City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
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File ID: 2024-00550 2/27/2024 Consent Item 9.
Appropriation of Funds for Redemption of Delta Shores Impact Fee Credits File ID: 2024-00550
Location: Districts 7, Represented by Councilmember Jennings; and District 8, Represented by Councilmember Vang and Mayor Steinberg
Recommendation: 1) Adopt a Resolution a) authorizing the City Manager or the City Manager’s designee to increase the revenue and expenditure budgets by $695,921 for the Delta Shores MYOP Project (I06132130) in the Delta Shores Fee Fund (3217); b) transfer the revenue and expenditure budget to the Delta Shores MYOP (I06132130) project in the Delta Shores Fee Fund (Fund 3217) by $500,000 from the Non-Departmental operating budget; and c) authorizing the City Manager or the City Manager’s designee to redeem Delta Shores Impact Fee credits in accordance with the amounts stated in Exhibit A.
Contact: Jessica Steinhauer, Senior Development Project Manager, (916) 808-8243, [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
Description/Analysis
Issue Detail: As required by City Code Chapter 18.56 and the Delta Shores Finance Plan, the City collects the Delta Shores Impact Fee (“DS Fee”) for each Delta Shores building permit for the purpose of constructing or reimbursing developers that construct or advance-fund construction of the public infrastructure and facilities needed to serve the Delta Shores Planned Unit Development Project and the Stone Boswell Sub-Area Project. There are several components of the DS Fee, including the Regional Infrastructure, Backbone Infrastructure, and Public Facilities components.
In 2020, the City and M&H executed the Acquisition, Reimbursement, and Credit Agreement for
File ID: 2024-00550 2/27/2024 Consent Item 9.
Construction of Delta Shores Public Infrastructure, designated as City Agreement No. 2020-2502, dated August 18, 2020 (”ARC Agreement”). Per the ARC Agreement, (1) M&H agreed to construct or advance-fund specified regional and backbone infrastructure and public facilities included in the DS Fee program (2) the City agreed to acquire the improvements from M&H; and (3) the City agreed to reimburse M&H for the eligible costs of the improvements by providing credits against, and cash reimbursement from, the DS Fee in accordance with Chapter 18.56, article X, of the Sacramento City Code and the ARC Agreement.
Section 5 of the ARC Agreement authorizes M&H to assign the fee credits issued under the ARC Agreement to any person or entity by entering into a written assignment agreement, approved by the City, by which the assignee agrees to be subject to the ARC Agreement with respect to the fee credits. Subsequently, M&H entered into written agreements designated as City Agreement No. 2020 -3635 and City Agreement No. 2022-0650 which assigned a portion of M&H’s fee credits to Kaiser Foundation Health Plan, Inc. (“Kaiser”), and DS Shopping Center, LLC (“DS”).
The fee Credits that M&H retains and the fee credits that it assigns have the same redemption priority, per Section 5 of the ARC Agreement, which requires that the City to redeem credits in the order in which each Acquisition, Reimbursement, and Credit Agreement is signed. If the funds available in the DS Fee accounts are not sufficient to redeem all fee credits of the same priority, then redemption of the tendered fee credits will be pro rata based on each Developer’s credit balance as of December 31, 2023.
Approximately $695,921 in infrastructure impact fee revenues have been collected by the City and need to be appropriated for redemption of infrastructure fee credits. The recommended actions will authorize the redemption of M&H, Kaiser, and DS infrastructure fee credits in accordance with the ARC Agreement as follows:
Developer
Delta Shores
Regional
Infrastructure Fee
Credits Redemption
Allocation Amount
Delta Shores
Backbone
Infrastructure Fee
Credits Redemption
Allocation Amount
Payments to
Developer
M & H Realty Partners VI, LP 270,846.90$ 210,936.67$ 481,783.58$ Kaiser Foundation Health Plan, Inc. 71,187.94$ 128,113.67$ 199,301.61$ DS Shopping Center, LLC 5,257.36$ 9,577.57$ 14,834.93$ Total 347,292.20$ 348,627.92$ 695,920.12$ The ARC Agreement requires the City to offer impact fee credit redemption bi-annually if there is cash in the fee fund to do so. As residential development in Delta Shores is increasing, staff expects regular redemption of DS Fee credits in the future. Approval of the standard-form Waiver and Release Agreement, attached to this staff report, and City Manager signature authorization will
File ID: 2024-00550 2/27/2024 Consent Item 9.
ensure that both the City and credit holders’ consent to the amount of redemption of DSF credits in cash.
During Fiscal Year (FY) 2023/24, $500,000 of the Delta Shores infrastructure impact fee revenue to be collected between January and June 2024 which can be used for subsequent redemption was budgeted in the Non-Departmental operating budget. This funding needs to be transferred to the Delta Shores MYOP (I06132130).
Policy Considerations: The recommendation is consistent with the ARC Agreement and will provide for the distribution of DSF revenues, collected to date, to redeem M&H, Kaiser, and DS in cash for their infrastructure fee credits. The DSF revenues may not be used for the reimbursement or redemption of fee credits unless appropriated by the City Council for that purpose (see City Charter section116).
