7 (g) Effect of Redemption. From and after the date fixed for redemption, if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption have been duly provided, such Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date specified in such notice. Unless otherwise directed in writing by the City, the Trustee shall cancel and destroy all Bonds redeemed under this Section 2.03.
SECTION 2.04. Book Entry System.
(a) Original Delivery. The Bonds will be initially delivered in the form of a separate single fully registered bond (which may be typewritten) for each maturity of the Bonds. Upon initial delivery, the Trustee shall register the ownership of each Bond on the Registration Books in the name of the Nominee. Except as provided in subsection (c), the ownership of all of the Outstanding Bonds will be registered in the name of the Nominee on the Registration Books.
With respect to Bonds the ownership of which is registered in the name of the Nominee, the City and the Trustee have no responsibility or obligation to any Depository System Participant or to any person on behalf of which the Nominee holds an interest in the Bonds. Without limiting the generality of the immediately preceding sentence, the City and the Trustee have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Depository System Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed if the City elects to redeem the Bonds in part, (iv) the payment to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any amount with respect to principal, premium, if any, or interest on the Bonds or (v) any consent given or other action taken by the Depository as Owner of the Bonds.
The City and the Trustee may treat and consider the person in whose name each Bond is registered as the absolute owner of such Bond for the purpose of payment of principal of and premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers of ownership of such Bond, and for all other purposes whatsoever. The Trustee shall pay the principal of and the interest and premium, if any, on the Bonds only to the respective Owners or their respective attorneys duly authorized in writing, and all such payments will be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal of and interest and premium, if any, on the Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner shall receive a Bond evidencing the obligation of the City to make payments of principal, interest and premium, if any, under this Indenture. Upon delivery by the Depository to the City of written notice to the effect that the Depository has determined to substitute a new Nominee in its place, and subject to the provisions herein with respect to Record Dates, such new nominee will become the Nominee hereunder for all purposes; and upon receipt of such a notice the City will promptly deliver a copy of the same to the Trustee.
8 (b) Representation Letter. In order to qualify the Bonds for the Depository’s book-entry system, the City will execute and deliver to such Depository a letter representing such matters as necessary to so qualify the Bonds. The execution and delivery of such letter shall not in any way limit the provisions of subsection (a) above or in any other way impose upon the City or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Bond Owners. Upon the written acceptance by the Trustee, the Trustee shall agree to take all action reasonably necessary for all representations of the Trustee in such letter with respect to the Trustee to at all times be complied with. In addition to the execution and delivery of such letter, the City may take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.
(c) Transfers Outside Book-Entry System. If either (i) the Depository determines not to continue to act as Depository for the Bonds, or (ii) the City determines to terminate the Depository as such, then the City will thereupon discontinue the book-entry system with such Depository. In such event, the Depository shall cooperate with the City and the Trustee in the issuance of replacement Bonds by providing the Trustee with a list showing the interests of the Depository System Participants in the Bonds, and by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or before the date such replacement Bonds are to be issued. The Depository, by accepting delivery of the Bonds, agrees to be bound by the provisions of this subsection (c). If, prior to the termination of the Depository acting as such, the City fails to identify another Securities Depository to replace the Depository, then the Bonds shall no longer be required to be registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging Bonds shall designate, in accordance with the provisions hereof.
If the City determines that it is in the best interests of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the City may notify the Depository System Participants of the availability of such certificated Bonds through the Depository.
In such event, the Trustee will authenticate, transfer and exchange Bonds as required by the Depository and others in appropriate amounts; and whenever the Depository requests, the Trustee and the City will cooperate with the Depository in taking appropriate action (a) to make available one or more separate certificates evidencing the Bonds to any Depository System Participant having Bonds credited to its account with the Depository, or (b) to arrange for another Securities Depository to maintain custody of a single certificate evidencing such Bonds, all at the City’s expense. (d) Payments to the Nominee. Notwithstanding any other provision of this Indenture to the contrary, so long as a Bond is registered in the name of the Nominee, all payments with respect to principal of and interest and premium, if any, on that Bond and all notices with respect to that Bond shall be made and given, respectively, as provided in the letter described in subsection (b) of this Section or as otherwise instructed by the Depository.
SECTION 2.04. Form and Execution of Bonds. The Bonds, the form of Trustee’s certificate of authentication, and the form of assignment to appear thereon, are set forth in Appendix B attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture.
9 The City Manager of the City shall execute, and the City Clerk shall attest each Bond. Any or all of such signatures may be made manually or may be affixed by facsimile thereof. If any officer whose signature appears on a Bond ceases to be such officer before the Closing Date, such signature will nevertheless be as effective as if the officer had remained in office until the Closing Date. A Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of that Bond are the proper officers of the City, duly authorized to execute debt instruments on behalf of the City, although on the date of that Bond any such person was not an officer of the City.
Only those Bonds bearing a certificate of authentication in the form set forth in Appendix B, manually executed and dated by the Trustee, are valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee is conclusive evidence that such Bonds have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
SECTION 2.05. Transfer and Exchange of Bonds.
(a) Transfer. A Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of that Bond to the Trustee at its Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. The Trustee shall collect any tax or other governmental charge on the transfer of any Bonds under this Section. Whenever any Bond or Bonds are surrendered for transfer, the City will execute and the Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of like series, interest rate, maturity and aggregate principal amount. The City will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer of Bonds.
(b) Exchange. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations and of the same series, interest rate and maturity. The Trustee shall collect any tax or other governmental charge on the exchange of Bonds under this subsection (b). The City will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any exchange of Bonds.
SECTION 2.06. Registration Books. The Trustee will keep or cause to be kept, at its Office, sufficient records for the registration and registration of transfer of the Bonds, which shall at all times during normal business hours, and upon reasonable notice, be open to inspection by the City. The Trustee will register the ownership and transfer of the Bonds on the Registration Books under such reasonable regulations as it may prescribe.
SECTION 2.07. Bonds Mutilated, Lost, Destroyed or Stolen. If a Bond is mutilated, the City, at the expense of the Owner of that Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and substitution for the Bond so mutilated, upon surrender to the Trustee of the Bond so mutilated. The Trustee shall cancel every mutilated Bond surrendered to it and deliver such mutilated Bond to or upon the order of the City. If a Bond is lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence is satisfactory to the Trustee and if indemnity satisfactory to the Trustee is given, the City, at the expense of the Owner, will execute, and the Trustee will thereupon authenticate and
10 deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen. The Trustee may require payment of a sum not exceeding the actual cost of preparing each new Bond issued under this Section and of the expenses which may be incurred by the Trustee in connection therewith. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen will constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and are equally and proportionately entitled to the benefits of this Indenture with all other Bonds issued under this Indenture.
Notwithstanding any other provision of this Section, in lieu of delivering a new Bond for which principal has become due for a Bond which has been mutilated, lost, destroyed or stolen, the Trustee may make payment of such Bond in accordance with its terms upon receipt of indemnity satisfactory to the Trustee.
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS;
ISSUANCE OF PARITY DEBT
SECTION 3.01. Issuance of Bonds. Upon the execution and delivery of this Indenture, the City shall execute and deliver Bonds in the aggregate principal amount of $[PAR] to the Trustee and the Trustee shall authenticate and deliver the Bonds to the Original Purchaser upon receipt of a Request of the City therefor.
SECTION 3.02. Deposit and Application of Proceeds. Upon receipt of the proceeds of the Bonds on the Closing Date, the Trustee shall deposit and apply the proceeds as follows:
(i) the Trustee shall deposit the amount of $_______ in the Costs of Issuance Fund.
(ii) the Trustee shall apply the amount of $_______, constituting the remainder of the proceeds of sale of the Bonds, to the satisfaction of the City’s obligations under the PERS Contracts by effecting a wire transfer of such proceeds to PERS, in accordance with a Request of the City.
SECTION 3.03. Establishment and Application of Costs of Issuance Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the “Costs of Issuance Fund” into which the Trustee shall deposit a portion of the proceeds of sale of the Bonds under Section 3.02(a). The Trustee shall disburse amounts in the Costs of Issuance Fund from time to time to pay the Costs of Issuance of the Bonds upon submission of a Request of the City stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. The Trustee may conclusively rely on such Requests of the City and shall be fully protected in relying thereon. On _____, 20__, or upon the earlier Request of the City, the Trustee shall transfer all amounts remaining in
11 the Costs of Issuance Fund to the Debt Service Fund, and shall thereupon close the Costs of Issuance Fund.
SECTION 3.04. Validity of Bonds. The validity of the authorization and issuance of the Bonds is not dependent upon the expenditure of the proceeds thereof to pay PERS Obligations, or upon the performance by any person of its obligation with respect to the PERS Obligations.
SECTION 3.05. Issuance of Parity Debt. The City may issue Parity Debt in such principal amount as it determines subject to the following conditions precedent:
(a) No Event of Default (or no event with respect to which notice has been given and which, once all notice of grace periods have passed, would constitute an Event of Default) has occurred and is continuing. (b) The proceeds of such Parity Debt shall be applied solely for (A) satisfying any obligation to make payments pursuant to the Retirement Law relating to pension benefits accruing to the City employees who are PERS members, and for payment of all costs incidental to or connected with the issuance of such Parity Debt for such purposes, and/or (B) the purpose of refunding any Bonds or Parity Debt then Outstanding, including payment of all costs incidental to or connected with such refunding.
(c) The Pension Tax Override Revenues, as shown in audited financial statements of the City for the most recent Fiscal Year for which audited financial statements are available, are at least equal to [125]% of Maximum Annual Debt Service on all Bonds and Parity Debt which will be Outstanding following the issuance of the Parity Debt.
(d) The Supplemental Indenture or other document authorizing the issuance of such Parity Debt shall provide that:
(i) interest on the Parity Debt is payable on February 1 and August 1 in each year of the term of the Parity Debt, except that interest during the first twelve-month period may be payable on any February 1 or August 1; and
(ii) the principal of the Parity Debt is payable on August 1 in any year in which principal is payable.
(e) The City shall deliver to the Trustee a Certificate of the City certifying that the conditions precedent to the issuance of such Parity Debt set forth above have been satisfied.
Any Parity Debt issued by the City shall be secured by a pledge of and lien on the Pension Tax Override Revenues which is on a parity with the pledge and lien which secures the Bonds. However, such Parity Debt will not be secured by or payable from amounts held in the Interest Account or the Principal Account which are established hereunder for the Bonds. In addition, any Parity Debt issued by the City may, but is not
12 required to, be secured by a separate reserve fund or account established therefore in the Supplemental Indenture or other document authorizing the issuance of such Parity Debt.
SECTION 3.06. No Senior Debt; Issuance of Subordinate Debt. The City hereby covenants that, so long as the Bonds are Outstanding, the City shall not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any indebtedness (collectively, “Indebtedness”), which is in any case payable from all or any part of the Pension Tax Override Revenues, except (i) the Bonds, (ii) Parity Debt issued or incurred pursuant to Section 3.05, (iii) Indebtedness payable from, but not secured by a pledge of or lien upon Pension Tax Override Revenues, and (iv) Indebtedness secured by a pledge of or lien on any Pension Tax Override Revenues which is subordinate to the pledge and lien which secures the Bonds and any Parity Debt.
ARTICLE IV
SECURITY FOR THE BONDS; FLOW OF FUNDS;
INVESTMENTS
SECTION 4.01. Security of Bonds; Equal Security. For the security of the Bonds, the City hereby grants a first pledge of and lien on, and a security interest in, all of the Pension Tax Override Revenues and all of the moneys on deposit in the Retirement Tax Special Revenue Fund, on a parity with the pledge, lien and security interest which secures any Parity Debt. Such pledge, lien and security interest are for the equal security of the Bonds and any Parity Debt without preference or priority for number, date of execution or date of delivery.
In addition, the Bonds (but not any Parity Debt) are secured by a first pledge of and lien on, and a security interest in, all of the moneys on deposit in the Debt Service Fund, the Interest Account and the Principal Account. Except for the Pension Tax Override Revenues and such other moneys, no funds of the City are pledged to, or otherwise liable for, the payment of principal of or interest on the Bonds and the redemption price thereof.
In consideration of the acceptance of the Bonds by those who hold the same from time to time, this Indenture constitutes a contract between the City and the Owners from time to time of the Bonds, and the covenants and agreements herein set forth to be performed on behalf of the City are for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein.
Neither the Bonds nor the obligations of the City to make payments on the Bonds constitute an indebtedness of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.
SECTION 4.02. Retirement Tax Special Revenue Fund; Transfer of Pension Tax Override Revenues. The City has established the Retirement Tax Special Revenue Fund,
13 which is held by the City. The City shall deposit all of the Pension Tax Override Revenues received with respect to any [Bond Year] into the Retirement Tax Special Revenue Fund promptly upon receipt thereof by the City until such time during such Fiscal Year as the amounts on deposit in Retirement Tax Special Revenue Fund equal the aggregate amounts required to pay principal of and interest on and the redemption price of the Bonds and any Parity Debt in such [Bond Year].
All Pension Tax Override Revenues received by the City during any [Bond Year] in excess of the amounts required to be deposited as described in the preceding paragraph shall be released from the pledge, security interest and lien under this Indenture for security of the Bonds and any Parity Debt and may be applied by the City for any lawful purpose of the City.
SECTION 4.03. Debt Service Fund. There is hereby established a separate fund to be known as the “Debt Service Fund” which shall be held by the Trustee in trust for the benefit of the Bond Owners. The Trustee shall hold the Debt Service Fund for the uses and purposes set forth herein, so long as any of the Bonds remain Outstanding. In addition to any transfers required to be made in respect of outstanding Parity Debt, the City shall withdraw from the Retirement Tax Special Revenue Fund and transfer to the Trustee the following amounts at the following times, for deposit by the Trustee in the following respective special accounts within the Debt Service Fund, which accounts are hereby established with the Trustee with respect to the Bonds, in the following order of priority:
(a) Interest Account. On or before the fifth Business Day preceding each date on which interest on the Bonds is due and payable, the City will transfer to the Trustee for deposit in the Interest Account an amount which, when added to the amount then on deposit in the Interest Account, equals the aggregate amount of the interest coming due and payable on the Outstanding Bonds on such date. The Trustee will apply amounts in the Interest Account solely for the purpose of paying the interest on the Bonds when due and payable.
(b) Principal Account. On or before the 5th Business Day preceding each date on which principal of the Bonds is due and payable at maturity or upon mandatory sinking fund redemption, the City will transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then on deposit in the Principal Account, equals the amount of principal coming due and payable on such date on the Outstanding Bonds, including the principal amount of the Term Bonds that are subject to mandatory sinking fund redemption on such date under Section 2.03(b). The Trustee will apply amounts in the Principal Account solely for the purpose of paying the principal of the Bonds at the maturity thereof and the principal of the Bonds that are Term Bonds upon the mandatory sinking fund redemption thereof.
If five days prior to any principal payment date, Interest Payment Date or mandatory sinking fund redemption date, the amounts on deposit in the Debt Service Fund, the Interest Account, and the Principal Account are insufficient to make such payments, the Trustee shall immediately notify the City, in writing, of such deficiency and direct that the City transfer the amount of such deficiency to the Trustee on or prior to such payment date. The City covenants and agrees to transfer to the Trustee from any Pension
14 Tax Override Revenues in its possession the amount of such deficiency on or prior to the principal, interest or mandatory sinking fund redemption date referenced in such notice.
After the transfers to the Interest Account and the Principal Account required to be made by the Trustee pursuant this Section 4.3, if any, any amounts remaining in the Debt Service Fund, except as the City shall otherwise direct in writing or as is otherwise provided in a Supplemental Indenture, shall be transferred by the Trustee to the City on the same Business Day or as soon as practicable thereafter. The City may use and apply the Pension Tax Override Revenues when received by it for any lawful purpose of the City.
SECTION 4.04. Investment of Moneys in Funds. The Trustee shall invest moneys in the funds and accounts established and held by it hereunder in Permitted Investments specified in the Request of the City (which Request will be deemed to include a certification that the specified investment is a Permitted Investment) delivered to the Trustee at least two Business Days in advance of the making of such investments. If and to the extent set forth in a Request of the City filed with the Trustee, the City may designate an investment advisor or investment advisory firm that is authorized to act on its behalf for purposes of directing the investment of amounts in any of the funds and accounts established hereunder and held by the Trustee. In the absence of any direction from the City concerning the investment of amounts held by the Trustee hereunder, the Trustee shall invest any such amounts solely in Permitted Investments described in subsection (f) of the definition thereof provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received written directions from the City specifying a specific money market fund and, if no such written directions from the City are so received the Trustee shall hold such moneys uninvested.
The City shall invest amounts held by it under this Indenture in any obligations or securities in which the City is legally authorized to invest funds within its control under the laws of the State of California.
Obligations purchased as an investment of moneys in any fund or account will be deemed to be part of such fund or account. Whenever in this Indenture the City is required to transfer any moneys to the Trustee, such transfer may be accomplished by transferring a like amount of Permitted Investments. All interest or gain derived from the investment of amounts in any of the funds or accounts held by the Trustee hereunder will be retained in the respective fund or account from which such investment was made. For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder upon receipt by the Trustee of a Request of the City. The Trustee may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee shall incur no liability for losses arising from any investments made under this Section.
The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the City periodic transaction statements which include detail for all investment transactions made by the Trustee hereunder.
15 The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder.
ARTICLE V
OTHER COVENANTS OF THE CITY
SECTION 5.01. Punctual Payment. The City will punctually pay or cause to be paid the principal, premium (if any) and interest to become due in respect of all the Bonds in strict conformity with the terms of the Bonds and this Indenture. The City will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures.
SECTION 5.02. Pension Tax Override Levy. The City covenants that, so long as any Bonds are Outstanding under this Indenture, the City shall levy the Pension Tax Override (in an amount not to exceed the maximum tax permitted by law) in each Fiscal Year, whether or not the accrued unfunded actuarial liability of the City to PERS is amortized prior to the final maturity of any Bond issued pursuant to this Indenture, in amounts that the City expects will be sufficient, when aggregated with any Pension Tax Revenues available to the City and on hand, to pay principal of and interest on and redemption price, if any, of the Bonds. The Pension Tax Override Revenues may not be applied to pay principal and interest and the redemption price, if any, of Bonds issued to pay obligations of the City to PERS other than the Bonds or other obligations or liabilities issued or incurred to pay all or a portion of the PERS Obligations.
SECTION 5.03. Budget and Appropriation. So long as any Bonds remain Outstanding hereunder, the City shall adopt all necessary budgets and make all necessary appropriations for the payment of principal of and interest and premium (if any) on the Bonds from the Pension Tax Override Revenues. If any payment of principal of and interest and premium (if any) on the Bonds requires the adoption by the City of a supplemental budget or appropriation, the City shall promptly adopt the same. The covenants on the part of the City contained in this Section constitute duties imposed by law and it is the duty of each and every public official of the City to take such actions and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Section.
The City will not assign or pledge Pension Tax Override Revenues or other amounts under this Indenture except as provided under the terms hereof.
SECTION 5.04. Compliance with Parity Debt Documents. The City will faithfully observe and perform all of the conditions, covenants and requirements of the documents authorizing the issuance of any Parity Debt. The City shall not take any action, or omit to take any action within its control, which constitutes or which with the passage of time if not cured would constitute an event of default under and within the meaning of the documents authorizing the issuance of any Parity Debt.
SECTION 5.05. Collection of Pension Tax Override Revenues. (a) The City hereby covenants not to amend, modify or alter the City Charter so long as any of the Bonds are Outstanding in any manner which would reduce the amount of or timing of receipt of Pension Tax Override Revenues.
16 (b) The City further covenants that so long as the Bonds are Outstanding, it will not, to the best of its ability, suffer or permit any change, modification or alteration to be made to the City Charter which would materially and adversely affect the rights of the Owners of the Bonds.
SECTION 5.06. Books and Accounts. The City shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries are made of all transactions relating to the Pension Tax Override Revenues. Such books of record and accounts shall at all times during business hours be subject, upon prior written request, to the reasonable inspection of the Trustee (who has no duty to inspect) and the Owners of not less than 10% in aggregate principal amount of the Bonds then Outstanding, or their representatives authorized in writing.
The City will cause to be prepared annually, within nine months after the close of each Fiscal Year so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year, as of the end of such Fiscal Year. The City will furnish a copy of such statements, upon reasonable request, to the Trustee. The Trustee has no duty to review any such financial statement.
SECTION 5.07. Protection of Security and Rights of Owners. The City shall preserve and protect the security of the Bonds and the rights of the Owners. From and after the date of issuance of the Bonds, the City shall not contest the validity or enforceability of the Bonds or this Indenture.
SECTION 5.08. Continuing Disclosure. The City shall comply with and carry out all of the provisions of the Continuing Disclosure Certificate which has been executed and delivered by the City on the Closing Date. Notwithstanding any other provision hereof, failure of the City to comply with such Continuing Disclosure Certificate does not constitute an Event of Default hereunder; provided, however, that any Participating Underwriter (as such term is defined in such Continuing Disclosure Certificate) or any Owner or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the City to comply with its obligations under this Section.
SECTION 5.09. Further Assurances. The City shall adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Bond Owners the rights and benefits provided in this Indenture.
17 ARTICLE VI
THE TRUSTEE
SECTION 6.01. Duties, Immunities and Liabilities of Trustee. (a) The Trustee shall, prior to the occurrence of an Event of Default, and after the curing or waiving of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or duties will be read into this Indenture against the Trustee. The Trustee shall, during the existence of any Event of Default (which has not been cured or waived), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a reasonable corporate trustee would exercise or use.
(b) The City may remove the Trustee at any time, and shall remove the Trustee (i) if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or (ii) if at any time (A) the Trustee ceases to be eligible in accordance with subsection (e) of this Section, (B) becomes incapable of acting, (C) is adjudged a bankrupt or insolvent, (D) a receiver of the Trustee or its property is appointed, or (E) any public officer takes control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation. The City may accomplish such removal by giving 30 days written notice to the Trustee, whereupon the City will appoint a successor Trustee by an instrument in writing. (c) The Trustee may at any time resign by giving written notice of such resignation to the City, and by giving notice of such resignation by first class mail, postage prepaid, to the Bond Owners at their respective addresses shown on the Registration Books. Upon receiving such notice of resignation, the City will promptly appoint a successor Trustee by an instrument in writing.
