CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
3/28/2022
1 SUBJECT:
Discussion Regarding Updates to the Park Development Impact Fee RECOMMENDED ACTION:
Receive Report Regarding Park Development Facilities Impact Fee and the Quimby Act Parkland Dedication Requirements and In Lieu Fees within the City of Pacifica and Provide Direction to Staff Regarding Potential Fee Reductions for Affordable Housing Units and Accessory Dwelling Units (ADU).
STAFF CONTACT:
Sam Bautista, P.E., Deputy Director of Public Works
[email protected]
(650) 738-3767
Tina Wehrmeister, Assistant City Manager/Planning Director [email protected]
(650) 738-7409
Lisa Petersen, P.E., Director of Public Works
[email protected]
(650) 738-3767
BACKGROUND:
On February 14, 2022, staff brought this item to the City Council for consideration. The City Council asked staff to return with general clarification regarding the proposed fees including a discussion regarding applicability to affordable housing developments. Staff is requesting direction from the Council and will place this item on the April 25th agenda for action.
The City of Pacifica has a park impact fee program to ensure that new development pays the capital costs associated with growth. In the case of parks, these impact fees would apply to the most common development type in Pacifica currently - incremental growth associated with additions and new single-family homes. The proposed fee update would also apply to other types of new development including multi-family housing and subdivisions.
Pacifica’s park impact fees were last adopted in 2012 and need to be updated to reflect service demand and incorporate best available information. Currently, park impact fees generate an average of $150,352 per year which is not sufficient to maintain the City’s existing level of service for park facilities and serve future growth.
In California, local governments can impose two types of development impact fees for funding parks and recreational facilities. Under the Quimby Act (Government Code § 66477), local governments may require the dedication of land for parks or the payment of fees in-lieu of land dedication as a condition of subdivision map approval. To fund the construction of new park and recreational facilities, local governments may also impose AB1600 Park Impact Fees by Pacifica City Council 2
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following the guidelines set forth by the Mitigation Fee Act (Government Code § 66000). On March 26, 2012, City Council adopted Resolution No. 09-2012 establishing the need for both types of fees: a Parkland Dedication In-Lieu Fee (Quimby Act) and a Park Facilities Impact Fee, within the City of Pacifica (Attachment “A”) (collectively the “Park Fees Program”). The City prepared a Park Facilities Impact Fee Study to establish the nexus between the imposition of new Citywide Park Impact Fees and the estimated reasonable cost of providing the service for which the fee is charged. The Park Fees Program is designed to ensure that new development pays their fair of the cost of land acquisition for parks (in order to maintain the City’s existing ratio of parks-to-population) and their fair share of the cost of development of new parks, trails, and open space.
Quimby Act Fee
Local governments in California provide a critical role in the effort to set aside parkland and open space for recreational purposes. Cities and counties have been authorized since the passage of the 1975 Quimby Act to pass ordinances requiring that developers set aside land, donate conservation easements, or pay fees for park improvements. Revenues generated through the Quimby Act cannot be used for the operation and maintenance of park facilities.
The goal of the Quimby Act was to require developers to help mitigate the impacts of growth from new development. The Quimby Act gives authority for passage of land dedication ordinances only to cities and counties. The Quimby Act only applies to residential subdivision developments. The fees must be paid and land conveyed directly to the local public agencies that provide park and recreation services community-wide. The fee is based on the cost of land in the community and the City’s current park service standards, which exceeds five (5) park acres per one thousand (1,000) residents standard.
Park Impact Fee
An impact fee is a fee that is imposed by a local government on a new or proposed development project to pay for all or a portion of the costs of providing public services to the new development. Impact fees are a charge on new development to help fund and pay for the construction or needed expansion of offsite capital improvements. Projects subject to this fee include new single-family homes and additions, two of the most common development types in Pacifica. A park impact fee is based on maintaining the current level of park service for a community, cost of land, and anticipated population growth.
DISCUSSION:
In order to maintain the City’s existing ratio of parks-to-population, development impact fees are needed to fund new development’s share of the cost of park and recreational facilities. The fees are driven by the cost of parks and the existing ratio of park acreage to population. The goal of this effort is to ensure there is adequate funding to acquire land, build new parks, and improve existing parks to meet the demand of the increased population.
Currently, the City imposes the Quimby Act Fee and Mitigation Fee Act Fees depending on the type of development. The Quimby Act Fee in-lieu of land dedication is a fee, which is payable by residential development occurring in subdivisions. The Mitigation Fee Act Fee has two components:
· A Mitigation Fee Act Fee for land acquisition. This fee is payable by residential development not occurring in subdivisions.
