of the City. if necessary to reach the full fifteen ( 15) year term of the Sales Tax Sharing period, the final month or months shall likewise be prorated.
EXAMPLE OF TAX SHARING REIMBURSEMENT
ANNUAL
SALES TAX
City' s Sales
Tax Base
City Share over
Base
Dealership Share
over Base
City
TOTAL
175, 326
Dealership
TOTAL
143, 514
ANNUAL
REVENUE
318, 840 150, 00 25, 326 143, 514 318, 840
100% of first
150k
15% over
85% over S150k
15Ok
c) Making Payment. The Economic Incentive Payment is payable to Dealership by City in quarterly payments within 30 days subsequent to the City' sreceipt of Sales Tax revenue from the State Board ofEqualization in accordance with the City Finance Department' sprocedures as they may change from time to time.
d) Exclusions from Sales Tax. Sales Tax not actually received by City, for reasons not within City' s control, are not subject to sharing under this Agreement unless and until actually received by City. Transactions and Use Tax collected by City is separate from, and excluded from, the Bradley Burns Uniform Local Sales and Use Tax and shall not be included in the calculation of the Economic Incentive Payment
3. 5 Sign Improvements.
a. Dealership shall be entitled to apply for a
freestanding freeway -oriented sign.
Dealership shall he permitted to a freestanding freeway -oriented sign as outlined in Section 17. 36. 110 of the sign regulations substantially as illustrated in Exhibit " A" and/ orExhibit "B" ofthis agreement. Upon submittal ofapplication and approval by City Council, Dealership shall receive entitlement for the freestanding freeway - oriented sign only, as outlined in the zoning ordinance. Prior to approval of a building Ref: Resolution 2016- 80
864
permit for the sign structure, the applicant shall submit a sign application to be reviewed and approved by the City Manager or his/er designee in accordance with the design guidelines of Section 17. 36. 010 of the sign regulations. Any necessary findings regarding the freestanding freeway -oriented sign shall be made at time of building permit application.
b. Dealership shall be entitled to apply for a freestanding freeway -oriented sign that includes the relocation of an existing billboard that may be incorporated into one sign, or two separate signs. Currently, the Dealership' ssite includes an existing billboard.
Should the business desire to relocate the existing billboard for offsite advertising, Dealership shall apply for approval of a relocation agreement by City Council in accordance with Section 17. 36. 060( D) of the sign regulations.
3. 6 Defaults and Remedies.
a) Defaulted Dealership Improvements. Dealership shall be deemed Defaulted if Dealership Improvements have not begun within eighteen ( 18) months after the Effective Date of this Agreement. At time of Defaulted Dealership Improvements, Tax Sharing split shall revert to terms stated above in Recitals and Representations 2. 2, by which both parties will split the City' ssales tax revenue generated from the operations on a 50/0 basis above the City' s
Sales Tax Base, and the Sales Tax Base shall revert
to two hundred thousand dollars ($ 200, 00) annually.
b) Occurrence of any or all of the following shall constitute a default under this Agreement:
c) Failure or refusal on the part of either party to perform a material term or obligation of this Agreement.
d) The filing of a petition in bankruptcy by or against Dealership, or the appointment of a receiver or trustee of any property of Dealership or an assignment by Dealership for the benefit of creditors, or adjudication that Dealership is insolvent by a court, and a failure of Dealership to cause such petition, appointment or assignment to be removed or discharged within sixty days.
e) Dealership' sceasing for any reason to operate on the Property or its relocation outside the City during the term hereof.
I) Failure of Dealership to report to the State Board of Equalization all taxable sales actually made from the Dealership and to remit the full amount of the sales tax when due from all taxable sales actually made by Dealership. g) Establishment ofanother facility within California resulting in a diminution of taxable sales below that reported to the State Board of Equalization in calendar year 2015.
Ref: Resolution 2016- 80
865
3. 7 indemnification; Release.
a) Survival. The indemnification provided in this section shall survive the termination of, and/ orthe expiration of the term of, the Agreement for a period of five ( 5) years from the termination or end of said term.
b) Dealership agrees to and shall indemnify, defend ( with counsel reasonable acceptable to the City) and hold City, and its elected officials, officers, employees, agents, and attorneys ( the " Indemnified Parties") harmless from and against all losses, costs and expenses ( including reasonable attorneys' fees) damages, claims and liabilities to third parties arising from the evaluation, approval, entering into and carrying out ofthe terms and provisions of this Agreement, including, hut not limited to a challenge to this Agreement or the transactions contemplated by this Agreement, except to the extent causes by the sole negligence or wrongful acts of the Indemnified Parties. c) Release. Dealership releases City from any Claims arising from any inability of City to legally collect sales tax, share sales tax as provided in this Agreement, or any other act or omission, including any state statute or regulation to which City is subject, which is beyond City' ssole control.
d) Waiver. Dealership waives any right which it might have or accrue at any time during the effective period of any provision of this Agreement, including these indemnification provisions, or any of its various exhibits, to pursue any legal or equitable remedy or Claim against City, other than for non- payment of Dealership' sshare of Sales Tax calculated under and otherwise due under the provisions of this Agreement.
3. 8 Termination of Agreement by City.
a) City' sRight to Terminate. City shall have the right to terminate its obligations under this Agreement if Dealership breaches any promise, obligation, covenant or duty under this Agreement or the Operating Covenants, including, without limitation, the failure of Dealership to construct the Dealership Improvements, the failure of Dealership to collect Sales Tax, the failure of Dealership to operate the Business continuously during the term of the Agreement, or the failure of Dealership to otherwise satisfy the requirements of this agreement.
b) Notice of Termination and Cure. in order to terminate this Agreement, City shall first provide notice to Dealership, given in accordance with the notice requirements set forth in Section 6 hereof, specifying Dealership' sbreach of the Agreement in reasonable detail and indicating what steps Dealership must take to cure the Ref: Resolit! on 2016- 80
866
referenced breach. Dealership will be afforded ten ( 10) business days from the date of the notice to cure the specified breach( es).
c) If, at the end of the ten ( 10) day cure period, any correctible breaches have not been corrected, City shall have the right, at its sole option, to deem the Agreement terminated without further notice or action by City. In such case, Dealership ( or any other person or entity receiving any portion of the Economic Incentive Payments directly from City) shall be obligated to immediately repay all installments of the Economic Incentive Payments made by City, together with interest thereon at the highest rate permitted by law, from the date of the initial payment made by City to Dealership.
3. 9 Miscellaneous Provisions.
a) Council Action. All findings and decisions ofthe City Council taken in connection with this Agreement with Dealership to participate in Sales Tax Sharing shall he deemed to be reasonable and supported by an adequate and appropriate record. No such findings or decisions shall be subject to challenge or be the subject of any Claim by Dealership. Any action taken by City, including, but not limited to, the termination of this Agreement under the provisions hereof, shall he at the sole option of City and in its sole and absolute discretion, unless a different standard is otherwise specifically indicated. Dealership acknowledges that City would not have entered into this Agreement in the absence of this covenant by Dealership. b) Integration. All exhibits attached to this Agreement are deemed to be incorporated into this Agreement byreference.
c) Further Documents. Dealership agrees to execute any additional documents, forms, notices, applications or other documents which City reasonably determines to he necessary to carry out the intent of this Agreement and/ orthe intent and provisions of applicable portions of the Codc.
d) Partial Invalidity; Severance. The Parties agree that, should any provision, section, paragraph, sentence or word of this Agreement be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of legislation, the remaining provisions, sections, paragraphs, sentences and words of this Agreement shall remain in full force and effect and the Parties agree in good faith to immediately amend this Agreement in such a way as to provide alternative provisions, sections, paragraphs, sentences or words as necessary to carry out the intent of this Agreement and/ orthcCodc.
Ref: Resolution 2016- 80
867
e) Payment of Taxes and Encumbrances. Dealership shall keep current and in good standing and pay prior to delinquency all lawful real property taxes, assessments mortgages payments, loan payments, rents, lease payments, liens, and other monetary encumbrances on or against the Improved Business the repayment of which is secured by the Property, at all times during the term of the Operating Covenants.
f) Assignments and Transfers. Dealership shall not, without prior written approval of City, which approval may be given or withheld at the absolute discretion of City: (i) assign or attempt to assign this Agreement or any right herein; or ( ii) make any total or partial sale, transfer, conveyance, lease, leaseback, or assignment of the whole or any part of the Improved Business and/ orthe Property or the improvements thereon; or ( iii) transfer control of Dealership through whatever mechanism, including, without limitation, sales of stock, a sale of Dealership to any other person or party, or agreements giving voting control to persons not holding an interest in Dealership at the date of this Agreement. This prohibition shall not apply to the reasonable grant of limited easements or permits to facilitate the development of the Property. Notwithstanding the foregoing, City agrees that it will consider an assignment of this Agreement in connection with a sale of the improved Business to a third party, provided that said third party provides City with such financial or other information as City deems necessary in its sole discretion to enable it to adequately evaluate the experience and ability of the third party to operate the Improved Business. All decisions made by City in connection with such an assigmncnt shall be made at City' ssole discretion and in its sole judgment, and shall not he subject to challenge. All rights granted to Dealership under this Agreement shall automatically terminate upon a sale or long- term lease, of longer than three months, of the improved Business or of the Dealership to a third party, and Dealership shall have no remaining rights under this Agreement, notwithstanding any approved assignments. g) Remedies. With respect to any default by the other Party occurring after the Effective Date, whether with regard to a breach during the period of Sales Tax Sharing, the term of the indemnification provided in this Agreement to City by Dealership, or the life of the Operating Covenants, the non -breaching Party may institute legal action to cure, correct or remedy any default, providing that such action is not otherwise prohibited or restricted by the provisions ofthis Agreement, to recover any damages arising from such breach or to obtain any other remedy consistent with the purposes of this Agreement, and further provided that notice is given in accordance with this Agreement. Any legal actions brought concerning this Agreement or Economic incentive Payments hereunder must be instituted in Ref. Resolution 2016- 80
868
the Superior Court of the County of Riverside, State of California, in any other appropriate court in that County, or in the Federal District Court in the Central District of California.
h) Governing Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement.
i) Rights are Cumulative: Wavier. Except with respect to any rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. A waiver of a
requirement shall not constitute an ongoing waiver of that requirement in the future.
j)Notices. Any and all notices, demands or communications submitted by any Party to the other Party pursuant to or as required by this Agreement shall be proper if in writing and dispatched by messenger for immediate personal delivery, or by registered or certified United States mail, postage prepaid, return receipt requested, to the principal office of City and Dealership, as applicable, as designated in Section 3. 9j hereof Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is dispatched by messenger for immediate personal delivery, or two (2) calendar days after it is placed in the United States mail as heretofore provided. Any notices to any Party required to be given under this Agreement, or given by a Party for other reasons, shall be sent to:
Dealership:
City:
Alam Khan
Diamond Hills Chevrolet, Buick, GIvIC
4545 West Ramsey Street
Banning, CA 92220
City ofBanning
99 E. Ramsey Street
Banning, CA 92220
Attention: City Manager
Ref: Resolution 2016- 80
869
k) Conflict of Interest. No elected official, officer, employee or agent of City having any conflict of interest, direct or indirect, related to this Agreement and/ orthe development of the Dealership Improvements or the Improved Business shall participate in any decision relating to this Agreement.
1) No Third Party Consideration. Dealership warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. Third parties, for the purposes of this Section, shall not include persons to whom fees are paid for professional services if rendered by attorneys, financial or other consultants, accountants, engineers, architects and the like when such fees are considered necessary by Dealership. For the purposes of this paragraph, third parties shall include any officer, employee, agent or elected official ofCity. in) No Personal Liability of Officials. No elected official, official or officer, employee, agent or attorney of City shall be personally liable to Dealership, its shareholders or principals, or any successor in interest, or any other party or person whatsoever, in the event of any default or breach by City or for any amount which may become due to Dealership or to its successors, or on any obligations under the terms of this Agreement, except for gross negligence or willful acts of such member, officer, employee or attorney.
n) Force Maicure. In addition to specific provisions of this Agreement, performance by either Party hereunder shall not be deemed to be in default where delays or defaults arc due to war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of public enemy; epidemics; quarantine restrictions; freight embargoes or lack of transportation; weather -caused delays; inability to secure necessary labor, materials or tools; acts of the other Party other than as permitted or required by the terms of this Agreement; acts or failure to act of any public or governmental agency or entity other than as permitted or required by the terms of this Agreement ( except that action or failure to act by City shall not extend the time for City to act unless such extension is otherwise expressly authorized herewith) unless such action or failure to act is the result of a lawsuit or injunction, or any other causes beyond the control or without the fault of the Party claiming an extension of lime to perform. Any extension of time for any such cause hereunder shall he for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the Party claiming such extension is sent to the other Party within thirty (30) calendar days of the commencement of the cause. If notice is not timely given, such extension shall not commence until and if the other Party has actual knowledge ofthe cause. Times of performance under this Agreement may be extended by mutual agreement in writing by and between City Ref: Resolution 2016- 80
870
and Dealership.
o) Inspections. City shall have the right at all reasonable times, and no cost or expense may be imposed with respect thereto by Dealership, to inspect the books and records of Dealership pertaining to a breach or suspected breach ofthis Agreement.
Matters learned by City in the course of such inspections shall not be disclosed to third parties unless required by law or unless otherwise resulting from or related to the pursuit ofany remedies or the assertion of any rights by City hereunder. p)
q)
City Administration. The City Manager of City is authorized to sign on his own authority amendments to this Agreement which are of routine or technical nature.