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)).
The City prepared an environmental impact report (“EIR”) that evaluated the environmental effects of the Delta Shores project (P06-197). The City Council certified the EIR on January 13, 2009 (Resolution No. 2009-0030), and the Planning and Design Commission later certified the EIR and an addendum for the commercial-development portion of the Delta Shores project (P14- 025) on April 16, 2015. The Stone-Boswell area will be evaluated when a formal project application is submitted to the City, and at that time the impacts related to the project and its infrastructure will be analyzed.
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: Appropriating funds from Fund 3217 will allow M&H, Kaiser, and DS to redeem DSF credits in accordance with the ARC Agreement for advance funding a portion of the construction of regional and backbone infrastructure. The recommended actions are consistent with the City Code Chapter 18.56, Article X.
Financial Considerations: The Delta Shores MYOP Project (I06132130) budget needs to be increased by $1,195,921 in the Delta Shores Fee Fund (Fund 3217) to provide for the Delta Shores
File ID: 2024-00550 2/27/2024 Consent Item 9.
infrastructure fee credits redemption authorized under the ARC Agreement. This amount includes the budget transfer of the $500,000 from the FY2023/24 Non-Departmental operating budget for the same purpose which is in addition to the $695,921 budget increase for the actual revenue collected.
Local Business Enterprise (LBE): Not applicable.
RESOLUTION NO. 2024-
Adopted by the Sacramento City Council
Resolution Appropriating Funds for Redemption of Delta Shores Impact Fee Credits
BACKGROUND
A. In 2020, the City and M&H executed the Acquisition, Reimbursement, and Credit Agreement for Construction of Delta Shores Public Infrastructure, designated as City Agreement No. 2020-2502, dated August 18, 2020 (“ARC Agreement”). Per the ARC Agreement, (1) M&H agreed to construct or advance-fund specified regional and backbone infrastructure and public facilities included in the DS Fee program (2) the City agreed to acquire the improvements from M&H; and (3) the City agreed to reimburse M&H for the eligible costs of the improvements by providing credits against, and cash reimbursement from, the Delta Shores Impact Fee (“DS Fee”) in accordance with Chapter 18.56, article X, of the Sacramento City Code and the ARC Agreement.
B. The City has confirmed that M&H constructed the regional infrastructure, certain backbone infrastructure, and public facilities as required by the ARC Agreement and is entitled to redemption of fee credits for those improvements.
C. Section 5 of the ARC Agreement authorizes M&H to assign the fee credits issued under the ARC Agreement to any person or entity by entering into a written assignment agreement, approved by the City, by which the assignee agrees to be subject to the ARC Agreement with respect to the fee credits. M&H therefore entered into written agreements designated as City Agreement No. 2020-3635 and City Agreement No. 2022-0650 and assigned a portion of M&H’s fee credits to Kaiser Foundation Health Plan, Inc., and to DS Shopping Center, LLC.
D. The fee Credits that M&H retains and the fee credits that it assigns have the same redemption priority, per Section 5 of the ARC Agreement which is determined by the effective date of the ARC Agreement. The City must redeem credits in the order in which each Acquisition, Reimbursement, and Credit Agreement is signed.
If the funds then available in the Delta Shores Impact Fee accounts are not sufficient to redeem all fee credits of the same priority, then redemption of the tendered fee credits will be pro rata based on each Developers credit balance as of December 31, 2023.
E. Since July 2023, the City has collected Delta Shores Impact Fee revenues totaling $695,920.12 that can be used to redeem Delta Shores Impact Fee credits in cash.
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 E are true and correct.
Section 2. The City Manager or the City Manager’s designee is hereby authorized to increase the revenue and expenditure budget in the Delta Shores MYOP (I06132130) project in the Delta Shores Fee Fund (Fund 3217) by $695,921.
Section 3 The City Manager or the City Manager’s designee is hereby authorized to transfer the $500,000 Delta Shores Fee Fund (Fund 3217) Fiscal Year 2023/24 Non-Departmental operating revenue and expenditure budgets to the Delta Shores MYOP (I06132130).
Section 4. The City Manager or the City Manager’s designee is hereby authorized to redeem DS Fee credits in accordance with the amounts stated in Exhibit A attached hereto.
Section 5. Exhibit A is part of the resolution.
Table of Contents:
Exhibit A – Delta Shores Impact Fee Credit Redemption Amounts
Exhibit A
Delta Shores Impact Fee Credit Redemption Amounts
Developer
Delta Shores
Regional
Infrastructure Fee
Credits Redemption
Allocation Amount
Delta Shores
Backbone
Infrastructure Fee
Credits Redemption
Allocation Amount
Payments to
Developer
M & H Realty Partners VI, LP 270,846.90$ 210,936.67$ 481,783.58$ Kaiser Foundation Health Plan, Inc. 71,187.94$ 128,113.67$ 199,301.61$ DS Shopping Center, LLC 5,257.36$ 9,577.57$ 14,834.93$ Total 347,292.20$ 348,627.92$ 695,920.12$