· A Mitigation Fee Act Fee for parkland improvements. This fee is payable by all residential development.
A development project pays either the Quimby Act Fee in-lieu of land dedication, or the Mitigation Fee Act Fee for land acquisition, not both. The Quimby and Mitigation Fee Act land- Pacifica City Council 3
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related fees are the exact same amount, and all residential development pays the Mitigation Fee Act improvements fee, therefore, the total fee is the same for everyone. The nuance is that those subject to Quimby can dedicate the land instead of paying the fee, in which case, they would still be responsible for the Mitigation Fee Act improvement fee.
These fees are a funding source for park improvements in Pacifica. Recently, the fees have been used to fund a portion of the construction of Community Center Park and Fairmont Park improvements, in which the footprint of the play structures were increased in both parks. It is anticipated that a portion of funding used to install new expanded play structures at Imperial Park, Skyridge Park, Marvilla Park and Brighton Park will be provided by these fees. Without these fees, there would be no continuing money source for new or major improvements to Pacifica’s parks, athletic fields, and open space.
The City plans to use park facilities fee revenues to purchase parkland or construct improvements to add to the system of park and recreation facilities that serves new development. The City may only use impact fee revenue to provide facilities and intensify usage of existing facilities needed to serve new development. Fee revenue collected under the Quimby Act can also be used to rehabilitate park facilities, in addition to acquiring new parkland. Also, as an example, these fees could be used for the construction of new trails to expand the trails system; however, if the new trails are located on non-City-owned parcels, the City must obtain public access easements for the use and maintenance of these trails.
It is good practice to analyze and periodically update impact fees, and with the enactment of AB 602, impact fees now must be updated at least every eight years. To that end, the City contracted with Willdan Financial Services to assist with the update (Attachment “B”). These fees are calculated based on cost of parkland (per acre) and cost of park improvement (per acre). In 2012, the costs of parkland and park improvements were $150,000 (per acre) and $411,000 (per acre), respectively. In December 2021, the costs of parkland and park improvements were $1,545,000 (per acre) and $1,350,000 (per acre), respectively. These increased costs result in higher calculated fees. Based on the total costs of facilities needed to serve new development from the impact fee update study, the total projected fee revenue is $31,584,450 (from 2021 to 2040). The following table shows the current, updated Park Facilities Impact, and remodel/add bedroom fees:
Bedrooms Current Park Facilities
Impact Fee
Updated Park Facilities
Impact Fee
Remodel/Add
Bedroom
0 $0 $20,522
1 $3,702 $24,066 $3,544
2 $5,181 $36,764 $12,698
3 $6,416 $44,589 $7,825
4 $7,897 $50,938 $6,349
5 $9,130 $58,910 $7,972
Additional
Bedroom
+$1,481 +$7,972 $7,972
Bedroom Calculation and Fee Schedule
All fees are calculated based on the average number of people living in a dwelling unit in Pacifica. Occupant density assumptions ensure a reasonable relationship between the size of a development project, the increase in service population associated with the project, and the amount of the fee. Persons per bedroom assumptions ensure a reasonable relationship between the size of a dwelling unit and the residents, and therefore demand for public facilities.
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For residential development, the fee is based on the number of bedrooms in each additional housing unit, so the fee schedule must convert service population estimates to these measures of bedrooms per dwelling unit and number of dwelling units in the project. The conversion is done with average household size factors that vary by bedrooms proposed in the dwelling unit and are established from the 2019 American Housing Survey, which estimates the persons per bedroom. The occupant densities are factors taken into consideration when calculating the fees.
To calculate fees, the investment in park facilities is determined on a per resident basis for both land acquisition and improvements. These cost factors are based on the unit cost estimates and facility standards. The fees scale with the increases in average residents per dwelling unit, by number of bedrooms. The more people that live in a particular sized dwelling unit on average, the higher the fees. The incremental fee per bedroom is the difference between the fee for a particular number of bedrooms and the fee for a unit with one fewer bedroom. The increases in average persons per dwelling unit by number of bedrooms are not linear, so the incremental fee per bedroom is not uniform as the number of bedrooms increases.
The City anticipates that the park fees would be the primary revenue source to fund new development’s investment in park facilities. “Table 9” from the final report shows the maximum justified park facilities fee based on a five acre per 1,000 resident standard. Fees can also be charged incrementally for the addition of net new bedrooms. For example, if a homeowner wants to add a bedroom to their existing three-bedroom home, the homeowner would pay $6,349.