(d) Any removal or resignation of the Trustee and appointment of a successor Trustee becomes effective upon acceptance of appointment by the successor Trustee. If no successor Trustee has been appointed and accepted appointment within 45 days following giving notice of removal or notice of resignation as aforesaid, the resigning Trustee, at the expense of the City, or any Owner (on behalf of such Owner and all other Owners) may petition any federal or state court for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture shall signify its acceptance of such appointment by executing and delivering to the City and to its predecessor Trustee a written acceptance thereof, and to the predecessor Trustee an instrument indemnifying the predecessor Trustee for any costs or claims arising during the time the successor Trustee serves as Trustee hereunder, and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless, upon the receipt by the predecessor Trustee of the Request of the City or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as
18 may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the City will execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the City will mail or cause the successor Trustee to mail, by first class mail postage prepaid, a notice of the succession of such Trustee to the trusts hereunder to each rating agency which then maintains a rating on the Bonds, and to the Owners at the addresses shown on the Registration Books. If the City fails to mail such notice within 15 days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the City. (e) Any Trustee appointed under the provisions of this Section in succession to the Trustee shall:
be a company or bank having trust powers,
have a corporate trust office in the State of California, have (or be part of a bank holding company system whose bank holding company has) a combined capital and surplus of at least $50,000,000, and
be subject to supervision or examination by federal or state authority.
If such bank or company publishes a report of condition at least annually, under law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this subsection the combined capital and surplus of such bank or company is deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign immediately in the manner and with the effect specified in subsection (c) of this Section.
The City shall maintain a Trustee qualified under the provisions of the foregoing provisions of this subsection (e), so long as any Bonds are Outstanding.
SECTION 6.02. Merger or Consolidation. Any bank or company into which the Trustee may be merged or converted or with which either of them may be consolidated or any bank or company resulting from any merger, conversion or consolidation to which it shall be a party or any bank or company succeeding to all or substantially all of its corporate trust business, provided such bank or company shall be eligible under subsection (e) of Section 6.01, shall be the successor to such Trustee without the execution or filing of any paper or any further act on the part of any of the parties hereof, anything herein to the contrary notwithstanding.
19 SECTION 6.03. Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall be taken as statements of the City, and the Trustee assumes no responsibility for the correctness of the same, nor does it have any liability whatsoever therefor, nor does it make any representations as to the validity or sufficiency of this Indenture or of the Bonds nor does it incur any responsibility in respect thereof, other than as expressly stated herein. The Trustee is, however, responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee is not liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee is not liable for the acts of any agents of the Trustee selected by it with due care. The Trustee may become the Owner of Bonds with the same rights it would have if they were not Trustee and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of the Owners, whether or not such committee shall represent the Owners of a majority in principal amount of the Bonds then Outstanding. The Trustee, either as principal or agent, may engage in any financial or other transaction with the City.
(b) The Trustee is not liable with respect to any action taken or omitted to be taken by it in accordance with the direction of the Owners of a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. (c) The Trustee is not liable for any action taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture, except for actions arising from the negligence or willful misconduct of the Trustee. The permissive right of the Trustee to do things enumerated hereunder shall not be construed as a mandatory duty.
(d) The Trustee will not be deemed to have knowledge of any Event of Default hereunder unless and until a responsible officer of the Trustee has actual knowledge thereof, or unless and until a responsible officer of the Trustee has received written notice thereof at its Office. Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or of any of the documents executed in connection with the Bonds, or as to the existence of an Event of Default hereunder or thereunder. The Trustee shall not be responsible for the City’s payment of principal and interest on the Bonds, the City’s observance or performance of any other covenants, conditions or terms contained herein, or the validity or effectiveness of any collateral given to or held by it. Without limiting the generality of the foregoing, and notwithstanding anything herein to the contrary, the Trustee is not responsible for reviewing the contents of any financial statements furnished to the Trustee under Section 5.05 and may rely conclusively on the Certificate of the City accompanying such financial statements to establish the City’s compliance with its financial covenants hereunder, including, without limitation, its covenants regarding the deposit and investment of Pension Tax Override Revenues (other than its covenants to transfer such moneys to the Trustee when due hereunder).
20 (e) No provision in this Indenture requires the Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder. The Trustee is entitled to receive interest on any moneys advanced by it hereunder, at the maximum rate permitted by law. (f) The Trustee may establish additional accounts or subaccounts of the funds established hereunder as the Trustee deems necessary or prudent in furtherance of its duties under this Indenture.
(g) The Trustee has no responsibility or liability whatsoever with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds, nor shall the Trustee have any obligation to review any such material, and any such review by the Trustee will not be deemed to create any obligation, duty or liability on the part of the Trustee.
(h) Before taking any action under Article VIII hereof the Trustee may require indemnity satisfactory to the Trustee be furnished to it to hold the Trustee harmless from any expenses whatsoever and to protect it against any liability it may incur hereunder. (i) The immunities extended to the Trustee also extend to its directors, officers, employees and agents.
(j) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty.
(k) The Trustee may execute any of the trusts or powers hereof and perform any of its duties through attorneys, agents and receivers and shall not be answerable for the conduct of the same if appointed by it with reasonable care. (l) The Trustee will not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of delay in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to any project refinanced with the proceeds of the Bonds, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee.
SECTION 6.04. Right to Rely on Documents. The Trustee is protected in acting upon any notice, resolution, requisition, request, consent, order, certificate, report, opinion or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, including, without limitation, Bond Counsel or other counsel of or to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Trustee hereunder in accordance therewith.
21 The Trustee is not bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and such person’s title thereto is established to the satisfaction of the Trustee.
Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee deems it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Certificate of the City, which shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Certificate, but in its discretion the Trustee may (but has no duty to), in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may deem reasonable. The Trustee may conclusively rely on any certificate or report of any Independent Accountant appointed by the City.
SECTION 6.05. Preservation and Inspection of Documents. The Trustee shall retain in its possession all documents received by it under the provisions of this Indenture, which are subject during normal business hours, and upon reasonable prior written notice, to the inspection of the City and any Owner, and their agents and representatives duly authorized in writing.
SECTION 6.06. Compensation and Indemnification. Absent any agreement to the contrary, the City shall pay to the Trustee from time to time compensation for all services rendered under this Indenture and also all expenses, charges, legal and consulting fees and other disbursements and those of its attorneys (including any allocated costs of internal counsel), agents and employees, incurred in and about the performance of its powers and duties under this Indenture. The Trustee has a first lien on the Pension Tax Override Revenues and all funds and accounts held by the Trustee hereunder to secure the payment to the Trustee of all fees, costs and expenses, including compensation to its experts, attorneys and counsel incurred in declaring such Event of Default and in exercising the rights and remedies set forth in Article VIII. Any such expenses incurred by the Trustee will be deemed to constitute a substantial contribution to the trust estate which secures the Bonds.
The City further covenants to indemnify the Trustee and its officers, directors, agents and employees, from and against any loss, expense and liabilities, whether or not litigated, which it may incur arising out of or in the exercise and performance of its powers and duties hereunder, including the costs and expenses of defending against any claim of liability and of enforcing any remedies hereunder and under any related documents, but excluding any and all losses, expenses and liabilities which are due to the negligence or willful misconduct of the Trustee, its officers, directors, agents or employees. The obligations of the City under this Section shall survive resignation or removal of the Trustee under this Indenture and payment of the Bonds and discharge of this Indenture.
SECTION 6.07. Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with industry standards, in which complete and accurate entries shall be made of all transactions made by it relating to the proceeds of the Bonds and all funds and accounts established and held by the Trustee under this Indenture. Such books of record and account shall be available for inspection by the City at reasonable hours, during regular business hours, with reasonable prior notice and under reasonable circumstances.
The Trustee shall furnish to the City, at least semiannually, an accounting (which may be
22 in the form of its customary statements) of all transactions relating to the proceeds of the Bonds and all funds and accounts held by the Trustee under this Indenture. Upon the City’s election, such statements shall be delivered by the Trustee’s online service and upon electing such service, paper statements will be provided to the City only upon request of the City to the Trustee.
ARTICLE VII
MODIFICATION OR AMENDMENT OF THIS INDENTURE
SECTION 7.01. Amendments Permitted.
(a) Amendment With Bond Owner Consent. This Indenture and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended by the City and the Trustee upon Request of the City at any time by the execution of a Supplemental Indenture, with the written consent of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 9.05. Any such Supplemental Indenture becomes effective upon the execution and delivery thereof by the parties thereto and upon consent of the requisite Bond Owners. No such modification or amendment may:
(i) extend the maturity of a Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal thereof, or interest thereon, at the time and place and at the rate and in the currency provided therein, without the written consent of the Owner of such Bond;
(ii) permit the creation by the City of any mortgage, pledge or lien upon the Pension Tax Override Revenues superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as expressly permitted by this Indenture), or reduce the percentage of Bonds required for the affirmative vote or written consent to an amendment or modification; or
(iii) modify any of the rights or obligations of the Trustee without its written consent.
(b) Amendment Without Bond Owner Consent. This Indenture and the rights and obligations of the City and of the Owners of the Bonds may also be modified or amended at any time by a Supplemental Indenture, without the consent of any Owners of the Bonds, for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City contained in this Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the City;
(ii) to provide additional security for the Bonds;
23 (iii) to cure any ambiguity, or to cure, correct or supplement any defective provision contained in this Indenture, or in any other respect whatsoever as the City deems necessary or desirable, provided under any circumstances that such modifications or amendments do not materially adversely affect the interests of the Owners in the opinion of Bond Counsel filed with the City and the Trustee; or (iv) to provide for the issuance of Parity Debt under Section 3.05, and to provide the terms and conditions under which such Parity Debt may be issued, including but not limited to the establishment of funds and accounts relating thereto and any other provisions relating solely thereto, subject to and in accordance with the provisions of Section
3.05. SECTION 7.02. Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective under this Article VII, this Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
SECTION 7.03. Endorsement or Replacement of Bonds After Amendment. After the effective date of any amendment or modification hereof under this Article VII, the City may determine that any or all of the Bonds shall bear a notation, by endorsement in form approved by the City, as to such amendment or modification and in that case upon demand of the City the Owners of such Bonds shall present such Bonds for that purpose at the Office of the Trustee, and thereupon a suitable notation as to such action shall be made on such Bonds. In lieu of such notation, the City may determine that new Bonds shall be prepared and executed in exchange for any or all of the Bonds and in that case upon demand of the City the Owners of the Bonds shall present such Bonds for exchange at the Office of the Trustee without cost to such Owners.
SECTION 7.04. Amendment by Mutual Consent. The provisions of this Article VII do not prevent any Owner from accepting any amendment as to the particular Bond held by such Owner.
SECTION 7.05. Trustee’s Reliance. The Trustee may conclusively rely, and is protected in relying, upon a Certificate of the City and an opinion of counsel stating that all requirements of this Indenture relating to the amendment or modification hereof have been satisfied and that such amendments or modifications do not materially adversely affect the interests of the Bond Owners.
24 ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. Events of Default. Each of the following events constitutes an Event of Default hereunder:
(a) Failure to pay any installment of the principal of any Bonds when due, whether at maturity as therein expressed, by acceleration or otherwise.
(b) Failure to pay any installment of interest on the Bonds when due. (c) Failure by the City to observe and perform any of the other covenants, agreements or conditions on its part contained in this Indenture or in the Bonds, if such failure has continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, has been given to the City by the Trustee; provided, however, if in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 30-day period, such failure will not constitute an Event of Default if the City institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time. (d) The City commences a voluntary case under Title 11 of the United States Code or any substitute or successor statute.
(e) The occurrence and continuation of an event of default under and as defined in the documents authorizing the issuance of any Parity Debt.
SECTION 8.02. Remedies on Default. Whenever any Event of Default has happened and is continuing, the Trustee has the right, at its option and without any further demand upon or notice to the City, to take any one or more of the following actions:
(a) Acceleration of Maturities. The Trustee may declare the principal of the Bonds, together with the accrued interest thereon, to be due and payable immediately, and upon any such declaration the same will become immediately due and payable, anything in this Indenture or in the Bonds to the contrary notwithstanding. This provision, however, is subject to the condition that if, at any time after the principal of the Bonds has been so declared due and payable, and before any judgment or decree for the payment of the moneys due has been obtained or entered, the City deposits with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal and interest at the respective rates of interest borne by those Bonds, and the reasonable fees and expenses of the Trustee, including fees and expenses of its attorneys, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) has been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate has been made therefor, then, and in every such case, the Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the City and to the Trustee, may, on behalf
25 of the Owners of all of the Bonds, rescind and annul such declaration and its consequences. However, no such rescission and annulment extends to or affects any subsequent default, or impairs or exhausts any right or power consequent thereon. (b) Actions at Law or in Equity. The Trustee may take whatever action at law or in equity may appear necessary or desirable to enforce performance and observance of any obligation, agreement or covenant of the City under this Indenture. (c) Appointment of Receiver. As a matter of right, in connection with the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and the Bond Owners hereunder, the Trustee may cause the appointment of a receiver or receivers of the Pension Tax Override Revenues and other amounts pledged hereunder, with such powers as the court making such appointment shall confer.
SECTION 8.03. Notice of Event of Default. Immediately upon becoming aware of the occurrence of an Event of Default, but in no event later than five Business Days following becoming aware of such occurrence, the Trustee shall give notice of such Event of Default to the City by telephone confirmed in writing. Such notice shall also state whether the principal of the Bonds has been declared to be or have immediately become due and payable as provided in Section 8.02(a). With respect to any Event of Default described in Section 8.01(a) or (b), the Trustee shall, and with respect to any Event of Default described in Section 8.01(c) the Trustee in its sole discretion may, also give such notice to the Bond Owners, which shall include the statement that interest on the Bonds will cease to accrue from and after the date, if any, on which the Trustee declares the Bonds to become due and payable under Section 8.02 (but only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually paid on such date).
SECTION 8.04. Application of Funds Upon Event of Default. All of the Pension Tax Override Revenues and all sums in the funds and accounts established and held by the Trustee hereunder upon the occurrence of an Event of Default, and all sums thereafter received by the Trustee hereunder, shall be applied by the Trustee as follows and in the following order:
First, to the payment of any fees, costs and expenses incurred by the Trustee to protect the interests of the Owners of the Bonds; payment of the fees, costs and expenses of the Trustee (including fees and expenses of its counsel, including any allocated costs of internal counsel) incurred in and about the performance of its powers and duties under this Indenture and the payment of all fees, costs and expenses owing to the Trustee under Section 6.06, together with interest on all such amounts advanced by the Trustee at the maximum rate permitted by law.
Second, to the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal, with interest on such overdue amounts at the respective rates of interest borne by those Bonds, and in case such moneys are insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue amounts without preference or priority among such interest, principal and interest on overdue amounts ratably to the aggregate of such interest, principal and interest on overdue amounts.
26 SECTION 8.05. Power of Trustee to Control Proceedings. If the Trustee, upon the happening of an Event of Default, takes any action, by judicial proceedings or otherwise, in the performance of its duties hereunder, whether upon its own discretion, upon the request of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, it has full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action. The Trustee may not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in principal amount of the Outstanding Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.
SECTION 8.06. Limitation on Owners’ Right to Sue. No Owner of a Bond has the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless:
(a) said Owner has previously given to the Trustee written notice of the occurrence of an Event of Default;
(b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding have requested the Trustee in writing to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name;
(c) said Owners have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and
(d) the Trustee has failed to comply with such request for a period of 60 days after such written request has been received by, and said tender of indemnity has been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder; it being understood and intended that no one or more Owners has any right in any manner whatever by his or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of and premium, if any, and interest on such Bond as herein provided, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
SECTION 8.07. Non-waiver. Nothing in this Article VIII or in any other provision of this Indenture or in the Bonds, affects or impairs the obligation of the City, which is absolute and unconditional, to pay from the Pension Tax Override Revenues and other
27 amounts pledged hereunder, the principal of and interest and redemption premium (if any) on the Bonds to the Bond Owners when due and payable as herein provided, or affects or impairs the right of action, which is also absolute and unconditional, of the Bond Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds.
A waiver of any default by any Owner does not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Bond Law or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners.
If a suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the Owners, the City and the Owners will be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
SECTION 8.08. Actions by Trustee as Attorney-in-Fact. Any suit, action or proceeding which any Owner has the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners similarly situated and the Trustee is hereby appointed (and the successive respective Owners by taking and holding the Bonds shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact, subject to the provisions of Article VI. Notwithstanding the foregoing provisions of this Section, the Trustee has no duty to enforce any such right or remedy unless it has been indemnified to its satisfaction for any additional fees, charges and expenses of the Trustee related thereto, including without limitation, fees and charges of its attorneys and advisors.
SECTION 8.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Bond Law or any other law.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Benefits Limited to Parties. Nothing in this Indenture, expressed or implied, gives any person other than the City, the Trustee and the Owners, any right, remedy, claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the City are for the sole and exclusive benefit of the Trustee and the Owners.
28 SECTION 9.02. Successor is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture either the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the City or the Trustee binds and inures to the benefit of the respective successors and assigns thereof whether so expressed or not.
SECTION 9.03. Defeasance of Bonds. If the City pays and discharges the entire indebtedness on any Bonds in any one or more of the following ways:
(a) by paying or causing to be paid the principal of and interest on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee or an escrow bank, in trust, at or before maturity, an amount of cash which, together with the available amounts then on deposit in the funds and accounts established under this Indenture, is fully sufficient to pay such Bonds, including all principal, interest and redemption premium, if any; (c) by irrevocably depositing with the Trustee or an escrow bank, in trust, Federal Securities in such amount as an Independent Accountant determines will, together with the interest to accrue thereon and available moneys then on deposit in any of the funds and accounts established under this Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premium, if any) at or before maturity; or (d) by purchasing such Bonds prior to maturity and tendering such Bonds to the Trustee for cancellation;
and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption has been duly given or provision satisfactory to the Trustee has been made for the giving of such notice, then, at the election of the City, and notwithstanding that any such Bonds have not been surrendered for payment, the pledge of the Pension Tax Override Revenues and other funds provided for in this Indenture and all other obligations of the Trustee and the City under this Indenture with respect to such Bonds shall cease and terminate, except only:
(i) the obligation of the Trustee to transfer and exchange Bonds hereunder,
(ii) the obligation of the City to pay or cause to be paid to the Owners of such Bonds, from the amounts so deposited with the Trustee, all sums due thereon, and
(iii) the obligations of the City to compensate and indemnify the Trustee under Section 6.06.
The City shall file notice of such election with the Trustee. The Trustee shall pay any funds thereafter held by it, which are not required for said purpose, to the City.
29 In the case of a defeasance or payment of all of the Bonds Outstanding in accordance with this Section, the Trustee shall pay all amounts held by it in any funds or accounts hereunder, which are not required for said purpose or for payment of amounts due the Trustee under Section 6.06, to the City.
SECTION 9.04. Execution of Documents and Proof of Ownership by Owners. Any request, consent, declaration or other instrument which this Indenture may require or permit to be executed by any Owner may be in one or more instruments of similar tenor, and shall be executed by such Owner in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, consent, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer.
The ownership of Bonds and the amount, maturity, number and date of ownership thereof are conclusively proved by the Registration Books.
Any request, declaration or other instrument or writing of the Owner of any Bond binds all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Trustee in good faith and in accordance therewith.
SECTION 9.05. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are owned or held by or for the account of the City shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. The Trustee will not be deemed to have knowledge that any Bond is owned or held by the City unless the Trustee has received written notice to that effect.
SECTION 9.06. Waiver of Personal Liability. No member, officer, agent or employee of the City is individually or personally liable for the payment of the principal of or interest or any premium on the Bonds. However, nothing contained herein relieves any such member, officer, agent or employee from the performance of any official duty provided by law.
SECTION 9.07. Destruction of Canceled Bonds. Whenever in this Indenture provision is made for the surrender to the City of any Bonds which have been paid or canceled under the provisions of this Indenture, a certificate of destruction duly executed by the Trustee shall be deemed to be the equivalent of the surrender of such canceled Bonds and the City is entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Bonds therein referred to. The City will pay all costs of any microfilming of Bonds to be destroyed.
SECTION 9.08. Notices. All written notices under this Indenture shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice is effective either (a) upon transmission by facsimile transmission or other
30 form of telecommunication, (b) upon actual receipt after deposit in the United States mail, postage prepaid, or (c) in any other case, upon actual receipt. The City or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are given hereunder.
If to the City: City of Watsonville
250 Main Street
Watsonville, California 95076
Attention: Administrative Services Director
If to the Trustee:
SECTION 9.09. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Indenture is for any reason held illegal, invalid or unenforceable, such holding will not affect the validity of the remaining portions of this Indenture. The City and the Trustee hereby declare that they would have entered into this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Indenture may be held illegal, invalid or unenforceable.
SECTION 9.10. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of the interest or premium (if any) on or principal of the Bonds which remains unclaimed for two years after the date when the payments of such interest, premium and principal have become payable, if such money was held by the Trustee at such date, or for two years after the date of deposit of such money if deposited with the Trustee after the date when the interest and premium (if any) on and principal of such Bonds have become payable, shall be repaid by the Trustee to the City as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the City for the payment of the principal of and interest and redemption premium (if any) on such Bonds.
SECTION 9.11. Execution in Counterparts. This Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
SECTION 9.12. Governing Law. This Indenture shall be construed and governed in accordance with the laws of the State of California.
31 IN WITNESS WHEREOF, the City of Watsonville has caused this Indenture to be signed in its name by its Administrative Services Director and attested to by its City Clerk, and [TRUSTEE], in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.
CITY OF WATSONVILLE
By
Administrative Services Director
Attest:
City Clerk
[TRUSTEE],
as Trustee
By
Authorized Officer
A-1
APPENDIX A
DEFINITIONS
“Authorizing Resolution” means the Resolution adopted by the City Council of the City on __________, 2022, authorizing the issuance of the Bonds. “Beneficial Owner” means the beneficial owner of each such Bond, determined under the rules of DTC.
“Bond Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any other attorney or firm of attorneys appointed by or acceptable to the City of nationallyrecognized experience in the issuance of obligations issued by public agencies. “Bond Law” means the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code, as in effect on the Closing Date or as thereafter amended. “Bond Year” means any twelve-month period beginning on August 2 in any year and extending to the next succeeding August 1, both dates inclusive; except that the first Bond Year begins on the Closing Date and ends on August 1, 2022. “Bonds” means the City of Watsonville Limited Tax Refunding Bonds, Series 20__ (Federally Taxable) issued by the City in the aggregate principal amount of $[PAR] under the municipal affairs powers of the City as a charter city of the State of California, and under this Indenture.
“Business Day” means a day of the year (other than a Saturday or Sunday) on which banks in California are not required or permitted to be closed, and on which the New York Stock Exchange is open.
“Certificate of the City” means a certificate in writing signed by the Mayor, the City Manager, Assistant City Manager, Administrative Services Director and Assistant Administrative Services Director of the City, or any other person designated as an authorized officer of the City by a written certificate executed by the City Manager and filed with the Trustee.
“City” means the City of Watsonville, a charter city and municipal corporation duly organized and existing under the Constitution and laws of the State of California. “City Charter” means the Charter of the City of Watsonville ratified by the qualified electors of said City at a special municipal election held therein on the February 16, 1960, and as amended from time to time.
