Grover Beach City Council
August 26, 2024

Agenda Item No. 10

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: August 26, 2024 FROM: Matthew Bronson, City Manager
PREPARED BY: Megan Martin, Community Development Director SUBJECT: Second Reading and Adoption of an Ordinance to Repeal and Replace Article X (Revenue and Taxation), Chapter 13 (Development Impact Fees) of the Grover Beach Municipal Code and Establish a Development Impact Fee Deferral Program; and Adopt a Resolution to Amend the Master Fee Schedule.

RECOMMENDATION
Conduct a public hearing and second reading and adopt an Ordinance to repeal and replace Article X (Revenue and Taxation), Chapter 13 (Development Impact Fees) of the Grover Beach Municipal Code (GBMC) and establish a Development Impact Fee Deferral Program; and Adopt a Resolution to amend the Master Fee Schedule.

BACKGROUND
In 1995, the City of Grover Beach (the “City”) adopted Ordinance No. 95-10, adding Chapter 13 to the Grover Beach Municipal Code (GBMC) Article X to establish Development Impact Fees.

The City’s Development Impact Fee (DIF) schedule was established to raise the capital revenues necessary to mitigate the cost of various City infrastructure and facilities required because of additional demands from new development. The City’s DIFs were last updated in 2006.

Beginning in 2022, State law required updates to local government DIF schedules every eight years through a comprehensive review to account for existing development and future growth as well as to reflect changes in adopted Capital Improvement Programs (CIPs). The City engaged with Willdan Financial Services to prepare a comprehensive update and programmed the 2024 Development Impact Fee Nexus Study Update (DIF Study) and corresponding schedule through the Five-Year CIP and the City’s Facility Conditions and Needs Assessment report. The findings within the DIF Study enable the City to expand its inventory of public facilities that will accommodate future growth and development in the City through 2050 as envisioned in the City’s General Plan.

On June 24, 2024, the City Council (Council) adopted by Resolution (Res. No. 24-34) the DIF Study and made findings to adopt the maximum justified fee amounts as part of the DIF schedule for the following categories: Administrative Facilities, Law Enforcement Facilities, Fire Protection, Parks, Recreation, Water, and Sewer. The Council further directed staff to develop a DIF deferral program for specified types of housing development and return with an amended ordinance (GBMC Article X, Chapter 13) and Resolution. On July 22, 2024, the Council considered the first reading and introduction of the Ordinance and DIF Deferral program.

Staff Report: Second Reading of an Ordinance Updating Development Impact Fees Page 2 August 26, 2024

Grover Beach Municipal Code Article X, Chapter 13 Amendments As directed by Council, staff has prepared amendments to the GBMC and recommends the repeal and replacement of the existing ordinance (GBMC Article X, Chapter 13) to effectively implement changes to the City’s DIFs. The proposed changes seek to align with State regulations, clarify those regulations, provide opportunities for deferrals of DIFs for qualifying projects, and apply a DIF schedule that will enable the City to expand its inventory of public facilities, accommodating future growth and development.

Master Fee Schedule Update
To incorporate the maximum justified fees (Table E.1 below) identified by the DIF Study, the Master Fee Schedule (Fee Schedule) must be updated by resolution (Attachment 2). Pursuant to Council direction, the maximum justified fees are to be implemented in a two-year phased approach, and beginning in year three, the fees will be adjusted annually for inflation using the California Construction Cost Index (CCCI) beginning in 2026.

This structured roll-out is designed to provide a balanced and manageable transition for developers, while ensuring the City can continue to fund essential public facilities and infrastructure improvements.

The DIFs will be automatically adjusted each year by the following:
• Effective October 25, 2024: 50% increase for all categories; and, • Effective July 1, 2025: remaining 50% increase for all categories; and, • Effective July 1, 2026: For all categories, percent change for annual inflation using CCCI The following page shows an example of the two-year phased approach for commercial development:

Staff Report: Second Reading of an Ordinance Updating Development Impact Fees Page 3 August 26, 2024

Fees will be collected pursuant to the attached Resolution (Attachment 2) in separate accounts for the facility types for which these impact fees are collected. Within 180 days of the close of each fiscal year, the Administrative Services Director shall make available to the public an accounting of the funds as provided for in Government Code Section 66006(b), and the Council shall review that information at its next regular public meeting.

Fees adopted by resolution shall become effective no sooner than 60 days after adoption, pursuant to Government Code Section 66017. The fees imposed by the Resolution shall be effective on October 25, 2024.

DIF Deferral Program
A DIF Deferral Program is a policy that allows developers to postpone payment of DIFs to a later stage in the development process, rather than paying upfront. By deferring fees, the program can make it financially easier for developers to initiate projects. These programs are most often used to incentivize certain types of development, such as affordable housing, mixed-use projects, or developments in targeted areas that are in need of revitalization.

