CITY OF SIGNAL HILL
STAFF REPORT
2175 Cherry Avenue • Signal
Hill, California 90755-3799
1/10/2023
AGENDA ITEM
TO:
HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM:
SHARON DEL ROSARIO
ADMINISTRATIVE SERVICES OFFICER/FINANCE DIRECTOR
SUBJECT:
REPORTS ON DEVELOPMENT IMPACT FEES FOR FISCAL YEAR (FY) 2021-22, FY 2020-21, AND FY 2019-20
Summary:
Form of Notice: Notice was published in the Signal Tribune newspaper per Government Code Section 65091 (a)(4) on December 16, 2022; and was posted in accordance with Signal Hill Municipal Code Section 1.08.010 on or before December 16, 2022.
In accordance with Section 66006 of the California Government Code, the City is required to report on the status of Development Impact Fees (DIFs), including the collection of revenue and expenditures of these funds. This report summarizes the required financial information for FY 2021- 22, 2020-21, and 2019-20.
Recommendation:
Receive and file the annual financial report findings relating to the Traffic Impact Fees, Park and Recreation Impact Fees, and the Water System Impact Fees required under the California Mitigation Act (AB 1600) and based on the findings reported, reaffirm the necessity of continuing to collect and accumulate unexpended impact fees under the Government Code section 66001(d).
Fiscal Impact:
There is no fiscal impact related to receiving and filing of this report, as impact fee revenues and expenditures have already been approved as part of the City’s budget. Reporting of this information satisfies the regulatory requirements for the City to continue to impose DIFs on new development.
Strategic Plan Objectives:
Goal No. 1: Ensure long-term fiscal stability.
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Goal No. 4: Maintain the public infrastructure.
Goal No. 5: Ensure an enhanced quality of life for the residents.
Goal No. 6: Promote a transparent and open government.
Background and Analysis:
The California Government Code Sections 66000 through 66006 contain certain procedural requirements that apply to the collection of DIFs and the expenditure of these revenues. Section 66006 of the California Government Code specifies accountability and annual reporting requirements pertaining to development impact fees. SB 1693 modified this government code section as of January 1, 1997. While staff prepares an update to the DIF funds with the annually adopted budget, State law requires that the City periodically provides reports and make findings to support the ongoing implementation of the current impact fee program. These requirements include 1) an annual report of receipts, expenditures, and status of DIF funds and 2) findings every five years providing specific information about certain fund balances.
The annual report presents a review only of the development impact fee activity, by account, for the fiscal year. It does not include any recommendations for any fee changes. However, any fee changes that have occurred during the year have been incorporated into this report. The report should include the following items.
A. A brief description of the type of fee in the account.
B. The amount of the fee.
C. The beginning and ending balance of the account.
D. The amount of fees collected and interest earned.
E. Identification of each public improvement for which fees were spent, the total public expenditures for each improvement, and the percentage of the expenditures that were paid for with development impact fees.
F. An approximate date by which construction of the public improvement will commence if the City determined that sufficient funds have been collected to complete financing on an incomplete public improvement.
G. Amount of refunds or re-allocations of development impact fees made pursuant to Government Code 66001
The five-year report analyzes unexpended revenues. California Government Code Section 66001(d) (1) requires the local agency make all the following findings every fifth year with the respect to the portion of the account remaining unexpended, whether encumbered to a specific project or remaining unencumbered in an impact fee fund. The report should include the following items.
A. Identify the purpose to which the fees is to be put.
B. Demonstrate a reasonable relationship between the fee and purpose for which it is charged.
C. Identify all sources and amount so funding anticipated to complete financing in incomplete improvements.
D. Designate the approximate dates on which the funding is expected to be deposited into the appropriate account or fund.
The Traffic Impact Fee fund and Park and Recreation Impact Fee fund has DIFs collected over five years ago that remain unexpended and the City is required to report the specified findings. The report findings determined that these funds are in compliance and provide the expected use of the CITY OF SIGNAL HILL Page 2 of 3 Printed on 1/6/2023
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report findings determined that these funds are in compliance and provide the expected use of the DIFs designated for current or future Capital Improvement Program (CIP) projects. Also, the City is in the process of preparing a Local Road and Safety plan that will identify future street, traffic signal and roadway improvements needed to provide adequate traffic flow and safety from growth projected pursuant to the general plan and it is anticipated that this plan will identify additional improvement projects utilizing the balance of the Traffic Impact Fee fund. The City also plans to update its Parks and Recreation Master plan and its companion Priority and Implementation plan to help project future increased park and trail acreage needs that correlate with the projected population growth of the City resulting from future developments. While, the current five-year findings identify the planned CIP projects, the updated master plans are projected to identify new CIP improvements utilizing these DIFs in the near term.
The Water System Impact Fee is considered a capacity fee and is treated differently than other fees under AB 1600 and are not subject to the same findings and accounting requirements.. The Water System Impact fees were historically part of this report and has been included for full disclosure. The Impact fee fund currently has an existing balance and is anticipated to be fully utilized for future water improvement projects.
While the City currently conducts a thorough review of the impact fee funds during the annual budget process to assess current development projects, anticipated impact fee collections and CIP projects utilizing impact fees, the City Council last reviewed the detailed impact fee report findings in 2012.
Section 66006(b)(1) of the California Government Code requires each local agency to make public a status report of it’s development fees within 180 days after the last day of each fiscal year. Section 66006(2) also requires each local legislative body to review the annual report on development fees at a public meeting not earlier than 15 days after the information is made available to the public. This year the City of Signal Hill made its annual and five-year impact fee report on development fees available to the public on December 23, 2022 and posted two prior year reports to bring the City into compliance to meet these requirements.
The City’s DIF program has helped fund important City infrastructure to accommodate growth from new development, which ultimately supports the City Council’s efforts to build better neighborhoods that can integrate new development while preserving the City’s existing character.
Staff recommends the City Council receive and file the annual and five-year impact fee reports. The reports identify projects included in the adopted and long-term CIP plan that utilize the DIF unspent fund balance; thus demonstrating the City’s current use of DIF funds and the continued need for impact fee funding and satisfies the requirements and obligations under the Mitigation Fee Act.
Approved:
_________________________
Joe Hoefgen
Attachments
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