“Closing Date” means [Closing Date], being the date on which the Bonds are delivered by the City to the Original Purchaser.
“Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the City relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to: printing expenses; rating agency fees; filing and
A-2
recording fees; initial fees, expenses and charges of the Trustee and its counsel, including the Trustee’s first annual administrative fee; fees, charges and disbursements of attorneys, financial advisors, accounting firms, consultants and other professionals; and any other cost, charge or fee in connection with the original issuance of the Bonds. “Costs of Issuance Fund” means the fund by that name established and held by the Trustee under Section 3.03.
“Debt Service Fund” means the fund by that name established and held by the Trustee under Section 4.03.
“Depository” means (a) initially, DTC, and (b) any other Securities Depository acting as Depository under Section 2.03.
“Depository System Participant” means any participant in the Depository’s bookentry system. “DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Event of Default” means any of the events described in Section 8.01. “Federal Securities” means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), for which the full faith and credit of the United States of America are pledged; (b) obligations of any agency, department or instrumentality of the United States of America, the timely payment of principal and interest on which are directly or indirectly secured or guaranteed by the full faith and credit of the United States of America.
“Fiscal Year” means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other twelve-month period selected and designated by the City as its official fiscal year period under a Certificate of the City filed with the Trustee.
“Indenture” means this Indenture of Trust between the City and the Trustee, as amended or supplemented from time to time under any Supplemental Indenture entered into under the provisions hereof.
“Independent Accountant” means any accountant or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State of California, appointed by or acceptable to the City, and who, or each of whom: (a) is in fact independent and not under domination of the City; (b) does not have any substantial interest, direct or indirect, with the City; and (c) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City.
“Interest Account” means the account by that name established and held by the Trustee under Section 4.03.
A-3
“Interest Payment Date” means ______ 1, 20__, and each February 1 and August 1 thereafter so long as any of the Bonds remain unpaid. “Maximum Annual Debt Service” means, with respect to the Outstanding Bonds or Parity Debt, the largest amount of principal and interest coming due with respect to the Outstanding Bonds or Parity Debt during the current or any future Bond Year. “Nominee” means (a) initially, Cede & Co. as nominee of DTC, and (b) any other nominee of the Depository designated under Section 2.03(a). “Office” means, with respect to the Trustee, the corporate trust office of the Trustee at the address set forth in Section 9.08, or at such other or additional offices as may be specified by the Trustee in writing to the City; except that with respect to presentation of Bonds for payment or for registration of transfer and exchange, such term means the office or agency of the Trustee at which, at any particular time, its corporate trust agency business is conducted.
“Original Purchaser” means ___________, as original purchaser of the Bonds upon the negotiated sale thereof.
“Outstanding”, when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 9.05) all Bonds except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (c) Bonds in lieu of or in substitution for which other Bonds have been authorized, executed, issued and delivered by the City hereunder.
“Owner” means, with respect to any Bond, the person in whose name the ownership of such Bond is registered on the Registration Books. “Parity Debt” means any bonds, notes, loans, advances or other indebtedness issued or incurred by the City in accordance with Section 3.05, which are secured by a pledge of and lien on the Pension Tax Override Revenues on a parity with the Bonds. “Pension Tax Override” means the ad valorem tax override annually levied at the rate of 0.07% of the assessed value of all taxable property within the City pursuant to the City Charter and Article XIIIA, Section 1(b)(1) of the California Constitution. “Pension Tax Override Revenues” means the revenues received by or payable to the City from the Pension Tax Override.
“Permitted Investments” means any of the following:
(a) Federal Securities.
(b) Any direct or indirect obligations of an agency or department of the United States of America whose obligations represent the full faith and credit of the United States of America, or which are rated A or better by S&P.
A-4
(c) U.S. dollar denominated deposit accounts, federal funds, and banker’s acceptances with domestic commercial banks, which may include the Trustee, its parent holding company, if any, and their affiliates, which have a rating on their short-term certificates of deposit on the date of purchase of “A” or better by S&P, maturing no more than 360 days after the date of purchase, provided that ratings on holding companies are not considered as the rating of the bank. (d) Commercial paper rated “A-1+” or better by S&P.
(e) Federal funds or bankers acceptances with a maximum term of one year of any bank which an unsecured, uninsured and unguaranteed obligation rating of “A-1+” or better by S&P.
(f) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of at least AAAm-G, AAAm or AAm, which funds may include funds for which the Trustee, its affiliates, parent or subsidiaries provide investment advisory or other management services.
(g) Obligations the interest on which is excludable from gross income under Section 103 of the Tax Code, and which are either (a) rated A or better by S&P, or (b) fully secured as to the payment of principal and interest by Permitted Investments described in clauses (a) or (b). (h) Obligations issued by any corporation organized and operating within the United States of America having assets in excess of $500,000,000, which obligations are rated A or better by S&P. (i) Bonds or notes issued by any state or municipality which are rated A or better by S&P.
(j) Any investment agreement with, or guaranteed by, a financial institution the long-term unsecured obligations or the claims paying ability of which are rated A or better by S&P at the time of initial investment, by the terms of which all amounts invested thereunder are required to be withdrawn and paid to the Trustee in the event such rating at any time falls below A.
(k) The Local Agency Investment Fund of the State of California, created pursuant to Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name.
“PERS” means the California Public Employees’ Retirement System. “PERS Contracts” means the contracts, as amended from time to time, entered into by the City and PERS pursuant to the Retirement Law obligating the City to make contributions to PERS in exchange for PERS providing retirement benefits to certain District employees.
A-5
“PERS Obligations” means the obligation of the City under the Retirement Law and the PERS Contracts to make payments to PERS with respect to benefits accruing to retired District employees who are PERS members, including retired public safety employees and retired miscellaneous employees.
“Principal Account” means the account by that name established and held by the Trustee under Section 4.03.
“Record Date” means, with respect to any Interest Payment Date, the close of business on the 15th calendar day of the month preceding such Interest Payment Date, whether or not such 15th calendar day is a Business Day. “Registration Books” means the records maintained by the Trustee under Section
2.06 for the registration and transfer of ownership of the Bonds. “Request of the City” means a request in writing signed by the Mayor, the City Manager, Assistant City Manager, Administrative Services Director and Assistant Administrative Services Director of of the City, or any other person designated as an authorized officer of the City by a written certificate executed by the City Manager and filed with the Trustee.
“Retirement Tax Special Revenue Fund” means the fund by that name established and held by the City.
“Retirement Law” means the California Public Employees Retirement Law, commencing with Section 20000 et. seq of the Government Code of the State of California. “S&P” means S&P Global Ratings, and its successors.
“Securities Depositories” means DTC; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in a Request of the City delivered by the City to the Trustee.
“Supplemental Indenture” means any indenture, agreement or other instrument which amends, supplements or modifies this Indenture and which has been duly entered into between the City and the Trustee; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
“Term Bonds” means the Bonds maturing on August 1 in each of the years ___ and ____.
“Trustee” means [Trustee], as Trustee hereunder, or any successor thereto appointed as Trustee hereunder in accordance with the provisions of Article VI.
B-1
APPENDIX B
FORM OF BOND
No. ***$ ***
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
CITY OF WATSONVILLE
Limited Tax Refunding Bonds, Series 20__ (Federally Taxable) RATE OF INTEREST: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:
August 1, [Closing Date]
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: THOUSAND DOLLARS
THE CITY OF WATSONVILLE, a transit district duly organized and existing under the laws of the State of California (the “District”), for value received, hereby promises to pay (but only out of the Pension Tax Override Revenues and other moneys and securities hereinafter referred to) to the Registered Owner identified above or registered assigns (the “Registered Owner”), on the Maturity Date identified above, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Rate of Interest identified above in like lawful money from the date hereof, which date shall be the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond, unless (a) this Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth calendar day of the month preceding such Interest Payment Date (a “Record Date”), in which event it shall bear interest from such Interest Payment Date, or (b) this Bond is authenticated on or before _____ 15, 20__, in which event it shall bear interest from the Original Issue Date identified above, or (c) interest on this Bond is in default as of the date of authentication hereof, in which event interest hereon will be payable from the date to which interest has been paid in full. Interest hereon is payable semiannually on February 1 and August 1 in each year, commencing August 1, 20__ (the “Interest Payment Dates”) until payment of such Principal Amount in full.
The Principal Amount hereof is payable upon presentation and surrender hereof at the corporate office of [Trustee], as trustee (the “Trustee”), in _____, ______, or such other place as designated by the Trustee. Interest hereon is payable by check of the
B-2
Trustee mailed by first class mail on each Interest Payment Date to the Registered Owner hereof at the address of such Registered Owner as it appears on the registration books of the Trustee as of the close of business on the preceding Record Date. At the written request of the Owner of Bonds in an aggregate principal amount of at least $1,000,000, which written request is on file with the Trustee as of any Record Date, the Trustee will pay interest on such Bonds on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the United States of America as specified in such written request, which written request will remain in effect until rescinded in writing by the Owner.
This Bond is one of a duly authorized issue of bonds of the City designated as the “City of Watsonville Limited Tax Refunding Bonds, Series 20__ (Federally Taxable)” (the “Bonds”) of an aggregate principal amount of $[PAR], all of like tenor and date (except for such variation, if any, as may be required to designate varying numbers, maturities or interest rates) and all issued under an Indenture of Trust, dated as of _____ 1, 20__, between the City and the Trustee (the “Indenture”). The Bonds have been authorized to be issued by the City pursuant to a resolution adopted by the City Council of the City on __________, 2022. Reference is hereby made to the Indenture (copies of which are on file at the office of the City) and all supplements thereto for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Pension Tax Override Revenues, as that term is defined in the Indenture, and the rights thereunder of the owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the City thereunder, to all of the provisions of which the Registered Owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds have been issued by the City to refinance obligations of the City owing to the Public Employees Retirement System of the State of California.
This Bond and the interest hereon and all other parity obligations and the interest thereon (to the extent set forth in the Indenture) are payable from, and are secured by a charge and lien on the Pension Tax Override Revenues. The City may issue additional obligations on a parity with the Bonds under and in accordance with the Indenture. As and to the extent set forth in the Indenture, all of the Pension Tax Override Revenues are exclusively and irrevocably pledged in accordance with the terms hereof and the provisions of the Indenture, to the payment of the principal of and interest on the Bonds and any such parity obligations. Notwithstanding the foregoing, certain amounts out of Pension Tax Override Revenues may be applied for other purposes as provided in the Indenture.
This Bond is not a debt of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation, and neither said District, said State, nor any of its political subdivisions, is liable hereon nor in any event shall this Bond be payable out of any funds or properties other than the Pension Tax Override Revenues.
The rights and obligations of the City and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture, but no such modification or amendment shall permit a change in the terms of maturity of the principal of any outstanding Bond or of any installment of interest thereon or a reduction in the rate of interest thereon without the consent of the owner of such Bond,
B-3
or shall reduce the percentages of the owners required to effect any such modification or amendment.
The Bonds maturing on or before August 1, ____, are not subject to redemption prior to their respective stated maturities. The Bonds maturing on or after August 1, ____, are subject to redemption in whole, or in part among maturities on such basis as set forth in a Request of the City, and within a maturity on a pro rata basis among the Beneficial Owners of the Bonds of such maturity, at the option of the City, on any date on or after August 1, ____, from any available source of funds, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium.
The Bonds maturing on August 1 in each of the years ____ and ____ (the “Term Bonds”) are subject to mandatory redemption, within a maturity on a pro rata basis among the Beneficial Owners of the Term Bonds of such maturity, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the following tables. If some but not all of the Term Bonds have been redeemed pursuant to optional redemption described in the preceding paragraph, the total amount of all future sinking fund payments will be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000 (as set forth in a schedule provided by the City to the Trustee).
Term Bonds Maturing
August 1, ____
Sinking Fund
Redemption Date
(August 1)
Principal Amount
To Be Redeemed
Term Bonds Maturing
August 1, 20__
Sinking Fund
Redemption Date
(August 1)
Principal Amount
To Be Redeemed
As provided in the Indenture, the Trustee is required to mail notice of redemption of any Bonds by first class mail, postage prepaid, not less than 20 nor more than 60 days before the redemption date, to the registered owners of the Bonds to be redeemed, but neither failure to receive such notice nor any defect in the notice so mailed affects the sufficiency of the proceedings for prepayment or the cessation of accrual of interest thereon. Any notice so given by the Trustee with respect to the optional redemption of Bonds may be rescinded under the circumstances and with the effect set forth in the Indenture. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest hereon will cease to accrue from and after the date fixed for redemption.
Whenever provision is made in the Indenture for the redemption of less than all of the Bonds of a maturity, the Trustee will select the Bonds of such maturity to be redeemed on a pro rata basis among the Beneficial Owners of the Bonds of such maturity. For purpose of such selection, all Bonds will be deemed to be comprised of separate $5,000
B-4
denominations and such separate denominations will be treated as separate Bonds which may be separately redeemed.
So long as the Bonds are registered in book-entry-only form and so long as DTC (as defined below) or a successor securities depository is the sole registered Owner of the Bonds, partial redemptions will be done in accordance with procedures of the DTC. It is the City’s intent that redemption allocations made by DTC be made in accordance with the proportional provisions described in the Indenture. However, neither the City nor the Trustee has a duty to assure, and can provide no assurance, that DTC will allocate redemptions among Beneficial Owners (as defined in the Indenture) on such a proportional basis, and neither the City nor the Trustee shall have any liability whatsoever to Beneficial Owners in the event redemptions are not done on a proportionate basis for any reason.
If an Event of Default occurs under and as defined in the Indenture, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture, but such declaration and its consequences may be rescinded and annulled as further provided in the Indenture.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at said corporate trust office of the Trustee in _____, ______, or such other place as designated by the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon registration of such transfer a new Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor.
The City and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the City and the Trustee shall not be affected by any notice to the contrary.
It is hereby certified that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the laws of the State of California and that the amount of this Bond, together with all other indebtedness of the City, does not exceed any limit prescribed by any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Trustee for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
This Bond is not entitled to any benefit under the Indenture and is not valid or obligatory for any purpose until the certificate of authentication hereon endorsed has been signed by the Trustee.
B-5
IN WITNESS WHEREOF, the CITY OF WATSONVILLE has caused this Bond to be executed in its name and on its behalf with the facsimile signature of its City Manager and to be attested to by the facsimile signature of the City Clerk, all as of the Original Issue Date specified above.
CITY OF WATSONVILLE
By
City Manager
Attest:
City Clerk
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.
Dated:
[TRUSTEE],
as Trustee
By
Authorized Signatory
B-6
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto __________________________________ whose address and social security or other tax identifying number is ____________________, the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s)
________________________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature(s) shall be guaranteed by an
eligible guarantor institution.
Note: The signature(s) on this Assignment shall correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever.
3/3/2022 5:38:09 PM
C:\Program Files\eSCRIBE\TEMP\1738827603\1738827603,,,Presentation of the Watsonville 2021 Housing Element Annual Progress Report.docx
Agenda Report
MEETING DATE: Tuesday, March 8, 2022
TO: City Council
FROM: COMMUNITY DEVELOPMENT DIRECTOR MERRIAM
CARLOS LANDAVERRY, HOUSING MANAGER
SUBJECT: PRESENTATION OF THE WATSONVILLE 2021 HOUSING ELEMENT
ANNUAL PROGRESS REPORT
STATEMENT OF ISSUES:
Presentation of the Watsonville 2021 Housing Element Annual Progress Report.
RECOMMENDED ACTION:
Staff recommends that the City Council by motion, based on the Planning Commission’s recommendation, accept the Housing Element Annual Progress Report for 2021, which must be submitted to the State Housing and Community Development Department and the Office of Planning and Research by April 1, 2022.
DISCUSSION:
Government Code Section 65400 requires each local government to complete the Housing Element Annual Progress Report (APR) and submit it to the State Housing and Community Development Department (HCD) and the Office of Planning and Research (OPR) by April 1 each year. Cities and counties with a compliant housing element and up-to-date submissions of APRs gain access to State grant funds.
This part of the Housing Element Annual Report details progress in meeting the City’s share of regional housing needs and local efforts to remove governmental constraints to the maintenance, improvement, and development of housing. The Housing Element APR is prepared using standards, forms, and definitions adopted by HCD. The data and information in the HCD forms document the number of new units of all types of housing in each income category, and the progress in meeting the City’s share of the Regional Housing Needs Allocation (RHNA).
The reporting forms have been revised by HCD in recent years and require detailed information on each application, entitlement, issued building permit and completed construction in an Excel spreadsheet format. As a result, the tables are large and difficult to reproduce as attachments to this report. Summaries of the information presented in Tables A and A2 are attached to this report and the entire report can be found at the following link:
https://cityofwatsonville.org/165/Housing
3/3/2022 5:38:09 PM
C:\Program Files\eSCRIBE\TEMP\1738827603\1738827603,,,Presentation of the Watsonville 2021 Housing Element Annual Progress Report.docx
Table A contains data on the housing development applications that were submitted to the Community Development Department in 2021. A total of 223 units were proposed in the 4 applications received last year. Three applications were still in process at the end of 2021 and are expected to be approved in 2022. The table below shows all proposed units in 2021.
Table A: Housing Applications Summary
Total Housing Applications Submitted: 4
Number of Proposed Units in All Applications Received: 223 Total Housing Units Approved: 223
Total Housing Units Disapproved: 0
Table A2 contains data on the discretionary housing development applications that were approved (entitled), all ministerial building permits issued for housing development, and housing construction completed. Building permits were issued for a total of 86 housing units in 2021 including single family dwellings and ADUs. The table below shows all the permits issued in 2021 by income category.
Table A2: Building Permits Issued by Affordability Summary Income Level Current Year
Very Low
Deed Restricted 0
Non-Deed
Restricted 0
Low
Deed Restricted 4
Non-Deed
Restricted 0
Moderate
Deed Restricted 3
Non-Deed
Restricted 0
Above Moderate 79
Total Units 86
Table B places these 86 new housing units into affordability categories to demonstrate the City’s progress in meeting the allocated share of regional housing need for the planning period (RHNA).
Table C is not applicable to the City.
Table D contains information on the status and progress of Housing Element program and policy implementation for all programs described in the Housing Element.
Tables E and F are not applicable to the City.
3/3/2022 5:38:09 PM
C:\Program Files\eSCRIBE\TEMP\1738827603\1738827603,,,Presentation of the Watsonville 2021 Housing Element Annual Progress Report.docx
Table G requests a list of City-owned sites from the Housing Element Sites Inventory that were sold, leased, or otherwise disposed of during the reporting year. A number of dispositions currently in progress are expected to be finalized in 2022 (280 Main Street and 36 Airport Road) and will be included in next year’s report.
Table H requests an inventory of City-owned surplus lands. The City-owned property at 280 Main Street (Porter Building) was declared surplus in 2021.
The Summary Table provides a summary of housing units for which building permits were issued and applications were submitted in 2021. These tables also include information on SB 35 streamlining applications and permits; one project (1482 Freedom Blvd. by Eden Housing) has applied for SB 35 streamlining in the City to date.
The LEAP Reporting table is required for any jurisdictions that have received Local Early Action Planning (LEAP) grants. The City of Watsonville submitted an application for the LEAP grant that was executed in November, 2021. The grant funds will be used to cover City costs for the Downtown Specific Plan as well as implementation of the Specific Plan once it has been adopted.
The Housing Element Annual Progress Report was presented to the Planning Commission at its regularly scheduled meeting on March 1, 2022. No written comments in support or opposition were submitted prior to the meeting and no one from the public spoke during the meeting. The Planning Commission voted unanimously to recommend that the City Council accept the Watsonville Housing Element Annual Progress Report for 2021.
STRATEGIC PLAN:
The Housing Element Annual Progress Report is an informational document that shows the City’s progress in meeting our Regional Housing Needs Allocation and is consistent with the following elements of the City’s Strategic Plan.
1-Housing
2-Fiscal Health
3-Infrastructure & Environment
5-Community Engagement & Well-Being
7-Efficient and High Performing Government
FINANCIAL IMPACT:
Preparation of the Housing Element Annual Progress Report is part of the Community Development Department’s budgeted work program using existing staff resources.
ALTERNATIVE ACTION:
The City Council may decide not to accept the Planning Commission’s recommendation to accept the Housing Element Annual Progress Report for 2021 at this time, but doing so, may jeopardize the City’s ability to gain access to State grant funds.
ATTACHMENTS AND/OR REFERENCES (If any):
1) 2021 Housing Element Summary Table
2) Link to the 2021 Housing Element Annual Progress Report:
https://cityofwatsonville.org/165/Housing
Jurisdiction Watsonville
Reporting Year 2021 (Jan. 1 - Dec. 31)
Planning Period 5th Cycle 12/31/2015 - 12/31/2023
Current Year
Deed Restricted 3
Non-Deed Restricted 0
Deed Restricted 2
Non-Deed Restricted 0
Deed Restricted 2
Non-Deed Restricted 0
84 91
Units by Structure Type Entitled Permitted Completed
SFA 0 0 0
SFD 0 0 0
2 to 4 0 0 0
5+ 21 53 5
ADU 0 38 38
MH 0 0 0
Total 21 91 43
43 266
266
0 1
1 1
53 Number of Proposed Units in All Applications Received:
Building Permits Issued by Affordability Summary
Income Level
Very Low
Low
Moderate
Above Moderate
Total Units
Note: Units serving extremely low-income households are included in the very low-income permitted units totals Housing Applications Summary
Total Housing Applications Submitted:
Total Units Constructed with Streamlining
Total Housing Units Approved:
Total Housing Units Disapproved:
Use of SB 35 Streamlining Provisions
Number of Applications for Streamlining
Number of Streamlining Applications Approved
Total Developments Approved with Streamlining
Attachment 1
Housing Element
Annual Progress Report
2021
2021 Housing Element
Annual Progress Report
Required by state law to receive funding (both housing and non-housing related funds)
Provides overview of housing development annually
Applications, entitlements, permits, completed units
Provides a summary of Housing Element goals met
New Requirements
SB35 Streamlining, Surplus Land Inventory, LEAP Reporting
Housing Element Program Goals
Housing Program:
Approved 5 first time homebuyer loans
Approved sale of 3 affordable units
Processed 6 housing rehabilitation applications
Monitored over 350 affordable housing units
Leveraged CDBG funds to assist low-moderate income residents; assist Parks & Rec and code enforcement activities; fund capital projects
Housing Element
Program Goals Continued
Housing Activity:
Mortgage Assistance Pre-qualifications 13
Refinances/Subordinations 51
Payoff Demands 41
Sale Price Calculations 78
Rental Assistance 270
Code Enforcement Cases 374
Work with Non-Profit Housing Developers
Mobile Home Parks
Development Activity
2021 Results
Total planning applications submitted: 4 (223 units)
Housing units approved: 223
Total units Entitled: 124
Building permits issued: 86
Building permits finaled: 25
2021 Proposed Units by Income Level
Income Level
Current Year
(2021)
Very Low 135
Low 4
Moderate 3
Above Moderate 81
Total Units 223
RHNA progress made to date
Income RHNA
Allocation
by Income
Level
2016 2017 2018 2019 2020 2021 Total
to Date
years)
Total
Remaining
RHNA by
Income
Very Low 169 20 1 21 148
Low 110 2 3 1 4 10 100
Moderate 128 4 7 1 3 15 113
Above
Moderate 293 27 103 4 25 18 79 256 37
Total RHNA 700
Total Units 53 114 4 27 18 86 302 398
221 Airport
48 units
Miles Lane
72 units
1482 Freedom
53 units
CURRENT DEVELOPMENTS
Sunshine
Gardens
87 units
Hillcrest
Estates
144 units
558 Main St.
50 units
547 Airport
21 units
Estimated Construction Timeline for Major Projects
Project Name 2021 2022 2023 2024
221 airport Blvd Begin Building Finish Building
558 Main St. Entitled Begin Building Finish Building
Miles Lane Begin Building Finish Building
1482 Freedom Blvd Entitled Begin Building Finish Building Sunshine Gardens Resume Building
Hillcrest Estates Begin Building
547 Airport Begin Building
Recommendation
The Planning Commission recommends that City Council
accept the 2021 Housing Element Annual Progress Report.