Independent Review. Each Party represents and warrants the following: they have carefully read this Agreement, and in signing this Agreement arc agreeing to be bound by the same, they have received independent legal advice from legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement, and they have freely signed this Agreement and agreed to be bound by it without any reliance upon any agreement, promise, statement or representation by or on behalf of the other Party, or its respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. This Agreement shall be interpreted as though prepared jointly by both Dealership and City.
r) Prevailing Party. If either Party hereto files any action or brings any action or proceeding against the other arising out of this Agreement, seeks the resolution of disputes, or is made a party to any action or proceeding brought by a third party with respect to the Agreement or the participation in either by either Party, then as between Dealership ( and any successor in interest thereof) and City, the prevailing Patty shall be entitled to recover as an element of its costs of suit or resolution of disputes, and not as damages, its reasonable attorneys' fees as fixed by the Court or other forum for resolution of disputes as may be agreed upon by the Parties in such action or proceeding or in a separate action or proceeding brought to recover such attorneys' fees.
s) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns.
t) Time Frames. Unless otherwise indicated with respect to arequirement, all time Ref: Resolution 2016- 80
871
frames for performance of an act required or permitted by this Agreement shall be calendar days. Time frames measured in months shall he calculated with reference to the actual number of days in the relevant months. Annual time frames shall mean a period of 365 days.
Duplicate Originals. This Agreement shall be executed in two ( 2) duplicate originals each of which is deemed to he an original. This Agreement constitutes the entire understanding and agreement of the Parties. The Parties may sign this Agreement in counterparts.
v) Integration. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the Parties with respect to all or any part ofthe subject matter hereof w) Waivers. All waivers of the provisions ofthis Agreement and all amendments hereto must be in writing and signed by the appropriate representatives of City and/ or Dealership. Other than minor or technical amendments which the City Manager may approve on his own authority, any amendment to this Agreement must be approved by the City Council of City.
SIGNATURES ON THE FOLLOWING PAGE]
Ref: Resolution 2016- 80
872
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first -above written.
CITY:
CITY OF BANNING, a municipal
corporation
Michael Rock, City Manager
ATTEST:
ate" d&itl.,- 6, 011__-
Marie Calderon, City Clerk
APPROVED AS TO FORM
AM) LEGAL CONTENT:
L () X
John C/ Cotti, Interim City Attorney
Jenkins & Hogin, LLC
Two signatures are required if a corporation
CONSULTANT:
By:
Name: Alan Khan
Title: Owner
By: / /)t -, v -
Name:
Title:
Address: 4545 & 4661 W. Ramsey street
Banning, CA 92220
NOTE: CONSULTANT' SSIGNATURES SHALL BE DULY NOTARIZED, AND APPROPRIATE
ATTESTATIONS SHALL BE INCLUDED AS MAY BE REQUIRED BY THE BYLAWS, ARTICLES OF
INCORPORATION,
BUSINESS ENTITY.
OR OTHER RULES OR REGULATIONS APPLICABLE TO DEVELOPER' S Ref: Resolution 2016- 80
873
CALIFORNIA ALL- PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA
COUNTY OF iIv12,' t
S c,o-e ' 4,
On Totvott , C Y) LI before me, di -VI 1- OA_ 141 1-, pr:: ona appeared proved to me on the basis of satisfactory evidence to be the person(' whose namesAglare subscribed to the within instrument and acknowledged to me that ITO/ she/ thy executed the same in is// her/ their authorized capacity s`), and that by fslheritheir si naturecs' g on the instrument the perso rl(, or the entity upon behalf of which the p (, erson s') acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and_ correct.
WITNESS my ha ,end. I r l al
Signature: _ L 7/ E11,_
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT El INDIVIDUAL
CORPORATE OFFICER TITLE OR TYPE OF DOCUMENT
TITLE( S)
PARTNER( S) El LIMITED
GENERAL DATE OF DOCUMENT
El ATTORNEY - IN -FACT
TRUSTEE( S)
GUARDIAN/ CONSERVATOR
111
NUMBER OF PAGES
OTHER
SIGNER IS REPRESENTING:
NAME OF P R ON( S) OR ENTITY( IES))
koz
SIGNER( S) OTHER THAN NAMED ABOVE
STACY L. BAVOL
Commission # 2040093
Notary Public - California E
San Bernardino County
Comm. Expires Sep 1. 2017
Ref: ResoiuUon 2016- 8C
874
EXHIBIT A
j WAB i nA1 2
e0O OS
0, 1)L,;158
i q92 ,! elgxy , rn e^ '
Ref: Rescluton 2015- 80
875
30'- 0„
20' 2"
C
U,
Exit Now
CHEVROLET
BUICK
GMC
PRE -OWN
FRONT VIEW
SCALE: 1; S"= 1'-0"
r
CONCEPT
34'- 0"
PROPOSED DOUBLE FACED ELECTRIC, FREEWAY PYLON SIGN
Li ALL SIG NSVV U. L. SISTED GNS
SIDE VIEW
SCALE: 1/8"='-0"
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NMAs w•t
i ewewl .
PO. A•1 IV ... II
1•4. 0 PIM
w
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DRAWINGS ARE FOP ILLUSTRATIVE PURPOSES ONLY. SCALES, DIMENSIONS MAY VARY. SEAMS IN MATERIALS ARE NOT ILLUSTRATED, COLORS MAY VARY FROM ACTUAL PRODUCT.
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1 EW FWY PYLON SIGN CONCEPT . 5 IW SE 11-1A6
W ETOVEF AP9FCar--.
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876
877
EXHIBIT B
Ref: Resolution 2016- 30
878
lo
879
30' 0"
20' 2"
9 FRONT VIEW
SCALE: 118"='-6"
CONCEPT .
1. PROPOSED DOUBLE FACED ELECTRIC, FREEWAY PYLON SIGN
WELCOME TO
BANNING
Diamond Hills
Auto
Exit Now
CHEVROLET
BUICK
GMC
PRE -OWN
34' 0"
ALL SIGNS
U. L. LIS LU
SIDE VIEW
SCALE; 1(8"='-0"
tae,.. ..
tarletiOr
n. enin ex
A. nitstwai maws, no
DRAWINGS ARE FOR ILLUSTRATIVE PURPOSES ONLY. SCALES, DIMENSIONS MAY VARY. SEAMS IN MATERIALS APE NOT ILLUSTRATED. COLORS MAY VARY FROM ACTUAL PRODUCT.
Client E I ccation
CIR". HLtFR A' an, Nham LWIL741. R13 2046712
Origknal C^atong & P^ i;sccc
WV! FWYPYLONSIGN CONCEPT 2. 01 MP SS 11.6
CUSTOVER APPHOMS
Cim' abLtx Ott, C43
880
881
RESOLUTION 2016- 80
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BANNING,
CALIFORNIA, APPROVING THE AGREEMENT FOR SALES TAX SHARING AND
OPERATING BETWEEN THE CITY OF BANNING AND DALIA AUTO GROUP,
LLC AND KHAN PROPERTIES AND HOLDINGS, LLC, DOING BUSINESS AS
DIAMOND HILLS CHEVROLET BUICK GMC AS PRESENTED OR AMENDED BY
CITY COUNCIL FOLLOWING PUBLIC COMMENT
WHEREAS, City of Banning (" City") is a California municipal corporation; and WHEREAS, the City proposes to provide assistance in the expansion and renovation of a major automobile dealership in the City; and WHEREAS, Dalia Auto Group, LLC and Khan Properties and Holdings, LLC, doing business as Diamond Hills Chevrolet Buick GMC (" Dalia) is a limited liability company qualified to conduct business in the State of California and City of Banning; and
WHEREAS, the sales tax revenue generated by local merchants is critical to the City' s economic viability; and
WHEREAS, Dalia purchased Diamond Hills Auto Group located at 4545 W.
Ramsey Street and 4661 W. Ramsey Street, Banning, California; and WHEREAS, Dalia possesses a valid City of Banning Business License, Sales Permit from the California Department of Motor Vehicles, and Sales and Use Permit from the State Board of Equalization; and
WHEREAS, pursuant to Government Code Section 53083, the City has provided detailed terms of a proposed agreement between the City and Dalia in an Economic Development Subsidy Report; and
WHEREAS, operation of Dalia in the City, pursuant to the proposed Agreement, would provide the following benefits to the community:
1. Ensuring increased sales tax revenue, which ultimately funds essential City services while securing the City' sfinancial stability
2. Creating at least 10-5 new jobs in the community, thereby stimulating further generation of sales tax revenue and increased demand for housing, goods and services
3. Occupying a strategic site, Dalia complements the three existing new car dealerships with plans of expanding and making it a more appealing, economically vibrant destination for prospective car buyers Reso. No. 2016- 80
1 882
WHEREAS, City and Dalia have negotiated the terms of an Economic Development Subsidy Agreement to provide assistance to Dalia in purchasing additional parcels with freeway front signage, renovation, and expansion of the dealership, to ensure the long- term success of the City retail operation; and WHEREAS, pursuant to Government Code 53083, the City has held a noticed public hearing regarding the proposed economic development subsidy as required by said statute; and
WHEREAS, the City has duly considered all terms and conditions of the proposed agreement and maintains it severs the public interest of the City.
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
SECTION 1: That the City Council approves the Economic Development Subsidy Report and Agreement as presented or amended by City Council following public comment.
SECTION 2: That the City Counci[ authorizes the City Manager for the City of Banning to execute the Sales Tax Sharing and Operating Agreement.
PASSED, APPROVED AND ADOPTED this 12' t y
of December, 2016.
ATTEST:
Marie A. Calderon,_ City Clerk
City of Banning, California
APPROVED AS TO FORM
AND LEGAL CONTENT:
r
Jo C. Cotti, Interim City Attorney
Jenkins & Hogan, LLP
Reso. No. 2016- 80
2 rge M.. er Mayor
City of Banning, California
883
CERTIFICATION:
I, Marie A. Calderon, City Clerk of the City of Banning, California, do hereby certify that the foregoing Resolution, No. 2016- 80 was duly adopted by the City Council of the City of Banning, California, at a
regular meeting thereof held on the 12th day of December, 2016, by the following vote, to wit:
AYES: Councilmembers Andrade, Franklin, Peterson, Welch, Mayor Moyer NOES: None
ABSENT: None
ABSTAIN: None
L/1- 2d, e,/ ae. 4a.,__
Marie A. Calderon, City Clerk
City of Banning, California
Reso. No. 2016- 80
3 884
AGENDA
SPECIAL CITY COUNCIL MEETING
CITY OF BANNING
BANNING, CALIFORNIA
October 25, 2016 Banning Civic Center
2:00 p.m. Council Chambers
99 E. Ramsey St.
I. CALL TO ORDER
Roll Call - Councilmembers Franklin, Miller, Moyer, Peterson, Mayor Welch II. PUBLIC COMMENTS – On Items Not on the Agenda
A five-minute limitation shall apply to each member of the public who wishes to address the Mayor and Council on a matter not on the agenda. A thirty-minute time limit is placed on this section. No member of the public shall be permitted to “ share” his/her five minutes with any other member of the public.
Usually, any items received under this heading are referred to staff or future study, research, completion and/or future Council Action.) (See last page. PLEASE STATE YOUR NAME AND ADDRESS FOR THE RECORD.
III. REPORTS
1. Consideration and Approval of the Transfer of the Operating Covenant from Diamond Hills Auto Group, Inc. ( Diamond
Hills) to Dalia Auto Group, LLC (Dalia), Approval to Release the Tax-Sharing Payments in Arrears to Dalia, and Approval of the Amended and Restated Terms of Operating Covenant between the City of Banning (City) and Dalia………………………1
Staff Report – Rochelle Clayton, Deputy City Manager)
Recommendation: Consideration and approval of the transfer of the Operating Covenant from Diamond Hills Auto Group, Inc. (Diamond Hills) to Dalia Auto Group, LLC (Dalia), approval to release the tax - sharing payments in arrears to Dalia, and approval of the Amended and Restated Terms of Operating Covenant between the City of Banning ( City) and Dalia. If approved, staff will bring the full agreement to Council at its meeting on November 7, 2016 for final approval.
IV. ADJOURNMENT
885
Pursuant to amended Government Code Section 54957.5(b) staff reports and other public records related to open session agenda items are available at City Hall, 99 E. Ramsey St., at the office of the City Clerk during regular business hours, Monday through Friday, 8 a.m. to 5 p.m.
The City of Banning promotes and supports a high quality of life that ensures a safe and friendly environment, fosters new opportunities and provides responsive, fair treatment to all and is the pride of its citizens.
NOTICE: Any member of the public may address this meeting of the Mayor and Council on any item appearing on the agenda by approaching the microphone in the Council Chambers and asking to be recognized, either before the item about which the member desires to speak is called, or at any time during consideration of the item. A fiveminute limitation shall apply to each member of the public, unless such time is extended by the Mayor. No member of the public shall be permitted to “share” his/her five minutes with any other member of the public.
Any member of the public may address this meeting of the Mayor and Council on any item which does not appear on the agenda, but is of interest to the general public and is an item upon which the Mayor and Council may act. A five-minute limitation shall apply to each member of the public, unless such time is extended by the Mayor. No member of the public shall be permitted to “ share” his/her five minutes with any other member of the public. The Mayor and Council will in most instances refer items of discussion which do not appear on the agenda to staff for appropriate action or direct that the item be placed on a future agenda of the Mayor and Council. However, no other action shall be taken, nor discussion held by the Mayor and Council on any item which does not appear on the agenda, unless the action is otherwise authorized in accordance with the provisions of subdivision ( b) of Section 54954.2 of the Government Code.
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk's Office (951) 922-3102. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. [ 28 CFR 35.02 -35.104 ADA Tile II]
886
xr;,,
r'tFi 1
STAGECOACH TOWN USA
CITY OF BANNING
CITY COUNCIL REPORT
TO: CITY COUNCIL
FROM: Michael Rock, City Manager
PREPARED BY: Rochelle Clayton, Deputy City Manager
MEETING DATE: October 25, 2016
SUBJECT: Consideration and Approval of the Transfer of the Operating Covenant from Diamond Hills Auto Group, Inc. (Diamond Hills) to Dalia Auto Group, LLC ( Dalia), Approval to Release the Tax - Sharing Payments in Arrears to Dalia, and Approval of the Amended and Restated Terms of Operating Covenant between the City of Banning ( City) and Dalia.
