CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
1/13/2025
1 SUBJECT:
Annual and Five-Year Impact Fee Report 2023-2024 Mitigation Fee Act Development Fee Review
RECOMMENDED ACTION:
Adopt a resolution entitled "A Resolution of the City Council of the City of Pacifica Approving 2023-2024 Annual and Five-Year Impact Fee Report for the Fiscal Year Ending June 30, 2024.”
STAFF CONTACT:
John Mullins, Interim Public Works Director
(650) 501-6523
[email protected]
BACKGROUND/DISCUSSION:
The City of Pacifica, like many other local agencies, levies fees on new development within the City in order to fund public capital improvements necessitated by such development (Development Fees). In 1987 the State enacted Assembly Bill No. 1600, adding Section 66000 et seq. to the Government Code, commonly known as AB 1600 or the Mitigation Fee Act. The Mitigation Fee Act imposes certain accounting and reporting requirements on local agencies that collect Development Fees. The proposed action before the City Council is designed to ensure that the City complies with the accounting and reporting requirements of the Mitigation Fee Act.
1. A local jurisdiction must follow the process to make certain determinations regarding the purpose and use of the fees and to establish a “nexus” or connection between a development project and the public improvement being financed with the fee.
2. The fee revenue must be segregated from the general fund in order to avoid commingling of public improvement fees and the general fund.
3. If a local jurisdiction has had possession of a development fee for five years or more and has not committed that money to a project or actually spent that money, then it must make findings describing the continuing need for that money each fiscal year after the five years has expired.
4. If a local jurisdiction cannot make the findings required under paragraph 3, then the City must go through a refund procedure.
The City of Pacifica’s Municipal Code authorizes collection of the following Development Fees covered by the Mitigation Fee Act:
1. Traffic Impact Mitigation Improvement Fees for Highway One Improvements (Chapter 15,Title 8) - Fund 12
Fees are imposed on private development projects pursuant to Pacifica Municipal Code (Traffic Impact Mitigation Improvement Fund for Highway One Improvements, Chapter Pacifica City Council 2
January 13, 2025
15, Title 8, as added by Ordinance No. 318-C.S.). The purpose of the Highway 1 impact mitigation fee is to defray the actual or estimated costs of constructing improvements to Highway One in the City from Westport Drive south to the southern City limits, which improvements will be required to accommodate the increased traffic flow in the area resulting from future development in the City. There is a reasonable relationship between the amount of the fee and the purpose for which it is charged because the fee represents the City’s proportionate costs of constructing traffic and street improvements to serve new development and the fee revenues will be used for the purpose of constructing traffic and street projects that will serve new development.
The fee amount collected is based on the traffic generated by the respective development, measured by the square footage of the new development, and the new development’s proportionate cost to construct the improvements required to serve the traffic generated by the new development. In addition, the traffic impact mitigation fee is imposed in two impacting areas. The primary impacting area is that area lying south of Sharp Park Road. The secondary impact area is that area lying north of Sharp Park Road. The fee is imposed on new residential, commercial, and retail development.
2. Street Improvement Fee, (Section 214, Article 2, Chapter 2, Title 7 and Chapter 21, Title 8) - Fund 13
The City of Pacifica is responsible for maintaining over 90 centerline miles of street pavement. The City’s Street maintenance program has been chronically underfunded and as a result the City currently has one of the lowest pavement condition index (PCI) score in the bay area cities and faces a growing deficit in needed pavement maintenance and rehabilitation funding.
Utility Pavement Cut Recovery Fee (PMC Section 7-2.214). The Utility Pavement Cut Recovery Fee is imposed on private development projects pursuant to Pacifica Municipal Code (Utility Pavement Cut Recovery Fee, Section 214, Article 2, Chapter 2, Title 7). Excavations in paved streets owned and maintained by the City degrade and shorten the life of the surface of the streets, and this degradation increases the frequency and cost to the public of necessary resurfacing, maintenance, and repair.
These excavations cause degradation of the streets even where the excavations are refilled and repaired in conformity with applicable standards and requirements. It is appropriate that entities responsible for excavating into the City right-of-way bear the burden of the resulting cost of this degradation and shortened life of the surface rather than the taxpayers of the City. In addition, establishment of a Utility Pavement Cut Recovery Fee will create an incentive for utilities to coordinate excavations in the streets.
The purpose of this Utility Pavement Cut Recovery impact fee is to defray the actual or estimated cost of restoration and maintenance of City pavement related to the increased use and degradation of paved streets owned by the City resulting from pavement excavations for new development in the City. There is a reasonable relationship between the amount of the fee and the purpose for which it is charged because the fee represents the City’s proportionate costs of constructing traffic and street projects to serve new development and the fee revenues will be used for the purpose of constructing traffic and street projects that will serve new development.