3/3/2022 10:09:46 PM3/3/2022 5:54:06 PM3/3/2022 4:37:10 PM3/3/2022 4:36:57 PM3/2/2022 2:46:30 PM3/2/2022 11:31:24 AM3/2/2022 9:19:14 AM
C:\Program Files\eSCRIBE\TEMP\2294352994\2294352994,,,Report - Updating Park In-Lieu Fees and Park Impact Fees.docxhttps://cityofwatsonville.escribemeetings.com/Reports/PUBLIC HEARING TO ACCEPT IMPACT FEE STUDY AND CONSIDER UPDATING PARK IN LIEU AND PARK IMPACT FEES.docx
Agenda Report
MEETING DATE: Tuesday, March 8, 2022
TO: City Council
FROM: PARKS & COMMUNITY SERVICES DIRECTOR CALUBAQUIB
SENIOR ADMINISTRATIVE ANALYST ADRIANA FLORES
SUBJECT: DISCUSSION AND ADOPTION OF PARK AND RECREATION
IMPACT FEE STUDY AND UPDATED PARK IN LIEU AND PARK
IMPACT FEES AMENDING TITLES 3 AND 13 OF THE
WATSONVILLE MUNICIPAL CODE
STATEMENT OF ISSUES:
This report is intended to provide sufficient information and context to the City Council so that it can make an informed decision on the adoption of (1) a Parks and Recreation Impact Fee Study, (2) a proposed Quimby Fee Act Ordinance; and (3) a proposed Parks and Recreation Development Impact Fee Ordinance.
RECOMMENDED ACTION:
Staff recommends that the City Council:
1. Adopt a Resolution approving the Parks and Recreation Impact Fee Study, dated January 18, 2022, prepared by NBS Government Finance Group; and
2. Adopt an Ordinance adding Chapter 15 entitled Park Development Impact Fees of Title 3 (Finance) and repealing Articles 5 and 6 to Chapter 6 (Taxation) of the Watsonville Municipal Code; and
3. Adopt an Ordinance amending Chapter 6 of Title 13 by repealing article 2 (Parkland Dedications and Payment of In-Lieu Fees) in its entirety and replacing with a new Article 2 Entitled Quimby Park Land Dedication and Fees in Lieu; and
4. Adopt a Resolution approving Parks and Recreation Impact Fees to financially mitigate impacts to parks and recreational facilities and approving Quimby In-Lieu Fees.
DISCUSSION:
Background
In California, local governments can impose two types of development impact fees for funding parks and recreational facilities. Under the Quimby Act, found in the Subdivision Map Act (Government Code § 66477), local governments may require the dedication of land for parks or the payment of fees in-lieu of land dedication as a condition of subdivision map approval. To fund the construction of new park and recreational facilities, local governments may also impose AB1600 Park Impact Fees by following the guidelines set forth by the
3/3/2022 10:09:46 PM3/3/2022 5:54:06 PM3/3/2022 4:37:10 PM3/3/2022 4:36:57 PM3/2/2022 2:46:30 PM3/2/2022 11:31:24 AM3/2/2022 9:19:14 AM
C:\Program Files\eSCRIBE\TEMP\2294352994\2294352994,,,Report - Updating Park In-Lieu Fees and Park Impact Fees.docxhttps://cityofwatsonville.escribemeetings.com/Reports/PUBLIC HEARING TO ACCEPT IMPACT FEE STUDY AND CONSIDER UPDATING PARK IN LIEU AND PARK IMPACT FEES.docx
Mitigation Fee Act (Government Code § 66000).
Currently, the Watsonville Quimby Act ordinance (Article 2 of Chapter 13-6 of the City Code) imposes park land dedications and/or in-lieu fees on subdivisions larger than 50 parcels and only in-lieu fees on subdivisions of 50 parcels or less. These fees are the sole source of fees for major park improvements in Watsonville. The Quimby Land Dedication Requirement and In-Lieu Fees were first adopted and codified by the Council in July 1974. The fees and associated ordinances have been subsequently updated by the Council several times over the years, including:
July 1974 – Established fees
July 8, 1980 – Updated fees
May 12, 1983 – Updated fees
September 13, 1983 – Updated fees
October 1986 – Updated fees
December 7, 1987 – Updated fees
February 23, 1988 – Updated fees
September 27, 1988 – Clarified language
March 1989 – Updated per bedroom fees
September 1989 – Updated fees
November 13, 1990 – Updated fees
January 10, 1995 – Clarified language
October 21, 2008 – Updated fees
These fees and ordinances have not been reviewed and updated for over a decade.
Between Fiscal Years 2000/2001 and 2020/2021, a total of $4,537,000 was collected from this fee and $6,840,831 was spent from the fund. Projects during this time period included the creation of Franich Park, the Callaghan remodel, and the Ramsay Skatepark. Over this 20-year timeframe, an average of $227,000 was collected each year.
The current deferred maintenance needs of the City’s parks and recreation infrastructure is estimated at $20 million. Additionally, Watsonville residents have access to 2.25 acres of parkland per 1,000 residents, as compared to the City’s General Plan goal of 5 acres per 1,000 and the national average of 10 acres per 1,000. The need for additional park space is underscored when comparing Watsonville’s 143 acres of parkland to the City of Santa Cruz’s 1,700 acres. Additional funding is needed in order to remedy these historical and systemic inequities that have a direct relation to individual and community health and well-being.
The recommended actions are intended to:
1. Update the City’s ordinances to create parity with current State legislation, including changing the fee assessment from a per bedroom fee to square footage fee, and
2. Modernize the City’s fee structure to increase revenue that supports expanded access to quality park and recreation spaces.
3/3/2022 10:09:46 PM3/3/2022 5:54:06 PM3/3/2022 4:37:10 PM3/3/2022 4:36:57 PM3/2/2022 2:46:30 PM3/2/2022 11:31:24 AM3/2/2022 9:19:14 AM
C:\Program Files\eSCRIBE\TEMP\2294352994\2294352994,,,Report - Updating Park In-Lieu Fees and Park Impact Fees.docxhttps://cityofwatsonville.escribemeetings.com/Reports/PUBLIC HEARING TO ACCEPT IMPACT FEE STUDY AND CONSIDER UPDATING PARK IN LIEU AND PARK IMPACT FEES.docx
Quimby Act Fee
Local governments in California provide a critical role in the effort to set aside parkland and open space for recreational purposes. Cities and counties have been authorized since the passage of the 1975 Quimby Act to pass ordinances requiring that developers set aside land, donate conservation easements, or pay fees for park improvements. Revenues generated through the Quimby Act cannot be used for the operation and maintenance of park facilities.
The goal of the Quimby Act is to require developers to help mitigate the impacts of residential property improvements. The Act gives authority for passage of land dedication ordinances only to cities and counties. The fees must be paid and land conveyed directly to the local public agencies that provide park and recreation services communitywide. The fee is based on the cost of land in the community and a standard number of park acres per thousand residents.
Park Impact Fees
An impact fee is a fee that is imposed by a local government on a new or proposed development project to pay for all or a portion of the costs of providing public services to the new development. Impact fees are considered to be a charge on new development to help fund and pay for the construction or needed expansion of offsite capital improvements. These fees are usually implemented to help reduce the economic burden on local jurisdictions that are trying to deal with population growth within the area. A park impact fee is based on maintaining the current level of park service for a community, cost of land, and anticipated population growth.
Park Land Impact Fee
Since some residential development may not involve a subdivision of land, and the Quimby Act applies only to subdivisions (including parcel maps), it is useful to establish a park land impact fee that applies to residential development projects not involving a subdivision.
Park Improvement Impact Fee
Because the park land in-lieu and impact fees cover only the cost of acquiring parkland, a park improvement impact fee is proposed to cover the cost of park improvements. Park improvement impact fees are calculated to also include the cost of park maintenance vehicles and equipment.
Community Center and Recreation Facilities Impact Fee
These impact fees may be imposed to ensure that community centers and recreation facilities needs are able to serve future development in the City.
Analysis
According to the Association of Monterey Bay Area Governments’ 2022 Subregional Growth Forecast and current population estimates, the City will grow by approximately 5,506 residents by 2045. In order to maintain the City’s existing ratio of parks-to-population, development impact fees are needed to fund new development’s share of the cost of park and recreational facilities. The goal of this effort is to ensure there is adequate funding to acquire land, build
3/3/2022 10:09:46 PM3/3/2022 5:54:06 PM3/3/2022 4:37:10 PM3/3/2022 4:36:57 PM3/2/2022 2:46:30 PM3/2/2022 11:31:24 AM3/2/2022 9:19:14 AM
C:\Program Files\eSCRIBE\TEMP\2294352994\2294352994,,,Report - Updating Park In-Lieu Fees and Park Impact Fees.docxhttps://cityofwatsonville.escribemeetings.com/Reports/PUBLIC HEARING TO ACCEPT IMPACT FEE STUDY AND CONSIDER UPDATING PARK IN LIEU AND PARK IMPACT FEES.docx
new parks, and improve existing parks and recreation facilities to meet the demand of the increased population.
Without these fees, there would be no monies for new or major improvements to Watsonville’s parks, athletic fields, and open space. This effort includes updating the Quimby Act fees to reflect the current population trends and the cost of land.
The Quimby fees are inadequate to fully fund the additional park and recreational facilities needed to meet the needs of the additional population generated by new development. City Staff, with the professional services of consultant, NBS Government Finance Group, prepared a Park and Recreation Impact Fee Study to establish the legal and policy basis for the imposition of updated and new citywide park impact fees on new development within the City.
The proposed park impact fee program is being designed to ensure that new development not subject to the City’s Quimby Act Ordinance program, such as apartment buildings, pay their fair share of the cost of land acquisition for parks (in order to maintain the City’s existing ratio of parks-to-population) and their fair share of the cost of development of new parks, trails and open space. Moreover, the Park and Recreation Development Impact Fee Ordinance also includes a Community Centers and Recreational Facilities fee, the purpose of which is to mitigate the impact of new development on the need for community centers and recreation facilities in Watsonville.
Builders will not be charged twice. In the event that a subdivider dedicates land and/or pays fees in-lieu of land dedication under the City’s Quimby Act Ordinance program, the park impact fees imposed on that development project would receive an associated credit in an amount equal to the Quimby in-lieu fees paid or value of the dedicated land. Conversely, in the event that a development project is not subject to the City’s Quimby Act Ordinance program, the full Park Land Impact Fee would be imposed.
Proposed Fees
The attached Park and Recreation Impact Fee Study establishes the maximum fees that the City can charge developments. The City Council may choose to adopt lower fees, but higher fees would not be supported by this study. It is anticipated that increasing these fees to the maximum allowed would be cost-prohibitive for developers and have a detrimental effect on the creation of new housing in the city. Factoring for this, staff recommends that fees be adopted at 40% of the maximum allowed. It is further recommended that these fees be increased by 10% every 2 years, aligned with the biennial budget cycle, beginning with the Fiscal Year 2023-2025 budget. This will allow for a more gradual increase in fees and bring the City’s fees in line with other comparable jurisdictions that have more recently updated park fees. Fees charged by local comparable jurisdictions vary widely as shown in Attachment A.
The following chart summarizes current fees charged and maximum and proposed fees, based on the Park and Recreation Impact Fee Study.
Existing Fees
3/3/2022 10:09:46 PM3/3/2022 5:54:06 PM3/3/2022 4:37:10 PM3/3/2022 4:36:57 PM3/2/2022 2:46:30 PM3/2/2022 11:31:24 AM3/2/2022 9:19:14 AM
C:\Program Files\eSCRIBE\TEMP\2294352994\2294352994,,,Report - Updating Park In-Lieu Fees and Park Impact Fees.docxhttps://cityofwatsonville.escribemeetings.com/Reports/PUBLIC HEARING TO ACCEPT IMPACT FEE STUDY AND CONSIDER UPDATING PARK IN LIEU AND PARK IMPACT FEES.docx
1 Park land in-lieu fee for subdivisions is listed in Acres per Unit. Fee based on fair market value.
Dwelling
Unit Size
in Sq Ft
Park Land
In-Lieu Fee
Park Land
Impact Fee
Park Imprvmt
Impact Fee
Comm/Recr
Impact Fee Total Notes
<600 N/A $0.00 $0.00 $0.00 N/A
600-900 $1,500 $0.00 $0.00 $0.00 $1,500
1 bedroom
- $1500 per
room
>900-
1,200 $3,000 $0.00 $0.00 $0.00 $3,000
2 bedroom
- $1500 per
room
>1,200-
2,100 $5,001 $0.00 $0.00 $0.00 $5,001
3 bedroom
- $1667 per
room
>2,100-
2,500 $7,500 $0.00 $0.00 $0.00 $7,500
4 bedroom
- $1875 per
room
>2,500 $9,375 $0.00 $0.00 $0.00 $9,375
5 bedroom
- $1875 per
room
Commercial and Industrial: $0.50 per sq ft
Existing Fees are calculated per bedroom
Maximum Allowed
Dwelling
Unit Size
in Sq Ft
Park Land
In-Lieu Fee1
Park Land
Impact Fee
Park Imprvmt
Impact Fee
Comm/Recr
Impact Fee Total
Variance
from
Current2
<600 0.004 $2,794 $3,393 $467 $6,653
New
Fee
600-900 0.007 $4,877 $5,923 $815 $11,615 $10,115
>900-
1,200 0.0098 $6,929 $8,415 $1,158 $16,503 $13,503
>1,200-
2,100 0.0125 $8,755 $10,633 $1,464 $20,851 $15,850
>2,100-
2,500 0.0138 $9,690 $11,768 $1,620 $23,079 $15,579
>2,500 0.0149 $10,476 $12,723 $1,751 $24,950 $15,575
Proposed Fees (40% of Max)
Dwelling
Unit Size
in Sq Ft
Park Land
In-Lieu Fee1
Park Land
Impact Fee
Park Imprvmt
Impact Fee
Comm/Recr
Impact Fee Total
Variance
from
Current2
<600 0.0016 $1,117 $1,357 $187 $2,661
New
Fee
600-900 0.0028 $1,951 $2,369 $326 $4,646 $3,146
>900-
1,200 0.0039 $2,772 $3,366 $463 $6,601 $3,601
>1,200-
2,100 0.0050 $3,502 $4,253 $585 $8,340 $3,339
>2,100 0.0055 $3,876 $4,707 $648 $9,231 $1,731
3/3/2022 10:09:46 PM3/3/2022 5:54:06 PM3/3/2022 4:37:10 PM3/3/2022 4:36:57 PM3/2/2022 2:46:30 PM3/2/2022 11:31:24 AM3/2/2022 9:19:14 AM
C:\Program Files\eSCRIBE\TEMP\2294352994\2294352994,,,Report - Updating Park In-Lieu Fees and Park Impact Fees.docxhttps://cityofwatsonville.escribemeetings.com/Reports/PUBLIC HEARING TO ACCEPT IMPACT FEE STUDY AND CONSIDER UPDATING PARK IN LIEU AND PARK IMPACT FEES.docx
2 Variance does not include TBD Park Land In-Lieu Fee
On March 1, 2022 the Planning Commission held a Public Hearing on this item and unanimously approved staff recommendation. The Parks and Recreation Commission also considered a recommendation to the City Council on this item during its meeting on March 7, 2022. During the City Council’s public hearing on the Nexus Impact Fee Study and the proposed ordinances on March 8, 2022, the recommendations of the Planning Commission and Parks and Recreation Commission will be presented to the Council.
STRATEGIC PLAN:
This action supports the Council’s priorities and objectives of:
2- Fiscal Health – Sustainable Parks Funding
3- Infrastructure and Environment – Parks and Road Infrastructure 5 - Community Engagement and Well-Being – Parks Accessibility, Services for Youth 6 - Public Safety – Youth Development
7 - Efficient and High Performing Government – Financial Management FINANCIAL IMPACT:
Based on projected population growth through 2045, it is anticipated that the proposed fees would increase average annual revenue from $227,000 to $465,000. However, actual revenue is dependent on development and projects that the City can assess impact fees for by law. In Fiscal Years 18-19 and 19-20, the City collected $27,636 and $30,689 in park impact fees. Staff attribute this sharp decline largely to mandated exemptions for accessory dwelling units (ADUs). Due to factors such as this, the increase to average annual revenue from the proposed fees is likely far less. Although this alone is not enough to fully address Watsonville’s park inequities and deferred maintenance needs, this change will position the City to better address these needs. A more significant funding source is needed to sustain current service levels and accommodate future growth.
As stated previously, it is further recommended that these fees be increased by 10% every 2 years, aligned with the biennial budget cycle, beginning with the Fiscal Year 2023-2025 budget. Staff will recommend that the Council adopt new fees reflecting this increase as part of the adoption of each biennial budget, until a new study is performed or the maximum fee per the current study is reached. Per State law, this Nexus Study and associated fees must be updated every eight (8) years.
ALTERNATIVE ACTION:
The Council could elect to:
1. Approve both Ordinances
2. Approve the Ordinances with a fee other than 40% of the maximum as allowed by the Impact Fee Study Report
3. Deny one or both of the Ordinances
ATTACHMENTS AND/OR REFERENCES (If any):
A. Park Development Fee Comparison
ATTACHMENT A
1 Park Development Fee Comparison
Jurisdiction Park Impact -
Subdivisions
Park Impact - NonSubdivisionsPark Improvement Rec/Community Centers
Year Fess last
Updated
City of Watsonville –
Current
$1,500 per bedroom
for 1-2 bedroom unit;
$1,667 per bedroom
for
3-bedroom unit;
$1,875 per bedroom
for 4-bedroom unit;
$0.50 per
square foot for
commercial and
industrial
$1,500 per bedroom
for 1-2 bedroom unit;
$1,667 per bedroom
for
3-bedroom unit;
$1,875 per bedroom
for 4-bedroom unit;
$0.50 per
square foot for
commercial and
industrial
None None 2008
City of Watsonville –
Maximum Allowed
<600 2,972.16
600-900 $5,188.46
>900-1,200 $7,372.20
>1,200-2,100
$9,314.53
>2,100-2,500
$10,309.67
>2,500 $11,145.59
<600 $2,793.57
600-900 $4,876.71
>900-1,200 $6,929.24
>1,200-2,100 $8,754.85
>2,100-2,500 $9,690.20
>2,500 $10,475.89
<600 $3,392.72
600-900 $5,922.63
>900-1,200 $8,415.37
>1,200-2,100
$10,632.54
>2,100-2,500
$11,768.49
>2,500 $12,722.69
<600 $467.02
600-900 $815.28
>900-1,200 $1,158.41
>1,200-2,100 $1,463.62
>2,100-2,500 $1,619.98
>2,500 $1,751.33
City of Watsonville –
Proposed
County of Santa Cruz Dedicate 5 acres per
1,000 new service
population. In lieu
fees:
Single Family $9,400
per unit
Multi Family $7,050
per unit, plus
Residential Single
Family: $0.55/sq ft.
Residential Multi
Family: $0.42/sq ft
Residential Single
Family: $4.51/sq ft.
Residential Multi
Family: $3.38/sq ft
Retail, Restaurant
and Office: $5.58/sq
ft
Hotel, Motel, ShortTerm Rentals:
$6.66/sq ft
Industrial and R&D:
$2.60/sq ft
None None 2021
ATTACHMENT A
2 City of Santa Cruz Dedicate 2 acres per
1,000 residents for
neighborhood parks
and
2.5 acres per 1,000
residents for
community parks. Inlieu fee is
$3.00 per square foot
of each unit.
Dedicate 2 acres per
1,000 residents for
neighborhood parks
and
2.5 acres per 1,000
residents for
community parks. Inlieu fee is
$3.00 per square foot
of each unit.