On June 24, 2024, the Council directed staff to prepare and incorporate a DIF Deferral Program for qualifying residential projects (Attachment 3). Incorporating a DIF deferral program would be a significant step in supporting the development of qualifying residential development projects in Grover Beach as well as further implement Housing Element Program 6.1 which directs the City to consider a policy for fee deferrals associated with affordable housing projects. This program allows for deferral of certain impact fees to ease the financial burden on developers during the initial phases of construction. The program does not include deferral of water and sewer facility fees or “pass-through” fees (i.e. Lucia Mar Unified School District, South San Luis Obispo County Sanitation District), ensuring that essential services remain adequately funded.

Staff Report: Second Reading of an Ordinance Updating Development Impact Fees Page 4 August 26, 2024

After reviewing DIF deferral programs in other communities, staff compiled a draft of the DIF Deferral Program Guidelines (Attachment 3, Exhibit A), that are intended to establish measures for effective implementation of the program, a few of the key provisions are identified below:
• Eligible impact fees would be limited to the following: Transportation, Law Enforcement, Administrative, Fire Protection, Park, and Recreation.
• The term would provide a 17-year deferral (2-year buffer from the typical construction loan term); any request to extend the term would require a recalculation of the impact fees at the time the extension is requested (plus accrued interest). • An annual simple fixed interest rate of three percent (3%) shall be paid in full at the end of the term.
• The program would provide for the City Manager to approve deferrals up to an amount of $500,000.
• City Council approval would be required for deferrals of more than $500,000.

Qualifying or eligible projects under the DIF deferral program shall be limited to the following:
• Housing projects with 10 or fewer units that provide at least (1) of the total units to be sold or rented to lower or moderate-income households.
• Housing projects with more than 10 units, that provide at least 20 percent of the total units to be sold or rented to lower or moderate-income households. • Housing projects that are built, owned and managed by a government agency or a nonprofit housing organization.
• Affordable housing, Transitional housing, Supportive housing, Homeless Shelters and Low-Barrier Navigation Centers.

A fee deferral granted under this Program shall be acknowledged by a Deed of Trust and Promissory Note, herein referred to as the “DIF Deferral Agreement”, to ensure the security for the repayment of deferred fees. The DIF Deferral Agreement shall be recorded as a lien against the property on which the associated development project is to be located. The agreement would be removed upon payment in full of all deferred fees and accrued interest.

DIF Exemptions
Pursuant to State law, the Ordinance includes an exemption for ADUs up to 750 square-feet from DIFs (Gov. Code, § 65852.2, subd. (f)(3)). This was passed into law by the State in an effort to make ADUs even more affordable to build. ADUs are not exempt from school district fees. School districts are authorized to, but do not have to, levy impact fees for ADUs greater than 500 squarefeet pursuant to Section 17620 of the Education Code. ADUs less than 500 square-feet are not subject to school impact fees.

To further address housing needs, an exemption for Emergency Shelters from impact fees related to Transportation, Administration, Parks, and Recreation has been included. These facilities typically have a limited impact on transportation infrastructure, as residents are less likely to own vehicles or drive. They require minimal additional administrative services, operate with their own resources, and place little strain on parks and recreation facilities due to the transient nature of their residents. Furthermore, these exemptions support broader social goals by reducing financial burdens on organizations providing critical services and encouraging the development of shelters, ultimately aiding vulnerable populations and addressing homelessness more effectively.

Staff Report: Second Reading of an Ordinance Updating Development Impact Fees Page 5 August 26, 2024

Application of New Development Impact Fees to Current and Future Projects Under California law, the timing of when new development becomes subject to development impact fees generally follows whether the project has been “deemed complete”. For a project that has not yet been deemed complete by the effective date of new fees, the project will be subject to the fees in place on the date it is deemed complete. This means that if a project is deemed complete after the effective date of the new fees (October 25, 2024), the new fees will apply. If a project is deemed complete prior to the effective date, the new fees will not apply.

Next Steps
If adopted, the new Ordinance, DIF Deferral Program, and the update to the Master Fee Schedule for the new DIFs will take effect 60 days following adoption, on October 25, 2024.

FISCAL IMPACT
The fiscal impact of implementing the maximum justified DIF schedule is an estimated total of $23.3 million in fee revenue by 2050. These revenues are essential to mitigate the impacts of growth and development within Grover Beach and would support the City’s CIP. These fees will only cover the portion of these projects that are attributable to growth and development. In addition, these fees are collected over a period of 26 years, where the projects will likely be paid for using other sources, then reimbursed over time from these fees as they are collected.

ALTERNATIVES
The Council has the following alternatives to consider:

1. Conduct the second reading and adopt an Ordinance to repeal and replace Article X (Revenue and Taxation), Chapter 13 (Development Impact Fees) of the Grover Beach Municipal Code (GBMC) and establish a Development Impact Fee Deferral Program; and adopt a Resolution to update the Master Fee Schedule; or

2. Provide alternative direction to staff.

PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act. Pursuant to Government Code Section 36933, the full text of the Ordinance was made available to the public on the City’s website and a summary of the Ordinance was published in the New Times on August 22, 2024.

