City Council Agenda Report
TO: Mayor Clauzel and Members of the City Council
FROM: Fernando Ulloa, Interim City Manager
BY: Mike Willett, Public Works Director
MEETING DATE: October 15, 2024
ITEM NO: 7.2
SUBJECT: Adopt Resolution No. 2024-59 Approving Development Impact Fees and Nexus Studies for City Hall, the City’s Corporation Yard, Recreation Facilities, Parks, and Transportation Improvements.
RECOMMENDATION
Motion to Adopt Resolution No. 2024-59 Approving Development Impact Fees and Nexus Studies for City Hall, the City’s Corporation Yard, Recreation Facilities, Parks, and Transportation Improvements.
BACKGROUND
A development impact fee (“DIF”), also known as capital facilities fees or public facilities fees, is imposed to mitigate the impact of new development on the community. DIF funds are used to pay for public facilities and improvements to maintain adequate levels of service. Development impact fees must have an “essential nexus” to the government’s land-use interest and “rough proportionality” to the development’s impact. A city imposes DIF under the authority granted by the Mitigation Fee Act (codified at Government Code § 66000 et seq.). When imposing such a fee, a local agency must make certain findings as outlined by the Mitigation Fee Act. As a basis for such findings, local agencies typically prepare a nexus study in support of the maximum DIF that can be charged. On January 1, 2022, new requirements went into effect for California jurisdictions that charge DIF. “AB 602” (codified at Government Code § 66016.5) contains the additional requirements for nexus studies and fee increases.
New requirements enacted by AB 602 generally include explaining the existing level of service for each public facility, identifying the proposed new level of service, and explaining why the new level of service is appropriate. Fee increases also require review of the assumptions in the nexus study supporting the original fee and evaluation of fees collected under the original fee.
Another change under AB 602 was that the fee imposed on housing development projects must be formulated based on square footage.
City staff, in coordination with its consultants, are proposing adoption of increases to existing DIF and the supporting nexus studies, in accordance with the Mitigation Fee Act and AB 602 requirements.
Attached for Council’s review and consideration are:
(1) The Nexus Study prepared by Willdan Financial Services (“Willdan”), updating the City’s DIF for City Hall, the City’s Corporation Yard, Recreation Facilities, and Parks; and
(2) The Nexus Study prepared by Advanced Mobility Group (“AMG”), updating the City’s DIF for Transportation Improvements, known as the “Regional Traffic Impact Fee.”
(3) The new DIF schedules for the five (5) fee categories, as contained in the nexus studies.
ANALYSIS
The last nexus studies and fee updates for these specific DIF categories were last completed in 2006 as part of the City’s General Plan update. Since that time, the City has adopted a General Plan update in 2010, the West Patterson Business Park Expansion Master Plan (2012), and the Zacharias & Baldwin Ranch South Master Plan (2022). There has also been continued buildout of the West Patterson Business Park Master Plan (adopted in 2003) and the Villages Master Plan (adopted in 2006). The City has seen significant increases in construction costs and experienced significant growth since 2006. The citywide Capital Improvement Plan has expanded in cost and projects in order to maintain adequate levels of service for existing and future development.
Priorities and plans for citywide facilities and improvements were also in need of evaluation and update.
City staff has been working with Willdan and AMG to complete the nexus studies and fee schedules for the five (5) DIF categories. The nexus studies contain the analysis of DIF levels needed to maintain adequate levels of service and to support future development through buildout. The intent of the nexus studies is to arrive at fee levels representing future development’s share of public facilities and capital improvements. The fee categories being updated are listed as follows:
· City Hall Facilities
· Corporation Yard Facilities
· Recreation Facilities
· Parks
· Transportation Improvements
The proposed nexus studies and fee schedules have been formulated in compliance with the Mitigation Fee Act and AB 602. The nexus studies identify the facilities to be funded, which are also described in a Capital Improvement Program for each category of improvements. All information concerning the methodology and facilities to be financed can be found in the nexus studies.
The proposed fees and nexus studies were distributed to various stakeholders and were advertised as required by law. Concerns raised by stakeholders that submitted comments were evaluated by City staff, who is recommending adoption of the nexus studies and fee schedules as proposed.
Pursuant to Chapter 3.64 of the Patterson Municipal Code, the attached nexus studies and fee schedules are to be adopted by resolution (PMC § 3.64.020.) The Resolution attached for the Council’s consideration adopts the nexus studies and fee schedules prepared by Willdan and AMG.
As part of the attached Resolution, the Council will be authorizing annual index increases to allow for fees to be adjusted to keep up with ongoing inflation. City staff would utilize the Construction Cost Index for the San Francisco Bay Area.
FISCAL IMPACT
All costs for the fee studies were budgeted. The fee collections will be used for projects and improvements identified in the studies. The amount that will be collected depends on the pace of development within the City and will vary by fiscal year. DIF amounts are also sometimes negotiated separately in development agreements for specific projects. Assuming full buildout of the General Plan, it is estimated that DIF collections will generate the following amounts:
· City Hall Facilities: Approximately $16.4 Million
· Corporation Yard Facilities: Approximately $21.4 Million · Recreation Facilities: Approximately $45.7 Million
· Parks Impact Fees: Approximately $77.8 Million (Parkland & Improvements) · Transportation Impact Fees: Approximately $197.9 Million
ATTACHMENTS
1. Resolution No. 2024-59 Approving Development Impact Fees and Nexus Studies for City Hall, the City’s Corporation Yard, Recreation Facilities, Parks, and Transportation Improvements.
EXHIBIT A: 2024 Development Impact Fee Study Update by Willdan Financial Services (City Hall, Corporation Yard, Recreation Facilities, Parks) EXHIBIT B: 2024 Development Impact Fee Study Update by Advanced Mobility Group (Regional Traffic Impact Fee)