RECOMMENDATION:
Consideration and approval of the transfer of the Operating Covenant from Diamond Hills Auto Group, Inc. (Diamond Hills) to Dalia Auto Group, LLC ( Dalia), approval to release the tax -sharing payments in arrears to Dalia, and approval of the Amended and Restated Terms of Operating Covenant between the City of Banning ( City) and Dalia. If approved, staff will bring the full agreement to Council at its meeting on November 7, 2016 for final approval.
JUSTIFICATION:
Dalia has made a formal request to amend the current operating covenant to be vested with the new ownership. Since assuming operations from Diamond Hills, Dalia has not received sales tax sharing payments provided for in the existing agreement. Dalia has made some improvements and developed an improvement plan that includes the following:
Acquisition of freeway frontage property by Khan Properties and Holdings, LLC for visible signage from the freeway and visible auto inventory from the freeway, estimated to cost $ 750, 00
Purchase of signage to be installed at the property acquired along 1-0 freeway, estimated to cost $ 700, 00
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Renovations and upgrades of the existing facility, consistent with GM standards, estimated to cost from $ 1, 800, 000 to $ 2, 000,00
The expansion is projected to cost from $3. 2M to $ 3. 5M and significantly increase sales volume and create more jobs. If Dalia is able to renovate the facility to meet GM standards and specifications, Dalia' sprofit on new vehicles will increase by $ 400 per vehicle, which will also increase sales tax revenue.
While Dalia has improved sales since the purchase of Diamond Hills, the revenue increase is not sufficient to support capital improvements that will ultimately increase customers by way of freeway traffic and the ability to expand inventory and remain a source of long term revenue to the City through sales tax.
BACKGROUND:
On November 9, 2015, Diamond Hills Auto Group, Inc. sold and assigned its interests in the Property to the Dalia. In September 2015, the City was approached by representatives from the Dalia to notify the City that a sale was pending, secure a new business license and submit a sign permit.
Since the sale and transfer, the new operator has made significant changes to its operations, and include:
Since November sales volume has increased and is on track to outperform last year' ssales by 7-10% in both new and used inventory;
Job creation: full time employee count is now up to 63 ( existing agreement required 49); and
Community involvement: Dalia differs in its approach to the local community by sponsoring local events ( including Stagecoach Days) and partnering with employers on various cross -promotional opportunities throughout the Pass area.
OPTIONS:
1. Approve the transfer of the Operating Covenant from Diamond Hills to Dalia, release the tax -sharing payments in arrears to Dalia, and approve the Amended and Restated Terms of Operating Covenant between the City of Banning ( City) and Dalia. If approved, staff will bring the full agreement to Council at its meeting on November 7, 2016 for final approval.
2. Do not approve and provide direction to staff.
FISCAL IMPACT:
No fiscal impact to the budget. The existing operating covenant reimburses the dealership operator based upon sales tax revenue and has been factored into budgetary revenue projections. City is approximately $ 100, 00 in arrears for quarterly payments to the dealership.
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If approved, the cost of renovations, not to exceed $ 3. 2M will be paid to Dalia over an estimated 15 years, will be factored into the annual budget.
ATTACHMENTS:
1. Tentative Agreement for a Transfer of Operating Covenant and the Amended and Restated Terms of the Operating Covenant.
Reviewed and Approved by: Prepared by:
11 ciri el Rock R h' Clayton
City Manager Deput City Manager/
Administrative Services Director
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ATTACHMENT 1
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TENTATIVE AGREEMENT FOR A TRANSFER OF OPERATING COVENANT AND
THE AMENDED AND RESTATED TERMS OF THE OPERATING COVENANT Between
The City of Banning and
Dalia Auto Group, LLC
October 25, 2016
1. Transfer of Agreement for Operating Covenant, providing for an economic subsidy in the form of sharing of sales tax revenue, from Diamond Hills Auto Group to Dalia Auto Group, LLC, doing business as Diamond Hills Chevrolet Buick GMC and Khan Properties and Holdings, LLC.
2. The Amended and Restated Agreement for Operating Covenant is entered into between the City of Banning ( City) and Dalia Auto Group, LLC and Khan Properties and Holdings, LLC ( Dalia), whereby the City agrees to pay Dalia a portion of the sales tax revenue as a subsidy for renovations, improvements and expansion to the auto dealership.
3. The City will pay Dalia a percentage of the sales tax revenue as an economic subsidy for renovations, improvements and expansion at a rate of 85% over the first 150, 00 annually in the form of quarterly payments, provided that Dalia maintains its obligations under this agreement.
4. City and Dalia obligations are defined as follows:
Dalia and Khan Properties OBLIGATIONS:
A. Provide and operating covenant to operate a Chevrolet Buick GMC dealership at its current location or in the City of Banning for a period of fifteen ( 15) years.
B. Make improvements and renovations to the existing dealership, acquire property along the freeway, and install a freeway frontage sign. An expansion of the dealership will be applicable to the economic subsidy for improvements, up to the maximum of $ 3, 200, 000.
C. Provide the option to the City to display a message on the freeway frontage sign, including but not limited to " Welcome to Banning." D. Provide the City with documentation of soft and hard costs of all improvements, renovations and acquisitions, including a report of progress on an annual basis at the anniversary of the agreement.
City OBLIGATIONS:
A. City to pay Dalia a portion of the sales tax revenue as an economic subsidy for renovations, improvements, acquisitions, and expansion to the auto 891
dealership, in an amount not to exceed $ 3, 200, 000 at a rate of 85% over the first $150, 00 annually in the form of quarterly payments, provided that Dalia maintains its obligations under this agreement and completes the renovations, improvements, acquisition and possible expansion. The City shall keep 100% of the first $ 37, 500 each quarter, and any sales tax revenue above $ 37, 500 shall be split with 15% to the City and 85% to Dalia until the total cost of renovations, improvements, acquisitions, and expansion has been recovered by Dalia.
B. Upon recovery of the cost of renovations, improvements, acquisitions, and expansion, the City shall pay Dalia a portion of the sales tax revenue at a rate of 50% over the first $ 200, 00 annually in the form of quarterly payments, provided that Dalia remains in operation at its current location or within the City of Banning. The City shall keep 100% of the first $ 50, 000 each quarter, and any sales tax revenue above $ 50, 000 shall be split with 50% to the City and 50% to Dalia.
C. If Dalia does not show adequate documentation to the City of renovations, improvements, acquisitions, and expansion, the economic subsidy shall convert to the terms at set forth in item B under City Obligations.
5. The term of this Agreement shall remain in effect for fifteen years at the economic subsidy rate of 85% of sales tax revenue to Dalia over the first $150, 00, or until Dalia has recovered their costs for renovations, improvements, acquisitions, and expansion. If they recover the costs for renovations, improvements, acquisitions, and expansion, or do not complete the renovations, improvements, acquisitions, and expansion the rate shall convert to 50% of sales tax revenue to Dalia over the first $ 200, 00.
CITY OF BANNING Dalia Auto Group, LLC
Michael Rock, City Manager Alam Khan
Khan Properties and Holdings, LLC
Alam Khan
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RESOLUTION NO. 2012 -59
A RESOLUTION OF THE CITY OF BANNING, CALIFORNIA, ENTERING INTO AN
ECONOMIC DEVELOPMENT ASSISTANCE PROGRAM AND AUTHORIZING AN
AMENDED AND RESTATED OPERATING COVENANT WITH DIAMOND HILLS AUTO GROUP, INC.
WHEREAS, On June 12, 2012, the City enacted an ordinance adding Chapter 3.28 to the Banning Municipal Code adopting a comprehensive set of economic development incentives and programs to promote the development of Banning in the face of unique environmental constrains, to create jobs and to preserve the sound fiscal basis of the City in light of the elimination of redevelopment in California. To accomplish the purposes provided in the ordinance, the City and its associated and subordinated entities have the power to carry out policies, plans and programs, to enact measures, to enter into agreements, and to loan, grant, fund, or finance projects which will provide public benefit and protect the public health, safety and welfare of the community. These programs may be carried out singly or in combination in a manner to promote the economic development objectives of Chapter 3.28, with Section 3. 020(28. F) specifically providing for the use of "Economic Development Agreements" for sales taxes, transient occupancy taxes, utility taxes or other taxes to be shared with the generator, and rebates or waivers of franchise fees, business license fees, development impact fees, or other revenue sources but any such tax may only be imposed in accordance with law; and
WHEREAS, DIAMOND HILLS AUTO GROUP, a California Corporation Dealership ") operates a Buick, Chevrolet, GMC automobile sales franchise in the City of Banning at 4661 W. Ramsey Street ( "the Existing Facility "); and WHEREAS, On September 27, 2005, the City and Dealership entered into an Agreement Regarding Operating Covenant" (the "Original Agreement ") whereby the City agreed to (i) Pay the Dealer $2, 000000, over a ten year period, or until September 2015; (ii) Provide the parties an option to extend the Original Agreement by ten years, or until Septermber 2025, and create a new ceiling of $5, 000000, if the Dealer added a maximum of two new dealer franchises to the existing dealership; and (iii) Pay the Dealer a sliding percentage scale of sales tax as long as the City maintained a minimum threshold of $200,000 per year in sales tax by the Dealer. The percentage split ranged from 80% in Year 1 and decreased 5% per year until the percentage split was 50% in Year 7. Essentially, therefore, the Original Agreement contemplated a tax- sharing arrangement between Banning and Dealership by which the parties would eventually split the city's sales tax revenue generated from the Dealership'sBanning operations on a 50/50 basis; and
WHEREAS, Since mid -2006, the U.S. economy has been suffering a " Great Recession"— the worst economic conditions since the Great Depression of the 1930's. As the economy struggles to recover cities are facing an especially difficult time attracting business and expanding business in their respective communities. The effects of the Recession have been profound on Banning and communities in the region. Although national unemployment rates are improving slowly, California'sjob recovery is still a major problem. The May 2012 Rcso No. 2012 -59
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unemployment rate in California was I 1 %, while the national unemployment rate was 8.I %.
The unemployment rate in Riverside County in May 2012 was 12.8 %, while the unemployment rate in Banning was 14.6 %, which is 6.5% above the national rate. Economists believe that these unemployment rates are understated, since many individuals are underemployed or have stopped actively searching for jobs; and
WHEREAS, The Original Agreement was negotiated and structured pursuant to certain economic assumptions that were thwarted by the unusual circumstances of the Great Recession, and this has in tum substantially frustrated the ability of the parties to share sales tax revenues in the manner originally contemplated. Therefore, Dealership has requested the City to amend the Original Agreement as follows: (i) To remove the ceiling of $2, 00000,and ten years as outlined in the Original Agreement; (ii) To establish a minimum sales tax threshold of $25,000 per quarter or $100,000 per year before the City and the Dealership would split 50% of the sales tax generated over that threshold; (iii) To establish a seven eyar term with two option periods each having a seven year time frame potentially adding fourteen additional years to the term; (iv) To condition the Dealership to remain in the City of Banning during the term of the Amended Agreement, which includes operating out of their existing location at 4661 W.
Ramsey Street, relocating to a new location within the City, or operating multiple locations within Banning; (v) To condition the Dealership to provide various upgrades and improvements to their Existing Facility, provide new improvements to another location in Banning, or provide improvements to multiple locations in Banning; and (vi) To make the contractual obligations and rights terminable at the will of either party at any time. Without such amendments to allow actual sharing of sales tax revenues between the City and Dealership, the Dealership could potentially be forces to cease operations in the City and/or would be unable to make upgrades and improvements to its Existing Facility (or any other location in Banning) as needed to remain competitive and viable; and
WHEREAS, To implement the above - described revisions to the Original Agreement, Council is now presented with the "AMENDED & RESTATED AGREEMENT FOR PURCHASE OF OPERATING COVENANT ("Agreement") attached hereto as Exhibit "A"; and
WHEREAS, The parties believe that it is in the public interest to retain the operations of Dealership in the City via the Agreement for the following reasons: (i) The Dealership is the only new vehicle dealer in the City, thus providing a unique service that is not fulfilled by any other business in the City; (ii) The Dealership generates an average of 10% of the City's total sales tax revenues in any given year and is thus one of Banning's most significant tax - generating business;'(iii) The Dealership currently has forty -nine (49) full time employees and seven (7) part time employees, and the Dealership is anticipating adding approximately seven 7) new positions by the end of this year; (iv) Since 2005, the Dealership has provided enhancements and improvements to its existing location and has supported numerous nonprofits, businesses, and City - related events during this time period; and (v) if the Dealership were to close, it would leave vacant a site that otherwise may be very difficult to utilize; and WHEREAS, Under the City's economic development program under Chapter 3.28 of the Banning Municipal code, the Council must make the following findings to adopt the Reso. No. 2012 -59
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agreements for implementing the Project:
A. The Project will meet the conditions of Section 3. 05028. by (i) alleviating persistent conditions of blight; or (ii) creating new, or retaining, substantial revenues to the City and meeting the minimum thresholds for positive fiscal impact on City (i.e., at least 100,000 in annual revenues to City); or (iii) the Project will produce unique community amenities, especially as the Dealership is the City's only new automobile dealership.
13. The Project maintains unique private facilities not otherwise existing in Banning.
C. The Project has received all other discretionary entitlements required under the Zoning Ordinance, including any environmental review required by the California Environmental Quality Act.
D. The Project will not have an adverse effect on surrounding properties or the permitted uses thereof. The development of the project must not have a substantially adverse impact on traffic, or on surrounding properties or on the community generally.
