City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-00262 4/18/2023 Public Hearing Item 13.
North Natomas Public Facilities Land Acquisition Fee Update 2023 (Noticed 04/07/2023 and 04/12/2023)
File ID: 2023-00262
Location: Districts 1 and 3
Recommendation: Conduct a Public Hearing and upon conclusion, adopt a Resolution increasing the Public Facilities Land Acquisition Fee for the North Natomas Land Acquisition Program.
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: Mary Jean Rodriguez, Senior Development Project Manager, (916) 808-1980, [email protected].
Attachments:
1-Description/Analysis
2-Background
3-Current and Proposed Fee Schedule
4-Resolution
5-Exhibit A (Fee Update)
Description/Analysis
Issue Detail: The North Natomas Financing Plan (NNFP) adopted by Council Resolution No. 1994-0495 and updated on several subsequent occasions, includes a land acquisition program (LAP) to ensure the City’s timely acquisition of public land for installation of infrastructure and other public facilities. Additional information on the LAP is included in the Background section of the report.
Since 1997, the North Natomas Public Facilities Land Acquisition Fee (Fee) has been paid into the LAP by developers who pull building permits, and credits have been issued to developers as compensation for lands they dedicate to the City. Under the California Mitigation Fee Act
File ID: 2023-00262 4/18/2023 Public Hearing Item 13.
(Government Code § 66000 et seq.) and City Code Chapter 18.24, Article III, Fee revenues must be used either to acquire land or to purchase outstanding fee credits when the City determines that it no longer needs the revenues to acquire LAP lands. Landowners dedicating more than their fair share of public land are reimbursed or given fee credits for excess dedication through the LAP with advance approval by the City and execution of a Reimbursement/Credit Agreement with the City. If cash reimbursement is requested, such reimbursement will be limited to funds received by the City from the LAP. The right to reimbursement through cash requires Council action and execution of a Waiver and Release Agreement. Alternatively, if fee credits are requested, such fee credits will be applicable only against the Fee at 92%. The City will retain a 3% administrative fee and 5% land value contingency.
The amounts of the Fee paid into this program and the Public Land Acquisition Value (PLAV) used to acquire public land are reviewed annually and may be updated based on the results of an independent land valuation study, in accordance with City Code section 18.24.400. The Department of Finance Infrastructure Finance Division is recommending adjustment of the Fee amount. To establish assigned values and balance the effects of wide swings in land values , an independent appraisal is completed annually to determine the weighted average land value for properties in the NNFP area over the last three years. The 2023 Appraisal Report determined that as of November 1, 2022, the PLAV of developable land per acre has increased by 18%, from $317,741 per acre to $375,058 per acre. The increase in the PLAV is mostly attributed to higher residential land values.
As such, staff is recommending an 18% increase in the Fee. The Updated North Natomas Public Facilities Land Acquisition Fee Schedule, Exhibit A to the Resolution, breaks down the updated Fee by specific land use. Such increase would be effective July 1, 2023. The Fee includes a 3% administration fee to pay for the City’s time and expense in acquiring the land and managing the program plus a 5% land value contingency (to account for potential further increases in the PLAV over the next year). There are no additional changes recommended for the LAP aside from increase of the Fee amount.
Policy Considerations: The recommended actions are consistent with City Code Chapter 18.24.400 the LAP annual update procedures, and the Mitigation Fee Act.
Economic Impacts: None.
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
File ID: 2023-00262 4/18/2023 Public Hearing Item 13.
physical changes in the environment. (14 Cal. Code Regs. §§ 15378(b)(2), 15378(b)(4), and 15378(b)(5). Infrastructure projects or other public facility projects funded by Fee revenue will be evaluated under CEQA before construction is authorized.
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: Adoption of the revised Fee amount 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. It is also consistent with the City’s Strategic Plan to achieve sustainability and enhance livability.
Financial Considerations: North Natomas developers pay the Fee at the time building permits are issued. The collection of Fees and its associated interest are accounted for in a separate fund (Fund 3208). The Fee revenues and interest are also restricted by the Mitigation Fee Act and the LAP to the purchase of credits or to acquire needed public lands.
The recommended actions do not affect the General Fund or any City funds.
Local Business Enterprise (LBE): Not applicable.
Attachment 2
Background
The Public Facilities Land Acquisition Fee (Fee) for the North Natomas Land Acquisition Program (LAP) is part of the North Natomas Financing Plan (NNFP) adopted by City Council in 1994 (Resolution 1994-0495) and updated most recently in 2017. The LAP is governed by the California Mitigation Fee Act (Government Code § 66000 et seq.) and Sacramento City Code sections 18.24.250 through 18.24.410. The purpose of the LAP is twofold:
1) To ensure that public lands are available to the City to construct infrastructure and public facilities as needed due to on-going and future developments; and 2) To maintain equity among landowners for land provided to the City above and beyond standard dedications.
