A-32
ADMINISTRATIVE POLICIES AND PROCEDURES
SUBJECT: PUBLIC FACILITIES IMPACT FEES AND
ADMINISTRATIVE POLICY
EFFECTIVE: March 26 December 19, 2022 (Replaces policy dated October 18,2021March 26, 2022)
PURPOSE:
The purpose of this Administrative Policy is to establish a procedure for the Public Facilities Financing Plan and Fee Program.
POLICY:
The City Manager was granted authority by the Merced City Council on July 21, 2003 to establish this policy and procedure. This Policy supersedes and replaces the previous Policy with an effective date of October 18, 2021 March 26, 2022.
PROCEDURES:
PAYMENT OF PUBLIC FACILITIES FEES
Public facilities fees shall be charged and paid at the time of issuance of the certificate of occupancy, except for non residential which shall be paid at time of building permit issuance. The fee shall be determined by the fee schedule in effect on the date of building permit issuance. If a Mello-Roos, assessment district, or other arrangement of such a nature has been made, only the portion of the fee not covered by the district shall be assessed. If a specific use is not addressed in the fee schedule or definitions contained in this document, the fee will be determined by the Development Services Department as described in Merced Municipal Code Section 17.62.100.
Fees not paid at building permit issuancecertificate of occupancy shall require an agreement as specified in Government Code Section 66007, Subsection (C). Should any interpretation or disagreement arise which is not addressed by this administrative policy, the City Manager or his designee shall have the authority to render a decision. The City Manager or designee has authority to authorize credits and reimbursements be paid to developers as outlined in this policy. Such decisions shall be in writing.
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1 DEFINITIONS
1. Retail Commercial
"Retail Commercial" includes a wide range of retail and service uses, both freestanding and in shopping centers including, but not limited to, supermarkets, drugstores, department stores, general merchandise, specialty retail stores, discount stores, hardware/paint stores, garden centers or nurseries, wholesale markets, apparel stores, furniture stores, video arcades and car sales. This category includes banks/savings and loans, restaurants of all types, and auto-oriented uses.
Industrial
Facilities in which the primary activity is the production of finished items through manufacture, fabrication, processing, packaging, or treatment of raw materials or parts, except heavy industrial uses. Uses, which are considered to be in this category, include uses such as those listed below:
A)E Electronics assembly, paper products
B) Metal fabricator
C) Bottling plant
D) Cabinet shop
E) Machine shop
F) Sheet metal shop
G) Welding shop
H) Wholesale business
I) Printing plant
J) Material testing labs manufacturer
K) Warehouse
L) Corporation yard, freight yard
M) Equipment rental yard
N) Moving and storage service
O) Bulk feed storage
P) Lumber yard
Q) Cannery/Food Processing
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X: \Procedures|2022 Policy Updates\A-32 PFFP - Amended 3.21.22Proposed Amendments 11-14-22 2 Mixed Uses
When a development proposal contains more than an incidental mixture of uses, the general types of uses should be segregated and treated separately for the purpose of calculating development fees.
Office
Includes professional offices, business parks, business or administrative offices, insurance sales, research centers, and medical or dental services, and other health-related services (excluding hospitals).
Residential Single Family
Typically single family detached homes on individual lots, such as in residential subdivisions, but could also be in planned developments. Density of development may vary, but is typically six dwellings per acre or less.
6. Public Facilities Impact Fee, But Not Including Sewer and Water Charges The term "Public Facilities Impact Fee" shall mean the fee charged new construction, including, in some cases, the expansion of and/or the addition to an existing structure to mitigate an unfunded portion of the determined impact of the development. For the purpose of this policy, Public Facilities Impact Fees shall not include sewer and water charges as defined in Chapter 15 of the Merced Municipal Code.
Residential Multiple Family
Includes two- and multiple-family dwelling units of several types, including high and low rise apartments, high and low rise condominiums, and multi- family residential planned unit developments. This category also applies to mobile homes in mobile home parks.
8. Institutional
Includes nonprofit or quasi-public uses, such as a religious institution, library, public or private school or college, nonprofit cultural or community centers, hospitals, residential care facilities, charitable organizations, or government-owned or government-operated structures used for public purposes. Note that federal, state, and county, and City owned facilities are exempt from the City's impact fees. Fees for these uses will be determined on a case-by-case basis by the Director of ATTACHMENT 1—Page 3
X: \Procedures|2022 Policy Updates\A-32 PFFP - Amended 3.21.22Proposed Amendments 11-14-22 3 Development Services based on his/her determination of the similar nature of the use to one of the other land use categories.