The economic development agreement contains providisons to assure the continued operation of the Project consistent with Chapter 3.28 and providing for the enforcement of the covenants contained therein by City; and
WHEREAS, The City Council has conducted a public hearing as required by BMC Section 3. 080(28. A); and
WHEREAS, The City council has reviewed the 3.28 Summary Report and considered all ordal and written testimony relating during the public hearing, as well as, related to this matter.
NOW, THEREOFRE, BE IT RESOLVED, by the City Council of the City of Banning as follows:
SECTION 1. The above Recital are true and correct and incorporated into the terms and finding of this Resolution by this reference.
SECTION 2. Based on the foregoing recitations and all evidence presented to and considered by the City Council, including but not limited to the 3.28 Summary Report the findings of which are incorporated herein, the City Council hereby finds and determines:
A. The project will meet the conditions of Section 3. 05028. by (i) alleviating persistent conditions of blight; or (ii) creating new, or retaining, substantial revenues to the City and meeting the minimum thresholds for positive fiscal impact on City (i.e., at least 100,000 in annual revenues to City); or (iii) the Project will produce unique community amenities, especially as the Dealership is the City's only new automobile dealership. The project meets on or more of the above condtiions:
1) The Project will avoid creating a blighted condition by retaining and enhancing a use at the existing location where a property owner would find it difficult to utilize or renovate or other uses. The existing buildings Reso. No. 2012 -59
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on the site are specifically geared toward an auto dealerhsip use and would be difficult to market and re -use. The proejct will serve to strengthen Banning's land use and social structure, and will alleviate economic and physical blight within the community.
2) The Project will retain one of Banning's most significant tax - generating businesses. The Dealership represents approximately 10% of the City's annual sales tax generation and the Dealership will continue to provide the City with equivalent revenues for the next seven years. The City also projects that revenues generated by the Dealership will continue to increase as the economy recovers and if the Dealership expands its footprint in the City. Because the Agreement set a threshold of $100,000 annual sales tax generation by the Dealership, the Agreement meets the threshold set forth in BMC 3.D). 28050(
3) The Project will continue to be significant to the community'scharacter and quality of life. The Project retains the City's only existing new car dealership. The Project is vital and in the best interest of the City and will serve the health, safety, and general welfare of the citizens of Banning and the region.
B. The Project has received all other discretionary entitlements required under the zoning ordinance, including any environmental review required by the California Environmental Quality Act. The project includes facade related enhancements that consist primarily of new exterior remodeling, light, trim, fascia pop out details, window, signage and branding images, stucco, paint, and landscapring. The improvements will be consistent with the recent improvements the Dealer made at their Upland, California location. Should the Dealer relocate or expand to another Banning site, the appropriate environmental requirements would be imposed on the proejct.
C. The Proejct will not have an adverse effect on surround properties or the permitted uses thereof. The development of the Project will not have a substantially adverse impact on traffic, or on surrounding properties or on the community generally. The proposed enhancements and improvements outlined for the Proejct are on -site and will not create an adverse impact on traffic, surrounding properties, or the community in general.
D. The Agreement containes provisions to assure the continued operation of the Project consistent with Chapter 3.28 and providing for the enforcement of the covenants contained therein by the City. The Agreement obtains from Dealership a commitment to its continued operation in Banning for at lease the next seven years, with two possible two -year extension. Breach of that commitment affects a legally- enforceable default of the City's Agreement with the Dealership.
SECTION 3. The City Council hereby approves the Agreement as Exhibit "A" hereto and authorizes its execution in accordance with the foregoing findings.
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SECTION 4. The City Manager is hereby authorized to take all actions necessary to effectuate and approve the Agreement and the transactions describe in this Resolution.
SECTION 5. The City Clerk shall certify to the passage and adoption hereof.
PASS, APPROVED AND ADOPTED this 24th day ofJuly 2012.
Don R. Robinson, Mayor
City of Banning
ATTEST:
Marie A. Calderon, City Clerk
City of Banning
APPROVED AS TO FORM AND
LEGAL CONTENT:
Da .• J. s Ieshire, City Attorney
Aleshire & Wynder, LLP
CERTIFICATION:
I, Marie A. Calderon, City Clerk of the City of Banning, California, do hereby certify that the foregoing Resolution No. 2012 -59 was duly adopted by the City Council of the City of Banning at a regular meeting thereof held on the 24 day of July, 2012, by the fol lowing vote, to wit:
AYES: Councilmembers Botts, Franklin, I- lanna, Machisic, Mayor Robinson NOES: None
ABSENT: None
ABSTAIN: None
z 7 S,'
Marie A. Calderon, City Clerk
City of Banning, California
Rcso. No. 2012 -59
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EXHIBIT "A"
to
Resolution No. 2012 -59
898
AMENDED AND RESTATED AGREEMENT FOR
PURCHASE OF OPERATING COVENANT
between
THE CITY OF BANNING,
a municipal corporation
and
DIAMOND HILLS AUTO GROUP, INC.,
a California corporation
Effective Date:
Commencement Date: January 1, 2012
01102/ 119697 0034/
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AMENDED & RESTATED AGREEMENT FOR
PURCHASE OF OPERATING COVENANT & OPERATING COVENANT
This Amended & Restated Agreement for Purchase of Operating Covenant & Operating Covenant ( "Agreement ") is entered into between (i) the CITY OF BANNING ( "Banning "), a municipal corporation, and (ii) DIAMOND HILLS AUTO GROUP, INC. ( "Dealership "), a California corporation. Banning and Dealership are each individually referred to as a "party" and collectively as the "parties ".
1. EFFECTIVE DATE
This Agreement will not become effective until it (i) has been duly executed by the authorized officers of the Dealership and delivered to Banning, and (ii) has been duly approved by the City Council of the City of Banning (the "Effective Date ").
2. RECITALS AND REPRESENTATIONS
2.1 The Dealership represents and warrants to the City that it has the legal right to use and occupy that certain real property (the "Property ") located within the City of Banning, and commonly known as 4661 W. Ramsey Street, Banning, California. A legal description of the Property is attached as Exhibit "A ". A map showing the location of the Property is attached as Exhibit `B ".
2.2 The Dealership represents and warrants to the City that, pursuant to a management agreement its affiliate, Mark Christopher Chevrolet, Inc., a Delaware Corporation Manager "), is operator of the "Existing Facility" (hereinafter defined) located on the Property and that it has an option to purchase said parcel from its current owner, Sunset Chevrolet/Oldsmobile, Inc., a Califomia Corporation and Frank Coletto. A copy of the Management Agreement is attached hereto as Exhibit "C ". "Dealership" includes any entity in which the principals of Dealership own a controlling interest.
2.3 On September 27, 2005, the City and Dealership entered into an "Agreement Regarding Operating Covenant" (the "Original Agreement ") whereby the City agreed to (i) Pay the Dealer $2, 000000, over a ten year period, or until September 2015; (ii) Provide the parties an option to extent the Original Agreement by ten years, or until September 2025, and create a new ceiling of $5, 000000, if the Dealer added a maximum of two new dealer franchises to the existing dealership; and (iii) Pay the Dealer a sliding percentage scale of sales tax as long as the City maintained a minimum threshold of $200,000 per year in sales tax by the Dealer. The percentage split ranged from 80% in Year 1 and decreased 5% per year until the percentage split was 50% in Year 7. Essentially, therefore, the Original Agreement contemplated a tax- sharing arrangement between Banning and Dealership by which the parties would eventually split the City's sales tax revenue generated from the Dealership's Banning operations on a 50/50 basis.
2.4 Since mid -2006, the U.S. economy has been suffering a "Great Recession" —the worst economic conditions since the Great Depression of the 1930's. As the economy struggles to recover cities are facing an especially difficult time attracting' business and expanding business in their respective communities. The effects of the Recession have been profound on Banning 01102/ 119697.0034/ 4
900
and communities in the region. Although national unemployment rates are improving slowly, California's job recovery is still a major problem. The May 2012 unemployment rate in California was 11%, while the national unemployment rate was 8.1 %. The unemployment rate in Riverside County in May 2012 was 12.8 %, while the unemployment rate in Banning was 14.6 %, which is 6.5% above the national rate. Economists believe that these unemployment rates are understated, since many individuals are underemployed or have stopped actively searching for jobs.
2.5 In light of the ongoing Recession and the elimination of redevelopment in California pursuant to the adoption of ABlx 26 and the decision of the California Supreme Court in CRA v. Matosantos in January 2012, Banning determined that it must develop an alternative means of eliminating blight and undertaking economic development. Thus, Banning adopted Ordinance 1453 on June 12, 2012, establishing an "Economic Development Incentive Program" geared towards attracting new businesses and helping existing businesses to expand and flourish in the community. The goal of this Program is to promote public /private partnerships, encourage businesses to grow and expand, retain and create jobs, promote economic growth in the City, enhance community image, and invest in infrastructure improvements. The Program provides financial assistance to businesses if the business meets specific criteria and provides a significant long -term benefit to the general public. To accomplish the purposes provided in the Program, the City and its associated and subordinated entities shall have the power to carry out policies, plans and programs, to enact measures, to enter into agreements, and to loan, grant, fund, or finance projects which will provide public benefit and protect the public health, safety and welfare of the community. The Program, as codified at Chapter 3.28 of the Banning Municipal Code, specifically provides for the use of "Economic Development Agreements" and "Tax Rebate Agreements" for sales taxes, transient occupancy taxes, utility taxes or other taxes to be shared with the generator, and rebates or waivers of franchise fees, business license fees, development impact fees, or other revenue sources but any such tax may only be imposed in accordance with law. (See, BMC, § 3. 020(28. F).)
2.6 The Dealership results significant municipal benefits to Banning and its citizens, including, without limitation, the creation of significant new numbers of employment opportunities, property tax revenues, sales tax revenues, and other ancillary benefits. However, as a result of the Recession, the City has only shared approximately $115,000 in sales tax revenue with the Dealership under the 2005 Original Agreement. This total is well below what the Dealership and City originally projected given ongoing economic conditions. For sixteen quarters the Dealer did not generate enough sales to qualify for a percentage split in sales tax under the Original Agreement. However, as the Recession slowly subsides, in the fourth quarter of 2011 the Dealership finally started to see a small increase in their sales, which exceeded the required threshold amount and did resulted in a small rebate of same tax per the Original Agreement.
2.7 In short, the Original Agreement was negotiated and structured pursuant to certain economic assumptions that were thwarted by the unusual circumstances of the Great Recession, and this has in turn substantially frustrated the ability of the parties to share sales tax revenues in the manner originally contemplated. Therefore, Dealership has requested this Agreement to amend the Original Agreement as follows: (i) To remove the ceiling of $2, 000000,and ten years as outlined in the Original Agreement; (ii) To establish a minimum sales tax threshold of 3 01102/ 119697. 0034/ 4
901
25,000 per quarter or $100,000 per year before the City and the Dealership would split 50% of the sales tax generated over that threshold; (iii) To establish a seven year term with two option periods each having a two year time frame potentially adding four additional years to the term; iv) To condition the Dealership to remain is the City of Banning during the term of the Amended Agreement, which includes operating out of their existing location at 4661 W. Ramsey, relocating to a new location within the City, or operating multiple locations within Banning; (v) To condition the Dealership to provide various upgrades and improvements to their Existing Facility, provide new improvements to another location in Banning, or provide improvements to multiple locations in Banning; and (vi) To make the contractual obligations and rights terminable at the will of either party at any time. Without such amendments to allow actual sharing of sales tax revenues between the City and Dealership, the Dealership could potentially be forced to cease operations in the City and/or would be unable to make upgrades and improvements to its Existing Facility (or any other location in Banning) as needed to remain competitive and viable.
2.8 The parties believe that it is in the public interest to retain the operations of Dealership in the City for the following reasons: (i) The Dealership is the only new vehicle dealer in the City, thus providing a unique service that is not fulfilled by any other business in the City; (ii) The Dealership generates an average of 10% of the City's total sales tax revenues in any given year and is thus one of Banning's most significant tax - generating business; (iii) The Dealership currently has 49 full time employees and 7 part time employees, and the Dealership is anticipating adding approximately 7 new positions by the end: of this year; (iv) Since 2005, the Dealership has provided enhancements and improvements to its existing location and has supported numerous non - profits, businesses, and City- related events during this time period; and v) if the Dealership were to close, it would leave vacant a site that otherwise may be very difficult to utilize. This Agreement is in accord with applicable state and federal laws and is in the vital and best interests of the community, will serve the health, safety, and general welfare of the City and its citizens, will serve to strengthen the City's land use and social structure, and alleviate economic and physical blight within the City.
2.9 Based upon the foregoing understandings, the specific purpose of this Agreement is to amend and restate the Original Agreement to provide Dealership with financial assistance consistent with Chapter 3.28 of the Banning Municipal Code via rebates of local sales tax and implement the other amendments outlined in Recital 2.7 above. -
3. TERMS OF OPERATING COVENANT &SALES TAX SHARING
3.1 Definitions. In addition to the defined terms set forth in various sections of this Agreement, the following terms shall have the following meanings:
3. 11. Base Amount: The `Base Amount" means the amount of Sales Tax Revenue the City must receive during each Computation Period and/or Computation Year before the City is required to make a Covenant Payment to Dealership. For the purposes of this Agreement, the Base Amount for each Computation Period shall be Twenty-Five Thousand Dollars and No Cents ($25, 00) 000. and the Base Amount for each Computation Year shall be One Hundred Thousand Dollars and No Cents ($100, 00). 00.The City keeps the Base Amount. 4 01102/ 119697 0034/
902
3. 21. Claims and Liabilities: Claims and Liabilities" means any and all claims, demands, damages, causes of action, liens, liabilities, losses, damages, costs and expenses, including reasonable attorney's fees, arising out of or in connection with this Agreement and/or the sharing of Sales Tax Revenues hereunder. Claims or Liabilities include, but are not limited to, actions where (i) the City, its officers, agents or employees, is made a party to any action or proceeding filed or prosecuted against Dealership for any such Claims or Liabilities, or (ii) Dealership, its officers, agents or employees is made a party to any action or proceeding filed or prosecuted against Banning for any such Claims or Liabilities.