The Fee is set based on the estimated weighted average unit value of land in the NNFP area for the three preceding years. The three values are determined by an independent appraiser and averaged to determine the Public Land Acquisition Value (PLAV). The last Fee was set in 2022 and the PLAV has increased since then due to increasing residential land values.
Pursuant to City Code section 18.24.400, the City Council may revise the Fee from time to time to take into account changes in the PLAV. Pursuant to City Code section 18.24.330, the City Council may similarly update the allowable credits and reimbursements of the Fee for lands dedicated for public improvements. The current and proposed Fee amounts are detailed in the attached Fee Schedule. The PLAV under the LAP is as follows:
1) Current - $317,741 / Gross Developable Acre
2) Proposed - $375,058 / Gross Developable Acre
The LAP operates by collecting the Fee from developers when they pull building permits and by issuing a Fee credit to developers who dedicate lands to the City. Credit holders can use the credits against the Fee at 92% or they can receive cash reimbursement if the goals of the LAP are satisfied.
The LAP does not cover standard subdivision dedications, such as dedication of collector roads or frontage improvements. For this reason, LAP lands are sometimes referred to as “extraordinary dedications.” The LAP lands are defined by the North Natomas Community Plan, adopted by City Council Resolution No. 1986-0348 and updated on several subsequent occasions, to 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 372 have already been acquired. Of the remaining 43 acres, 33 will be acquired under development agreements and 10 will be acquired through conditions of approval for a single parcel. A map of the land previously acquired through the LAP and the land yet to be acquired is attached.
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, is being reasonably satisfied. As for the pending acquisitions, all landowners in North Natomas have entered into development agreements (and extensions to those agreements) that require compliance with all requirements of the NNFP, including the dedication of LAP lands. The 10 acres referenced above cannot be developed without the required dedications, but those dedications are also not necessary until the property is developed.
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 recommended Fee increase.
The redemption of credits will be at the face value of the credits when issued. These credits do not earn interest and are not otherwise adjusted. Interest on the Fee revenue is used exclusively to redeem credits or to acquire needed public lands.
The source of funds for the reimbursement is Fee amounts collected solely for the purposes of the LAP. Pursuant to the Mitigation Fee Act and Sacramento City Code section 18.24.360, the Fees collected and any interest on those Fees must be used for the purposes of the LAP and cannot be loaned or used for operational or cash-flow purposes except for the cash-flow needs of other development impact fees in the NNFP.
Attachment 3
NORTH NATOMAS PUBLIC FACILITIES LAND ACQUISITION FEE
SCHEDULE
LAND USE
Proposed
Current Public
Facilities Land
Acquisition Fee
Public Facilities Land
Acquisition Fee
(Effective July 1, 2023)
Residential Fee Per Unit Fee Per Unit
Single Family Attached / Detached
Rural Estates $33,839 $39,943
Lot Size > 5000 sq. ft. $5,047 $5,957
Lot Size 3250 - 5000 sq. ft. $4,153 $4,902
Lot Size < 3,250 sq. ft. $3,260 $3,848
Age- Restricted Single Family $5,998 $7,080
Multi-Family (>2 attached units)
8-12 units per net acre $3,260 $3,848
12-18 units per net acre $2,376 $2,805
>18 units per net acre $1,492 $1,761
Age Restricted Apartments $1,497 $1,767
Age-Restricted Congregate Care $791 $934
Non-Residential Fee Per Acre Fee Per Acre
Convenience Commercial $33,839 $39,943
Community Commercial $33,839 $39,943
Village Commercial $33,839 $39,943
Transit Commercial $33,839 $39,943
Highway Commercial $33,839 $39,943
Regional Commercial $33,839 $39,943
Office EC 30 $33,839 $39,943
Office EC 40 $33,839 $39,943
Office/Hospital EC 50 $33,839 $39,943
Office EC 65 $33,839 $39,943
Office EC 80 $33,839 $39,943
Light Industrial w/ <20% Office $33,839 $39,943
Light Industrial w/ 20%-50% Office $33,839 $39,943
Age-Restricted Conv. Care/Skilled Nursing $33,839 $39,943 Stadium $20,682 $24,413
RESOLUTION NO.
