Susana Alcala Wood, City Attorney Jorge Oseguera, City Auditor Mindy Cuppy, City Clerk Howard Chan, City Manager John Colville, City Treasurer City Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-00183 February 15, 2022 Consent Item 06
Title: Appropriation of North Natomas Basin 6 Drainage Fee Revenues
Location: Districts 1 and 3
Recommendation: Adopt a Resolution: 1) authorizing the City Manager or City Manager’s designee to increase the revenue and expenditure budgets by $514,195 for the Basin 6 Drainage Project (I22200600) in the North Natomas Drainage Fee Fund (3205); and 2) authorizing the City Manager or City Manager’s designee to distribute the funds in accordance with Exhibit A.
Contact: Mary Jean Rodriguez, Senior Development Project Manager, (916) 808-1980, [email protected]; Sheri Smith, Special Districts Manager, (916) 808-7204, [email protected], Department of Finance
Presenter: None
Attachments:
1-Description/Analysis
2-Resolution
3-Exhibit A (Drainage Fee Revenues Distribution)
File ID: 2022-00183 Consent Item 06
February 15, 2022
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City of Sacramento
Description/Analysis
Issue Detail: As required by City Code chapter 18.24 and the North Natomas Finance Plan, the City collects a drainage fee from each Basin 6 landowner for the purpose of reimbursing the developers that construct “common” drainage improvements. Alleghany Properties, LLC (Alleghany) has constructed common drainage improvements in Basin 6 in accordance with City Agreement No. 98-100 and City Manager Agreement No. 2002-712, and Beazer Homes, Inc. (Beazer) has constructed common drainage improvements in Basin 6 in accordance with City Manager Agreement Nos. 2006-0398 and 2005-1002. These four agreements (collectively, the Drainage Agreements) obligate the City to reimburse Alleghany’s and Beazer’s construction costs. The Drainage Agreements were superseded by the Basin 6 Settlement Agreement (the Settlement Agreement) designated as City Agreement No. 2019- 0329 approved by City Council on March 26, 2019, to resolve disagreement on the amount of reimbursement and distribution of drainage fee revenues.
The City will follow the procedure set forth in section 1.3 of the Settlement Agreement when disbursing fee revenues each calendar quarter. The City will disburse the fee revenue currently available as follows 81.83% to Alleghany, from which the City will retain a 3% administrative fee, and 18.17% to Beazer, from which the City will not retain a 3% administrative fee, as the City waived the administrative fee under Exhibit G of the Beazer Agreements.
Approximately $514,195 in drainage-fee revenues have been collected and should be appropriated for reimbursement. The recommended actions will authorize the reimbursement of Alleghany and Beazer in accordance with the Settlement Agreement. The City will disburse $408,143 to Alleghany, from which the City will retain $12,623 administrative fee, and $93,429 to Beazer.
Policy Considerations: The recommendation is consistent with the Settlement Agreement and will provide for the distribution of drainage fees to reimburse Alleghany and Beazer for their approved costs of constructing drainage facilities in Basin 6 as required by the North Natomas Finance Plan. The drainage fees may not be used for the reimbursement unless appropriated by the City Council for that purpose (City Charter § 116).
Economic Impacts: Not applicable.
Environmental Considerations:
California Environmental Quality Act (CEQA): Under the CEQA Guidelines, continuing administrative activities do not constitute a project and are therefore exempt from review (14 Cal. Code Regs. §15378(b)(2)).
File ID: 2022-00183 Consent Item 06
February 15, 2022
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City of Sacramento
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: Appropriating funds from Fund 3205 will allow Alleghany and Beazer to be reimbursed in accordance with the Settlement Agreement for a portion of the drainage-facility costs they incurred. The recommended actions are consistent with City Code chapter 18.24, article II.
Financial Considerations: The Basin 6 Drainage Project (I22200600) budget needs to be increased by $514,195 in the North Natomas Drainage Fee Fund (Fund 3205) to provide for the reimbursements authorized under the Settlement Agreement. There are adequate deposits available to increase the revenue budget in the project by the same amount.
Local Business Enterprise (LBE): Not applicable.
RESOLUTION NO. 2022-
Adopted by the Sacramento City Council
Resolution Appropriating Drainage Fee Revenues
BACKGROUND
A. Under City Agreement No. 98-100 and City Manager Agreement Nos. 2002-712, 2006-0398, and 2005-1002 (the “Drainage Agreements”), Alleghany Properties, LLC and Beazer Homes Holdings, LLC agreed to construct specified “common” drainage improvements to serve North Natomas Drainage Basin 6, and the City agreed to reimburse their construction costs using drainage fees collected from the owners of land within Basin 6.
B. The City has confirmed that Alleghany and Beazer constructed the drainage improvements as required by the Drainage Agreements and are entitled to reimbursement for those improvements, except as follows: Alleghany is still obligated to design and construct approximately 3,769 linear feet of drainage pipes in various diameters.
C. On August 12, 2008, by Resolution No. 2008-0567, City Council approved the distribution of then-available drainage-fee funds, totaling $2,719,331, as follows:
● In August 2008, the City disbursed $1.2 million to Alleghany and retained $84,103 for the cost of administering the fee program.
● In March 2009, the City interpleaded the remaining $1,519,331 with the Sacramento County Superior Court (Case No. 34-2009-00037027-CU-CO- GDS).
D. On March 26, 2019, by Resolution No. 2019-0093, City Council approved the Basin 6 Settlement Agreement designated as City Agreement No. 2019-0329 that superseded Drainage Agreements to resolve disagreement on how the drainage fees on hand and to be collected should be distributed and the distribution of then- available drainage-fee funds. The City disbursed $552,364 to Alleghany, $762,225 to Beazer, and retained $40,657 as the City’s 3% fee for the cost of administering the fee program.
E. On February 11, 2020, by Resolution No. 2020-0052, City Council authorized the appropriation and distribution of collected and appropriated drainage fee revenues totaling $260,775. The City disbursed $206,990 to Alleghany, from which the City retained $6,402 administrative fee, and $47,383 to Beazer, from which the City did
not retain a 3% administrative fee, as the City waived the administrative fee under Exhibit G of the Beazer Agreements.
F. Since February 2020, the City has collected—and now has on hand—additional drainage fee revenues totaling $514,195. The City will disburse $408,143 to Alleghany, from which the City will retain $12,623 administrative fee, and $93,429 to Beazer, from which the City will not retain a 3% administrative fee, as the City waived the administrative fee under Exhibit G of the Beazer Agreements.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Council finds that background statements A through F are correct.
Section 2. To implement the Basin 6 Settlement Agreement, the City Council directs that the revenue and expenditure budgets in the Basin 6 Drainage (I22200600) project in the North Natomas Drainage Fee Fund (Fund 3205) be increased by $514,195.
Section 3. The City Manager or City Manager’s designee is hereby authorized to distribute the $514,195 as follows: $408,143 to Alleghany and $93,429 to Beazer, with $12,623 being retained as the City’s fee for administering the drainage-fee program.
Section 4. Exhibit A is part of the resolution.
Table of Contents:
Exhibit A – Drainage Fee Revenues Distribution
Exhibit A
Drainage Fee Revenues Distribution
Developer
Fee Revenues
Currently Available 3% Admin
Developer
Reimbursement
Alleghany Properties, LLC 420,766$ 12,623$ 408,143$ Beazer Homes Holdings, LLC 93,429 - 93,429 Total 514,195$ 12,623$ 501,572$