3.1. Commencement Date: "Commencement Date" means January 1, 2012.
3. 41. Computation Period: "Computation Period" shall mean each continuous three (3) month period during the Eligibility Period. There will be a total of twenty -eight (28) Computation Periods within the Eligibility Period. From the Commencement Date, the first Computation Period was January 1 through March 31, 2012. The second Computation Period shall be commence April 1, 2012, and ending June 30, 2012, and so on.
3. 51. Computation Year: "Computation Year" shall mean four (4) immediately successive Computation Periods. Unless extended pursuant to Article 4 hereof, there shall be a total of seven (7) Computation Years within the Eligibility Period (or January 1, 2012, through December 31, 2018).
3. 61. Covenant Payments: "Covenant Payments" means those contingent payments made by Banning to Dealership pursuant to Section 3.3 of this Agreement for the purchase of the Operating Covenant described in Section 3.2 of this Agreement.
3.71. Dealership Activities: Dealership Activities" means the commercially reasonable business practices and activities associated with conducting an automobile dealership, including, but not limited to, the selling, leasing, rental; purchasing, transporting, servicing, repairing, and detailing of new and used motor vehicles, including, but not limited to, automobiles, trucks, and any other motorized vehicle, and all other related activities conducted directly by Dealership, concessionaires, or lessees thereof, in the City of Banning.
3. 81. Default: "Default" means the following:
a) Dealership fails to strictly abide by any material provision of this Agreement, including, without limitation, the Operating Covenant;
b) Dealership fails to make any reasonable improvements, repairs or other alterations as required by Article 7; or
c) Dealership relocates any of its business operations in the City of Banning to an area outside the jurisdictional boundaries of the City of Banning; or d) Dealership fails to make any reasonable improvements, repairs or other alterations to the Existing Facility, at Dealership's sole cost, expense and liability, that may be required pursuant to any applicable Federal, State or local ordinances and regulations; or 5 01107/ 119697. 0034/ 4
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e) Dealership fails to maintain the Existing Facility as a first class auto sales center; or
f) Dealership fails to maintain the appropriate master sales permits for the sale and resale of automobiles, trucks, and other motor vehicles from the Existing Facility; or g) Dealership fails to designate Banning as the point of sale on all sales tax returns to the State of California and in all sales and lease contracts or other transactions related to Dealership Activities conducted at the Existing Facility.
3.91. Eligibility Period: Eligibility Period" means the period commencing on the Commencement Date and ending seven (7) years thereafter (subject to extension as hereinafter provided in Article 4 or unless terminated sooner pursuant to specific provisions of this Agreement). The total potential Eligibility Period for the Agreement equals seven (7) years from the Commencement Date, plus two potential seven -year extensions, or a total potential of eleven (21) years. The Eligibility Period is occasionally herein interchangeably referred to as the term" of this Agreement.
3. 101.Existing Facility: As used in this Agreement, "Existing Facility" shall mean the existing Chevrolet/Oldsmobile automobile dealership and the physical structures, fixtures, landscaping, and all other improvements appurtenant thereto, located on the Property.
3. 11.Indemnity Costs: Indemnity Costs" means all costs of defending or prosecuting suits or claims, including actual attorneys' fees and expert witness fees incurred in enforcing, perfecting and executing a judgment or award arising from, or related to, either the enforcement or performance of this Agreement or suits /claims relating to, or arising from, the subject matter of this Agreement. Indemnity Costs include, without limitation, attomeys', consultants' and experts' fees, costs and expenses incurred in the following: (i) post judgment motions and appeals, (ii) contempt proceedings, (iii) administrative proceedings and SBE proceedings, (iv) garnishment, levy and debtor and third party examination; (v) discovery; and vi) bankruptcy litigation. Such costs include all costs of necessary experts including appraisers, financial analysis, tax analysis, audits, and all other necessary consultants. Such costs further include the costs of any settlement or judgment concerning Claims or Liabilities.
3. 121.Sales Tax: Sales Tax" means all sales and use taxes levied under the authority of the California "Sales and Use Tax Law ", Part 1 of Division 2 of the California Revenue and Taxation Code, commencing with Section 6001, and any successor law thereto.
3. 131. Sales Tax Revenue: "Sales Tax Revenue" means that portion of taxes derived and received by Banning from the imposition of the Bradley -Bums Uniform Local Sales and Use Tax Law (Part 1.5, Division 2 of the California Revenue and Taxation Code, Sections 7200, et seq.), as it currently exists and as it may be from time to time, amended, repealed and reenacted, renamed, and/or otherwise modified, arising from Dealership Activities conducted at the Existing Facility on the Property. Actual Sales Tax Revenue for each fiscal year shall be determined based upon the final audited sales tax figures released for such fiscal year by the State of California. Sales Tax Revenues shall not include (i) Penalty Assessments, (ii) any Sales Tax levied by, collected for, or allocated to the State of California, the County of Riverside, a 6 01102/ 119697.0034/ 4
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district or any entity (including an allocation to a statewide or countywide pool) other than the City, (iii) any administrative fee charged by the SBE, (iv) any Sales or Use Tax subject to any sharing, rebate, offset or other charge imposed pursuant to any applicable provision of federal, state or local (except the City's) law, rule, or regulation, (v) any Sales Tax attributable to any transaction not consummated within the Eligibility Period, or (vi) any Sales Tax (or other funds measured by Sales Tax) required by the State of California to be paid over to another public entity (including the state) or set aside and /or pledged to a specific use other than for deposit into or payment from Banning's general fund including retroactively. The term "Sales Tax Revenues" refers to Sales Tax amounts paid by Dealership and allocable to Banning prior to any rebate or offset thereof under the tax sharing arrangements in this agreement.
3.2 Operating Covenant; Situs for Tax Purposes. The Dealership covenants and agrees for itself and all voluntary and involuntary successors and assigns to, that, for the duration of the Eligibility Period (subject to extension as hereinafter provided and unless terminated sooner pursuant to specific provision of this Agreement), the Dealership shall operate, or cause to be operated, upon the Property the entirety of the Existing Facility in a commercially reasonable business manner, consistent with all applicable provisions of Federal, State and local laws and regulations. The Dealership Activities shall be conducted on the Property from the Existing Facility. Subject to Section 3. 5, 1.the Existing Facility shall be operated in accordance with the reasonable and customary automobile dealership practices in the surrounding communities. The Dealership or its successor will operate and maintain the Existing Facility in a commercially reasonable and prudent manner, with the objective of being regarded as a first class auto sales center and to generate the greatest feasible amount of Sales Tax Revenue. To this end, the Dealership shall not cause interruption to, or ceasing of, Dealership Activities for a period of more than three (3) consecutive business days and Dealership shall maintain hours of business in keeping with customary automobile dealership practices. The Dealership's obligations pursuant to the immediately preceding sentence include, without limitation, the obligation to advertise, market and promote the Existing Facility in a commercially reasonable fashion, once again consistent with the objective of maximizing the amount of Sales Tax Revenue. Dealership acknowledges that it is solely responsible for any and all City business license fees and any applicable permits.
3. 12: Banning as Situs. For the term of this Operating Covenant, the City of Banning shall be designated as the situs for all purposes of Sales Tax generated by the Dealership and resulting from the Dealership Activities. Dealership shall obtain, and will maintain, a retail sales tax permit from the SBE. Dealership will take all reasonable actions to maximize Banning sales and assure that transactions occurring in the City of Banning will be qualifying retail sales for Sales Tax purposes in accordance with the rules and regulations of the SBE. Dealership will act and cause its business, unless otherwise agreed to by City, to be the place of sale for all retail sales made by Dealership during the term of this Agreement. In all sales reports filed by Dealership with the SBE, relating to retail sales, where such a designation is permitted or required under the Sales and Use Tax Law, Dealership specify Banning as the place of sale for all of its retail sales. Dealership shall not decrease the scope of its operations at the Existing Facility from their levels of service existent as of the Effective Date hereof without the prior written approval of City, which approval may be executed by the City Manager and shall not be unreasonably withheld or delayed.
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3. 22. Use ofProperty. The Property shall be used only for the purposes of the operation of the Existing Facility for Dealership Activities in accordance with this Agreement, or for the operation of substitute automobile dealership facilities acceptable to Banning in its reasonable discretion and subject to prior written approval of City, which approval may be executed by the City Manager and shall not be unreasonably withheld or delayed.
3.2. Marketing. Dealership, in the normal course of its business as it produces promotional, sales, advertising, marketing, packaging, and other such materials relating to its Dealership Activities and the Existing Facility shall ensure that such materials prominently display and identify the City of Banning as a major center of Dealership'ssales and operations.
City is hereby given license by Dealership to use the name, likeness, or other description of Dealership and /or the Existing in City marketing, promotional, or information material prepared for or used by the City. City shall provide Dealership with a reasonable opportunity to review and comment upon any such materials utilizing Dealership's name, likeness or other description. The use of any trademark or servicemark shall be subject to the standards and or requirements associated with the use of such trademark or servicemark.
3. 42. Improvements. Dealership shall build all improvements as required by Article 7 hereof.
3.3 Payment for Operating. Covenant Contingent Upon Occurrence of Certain Conditions.
3. 13. Sales Tax Rebate to Dealership. This, paragraph sets forth the parties' agreement with respect to Banning's acquisition of the Operating Covenant set forth in Section
3.2. The consideration to be paid to the Dealership in exchange for the Operating Covenant shall consist of Banning's payment to the Dealership, during the Eligibility Period ending on December 31, 2018 (subject to extension as hereinafter provided in Article 4) of an amount equal to fifty percent (50 %) of Sales Tax Revenue in excess of the Base Amount (the "Banning Payments to Dealership ").
3. 23. Conditions Precedent to Banning Payments to Dealership. It is expressly agreed that Banning's obligations under this Section 3.3 are contingent on a Computation Period to Period basis and, for each Computation Period, Banning's obligations to make any payments hereunder are expressly contingent upon the satisfaction of the following conditions precedent in each such Computation Period:
a) Dealership having, for the entirety of the subject Computation Period, completely fulfilled its material obligations under this Agreement, including, without limitation, the Operating Covenant; and
b) Dealership having generated no less than the Base Amount in Sales Tax Revenues allocable to City in the subject Computation Period (i.e., at least 25,000 in the Computation Period); or
c) Dealership having generated no less than the Base Amount in Sales Tax Revenues allocable to City in the prior Computation Year (i.e., the $100, 00000.
Base Amount must have been generated in the prior Computation Year). For 8 01102/ 119697.0034/ 4
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example, as a condition precedent to the City making any Banning Payments to Dealership in the course of the year 2013, Dealership shall have met or exceeded the Computation Year Base Amount in year 2012; likewise any payments for any Computation Period in the year 2014 shall be conditioned on the Dealership having met the Computation Year Base Amount in the year 2013, and so on. Amounts shall not be aggregated from Computation Year to Computation Year, nor from Computation Period to Computation Period. Only after completing a Computation Year that meets or exceeds the Base Amount of $100,000 will there be an entitlement to Banning Payments to Dealership in the following year. For example, if Dealership is unable to generate $100,000 Base Amount in year 2012 and 2013, but Dealership is able to generate said Base Amount in Year 2014, then the Dealership will be entitled to start receiving Banning Payments to Dealership in the first Computation Period of year 2015 (assuming all other conditions precedent are met, including the Base Amount condition for that Computation Period).
Should any one of the foregoing conditions precedent not be satisfied for any Computation Period, then Banning shall have no obligation under this Section 3.3 to make, and may cease making, any payments to Dealership. In any action or proceeding brought by either party to interpret or enforce the provisions of this Section 3.3, the trier of fact in such action or proceeding may refer to this paragraph to ascertain and give effect to the intention of the parties hereto.
