DATE: December 18, 2023
TO: Mayor and Members of the City Council President and Members of the Estero Municipal Improvement District (EMID) Board of Directors
VIA: Stefan Chatwin, City/District Manager
FROM: Edmund Suen, Finance Director
Waqas Hassan, Assistant Finance Director
DEPARTMENT: Finance
SUBJECT: ANNUAL DEVELOPMENT IMPACT FEE AND CAPACITY FEE REPORT FOR FISCAL YEAR 2022-2023
RECOMMENDATION
It is recommended that the City Council/EMID Board of Directors adopt the attached resolutions approving the annual development impact fee and capacity fee report for Fiscal Year 2022-2023.
EXECUTIVE SUMMARY
California Government Code 66000-66013 requires public agencies who assess development impact fees and capacity fees to provide an annual report at a public meeting. City staff has prepared such a report for Fiscal Year 2022-2023.
BACKGROUND AND ANALYSIS
Local agencies often charge a fee as a condition of approval for development projects to fund public improvements to compensate for the demands that the developments have on public resources. This fee is known as a development impact fee. In 1989, the State Legislature passed Assembly Bill 1600 (AB 1600), which added Sections 66000 et seq. to the California Government Code known as the Mitigation Fee Act (MFA). The MFA applies to fees imposed on development projects to fund public facilities.
The City/District assesses two enterprise capacity fees – Water Connection Fee and Sewer Connection Fee. The purpose of the capacity fees is to ensure that development pays its fair share of the costs associated with providing system capacity. The fee is charged at the time the building permit is issued. The fees collected enable the City/District to recover its initial infrastructure construction costs and subsequent maintenance costs that ratepayers have incurred to provide capacity for future connections. As of June 30, 2023, for Water Connection Fee, the unexpended fund balance is $1,206,901 and, for Sewer Connection Fee, the unexpended fund balance is $338,429. These fund balances and continued collection fees will be utilized to fund the projects related to system improvements and ongoing maintenance of existing facilities.
The City/District also assesses the following development impact fees.
A. Affordable Housing Commercial Linkage Fee – This fee is paid by developers of commercial development projects to mitigate the impacts that such developments have on the demand for affordable housing in the City/District. As of June 30, 2023, the unexpended fund balance was $588,599. The fund balance and continued collection of this fee will be used to provide housing affordable to very low income, lower income, and moderate-income households in the City.
B. Park Facilities Impact Fee – This fee is paid by developers for their share of the development of park and recreational facilities related to new development. As of June 30, 2023, there were no Park Facilities Impact fees collected.
C. Public Safety Impact Fee – The purpose of the fee is to fund public safety facilities by providing adequate levels of police and fire facility improvements, vehicles, and other equipment necessary for adequate police and fire service provision related to new development. As of June 30, 2023, there were no Public Safety Impact fees collected.
D. Transportation Impact Fee – The purpose of the fee is to fund the planning, design, development, and construction of Transportation Facilities related to new development and ensure that new development pays for its fair share of Transportation Facilities. As of June 30, 2023, there were no Transportation Impact fees collected.
Pursuant to Government Code Section 66006(b)(1), AB 1600 requires local agencies to report the impact fees collected and their use annually. The MFA requires that the annual report of the impact fee must be made available to the public within 180 days after the last day of the fiscal year. The report must contain:
1. A brief description of the type of fee.
2. The amount of the fee.
3. The fee beginning and ending balances for the fiscal year.
4. The amount of fee collected, and interest earned.
5. An identification of each expenditure from the account, including a brief description of the expenditure and the percentage of the total cost of the expenditure funded by the fee.
6. An approximate date when construction will begin if the agency determines it has sufficient funds to complete a public improvement.
7. A description of any interfund transfer or loan made from the account.
8. The amount of any refunds made from the account.
The attached report contains details to satisfy the requirements of Government Code section 66006 and is available to the public on the Financial Services page of the City’s website.
CALIFORNIA ENVIRONMENTAL QUALITY ACT
Not Applicable
FISCAL IMPACT
There is no fiscal impact for the acceptance of this report.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
City Council Operations and Improved Community Engagement ATTACHMENTS:
Attachment 1 – City Resolution
Attachment 2 – EMID Resolution
Attachment 3 – Development Impact Fees Report for Fiscal Year 2022-2023