City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-01644 1/23/2024 Public Hearing Item 13.
Administrative Matter: Adopt Resolutions to Refine Exemption Language Related to the Department of Utilities Development Impact Fee Adjustments File ID: 2023-01644
Location: Citywide
Recommendation: Conduct a public hearing and upon conclusion: 1) Adopt a Resolution amending exemption language related to adopted Water System, Sewer, and Combined Sewer Development Fees; and 2) Adopt a Resolution amending exemption language related to the adopted Storm Drainage Development Fee.
Contact: Kelly Sherfey, Project Manager, (916) 808-1466, [email protected]; Sherill Huun, Engineering & Water Resources Division Manager, (916) 808-1455, [email protected], Pravani Vandeyar, Director, (916) 808-3765, [email protected]; Department of Utilities Presenter: Pravani Vandeyar, Department of Utilities Director, (916) 808-3765, [email protected]
Attachments:
1- Description/Analysis
2- Redline Changes of Grading Exemption Language
3- Resolution relating to the Water System, Sewer, and Combined Sewer Development Fee 4- Resolution relating to the Storm Drainage Development Fee Description/Analysis
Issue Detail: On October 24, 2023, and November 14, 2023, City Council adopted Resolutions 2023- 0338 and 2023-0368, respectively, to adjust the Water System, Sewer, and Combined Sewer Development Fees, as well as establish the Storm Drainage Development Fee to align with recently updated Nexus Studies. The resolutions provided exemptions to development projects that had engaged in grading and subdivision improvement plan activities that were vague and may lead to misinterpretation. The proposed resolutions include more detailed grading exemption language and will replace that exemption language in Resolutions 2023-0338 and 2023-0368. These resolutions
File ID: 2023-01644 1/23/2024 Public Hearing Item 13.
will take effect 60 days after adoption.
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.
U 1.1.5 Growth and Level of Service. The City shall require new development to provide adequate facilities or pay its fair share of the cost for facilities needed to provide services to accommodate growth without adversely impacting current service levels.
U 1.1.6 Infrastructure Finance. The City shall develop and implement a financing strategy and assess fees to construct needed water, wastewater, stormwater drainage, and solid waste facilities to maintain established service levels and to mitigate development impacts to these systems (e.g., pay capital costs associated with existing infrastructure that has inadequate capacity to serve new development). The City shall also assist developers in identifying funding mechanisms to cover the cost of providing utility services in infill areas.
Economic Impacts: The Water System, Sewer, Combined Sewer, and Storm Drainage Development Fees (Utility Development Fees) will fund infrastructure necessary to support development.
Environmental Considerations: It has been determined that the proposed activities are not a project pursuant to the California Environmental Quality Act (CEQA) Guidelines Section 15378(b).
The activities described in this report are the creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. As a result, the proposed activities are not subject to CEQA pursuant to CEQA Guidelines Section 15060(c)(3).
Sustainability: The proposed fee supports new residential and non-residential development needed to meet the population growth projections outlined in the General Plan. The proposed development fee framework ensures that existing ratepayers are not paying 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: The Law and Legislation Committee reviewed the Storm Drainage Development Fee Ordinance on September 19, 2023, and forwarded a recommendation of approval to the City Council by a vote of four to zero.
City Council adopted Resolution 2023-0338 related to the Water, Sewer, and Combined Sewer Development Fees and the Storm Drainage Development Fee Ordinance on October 24, 2023, by a vote of eight to zero.
File ID: 2023-01644 1/23/2024 Public Hearing Item 13.
City Council adopted Resolution 2023-0368 related to the Storm Drainage Development Fees on November 14, 2023, by a vote of nine to zero.
Rationale for Recommendation: City Council approval is required for the amendments to the grading exemption language. The revised exemption language provides additional clarity for implementation of the exemption.
Financial Considerations: Development fees provide a mechanism to ensure that new development pays for the public infrastructure needs caused by new growth. The Utility Development Fees framework also includes administrative fees to recoup staff time required to administer the program. Revenues derived from the Utility Development Fees will be deposited in separate funds.
The exemptions from the Utility Development Fee adjustments provided for pipeline projects will create a funding gap in Utilities’ Capital Improvement Programs. This funding gap must be closed with alternative funding sources. Refinement of the grading exemption language will narrow the funding gap by focusing the exemption on intended pipeline projects and not inactive development projects within the City.
The Utility Development Fees will not have an impact on the General Fund.
Local Business Enterprise (LBE): Not applicable.
Background: City Council adopted the Water System, Sewer, and Combined Sewer Development Fees (Resolution 2023-0338) and the Storm Drainage Development Fees (Resolution 2023-0368), with an effective date of January 22, 2024.
Throughout the outreach process, the main area of concern has been the effect of these fees on development projects currently in the development pipeline. To address these concerns, the implementation of the Utility Development Fee adjustments was phased in over four years.
Additionally, all projects with a building permit application that has been accepted for processing by the City and has paid application fees prior to January 22, 2024, are not subject to the adjusted fee amounts. Finally, a five-year exemption from the adjusted fees was provided for projects with active SB 330 and grading permit and subdivision improvement plan applications submitted before the effective date, January 22, 2024.
This approach helped address the concern related to the current economic market facing development and took into consideration development projects that were already in the middle of the City’s approval processes.
However, as the Department of Utilities (DOU) began to develop the implementation guidelines of these fees and the associated exemptions it was found that the adopted exemption language related
File ID: 2023-01644 1/23/2024 Public Hearing Item 13.
to grading is vague and may lead to misinterpretation.