For purposes of this Section 3.3, Banning will be deemed to have "made" a Quarterly Payment (hereinafter defined) or Adjustment Payment (hereinafter defined) to Dealership if Banning either (i) makes a cash payment to Dealership as provided in Section 3. 43.or 3. 5, 3.or ii) applies any amount due to Dealership under this Section 3.3 to reduce the amount of any then - existing Sales Tax Deficit (hereinafter defined) as provided in Section 3. 5.3
3.3. Calculation of Quarterly Payments for The First Three Computation Periods ofEach Computation Year. Within thirty (30) days following the end of each of the first three (3) Computation Periods during each Computation Year, Dealership shall submit to Banning a certified copy of its report to the State of California Board of Equalization ("BOE") which sets forth the amount of sales tax paid to the BOE during that Computation Period arising from Dealership Activities conducted at the Existing Facility on the Property or such other sites /facilities as may be subject to this Agreement. Within twenty (20) days from the Dealership's submission of the aforementioned report, Banning shall determine the amount of Sales Tax Revenue it will receive for the subject Computation Period. Within twenty (20) days following Banning's determination of the Sales Tax Revenue for the subject Computation Period, and contingent upon Banning's determination that the Dealership generated no less than the Base Amount for that Computation Period (i.e., $25,000), Banning shall pay to Dealership an amount equal to Banning Payments to Dealership of the Sales Tax Revenue generated during the subject Computation Period which is in excess of the Base Amount ( "Quarterly Payment "). The fourth Computation Period of each Computation Year shall be used as an adjustment period as described in the immediately following Section 3. 4.3
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3. 43. Year -End Adjusted Payments. Within one hundred twenty (120) days following the end of each Computation Year, Banning will determine, based upon information furnished by Dealership and from the BOE, whether Dealership has generated a minimum of the Base Amount in Sales Tax Revenue for that Computation Year. Contingent upon Banning's determination that the Sales Tax Revenues generated during the subject Computation Year are equal to or greater than the Base Amount, Banning will then determine the year -end amount due to Dealership ( "Computation Year Compensation "), which Computation Year Compensation is calculated as follows:
Total Calculated Banning Payments to Dealership due for Computation Year] Minus
Computation Year Base Amount (or $100,000)]
Computation Year Compensation will be adjusted as follows:
a) If the Computation Year Compensation is equal to the total amount of the Quarterly Payments that were already paid to Dealership in the first three Computation Periods of the Year per Section 3., 3.then no adjustment or payment shall be necessary.
b) If the Computation Year Compensation is greater than the total amount of the Quarterly Payments that were already paid to Dealership in the first three Computation Periods of the Year per Section 3., 3.then, within one hundred and sixty (160) days following the end of the Computation Year, Banning shall pay to Dealership an amount ( "Adjustment Payment "), equal to the difference between the Computation Year Compensation and the total amount of any Quarterly Payments made by Banning to Dealership during that Computation Year.
c) If the Computation Year Compensation is less than the total amount of any Quarterly Payments made by Banning to Dealership during that Computation Year, then the difference between the. Computation Year Compensation and the total of any Quarterly Payments made by Banning to Dealership during that Computation Year shall be an obligation of Dealership to Banning. Such obligation shall be hereinafter referred to as the "Sales Tax Deficit ". i. Sales Tax Deficits may be aggregated and carried over from Computation Year to Computation Year. The term "Sales
Tax Deficit" means the aggregate of any Sales Tax Deficit generated in the subject Computation Year and any Sales Tax Deficit carried over from a previous Computation Year or Years.
ii. Sales Tax Deficits shall be applied to offset any Quarterly Payment or Adjustment Payment which Banning may owe
to Dealership in any subsequent Computation Period or
Computation Year. Any amounts which Banning may owe
Dealership pursuant to provisions of this Section 3.3 in any 10 n 1 1 nJ i0014/1196Q7 4
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Computation Period shall be first credited to reduce the amount of any then - existing Sales Tax Deficit, and, once that Sales Tax Deficit has been eliminated, Banning shall again commence making Quarterly Payments or
Adjustment Payments to Dealership if and as warranted in future Computation Periods or Computation Years.
3. 53. Payment of Sales Tax Deficit or Accrued Payment Upon Expiration or Termination of this Agreement. If, at the end of the Eligibility Period, there is a Sales Tax Deficit, then Dealership shall pay the amount of such Sales Tax Deficit to Banning within thirty 30) days from the end of such Eligibility Period. Furthermore, if this Agreement is terminated by either party as provided in Section 11.1, then (i) the Dealership shall, within thirty (30) days from such termination, pay to Banning the amount of any then existing Sales Tax Deficit that accrued prior to the date of termination, and (ii) Banning shall, within ninety (90) days from such termination, pay to Dealership any amounts due to Dealership that accrued prior to the date of termination.
3.63. Contingent Obligation. Banning's obligation to make the payments hereinabove described is expressly subject to the provisions of Sections 3.4 and 11.1 of this Agreement.
3.4 - Audit/Review of Books and Records. Either party shall, upon no less than five 5) days prior written request from the other party, make the entirety of its books and records relating to the calculation and determination of that party's rights and obligations under this Agreement available at no cost to the requesting party and/or its designees (including its accountants and/or attorneys) and shall direct its accountants and other consultants and contractors in possession of its books and records to do likewise; provided, however, that nothing herein shall be deemed to abridge or constitute a waiver of any party's evidentiary rights and privileges arising pursuant to any provision of law, hereof or as otherwise ordered by any court of competent jurisdiction. Each party shall bear the costs of its own auditors, experts and other consultants it may engage to complete its investigation of the other party's books and records hereof, or as otherwise ordered by the court.
3.5 Review of Dealership'sOperations. City may conduct a review, upon reasonable notice, of Dealership's operations in City to verify that it is conducting its sales operation in a way that requires all Sales Tax to be allocated to, City or as otherwise may be required to assure that the terms of this Agreenient, including the Operating Covenants, are being fulfilled
4. OPTION TO EXTEND TERM / ELIGIBILITY PERIOD
4.1 Extension of Tema/ Eligibility Period. The term of this Agreement, including the Eligibility Period, may be extended no more than twice, with each possible extension being a maximum of two years. No later than sixty (60) days prior to the expiration of this Agreement and the Eligibility Period, either party may seek to exercise the option to extend this Agreement the "Optioning Party") by giving the other party (the "Non- Optioning Party ") written notice of the Optioning Party's desire to extend the Agreement. Within thirty (30) days following such notice, Non - Optioning Party shall notify Optioning Party whether it consents to the option to 11 01102/ 119697.0034/ 4
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extend the Eligibility Period, in which case such term shall be extended for no more than seven years, so long as no more than two such extensions are granted. The Non-Optioning Party may elect to reject a request for extension in its sole discretion.
4.2 Commencement of Extended Terms. Each extension of the Eligibility Period, if any, shall commence upon the date that marks the start of the first Computation Period following the Optioning Party's request for extension per Section 4.1. For example, if the Eligibility Period is set to expire December 31, 2018 (as it is for the initial term hereof), and if an Optioning Party timely requests extension of the Period in accordance with Section 4.1 with the request being accepted by the Non - Optioning Party, then the start of the extended term would be January 1, 2019.
5. AGREEMENT MAY RUN TO OTHER BANNING SITES; EXCLUSIVITY
5.1 Additional or Relocated Sites. Dealership may at its option transfer this Agreement to any site or sites within the City of Banning subject to compliance with all applicable state, federal and local laws, including without limitation the Banning Zoning and Municipal Codes. Without limiting the foregoing, it is the understanding that this Agreement may cover multiple sites of Dealership within the City of Banning if the parties are able to mutually agree to an amendment hereof incorporating and accommodating such additionaUrelocated sites. Either party may provide written notice to the other that the noticing party elects to first enter into good faith negotiations for a period of not -to- exceed sixty (60) business days to modify the terms of this Agreement in such a manner as to reasonably address a proposed relocation or expansion of Dealership Activities to another site.
5.2 Exclusivity. While this Agreement is in effect, Dealership shall not relocate its business operations outside the jurisdictional boundaries of the City of Banning. Moreover, Dealership shall not open or operate any other business or commercial location undertaking Dealership Activities within any area located within a ten (10) mile radius of the City of Banning jurisdictional boundaries.
6. LIMITS ON ASSISTANCE
6.1 Unless otherwise agreed by the parties in writing, Dealership shall not to seek Further Assistance" (as defined herein) from the City, its Public Utilities or other affiliated governmental affiliates ( collectively "City ") for the Existing Facility or any additional Dealership Activities or expanded operations that Dealership may open in the City. The potential for Dealership to expand its Dealership Activities in the City is a material inducement for the City entering into this Agreement and constitutes part of the consideration received by the City under this Agreement. As such, Dealership covenants and agrees that it will not seek Further Assistance from the City during the term of this Agreement regardless of any new or expanded operations Dealership may undertake in Banning. For the purposes of this Section, Further Assistance" shall mean any:
a) Direct or indirect monetary payments, offsets, reimbursements or other assistance provided to Dealership, as defined herein;
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b) Waiver, deferment, or payment of any City fees or charges attributable to Dealership;
c) Waiver or deferment of any condition of approval requiring installation of public improvements, or the City's funding of such public improvements, related to the Property or other real property upon which Dealership is operating or intends to operate;
d) This Section shall not be construed as to prohibit the City providing the assistance described under this Agreement or the City complying with a request by Dealership for expedited permit processing and other land use planning and land assembly services.
6.2 No Financial Assistance To Be Accepted from Other Agencies for Relocation.
Unless otherwise agreed by Banning in writing, Dealership covenants and agrees for the period beginning on the Effective Date and continuing until and including the termination or expiration of this Agreement, Dealership will not, directly or indirectly, solicit or accept any Financial Assistance (as defined below) from any other public or private person or entity, to the extent such Financial Assistance is given for the purpose of causing, or would result in, either Dealership Activities being relocated from Banning's jurisdiction or termination of this Agreement. For purposes of this Section 6.2, the term "Financial Assistance" means any direct or indirect payment, subsidy, rebate, or other similar or dissimilar monetary or non - monetary benefit, including, without limitation, payment of land subsidies, relocation expenses, public financings, property or sales tax relief or rebates, relief from public improvement obligations, or payment from public improvement obligations, or payment for public improvements to or for the benefit of Dealership.
7. CONSTRUCTION OF IMPROVEMENTS
7.1 Scope Of Improvements & Schedule Of Performance. Dealership shall improve its Existing Location by constructing approximately $ 1, 000500, worth of improvements, consisting primarily of facade- related enhancements with new exterior lighting, trim fascia, pop - out details, windows, new sign and branding images, stucco, paint, and landscape improvements the "Improvements "). The Improvements are further detailed in Dealership's Scope of Development and Conceptual Plans (Exhibit "E ") and will be consistent with the plans and permits approved by the City pursuant to Section 7.3. Notwithstanding any other provision set forth in this Agreement to the contrary, in the event of any conflict between the narrative description of the, Improvements in this Agreement (including Exhibit "E ") and the approved plans and permits, the approved plans and permits shall govern.
7.11. Critical Construction Deadlines. Once Improvement construction is commenced, it shall be diligently pursued to completion, and shall not be abandoned for more than thirty (30) consecutive days, except when due to an Excusable Delay (defined hereinafter).
Dealership shall keep Banning informed of the progress of construction and submit to Banning written reports of the progress of the construction when and in the form requested by Banning.
Critical Improvement construction deadlines are set forth in Exhibit "F" hereto. 13 01102/ 1196974 0034/
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7. 21. Extensions of Time. In addition to delays in the Improvement deadlines as may be permitted due to Excusable Delays, it is understood that the foregoing critical deadlines are subject to all other terms and conditions set forth in this Agreement, and as will be more thoroughly set forth in the future. The critical construction deadlines may be altered or amended by written agreement signed by both parties. A failure by either party to enforce a breach of any particular time provision shall not be construed as a waiver of any other time provision. The City Manager of Banning shall have the authority to approve extensions of time without City Council action if such extension .does not exceed a cumulative total of 180 days.
7.2 Dealership Responsible for Improvement Costs. Dealership is responsible for paying all costs for the Improvements unless otherwise provided herein. Improvement costs include the total Improvement construction costs, all site preparation costs, all infrastructure costs, building permits and development fees, all design and consultant costs, all financing costs, all fixtures and equipment for the facility, and all other costs related to the Improvements of any nature whatsoever.
7. 12. Prevailing Wages. Although the parties hereto believe that Dealership, will bear all costs of the Improvements and no financial assistance or public monies are being provided to Dealership with respect to the Improvements,, Dealership fully accepts the risk that construction or development of the Improvements may qualify as a "public work" "paid for in whole or in part out of public funds," as described in California Labor Code Section 1720 et seq., Prevailing Wage Law "), such that it would cause Dealership to be required to pay prevailing wages for any aspect of the development. Dealership hereby represents and warrants that the Improvements are not subject to Prevailing Wage Law because no funding sources for the Improvements will trigger the application of Prevailing Wage Laws. Notwithstanding the foregoing, the Dealership fully bears any and all risk that Prevailing Wage Laws may be found to apply to the Improvements. To this end, Dealership acknowledges and agrees that should any third party, including but not limited to the Director of the Department of Industrial Relations DIR "), require Dealership or any of its contractors or subcontractors to pay the general prevailing wage rates of per diem wages and overtime and holiday wages determined by the Director of the DIR under Prevailing Wage Law for all or any of the assistance provided hereunder, then Dealership shall indemnify, defend, and hold City harmless from any such determinations, or actions (whether legal, equitable, or administrative in nature) or other proceedings, and shall assume all obligations and liabilities for the payment of such wages and for compliance with the provisions of the Prevailing Wage Law: The City makes no representation that any construction to be completed by Dealership is or is not subject to Prevailing Wage Law.
7. 22. Dealership's Financial Statements. Dealership agrees to provide the City with documentation and financial statements to the end of demonstrating that Dealership can fund the total projected/estimated Improvement costs through, cumulatively, the following sources: i) Dealership equity, and/or (ii) private financing from financial institutions. Such financial statements shall include statements from financial institutions with whom Dealership conducts business evidencing their willingness to provide the financing required hereunder. If Dealership elects to self -fund the construction of the Improvements, Dealership may satisfy this obligation by providing City with a letter evidencing facts demonstrating Dealership's ability to self -fund the Improvements.
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7.3 Improvement Plans.
7.13. Proposed Improvements' Consistency With Plans and Codes. City warrants and represents that the City of Banning General Plan, and Zoning Ordinance permit City's proposed development, and construction, operation, and use of the Existing Facility as provided in this Agreement, including without limitation the Improvements as described in Exhibit "E ", subject to (i) approval of this Agreement, and (ii) those development approvals yet to be obtained, including site plan review, if applicable. It is expressly understood by the parties hereto that City makes no representations or warranties with respect to approvals required by any other governmental entity or with respect to approvals hereinafter required from City. The City and any other governmental body with jurisdiction over the Property reserve full police power authority over the Property. However, City shall reasonably cooperate with Dealership in procuring the foregoing approvals. Nothing in this Agreement shall be deemed to be a prejudgment or commitment with respect to such items or a guarantee that such approvals or permits will be issued within any particular time or with or without any particular conditions.
7. 23. Dealership Efforts To Obtain Approvals as May be Needed. Dealership shall exercise its commercially reasonable efforts to timely submit all documents and information necessary, if any, to obtain any required development and building approvals from the City in a timely manner. Not by way of limitation of the foregoing, in developing and constructing the Improvements, Dealership shall comply with all applicable development standards in the City of Banning Municipal Code and shall comply with all building codes, landscaping, signage, and parking requirements, except as may be permitted through approved variances and modifications.
