TO:
VIA:
FROM:
DATE:
SUBJECT:
FISCAL
IMPACT:
SUMMARY:
Placentia Cit Council
CITY COUNCIL
CITY ADMINISTRATOR
DIRECTOR OF DEVELOPMENT SERVICES
JUNE 18, 2024
AGENDA REPORT
PROFESSIONAL SERVICES AGREEMENT WITH DTA TO COMPLETE A
DEVELOPMENT IMPACT FEE NEXUS STUDY UPDATE AND TO CREATE A
PUBLIC SAFETY COMMUNITY FACILITIES DISTRICT
AMOUNT NEEDED FOR AGREEMENT:
STAFF RECOMMENDED CONTINGENCY:
TOTAL COST OF PROPOSED AGREEMENT:
GENERAL PLAN UPDATE FEE FUNDS (749506-6017)
$126,230
$ +770
$127,000
$127,000
On April 16, 2024, as part of the annual Development Impact Fees program (DIF) update, City Council directed Staff to prepare a new Development Impact Fee Nexus Study Report to facilitate an update of both Citywide Development Impact Fees and Transit -Oriented Development (TOD) Impact Fees to be effective Fiscal Year 2025-26 or earlier. As such, Staff prepared a Request for Proposals (RFP) to update all City DIFs and to create a successor Public Safety Community Facilities District (CFD) for the City of Placentia to address increased public safety costs citywide.
The RFP for both tasks was circulated for approximately 30 days. The recommended actions would approve a Professional Services Agreement with DTA, formerly David Taussig & Associates, in a not -to -exceed amount of $127,000.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Approve a Professional Services Agreement with DTA to provide professional services to facilitate an update of both Citywide Development Impact Fees, Transit -Oriented Development Impact Fees and to create a successor Public Safety Community Facilities District (CFD) for the City of Placentia for an amount not to exceed $127,700; and
2. Authorize the City Administrator to execute the necessary documents, in a form approved by the City Attorney.
STRATEGIC PLAN STATEMENT:
This item is consistent with the City Council approved 5 -Year Strategic Goal to:
Keep Development Impact Fees current and updated to facilitate cost recovery by requiring new development to pay a fair share of costs for City facilities, as Objective Number 1.3 is to Update
1.j.
June 18, 2024
City Council Agenda
June 18, 2024
Fee Study/Cost Allocation. In addition, this action is consistent with Objective Number 3.12 to secure funding for affordable housing as the Citywide Residential Affordable Housing Impact Fees will likely be adjusted commensurate with the nexus fee study prepared by DTA.
BACKGROUND:
DIFs are a commonly used method of collecting a proportional share of funds from new development for infrastructure improvements and/or other public facilities capital improvements that would be needed as a result of the new development. These fees are seen as paying for the aforementioned future required infrastructure costs as opposed to the General Fund and are therefore seen as cost recovery in nature. With rare exceptions, DIFs are one-time funds restricted to funding capital costs for new facilities or upgrades to existing facilities and are not used for annual operations and/or maintenance. Impact fees may only be imposed on new development, and the fee proceeds must be spent on improvements needed as a result of the new development.
Pursuant to the Mitigation Fee Act ("Act"), California Government Code Section 66000, et seq. (also known as AB 1600), adoption of impact fees requires documentation of the "nexus" between the fees being charged, the impacts of new development, the benefit of the facilities needed to mitigate such impacts, and the proportional cost allocation among different fee categories. Impact fee programs must be adopted by the City Council via an ordinance, however, once the program is adopted, the fees could potentially be automatically updated via City Council resolution. Impact fees are imposed either jurisdiction -wide or in a relatively large area anticipating significant amounts of new development, such as a specific plan area or community plan area. In Placentia, we have both citywide (includes affordable housing) impact fees and TOD District specific impact fees.
In 2017, the City prepared development impact fee nexus studies for the purpose of updating DIFs pursuant to California Government Code Section 66000. Three different nexus studies were completed in 2017 and were utilized respectively to adopt the current citywide DIFs, the housing impact fee, and the TOD DIFs. The DIF program that is currently in place was adopted by City Council in October 2017, implemented by Ordinance Nos. 0-2017-09 (TOD DIFs), 0-2017- 10 (Citywide DIFs), 0-2017-11 (Housing Impact Fee) and became effective in December 2017.
Although the 2017 DIF update was comprehensive in nature, the City did not update the DIFs between 2017 and 2020. The 2021 DIF update adjusted the fees commensurate with the CCI from December 2017 to February 2021. As part of updating the DIFs in 2021, City Council codified how annual updates to the DIFs will occur. The Municipal Code now states that the annual fee adjustment shall be based on April -to -April Construction Cost Index for Los Angeles as published by the Engineering News -Record for the preceding 12 months (April to April), with the exception of the 2022 fee update which was based upon February 2021 to April 2022 Construction Cost Index for Los Angeles as published by the Engineering News -Record.
