City Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-00338 June 14, 2022
Title: (Pass for Publication) Proposed Panhandle Impact Fee Ordinance
Location: District 1
Recommendation: 1) Review an Ordinance adding Article XI to Chapter 18.56 of the Sacramento City Code to create a Panhandle Impact Fee (PHIF); and 2) pass for publication the ordinance title per Sacramento City Charter Article III, section 32(c) for adoption on June 21, 2022.
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-Panhandle Impact Fee Ordinance
Description/Analysis
Issue Detail: On April 3, 2015, Council adopted the 2035 General Plan (General Plan), including policies and implementation measures to prepare and adopt citywide and subarea development impact fee programs. These programs would ensure new development pays its fair share of needed infrastructure improvements to support projected growth and development, including infill. The General Plan also provides direction to identify new funding mechanisms for infrastructure, such as new subarea finance plans.
On July 3, 2018, Council approved the Panhandle project entitlements and adopted the Panhandle Planned Unit Development Public Facilities Finance Plan (Finance Plan) that identified the infrastructure required for buildout and potential financing mechanisms. The Finance Plan considered a Panhandle Impact Fee (PHIF) as one of those funding mechanisms to be established at a later date. Council approved an updated Finance Plan and nexus study on May 31, 2022 (Updated Finance Plan) to reflect current costs and provide the legally required findings necessary for the establishment of the PHIF. Establishment of the PHIF will provide $31 million of the overall $70 million needed for the facilities and infrastructure identified in the Updated Finance Plan for the Panhandle area.
The PHIF would be established by addition of a new Article to Chapter 18.56 of the Sacramento City Code. Article I of Chapter 18.56 established the common set of administrative provisions for all City impact fees. In addition, Chapter 18.56 contains a framework for subarea financing districts that supports localized infrastructure needs by providing funding and reimbursement mechanisms. The PHIF Program will be a City-implemented, plan area-specific development impact fee program applicable only to new Panhandle development.
Policy Considerations: The proposed ordinance has been guided by the City’s goals and policies as established in the General Plan, including the policies that promote a complete and adequate infrastructure system to support future development.
Economic Impacts: None.
Environmental Considerations:
California Environmental Quality Act (CEQA): The City prepared an environmental impact report (EIR) that evaluated the environmental effects of the Panhandle Annexation and Planned Unit Development Project (P16-013). The EIR (State Clearinghouse No. 2016042074) was certified by the City Council on July 3, 2018 (Resolution No. 2018-0280). The Krumenacher Ranch area will be evaluated further under CEQA when a formal project application for that area is submitted to the City, and at that time the impacts related to the Krumenacher project and its infrastructure will be analyzed.
The proposed ordinance establishing the PHIF does not constitute a project and is therefore exempt from CEQA review because it involves creation of government funding mechanisms or other government fiscal activities that do not involve commitment to any specific project which may result in a potentially significant physical impact on the environment (14 Cal. Code Regs. § 15378(b)(4)). Infrastructure projects or other public facility projects funded by the PHIF will be evaluated under CEQA before construction is authorized.
Sustainability: The proposed ordinance and PHIF Program support new residential and non-residential development needed to meet the population growth projections outlined in the General Plan. The proposed PHIF framework ensures that the City is not taking on the full cost of infrastructure to support new development, but rather that new growth pays its fair share of infrastructure costs, thereby allowing the City to develop in a sustainable manner.
Commission/Committee Action: On May 17, 2022, the proposed PHIF ordinance was reviewed by the Law and Legislation Committee and forwarded to Council for consideration.
Rationale for Recommendation: The PHIF Program would provide consistency and certainty for developers and staff, provide funding for needed infrastructure and facilities, and offer financial incentives for developers to construct infrastructure and facilities. The PHIF Program would implement the same set of administrative provisions established for other impact fees in City Code Chapter 18.56.
Financial Considerations: The PHIF Program provides a mechanism to ensure that new development pays for the public infrastructure needs caused by new growth. The PHIF framework also includes administrative fees to recoup staff time required to administer the program. Revenues derived from the PHIF Program will be deposited in a separate fund. The PHIF Program will not have an impact on the General Fund.
Local Business Enterprise (LBE): Not applicable.
Attachment 2
Background
The Panhandle Planned Unit Development (PUD) project (Project) area encompasses approximately 589 acres of primarily vacant land located north of Del Paso Road, south of Elkhorn Boulevard, west of Sorento Road/East Levee Road, and east of the developed neighborhoods known as Natomas Park and Regency Park. The Project area is expected to produce 1,662 suburban neighborhood low-density residential units, including 340 “estate” units with an average density of 4.5 units per acre, 869 “traditional” units with an average density of 6 units per acre, and 453 “village” units with an average density of 7.5 units per acre.
The Project area will also include public facilities such as parks, an elementary school site, a high school/middle school site, open space, a detention basin, and roadways.