7.4 Applicable Laws. Dealership shall carry out the construction of the Improvements in conformity with all applicable laws, including all applicable federal and state labor laws.
8. RESTRICTIONS ON TRANSFER
8.1 Transfers Require Approval. Dealership shall not Transfer this Agreement or any of Dealership's rights hereunder, or any interests in this Agreement, directly or indirectly, voluntarily or by operation of law, except as provided below, without the prior written approval of City which consent shall not be unreasonably withheld. In considering whether it will grant written approval to any assignment by Dealership of its interests herein, which assignment requires City approval, City shall consider factors such as (i) whether Dealership operations within the City would be jeopardized; (ii) the financial strength, reputation and capability of the proposed assignee to perform Dealership's obligations hereunder; and (iii) the proposed assignee's ability to generate a similar fiscal return to City.
No assignment or transfer by Dealership of all or any portion of its interest in this Economic Development Agreement (including without limitation an assignment or transfer not requiring City approval hereunder) shall be deemed to relieve Dealership or any successor party from any obligations under this Agreement with respect to the performance hereof. In addition, no attempted assignment of any of Dealership's obligations hereunder shall be effective unless 15 01102/ 119697A 0034/
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and until the successor party executes and delivers to City an assumption agreement in a form reasonably approved by the City assuming such obligations.
8.2 Exceptions. The foregoing restrictions on transfers shall not apply to any of the following:
a) A sale or Transfer resulting from or in connection with a reorganization as contemplated by the provisions of the Internal Revenue Code of 1986, as amended or otherwise, in which the - ownership interests of a corporation are assigned directly or by operation of law to a person or persons, firm or corporation which acquires the control of the voting capital stock of such corporation or all or substantially all of the assets of such corporation. b) A conveyance of this Agreement to any entity that is an Dealership Affiliate. Dealership Affiliate" shall mean any entity which owns or controls Dealership, to any entity owned or controlled by Dealership, to any entity owned or controlled by or affiliated with any entity which owns or controls Dealership, or to any entity resulting from a consolidation, or to the surviving entity in case of a merger, to which consolidation or merger Dealership shall be a party, or to an entity to which all or substantially all of the assets of Dealership have been sold.
c) Transfers of ownership or control interest between members of Dealership'simmediate family, or transfers to a trust, testamentary or otherwise, in which the beneficiaries are limited to members of Dealership'simmediate family, or among the entities constituting Dealership.
8.3 Release Of Dealership. City's consent to a Transfer shall not be deemed to release Dealership of liability for performance under this Agreement unless such release is specific and in writing executed by City. Upon the written consent of City to the complete assignment of this Agreement and the express written assumption of the assigned obligations of Dealership under this Agreement by the assignee, Dealership shall be relieved of its legal duty from the assigned obligations under this Agreement, except to the extent Dealership is in Default under the terms of this Agreement prior to said Transfer.
8.4 Dealership To Pay Transfer Costs. Dealership will pay Cities their reasonable expenses for attorneys' fees and investigation costs necessary to investigate the suitability of any proposed assignee, and to review and finalize any documentation required as a condition for approving any Transfer.
9. LEGAL LIABILITIES; INDEMNITIES; DEFENSE OF ACTIONS
9.1 Indemnification and Defense of Third -Party and SBE Actions; 50 %/ 50% Allocation of Such Indemnity Costs. The parties shall mutually defend and indemnify each other, their officers and employees from Claims or Liabilities arising from this Agreement including, but not limited to, (i) those concerning the validity or enforceability of this or any related agreement between the parties, (ii) those arising from the performance of any party of the terms of this or any related agreement between the parties, (iii) those brought by any third party 16 01102/ 119697.0034/ 4
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and arising hereunder. The responsibility of each party will be to pay their respective share as provided in Sections 9. 42.and 9. 52.of the Indemnity Costs hereunder. The foregoing shall not apply to Claims or Liabilities caused by the sole negligence of a party, its officers or employees.
This Section 9.1 is only applicable to third -party Claims or Liabilities brought against City and/or Dealership; the provisions of this Section are not applicable to any claims or liabilities which Banning and Dealership may have against each other.
9. 11. Defense ofSBE Proceedings. The Cities and Dealership agree that, should the SBE question the correctness of the allocation or determine that there has been an improper allocation to the City, City shall defend such allocation in all SBE administrative proceedings.
For purpose of this paragraph, administrative proceedings include all SBE meetings, conferences and appeals before SBE Board Members. Dealership will cooperate fully with the Cities and their attorneys, and shall have the right to be present at and participate in all SBE administrative proceedings.
9. 21. Indemnity /Defense of Other Legal Actions. The indemnity obligations of the parties hereunder extend to the Indemnity Costs of all other Claims or Liabilities arising hereunder of any nature whatsoever arising out of or in connection with this Agreement, the Original Agreement and/or any changes in law as they may apply to this Agreement.
9. 31. Appointment of Counsel; Deposit for Costs. The City shall provide Dealership with notice of the pendency of any third -party action initiated to challenge the rights and obligations established under this Agreement. Depending on the nature of the proceeding, the parties may utilize either the City Attorney's office or may elect to retain separate legal counsel. The parties may mutually agree on a budget and may assign differing roles to legal counsel. Based on the budget, the parties may establish a defense fund and require the deposit of funds with the City in accordance with the shares under Section 9. 41.so that generally legal costs shall be covered for a period of at least sixty (60) days in advance of the need for expenditure. The parties will continue to make deposits as needed. If any party shall fail to make their deposit, the action may be abandoned by the performing party without liability to the defaulting party. The obligation to pay the cost of the action, including judgment, shall extend until judgment. After judgment in a trial court, the parties must mutually agree as to whether any appeal will be taken or defended. Each party shall have the right, within the first 30 days of the service of the complaint, in its sole and absolute discretion, to determine that it does not want to defend any litigation attacking this Agreement, in which case the party not wishing to abandon the case shall be responsible for the full costs of the action. In the event of an appeal, or a settlement offer, the parties shall confer in good faith as to how to proceed. In that event, Dealership shall be liable for any costs incurred by the City up to the date of settlement but shall have no further obligation to City beyond the payment of those costs. Notwithstanding Dealership'sindemnity for Claims or Liabilities, the City retains the right to settle any claims or litigation brought against it in its sole and absolute discretion and Dealership shall remain liable except where Dealership opposes the settlement. In such case the City may still settle the litigation but shall then be responsible for its own litigation expense but shall bear no other liability to Dealership.
9. 41. 50/50 Sharing of Indemnity Costs. The Dealership share of Indemnity Costs shall be 50% of the Indemnity Costs, as will the City's share of Indemnity Costs. 17 01102/ 119697.0034/ 4
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9. 51. Withholding City Payment for Indemnification. City may deduct from any Covenant Payment any amount payable to Dealership (i) any amounts which are necessary to compensate the City for any losses, costs, liabilities, or damages suffered by the City including due to Dealership'sfailure to perform its indemnity obligations hereunder, and/or (ii) any and all amounts for which the City may be liable to third parties, by reason of Dealership's acts or omissions in performing or failing to perform Dealership's obligation under this Agreement. In the event that any claim is made by a third party or otherwise, or any indebtedness shall exist which shall appear to be the basis for a claim of lien, City may withhold from any payment due an amount sufficient to cover such claim. Said withheld monies will be held in a separate account accruing interest at the same rate as Banning's general investments (without liability because of such withholding or interest rate). The failure of City to exercise such right to deduct or to withhold shall not, however, affect the obligations of Dealership to insure, indemnify, and protect Cities as elsewhere provided herein. In the event City becomes aware of any such claim, it shall give Dealership written notice of the basis of such claim including any documentation in connection therewith, and Dealership shall have twenty (20) days to provide a written response and City shall have ten (10) days thereafter to advise Dealership of its action on such claim prior to withholding any amount. If Dealership continues to dispute the withholding, City shall retain the funds until the dispute can be resolved. The claim must be actual and not merely potential or speculative, for example the filing of an action before the SBE, the filing of a lawsuit, the failure to pay legal fees which have been incurred pursuant to the indemnity obligation, or similar matter is considered "actual."
9. 61. Survival. All indemnity provisions set forth in this Agreement shall survive termination or expiration of this Agreement.
9.2 Changes in Law. Changes in law that materially undermine the intent and purposes of this Agreement may be a basis for termination or negotiated modification hereof.
9. 12. City and Dealership acknowledge that as of the Effective Date of this Agreement, the California legislature has adopted certain legislation commonly known as the triple -flip" which would divert to the State of California up to one - quarter (1/4) of the Sales Tax Revenue which would otherwise be payable to the City pursuant to the Sales Tax and Use Tax Law as it existed prior to enactment of the above - referenced legislation. City and Dealership acknowledge that such legislation will cause a reduction of up to approximately twenty -five percent (25 %) of the Sales Tax Revenues which would otherwise be allocable to City and that such reduction will cause a corresponding effect. Furthermore, City acknowledges that it is possible that the legislation described above, or some alternative legislation (whether or not similar to the "triple flip "), may be enacted and effective during one or more subsequent years during the term hereof and may materially and negatively impact the amount of Sales Tax Revenues and, accordingly, Covenant Payments. If future actions of the California legislature with respect to the allocation of Sales Taxes to cities will substantially frustrate the purposes and intent of this Agreement, then either party shall have the right, without obligation, to terminate this Agreement by sending a Termination Notice as described hereinabove. Alternatively, the parties may mutually elect to enter into good faith negotiations for a period of not -to- exceed sixty (60) business days to modify the terms of this Agreement in such a manner as to reasonably address any changes in law. Dealership hereby agrees to indemnify, defend, and hold harmless - City, its directors, officers, employees, agents, representatives, heirs, and successors from and 18 01102/ 119697. 0034/ 4
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against any and all Indemnity Costs arising from any application or impact of the triple flip or some alternative legislation (whether or not similar to the "triple flip ") upon the terms, conditions or implementation of this Agreement. Changes in law for purpose of this Section include new judicial interpretations or applications of law as wells as legislative enactments.
9. 22. In addition to, and without waiving or limiting the foregoing, the parties shall share 50% / 50% all attorneys' fees and Indemnity Costs, foreseeable or unforeseeable, directly or indirectly, arising from changes in law.
9. 32. Recapture ofCity Payments. If at any time during or after the term of this Agreement, the SBE determines that all or any portion of the Sales Tax Revenues received by the City were improperly allocated and/or paid to the City (an "improper allocation "), and if SBE requires repayment of, offsets against future Sales Tax Revenues, or otherwise recaptures from the City those improperly allocated and/or paid Sales Tax Revenues, then Dealership shall, within thirty (30) calendar days after written demand from the City, repay all Covenant Payments (or applicable portions thereof) theretofore paid to Dealership which are attributable to such repaid, offset or recaptured Sales Tax Revenues. If Dealership fails to make such repayment within thirty (30) calendar days after the City's written demand, then such obligation shall accrue interest from the date of City's original written demand at the then maximum legal rate imposed by the California Code of Civil Procedure on prejudgment monetary obligations, compounded monthly, until paid.
10. DEFAULTS & ENFORCEMENT
10.1 Notice & Cure. A Non - Defaulting Party in its discretion may elect to declare a default under this Economic Development Agreement in accordance with the procedures hereinafter set forth for any failure or breach of the other Party ( "Defaulting Party ") to perform any material duty or obligation of said Defaulting Party under the terms of this Agreement.
However, the Non - Defaulting Party must provide written notice to the Defaulting Party setting forth the nature of the breach or failure and the actions, if any, required by Defaulting Party to cure such breach or failure ( "Default Notice "). The Defaulting Party shall be deemed in Default" under this Agreement, if said breach or failure can be cured, but the Defaulting Party has failed to take such actions and cure such breach or failure within thirty (30) calendar days after the date of such notice ( "Cure Period "). However, if such non - monetary breach or failure cannot be cured within such Cure Period, and if and, as long as the Defaulting Party does each of the following:
a) Notifies the Non - Defaulting Party in writing with a reasonable explanation as to the reasons the asserted Default is not curable within the thirty (30) calendar day period;
b) Notifies the Non - Defaulting Party of the Defaulting Party's proposed cause of action to cure the Default;
c) Promptly commences to cure the Default within the thirty (30) calendar day period;
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d) Makes periodic reports to the Non - Defaulting Party as to the progress of the program of cure; and
e) Diligently prosecutes such cure to completion.
then the Defaulting Party shall not be deemed in breach of this Agreement.
10.2 Abatement of Covenant Payments. If Dealership fails to cure, or commence to cure, a Default as provided above, then Banning' obligations s.to make any Covenant Payments, if and as warranted by the provisions of Section 3.3, shall be abated and forever forgiven, discharged and excused for all periods of time during which the Default continues to exist Abatement Period ") If, however, Dealership cures, or commences to cure, such Default as provided in the preceding paragraph, Banning shall continue to make such Covenant Payments if and as warranted by Section 3.3. Furthermore, if Banning's obligation to make Covenant Payments is abated, forgiven, discharged and excused by reason of Dealership'sfailure to cure or commence such cure within said thirty (30) day period, Banning's obligations shall nonetheless be reinstated, and Banning shall make Covenant Payments if and as warranted by said Section
3.3, upon Dealership'scure of the default; provided, however, that any Sales Tax Revenues generated during the Abatement Period shall not be considered in determining whether Banning is obligated to make Covenant Payments pursuant to Section 3.3.