Adopted by the Sacramento City Council
Resolution Establishing the Revised Public Facilities Land Acquisition Fee Amount for the North Natomas Land Acquisition Program
BACKGROUND
A. The North Natomas Finance Plan, adopted by Resolution No. 1994-0495 and updated in 1999 by Resolution No. 1999-0471, in 2002 by Resolution No. 2002- 0374, in 2005 by Resolution No. 2005-0584, in 2009 by Resolution No. 2009- 0341, and in 2017 by Resolution No. 2018-0058 (the “NNFP”) established the North Natomas Land Acquisition Program (“LAP”) to facilitate the City’s timely acquisition of public land for installation of infrastructure and other public facilities in the NNFP Area (which area is defined in the NNFP).
B. Pursuant to City Code Chapter 18.24, Article III, the City Council may periodically revise the Public Facilities Land Acquisition Fee (“Fee”) charged to developers upon issuance of a building permit. Such revisions are determined by an independent land valuation study to establish the public land acquisition value (“PLAV”) based on the weighted average land value for properties in the NNFP area over the last three years.
C. City staff is recommending an adjustment of the Fee amount. The independent appraisal firm of BBG, Inc. completed a valuation study to determine the PLAV based on the weighted average land value for properties in the NNFP Area over the last three years. The 2023 Appraisal Report prepared by BBG, Inc. determined that as of November 1, 2022, the PLAV of developable land acre is estimated at $375,058 per acre (“Valuation Study”). When the last Fee adjustment was made in 2022, the PLAV was estimated at $317,741 per acre. In addition to the Valuation Study, City staff reviewed a Fee Study prepared by Economic and Planning Systems, Inc. in 2005 for the LAP. Therefore, City staff used the Valuation Study and the Fee Study (collectively, the “2023 Fee Basis”) to calculate the recommend amount for increase of the Fee amount for the LAP.
D. The North Natomas Community Plan (the “NNCP”), the NNFP, and the 2023 Fee Basis, along with the studies and reports each may reference or be based upon in whole or in part, together with any amendments thereto made after their initial adoption, establish the need for, costs of, and financing of public infrastructure and public facilities to address impacts of development within the NNFP Area, including acquisition of public lands, and present a reasonable basis on which to establish development impact fees. The foregoing items, and all other additional studies and reports, including, without limitation, drainage reports and proposals, transportation studies, and housing studies presented to the Council now or in the past for Council’s approval or for informational or other purposes, along with the studies, reports, and data each may reference or be based upon in whole or in part, and any and all amendments thereto made after their initial adoption, together with staff reports and other matters presented to the Council by City staff or interested parties, whether in writing or orally, constitute the record before City Council for purposes of the adoption of this resolution (the “Legislative Record”).
E. The Legislative Record contains an analysis of impacts of contemplated future development in the NNFP Area and the need for new public infrastructure and facilities required by such development. The 2023 Fee Basis sets forth a reasonable relationship between North Natomas development, the public lands, their estimated acquisition costs, and the amount of the development impact fee required for acquisition.
F. On Tuesday, April 18, 2023, at 5:00 p.m., a public hearing on adoption of this resolution was conducted by the Sacramento City Council at the City Council Chambers, New City Hall, 915 I Street (first floor), Sacramento, California and simultaneously by Zoom teleconferencing.
G. The 2023 Fee Basis was available for public inspection and review through the Office of the City Clerk for a period of at least ten days prior to the public hearing.
Materials supplementing the 2023 Fee Basis and all background data referenced in the 2023 Fee Basis were made available to interested parties upon request made to the City Finance Department, at least ten days prior to said public hearing.
H. The public hearing was also noticed pursuant to and in compliance with Government Code sections 66018, 66019, and 6062a and was held as part of a regularly scheduled meeting of the City Council, all as required by Section
18.24.070 of the Sacramento City Code.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. Findings.
(a) The City Council hereby finds and determines as follows:
(i) The background statements A through H are true and
correct and are incorporated herein by reference as
findings.
(ii) The contents of the 2023 Fee Basis are incorporated herein.
(b) As to the revised Fee associated with the LAP, as authorized by Chapter 18.24, Article III of the Sacramento City Code, the City Council makes the following additional findings:
(iii) The LAP (as subsequently revised) and the 2023 Fee Basis reflect reasonable and necessary refinements to the LAP as it was initially adopted. The revised LAP sets forth a
reasonable, fair, and equitable method by which the cost of the acquisition of necessary public land is shared by North Natomas landowners, without cost to the City. The revised LAP also sets forth provisions concerning credits,
reimbursements, and deferral in the payment of the Fee. As such, the revised LAP is consistent with the goals and
policies reflected in the NNCP and the NNFP.
(iv) The purpose of the Fee is to finance only the acquisition of required public land, as specified in Chapter V of the NNFP.