None None 1994
City of Capitola City may require the
dedication of land or
the payment of fees
in lieu thereof, or a
combination of both,
for park and
recreational
purposes
City may require the
dedication of land or
the payment of fees
in lieu thereof, or a
combination of both,
for park and
recreational
purposes
City may require the
dedication of land or
the payment of fees
in lieu thereof, or a
combination of both,
for park and
recreational
purposes
City may require the
dedication of land or
the payment of fees
in lieu thereof, or a
combination of both,
for park and
recreational
purposes
1980
City of Scotts Valley R-MT-5 (mountain) -
$10,978/unit
R-R-2.5 (rural) -
$10,978/ unit
R-1-40(estate) -
$10,978/ unit
R-1-20 (low density) -
$10,978/ unit
R-1-10 (sf, detached)
- $10,978/ unit
R-1-10 (sf, attached)
- $8,494/ unit
R-M-6/R-M-8 (MF) -
$8,547/ unit
R-H MF - $5,487/ unit
Mobile Homes and
2nd DU - $5,706/ unit
R-MT-5 (mountain) -
$10,978/unit
R-R-2.5 (rural) -
$10,978/ unit
R-1-40(estate) -
$10,978/ unit
R-1-20 (low density) -
$10,978/ unit
R-1-10 (sf, detached)
- $10,978/ unit
R-1-10 (sf, attached)
- $8,494/ unit
R-M-6/R-M-8 (MF) -
$8,547/ unit
R-H MF - $5,487/ unit
Mobile Homes and
2nd DU - $5,706/ unit
None None 2019
ATTACHMENT A
3 City of Salinas $904 per bedroom or
$1,820 per mobile
home space
$904 per bedroom or
$1,820 per mobile
home space
None None 2016
County of Monterey Dedicate 3 acres per
1,000 residents
Dedicate 3 acres per
1,000 residents
None None
City of Marina Single Family $9,165
Multi Family $8,486
Senior $6,111
Assisted Living –
Senior $3,394
Mobile Home $8,486
Campground/RV Park
$8,486
Single Family $9,165
Multi Family $8,486
Senior $6,111
Assisted Living –
Senior $3,394
Mobile Home $8,486
Campground/RV Park
$8,486
None None 2008
City of Morgan Hill Single Family $4,615
Multi Family $4,445
Senior/Downtown
$3,045
Secondary DU TBD
Single Family $2,930
Multi Family $2,826
Senior/Downtown
$1,934
Secondary DU TBD
Single Family $1,588
Multi Family $1,503
Senior/Downtown
$1,028
Secondary DU TBD
Single Family $4,204
Multi Family $3,689
Senior/Downtown
$2,784
Secondary DU TBD
2019
Reso No. (CM)
C:\Program Files\eSCRIBE\TEMP\2115729796\2115729796,,,Resolution - Approve Parks Impact Fee Study.docx ri 3/3/2022 9:01:59 PM
1 RESOLUTION NO.__________ (CM)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WATSONVILLE APPROVING THE PARKS AND RECREATION IMPACT
FEE STUDY DATED JANUARY 18, 2022
WHEREAS, the continuing growth of the City of Watsonville ("City), combined with the expectation of high-quality services by persons who live and work in the City, and reductions by the State of California in property tax allocations to local governments have been catalysts for the review of the City's existing and future public facilities and services made necessary by new development; and
WHEREAS, pursuant to Government Code Section 66000 et seq., ("Mitigation Fee Act") the City is authorized to impose fees and other exactions to provide necessary public facilities required to mitigate the negative effects of new development in the City; and WHEREAS, it is fair and equitable for new development to pay its fair share and contribute to the financing, acquisition and establishment of such facilities; and WHEREAS, the proposed fees are based upon the information contained in a document prepared by City staff and NBS Government Finance Group (“NBS”) entitled “City of Watsonville Parks and Recreation Impact Fee Study" dated January 18, 2022 (“Parks and Recreation Development Impact Fee Study Report"); and WHEREAS, copies of the Parks and Recreation Development Impact Fee Report and the Watsonville 2005 General Plan are on file in the City Clerk's office and are available for public review in accordance with state law.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:
Reso No. (CM)
C:\Program Files\eSCRIBE\TEMP\2115729796\2115729796,,,Resolution - Approve Parks Impact Fee Study.docx ri 3/3/2022 9:01:59 PM
2 1. The recitals set forth above are true and correct and incorporated herein by this reference.
2. The City Council of the City of Watsonville hereby approves the Parks and Recreation Development Impact Fee Study Report dated January 18, 2022, attached hereto as Exhibit “A” and is hereby incorporated by this reference. *******************************************
Final Report
Parks and Recreation Impact Fee Study
January 18, 2022
nbsgov.com
Prepared by:
Corporate Headquarters
32605 Temecula Parkway, Suite 100
Temecula, CA 92592
Toll free: 800.676.7516
Exhibit "A"
Executive Summary.............................................................................................................S-1 Organization of the Report....................................................................................................... S-1 Development Projections......................................................................................................... S-1 Impact Fee Analysis .................................................................................................................. S-1 Impact Fee Summary................................................................................................................ S-2 Chapter 1. Introduction.......................................................................................................1-1 Purpose..................................................................................................................................... 1-1 Legal Framework for Impact Fees ............................................................................................ 1-1 Impact Fee Calculation Methodology ...................................................................................... 1-7 Facilities Addressed in this Study ............................................................................................. 1-7 Chapter 2. Development Data .............................................................................................2-1 Study Area ................................................................................................................................ 2-1 Time Frame............................................................................................................................... 2-1 Development Types.................................................................................................................. 2-1 Population Growth ................................................................................................................... 2-1 Non-Residential Development ................................................................................................. 2-2 Growth Potential ...................................................................................................................... 2-2 Population per Unit .................................................................................................................. 2-2 Chapter 3. Park Land and Park Improvement Fees ...............................................................3-1 Proposed Fee Structure............................................................................................................ 3-1 Maximum Supported Fees ....................................................................................................... 3-2 Service Area.............................................................................................................................. 3-2 Methodology ............................................................................................................................ 3-2 Demand Variable...................................................................................................................... 3-2 Level of Service Standard ......................................................................................................... 3-2 Existing Assets .......................................................................................................................... 3-3 Existing Level of Service............................................................................................................ 3-5 Cost Per Capita ......................................................................................................................... 3-5 In-Lieu and Impact Fees per Unit ............................................................................................. 3-6 Projected Revenue ................................................................................................................... 3-7 Updating the Fees .................................................................................................................... 3-8 Nexus Summary........................................................................................................................ 3-8 Chapter 4. Community Centers & Recreation Facilities .........................................................4-1 Maximum Supported Fees ....................................................................................................... 4-1 Exhibit "A"
Service Area.............................................................................................................................. 4-1 Methodology ............................................................................................................................ 4-1 Demand Variable...................................................................................................................... 4-1 Level of Service Standard ......................................................................................................... 4-1 Existing Assets .......................................................................................................................... 4-2 Cost per Capita ......................................................................................................................... 4-2 Impact Fees per Unit ................................................................................................................ 4-3 Projected Revenue ................................................................................................................... 4-3 Updating the Fees .................................................................................................................... 4-4 Nexus Summary........................................................................................................................ 4-4 Chapter 5. Implementation .................................................................................................5-1 Adoption................................................................................................................................... 5-1 Administration.......................................................................................................................... 5-2 Training and Public Information............................................................................................... 5-7 Exhibit "A"
City of Watsonville Page S-1
Parks and Recreation Impact Fee Study
January 18, 2022
The City of Watsonville has retained NBS Government Finance Group to prepare this study to analyze the impacts of new development on the City’s parks and recreation facilities and to calculate impact fees based on that analysis. The methods used in this study are intended to satisfy all legal requirements of the U. S. Constitution, the California Constitution and the California Mitigation Fee Act (Government Code Sections 66000 et seq.) and the Quimby Act (Government Code Section 66477) where applicable. Organization of the Report Chapter 1 of this report provides an overview of the legal requirements for establishing and imposing such fees, and methods that can be used to calculate impact fees.
Chapter 2 contains data on existing and future residential development that is used in this report. Chapters 3 analyzes the impacts of development on park land and improvements and calculates park land in-lieu fees, park land impact fees, and park improvement impact fees. Chapter 4 analyzes the impacts of development of community and recreation facilities and calculates impact fees for those facilities. Chapter 5 contains recommendations for adopting and implementing impact fees, including suggested findings to satisfy the requirements of the Mitigation Fee Act.
Development Projections
Chapter 2 of this report presents estimates of existing residential development in Watsonville and a forecast of future development in the City out to 2045. Future development projected in Chapter 2 indicates that the City’s population could increase by almost 11% to about 56,000 by 2045.
Impact Fee Analysis
The following paragraphs briefly discuss the approach used to calculate impact fees for each type of facility addressed in this study. All of the fees proposed in this study apply only to residential development.
Chapter 3 – In-Lieu Fees and Impact Fees for Park Land and Improvements. At present, the City has a single park development fee in the form of a fee in-lieu of park land dedication. This report proposes adopting updated requirements for calculating the inlieu fee for subdivisions, as well as a separate park land impact fee for non-subdivision projects and impact fees for park improvements and community centers and recreation facilities.
Exhibit "A"
City of Watsonville Page S-2
Parks and Recreation Impact Fee Study
January 18, 2022
Chapter 3 of this report calculates park land acreage dedication requirements for per unit for projects involving a subdivision of land. Chapter 3 also calculates park land impact fees for projects not involving a subdivision of land and park Improvement impact fees that apply to all new residential development. Because the City’s adopted standard for parks is based on population and because added population is associated with residential development, the impact fees calculated in Chapter 3 apply only to residential development.
See Chapter 3 for more detail on the calculation of park land dedication requirements and park impact fees. Table S.1, later in this Executive Summary shows the amounts of the impact fees per unit calculated in this report.
Chapter 4 – Impact Fees for Community Centers and Recreation Facilities. Chapter 4 calculates impact fees for community centers and recreation facilities. Those impact fees are based on the City’s existing per-capita investment in community centers and recreation facilities. Because those facilities are intended to serve residents of the City, these fees apply only to residential development. See Chapter 4 for more detail on the calculation of impact fees for community centers and recreation facilities. Table S.1, below, shows the amounts of the community center and recreation facilities impact fees calculated in this report.
Impact Fee Summary
Impact fees per unit calculated in this report are summarized in Table S.1, below. Note that the total column includes park land in-lieu fees but not park land impact fees because only one of those fees would be charged to an individual project. The park land in-lieu fee is the larger of the two, but the difference is fairly small.
Table S.1: Parks and Recreation Impact Fees per Unit
Dwelling Unit
Size in Sq Ft
Park Land
In-Lieu Fee 1 Park LandImpact Fee 2 Park ImprvmtImpact Fee 3 Comm/RecrImpact Fee 4 Total 5 <600 TBD $2,793.57 3,392.72 $467.02 $6,653.31 600-900 TBD $4,876.71 5,922.63 $815.28 $11,614.62
>900-1,200 TBD $6,929.24 8,415.37 $1,158.41 $16,503.02
>1,200-2,100 TBD $8,754.85 10,632.54 $1,463.62 $20,851.00 >2,100-2,500 TBD $9,690.20 11,768.49 $1,619.98 $23,078.68 >2,500 TBD $10,475.89 12,722.69 $1,751.33 $24,949.92
1 Park land in-lieu fee for subdivisions to be determined case-by-case based on land value for each project; see acres per unit requirements in Table 3.6, Chapter 3 2 Park land impact fee for non-subdivision projects; see Table 3.7 in Chapter 3 3 Park improvement impact fees for all residential development; see Table 3.8 in Chapter 3 4 Community center and recreation facilities impact fee; see Table 4.3 in Chapter 4 5 Total includes the park land impact fee which would be charged only to projects not involving a subdivision; park land in-lieu fees for subdivisions would be determined on a case-by-case basis
Exhibit "A"
City of Watsonville Page S-3
Parks and Recreation Impact Fee Study
January 18, 2022
Watsonville’s existing park in-lieu fees per unit are shown in Table S.2, below. Currently, the City has only one type of park development fee. The City’s existing fees depend on the number of bedrooms per unit. With the exception of the <600 square foot category in the proposed fee schedule, the square footage per unit categories used for the proposed fees match up reasonably well to the existing categories.
No comparison of existing and proposed fees is calculated here because the park land inlieu fees cannot be calculated in advance.
Table S.2: Existing Park In-Lieu Fees
Dwelling Unit
Size in Sq Ft 1 Park LandIn-Lieu Fee 2 Park Land
Impact Fee
Park Imprvmt
Impact Fee
Comm/Rec Ctr
Impact Fee Total
<600 N/A $0.00 $0.00 $0.00 N/A
600-900 $1,500.00 $0.00 $0.00 $0.00 $1,500.00
>900-1,200 $3,000.00 $0.00 $0.00 $0.00 $3,000.00
>1,200-2,100 $5,001.00 $0.00 $0.00 $0.00 $5,001.00
>2,100-2,500 $7,500.00 $0.00 $0.00 $0.00 $7,500.00
>2,500 $9,375.00 $0.00 $0.00 $0.00 $9,375.00
1 From the City of Watsonville Development Fee Schedule; note that existing fees are based on the number of bedrooms per unit while the proposed fees are based on unit square footage categories; however, it appears most categories match up reasonably well 2 From the City of Watsonville Development Fee Schedule
Exhibit "A"
City of Watsonville Page 1-1
Parks and Recreation Impact Fee Study
September 30, 2021
Purpose
The purpose of this study is to analyze the impacts of development on the need for parks and recreation facilities provided by the City of Watsonville. This report documents the approach, data and methodology used in the analysis of impact fees for park land, park improvements, park maintenance vehicles and equipment and community and recreation centers, as well as park land dedication requirements and in-lieu fees under the Quimby Act.
The methods used to calculate impact fees and in-lieu fees in this report are intended to satisfy all legal requirements governing such fees, including provisions of the U. S.
Constitution, the California Constitution, the California Mitigation Fee Act (Government Code Sections 66000-66025), and the Quimby Act (Government Code Section 66477).
Legal Framework for Impact Fees
This brief summary of the legal framework for development impact fees and park land inlieu fees is intended as a general overview. It was not prepared by an attorney, and should not be treated as legal advice.
U. S. Constitution. Like all land use regulations, development exactions, including impact fees, are subject to the 5th Amendment prohibition on taking of private property for public use without just compensation. Both state and federal courts have recognized the imposition of impact fees on development as a legitimate form of land use regulation, provided the fees meet standards intended to protect against “regulatory takings.” A regulatory taking occurs when regulations unreasonably deprive landowners of property rights protected by the Constitution.
In two landmark cases dealing with exactions, the U. S. Supreme Court has held that when a government agency requires the dedication of land or an interest in land as a condition of development approval, or imposes ad hoc exactions as a condition of approval on a single development project that do not apply to development generally, a higher standard of judicial scrutiny applies. To meet that standard, the agency must demonstrate an "essential nexus" between such exactions and the interest being protected (see Nollan v.
California Coastal Commission, 1987) and make an” individualized determination” that the exaction imposed is "roughly proportional" to the burden created by development (see Dolan v. City of Tigard, 1994).
Until recently, it was widely accepted that legislatively-enacted impact fees that apply to all development in a jurisdiction are not subject to the higher standard of judicial scrutiny flowing from the Nollan and Dolan decisions. But after the U. S. Supreme Court decision in Koontz v. St. Johns Water Management District (2013), state courts have reached conflicting conclusions on that issue.
Exhibit "A"
City of Watsonville Page 1-2
Parks and Recreation Impact Fee Study
September 30, 2021
In light of that uncertainty, any agency enacting or imposing impact fees would be wise to demonstrate a nexus and ensure proportionality in the calculation of those fees.
Defining the “Nexus.” While courts have not been entirely consistent in defining the nexus required to justify exactions and impact fees, that term can be thought of as having the three elements discussed below. We think proportionality is logically included as one element of that nexus, even though it was discussed separately in Dolan v. Tigard. The elements of the nexus discussed below mirror the three “reasonable relationship” findings required by the Mitigation Fee Act for establishment and imposition of impact fees.
Need or Impact. Development must create a need for the facilities to be funded by impact fees. All new development in a community creates additional demands on some or all public facilities provided by local government. If the supply of facilities is not increased to satisfy the additional demand, the quality or availability of public services for the entire community will deteriorate. Impact fees may be used to recover the cost of facilities needed to serve new development, but only to the extent that the need for facilities is related to the development project subject to the fees.
The Nollan decision reinforced the principle that development exactions may be used only to mitigate impacts created by the development projects upon which they are imposed. In this study, the impact of development on facility needs is analyzed in terms of quantifiable relationships between various types of development and the demand for public facilities, based on applicable level-of-service standards. This report contains all of the information needed to demonstrate compliance with this element of the nexus.
Benefit. Development must benefit from facilities funded by impact fees. With respect to the benefit relationship, the most basic requirement is that facilities funded by impact fees be available to serve the development paying the fees. A sufficient benefit relationship also requires that impact fee revenues be segregated from other funds and expended in a timely manner on the facilities for which the fees were charged. Nothing in the U.S. Constitution or California law requires that facilities paid for with impact fee revenues be available exclusively to development projects paying the fees.
Procedures for earmarking and expenditure of fee revenues are mandated by the Mitigation Fee Act, as are procedures to ensure that the fees are either expended expeditiously or refunded. Those requirements are intended to ensure that developments benefit from the impact fees they are required to pay. Thus, over time, procedural issues as well as substantive issues can come into play with respect to the benefit element of the nexus.
Proportionality. Impact fees must be proportional to the impact created by a particular development project. Proportionality in impact fees depends on properly identifying development-related facility costs and calculating the fees in such a way that those costs are allocated in proportion to the facility needs created by different types and amounts of development. The section on impact fee methodology, below, describes methods used to allocate facility costs and calculate impact fees that meet the proportionality standard.
Exhibit "A"
City of Watsonville Page 1-3
Parks and Recreation Impact Fee Study
September 30, 2021
California Constitution. The California Constitution grants broad police power to local governments, including the authority to regulate land use and development. That police power is the source of authority for local governments in California to impose impact fees on development. Some impact fees have been challenged on grounds that they are special taxes imposed without voter approval in violation of Article XIIIA. However, that objection is valid only if the fees charged to a project exceed the cost of providing facilities needed to serve the project. In that case, the fees would also run afoul of the U. S.
Constitution and the Mitigation Fee Act.
Articles XIIIC and XIIID, added to the California Constitution by Proposition 218 in 1996, require voter approval for some “property-related fees,” but exempt “the imposition of fees or charges as a condition of property development.” The Mitigation Fee Act. California’s impact fee statute originated in Assembly Bill 1600 during the 1987 session of the Legislature, and took effect in January, 1989. AB 1600 added several sections to the Government Code, beginning with Section 66000. Since that time the impact fee statute has been amended from time to time, and in 1997 was officially titled the “Mitigation Fee Act.” Unless otherwise noted, code sections referenced in this report are from the Government Code.
The Mitigation Fee Act does not limit the types of capital improvements for which impact fees may be charged. It defines public facilities very broadly to include "public improvements, public services and community amenities." Although the issue is not specifically addressed in the Mitigation Fee Act, it is clear both in case law and statute (see Government Code Section 65913.8) that impact fees may not be used to pay for maintenance or operating costs. Consequently, the fees calculated in this report are based on the cost of capital assets only.
The Mitigation Fee Act does not use the term “mitigation fee” except in its official title.
Nor does it use the more common term “impact fee.” The Act simply uses the word “fee,” which is defined as “a monetary exaction, other than a tax or special assessment…that is charged by a local agency to the applicant in connection with approval of a development project for the purpose of defraying all or a portion of the cost of public facilities related to the development project ….”
To avoid confusion with other types of fees, this report uses the widely-accepted terms “impact fee” and “development impact fee” which both should be understood to mean “fee” as defined in the Mitigation Fee Act.
The Mitigation Fee Act contains requirements for establishing, increasing and imposing impact fees. They are summarized below. It also contains provisions that govern the collection and expenditure of fees and requires annual reports and periodic re-evaluation of impact fee programs. Those administrative requirements are discussed in the implementation chapter of this report.
Exhibit "A"
City of Watsonville Page 1-4
Parks and Recreation Impact Fee Study
September 30, 2021
Required Findings. Section 66001 requires that an agency establishing, increasing or imposing impact fees, must make findings to:
1. Identify the purpose of the fee;
2. Identify the use of the fee; and,
3. Determine that there is a reasonable relationship between:
a. The use of the fee and the development type on which it is imposed; b. The need for the facility and the type of development on which the fee is imposed; and
c. The amount of the fee and the facility cost attributable to the development project. (Applies when fees are imposed on a specific project.) Each of those requirements is discussed in more detail below.
Identifying the Purpose of the Fees. The broad purpose of impact fees is to protect public health, safety and general welfare by providing for adequate public facilities. The specific purpose of the fees calculated in this study is to fund construction of certain capital improvements that will be needed to mitigate the impacts of planned new development on City facilities, and to maintain an acceptable level of public services as the City grows.
This report recommends that findings regarding the purpose of an impact fee should define the purpose broadly, as providing for the funding of adequate public facilities to serve additional development.
Identifying the Use of the Fees. According to Section 66001, if a fee is used to finance public facilities, those facilities must be identified. A capital improvement plan may be used for that purpose, but is not mandatory if the facilities are identified in a General Plan, a Specific Plan, or in other public documents. In this case, we recommend that the City Council adopt this report as the public document that identifies the facilities to be funded by the fees.
Reasonable Relationship Requirement. As discussed above, Section 66001 requires that, for fees subject to its provisions, a "reasonable relationship" must be demonstrated between:
1. the use of the fee and the type of development on which it is imposed;
2. the need for a public facility and the type of development on which a fee is imposed; and,
3. the amount of the fee and the facility cost attributable to the development on which the fee is imposed.
These three reasonable relationship requirements, as defined in the statute, mirror the nexus and proportionality requirements often cited in court decisions as the standard for defensible impact fees. The term “dual rational nexus” is often used to characterize the standard used by courts in evaluating the legitimacy of impact fees. The “duality” of the Exhibit "A"
City of Watsonville Page 1-5
Parks and Recreation Impact Fee Study
September 30, 2021
nexus refers to (1) an impact or need created by a development project subject to impact fees, and (2) a benefit to the project from the expenditure of the fees.
Although proportionality is reasonably implied in the dual rational nexus formulation, it was explicitly required by the Supreme Court in the Dolan case, and we prefer to list it as the third element of a complete nexus.
Development Agreements and Reimbursement Agreements. The requirements of the Mitigation Fee Act do not apply to fees collected under development agreements (see Govt. Code Section 66000) or reimbursement agreements (see Govt. Code Section 66003). The same is true of fees in lieu of park land dedication imposed under the Quimby Act (see Govt. Code Section 66477).
Existing Deficiencies. In 2006, Section 66001(g) was added to the Mitigation Fee Act (by AB 2751) to clarify that impact fees “shall not include costs attributable to existing deficiencies in public facilities…” The legislature’s intent in adopting this amendment, as stated in the bill, was to codify the holdings of Bixel v. City of Los Angeles (1989), Rohn v.
City of Visalia (1989), and Shapell Industries Inc. v. Governing Board (1991).
That amendment does not appear to be a substantive change. It is widely understood that other provisions of law make it improper for impact fees to include costs for correcting existing deficiencies.
However, Section 66001(g) also states that impact fees “may include the costs attributable to the increased demand for public facilities reasonably related to the development project in order to (1) refurbish existing facilities to maintain the existing level of service or (2) achieve an adopted level of service that is consistent with the general plan.” (Emphasis added.)
Impact Fees for Existing Facilities. Impact fees may be used to recover costs for existing facilities to the extent that those facilities are needed to serve additional development and have the capacity to do so. In other words, it must be possible to show that fees used to pay for existing facilities meet the need and benefit elements of the nexus. Such fees may be used to pay down debt used to fund those existing facilities. It should be noted, however, that courts may frown on charging impact fees to reimburse the City’s General Fund for past contributions to the cost of existing facilities, even it those facilities are available to serve future development. (See Homebuilders Association of Tulare/Kings Counties, Inc. v. City of Lemoore.)