Attachments

1. Draft Ordinance

2. Draft Resolution (Master Fee Schedule)

3. Draft Resolution (Impact Fee Deferral Program)
Exhibit A – Impact Fee Deferral Program Guidelines
ORDINANCE NO. 24-__

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF GROVER BEACH, CALIFORNIA REPLACING ARTICLE X (REVENUE AND TAXATION) CHAPTER 13 (DEVELOPMENT IMPACT FEES) OF THE GROVER BEACH MUNICIPAL CODE WHEREAS, the City of Grover Beach (the “City”) is duly authorized pursuant to the Mitigation Fee Act (the “Act”), commencing with California Government Code, § 66000 et seq., to impose development impact fees (DIF) for purposes of defraying all or a portion of the costs of public facilities related to new development occurring within the City; and,
WHEREAS, the City adopted an Ordinance (Ord. 95-10) and established a DIF schedule that is charged to developers to mitigate the impacts of development upon public facilities; and WHEREAS, the City’s DIF schedule underwent a comprehensive update in 2005 (Resolution No. 06-11) and 2006 (Resolution No. 06-45) to reflect changes in infrastructure needs and costs; and, WHEREAS, the State now requires DIF schedules to complete a comprehensive review every eight years (Government Code § 66016(8)) to ensure fees remain relevant and appropriately aligned with current infrastructure needs and development impacts; and WHEREAS, the City engaged the financial firm, Willdan Financial Services (Willdan) to prepare a Nexus Study to evaluate and establish the reasonable relationship between the fees charged and the impact of new development on public infrastructure and services; and, WHEREAS, the City Council (Council) on June 26, 2024, held a duly noticed public hearing to hear all oral and written presentations from the public regarding the Nexus Study and proposed DIF schedule; and,
WHEREAS, on June 26, 2024, the Council adopted the Study (Resolution No. 24-34), finding that it accurately identifies the maximum justified fees necessary to fund public facilities and infrastructure improvements required to accommodate new development; and directed staff to prepare an Ordinance to amend the Grover Beach Municipal Code Article X (Revenue and Taxation), Chapter 13 (Development Impact Fees), and prepare and update the City’s Master Fee Schedule with the maximum justified fees for the City’s nine (9) DIF categories (Exhibit A) in two phases, and develop a DIF deferral program; and, WHEREAS, on July 22, 2024, the Council at a regular meeting introduced, by title only, an Ordinance to replace GBMC Article X (Revenue and Taxation), Chapter 13 (Development Impact Fees); and,

NOW THEREFORE, BE IT HEREBY ORDAINED BY THE CITY COUNCIL OF THE CITY OF GROVER BEACH AS FOLLOWS:

SECTION 1. Incorporation. The above recitals are true and correct and are incorporated herein by this reference.

SECTION 2. Environmental. The City Council finds that this Ordinance is exempt from the California Environmental Quality Act ("CEQA") because the Ordinance does not qualify as a “project” under CEQA and because the Ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment. (State CEQA Guidelines section 15060, subd. (c)(2), (3).) Section 15378 of the State Attachment 1
Ordinance No. Page 2 of 5
CEQA Guidelines defines a project as the whole of an action, which could potentially result in either a direct physical change, or reasonably foreseeable indirect physical change, in the environment. The Ordinance will not result in any construction or development, and it will not have any other effect that would physically change the environment. The Ordinance therefore does not qualify as a project subject to CEQA.

SECTION 3. Chapter 13 Development Impact Fees. Article X, Chapter 13 Development Impact Fees of the Grover Beach Municipal Code is hereby replaced as follows:

Sec. 101301. Purpose. To establish, impose, and collect fees for new development projects that will defray the cost of the expansion and improvement of infrastructure and public facilities necessary to accommodate the impacts of such development.

Sec. 101302. Authority. Pursuant to California Government Code Sections 66000 – 66025, the City is authorized to adopt and implement development impact fees to ensure that new development contributes to the cost of public infrastructure and services necessitated by growth.