In April 2023, two specific fees were updated commensurate with actual costs. The fees that were specifically updated beyond CCI are the Public Safety Impact Fee (now known as Fire, Police Animal Shelter fees) and TOD Sewer Impact Fee. Those specific fees were updated beyond CCI because the City performed the "City of Placentia Development Impact Fee Nexus Study" dated
City Council Agenda
June 18, 2024
April 2023. The balance of all Development Impact Fees were adjusted by CCI .23% as measured from April 2022 to April 2023.
In April 2024, City Council adjusted all Development Impact Fees for Fiscal Year 24-25 by CCI as measured from April 2023 to April 2024. As part of that update City Council directed Staff to prepare a new Development Impact Fee Nexus Study Report to be employed for the future update of both Citywide Development Impact Fees and Transit -Oriented Development (TOD) Impact Fees for fiscal year 2025-26 or earlier, with a cost increase metric that most closely reflects the current cost indices average for cost trends for specific construction trade labor and materials in the current construction environment. This recommendation was also included in the April 2023 staff report.
DISCUSSION:
Development Impact Fee Update
The existing DIFs currently in place include the following:
• Citywide Public Safety Impact Fee Program (Now known as Fire, Police Animal Shelter fees pursuant to the City of Placentia Development Impact Fee Nexus Study" dated April 2023)
• Citywide Park and Recreation Impact Fee Program
• Citywide Quimby Land Dedication and In -Lieu Fee Program • Citywide Sewer Impact Fee Program
• Citywide Traffic Impact Fee Program
• Citywide Storm Drainage Impact Fee Program
• TOD Traffic Impact Fee
• TOD Sewer Impact Fee (Now updated pursuant to the City of Placentia Development Impact Fee Nexus Study" dated April 2023)
• TOD Streetscape Infrastructure Impact Fee
• A Residential Affordable Housing Impact Fee ("RAHIF") requiring developers to pay a fee to mitigate the additional demand for affordable housing that is created by proposed market rate residential development.
As stated in the RFP, the City is proposing to keep and update all of the existing aforementioned DIFs already in place. DTA will conduct a Nexus Study to update all of those fees commensurate with actual and projected impacts. In addition, DTA's Nexus Study would consider the following components/programs for the DIFs at a minimum:
• Updated Public Safety DIF to adequately capture Police, Placentia Fire and Life Safety, Emergency Medical Services (EMS), and Dispatch, as well as Animal Control Services • Create Public Facilities DIF
• Create Information Technology DIF
City Council Agenda
June 18, 2024
Successor Public Safety Community Facilities District (CFD) The City implemented CFD 2014-01 to help offset rising police department operating costs attributed to new residential development. Although successfully implemented in 2014, it did not capture properties developed during the City's exponential growth spurt between 1970 and 2014.
Also, since that time the City has started its own fire department, contracted with a private 911 paramedic service provider, and expanded its emergency communications (dispatch) operations as well.
The boundaries of CFD 2014-01 cover the entire City and all new development projects are conditioned to be annexed into the CFD as a condition of receiving development entitlements and other project approvals. Rather than try to modify the existing CFD (requiring participant voting) to include the new added public safety operating costs, an entirely new successor CFD can be created, including aforementioned added public safety costs. Future development would then be conditioned to annex into the newly created successor CFD. It is envisioned that the boundaries of the new CFD will also match the City's boundaries.
Request for Proposals
A Request for Proposals for both the Development Impact Fee Update and Successor Public Safety Community Facilities District was widely circulated for approximately 30 days. DTA, formerly David Taussig & Associates submitted a proposal including both tasks for a total amount of $126,230. The DTA proposal was the sole proposal received. The DTA proposal was reviewed by the Directors of Finance and Development Services, as well as by the Public Works Department Senior Management Analyst. The reviewing team unanimously agrees that the DTA proposal is a complete and reasonable proposal. Development Services staff has positive experience working with DTA on the recently completed Old Town CFD, which was completed on time and within budget.
FISCAL IMPACT:
The FY 2024-2023 CIP Budget includes $127,000 for the Development Impact Fee Update and Successor Public Safety Community Facilities District project. As such, the recommended actions would approve a Professional Services Agreement with DTA, formerly David Taussig & Associates in a not -to -exceed amount of $127,000.
Prepared by: Reviewed and approved:
Joseph M. Lambert
Director of Development Services
Jennifer Lampman
Director of Finance
City Council Agenda
June 18, 2024
Reviewed and approved:
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Damien R. Arrula
City Administrator
Attachments:
1. Professional Services Agreement with DTA
Exhibit A. Scope of Work and Cost Proposal
Exhibit B. Insurance Requirements
Exhibit C. Certificates of Insurance