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: 2022-00486 March 22, 2022 Consent Item 09
Title: Redemption of North Natomas Land Acquisition Fee Credits
Location: Districts 1 and 3.
Recommendation: Adopt a Resolution: 1) approving the redemption of North Natomas land- acquisition-fee credits; 2) authorizing the City Manager or City Manager’s designee to appropriate $1,773,746 from the available fund balance in the North Natomas Finance Plan Public Land Acquisition Fee Fund (Fund 3208) and to increase the Debt Service expenditure budget by $1,773,746; and 3) authorizing the City Manager or City Manager’s designee to disburse $1,773,745.34 to Alleghany Properties, LLC from Fund 3208.
Contact: Mary Jean Rodriguez, Senior Development Project Manager, (916) 808-1980, [email protected]
, Department of Finance; Sheri Smith, Infrastructure
Finance Manager, (916) 808-7204, [email protected], Department of Finance
Presenter: None.
Attachments:
1-Description/Analysis
2-Background
3-Resolution – LAP Redemption
File ID: 2022-00486 Consent Item 09
March 22, 2022
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City of Sacramento
Description/Analysis
Issue Detail: The North Natomas Finance Plan (NNFP) includes a land-acquisition program (LAP) to ensure the timely acquisition of land for rights-of-way and other public purposes as required by the North Natomas Community Plan. Additional information about this program is included in the Background section of the report.
Since 1997, developers who pulled building permits in North Natomas have paid land- acquisition fees, and developers who dedicated public lands have received fee credits as compensation. The developers may use the fee credits to pay land-acquisition fees they owe, may sell the credits to other developers, or may tender the credits to the City for redemption in cash from fee revenues no longer needed to acquire LAP lands.
Most LAP lands have now been acquired. The remaining lands are either subject to development agreements that require dedication or will be acquired as a condition of development. To date, the City Council has authorized the release of $33,901,708 in available funds to redeem LAP fee credits. “Available funds” means the fee revenues and the interest earned on those revenues, less the City’s cost to administer the LAP. The total amount available to redeem credits for the current fiscal year is approximately $1.8 million. The City is not obligated to provide funding from any other funding source.
Policy Considerations: The recommendation is consistent with the NNFP adopted in 1994 (and updated in 1999, 2002, 2005, 2009, and 2017) and with all associated development and credit agreements.
Economic Impacts: Not applicable.
Environmental Considerations:
California Environmental Quality Act (CEQA): Approval of the recommended action is not a “project” subject to CEQA because it consists solely of administrative and financial activities that (a) do not involve a commitment to a specific project that might result in a potentially significant physical impact on the environment and (b) will not result in direct or indirect physical changes in the environment. (14 Cal. Code Regs. §§ 15378(b)(2), 15378(b)(4), and 15378(b)(5).)
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
File ID: 2022-00486 Consent Item 09
March 22, 2022
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City of Sacramento
Rationale for Recommendation: The recommended actions are authorized by chapter 18.24, article III, of the Sacramento City Code.
Financial Considerations: The fees collected and the associated interest are accounted for in Fund 3208 and are restricted by state law and the LAP to the redemption of credits and the payment of expenses associated with the acquisition of land identified in the NNFP. The amount of $1,773,746 will be transferred from the NNFP available fund balance (Fund 3208) to the Debt Service budget to provide sufficient resources to disburse the fee credits to Alleghany Properties, LLC. The recommended action will not affect the General Fund.
Local Business Enterprise (LBE): Not applicable.
Attachment 1
Background
The LAP is part of the NNFP adopted by City Council in 1994 and updated most recently in 2017. The purpose of the LAP is twofold:
(1) to ensure that public-use lands are available to the City to construct infrastructure and facilities as needed; and
(2) to maintain equity among landowners who hold different amounts of needed public land.
The LAP operates by collecting land-acquisition fees from developers when they pull building permits and by issuing fee credits to developers who dedicate lands. Credit holders can use the credits in lieu of paying fees or can redeem their credits for cash if the goals of the LAP are satisfied.
The LAP does not cover standard subdivision dedications such as collector roads or frontage improvements. For this reason, LAP lands are sometimes referred to as “extraordinary dedications.” These lands are defined by the North Natomas Community Plan and include buffers, the light-rail right-of-way, lands for public buildings, and roadways beyond the standard dedication, such as the median and inside lanes of major arterials and freeway interchanges.
The LAP comprises 415 acres, of which 371 have already been acquired. Of the remaining 44 acres, 34 will be acquired under development agreements that require compliance with the NNFP (including dedication of LAP lands), and 10 will be acquired through conditions of approval. All of those 10 acres are associated with one parcel. Below is a map showing the locations of these two categories of lands.