9. Lodging
Includes hotels, motels, and other commercial operations which provide lodging tor a tee, with or without cooking facilities, in individual rooms or suites. Includes extended stay hotels/motels, but does not include residential care facilities.
EXEMPTIONS
Fees shall not be imposed on any of the following:
1. Any alteration or addition to a residential structure except to the extent that additional units or guestrooms are created.
2. Any alteration or addition to a non-residential structure if the square footage of the structure is increased less than 10 percent, unless the alteration or addition changes the use of the structure to a higher intensity category, or results in the generation of additional peak hour trips (PHT).
3. Any replacement or reconstruction of an existing residential structure that has become destroyed or demolished, provided that the building permit for reconstruction is obtained within fifteen (15) years after the building was demolished, except to the extent that additional units or guest rooms are created.
4. Any replacement or reconstruction of an existing non-residential structure that has been destroyed or demolished, provided that the building permit for reconstruction is obtained within fifteen (15) years after the building was demolished, unless the replacement or reconstruction increases the square footage of the structure 10 percent or more or changes the use of the structure to a higher intensity category or results in the generation of additional peak hour trips (PHT). Whenever the alteration, addition, replacement, or reconstruction is not exempt, the fee shall be imposed only on the additional units of guest rooms, square footage, change in use to a higher intensity category, or additional peak hour trips (PHT) generated.
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X: \Procedures|2022 Policy Updates\A-32 PFFP —Amended 3.21.22Proposed Amendments 11-14-22 4 REDUCED SPECIAL FEES
Fees shall be reduced for the followingfor the following land uses shall be:
1. ACCESSORY DWELLING UNITS (ADUs): Per MMC
20.42.040(D)(3), A new accessory dwelling unit shall be required to pay all applicable fees, including impact fees. However, no impact fees shall be imposed on ADUs of less than 750 square feet. For an ADU larger than 750 square feet, any impact fee shall be charged proportionately in relation to the square footage of the single-family dwelling on the property.
2. INFILL DEVELOPMENT AND OPPORTUNITY ZONES:
Within the central area of the City and the Opportunity Zones, generally bounded on the north by Bear Creek, on the south by Childs Avenue, on the east by Glen Avenue, and on the west by West Avenue and Highway 99 within the area below (see map below), impact fees shall be reduced by 50 to 75 percent of the standard fee based on their reduced impact on public facilities.
WRASCAL CREEK BIKE P
TW.28TH ST-
KUR® T ESANTA FE AVE
EMAIN STI E/T
E CHILDS AVE E/CHILDS AVE
CONE AVE
BE E CAMPUS PKWY
W DICKENSON FERRY RD
Infill Development and Opportunity Zones
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X: \Procedures|2022 Policy Updates\A-32 PFFP - Amended 3.21.22Proposed Amendments 11-14-22 5 3. AFFORDABLE HOUSING: Fees for affordable housing projects shall be determined on a case-by-case basis depending on the level of affordability, number of affordable units, etc. The
determination shall be made by the Director of Development Services but can be appealed to the City Council per the provisions of MMC 17.62.050.
4. SINGLE-FAMILY HOMES SMALLER THAN THE AVERAGE
HOME SIZE IN MERCED: The average single-family home size in Merced based on building permits issued in 2021 was 1,920 square feet. For homes that are at least 10 to 20 percent below that average size, a reduced fee shall be charged proportional to the percent below the average single-family home size.
DEFERRED PAYMENT
If the total amount of public facilities fees due and payable at the time of issuance of a building permitcertificate of occupancy for a non-residential or multi- family project exceeds $50,000, the property owner may enter into a Deferred Payment Agreement with the City to pay twenty-five percent (25%) of those fees at the time the building permitcertificate of occupancy is issued with the remaining seventy-five percent (75%) to be paid in equal installments over the next five (5) years (or less at the developer's option).
REPAYMENT TERMS
1) INTEREST: The unpaid balance of the fees shall be subject to interest and collection charges. The annual interest rate will be equal to the 11th District Cost of Funds plus two percent (2%) [200 basis points] adjusted every July.
DUE ON TRANSFER: The unpaid balance, together with accrued interest, shall be due and payable in full upon the sale or any other transfer of the property.
3) RECORDING AND PROCESSING FEES: All such fees shall be paid by the owner or applicant.