Sec. 101303. Applicability. This Chapter shall apply to all new developments within the City, except as exempted under applicable state laws or by specific provision within this Chapter. Development projects subject to this Chapter include, but are not limited to, residential, commercial, industrial, and mixed-use developments that result in new construction or expansions of existing structures. (A) Exemptions. The following projects are exempted from payment of Development Impact Fees:
a. The United States or to any agency or instrumentality thereof, the State of California or any County or other political subdivision of the State of California. b. Remodeling or alteration of an existing residential building, but only if the number of dwelling units is not increased or the use changed.
c. That portion of a structure which existed before the addition of dwelling units or the enlargement of floor area in a non-residential structure. d. The reconstruction of any development project that is damaged, destroyed, or demolished, and replaced within two years from the date of demolition. e. Residential accessory structures, including sheds, workshops, garages, and other accessory structures as defined in Municipal Code Article IX (Development Code), Chapter 9 (Definitions).
f. Development, modification, or expansion of an Accessory Dwelling Unit that is less than 750 square-feet in size, in accordance with Government Code Section 66324(c). g. Development, modification, or expansion of an Emergency Shelter, subject to Municipal Code Article IX (Development Code), Chapter 2, Section 2.90.030 (Emergency Shelter Overlay Zone), shall be exempt from the following impact fees: Transportation, Administrative, Park, and Recreation facilities.

The calculation and imposition of impact fees, established to fund the capital costs of public facilities related to the needs of new development in the City, shall be based on the type, size, and intensity of each development project as outlined in the fee schedule adopted by the City Council.

Ordinance No. Page 3 of 5
Sec. 101304. Impact Fee Categories. The following impact fee categories have been established to address specific needs related to new development within the City:
(A) Administrative facilities
(B) Fire Protection Facilities
(C) Law enforcement facilities
(D) Park facilities
(E) Recreation Facilities
(F) Storm Drain facilities
(G) Transportation
(H) Wastewater
(I) Water
These impact fee categories are integral to ensuring that new development adequately contributes to the enhancement and maintenance of essential public facilities within the City.

Sec. 101305. Fees Established by Resolution. The specific amount of the impact fees and their calculations shall be established by resolution of the Council. The resolution shall set forth the precise amounts of the impact fees, identify the public facilities funded by these fees along with their estimated costs. Fees shall be based on a reasonable relationship between the fee charged and the cost of the public facilities and infrastructure improvements necessitated by the new development.

Sec. 101306. Payment of Fees. Except as otherwise provided in Section 66007 of the Government Code, development impact fees shall be paid to the City at the time of final occupancy certification. In cases where payment or all or part of the required fee is deferred at the time of final occupancy certification, the applicant, at the applicant's expense, may execute a contract with the City to pay all or a portion of the impact fees, in accordance with the provisions of the City’s Impact Fee Deferral Program Guidelines, as further described in Section 101307. When impact fees are paid in full, the City, at the expense of the applicant or property owner, shall execute a release of any lien securing those impact fees.

Sec. 101307. Appeals. Any aggrieved person subject to the fees established by this Chapter may appeal the imposition of these fees by meeting the following requirements:
(A) Time and Form. An appeal shall be submitted in writing, to the Community Development Director, and filed within 30 days following notification of the imposition of the fees and shall specifically state the pertinent facts and basis for the appeal.
(B) Fees. Payment of any fee required for processing of the appeal. (C) Public Hearing. The Council shall consider the appeal at a hearing to be held within 60 days after filing of the appeal. The decision of the Council shall be final.

Sec. 101308. Development Impact Fee Deferrals. The Council shall, by resolution, set forth the “Development Impact Fee Deferral Program Guidelines” that establish the application process and review procedures to consider a request for a deferral of certain development impact fees for qualifying projects that would otherwise be due and payable at the time of final occupancy certification. An Impact Fee Deferral Agreement shall explicitly provide for the recordation of a lien against the real property on which the associated development project is to be located, which shall be removed upon payment in full of all deferred fees. The Development Impact Fee Deferral Program Guidelines shall set forth the following:

Ordinance No. Page 4 of 5
(A) Identify eligible projects that align with the City’s goals, including but not limited to, housing projects that are built, owned and managed by a government agency or a nonprofit housing organization.
(B) Limit eligible impact fees to those identified in Section 101303 (Fees – Imposition and Application), however, water system improvements, storm drain facilities, and wastewater facilities impact fees shall not be eligible for the Impact Fee Deferral Program. (C) Establish the application process and review procedures to approve, modify, or deny an application.
(D) Develop a term for the loan with an annual simple fixed interest rate of three percent (3%) that shall be paid in full at the end of the term. Interest shall accrue starting at the commencement of the deferral period for an approved development project.

Sec. 101309. Credits and Reimbursement. If the approval of a development project is required by the City to construct facilities whose costs have been included in the calculation of impact fees applicable to that project, the applicant shall receive a credit against those impact fees, up to the amount charged for the same type of facility. Should the cost of the improvements constructed by the applicant exceed the amount of impact fees charged for the same type of facility, the excess cost shall be reimbursed to the applicant from other impact fee revenues within a reasonable timeframe. To qualify for reimbursement, the applicant must execute a reimbursement agreement with the City specifying the reimbursable amount and an approximate schedule for reimbursement.