The fee amount collected is based on the "Council-Approved Rate" contained in the most recently adopted Impact Fee Schedule. The fee is imposed on residential/commercial/retail development.
Construction Vehicle Impact Fee (PMC Title 8, Chapter 21). The Construction Vehicle Impact Fee is imposed on private development projects pursuant to Pacifica Municipal Pacifica City Council 3
January 13, 2025
Code (Construction Vehicle Impact Fee, Chapter 21, Title 8). The purpose of the Construction Vehicle Impact fee is to defray the actual or estimated cost of restoring City streets to accommodate the increased use and deterioration resulting from heavy construction vehicles associated with future development in the City. There is a reasonable relationship between the amount of the fee and the purpose for which it is charged because the fee represents the City’s proportionate costs of constructing traffic and street projects to serve new development and the fee revenues will be used for the purpose of constructing traffic and street projects that will serve new development.
The fee amount collected is based on the deterioration of City streets caused by new development’s construction vehicles, measured by the square footage added by the new development, and the new development’s proportionate cost to restore the damaged City streets. The fee is imposed on all developments in the City that require a building permit and add new residential or nonresidential building square footage.
3. Manor Drive Improvement Fund Traffic Impact Mitigation Fees for the Improvement of the Manor Drive/Palmetto Avenue/Oceana Boulevard Intersection (Chapter 18, Title 8) - Fund 14
The Manor Drive/Palmetto Avenue/Oceana Boulevard Intersections Improvement Fees are imposed on private development projects pursuant to Pacifica Municipal Code (Traffic Impact Mitigation Fees for the Improvement of the Subject Intersection, Chapter 18, Title 8, as added by Ordinance No. 422-C.S.). The purpose of establishing traffic impact mitigation fees is to defray the actual costs of constructing improvements to the Manor Drive/Palmetto Avenue/Oceana Boulevard intersection, which improvements will be required to accommodate the increased traffic flow in the area resulting from future building activity in the City. There is a reasonable relationship between the amount of the fee and the purpose for which it is charged because the fee represents the City’s proportionate costs of constructing traffic and street improvements to serve new development and the fee revenues will be used for the purpose of constructing traffic and street projects that will serve new development.
The fee amount collected is based on the traffic generated by the respective development uses and the estimated cost to construct the required improvements. The traffic impact mitigation fee is imposed on the areas lying north of Paloma Avenue within the Pacifica City limits. The fee is imposed on new residential, commercial, and retail development.
4. Planned Local Drainage Fund Planned Drainage Facilities Fees (Article 1, Chapter 4, Title 7) - Fund 19
The Planned Drainage Facilities Fee is imposed on private development projects pursuant to Pacifica Municipal Code (Article 1, Chapter 4, Title 7, as added by Ordinance No. 333-C.S.). The purpose of the Local Drainage impact mitigation fee is to defray the actual or estimated cost of constructing planned drainage facilities for the removal of surface and storm drainage waters to accommodate the increased drainage needs resulting from future development in the City. There is a reasonable relationship between the amount of the fee and the purpose for which it is charged because the fee represents the City’s proportionate costs of constructing planned drainage facilities to serve new development and the fee revenues will be used for the purpose of constructing planned drainage facilities that will serve new development.
The fee amount collected is based on the required storm water drainage improvements generated by the respective development, measured by the location and acreage of the Pacifica City Council 4
January 13, 2025
new development, and the new development’s proportionate cost to construct the improvements required to serve the increased use generated by the new development.
The fee is imposed on new residential, commercial, and retail development.
5. Capital Projects Fees (Article 2, Chapter 4, Title 7) - Fund 22.
The Capital Improvements Fees are imposed on private development projects pursuant to Pacifica Municipal Code (Capital Projects Fund, Article 2, Chapter 4, Title 7, as added by Ordinance No. 7-C.S.). The purpose of the General Capital Improvement impact mitigation fee is to defray the actual or estimated cost of constructing new public safety facilities to accommodate the increased service needs resulting from future development in the City. The fee is used to develop capital programs and to provide for the capital outlays necessary to provide added services and facilities as a result of such new construction, and to safeguard life, limb, and the public health and safety. There is a reasonable relationship between the amount of the fee and the purpose for which it is charged because the fee represents the City’s proportionate costs of constructing new public safety facilities to serve new development and the fee revenues will be used for the purpose of constructing new public safety facilities that will serve new development.
The fee amount collected is based on the estimated cost to construct the required capital improvements for new residential, commercial, and retail development, measured by the number of bedrooms or hotel or motel units or the permit valuation of the new development, and the new development’s proportionate costs to construct the improvements required to serve the increased use generated by the new development. It is to be used for the acquisition, construction, and improvement of major capital facilities of the City.