10.3 Termination. Upon receiving a Default Notice, should the Defaulting Party fail to timely cure any Default, or fail to diligently pursue such cure as prescribed above, the Nondefaulting Party may, in its discretion, provide the Defaulting Party with a written notice of intent to terminate this Agreement for cause ( "Termination_ Notice "). The Termination Notice shall state that the Nondefaulting Party will elect to terminate this Agreement as the Nondefaulting Party elects to terminate within thirty (30) calendar days and state the reasons therefor (including a copy of any specific charges of Default) and a description of the evidence upon which the decision to terminate is based. Once the Termination Notice has been issued, the Nondefaulting Party's election to terminate Agreements will only be .waived if (i) the Defaulting Party fully and completely cures all defaults prior to the date of termination, or (ii) pursuant to Section 10.:3.
10.3. Except as otherwise provided herein, upon such termination all executory obligations under this Agreement that accrue or arise subsequent to the' date of termination shall also terminate, but obligations that have accrued or arisen prior to such termination shall remain in full force and effect. Without limiting the generality of the foregoing, no termination of this Agreement shall operate to release or discharge Dealership from any obligation to refund to City any overpaid Covenant Payments or other monies owing to City. In addition, in the event that a court of competent jurisdiction determines the Sales Tax Revenues were improperly received by Banning and orders Banning to pay such improperly received Sales Tax Revenues as damages to a third party, and Dealership received Covenant Payments attributable to such improperly received Sales Tax Revenues, Dealership shall repay such Covenant Payments to City within thirty (30) calendar days after written demand by City.
10.4 Rights & Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party 20 01102/ 119697.0034/ 4
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of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Default or any other Default by the other party.
10.5 No Waiver. Except as otherwise provided in this Agreement, waiver by either party of the performance of any covenant, condition, or promise shall not invalidate this Agreement, nor shall it be considered a waiver of any other covenant, condition, or promise.
Waiver by either party of the time for performing any act shall not constitute a waiver of time for performing any other act or an identical act required to be performed at a later time. The delay or forbearance by either party in exercising any remedy or right as to any Default shall not operate as a waiver of any Default or of any rights or remedies or to deprive such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies.
11. GENERAL PROVISIONS
11.1 Termination. Either party may, in its sole and absolute discretion, terminate this Agreement, without cost, expense, or liability except as otherwise provided herein. Amounts accrued as due and payable under this Agreement prior to the termination do remain as a liability of the party owing such amounts. Notice of intent to terminate this Agreement without cause pursuant to this Section shall be given in the same manner as a Termination Notice, as hereinabove described.
11.2 Tax Consequences. Dealership acknowledges that it may experience tax consequences as a result of its receipt of the payments provided for in this Agreement and agrees that it shall bear any and all responsibility, liability, costs, and expenses connected in any way therewith.
11.3 Rights Not Granted Under Agreement. This Agreement is not, and shall not be construed to be, a Development Agreement under Government Code Section 65864 et seq., or a Disposition and Development Agreement under Health and Safety Code Section 33000 et seq.
This Agreement is not, and shall not be construed to be, an approval or an agreement to issue permits or a granting of any right or entitlement by Banning concerning any Existing Facility, project, development, or other construction by Dealership in the City of Banning. This Agreement does' not, and shall not be construed to, exempt Dealership in any way from the requirement to obtain permits and/or other discretionary or non - discretionary approvals as may be necessary for -the development, maintenance, operation, or otherwise of any Existing Facility, project, development or other construction within the City of Banning. This Agreement does not, and shall not be construed to, exempt Dealership from the application and/or exercise of Banning's power of eminent domain, or its police power including, but not limited to, the regulation of land uses, and the taking of any actions necessary to protect the health, safety, and welfare of its citizenry.
11.4 Consent. Whenever consent or approval of any party is required under this Agreement, that party shall not unreasonably withhold such consent or approval unless otherwise allowed by specific provision of this Agreement.
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11.5 Governing Law and Venue. This Agreement shall be construed and interpreted in accordance with the laws of the State of California, without regard to its conflicts of laws principles. Any action or proceeding commenced to interpret, enforce, or which is in any way related to this Agreement, including, without limitation, the Operating Covenant, shall be commenced and prosecuted in the appropriate court in the County of Riverside, California. Each party hereby irrevocably consents to the personal jurisdiction of the court in such matter Each party hereby irrevocably waives, to the maximum legal extent, the benefit of any provision of law providing for change of venue to any other court or jurisdiction for any reason whatsoever, including, without limitation, any diversity of citizenship between Dealership an Banning, or the fact that Banning is a party to this Agreement. Without limiting the generality of the foregoing,
11.6 Notices. Any notice, demand, request, consent, approval or communication that any party desires or is required to give to any other party under this Agreement shall be in writing and either served personally or sent by regular mail and shall be addressed to such party at the addresses set forth below. Any party may change its address by notifying the other parties of the change of address.
Dealership's
address: Diamond Hills Auto Group, Inc.
Attn: General Manager
4661 W Ramsey Street
Banning CA 92220
With a
copy to: Shulman Hodges & Bastian LLP
Attn: Ronald S. Hodges
26632 Towne Centre Drive Suite 300
Foothill Ranch, CA 92610
Banning's
address: City of Banning
Office of the City Manager
99 East Ramsey Street
Banning, California 92220
With a copy to: Aleshire & Wynder
Attn: Banning City Attorney
18881 Von Karman Avenue, Suite 1700
Irvine, California 92612
949) 223 -1170
11.7 Amendment or Modification. No amendment, change, modification, alteration or termination of this Agreement shall be made except pursuant to written instrument signed by Dealership and Banning. The City Manager is authorized to make minor, non - substantive changes to this Agreement on behalf of Banning without the need for formal City Council approval.
11.8 Entire Agreement; Good Faith Negotiations. This Agreement contains all of the terms and conditions agreed upon by the parties. No other understanding, oral or otherwise, 22 01102/ 119697.0034/ 4
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1 regarding the subject matter of this Agreement shall be deemed to exist or to bind any of the parties hereto.
The parties acknowledge that this Agreement is the product of mutual arms- length negotiations and that each party has been, or has, had the opportunity to have been, represented by legal counsel in the negotiation and drafting of this Agreement. Accordingly, the rule of judicial construction which provides that ambiguities in a document are to be construed against the drafter of that document shall have no application to the interpretation or enforcement of this Agreement. In any action or proceeding to interpret and/or enforce this Agreement, the trier of fact may refer to extrinsic evidence not in direct conflict with any specific provision of this Agreement to ascertain and give effect to the intent of the parties hereto.
11.9 No Third Party Beneficiaries. This Agreement is intended to and shall benefit only Banning, the Dealership, and their permitted successors and assigns. No person or entity not a party to this Agreement is intended to, nor shall it be, benefited by either Banning's or the Dealership's performance of their respective obligations under this Agreement. No person or entity not a party to this Agreement shall have any rights or causes of action against either Banning or the Dealership as a result of either Banning or the Dealership's performance or nonperformance under this Agreement.
1.1 Time of the Essence; Force Majeure. Time is of the essence in the performance of this Agreement. Notwithstanding the foregoing, in addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in Default where delays or Defaults are due to war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires; casualties; supernatural causes; acts of the "public enemy"; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority litigation; unusually severe weather; inability to secure necessary labor, materials or tools; acts of the other party; acts or the failure to act of a public or governmental agency or entity (except that acts or the failure to act of City shall not excuse performance by City); or any other causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform. In the event of such a delay (herein "Excusable Delay "), the party delayed shall continue to exercise reasonable diligence to minimize the period of the delay. An extension of time for any such cause shall be limited to the period of the Excusable Delay, and shall commence to run from the time of the commencement of the cause, provided notice by the party claiming such extension is sent to the other party within ten (10) calendar days of the commencement of the cause. Failure to provide such notice shall constitute a waiver of the claim. The following shall not be considered as events or causes beyond the control of Dealership, and shall not entitle Dealership to an extension of time to perform: (i) Dealership's inability to negotiate in good faith, or (ii) conditions outside the control of Dealership that decrease the profitability of Dealership operations within the City, or (iii) any inability of Dealership to obtain or maintain financing for its operations. Times of performance under this Agreement may also be extended by mutual written agreement by the parties.
The parties hereto expressly acknowledge that changes in either general economic conditions or changes in the economic assumptions of any of them which may have provided a basis for entering into this Agreement, and which occur at any time after the execution of this Agreement, are not Excusable Delays and do not provide any party with grounds for asserting 23 01102/ 119697.0034/ 4
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the existence of a delay or excuse in the performance of any covenant or undertaking which may arise under this Agreement. Each party expressly assumes the risk that changes in general economic conditions, or changes in such economic assumptions relating to the terms and covenants of this Agreement could impose an inconvenience or hardship on the continued performance of such party under this Agreement, but that such inconvenience or hardship is not an Excusable Delay and does not excuse the performance by such party of its obligations under this Agreement.
11.10 Attorneys Fees. In the event that either party to this Agreement brings an action or proceeding against the other to interpret or enforce this Agreement, or which in any way arises out of or as a result of the existence of this Agreement, the prevailing party in that action or proceeding, in addition to all other relief to which it may be entitled, shall be entitled to recover from the non - prevailing party the prevailing party's reasonable attorneys fees and costs of litigation. Recoverable costs and expenses include those incurred on appeal and in the enforcement of any judgment.
11.11 Authority to Execute. Each party is authorized to do business in California, has full legal right, power and authority to enter into this Agreement and to carry out and consummate all transactions contemplated hereby and, thereby, and by proper action duly authorized the execution and delivery of this Agreement. The persons executing this Agreement on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said party, (iii) by so executing this Agreement, such party is formally bound to the provisions of this Agreement, and iv) the entering into this Agreement does not violate any provision of any other Agreement to which said party is bound. This Agreement shall be binding upon the heirs, executors, administrators, successors and assigns of the parties.
SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year written below:
Dated: 2012 CITY
CITY OF BANNING, a Califomia general law city
Mayor Don Robinson
ATTEST
Marie Calderon, City Clerk
APPROVED AS TO FORM:
David J. Aleshire, City Attorney
Dated: 2012 DEALERSHIP
DIAMOND HILLS AUTO GROUP, INC., a
Califomia Corporation
By:
Christopher Leggio, President
By:
Loretta Holtz, Secretary /Treasurer
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CITY OF BANNING
STAFF REPORT
TO: CITY COUNCIL
FROM: Art Vela, Interim City Manager
PREPARED BY: Art Vela, Interim City Manager
MEETING DATE: February 24, 2026
SUBJECT: Approval of the City's Strategic Plan "Banning 2030 - Designing Our Future Today"
RECOMMENDATION:
Consider the approval of the City's Strategic Plan "Banning 2030 - Designing Our Future Today" BACKGROUND:
A Strategic Plan serves as a foundational document that aligns the City Council’s policy direction with organizational priorities. It establishes goals, measurable initiatives, and defined timelines to ensure accountability and transparency. A well-developed Strategic Plan strengthens coordination across departments, improves service delivery, and provides the community with a clear understanding of the City’s priorities and direction.
The attached memorandum prepared by Bob Deis, Sloan Sakai Yeung Wong LLP, provides an overview of the Strategic Planning presented for Council's consideration.
JUSTIFICATION:
Adoption of the Strategic Plan will formally establish the City Council’s priorities and provide a structured framework for implementation of the Tier 1 Strategic Initiatives. The Plan translates objectives into actionable initiatives.
The Strategic Plan is designed as a living document that will guide decision-making, budget development, and resource allocation over the planning horizon. By approving the Plan, the City Council affirms a proactive approach to accomplishing the identified goals.
FISCAL IMPACT:
The Strategic Plan identifies funding needs and corresponding funding sources associated with the Tier 1 Strategic Initiatives. Implementation costs will be incorporated into future annual budgets, Capital Improvement Program updates, and multi-year financial planning documents, subject to Council approval.
Adoption of the Strategic Plan does not, in itself, authorize specific expenditures beyond those already approved in the current fiscal year; rather, it establishes a policy framework that will guide future budget recommendations and funding decisions.
ALTERNATIVES:
1. Do not approve the Strategic Plan and provide alternative direction. 924
BUDGETED?:
No
CONTRACT/AGREEMENT:
No
ATTACHMENTS:
1. Memo Strategic Plan - B. Deis.pdf
2. Banning Strategic Plan.pdf
3. Banning Strategic Plan Appendix A.pdf
925
CITY OF BANNING
MEMO
TO: CITY COUNCIL
PREPARED BY: Bob Deis, Sloan Sakai Yeung Wong LLP
MEETING DATE: February 10, 2026
SUBJECT: Review and Approval of Banning’s Strategic Plan—"Banning 2030--Designing our Future TODAY!”
Your Council has inherited a substantial list of challenges that requires an equally substantial but coordinated plan to address them. Additionally, since Banning has three utilities and a major interstate highway through the middle of it, there is a constant list of issues that need to be planned for and executed to stay abreast with constantly evolving regulatory and technological changes in our various service areas.
As a result, your Council has sponsored the development of your Strategic Plan.
This Plan provides the rationale, the priorities and the guidance to your staff on meeting today’s but also the future needs of our City and community.
The Rationale For This Strategic Plan
Every high-performing public or private organization practices some self-reflection.
Questions like 1) Where are we heading? 2) What are our strengths and weaknesses? 3) What is developing as our opportunities and threats? 4) What should we do about these and 5) What are our priorities? As staff, we asked ourselves these very questions.
The answers to these questions were put into one document and shared with the City Council on November 25, 2025. You invested an entire day to review, discuss and provide direction to staff on what we call the SWOTs—our Strengths, Weaknesses, Opportunities and Threats. We then reviewed your preliminary decisions and work at a December Council meeting and got final direction to bring back Banning 2030—Designing our Future TODAY! for final adoption.
The Strategic Plan Document and Appendix A
You will note on Page 3 of the Plan Document a visual overview of the various components that make up your Strategic Plan. As you start from the top, your Council goals and direction as a governing body are more generalized, aspirational, and focused on the future. You updated the Vision and Mission Statements for the City. These provide 926
Review and Approval of Banning’s Strategic Plan
February 10, 2026