Sec. 101310. Disposition and Use of Collected Fees. The Administrative Services Director shall deposit fees collected pursuant to this Chapter in a separate fund or account and shall be used solely for the purpose of funding the public facilities and infrastructure improvements for which the fees were collected as listed in Section 101304. Any interest earned on funds deposited in a fund or account shall be deposited in that fund or account. Funds deposited in those accounts shall be used only to pay for design and construction, including construction administration, of projects identified in resolutions adopted pursuant to Section 101305 as the basis for the impact fees, or for reimbursements as provided in Section 101309.

Sec. 101311. Reporting. The City shall prepare an annual report detailing the collection and use of development impact fees in compliance with Government Code Section 66006. In addition to the annual report, the City shall conduct a review of all development impact fees every five years, as required by Government Code Section 66001(d).
(A) Public Availability. Both the annual and five-year reports shall be made available to the public in accordance with the requirements of Government Code Section 66006. (B) Public Hearing – Annual Reporting. Within 180 days of the close of each fiscal year, the Administrative Services Director shall make available to the public an accounting of the funds as provided for in Government Code Section 66006(b), and the Council shall review that information at its next regular public meeting.
(C) Public Hearing – Five-year Reporting. The Council shall review the five-year report at a public hearing.

Sec. 101312. Refund of Unexpended Fees. If fees collected are not expended or committed within the timeframe specified by the Mitigation Fee Act, the City shall refund the unexpended fees, along with any Ordinance No. Page 5 of 5
interest accrued, to the current property owner of record, in accordance with the procedures set for in Government Code Section 66001, or make findings as required by that Section to retain the fees.

SECTION 4. Publication. A summary of the Ordinance shall be published in a newspaper published and circulated in the City of Grover Beach at least five days prior to the City Council meeting at which the proposed ordinance is to be adopted. A certified copy of the full text of the proposed ordinance shall be posted at City Hall. Within 15 days after adoption of the Ordinance, the summary with the names of those City Council members voting for and against the Ordinance shall be published again, and the City Clerk shall post a certified copy of the full text of such adopted Ordinance.

SECTION 5. Effective Date. This Ordinance shall become effective 60 days after adoption.

SECTION 6. Severability. Should any provision of this Ordinance, or its application to any person or circumstance, be determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise void, that determination shall have no effect on any other provision of this Ordinance or the application of this Ordinance to any other person or circumstance, and, to that end, the provisions hereof are severable. The City Council declares that it would have adopted all the provisions of this Ordinance that remain valid if any provisions of this Ordinance are declared invalid.

INTRODUCED at a regular meeting of the City Council held on July 22, 2024, and PASSED, APPROVED, and ADOPTED by the City Council on August 26, 2024, on the following roll call vote to wit:

AYES: Council Members –
NOES: Council Members –
ABSENT: Council Members –
ABSTAIN: Council Members –
RECUSED: Council Members –

KAREN BRIGHT, MAYOR
Attest:

WENDI B. SIMS, CITY CLERK
Approved as to Form

ROB LOMELI, CITY ATTORNEY
**DRAFT**
RESOLUTION NO. 24-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GROVER BEACH,

CALIFORNIA, APPROVING NEW DEVELOPMENT IMPACT FEES, EFFECTIVE ON OCTOBER 25, 2024
WHEREAS, the City of Grover Beach (the “City”) is duly authorized pursuant to the Mitigation Fee Act (the “Act”), commencing with California Government Code, § 66000 et seq., to impose development impact fees (DIF) for purposes of defraying all or a portion of the costs of public facilities related to new development occurring within the City; and, WHEREAS, the City established a DIF schedule (Ord. 95-10) that is charged to developers to mitigate the impacts of development upon public facilities; and WHEREAS, the City’s DIF schedule underwent a comprehensive update in 2005 (Resolution No. 06-11) and 2006 (Resolution No. 06-45); and, WHEREAS, the State now requires DIF schedules to complete a comprehensive review every eight years (Government Code § 66016(8)) to ensure fees remain relevant and appropriately aligned with current infrastructure needs and development impacts; and WHEREAS, the City initiated a comprehensive update, selecting Willdan Financial Services (Willdan) to prepare the City’s Development Impact Fee Nexus Study Update (Study); and,
WHEREAS, in compliance with the Act, the City Council (Council) on June 26, 2024, held a duly noticed public hearing on the proposed DIF, to hear all oral and written presentations from the public regarding the proposed DIF; and,
WHEREAS, on June 26, 2024, the Council adopted the Study (Resolution No. 24-34), and directed staff to prepare an Ordinance to amend the Grover Beach Municipal Code Article X (Revenue and Taxation), Chapter 13 (Development Impact Fees), and prepare and update the City’s Master Fee Schedule with the maximum justified fees for the City’s nine (9) DIF categories (Exhibit A) in two phases; and,
WHEREAS, on July 22, 2024, the Council at a regular meeting introduced, by title only, an Ordinance to amend the GBMC Article X, Chapter 13; and, WHEREAS, on August 26, 2024, the Council held a duly noticed public hearing, and in accordance with the calculations and recommendations in the Study, seeks to adopt a Resolution to update the City’s Master Fee Schedule; and,
NOW, THERFORE, BE IT RESOLVED that the City Council of the City of Grover Beach, California, does hereby find:

SECTION 1. The above recitals are true and correct and are incorporated here by this reference.