The Panhandle Finance Plan was originally adopted in 2018 per City Council Resolution No. 2018-0285. The Updated Panhandle Finance Plan (Updated Finance Plan) was approved by City Council on May 31, 2022 per City Council Resolution No. 2022-0167. The Updated Panhandle Finance Plan allows for the orderly development of backbone infrastructure and public facilities to serve the proposed land uses in the Panhandle area. The Updated Finance Plan goals are to: identify funding for backbone infrastructure improvements and public facilities to support future development; incentivize catalytic development; provide a mechanism to reimburse private developers, when necessary and appropriate, for their construction of backbone infrastructure and public facilities; provide flexibility to adapt to the realities of development types and the rate of development; and leverage impact fees to maximize outside funding. The Updated Finance Plan contains a nexus study that provides the required justification for the Panhandle Impact Fee (PHIF) that will help finance the design, construction, installation, improvements and acquisition of all backbone infrastructure and public facilities needed for the Project.
Below is a summary of the proposed PHIF ordinance:
o PHIF is imposed on all parcels located within the Panhandle area for the following types of development: new dwelling units, buildings, or structures; additions to the commercial building area or residential building area of a building or structure; and changes in use of a building or structure.
o PHIF revenue may be used to: finance the design, construction, installation, improvement, and acquisition of the Panhandle facilities; reimburse the City for administrative costs related to overseeing the PHIF program; and reimburse landowners and holders of development credits.
o Development credits against the PHIF may be issued for Panhandle facilities constructed by a landowner pursuant to an agreement with the City.
o Landowners may receive reimbursement for portions of the landowner’s costs to construct Panhandle facilities that exceed the landowner’s PHIF obligation, when PHIF funds are available to pay the reimbursement and an agreement is executed with the City.
ORDINANCE NO.
Adopted by the Sacramento City Council
Date Adopted
AN ORDINANCE ADDING ARTICLE XI TO CHAPTER 18.56 OF THE SACRAMENTO CITY CODE,
RELATING TO THE PANHANDLE IMPACT FEE
BE IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO:
SECTION 1.
Article XI is hereby added to chapter 18.56 of the Sacramento City Code to read as follows:
Article XI. Panhandle Impact Fee
18.56.1110 Definitions.
The following definitions apply in this article:
“Panhandle area” means the area consisting of approximately 589 acres identified in, and subject to, the Panhandle finance plan.
“Panhandle facilities” means the infrastructure and facilities identified in the Panhandle finance plan.
“Panhandle finance plan” means the Panhandle finance plan adopted by the city council on May 31, 2022 (Resolution No. 2022-0167), and any amendments approved by the city council.
“Panhandle impact fee” means the fee established by section 18.56.1120 to finance the design, construction, installation, improvement, and acquisition of the Panhandle facilities.
“Panhandle infrastructure fund” means the infrastructure fund created by section 18.56.1130.
18.56.1120 Panhandle impact fee and imposition.
The Panhandle impact fee is established and imposed on all parcels located within the Panhandle area for the following types of development:
A. New dwelling units, buildings, or structures.
B. Additions to the commercial building area or residential building area of a building or structure.
C. Changes in use of a building or structure.
18.56.1130 Establishment of Panhandle infrastructure fund; use of fee revenues.
A. The Panhandle infrastructure fund is established. The city shall deposit all revenues generated by the Panhandle impact fee, and any interest earned on the fund balance, into the fund.
B. The city shall use the Panhandle infrastructure fund to:
1. Finance the design, construction, installation, improvement, and acquisition of the Panhandle facilities.
2. Reimburse the city for administrative costs identified in the Panhandle finance plan.
3. Reimburse landowners and holders of development credits consistent with section 18.56.1140 and the Panhandle finance plan.
18.56.1140 Credits and reimbursements.
A. The city council, by resolution or agreement, may establish policies and procedures for issuance of development credits against the Panhandle impact fee for Panhandle facilities constructed by a landowner, or for reimbursement of the portion of a landowner’s costs to construct Panhandle facilities that exceeds the landowner’s Panhandles impact fee obligation, if the city has Panhandle infrastructure funds available to pay the reimbursement. The policies and procedures shall be consistent with the following:
1. A landowner may only construct infrastructure and facilities for development credits with advance approval by a written fee-credit or reimbursement agreement.
2. Development credits do not run with the land.
3. Development credits are transferrable through a transfer agreement signed by both parties and approved by the city.
B. After the landowner constructs Panhandle facilities, the city manager shall determine the development credit or reimbursement amounts, if any, based on the terms of the fee-credit or reimbursement agreement. The landowner may appeal the city manager’s decision as set forth in section 18.56.155.
18.56.1150 Conflict with other provisions.
If there is any conflict between a provision of this article and any other provision of this chapter, the provision of this article governs.
SECTION 2.
This ordinance takes effect on August 20, 2022.