To help provide clarity and ensure that the initial intent to exempt active projects in the pipeline is met, DOU has developed refined language.
The added subsections to the grading exemption exclude grading permits and subdivision improvement plans that were submitted in the past and are currently inactive. A grading permit or subdivision improvement plan is inactive if there has been no inspections conducted, or permits applied for, reviewed or issued by the City within the project area for a period of one year. These projects would not be considered pipeline projects at the time of the adoption of the Utility Development Fee adjustments.
Lastly, the revised language defines the specific parcels that the exemption applies to based on the grading plans submitted with the grading permit or subdivision improvement plan. It also defines grading as rough or final grading and excludes stockpiling.
DOU has worked with stakeholders on the language amendments to confirm the agreed upon intent remains while providing clear guidelines to staff for implementation purposes.
The proposed resolutions will take effect March 23, 2024.
DOU Development Impact Fee Adjustment
Grading Exemption Amendment
C. Projects with submitted grading permit applications or subdivision improvement plan applications that have been accepted for processing by the City and have paid application fees prior to January 22, 2024, or grading permit applications or subdivision improvement plans approved prior to January 22, 2024, are not subject to the adjusted fee amounts shown in Exhibit B for five years after January 22, 2024. a. This exemption does not apply to projects with grading permits or subdivision improvement plans that are inactive as of January 22, 2024. A grading permit or subdivision improvement plan is inactive if there has been no inspections conducted, or permits applied for, reviewed or issued by the City within the project area for a period of one year.
b. For the purposes of this exemption, a project area is defined as the parcels in the grading permit or subdivision improvement plan that include rough or final grading detail, excluding stockpile grading.
RESOLUTION NO. 2024-
Adopted by the Sacramento City Council
January 23, 2024
ADOPTING A REVISED EXEMPTION FROM THE CITY OF SACRAMENTO ADJUSTED
WATER SYSTEM, SEWER, AND COMBINED SEWER DEVELOPMENT FEES
BACKGROUND
A. On October 24, 2023, the City Council held a public hearing in the manner required by Government Code section 66016 and subsequently adopted Resolution Number 2023- 0338, which approved nexus studies relating to the Water System, Sewer System, and Combined Sewer System and adopted adjusted Water System, Sewer, and Combined Sewer Development Fees.
B. As the Department of Utilities (DOU) began to develop the implementation guidelines for the adjusted development fees and the associated exemptions it was found that the adopted exemption language in the Resolution related to grading was vague and may lead to misinterpretation.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The exemption set forth in Section 3.C of Resolution number 2023-0338 is revised as follows:
C. Projects with submitted grading permit applications or subdivision improvement plan applications that have been accepted for processing by the City and have paid application fees prior to January 22, 2024, or grading permit applications or subdivision improvement plans approved prior to January 22, 2024, are not subject to the adjusted fee amounts shown in Exhibit B for five years after January 22, 2024.
a. This exemption does not apply to projects with grading permits or subdivision improvement plans that are inactive as of January 22, 2024. A grading permit or subdivision improvement plan is inactive if there has been no inspections conducted, or permits applied for, reviewed or issued by the City within the project area for a period of one year.
b. For the purposes of this exemption, a project area is defined as the parcels in the grading permit or subdivision improvement plan that include rough or final grading detail, excluding stockpile grading.
Section 2. This resolution takes effect March 23, 2024.
Adopted by the City of Sacramento City Council on January 23, 2024, by the following vote:
Ayes:
Noes:
Abstain:
Absent:
Attest:
The presence of an electronic signature certifies that the foregoing is a true and correct copy as approved by the Sacramento City Council.
RESOLUTION NO. 2024-
Adopted by the Sacramento City Council
January 23, 2024
ADOPTING A REVISED EXEMPTION FROM THE CITY OF SACRAMENTO ADJUSTED
STORM DRAINAGE DEVELOPMENT FEE
BACKGROUND
A. On November 14, 2023, the City Council held a public hearing in the manner required by Government Code section 66018 and subsequently adopted Resolution Number 2023-0368, which approved a nexus study related to the Storm Drainage System and adopted a Storm Drainage Development Fee.
B. As the Department of Utilities (DOU) began to develop the implementation guidelines for the adjusted development fee and the associated exemptions, it was found that the adopted exemption language in Resolution 2023-0368 related to grading was vague and may lead to misinterpretation.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The exemption set forth in Section 5.B of Resolution number 2023-0368 is revised as follows:
B. Projects with submitted grading permit applications or subdivision improvement plan applications that have been accepted for processing by the City and have paid application fees prior to January 22, 2024, or grading permit applications or subdivision improvement plans approved prior to January 22, 2024, are not subject to the adjusted fee amounts shown in Exhibit B for five years after January 22, 2024.
a. This exemption does not apply to projects with grading permits or subdivision improvement plans that are inactive as of January 22, 2024. A grading permit or subdivision improvement plan is inactive if there has been no inspections conducted, or permits applied for, reviewed or issued by the City within the project area for a period of one year.
b. For the purposes of this exemption, a project area is defined as the parcels in the grading permit or subdivision improvement plan that include rough or final grading detail, excluding stockpile grading.
Section 2. This resolution takes effect March 23, 2024.
Adopted by the City of Sacramento City Council on January 23, 2024, by the following vote:
Ayes:
Noes:
Abstain:
Absent:
Attest:
The presence of an electronic signature certifies that the foregoing is a true and correct copy as approved by the Sacramento City Council.