6. Housing In-Lieu Fee (Resolution No. 24-2007) - Fund 24 For any residential development that is not located within the redevelopment project area, the developer may propose to pay the City an amount of money in lieu of providing a Below Market Rate (BMR) unit. The purpose of the Housing In-Lieu fee is to provide funding assistance for the provision of affordable housing in-lieu of the BMR unit required for new development in the City. There is a reasonable relationship between the amount of the fee and the purpose for which it is charged because the fee represents the City’s proportionate costs of providing funding assistance for affordable housing to serve new development and the fee revenues will be used for the purpose of providing funding assistance for affordable housing that will serve new development.
The in-lieu fee amount collected shall be based on the estimated cost to provide the BMR unit and shall be set forth in a resolution adopted by the City Council. In-lieu payments shall be paid prior to occupancy of the first market rate unit to be developed within the residential development.
7. In-Lieu Parking Facilities Fee (Resolution No. 17-86, amended April 27, 2020 by Resolution 23-2020) - Fund 25
The In-Lieu Parking Facilities Fee is imposed on private development projects in Rockaway Beach and Sharp Park areas. The purpose of the Rockaway Beach and Sharp Park In-Lieu Parking Fee is to provide additional public parking at West Rockaway Beach and West Sharp Park consistent with the goals of the Rockaway Beach and Sharp Park Specific Plan to encourage shared parking facilities and accommodate the increased demand for parking resulting from future development in Pacifica City Council 5
January 13, 2025
the Rockaway Beach and Sharp Park areas. There is a reasonable relationship between the amount of the fee and the purpose for which it is charged because the fee represents the City’s proportionate costs of constructing additional public parking to serve new development and the fee revenues will be used for the purpose of constructing additional public parking that will serve new development.
The fee amount collected is based on the fee update study adopted by City Council Resolution No. 23-2020 on April 27, 2020, and the approximate cost of constructing a parking space in an above grade parking structure.
8. Dedications and Fees for Park and Recreational Purposes (Chapter 19, Title 8) - Fund 26 The Park Facilities Impact Fee is imposed on private residential development projects pursuant to Pacifica Municipal Code (Park Facility Impact Fee Chapter 19, Title 8). The purpose of the Parks Facilities impact fee is to defray the actual or estimated cost of constructing additional parks, recreational facilities, and open spaces to accommodate the increased needs resulting from future development in the City. There is a reasonable relationship between the amount of the fee and the purpose for which it is charged because the fee represents the City’s proportionate costs of constructing additional parks, recreational facilities, and open spaces to serve new development and the fee revenues will be used for the purpose of constructing additional parks, recreational facilities, and open spaces that will serve new development.
The fee amount collected is based on the increase in use of parks, recreational facilities, and open spaces generated by the respective development, measured by the number of residents due to residential construction, and the new development’s proportionate cost to construct the required recreational facilities and purchase the needed land and open space.
9. Tree In-Lieu Fee (Section 4-12-23, Chapter 12, Title 4) - Fund 29 The City established the Tree Fund for the preservation of protected trees on public and private property and to promote the health, safety, and general welfare of the citizens of the City, while recognizing individual rights to develop, maintain, and enjoy private property. (Establishment of Tree Fund, Section 4-12-23, Chapter 12, Title 4). The Tree In-Lieu fee is an agreed upon restoration payment. The purpose of the Tree In-lieu fee is for payment of the full replacement value of a mature tree or trees in lieu thereof if onsite replacement is not feasible. There is a reasonable relationship between the amount of the fee and the purpose for which it is charged because the fee represents the City’s proportionate costs of replacing and restoring trees to serve new development and the fee revenues will be used for the purpose of replacing and restoring trees that will serve new development.
The City shall administer and use the Tree Fund for the following purposes: (1) Purchasing, planting, and maintaining trees within the City; (2) Acquiring, maintaining, and preserving trees within the City to remain in a naturalistic state in perpetuity; (3) Performing and maintaining a City-wide tree inventory; (4) Educating residents and developers on the preservation, care, maintenance, benefits and value of trees within the City of Pacifica; and (5) Supporting programs for the purpose of increasing the tree canopy within the City of Pacifica as approved by the Council.
To mitigate the adverse effects of tree removal, a tree removal permit shall include conditions that require relocation of tree(s) on-site as recommended by a certified arborist, and/or replacement planting of a minimum of two (2) replacement trees for Pacifica City Council 6
January 13, 2025
every otherwise healthy tree removed and may be required to pay the replacement value of the mature protected tree minus the cost of the two (2) replacement trees or payment of the full replacement value of a mature tree or trees in lieu thereof if on-site replacement is not feasible. No applicant shall be required to expend more on the replacement trees than the appraised value of the trees for which a permit is required.