The total fee includes an administrative charge to fund costs that include: (1) legal, accounting, and other administrative support and (2) impact fee program administrative costs including revenue collection, revenue and cost accounting, mandated public reporting, and fee justification analyses. The table below shows the updated, proposed Park Facilities Impact Fee.
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As a comparison, the following tables shows Park Impact Fees of cities on the Peninsula (based on a four-bedroom single family unit), along with their corresponding standard level of service:
City Park Impact Fee Level of Park Service
(Acre)
Pacifica (existing) $5,887 5.00
Pacifica (max. justified) $50,938 5.00
Belmont $54,160 3.44
Half Moon Bay $7,764 5.00
Millbrae $55,522 2.65
Palo Alto $62,584 5.00
San Mateo $29,598 2.00
South San Francisco $29,124 3.00
Sunnyvale $87,120 5.00
Fee Reductions for Affordable Housing Units and Accessory Dwelling Units (ADU) Many cites have reduced fees for affordable housing. For example, the City of Fremont and the City of San Jose (among others) charge park impact fees for deed-restricted affordable housing at 50% of the max justified rate. Palo Alto exempts all impact fees for 100% affordable housing.
Many cities also exempt the inclusionary units in a project from the impact fees, but still charge fees to the market rate units. An analysis was performed to determine how affordable housing fee reductions/exemptions would affect the projected fee revenue. Based on historical data from 2015 to 2020, approximately 6.25% of the new dwelling units were moderate or below market rate units. The following table shows the calculated loss of fee revenue from 25% fee reduction to 100% fee exemption for Moderate and Below Market Rate Units.
A 100% fee exemption would result in a loss of approximately $2 million of park impact fees, while 75%, 50%, and 25% fee reductions would result in park impact fee loss of approximately $1.5 million, $1 million, and $500,000, respectively (from 2021 to 2040). It is in the City Pacifica City Council 6
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Council’s discretion to decide whether to implement fee reductions/exemptions for affordable housing units. However, by not collecting sufficient fees, the City may require commitment of other non-fee revenue to undertake future park projects, otherwise, future park projects could be deferred or delayed due to reduced fee revenue.
The data provided for the fee reduction analysis did not include ADUs, so the analysis did not take ADUs into account. In addition, the fees would be different for each ADU relative to the size of the primary unit, so there is no way to estimate the impact it would have on anticipated fee revenues. The California State Legislature recently amended requirements on local agencies for the imposition of development impact fees on accessory dwelling units (ADU) with Assembly Bill AB 68 in 2021. The amendment to California Government Code §65852.2(f)(2) stipulates that local agencies may not impose any impact fees on ADUs less than 750 square feet. ADUs greater than 750 square feet can be charged impact fees in proportion to the size of the primary dwelling unit. Thus, State law already exempts ADUs under 750 sf from paying impact fees.
Anecdotally, a reasonable assumption is that the smaller ADUs under 750 sf will be “naturally affordable.” The Council may wish to consider requiring ADUs larger than 750 sf to pay the proportional impact fee. If the Council decides to reduce impact fees for affordable units, that fee reduction could be available to ADUs larger than 750 sf if they are restricted units.
Staff is seeking direction from Council on whether the Park Development Facilities Impact Fee and the Quimby Act Parkland Dedication Requirements and In Lieu Fees should include reductions for affordable housing units and/or ADUs. Depending on the direction from the Council, staff will finalize the resolution and ordinance adopting the Park Development Facilities Impact Fee and the Quimby Act Parkland Dedication Requirements and In Lieu Fees for Council’s consideration at the regular meeting on April 25, 2022.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
The updated park in-lieu fee is consistent with the following Council adopted Goal:
· Stewardship of City Infrastructure: The updated park in-lieu fee would assist the City in acquiring parkland and/or fund the design and construction of public park improvements that would promote a healthy environment and activities for residents and visitors.
FISCAL IMPACT:
Park in-lieu fees assist the City in providing adequate park facilities necessitated by new development. Staff’s evaluation does not result in a budgetary impact.
ORIGINATED BY:
Engineering
ATTACHMENT LIST:
Attachment "A" - Resolution No. 09-2012 Establishing Parkland Dedication In-Lieu Fee (PDF) Attachment "B" - Pacifica Park Development Impact Fee Update (PDF)