SECTION 2. The Council hereby determines that the fees collected pursuant to this Resolution shall be used to finance the public facilities described or identified in the Study or other such facility plans as may be proposed, modified, or amended from time to time by the Council.

Attachment 2
Resolution No. 24- Page 2
SECTION 3. The Council hereby approves and adopts the DIF as set forth in Exhibit “A” to this Resolution, attached hereto and incorporated herein by this reference. Exhibit “A” sets forth the aggregate amount imposed as a DIF for development projects and also sets forth the breakdown of each DIF by category type. The DIF set forth in Exhibit “A” are consistent with the Study, adopted on June 26, 2024. The Council approved a phased approach to increasing the DIFs. The amount of the DIF shall be modified in two phases, annually, until it reaches the maximum amount consistent with the Study, as follows:
(1) Effective October 25, 2024: All categories increased 50% (2) Effective July 1, 2025: All categories increased 50% (3) Effective July 1, 2026: All categories increased by CCCI.

The amount of the DIF shall be modified, after 2025, annually to account for inflation each July 1 based on the change in the Engineering News Record, California Construction Cost Index (CCCI).

Such inflationary increases shall not constitute an increase within the meaning of the Act and may be implemented each year without the requirement to obtain approval of the City Council.

SECTION 4. The DIF approved by this Resolution supersede previously adopted resolutions that set the amounts of DIF.

SECTION 5. The Council finds that this Resolution is exempt from the California Environmental Quality Act (“CEQA”) because this Resolution does not qualify as a “project” under CEQA and because this Resolution will not result in a direct or reasonably foreseeable indirect physical change in the environment (State CEQA Guidelines Section 15060, subd. (c)(2), (3).) Section 15378 of the State CEQA Guidelines defines a project as the whole of an action, which could potentially result in either a direct physical change, or reasonably foreseeable indirect physical change, in the environment. Here, this Resolution will not result in any construction or development, and it will not have any other effect that would physically change the environment.

This Resolution therefore does not qualify as a project subject to CEQA.

SECTION 6. Consistent with the Act, the DIF schedule as identified in attached Exhibit “A” adopted by this Resolution shall take effect on October 25, 2024, a period no sooner than 60 days following adoption of this Resolution by Council (Government Code Section 66017).

SECTION 7. The Council finds that the fees recommended in the Study are separate and different from other fees the City may impose through the implementation of a specific plan or as a condition of final map approval, building permit issuance or tentative or parcel map approval pursuant to its authority under the Subdivision Map Act, the Quimby Act, and the City's implementing resolutions and ordinances, as may be amended from time to time. In addition, this Resolution shall not be deemed to affect the imposition or collection of other fees the City is legally authorized to impose and collect.

SECTION 8. If any action, subsection, sentence, clause or phrase of this Resolution or the imposition of the DIF for any project described in the Study or the application thereof to any person or circumstance shall be held invalid or unconstitutional by a court of competent jurisdiction, such invalidity shall not affect the validity of the remaining portions of this Resolution or other DIF levied by this Resolution that can be given effect without the invalid provisions or application of the DIF.

Resolution No. 24- Page 3
On motion by Council Member _____, seconded by Council Member ____, and on the following roll-call vote, to wit:

AYES: Council Members –
NOES: Council Members –
ABSENT: Council Members –
ABSTAIN: Council Members –
RECUSED: Council Members –
the foregoing Resolution was PASSED, APPROVED, and ADOPTED at a regular meeting of the City Council of the City of Grover Beach, California this 26th day of August.

KAREN BRIGHT, MAYOR
Attest:

WENDI B. SIMS, CITY CLERK
**DRAFT**
RESOLUTION NO. 24-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GROVER BEACH,

CALIFORNIA, ADOPTING THE DEVELOPMENT IMPACT FEE DEFERRAL PROGRAM GUIDELINES FOR QUALIFYING RESIDENTIAL PROJECTS.