Given the extent of the LAP acquisitions to date, staff believes that the first goal of the LAP (to ensure the timely acquisition of property) has been reasonably satisfied. The second goal of the LAP (equity among landowners) will continue to be met as the LAP continues to operate into the future. The basic operation of the LAP is not affected by the recommendations in this report.
To date, 371 acres have been acquired, and $36,370,962 in development credits (net of credits used for building-permit purposes) have been issued. All redemptions of these credits are at the face value of the credits when issued. The credits do not earn interest and are not otherwise adjusted.
Fees collected to redeem credits through June 30, 2021 total $34,040,099, including interest earnings on the fees and excluding administrative fees and contingencies. On July 20, 2010 (by Resolution No. 2010-415), on March 17, 2017 (by Resolution No. 2017-0095), on March 27, 2018 (by Resolution No. 2018-0103), on April 2, 2019 (by Resolution No. 2019-0105), on
November 10, 2020 (by Resolution No. 2020-0353), and on September 21, 2021 (by Resolution No. 2021-0284), the City Council approved the distribution of $24,263,740, $1,891,573, $2,029,574, $2,130,511, $1,387,532, and $2,198,778 respectively to credit holders, representing the total of available funds at those times. The total amount available to redeem credits for the current fiscal year is approximately $1.8 million. The City is not obligated to provide funding from any other funding source.
RESOLUTION NO.
Adopted by the Sacramento City Council
Approving the Redemption of North Natomas Land Acquisition Fee Credits and Associated Budgetary Transfers
BACKGROUND
A. The North Natomas Finance Plan, adopted by Resolution No. 95-495 and updated in 1999 by Resolution No. 99-471, in 2002 by Resolution No. 2002-374, in 2005 by Resolution No. 2005-584, in 2009 by Resolution No. 2009-341, and in 2017 by Resolution No. 2018-0058 (the “NNFP”), authorizes the North Natomas Land Acquisition Program (the “NNLAP”) to provide for the timely acquisition of designated NNLAP public lands for the development of the North Natomas Community Plan and to provide equity among landowners by providing development credits for dedicated lands and imposing fees on developers with no NNLAP dedications or development credits.
B. Fees are collected for the sole purposes of acquiring designated lands through condemnation proceedings, where necessary, and for redeeming credits at face value when, in the City’s sole judgment, the need for further acquisitions is remote.
C. Of the 415 acres to be acquired through the NNLAP, 371 have already been acquired by easement, deed, or an irrevocable offer of dedication. Of the remaining 44 acres, 34 acres will be acquired under development agreements that require compliance with the NNFP (including dedication of LAP lands), and 10 acres will be acquired through conditions of approval. All of those 10 acres are associated with one parcel that will be conditioned to dedicate the lands and cannot otherwise be developed without dedicating the lands.
D. To date, $36,370,962 in development credits (net of credits used for building-permit purposes) have been issued. All redemptions of these credits are at the face value of the credits when issued. The credits do not earn interest and are not otherwise adjusted.
E. Fees collected to redeem credits through June 30, 2021 total $34,040,099, including interest earnings on the fees and excluding administrative fees and contingencies. On July 20, 2010 (by Resolution No. 2010-415), on March 17, 2017 (by Resolution No. 2017-0095), on March 27, 2018 (by Resolution No. 2018-0103), on April 2, 2019 (by Resolution No. 2019-0105), on November 10, 2020 (by Resolution No. 2020-0353), and on September 21, 2021 (by Resolution No. 2021-0284), the City Council approved the
distribution of $24,263,740, $1,891,573, $2,029,574, $2,130,511, $1,387,532, and $2,198,778 respectively to credit holders, representing the total of available funds at those times. The total amount available to redeem credits for the current fiscal year is approximately $1.8 million. The City is not obligated to provide funding from any other funding source.
F. The priority of the redemptions to credit holders will generally reflect the dates of the agreements under which the credits were issued—that is, under the “Reimbursement and Credit Agreement for the North Natomas Land Acquisition Program” (“Credit Agreement”) that all developers must enter into to participate in the NNLAP. The earlier the date of the Credit Agreement, the higher the priority for redemption.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Council hereby finds that the background paragraphs set forth above are correct.
Section 2. The redemption of NNLAP fee credits in accordance with this resolution is hereby approved.
Section 3. The City Manager or his designee is hereby authorized to appropriate $1,773,746 from the available fund balance in the North Natomas Finance Plan Public Land Acquisition Fee Fund (Fund 3208) and to increase the Debt Service (70001025) expenditure budget by $1,773,746.
Section 4. The City Manager or his designee is hereby authorized to distribute the appropriated funds to Alleghany Properties, LLC in the amount of $1,773,745.34 after making, where applicable, any deductions for other fee or permit obligations to the City.