The Quimby Act. The Quimby Act (Government Code Section 66477), which pre-dates the Mitigation Fee Act, authorizes a city or county to require dedication of land, payment of fees in-lieu of dedication, or a combination of both, for park and recreational purposes as a condition of approval of a residential subdivision. The city or county must adopt an ordinance that includes definite standards for determining the proportion of the subdivision to be dedicated and the amount of the in-lieu fees to be paid.
Under the Quimby Act, land dedication and in-lieu fee requirements are based on the ratio of park acres to population in the jurisdiction. That ratio may not exceed three acres Exhibit "A"
City of Watsonville Page 1-6
Parks and Recreation Impact Fee Study
September 30, 2021
per thousand residents unless the existing ratio is higher, but is limited to five acres per thousand, even if the existing ratio exceeds that level. The population added by the subdivision is determined by the number of dwelling units and the average number of persons per unit. The population and the average number of persons per household in the city or county are to be based on the most recent federal census. Park acreage is to be based on the area of neighborhood and community parks in the city or county at the time of that census.
The land, fees, or combination thereof are to be used only for the purpose of developing new or rehabilitating existing neighborhood or community park or recreational facilities to serve the subdivision (dedicating the land or paying the fees). A 2013 amendment to the Quimby Act added a provision that in-lieu fees may be used for the purpose of developing new or rehabilitating existing park or recreational facilities in a neighborhood other than the neighborhood in which the subdivision paying the fees is located, if certain conditions are met (see paragraph (a)(3)(B) of Section 66477). “Neighborhood” is not defined in the statute.
The Quimby Act requires that the legislative body adopt a general plan or specific plan containing policies and standards for parks and recreational facilities, and that the amount and location of land to be dedicated or the fees to be paid shall bear a reasonable relationship to the use of the park and recreational facilities by future inhabitants of the subdivision.
The Quimby Act provides that if park and recreational services and facilities are provided by a public agency other than a city or county, the amount and location of park land to be dedicated or fees to be paid shall be jointly determined by that other public agency and the city or county having jurisdiction. The land or fees shall be conveyed directly to the public agency that provides park and recreational services on a communitywide level if that agency elects to accept the land or fee.
Only payment of fees may be required for subdivisions containing 50 units or less, or for condominium, stock cooperative or community apartment projects. The Quimby Act does not apply to commercial or industrial subdivisions or to condominium projects or stock cooperatives that consist of the subdivision of air space in an existing apartment building that is more than five years old when no new dwelling units are added. (see Subsection 66477 (d)).
Subsection 66477 (a) (8) provides that subdivisions containing less than five parcels and not used for residential purposes shall be exempted from the requirements of this section. However, in that event, a condition may be placed on the approval of a parcel map that if a building permit is requested for construction of a residential structure or structures on one or more of the parcels within four years, the fee may be required to be paid by the owner of each parcel as a condition of the issuance of the permit.
Exhibit "A"
City of Watsonville Page 1-7
Parks and Recreation Impact Fee Study
September 30, 2021
Impact Fee Calculation Methodology
Any one of several legitimate methods may be used to calculate impact fees. The choice of a particular method depends primarily on the service characteristics of, and planning requirements for, the facility type being addressed. Each method has advantages and disadvantages in a particular situation. To some extent they are interchangeable, because they all allocate facility costs in proportion to the needs created by development.
In this study, the method used to calculate impact fees is the standard-based or incremental expansion method. That is the same method specified in the Quimby Act for calculation of park land impact fees.
Standard-Based or Incremental Expansion Method. Standard-based fees are calculated using a specified relationship or standard that determines the number of service units to be provided for each unit of development. The standard can be established as a matter of policy or it can be based on the level of service being provided to existing development in the study area.
Using the standard-based method, costs are defined on a generic unit-cost basis and then applied to development according to a standard that sets the number of service units to be provided for each unit of development.
Park in-lieu and impact fees are commonly calculated this way. The level of service standard for parks is typically stated in terms of acres of parks per thousand residents. A cost-per-acre for park land or park improvements can usually be estimated without knowing the exact size or location of a particular park. The ratio of park acreage to population and the cost per acre for parks can be used to calculate a cost per capita. The cost per capita can then be converted into a cost per unit of development based on the average population per dwelling unit for various types of residential development.
Impact fees for park maintenance vehicles and equipment and community and recreation facilities are calculated using a similar approach, but the standard is stated in terms of cost per capita rather than acres per capita.
Facilities Addressed in this Study
Impact/in-lieu fees for the following types of facilities are addressed in this report: Park land Acquisition Park Improvements Park Maintenance Vehicles and Equipment Community and Recreation Centers The next chapter, Chapter 2, contains information on existing and future development used in this study. Chapter 3 presents the impact fee analysis and fee calculations for parks. Chapter 4 presents the impact fee analysis and fee calculations for community and recreation centers.
Exhibit "A"
City of Watsonville Page 2-1
Parks and Recreation Impact Fee Study
September 30, 2021
This chapter presents data on existing and future development that is relevant to the calculation of impact fees in subsequent chapters of this report.
The information in this chapter may be used to establish levels of service, analyze facility needs, and/or allocate the cost of capital facilities to various types of development.
Study Area
The study area for this study isthat portion of the existing City and the Sphere of Influence that has the potential for additional residential development as described in Land Use and Community Development Element of the Watsonville General Plan.
Time Frame
No time frame is assumed for the buildout of future development projected in this study.
The methods used to calculate impact fees in this study do not require assumptions regarding the rate or timing of development.
Development Types
The development types for which impact fees are calculated in this report represent categories of residential development based on the gross square footage of dwelling units excluding garages, carports, covered patios, balconies, etc. The specific categories of residential development used in this study are shown in tables presented later in this chapter. Residential development contained in mixed use projects should be classified based only on the residential portion of a building.
Population Growth
The graph at right shows the
California Department of
Finance (DOF) population
estimates for the City of
Watsonville for January 1 of
the years 2011 through
2021.
The City’s estimated
population has been
essentially flat over that
period. DOF estimates showed some population growth over the first half of the decade, but since 2016 it has declined back to approximately the 2011 level. The estimated population for January 1, 2021 was 51,366.
0 10,000
20,000
30,000
40,000
50,000
60,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Population
Year
Watsonville Population
2011-2021
Exhibit "A"
City of Watsonville Page 2-2
Parks and Recreation Impact Fee Study
September 30, 2021
During the same period, the Department of Finance estimates the number of dwelling units in Watsonville has increased by 139 units from 14,095 to 14,234. The City’s estimated 2021 vacancy rate was 3.98%. The analysis in this study deals only with population in households, but the number of people living in group quarters in 2021 was only 528 or about 1% of the City’s total population.
Non-Residential Development
This study does not calculate in-lieu fees or impact fees for non-residential (commercial, office and industrial) development. We don’t believe we can demonstrate a nexus to support such fees, and the Quimby Act, which authorizes the requirement for residential subdivisions to dedicate park land or pay of fees in lieu of dedication specifically exempts commercial and industrial subdivisions. The City’s adopted standard of 5 acres of parks per 1,000 residents is based on population and the City has not adopted any policy or standard relating to the need for parks in connection with non-residential development.
So, for purposes of this study, the impact of growth on parks and recreational facilities is measured in terms of the added population associated with residential development.
Growth Potential
Watsonville has a very limited supply of land available for future residential development.
Table 2.1 summarizes Watsonville’s existing and forecasted residential development in terms of dwelling units and population.
Population per Unit
Impact fees and in-lieu fees calculated in this report are based on per-capita costs, which are multiplied by a population per unit to get to in-lieu fees and impact fees per unit. In this report, residential development is broken down into six categories based on dwelling unit sizes in square feet. Those categories, and the estimated population per unit for each category are shown in Table 2.2 on the next page. The square footage categories are correlated with the number of bedrooms per unit.
Table 2.1: Existing and Future Residential Development
2021 1 2045 2 Change
Dwelling Units 14,234 16,519 2,285
Population per Unit 3.57 3.41 2.41
Population 50,838 56,344 5,506
1 2021 data from the California Department of Finance 2021 E-5 report 2 2045 data from Final Draft of the 2022 AMBAG Subregional Growth Forecast
Exhibit "A"
City of Watsonville Page 2-3
Parks and Recreation Impact Fee Study
September 30, 2021
The data in Tables 2.1 and 2.2 above are used in the next two chapters to calculate impact fees and in-lieu fees per dwelling unit.
Table 2.2: Population per Unit
Dwelling Unit No. of % of No. of Est % of Estimated Pop per Size in Sq Ft 1 Bedrooms Units 2 Units 3 Pop 4 Pop 5 Unit 6 <600 0 5.4% 769 2.0% 1,017 1.32 600-900 1 11.6% 1,651 7.5% 3,813 2.31
>900-1,200 2 33.2% 4,726 30.5% 15,506 3.28
>1,200-2,100 3 33.6% 4,783 39.0% 19,827 4.15
>2,100-2,500 4 14.4% 2,050 18.5% 9,405 4.59
>2,500 5+ 1.8% 256 2.5% 1,271 4.96
Total/Average 100.0% 14,234 100.0% 50,838 3.57
1 Estimated square feet per unit ranges based on number of bedrooms 2 Data from American Community Survey 2019 5-Year Estimates, Table B25401 3 Number of units by square feet per unit categories = % of units X total units 4 Percentage of population estimated by NBS and the Watsonville Community Development Department 5
Estimated population = estimated percentage of population X total population 6 Population per unit = estimated population / number of units Exhibit "A"
City of Watsonville Page 3-1
Parks and Recreation Impact Fee Study
January 18, 2022
Proposed Fee Structure
This study proposes revising the structure of Watsonville’s in-lieu and impact fees to clarify the purpose of the fees and to add fees for park improvements. Chapter 4 of this report also calculates a new impact fee for community centers and recreation facilities.
We propose that the City restructure its park fee program to include: (1) park land dedication requirements and fees in lieu of dedication for residential subdivisions under the Quimby Act; (2) park land impact fees that apply to residential projects not involving a subdivision; and, (3) park improvement impact fees that apply to all residential development. A residential development project would be subject to either the park land in-lieu fee or the park land impact fee, but not both. Both fees are based on the cost of land, but they may differ in amount because they are governed by different laws that determine the amount of land required. The park improvement impact fees are based on the cost of park improvements and would apply to all residential development, whether or not a subdivision is involved.
As discussed in Chapter 1, the Quimby Act, which is part of the Subdivision Map Act, authorizes cities and counties in California to require residential subdivisions to dedicate land for parks or pay a fee in lieu of dedication. The Act contains rules for determining the amount of land to be dedicated, depending on the existing ratio of park acreage to population. The dedication requirement is to be based on the existing ratio of park acreage to population, except that it may be based on at least 3.0 acres per 1,000 residents regardless of the existing ratio and may not exceed 5.0 acres per 1,000.
Since some residential development may not involve a subdivision of land, and the Quimby Act applies only to subdivisions (including parcel maps), it is useful to establish a park land impact fee that applies to residential development projects not involving a subdivision. The park land impact fee is very similar to a Quimby in-lieu fee, but the amount may differ because it may be based on a park-acreage-to-population ratio lower than the 3.0 acres per 1,000 allowed by the Quimby Act, or in rare cases, higher than the
5.0 acres per 1,000 population limit provided in the Act.
And, because the park land in-lieu and impact fees cover only the cost of acquiring park land, a park improvement impact fee is proposed to cover the cost of park improvements.
The park improvement impact fees calculated in this chapter also include the cost of park maintenance vehicles and equipment.
Exhibit "A"
City of Watsonville Page 3-2
Parks and Recreation Impact Fee Study
January 18, 2022
Maximum Supported Fees
All of the fees calculated in this report represent the maximum fee amounts supported by the data and analysis used in this study. The City Council may choose to adopt lower fees, but higher fees would not be supported by this study.
Service Area
All park impact fees calculated in this chapter are intended to apply to all new residential development in the City. Methodology
This chapter calculates impact fees using the standard-based method discussed in Chapter 1 and specified in the Quimby Act. Standard-based fees are calculated using a specified relationship or standard that determines the number of service units to be provided for each unit of development.
Demand Variable
A “demand variable” is a quantifiable attribute of development that is used in fee calculation formulas to represent the impact of development. Because the need for parks is defined in terms of population, the demand variable used to calculate park impact fees in this chapter is population.
Because added population is associated with residential development, the in-lieu fees and impact fees calculated in this chapter apply only to residential development.
Level of Service Standard
The City’s level of service standard for parks, as adopted in Recreation, Parks and Open Space Element of the Watsonville General Plan is five acres per 1,000 residents, with two acres in neighborhood parks and three acres in community parks. However, the level-of-service standard used to calculate impact fees for park land and improvements is based on the City’s existing ratio of improved park acres to population.
Improved acres are used because the California Court of Appeal in Boatworks LLC vs. City of Alameda (2019) ruled that park land not available for public use may not be considered in establishing the existing level of service when calculating park impact fees.
The level of service used to calculate park land dedication requirements and in-lieu fees under the Quimby Act is higher than the existing ratio because the Act allows 3.0 acres per 1,000 population to be used for that purpose, even if the existing ratio is lower.
Exhibit "A"
City of Watsonville Page 3-3
Parks and Recreation Impact Fee Study
January 18, 2022
Existing Assets
Table 3.1 lists the City’s existing parks and shows both total acres and improved acres of park land. Table 3.2 on page 3-4 lists the City’s existing park maintenance vehicles and equipment and their estimated replacement cost.
Table 3.2 lists the City’s existing park maintenance vehicles and equipment. The replacement cost of those vehicles will be used to calculate a cost per capita which will be included, along with the cost per capita for park improvements, to calculate park improvement impact fees. Replacement cost is used to represent the cost of acquiring the additional vehicles and equipment that will be needed to maintain the additional parks to be funded by the fees calculated in this chapter.
Table 3.1: Existing Parks
Park Park Total Improved
Name Type 1 Park Acres Park Acres
Pinto Lake Park Community 78.50 78.50
Franich Park Community 14.02 14.02
Ramsay Park Community 25.91 25.91
Crestview Park Neighborhood 2.01 2.01
Hope Drive Park Neighborhood 2.46 2.46
Callaghan Park Neighborhood 2.64 2.64
Seaview Ranch Park Neighborhood 4.00 4.00
Cherry Blossom Park Pocket 0.15 0.15
Arista Park Pocket 0.27 0.27
Joyce-McKenzie Park Pocket 1.72 1.72
Victorian Park Pocket 0.13 0.13
Brentwood Park Pocket 0.41 0.41
Bronte Park Pocket 0.28 0.28
Atri Park Pocket 0.32 0.32
Flodberg Park Pocket 1.07 1.07
Hazelwood Park Pocket 1.07 1.07
Peace Drive Park Pocket 1.40 1.40
Emmett Courts Park Pocket 0.15 0.15
Kearney Park Pocket 0.29 0.29
City Plaza Pocket 1.40 1.40
Marinovich Park Pocket 1.03 1.03
Riverside Mini Park Pocket 0.34 0.34
Muzzio Park Pocket 1.13 1.13
River Park Pocket 1.43 1.43
Memorial Park Pocket 0.22 0.22
Las Brisas Park Pocket 1.00 1.00
Total 143.35 143.35
Source: City of Watsonville Parks and Community Services 1 Pocket parks are considered neighborhood parks for purposes of the Quimby Act
Exhibit "A"
City of Watsonville Page 3-4
Parks and Recreation Impact Fee Study
January 18, 2022
Table 3.2: Existing Park Maintenance Vehicles & Equipment Repl Impact Fee
Year Make Description Cost Cost Basis
1988 Chevrolet C10 1/2 Ton Pick-Up 25,000 0
2001 N/A 2001 Utility Trailer 4,500 4,500
2002 Dodge 2002 Ram Wagon 33,000 33,000
2004 Dodge 2004 Dakota Pick-Up 25,000 25,000
2005 Ford E-350 Super Duty Van 33,000 33,000
2005 Ford E-350 Super Duty Van 33,000 33,000
2005 Ford E-Series Van PAL Unit # 8 34,000 34,000
2007 Dodge 2007 Sprinter 3500 Van 47,000 47,000
2008 Ford E350 Super Duty XL Van PAL Unit # 9 35,000 35,000 2016 Ford 2016 Super Van 35,000 35,000
2017 Ford Transit Passenger Van 35,000 35,000
2019 Ford Transit 10 Passenger Van 35,000 35,000
1996 Dodge Van 35,000 35,000
2007 Chevrolet Van 34,000 34,000
2017 Ford Transit - 15 Passenger 45,000 45,000
2005 Chevrolet Astro Van 33,000 33,000
1982 Ford 530A Tractor 75,000 75,000
1993 N/A Mower Trailer 4,500 4,500
2001 Kubota F2560 Mower 25,000 25,000
2001 Kubota B2710HSD Four Wheel Drive Tractor 16,000 16,000 2004 Kubota F3060 Mower #3 25,000 25,000
2004 Dargo Trailer 4,500 4,500
2004 Kubota RTV900 Tractor 25,000 25,000
2007 Kubota F3680-F Mower 25,000 25,000
2017 Priefert Water Wagon Trailer 11,600 11,600
2019 Walton Tilt Trailer 9,600 9,600
2019 Kubota L4760HST Tractor 67,500 67,500
2021 John Deere Z997R Diesel ZTRAK Mower 25,000 25,000
2021 John Deere Z997R Diesel ZTRAK Mower 25,000 25,000
1995 GMC 3500 Pick-Up 45,000 45,000
1999 Dodge RAM 2500 Pick-Up 30,000 30,000
1999 Dodge RAM 2500 Pick-Up 30,000 30,000
1999 Dodge 2500 Pick-Up 35,000 35,000
2000 GMC 3500 Pick-Up 25,000 25,000
2002 Chevrolet 1500 Pick-Up 25,000 25,000
2002 Dodge 2500 Pick-Up 30,000 30,000
2005 Chevrolet 1500 Pick-Up 25,000 25,000
2007 Chevrolet Silverado 3500 Flatbed 65,000 65,000
2018 Chevrolet C1500 Double Cab Pick-Up 34,500 34,500
2018 Chevrolet C1500 Pick-Up 30,900 30,900
2019 Ford F250 4X4 Pick-Up 35,000 35,000
2019 Ford F250 4X4 Pick-Up 35,000 35,000
2020 Ford F150 Long Bed Truck 25,000 25,000
2020 Ford F150 Long Bed Truck 25,000 25,000
2020 Ford F150 Long Bed Truck 25,000 25,000
2020 Ford F150 Long Bed Truck 25,000 25,000
2021 Ford F150 Long Bed Truck 25,000 25,000
2021 Ford F150 Long Bed Truck 25,000 25,000
Total 1,455,600 1,430,600
Source: City of Watsonville fleet inventory
Exhibit "A"
City of Watsonville Page 3-5
Parks and Recreation Impact Fee Study
January 18, 2022
Existing Level of Service
Table 3.3 shows the existing level of service for all City-owned park land and for improved park land in terms of acres per capita and acres per 1,000 population.
Cost Per Capita
Table 3.4 calculates the cost per capita for park maintenance vehicles and equipment using the impact fee cost basis from Table 3.2 and the existing population from Table 2.2 in Chapter 2. That cost per capita is used as the existing level of service for those assets in the impact fee calculations.
Table 3.5 on the next page shows the cost per capita for park land acquisition and park improvements. The acres per capita factor for park land in lieu fees in Table 3.5 is based on 3.0 acres per 1,000 population in accordance with the Quimby Act. The acres per capita factor for the other fees is based on the existing ratio of improved acres per capita from Table 3.3.
No cost per acre or cost per capita is shown for park land in-lieu fees in Table 3.5 because, by City ordinance, the cost per acre on which the in-lieu fees are based is determined on a case-by-case basis at the time of approval.
Table 3.3: Existing Level of Service - Park Acres per Capita Facility
Existing
Acres 1 ExistingPop 2 Acres perCapita 3 Acres per1,000 4 City-owned Parkland 143.35 50,838 0.00282 2.82 Improved Parkland 143.35 50,838 0.00282 2.82
1 See Table 3.1
2 Existing population; see Table 2.1
3 Acres per capita = existing acres / existing population 4 Acres per 1,000 population = acres per capita X 1,000 Table 3.4: Cost per Capita - Vehicles and Equipment
Impact Fee
Cost Basis 1 ExistingPopulation 2 Cost perCapita 3 $1,430,600 50,838 $28.14 1 See Table 3.2
2 See Table 2.1
3 Cost per capita = impact fee cost basis / existing population Exhibit "A"
City of Watsonville Page 3-6
Parks and Recreation Impact Fee Study
January 18, 2022
In the next section, the per-capita costs from Table 3.5 are used to calculate impact fees per unit of development for park land acquisition and park improvements.
In-Lieu and Impact Fees per Unit
Table 3.6 shows the calculation of park land acreage dedication requirements per unit by dwelling unit size for subdivisions. The acreage dedication requirement for each unit size is based on the acres-per-capita figure from Table 3.5 and average population per dwelling unit from Table 2.2. Park land in-lieu fees will be calculated case-by-case using the acres per unit requirementsfrom Table 3.6 and a cost per acre that will be determined for each subdivision at the time of approval.
Table 3.7 shows the calculation of park land impact fees per unit by dwelling unit size for projects not involving a subdivision. They are calculated using per-capita costs from Table
3.5 and average population per dwelling unit from Table 2.2.
Table 3.5: Cost per Capita - Park Land and Improvements Fee Type
Cost per
Acre1 Acres perCapita 2 Cost perCapita3 Park Land In-Lieu Fees (Subdivisions) TBD 0.00300 TBD Park Land Impact Fees (w/o Subdivision) $ 748,950 0.00282 $ 2,111.85 Park Improvements (All Residential Units) $ 899,600 0.00282 $ 2,536.64 1 Park land acquisition cost per acre and park improvement cost per acre based on average land and improvement costs for recent Watsonville parks projects; by ordinance, cost per acre for park land in-lieu fees for subdivisions will be determined on a case-by-case basis
2 Acres per capita for park land in-lieu fees based on 3.0 acres per 1,000 residents as provided in the Quimby Act; acres per capita for park land impact fees and park improvement impact fees based on the existing ratio from Table 3.3 3 Cost per capita = cost per acre X acres per capita
Table 3.6: Park Land Dedication Requirements (Subdivisions) Dwelling Unit
Size in Sq Ft
Acres per
Capita 1 Population perUnit 2 Acres perUnit 3 <600 0.003 1.32 0.0040 600-900 0.003 2.31 0.0069
>900-1,200 0.003 3.28 0.0098
>1,200-2,100 0.003 4.15 0.0124
>2,100-2,500 0.003 4.59 0.0138
>2,500 0.003 4.96 0.0149
1 See Table 3.5
2 See Table 2.2
3 Acres per unit = acres per capita X population per unit Exhibit "A"
City of Watsonville Page 3-7
Parks and Recreation Impact Fee Study
January 18, 2022
Table 3.8 shows the calculation of impact fees per unit by dwelling unit size for park improvements and park maintenance vehicles and equipment. Those fees are calculated using per-capita costs for park improvements from Table 3.5 and per-capita costs for park maintenance vehicles and equipment from Table 3.4.