WHEREAS, the City Council of the City of Grover Beach conducted a public hearing in the Council Chambers of City Hall, 154 South 8th Street, Grover Beach, California, on June 24, 2024, adopting the 2024 Development Impact Fee Nexus Study and directing staff to develop a Development Impact Fee deferral program for qualifying housing projects; and WHEREAS, the City Council of the City of Grover Beach conducted a public hearing in the Council Chambers of City Hall, 154 South 8th Street, Grover Beach, California, on July 22, 2024, to review and consider adoption of the Development Impact Fee Deferral Program Guidelines; and
WHEREAS, the City Council has duly considered all evidence, including consistency with the Mitigation Fee Act, interested parties, and evaluation and recommendations by staff, presented at said hearing; and
WHEREAS, notices of said public hearings were made at the time and in the manner required by law; and
NOW, THERFORE, BE IT RESOLVED that the City Council of the City of Grover Beach, California, does hereby adopt the Development Impact Fee Deferral Program Guidelines (Exhibit A):

SECTION 1. Environmental Review. This Resolution is exempt from the California Environmental Quality Act (“CEQA”) because this Resolution does not qualify as a “project” under CEQA and because this Resolution will not result in a direct or reasonably foreseeable indirect physical change in the environment (State CEQA Guidelines Section 15060, subd. (c)(2), (3).) Section 15378 of the State CEQA Guidelines defines a project as the whole of an action, which could potentially result in either a direct physical change, or reasonably foreseeable indirect physical change, in the environment. Here, this Resolution will not result in any construction or development, and it will not have any other effect that would physically change the environment.

This Resolution therefore does not qualify as a project subject to CEQA.

SECTION 2. The Development Impact Fee Deferral Program Guidelines as identified under Grover Beach Municipal Code Article X Chapter 13 Section 101305 (Development Impact Fee Deferrals), shall set forth the application process and review procedures for any request to defer certain development impact fees for the following qualifying projects that would otherwise be due and payable at the time of final occupancy certification:

1. Housing projects with 10 or fewer units that provide at least (1) of the total units to be sold or rented to lower or moderate-income households.

2. Housing projects with more than 10 units that provide at least 20 percent of the total units to be sold or rented to lower or moderate-income households.

3. Housing projects that are built, owned and managed by a government agency or a nonprofit housing organization.

Attachment 3
Resolution No. 24- Page 2

4. Affordable housing, Transitional housing, Supportive housing, Homeless Shelters and Low-Barrier Navigation Centers.

SECTION 3. Housing projects shall have the same meaning as defined in the Housing Accountability Act, Government Code Section 65589.5(h)(2).

SECTION 4. A Development Impact Fee Deferral Deed of Trust and Promissory Note shall be executed and recorded on the property. The Promissory Note shall describe the deferral as a loan on the property for a term of at least 17 years and shall account for an annual simple fixed interest rate of three percent, to be paid in full at the end of the term.

SECTION 5. Development Impact Fee Deferral Program Guidelines shall be consistent with requirements identified in Mitigation Fee Act, as amended from time to time.

SECTION 6. This Development Impact Fee Deferral Program Guidelines shall only be eligible for the following City-wide impact fees; Transportation Improvements, Law Enforcement Facilities, Administrative Facilities, Fire Protection Facilities, Park Facilities, and Recreation Facilities.

SECTION 7. The Development Impact Fee Deferral Program as identified in attached Exhibit “A” shall take effect no sooner than October 25, 2024, following adoption of this Resolution by Council.

On motion by Council Member _____, seconded by Council Member ____, and on the following roll-call vote, to wit:

AYES: Council Members –
NOES: Council Members –
ABSENT: Council Members –
ABSTAIN: Council Members –
RECUSED: Council Members –
the foregoing Resolution was PASSED, APPROVED, and ADOPTED at a regular meeting of the City Council of the City of Grover Beach, California this 26th day of August.

KAREN BRIGHT, MAYOR
Attest:

WENDI B. SIMS, CITY CLERK
**DRAFT**

CITY OF GROVER BEACH
DRAFT

DEVELOPMENT IMPACT FEE DEFERRAL

PROGRAM GUIDELINES
Approved by
City Council Resolution No. XX
[MONTH] 2024
Exhibit A
DRAFT Development Impact Fee Deferral Program Guidelines City of Grover Beach

PROGRAM OVERVIEW
The Impact Fee Deferral Program (“Program”) is designed to encourage the construction of qualifying residential development projects within the City of Grover Beach (the “City”) that further the City’s housing goals and strategies. The Program allows for the deferral of certain development impact fees that would otherwise be due and payable at the time of final occupancy for an approved development project for a period of seventeen (17) years with interest.

PROGRAM GUIDELINES
Review Authority
The City Manager has the authority to approve and execute any eligible fee deferral under this Program up to Five Hundred Thousand Dollars ($500,000); any fee deferral for an amount of more than $500,000 must be approved by the City Council. The Review Authority has the ability to approve and execute any eligible fee deferral under this Program.

Applicability
The approval of a fee deferral pursuant to this Program for any development project shall not be transferable to another project regardless of whether the applicant is the same for both projects and whether the other project is also an eligible project.

Eligible Projects
• Housing projects with 10 or fewer units
that provide at least (1) of the total units
to be sold or rented to lower or
moderate-income households.
• Housing projects with more than 10
units that provide at least 20 percent of
the total units to be sold or rented to
lower or moderate-income households.
• Housing projects that are built, owned
and managed by a government agency
or a nonprofit housing organization.
• Affordable housing, Transitional
housing, Supportive housing, Homeless
Shelters and Low-Barrier Navigation
Centers.