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X: \Procedures|2022 Policy Updates\A-32 PFFP — Amended 3.21.22Proposed Amendments 11-14-22 6 SECURITY
The developer shall, as security for repayment, execute a promissory note or bond evidencing the obligation and terms of repayment. In addition to the promissory note or bond, the developer may be required, at the discretion of the City, to provide additional security of a type and amount determined by the City.
PROCESSING DEFERRED FEE REQUESTS
A developer who requests the deferral of public facilities fees shall make application to the Development Services Department, for review, processing, and determination of eligibility. Such requests shall have a processing fee of Eight Hundred Seventy-One Dollars ($871.00) in 2022, adjusted each January 1, per the Consumer Price Index (CPI).
CREDIT OR REIMBURSEMENT
If the developer constructs improvements that are part of the public facility fee program and required by the City, the following shall apply:
1. If the actual cost of the improvement is equal to or less than the total amount of fees to be paid, the developer will receive a credit in an amount equal to the actual cost of the improvements (but in no event in excess of the City Engineer's estimate). No credit shall be given until and unless the improvement is constructed and accepted by City or until developer provides security for the improvement in the same manner as security for subdivision improvements.
2. If the actual cost of the improvements is greater than the total amount of fees to be paid, a reimbursement agreement with the City shall be established. No eredit-reimbursement shall be given until and unless the improvement is constructed and accepted by City_ or until developer provides security for the improvement in the same manner as security for subdivision improvements.
3. Developers shall be reimbursed on a first in time basis and based on the availability of public facility fee program funds. First in time shall be determined by when the public improvement is secured or by when the public improvement is completed and accepted by City., whichever first occurs.
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X: \Procedures|2022 Policy Updates\A-32 PFFP —Amended 3.21.22Proposed Amendments 11-14-22 7 4. Of the fees collected for projects, one-half shall be dedicated to repayment for developer installed improvements and one-half shall be earmarked for improvements to be installed by the City. In its discretion, the City may use any or all of the fees to reimburse developers.
5. City shall be under no obligation to reimburse developers except from the one-half of the fees collected, and no reimbursement shall be owed until fees for said purpose have been collected and until the installing developer has filed a written request for reimbursement with the City Clerk. In no event shall reimbursement be made to the installing developer after the tenth anniversary of the date the public improvement was accepted by the City.
6. Reimbursements, if any, shall not bear interest.
1. Unused Park and Recreation Facilities Fee credits granted per the now repealed Merced Municipal Code Section 17.38 can be applied toward the Public Facilities Impact Fees.
7.8. To be eligible for credit or reimbursement, all public improvements that are part of the public facility fee program shall be paid at prevailing wages. That includes any portion of the public improvement which is not eligible for reimbursement (i.e. curb, gutter, sidewalk, landscaping, etc.)
RIGHT-OF-WAY DEDICATION AND REIMBURSEMENT
Unless provided otherwise by development agreement, by use permit, condition of approval, mitigation measure, or by city standards, the developer will be eligible for credit/reimbursement for the cost of any additional right-of-way required for street improvements in excess of the first 37 feet (or other collector standard) required for a one-half street section measured from the ultimate right-of- way line. In calculating the value of the right-of-way, the value will be determined by the City Engineer. If the developer objects to the determined fair market value, he/she may appeal to the City Council. The burden of proof shall lie with the developer. Any right-of-way required to accommodate access to a given parcel such as "deceleration lanes" will be dedicated at the developer's expense and is not subject to credit/reimbursement.
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X:\Procedures|2022 Policy Updates\A-32 PFFP —Amended 3.21.22Proposed Amendments 11-14-22
STREET CONSTRUCTION PAVING REIMBURSEMENT
The first 24 feet of paving adjacent to the curb line plus all paving required to accommodate deceleration lanes and driveways are a developer responsibility and are not subject to credit/reimbursement. The developer will be eligible for credit/reimbursement for the remainder of the street section outside of the first 24 feet of paving on either side of the street.
TRAFIC SIGNAL REIMBURSEMENT
Unless provided otherwise by development agreement or by use permit, the developer will be eligible for 100 percent credit/reimbursement for installation of traffic signals at the intersection of two arterial streets, and for 50 percent reimbursement at an intersection of an arterial and collector street.
ARTERIAL BRIDGE REIMBURSEMENT
Unless provided otherwise by development agreement or by use permit, the developer will be eligible for 100 percent credit/reimbursement for construction of arterial bridges.
APPROVED:
Stephanie R. Dietz
City Manager
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X: \Procedures\2022 Policy Updates\A-32 PFFP - Amended 3.21.22Proposed Amendments 11-14-22 9