The Director shall determine the replacement value of the trees utilizing the most recent edition of the Guide for Plant Appraisal by the Council of Tree and Landscape Appraisers.
10. Sewer Connection Charges, (Article 1, Chapter 11, Title 6) - Fund 34 The Sanitary Sewer Facilities Fee is imposed on private development projects pursuant to Pacifica Municipal Code (Sewer Connection Charges, Chapter 11, Title 6). The purpose of the Sewer Facility capacity fee is to defray the actual or estimated cost of acquisition, construction, and operation of City sanitation and sewage facilities to accommodate the increased use of the facilities resulting from future development in the City. The sewer connection fees (PMC Section 6-11.102 and 6-11.103) are designed to offset future costs for the replacement and expansion of the Wastewater Treatment Plant and related sewage collection facilities. The inflow and infiltration charges (PMC Section 6-11.104) reflect the contribution necessary to maintain the existing capacity of the collection system to serve new development by providing facilities to eliminate an equivalent volume of inflow and infiltration as the new flows contribute to the sewage system. The sewer tap fee (PMC Section 6-11.301) applies only if the City performs the tap and it reflects the actual cost of the service.
The fee amount collected is based on the required sanitary sewer improvements which are based on the proposed new projects generated by the respective uses and the estimated cost to construct the required improvements. The fee is imposed on new residential, commercial, and retail development.
The current amount of the Development Fees can be found on pages 8 to 12 of the report.
The Mitigation Fee Act mandates that for accounting purposes, Development Fees and related interest must be accounted for separately and used only for the purposes for which the Development Fees were collected. The City tracks Development Fee activity through dedicated revenue accounts and specific expenditure allocations to appropriate projects.
Mitigation Fee Act Reporting Requirements
The Mitigation Fee Act requires that, within 180 days after the close of the fiscal year, the City must make available to the public the following information regarding each of its Development Fee funds:
• A brief description of the type of Development Fee in the fund. • The amount of the Development Fee.
• The beginning and ending fund balance for the fiscal year. • The amount of Development Fees collected and interest earned. • An identification of each public improvement on which Development Fees were expended together with the amount of such expenditures. • Information regarding the schedule for commencement of certain public improvements to be funded with Development Fees.
• A description of any inter-fund transfers or loans made from the fund. • The amount of any refunds made.
Pacifica City Council 7
January 13, 2025
To comply with these requirements, staff has prepared the attached Mitigation Fee Act Annual Report of Development Fees. Pursuant to the requirements of the Mitigation Fee Act, this report is being presented to the City Council for review at a regularly scheduled public meeting not less than 15 days after the information was made available to the public. The 2023-2024 report was filed with the City Clerk’s office and made available for public review on December 18, 2024.
In addition, notice of the time and place of this meeting must be mailed at least 15 days prior to the meeting to all interested parties who filed a written request for such a notice. The City has received no such requests for notice.
Findings Regarding Unexpended Fees
For the fifth fiscal year following the first deposit into the fund, and every five years thereafter, the City is required to make certain findings with respect to that portion of the fund remaining unexpended, whether committed or uncommitted. Gov. Code § 66001(d)(1). The findings are:
• The purpose to which the Development Fee is to be put. • There is a reasonable relationship between the Development Fee and the purpose for which it is charged.
• Identify all sources and amounts of funding anticipated to complete financing in incomplete improvements to be funded by the Development Fee. • Designate the approximate date on which the financing of the incomplete improvements will be complete.
Staff prepared a five-year analysis of the development fees. Staff finds that the purpose for each Development Fee is sufficiently described in the attached report. In addition, the original nexus study creating or amending the fee establishes the reasonable relationship between the Development Fee and the purpose for which it was created, the other sources and amounts of funding anticipated to complete the financing of the projects where the Development Fee are part of the funding and the approximate dates on which the financing of the incomplete improvements will be completed are outlined in the City’s CIP budget each year.
ALTERNATIVE ACTION:
No alternative action has been identified for the approval of the 2023-2024 Mitigation Fee Act Annual Report of Development Fees.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
Approval of the 2023-2024 Annual and Five-Year Impact Fee Report for the Fiscal Year Ending June 30, 2024 is consistent with the following Council adopted Goals:
• Enhance organizational and fiscal stability: the mitigation fees provide vital financing mechanism for City infrastructure.
• Improve and steward City infrastructure, streets and facilities: The mitigation fees assist in the development and improvement of City infrastructure.
FISCAL IMPACT:
There is no fiscal impact associated with this item. All development impact fees collected to date Pacifica City Council 8
January 13, 2025
have been committed or expended and are not subject to refund.
ORIGINATED BY:
Public Works
Finance Department
ATTACHMENT LIST:
Attachment A: Resolution (DOCX)
Attachment B: AB 1600 FY 2023-2024 121624 FINAL (PDF)