Eligible Impact Fees
• Transportation Improvements
• Law Enforcement Facilities
• Administrative Facilities
• Fire Protection Facilities
• Park Facilities
• Recreation Facilities
Non-Eligible Fees
• Water System Improvements
• Wastewater Facilities
• Storm Drain Facilities
• Permit review fees
• Pass-through fees (i.e. School district)
Application and Approval Process
An application for an Impact Fee Deferral shall be filed with the Community Development Department on a City application form, together with all required fees and all other information and materials specified in these Program Guidelines and/or checklists submittal requirements.

The application may be approved or denied at the sole discretion of the Review Authority. A fee deferral granted under this Program shall be acknowledged by a Deed of Trust and Promissory DRAFT Development Impact Fee Deferral Program Guidelines City of Grover Beach

Note, herein referred to as “Impact Fee Deferral Agreement”, to ensure the security for the repayment of deferred fees.

The following requirements must be satisfied prior to the execution of a fee deferral agreement:
1) Submittal to the City of a completed fee deferral application; and 2) Approval of the fee deferral application by the City Council; and 3) Provision of adequate security securing the repayment through the recordation of an Impact Fee Deferral Agreement; and
4) Payment of the administration or recordation costs of the associated loan agreements.

In no event shall final occupancy be issued for an approved eligible project until either of the following occurs:
a) Payment of all applicable impact fees due; or
b) Execution of an Impact Fee Deferral Agreement pursuant this Program.

Repayment Terms
The maximum fee deferral period for any approved development project is seventeen (17) years from the date of final occupancy certification, with no payments required during the deferral period. Prior to or at the end of the deferral period, the impact fees and associated interest must be repaid in full in a single payment.
 An annual simple fixed interest rate of three percent (3%) shall be paid in full at the end of the term. Interest shall accrue starting at the commencement of the deferral period for an approved development project.
 The impact fee deferral plus any accrued interest may be paid at any time prior to the end of the deferral period. An early payment in the full amount plus interest would remove any loan contingencies.
 The deferral period term may be extended for an additional term of 17 years upon submittal of a new application, subject to the approval of the City Council, as applicable. Time extensions for impact fee deferrals shall be recalculated at current rates applicable at the time of the requested extension submittal, and are, therefore, subject to any rate increases/decreases after the initial deferral period, plus interest.

Definitions
“Affordable Housing” shall have the same meaning as defined in the Health and Safety Code Section 50052.5.
“Applicant” means the owner or owners of record of the real property with an approved development project for which the deferral of certain development impact fees is sought pursuant to this Program.
“Approved development project” refers to a project that is subject to development impact fees and has received issuance of a building permit.
“Eligible project” means an approved development project under this Program for which the City has approved the deferral of certain development impact fees. “Homeless Shelters” and “Low-Barrier Navigation Centers” shall have the same meaning as defined in Government Code Section 65660 et seq.

DRAFT Development Impact Fee Deferral Program Guidelines City of Grover Beach

“Housing Project” shall have the same definition as the Housing Accountability Act, Government Code Section 65589.5(h)(2).
“Supportive Housing” shall have the same meaning as defined in Health and Safety Code Section 50675.2.
“Transitional Housing” shall have the same meaning as defined in Health and Safety Code Section 50675.14.

GENERAL CONDITIONS
The estimated time from completed application to a deferral decision, evidenced by a deferral agreement, will vary depending on the quality and completeness of the application, the responsiveness of the applicant, and the workload of City staff, among other factors.

All applications for deferral under the Program shall be considered on a case-by-case basis.

Approval is not guaranteed, and the City has complete and sole discretion to approve or deny any application for deferral, and to provide full or partial deferral, or none at all. All deferral decisions shall be documented by a written Impact Fee Deferral Agreement executed by the applicant and the City setting forth the terms and conditions of any deferral under the Program. Applicant shall have no rights in any funding, or otherwise under the Program, absent a fully executed Impact Fee Deferral Agreement.

Applicants shall comply with all laws with respect to the deferral of fees under the Program. The City makes no representation as to whether the applicant’s deferral of fees would subject applicant’s activities or project to the state prevailing wage laws, as set forth at Labor Code sections 1720, et seq. Applicants shall perform all work in compliance with all applicable laws including, without limitation, and as applicable, state prevailing wage laws pursuant to Labor Code sections 1720, et seq. In the event an applicant fails to comply with any applicable law, including, without limitation, prevailing wage laws, if applicable, the applicant shall be liable for the payment of all penalties, wages and/or damages resulting therefrom, and shall defend, indemnify, and hold the City harmless for any violations or alleged violations of law. These provisions will be included in any Impact Fee Deferral Agreement. Applicant is encouraged to seek legal advice through legal counsel of their choosing for further guidance.