(v) The various types of development in the NNFP Area
generate a need for certain public infrastructure that has not been constructed and that is required for consistency with the City’s General Plan and the NNCP, and to protect the public’s health, safety, and general welfare. The acquisition of public land under the LAP is necessary to support the construction of public facilities and infrastructure and to provide open space, buffers, and certain parks as set forth in the LAP.
(vi) The Legislative Record establishes a reasonable relationship between the need for the specified public land and the
impacts of the various types of development contemplated in the NNFP Area, for which the Fee is charged.
(vii) There is a reasonable relationship between the use of the revised Fee and the type of development for which the Fee is charged, as described in the Legislative Record,
including, without limitation, the LAP, the NNFP, and the 2023 Fee Basis.
(viii) The revised Fee amount is consistent with the City’s General Plan and the NNCP, and the City Council has considered the effects of the Fee with respect to the City’s housing needs and the regional housing needs.
Section 2. The amount of the Fee provided under the LAP is hereby established for each of the referenced categories of land use as specified in the Updated North Natomas Public Facilities Land Acquisition Fee Schedule, which is incorporated herein as Exhibit A.
Section 3. The amount of the PLAV that is used to establish the Fee is hereby established as the amount specified in the Valuation Study, which is incorporated herein by reference and was based on the criteria defined in the NNFP. The PLAV may be adjusted annually and become effective July 1st of each succeeding year.
Section 4. Pursuant to Chapter 18.24 of the Sacramento City Code, credits against and reimbursements of the Fee shall be calculated and adjusted pursuant to and in accordance with the provisions of the NNFP.
Section 5. The provisions of this resolution are subject and subordinate to the provisions of City Code Chapter 18.24 and shall be construed and applied consistent therewith as Chapter 18.24 presently exists or is amended from time to time.
Section 6. Any judicial action or proceeding to attack, review, set aside, void, or annul this resolution must be brought within 120 days of its effective date, pursuant to California Government Code section 66022(a).
Section 7. This resolution will become effective 60 days after its adoption, pursuant to California Government Code section 66019(b).
Section 8. Severability.
(a) If any section, phrase, sentence, or other portion of this resolution for any reason is held or found to be invalid, void, unenforceable, or unconstitutional by a court of competent jurisdiction, such portion shall be deemed a separate, distinct, and independent provision, and such holding shall not affect the validity of the remaining portions of this resolution.
(b) If any fee set by this resolution for any reason is held or found to be invalid, void, unenforceable, or unconstitutional by a court of competent jurisdiction, such fee shall be deemed a separate, distinct and independent fee, and such holding shall not affect the validity of the remaining fees set by this resolution.
(c) If any fee set by this resolution is held or found to be invalid, void, unenforceable, or unconstitutional by a court of competent jurisdiction based upon an insufficient relationship or nexus to a specific public infrastructure for which the revenue generated from such fee may be expended pursuant to Chapter 18.24 of the Sacramento City Code or any resolution adopted pursuant to that chapter, the fee as it relates to the specific public infrastructure shall be deemed a separate, distinct, and independent fee, and such holding shall not affect the validity of the fee as it relates to other public infrastructure.
Section 9. Exhibit A is part of the resolution.
Table of Contents:
Exhibit A: Updated North Natomas Public Facilities Land Acquisition Fee Schedule
EXHIBIT A TO RESOLUTION
UPDATED NORTH NATOMAS PUBLIC FACILITIES LAND
ACQUISITION FEE SCHEDULE
LAND USE
Public Facilities Land
Acquisition Fee
(Effective July 1, 2023)
Residential Fee Per Unit
Single Family Attached / Detached
Rural Estates $39,943
Lot Size > 5000 sq. ft. $5,957
Lot Size 3,250-5,000 sq. ft. $4,902
Lot Size < 3,250 sq. ft. $3,848
Age-Restricted Single Family $7,080
Multi-Family (>2 attached units)
8-12 units per net acre $3,848
12-18 units per net acre $2,805
>18 units per net acre $1,761
Age-Restricted Apartments $1,767
Age-Restricted Congregate Care $934
Non-Residential Fee Per Acre
Convenience Commercial $39,943
Community Commercial $39,943
Village Commercial $39,943
Transit Commercial $39,943
Highway Commercial $39,943
Regional Commercial $39,943
Office EC 30 $39,943
Office EC 40 $39,943
Office/Hospital EC 50 $39,943
Office EC 65 $39,943
Office EC 80 $39,943
Light Industrial w/ <20% Office $39,943
Light Industrial w/ 20%-50% Office $39,943
Age-Restricted Conv. Care/Skilled Nursing $39,943 Stadium $24,413