CITY COUNCIL STAFF REPORT
Meeting: November 7, 2023
Subject
Mitigation Fee Act – the Annual & Five-Year Report for Fiscal Year (FY) 2022-2023.
Recommended Action
Adopt Resolution No. 23-____ entitled “A Resolution of the City of Cupertino City Council approving the Annual & Five-Year Mitigation Fee Report for Fiscal Year ending June 30, 2023, and making required findings” to:
1) Make the required findings; and
2) Approve the Annual & Five-Year Mitigation Fee Report for the Fiscal Year ending June 30, 2023, as required by Government Code Section 66000 et seq.
Reasons for Recommendation
Background
The Mitigation Fee Act (Government Code Section 66000 et seq.) requires public agencies to account for and make findings when imposing mitigation fees as a condition of development approval. Government Code Section 66006(b) also requires that public agencies annually review and make available to the public a report accounting for mitigation fees held by the agency. Additional reporting is required at least every five years pursuant to Government Code Section 66001(d).
There are several mitigation fees that the City of Cupertino has required as a condition of development approval in lieu of requiring construction of certain public improvements. These fees are subject to annual and five-year reporting requirements. Mitigation fees are based on a development’s fair share of a larger public improvement project. This reporting does not include fees that are not subject to reporting requirements under Government Code Section 66000 et seq., except for parkland dedication fees that are subject to the Quimby Act and not the Mitigation Fee Act. The City reports on parkland dedication fees to provide further transparency on funds collected.
Pursuant to Section 66006(b), the City is required to make available to the public the following information concerning mitigation fees each fiscal year:
A brief description of the type of fee in the account or fund.
Amount of the fee.
Beginning and ending balances of the account or fund.
The amount of fees collected, and interest earned.
Identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with in‐lieu fees.
Identification of an approximate date by which the construction of the public improvement will commence, if the local agency determines that sufficient funds have been collected to complete the public improvement and the public improvement remains incomplete.
A description of each inter-fund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned fees will be expended. In the case of an interfund loan, the date on which the loan will be repaid, and the rate of interest that the account or fund will receive on the loan.
The amount of any refunds made pursuant to Government Code section 66001(e) and any allocations made pursuant to Government Code section 66001(f).
Under Section 66001(d), the City also must make certain findings regarding unfinished improvements every five years following the first deposit of mitigation fees into a fund. The agency must identify the purpose for which the fee was expended and demonstrate a reasonable relationship between the fee and the purpose for which it was used. The agency also must identify all sources and amounts of funding anticipated to complete the financing of incomplete improvements and to designate approximate dates when this funding is expected to be deposited into the account. Fees received through a development agreement are exempt from the five-year report.
FY 2022-23 Report
The attached report includes the annual report for the fiscal year ending June 30, 2023, and a five-year report for all fees. Since the City provided a five-year report last fiscal year, a new five-year report is not required. However, because the five-year report provides additional detail, the City annually provides such data to better inform the public.
The following provides a brief overview of the updates made to this year’s report:
Interstate 280/Junipero Serra Channel Trail Improvements (renamed to Tamien Innu): The project was removed from this report as all funds were expended in FY 2022-23 and used towards design services for the project.
All projects have been updated to reflect FY 2022-23 information.
Questions from the FY 2022 Report
At the December 20, 2022 meeting, Councilmember Moore had the following questions pertaining to the report and requested a subcommittee to be formed to examine the matter. In January 2023, all council subcommittees were dissolved, including the mitigation fee act review subcommittee. In an effort to provide follow up responses to Councilmember Moore’s questions, staff included both question and staff’s response (shown in italics) below.
Why are the master storm drain fees not included in the report? Staff’s response: The master storm drain fee was considered a maintenance fee in prior years. A more recent interpretation by the City Attorney’s office suggested the fee to be included in the report. The master storm drain fees have been included in the FY 2022-23 report, and will be included moving forward, to provide further transparency on funds collected.
When do other cities take this item to their City Council? Staff’s response: In researching some of the neighboring cities, the following indicates when the city took their FY 2021-22 report to their City Council:
City of Mountain View: December 6, 2022
City of Sunnyvale: December 13, 2022
City of San Jose: December 13, 2022
City of Saratoga: December 21, 2022
City of Palo Alto: January 23, 2023
City of Santa Clara: January 31, 2023
As of October 24, 2023, the cities mentioned above have not yet taken their FY 2022-23 report to their City Council.
Where do we post the reports online?
Staff’s response: The annual reports, including the FY 2022-23 report, are posted at the link below. https://www.cupertino.org/our-city/departments/finance/budget-reports What are the noticing requirements?
Staff’s response: The Mitigation Fee Act stipulates a 15-day public review period for the annual report. The FY 2022-23 annual report was made available to the public on the City’s webpage on October 23, 2023. A public hearing is not required for this item; therefore, no additional noticing in advance of the Council meeting is required.
Sustainability Impact
No sustainability impact.
Fiscal Impact
Not applicable. Accepting the Annual and Five-Year Reports does not have any impact to the city’s budget.
California Environmental Quality Act
Not applicable.
_____________________________________
Prepared by: Jennifer Chu, Senior Civil Engineer
Reviewed by: Chad Mosley, Director of Public Works
Reviewed by: Matt Morley, Assistant City Manager
Approved for Submission by: Pamela Wu, City Manager
Attachments:
A – Annual & Five-Year Report for FY 2023
B – Draft Resolution