Projected Revenue
Table 3.9 shows projected revenue from the park improvement impact fees calculated in this chapter. Revenue from park land impact fees and park land in-lieu fees cannot be calculated because it is not known how many future units will be in subdivisions, and the land value on which the in-lieu fees are based will be established on a case-by-case basis.
Also, because there is no way of forecasting the number of future units by square footage categories, impact fee revenue is projected based on added population to 2045.
Table 3.7: Park Land Impact Fees (Non-Subdivision Projects) Dwelling Unit
Size in Sq Ft
Cost per
Capita 1 Populationper Unit 2
In-Lieu Fee
per Unit 3 <600 $2,111.85 1.32 $2,793.57
600-900 $2,111.85 2.31 $4,876.71
>900-1,200 $2,111.85 3.28 $6,929.24
>1,200-2,100 $2,111.85 4.15 $8,754.85
>2,100-2,500 $2,111.85 4.59 $9,690.20
>2,500 $2,111.85 4.96 $10,475.89
1 See Table 3.5
2 See Table 2.2
3 Impact fee per unit = cost per capita X population per unit Table 3.8: Park Improvement Impact Fees (All Residential Dev) Dwelling Unit
Size in Sq Ft
Cost per
Capita 1 Populationper Unit 2
In-Lieu Fee
per Unit 3 <600 $2,564.78 1.32 $3,392.72
600-900 $2,564.78 2.31 $5,922.63
>900-1,200 $2,564.78 3.28 $8,415.37
>1,200-2,100 $2,564.78 4.15 $10,632.54
>2,100-2,500 $2,564.78 4.59 $11,768.49
>2,500 $2,564.78 4.96 $12,722.69
1 Includes per-capita costs for park improvements from Table 3.5 and for park maintenance vehicles and equipment from Table 3.4 2 See Table 2.2
3 Impact fee per unit = cost per capita X population per unit Exhibit "A"
City of Watsonville Page 3-8
Parks and Recreation Impact Fee Study
January 18, 2022
Updating the Fees
The in-lieu fees and impact fees calculated in this chapter are based the current estimated cost of park land and improvements. We recommend that the fees be reviewed annually and adjusted as needed using local cost data or an index such as the Engineering News Record Construction Cost Index (CCI). See the Implementation Chapter for more on indexing of fees.
Nexus Summary
As discussed in Chapter 1 of this report, Section 66001 of the Mitigation Fee Act requires that an agency establishing, increasing or imposing impact fees, must make findings to:
Identify the purpose of the fee;
Identify the use of the fee; and,
Determine that there is a reasonable relationship between:
a. The use of the fee and the development type on which it is imposed; b. The need for the facility and the type of development on which the fee is imposed; and
c. The amount of the fee and the facility cost attributable to the development project.
Satisfying those requirements also ensures that the fees meet the “rational nexus” and “rough proportionality” standards enunciated in leading court decisions bearing on impact fees and other exactions. (For more detail, see “Legal Framework for Impact Fees” in Chapter 1.) The following paragraphs explain how the impact fees calculated in this chapter satisfy those requirements.
Purpose of the Fee: The purpose of the impact fees calculated in this chapter is to mitigate the impact of new development on the need for parks in Watsonville. Use of the Fee. Impact fees calculated in this chapter will be used to provide additional parks to mitigate the impacts of new development in the City.
Table 3.9: Projected Revenue from Park In-Lieu and Impact Fees Development Fees per Added Projected
Type Capita 1 Pop 2 Revenue 3 Park Improvement Impact Fees $2,564.78 5,506 $ 14,121,676 Total $ 14,121,676
1 Cost per capita for park improvement impact fees from Table 3.8 2 Population increase to 2045; see Table 2.1
3 Projected revenue = cost per capita X added population Exhibit "A"
City of Watsonville Page 3-9
Parks and Recreation Impact Fee Study
January 18, 2022
As provided by the Mitigation Fee Act, revenue from impact fees may also be used for temporary loans from one impact fee fund or account to another.
Reasonable Relationship between the Use of the Fee and the Development Type on Which It Is Imposed. The impact fees calculated in this chapter will be used to provide additional parks to serve the needs of added population associated with new residential development in Watsonville. Reasonable Relationship between the Need for the Facilities and the Type of Development on Which the Fee Is Imposed. New development increases the need for parksto maintain the existing level of service, as described earlier in this chapter. Without additional parks, the increase in population associated with new residential development would result in a reduction in the level of service provided to all residents of the City.
Reasonable Relationship between the Amount of the Fee and the Facility Cost Attributable to the Development Project. The amount of the park impact fees charged to a residential development project will depend on the increase in population associated with that project. The fees per unit of development calculated in this chapter for various sizes of residential units are based on the estimated average population per unit for those unit sizes in Watsonville. Thus, the fee charged to a development project reflects the impact of that project on the need for parks in the City.
Exhibit "A"
City of Watsonville Page 4-1
Parks and Recreation Impact Fee Study
September 30, 2021
This chapter calculates impact fees for community centers and recreation facilities needed to serve future development in the City. The community and recreation center impact fees calculated in this chapter are based on the relationship between the City’s existing population and the replacement cost of Watsonville’s existing community center and recreation facilities.
Maximum Supported Fees
All of the fees calculated in this report represent the maximum fee amounts supported by the data and analysis used in this study. The City Council may choose to adopt lower fees, but higher fees would not be supported by this study.
Service Area
The community centers and recreation facilities impact fees in this chapter apply to all residential development in the City.
Methodology
This chapter calculates impact fees using the standard-based method discussed in Chapter 1. Standard-based fees are calculated using a specified relationship or standard that determines the number of service units to be provided for each unit of development.
In this case, the standard is the existing level of service as discussed below. This approach is used so that the community and recreation center impact fees paid by new development are based on the cost of maintaining the current level of service as the City grows.
Demand Variable
A “demand variable” is a quantifiable attribute of development that is used in fee calculation formulas to represent the impact of development. The demand variable used to calculate impact fees for community centers and recreation facilities is population.
Because added population is associated with residential development, the in-lieu fees and impact fees calculated in this chapter apply only to residential development.
Level of Service Standard
The level of service standard used to calculate impact fees in this chapter is the existing relationship between the City’s population and the replacement cost of existing community centers and recreation facilities.
Exhibit "A"
City of Watsonville Page 4-2
Parks and Recreation Impact Fee Study
September 30, 2021
Existing Assets
Table 4.1 lists the City’s existing community centers and recreation facilities with their estimated replacement cost. Replacement cost is used in this analysis as an indicator of the cost of constructing additional facilities to serve future development.
Cost per Capita
Table 4.2 calculates the replacement cost per capita for community centers and recreation facilities using the impact fee cost basis from Table 4.1 and the existing population from Table 2.1 in Chapter 2.
Table 4.1: Existing Community Center and Recreation Facilities Square Building FF&E Site Land Impact Fee
Facility Feet 1 Repl Cost 2 Value 3 Acres 4 Value 5 Cost Basis 6 Callaghan Park Cultural Center 3,273 $ 680,064 $ - - $ - $ 680,064 Civic Plaza Bandstand 1,000 $ 197,394 $ - - $ - $ 197,394 Corralitos Community Center (Padre's Hall) 3,069 $ 481,827 $ - - $ - $ 481,827 Corralitos Women's Club 1,270 $ 202,020 $ - - $ - $ 202,020 Gene Hoularis and Waldo Rodriguez Youth Center 12,000 $ 2,737,749 $ 28,123 - $ - $ 2,765,872 Marinovich Community Center 7,200 $ 1,275,044 $ 37,598 - $ - $ 1,312,642 Mello Center
PCS Headquarters 4,672 $ 794,733 $ 19,118 - $ - $ 813,851 Muzzio Community Center 28,000 $ 4,563,376 $ - - $ - $ 4,563,376 Pajaro Valley Arts Building 2,025 $ 513,503 $ - 0.12 $ 89,874 $ 603,377 PAL Building 1,731 $ 300,807 $ - - $ - $ 300,807
PAL Modular Trailer 630 $ 68,762 $ 18,804 - $ - $ 87,566 Pinto Lake Mobile Home 1,148 $ 126,129 $ - - $ - $ 126,129 Ramsay Park Family Center 9,837 $ 2,047,466 $ 56,509 - $ - $ 2,103,975 Senior Center (incl. craft center) 10,421 $ 2,583,579 $ 9,558 0.41 $ 307,070 $ 2,900,207 Veterans Building
YWCA Day Care and Recreation Center 4,000 $ 794,702 $ 14,706 - $ - $ 809,408 Total $17,367,155 $184,416 0.53 $ 396,944 $17,948,515
1 Building square feet from City of Watsonville Property Schedule; Mello Center and Veterans Building are not owned by the City 2 Estimated building replacement cost from City of Watsonville Property Schedule 3 Furniture, fixtures and equipment (FF&E) from the City of Watsonville Property Schedule 4 Site acres provided by the City of Watsonville
5 Land value = site acres X land value per acre estimated by the City of Watsonville 6 Impact fee cost basis = building replacement cost + FF&E value + land value Table 4.2: Cost per Capita
Impact Fee Existing Cost
Cost Basis1 Population 2 per Capita 3 $17,948,515 50,838 $353.05 1 See Table 4.1
2 See Table 2.1
3 Cost per Capita = impact fee cost basis / existing population Exhibit "A"
City of Watsonville Page 4-3
Parks and Recreation Impact Fee Study
September 30, 2021
In the next section, the replacement cost per-capita from Table 4.2 is used to calculate community center and recreation facilities impact fees per unit of development by development type.
Impact Fees per Unit
Table 4.3 shows the calculation of community center and recreation facilities impact fees by dwelling unit size. Those fees are calculated using the cost per capita from Table 4.2 and average population per dwelling unit from Table 2.2 in Chapter 2.
Projected Revenue
Potential revenue from the community centers and recreation facilities impact fees can be estimated by applying the fees per unit from Table 4.3 to forecasted future development from Table 2.1. There is no way of forecasting the number of future units by square footage, so revenue is projected based on added population.
Table 4.4 shows the projected revenue to buildout from the community centers and recreation facilities impact fees calculated in this chapter. This projection assumes that future development occurs as shown in Chapter 2.
Table 4.3: Impact Fee per Unit
Dwelling Unit
Size in Sq Ft
Cost per
Capita 1 Populationper Unit 2
Impact Fee
per Unit 3 <600 $353.05 1.32 $467.02
600-900 $353.05 2.31 $815.28
>900-1,200 $353.05 3.28 $1,158.41
>1,200-2,100 $353.05 4.15 $1,463.62
>2,100-2,500 $353.05 4.59 $1,619.98
>2,500 $353.05 4.96 $1,751.33
1 See Table 4.2
2 See Table 2.2
3 Impact fee per unit = cost per capita X population per unit Table 4.4: Projected Revenue from Impact Fees
Impact Fees Added Projected
Capita 1 Population 2 Revenue 3 $353.05 5,506 $1,943,910 1 See cost per capita in Table 4.2
2 See Table 2.1
3 Projected revenue = fees per capita X added population Exhibit "A"
City of Watsonville Page 4-4
Parks and Recreation Impact Fee Study
September 30, 2021
Updating the Fees
The impact fees calculated in this chapter are based the current estimated replacement costs for community center and recreation facilities. We recommend that the fees be reviewed and adjusted annually using local cost data or an index such as the Engineering News Record Building Cost Index (BCI). See the Implementation Chapter for more on indexing of fees.
Nexus Summary
As discussed in Chapter 1 of this report, Section 66001 of the Mitigation Fee Act requires an agency establishing, increasing or imposing impact fees to make findings to:
Identify the purpose of the fee;
Identify the use of the fee; and,
Determine that there is a reasonable relationship between:
a. The use of the fee and the development type on which it is imposed; b. The need for the facility and the type of development on which the fee is imposed; and
c. The amount of the fee and the facility cost attributable to the development project.
Satisfying those requirements also ensures that the fees meet the “rational nexus” and “rough proportionality” standards enunciated in leading court decisions bearing on impact fees and other exactions. (For more detail, see “Legal Framework for Impact Fees” in Chapter 1.) The following paragraphs explain how the impact fees calculated in this chapter satisfy those requirements.
Purpose of the Fee: The purpose of the impact fees calculated in this chapter is to mitigate the impact of new development on the need for community centers and recreation facilities in Watsonville.
Use of the Fee. Impact fees calculated in this chapter will be used to provide additional community centers and recreation facilities to mitigate the impact of new development on the need for those facilities in the City.
As provided by the Mitigation Fee Act, revenue from impact fees may also be used for temporary loans from one impact fee fund or account to another.
Reasonable Relationship between the Use of the Fee and the Development Type on Which It Is Imposed. The impact fees calculated in this chapter will be used to provide additional community centers and recreation facilities to serve the needs of added population associated with new residential development in Watsonville.
Exhibit "A"
City of Watsonville Page 4-5
Parks and Recreation Impact Fee Study
September 30, 2021
Reasonable Relationship between the Need for the Facilities and the Type of Development on Which the Fee Is Imposed. New development increases the need for community centers and recreation facilities to maintain the existing level of service, as described earlier in this chapter. Without additional community centers and recreation facilities, the increase in population associated with new residential development would result in a reduction in the level of service provided to all residents of the City.
Reasonable Relationship between the Amount of the Fee and the Facility Cost Attributable to the Development Project. The amount of the community centers and recreation facilities impact fees charged to a residential development project will depend on the increase in population associated with that project. The fees per unit of development calculated in this chapter for each type of residential development are based on the estimated average population per unit for that type of development in Watsonville. Thus, the fee charged to a development project reflects the impact of that project on the need for community centers and recreation facilities in the City.
Exhibit "A"
City of Watsonville Page 5-1
Parks and Recreation Impact Fee Study
September 30, 2021
This chapter of the report contains recommendations for adoption and administration of impact fees, and for the interpretation and application of the development impact fees and in-lieu fees calculated in this study. It was not prepared by an attorney and is not intended as legal advice.
Statutory requirements for the adoption and administration of fees imposed as a condition of development approval (impact fees) are found in the Mitigation Fee Act (Government Code Sections 66000 et seq.). Requirements for park land dedication and fees in lieu of dedication are governed by the Quimby Act (Government Code 66477).
Adoption
The form in which development impact fees are enacted should be determined by the City attorney. The specific requirements are different for impact fees under the Mitigation Fee Act, and for park land dedication and in-lieu fees under the Quimby Act. The latter requirements must be adopted by ordinance and are subject to the same noticing and public hearing procedures as any ordinance.
Procedures for adoption of fees subject to the Mitigation Fee Act including notice and public hearing requirements are specified in Government Code Sections 66016 and 66018. It should be noted that Section 66018 refers to Government Code Section 6062a, which requires that the public hearing notice be published at least twice during the 10- day notice period. Government Code Section 66017 provides that fees subject to the Mitigation Fee Act do not become effective until 60 days after final action by the governing body.
Actions establishing or increasing fees subject to the Mitigation Act require certain findings, as set forth in Government Code Section 66001 and discussed below and in Chapter 1 of this report.
Establishment of Fees. Pursuant to the Mitigation Fee Act, Section 66001(a), when an agency establishes fees to be imposed as a condition of development approval, it must make findings to:
1. Identify the purpose of the fee;
2. Identify the use of the fee; and
3. Determine how there is a reasonable relationship between:
a. The use of the fee and the type of development project on which it is imposed;
b. The need for the facility and the type of development project on which the fee is imposed
Exhibit "A"
City of Watsonville Page 5-2
Parks and Recreation Impact Fee Study
September 30, 2021
Examples of findings that could be used for impact fees calculated in this study are shown below. The specific language of such findings should be provided by the City Attorney. A more complete discussion of the nexus for each fee can be found in individual chapters of this report.
Sample Finding: Purpose of the Fee. The City Council finds that the purpose of the impact fees hereby enacted is to protect the public health, safety and welfare by requiring new development to contribute to the cost of public facilities needed to mitigate the impacts of new development. Sample Finding: Use of the Fee. The City Council finds that revenue from the impact fees hereby enacted will be used to provide public facilities needed to mitigate the impacts of new development in the City and identified in the 2021 City of Watsonville Parks and Recreation Impact Fee Study by NBS. 1 Sample Finding: Reasonable Relationship: Based on analysis presented in the 2021 City of Watsonville Parks and Recreation Impact Fee Study by NBS, the City Council finds that there is a reasonable relationship between:
a. The use of the fees and the types of development projects on which they are imposed; and,
b. The need for facilities and the types of development projects on which the fees are imposed.
Administration
The California Mitigation Fee Act (Government Code Sections 66000 et seq.) mandates procedures for administration of impact fee programs, including collection and accounting, reporting, and refunds. References to code sections in the following paragraphs pertain to the California Government Code.
Imposition of Fees. Pursuant to the Mitigation Fee Act, Section 66001(a), when an agency imposes an impact fee upon a specific development project, it must make essentially the same findings adopted upon establishment of the fees to:
1. Identify the purpose of the fee;
2. Identify the use of the fee; and
3. Determine how there is a reasonable relationship between:
1 According to Gov’t Code Section 66001 (a) (2), the use of the fee may be specified in a capital improvement plan, the General Plan, or other public documents that identify the public facilities for which the fee is charged. The findings recommended here identify this impact fee study as the source of that information.
Exhibit "A"
City of Watsonville Page 5-3
Parks and Recreation Impact Fee Study
September 30, 2021
a. The use of the fee and the type of development project on which it is imposed;
b. The need for the facility and the type of development project on which the fee is imposed
Per Section 66001 (b), at the time when an impact fee is imposed on a specific development project, the City is also required to make a finding to determine how there is a reasonable relationship between:
c. The amount of the fee and the facility cost attributable to the development project on which it is imposed.
In addition, Section 66006 (f) provides that a local agency, at the time it imposes a fee for public improvements on a specific development project, "... shall identify the public improvement that the fee will be used to finance." The required notification could refer to the improvements identified in this study.
Section 66020 (d) (1) requires that the agency, at the time it imposes an impact fee, provide a written statement of the amount of the fee and written notice of a 90-day period during which the imposition of the fee can be protested. Failure to protest imposition of the fee during that period may deprive the fee payer of the right to subsequent legal challenge.
Section 66022 (a) provides a separate procedure for challenging the establishment of an impact fee. Such challenges must be filed within 120 days of enactment.
Collection of Fees. Section 66007 (a) provides that a local agency shall not require payment of fees by developers of residential projects prior to the date of final inspection, or issuance of a certificate of occupancy, whichever occurs first.
However, "utility service fees" (not defined) may be collected upon application for utility service. In a residential development project of more than one dwelling unit, Section 66007 (a) allows the agency to choose to collect fees either for individual units or for phases upon final inspection, or for the entire project upon final inspection of the first dwelling unit completed.
Section 66007 (b) provides two exceptions when the local agency may require the payment of fees from developers of residential projects at an earlier time: (1) when the local agency determines that the fees “will be collected for public improvements or facilities for which an account has been established and funds appropriated and for which the local agency has adopted a proposed construction schedule or plan prior to final inspection or issuance of the certificate of occupancy” or (2) the fees are “to reimburse the local agency for expenditures previously made.”
Statutory restrictions on the time at which fees may be collected do not apply to non- residential development.
Exhibit "A"
City of Watsonville Page 5-4
Parks and Recreation Impact Fee Study
September 30, 2021
Notwithstanding the foregoing restrictions, many cities routinely collect impact fees for all facilities at the time building or grading permits are issued and builders often find it convenient to pay the fees at that time.
In cases where the fees are not collected upon issuance of building permits, Sections 66007 (c) (1) and (2) provide that the City may require the property owner to execute a contract to pay the fee, and to record that contract as a lien against the property until the fees are paid.
Earmarking and Expenditure of Fee Revenue. Section 66006 (a) mandates that fees be deposited “with other fees for the improvement in a separate capital facilities account or fund in a manner to avoid any commingling of the fees with other revenues and funds of the local agency, except for temporary investments, and expend those fees solely for the purpose for which the fee was collected.” Section 66006 (a) also requires that interest earned on the fee revenues be placed in the capital account and used for the same purpose.
The language of the law is not clear as to whether depositing fees "with other fees for the improvement" refers to a specific capital improvement or a class of improvements (e.g., street improvements). We are not aware of any municipality that has interpreted that language to mean that funds must be segregated by individual projects. And, as a practical matter, that approach would be unworkable in any event because it would mean that no pay-as-you-go project could be constructed until all benefiting development had paid the fees. Common practice is to maintain separate funds or accounts for impact fee revenues by facility category (i.e., streets, park improvements), but not for individual projects.
Impact Fee Exemptions, Reductions, and Waivers. In the event that a development project is found to have no impact on facilities for which impact fees are charged, such project must be exempted from the fees.
If a project has characteristics that will make its impacts on a particular public facility or infrastructure system significantly and permanently smaller than the average impact used to calculate impact fees in this study, the fees should be reduced accordingly. Per Section 66001 (b), there must be a reasonable relationship between the amount of the fee and the cost of the public facility attributable to the development on which the fee is imposed.
The fee reduction is required if the fee is not proportional to the impact of the development on relevant public facilities.
In some cases, the agency may desire to voluntarily waive or reduce impact fees that would otherwise apply to a project as a way of promoting goals such as affordable housing or economic development. Such a waiver or reduction may not result in increased costs to other development projects, so the effect of such policies is that the lost revenue must be made up from sources other than impact fees.
Exhibit "A"
City of Watsonville Page 5-5
Parks and Recreation Impact Fee Study
September 30, 2021
Credit for Improvements Provided by Developers. If the City requires a developer, as a condition of project approval, to dedicate land or construct facilities or improvements for which impact fees are charged, the City should ensure that the impact fees are adjusted so that the overall contribution by the developer does not exceed the impact created by the development.
In the event that a developer voluntarily offers to dedicate land, or construct facilities or improvements in lieu of paying impact fees, the City may accept or reject such offers, and may negotiate the terms under which such an offer would be accepted. Excess contributions by a developer may be offset by reimbursement agreements. Credit for Existing Development. If a project involves replacement, redevelopment or intensification of previously existing development, impact fees should be applied only to the portion of the project that represents a net increase in demand for relevant City facilities, applying the measure of demand used in this study to calculate that particular impact fee.
Annual Report. Section 66006 (b) (1) requires that once each year, within 180 days of the close of the fiscal year, the local agency must make available to the public the following information for each separate account established to receive impact fee revenues:
1. A brief description of the type of fee in the account or fund;
2. The amount of the fee;
3. The beginning and ending balance of the account or fund;
4. The amount of the fees collected and interest earned;
5. Identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the percentage of the cost of the public improvement that was funded with fees;
6. Identification of the approximate date by which the construction of a public improvement will commence, if the City determines sufficient funds have been collected to complete financing of an incomplete public improvement;
7. A description of each inter-fund transfer or loan made from the account or fund, including interest rates, repayment dates, and a description of the improvement on which the transfer or loan will be expended;
8. The amount of any refunds or allocations made pursuant to Section 66001, paragraphs (e) and (f).
The annual report must be reviewed by the City Council at its next regularly scheduled public meeting, but not less than 15 days after the statements are made public, per Section 66006 (b) (2).
Exhibit "A"
City of Watsonville Page 5-6
Parks and Recreation Impact Fee Study
September 30, 2021
Refunds under the Mitigation Fee Act. Prior to 1996, The Mitigation Fee Act required that a local agency collecting impact fees was required to expend or commit impact fee revenue within five years or make findings to justify a continued need for the money.
Otherwise, those funds had to be refunded. SB 1693, adopted in 1996 as an amendment to the Mitigation Fee Act, changed that requirement in material ways.
Now, Section 66001 (d) requires that, for the fifth fiscal year following the first deposit of any impact fee revenue into an account or fund as required by Section 66006 (b), and every five years thereafter, the local agency shall make all of the following findings for any fee revenue that remains unexpended, whether committed or uncommitted:
1. Identify the purpose to which the fee will be put;
2. Demonstrate the reasonable relationship between the fee and the purpose for which it is charged;
3. Identify all sources and amounts of funding anticipated to complete financing of incomplete improvements for which impact fees are to be used;
4. Designate the approximate dates on which the funding necessary to complete financing of those improvements will be deposited into the appropriate account or fund.
Those findings are to be made in conjunction with the annual reports discussed above. If such findings are not made as required by Section 66001, the local agency could be required to refund the moneys in the account or fund, per Section 66001 (d). Once the agency determines that sufficient funds have been collected to complete financing on incomplete improvements for which impact fee revenue is to be used, it must, within 180 days of that determination, identify an approximate date by which construction of the public improvement will be commenced (Section 66001 (e)). If the agency fails to comply with that requirement, it must refund impact fee revenue in the account according to procedures specified in Section 66001 (d). Refunds under the Quimby Act. The Quimby Act, Section a.(6)(A) requires that a City, County or other agency to which park land or in-lieu fees are conveyed or paid shall develop a schedule “specifying how, when and where it will use the land or fees or both to develop park or recreational facilities to serve residents of the subdivision…. Any fees collected under the ordinance shall be committed within five years after the payment of the fees or the issuance of building permits on one-half of the lots created by the subdivision, whichever occurs later. Any fees not committed within five years must be refunded.
Annual Update of the Capital Improvement Plan. Section 66002 (b) of the Mitigation Fee Act provides that if a local agency adopts a capital improvement plan to identify the use of impact fees, that plan must be adopted and annually updated by a resolution of the governing body at a noticed public hearing. The alternative, per Section 66001 (a) (2) Exhibit "A"
City of Watsonville Page 5-7
Parks and Recreation Impact Fee Study
September 30, 2021
is to identify improvements by applicable general or specific plans or in other public documents.
In most cases, the CIP identifies projects for a limited number of years and may not include all improvements needed to serve future development covered by the impact fee study. We recommend that the City Council cite this development impact fee study as the public document identifying the use of the fees.
Indexing of In-Lieu/Impact Fees. Where impact fees calculated in this report are based on current costs, those costs should, if possible, be adjusted periodically to account for changes in the cost of facilities or other capital assets that will be funded by the impact fees. That adjustment is intended to account for escalation in costs for land, construction, vehicles and other relevant capital assets. We recommend the Engineering News Record Building Cost Index as the primary basis for indexing construction costs. Where land costs are covered by an impact fee or in-lieu fee, land costs should be adjusted based on changes in local land prices.
Training and Public Information
Effective administration of an impact fee program requires considerable preparation and training. It is important that those responsible for collecting the fees, and for explaining them to the public, understand both the details of the fee program and its supporting rationale.
Before fees are imposed, a staff training workshop is highly desirable if more than a handful of employees will be involved in collecting or accounting for fees.
It is also useful to pay close attention to handouts that provide information to the public regarding impact fees. Impact fees should be clearly distinguished from other fees, such as user fees for application processing, and the purpose and use of particular impact fees should be made clear.
Finally, anyone responsible for accounting, capital budgeting, or project management for projects involving impact fees must be fully aware of the restrictions placed on the expenditure of impact fee revenues. Some fees recommended in this report are tied to specific improvements and cost estimates. Fees must be expended accordingly, and the City must be able to show that funds have been properly expended.
Exhibit "A"
Reso No. (CM)
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM AJS ______ TV ______ PCS ______ ORDINANCE NO. (CM)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
WATSONVILLE ADDING CHAPTER 15 ENTITLED PARK
DEVELOPMENT IMPACT FEES OF TITLE 3 (FINANCE) AND
REPEALING ARTICLES 5 AND 6 TO CHAPTER 6 (TAXATION) OF THE
WATSONVILLE MUNICIPAL CODE
WHEREAS, the City Council of the City of Watsonville hereby adopts the findings set forth herein below, the findings and facts contained in that certain City of Watsonville Parks and Recreation Development Impact Fee Study Report, dated January 18, 2022 (“Parks and Recreation Development Impact Fee Study"), prepared by City of Watsonville (“City”) staff and NBS Government Finance Group, and the findings contained in Chapter 3-15 and Watsonville Municipal Code; and,
WHEREAS, the continuing growth of the City, combined with the expectation of high-quality services by persons who live and work in the City, and reductions by the State of California in property tax allocations to local governments have been catalysts for the review of the City's existing and future public facilities and services made necessary by new development; and
WHEREAS, pursuant to Government Code Section 66000 et seq., ("Mitigation Fee Act") the City is authorized to impose fees and other exactions to provide necessary public facilities required to mitigate the negative effects of new development in the City; and WHEREAS, it is fair and equitable for new development to pay its fair share and contribute to the financing, acquisition and establishment of such facilities; and WHEREAS, the proposed fees are based upon the information contained in the Parks and Recreation Development Impact Fee Study; and
Ord No. (CM) 2
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
WHEREAS, copies of the Parks and Recreation Development Impact Fee Study and the General Plan are on file in the City Clerk's office and are available for public review in accordance with state law, as more fully described below; and WHEREAS, this imposition of development impact fees has been reviewed by staff in accordance with the California Environmental Quality Act ("CEQA") and the CEQA Guidelines and the City of Watsonville Local Guidelines for implementing CEQA and it has been determined that the adoption of this Ordinance is exempt from CEQA pursuant to Sections 15378(b)(4), 15061(b)(3), and 15273 of the CEQA Guidelines, Section 21065 of the Public Resources Code and the City of Watsonville Local Guidelines for implementing CEQA. The intent of the Parks and Recreation Development Impact Fee Study and proposed fees is to provide a means of mitigating some of the potential environmental impacts which have been identified in planning efforts for anticipated future growth of the City. Specific environmental studies are required to be performed for each project that requires further review under CEQA prior to approval of the specific project; and
WHEREAS, the City has: 1) made available to the public, at least ten days prior to its public hearing, data indicating the estimated cost required to provide the facilities and infrastructure for which these development fees are imposed and the revenue sources anticipated to provide those facilities and infrastructure; 2) mailed notice at least thirty days prior to this meeting to all interested parties who have requested notice of new or increased development fees; and 3) held a duly noticed, regularly scheduled public hearing on March 8, 2022, at which time oral and written testimony was received regarding the proposed fees; and
Ord No. (CM) 3
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
WHEREAS, the City Council has reviewed and considered the staff report, the Parks and Recreation Development Impact Fee Study, the General Plan, and all oral and written testimony.
Table of Contents
SECTION 1. ENACTMENT. ................................................................................................. 3 CHAPTER 15 PARK DEVELOPMENT IMPACT FEES........................................................ 4 Article 1. General Provisions ................................................................................................ 4 Sec. 3-15.101 Purpose......................................................................................... 4 Sec. 3-15.102 Findings......................................................................................... 4 Sec. 3-15.103 Definitions. .................................................................................... 6 Sec. 3-15.104 Description of fees......................................................................... 7 Sec. 3-15.105 Limited use of fees. ....................................................................... 8 Sec. 3-15.106 Imposition of fees. ......................................................................... 9 Sec. 3-15.107 Quimby In-Lieu Fees................................................................... 10 Sec. 3-15.108 Developer construction of facilities at parks ................................ 10 Sec. 3-15.109 Fee adjustment............................................................................ 11 Sec. 3-15.110 Development agreements. .......................................................... 11 Sec. 3-15.111 Park Land Impact Fee Fund Requirement. ................................. 12 Sec. 3-15.112 Park Improvement Impact Fee Fund Requirement...................... 12 Sec. 3-15.113 Community/Recreation Center Impact Fee Fund Requirement... 12 Sec. 3-15.114 Schedule of Development Impact Fees....................................... 12 SECTION 2. SEVERABILITY. ............................................................................................ 12 SECTION 3. PUBLICATION............................................................................................... 13 SECTION 4. EFFECTIVE DATE. ....................................................................................... 13 SECTION 5. EXECUTION.................................................................................................. 13 o-0-o
THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, DOES ORDAIN AS FOLLOWS:
SECTION 1. ENACTMENT.
Title 3 (Finance) of the Watsonville Municipal Code is hereby amended by adding a new Chapter 15 entitled Park Development Impact Fees to read in words and figures as follows:
Ord No. (CM) 4
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
CHAPTER 15 PARK DEVELOPMENT IMPACT FEES
Article 1. General Provisions
Sec. 3-15.101 Purpose.
The purpose of the Park Development Impact Fees is to enable the acquisition and/or development and/or improvement of neighborhood and community parks to provide both passive and active recreational opportunities to the residents of the City of Watsonville in order to improve the quality of life and for the public health, welfare and benefit. New development within the City generates a need for added facilities and an increased demand upon existing facilities, and the imposition of Park Development Impact Fees upon new residential development is necessary to provide funding for such new or improved facilities meeting established standards for such new development. As set forth herein, the City has established the following Park Development Impact Fees:
(1) Parkland Impact Fee; (2) Park Improvement Impact Fee; and (3) Community Centers and Recreation Facilities Impact Fee. In establishing the fees described in the following sections, the city council finds the fees adopted to be consistent with state law (California Government Code Section 66000 et seq.) and with the City’s general plan and, pursuant to Government Code Section 65913.2, has considered the effects of the fees and determines that the fees are not material with respect to the City’s housing needs as established in the housing element of the Watsonville general plan.
Sec. 3-15.102 Findings.
(a) Findings. The City Council finds:
(1) Additional parkland, community centers, and recreation facilities are needed to accommodate future growth and maintain an acceptable level of the existing park and recreational facilities for all areas of the City of Watsonville.
Ord No. (CM) 5
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
(2) New development or conversions within the City of Watsonville result in increased usage of the existing park and recreational facilities throughout the city, which thereby increases the service requirements and the capital equipment requirements of the city’s parks and recreation facilities. (3) The City must continue to fund park land and recreation improvements within the City. These park and recreation improvements include developing additional parklands, open spaces, and recreational facilities. These additional capital expenditures are necessary to maintain the public health, safety, and welfare by assuring an acceptable level of the park and recreation facilities is available in Watsonville.
(4) In the absence of the imposition of a park improvement impact fee upon new development or conversions, the additional capital expenses necessary to maintain an acceptable level of civic services for the entire city would be unfairly imposed upon the owners and residents of the existing buildings and improvements within the city of Watsonville.
(5) New development or conversions without the payment of fees imposed by this section would not be fair to the owners and occupants of existing buildings within the city of Watsonville.
(6) The facts and evidence presented in the City’s impact fee study establish that there exists a reasonable relationship between the need for parkland, park improvements, community centers, and other recreation facilities and the impacts of the types of new development or conversions for which a corresponding fee is charged. A reasonable relationship or nexus also exists between the fee’s use and the type of new development or conversions for which the fee is charged.
Ord No. (CM) 6
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
Sec. 3-15.103 Definitions.
(a) “Building permit” shall mean the permit required or issued by the city of Watsonville for the construction, improvement or remodeling of any structure pursuant to the city of Watsonville’s building codes.
(b) “City” shall mean the governmental body managing the administrative operations of the city of Watsonville.
(c) “City of Watsonville” shall mean all property located within the geographical area within the city of Watsonville’s city limit line.
(d) “City impact fee study” shall mean the document prepared by city staff and NBS Government Finance Group (“NBS”) entitled City of Watsonville Parks and Recreation Development Impact Fee Study" dated January 18, 2022. (e) “Conversion” shall mean converting from unusable to usable floor space, or converting the existing use to another use.
(f) “Development Permit” shall mean the permit required or issued by the City of Watsonville for the grading, site improvement, construction, or improvement of property associated with new development and conversion.
(g) “Developer” shall mean any person who is the owner or authorized agent of an owner of any new development within the city of Watsonville. (h) “Dwelling unit” shall mean a residential dwelling within the city of Watsonville, as defined in Chapter 14-18.322 of this code.
(i) “New development” shall mean the original construction of residential, or the addition of usable floor space within existing residential buildings, or the construction of new accessory buildings.
Ord No. (CM) 7
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
(j) “Owner” shall mean the legal owner(s) or the authorized agent(s) for any owner of property being developed.
(k) “Park Development Impact Fees” shall mean, collectively, those fees established by this Title and includes the following separate fees: (1) Parkland Impact Fee; (2) Park Improvement Impact Fee; and (3) Community Centers and Recreation Facilities Impact Fee.
(l) “Usable floor space” shall mean any interior space constructed or converted to be used for human occupancy in accordance with the Uniform Building Code.
Sec. 3-15.104 Description of fees.
(a) A Parkland Impact Fee is hereby established on new residential development or conversions within the city of Watsonville in accordance with the schedule of fees that may be established by the City Council by resolution. No fee shall be assessed on any governmental use by the city, county, state or federal government. (b) A Park Improvement Impact Fee is hereby established on new residential development or conversions within the City of Watsonville in accordance with the schedule of fees that may be established by the City Council by resolution. No fee shall be assessed on any governmental use by the city, county, state or federal government. (c) A Community Centers and Recreational Facilities Impact Fee is hereby established on new residential development or conversions within the City of Watsonville in accordance with the schedule of fees that may be established by the City Council by resolution. No fee shall be assessed on any governmental use by the city, county, state or federal government.
(d) At least every eight (8) years, the City Council shall review these fees to determine whether the fee amounts are reasonably related to the impacts of development
Ord No. (CM) 8
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
and whether the public improvement projects described in the city’s capital improvement projects related to parks and recreation are still needed. Failure to undertake this review shall not invalidate the imposition of the fees.
Sec. 3-15.105 Limited use of fees.
The revenues raised by payment of these Park Development Impact Fees shall each be placed in separate special impact fund accounts for (1) Park Land Impact Fee; (2) Park Improvement Impact Fee; and (3) Community Centers and Recreational Facilities Impact Fee, and such revenues, along with any interest earnings, shall be used solely to:
(a) Pay for the acquisition of parkland, park and recreation facilities maintenance, the City’s future construction of those public improvement projects at least partially allocable to new residential development or conversions as described in the city’s capital improvement projects list related to parks, community centers, and recreation facilities; or (b) Reimburse developers who have been required or permitted by Section 3-
15.108 to install such listed facilities which are oversized with supplemental size, length or capacity.
Revenue from impact fees may also be used for temporary loans from one impact fee fund/account to another impact fee fund/account.
Sec. 3-15.106 Imposition of fees.
(a) Park Development Impact Fees shall be imposed on:
(1) New residential development; and
(2) Conversions, as provided in this chapter.
(b) Park Development Impact Fees shall be paid by the owner of the property on which new development or conversion is to occur. The fees shall be collected by the city prior to the issuance of the building or development permit(s) for such development or
Ord No. (CM) 9
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
conversion, whichever occurs first, unless payment at a later time is mandated by Government Code Section 66007. The fees shall be calculated based on the fee schedule in effect at the time the first building permit or development permit is issued. (c) Except as otherwise provided herein, square footage of residential buildings shall be measured by exterior dimensions. Unfinished attics, crawlspaces, and basements shall not be assessed until converted and finished as usable floor space. (d) A building or structure consisting of non-usable floor space, e.g., a garage, carport or storage shed, shall not be deemed to be part of the residential building for the purpose of determining the square footage of the residential building. (e) Each dwelling unit within a multifamily residential building or development project shall be deemed a separate dwelling unit for which a fee shall be imposed and shall be paid.
(f) Additions to an existing building shall be deemed to occur whenever the amount of usable floor space is increased, or whenever new building space is constructed where no structures existed as part of the existing building, whether or not the total building floor area is increased by the new construction.
(g) No development impact fee shall be imposed more than once for the same floor space.
Sec. 3-15.107 Quimby In-Lieu Fees.
Schedule of Quimby Fees. In-lieu fees shall be imposed and/or the dedication of parkland shall be required as a condition of approval of tentative map or parcel map pursuant to Chapter 6 of Title 13.
Sec. 3-15.108 Developer construction of facilities at parks
Ord No. (CM) 10
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
(a) The reimbursement amount shall not include the portion of the improvement needed to provide services or mitigate the need for the facility or the burdens created by the development.
(b) A developer who installs an off-site improvement at a park as a special mitigation measure for a project identified on the capital improvement projects list to be funded at least partially by impact fees may claim credit on such a fee not to exceed the impact fee payable for the development project. The City’s Public Works Director is authorized to allow such credit.
(c) If a developer is dissatisfied with the decision of the City’s Public Works Director regarding a reimbursement agreement or a credit of development impact fees, the developer shall appeal for relief to the City Council by filing a written appeal with the City Clerk within fifteen (15) days after the disputed decision pursuant to Part 11 of Chapter 14-10 of the City Code. The appeal shall state in sufficient detail the basis for the claimed credit. The decision of the City Council shall be final.
Sec. 3-15.109 Fee adjustment.
(a) A developer of any project, including any new building or addition to or conversion of any existing building, subject to the fees described in this chapter, may apply to the City Council for a reduction or adjustment of the fee(s), or a waiver of the fee(s), based upon the absence of any reasonable relationship between the nature of the impact of the development and either the amount of the fee charged or the type of facilities to be financed.
(b) The application for a fee reduction, adjustment, or waiver shall be made in writing and filed with the City Clerk within twenty (20) days after the City has provided to the applicant the amount of the fees due.
Ord No. (CM) 11
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
(c) The application shall state in detail the factual basis for the claim of waiver, reduction, or adjustment. The city council shall consider the application at a hearing held at the next available council hearing after the filing of the fee adjustment application. The City Council’s decision shall be supported by findings of fact. The decision of the city council shall be final.
(d) If a reduction, adjustment, or waiver is granted, any change in use within the project shall invalidate the waiver, adjustment or reduction of the fee.
Sec. 3-15.110 Development agreements.
The terms of any development approval or building permit(s) may be negotiated as part of a development agreement which may require a developer to provide or finance any public projects deemed agreeable to both the developer and the City Council.
Development constructed under the terms of an approved development agreement may be exempted from the payment of any of the impact fees required under this chapter.
Sec. 3-15.111 Park Land Impact Fee Fund Requirement.
The City Council hereby establishes a special fund designated as “Park Land Impact Fee Fund.” All funds from the imposition of the fees provided herein, shall be deposited in such Fund to be used exclusively for the purpose of mitigating the impact of new development on the need for parks.
Sec. 3-15.112 Park Improvement Impact Fee Fund Requirement.
The City Council hereby establishes a special fund designated as “Park Improvement Impact Fee Fund.” All funds from the imposition of the fees provided herein, shall be deposited in such Fund to be used exclusively for the purpose of developing new or refurbishing existing facilities to maintain the existing level of service or (2) achieve an adopted level of service that is consistent with the general plan.
Ord No. (CM) 12
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
Sec. 3-15.113 Community/Recreation Center Impact Fee Fund Requirement.
The City Council hereby establishes a special fund designated as “Community/Recreation Center Impact Fee Fund.” All funds from the imposition of the fees provided herein, shall be deposited in such Fund to be used exclusively for the purpose of mitigating the impact of new development on the need for community centers and recreation facilities in Watsonville.
Sec. 3-15.114 Schedule of Development Impact Fees
The schedule of the Park Development Impact Fees imposed by this chapter shall be established and adjusted from time to time by resolution of the city council. The impact fees shall not exceed the cost of mitigating the impact of new development.
SECTION 2. SEVERABILITY.
Any provision of the Watsonville Municipal Code or appendices thereto inconsistent with the provisions of the Ordinance, to the extent of such inconsistencies and no further, are repealed or modified to that extent necessary to affect the provisions of this Ordinance. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council of the City of Watsonville hereby declares that it would have adopted this Ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional.
SECTION 3. PUBLICATION.
Ord No. (CM) 13
C:\Program Files\eSCRIBE\TEMP\11255319849\11255319849,,,Ordinance - WMC 3-15 Park Development Impact Fees .docx ri 3/4/2022 11:25:58 AM
This ordinance shall be published in the Watsonville Register-Pajaronian in compliance with the provisions of the Charter of the City of Watsonville.
SECTION 4. EFFECTIVE DATE.
This ordinance shall be in force and take effect thirty (30) days after its final adoption.
SECTION 5. EXECUTION.
The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance.
******************************
Reso No. (CM)
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx
ri 3/4/2022 11:26:20 AM AJS ______ MDH ______ CDD ______ ORDINANCE NO. (CM)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
WATSONVILLE AMENDING CHAPTER 6 OF TITLE 13 OF THE
WATSONVILLE MUNICIPAL CODE BY REPEALING ARTICLE 2
(PARKLAND DEDICATIONS AND PAYMENT OF IN-LIEU FEES) IN ITS ENTIRETY AND REPLACING WITH A NEW ARTICLE 2 ENTITLED
QUIMBY PARK LAND DEDICATION AND FEES IN LIEU)
WHEREAS, Government Code Section 66477 (also known as the "Quimby Act") authorizes the legislative body of a city to, by ordinance, require the dedication of land or payment of fees in lieu thereof ("Quimby Fees"), or a combination of both, for park and recreational purposes as a condition to the approval of any tentative map; and WHEREAS, the Act provides that, prior to adoption of such an ordinance, the City Council must have adopted a general plan or specific plan containing policies and standards for parks and recreational facilities, and the park and recreational facilities are in accordance with definite principles and standards; and WHEREAS, in furtherance of the Parks and Recreation Element of the City's 2005 General Plan, the Watsonville Parks and Recreation Master Plan was prepared, which Plan contains policies and standards for parks and recreation facilities; and WHEREAS, pursuant to Section 15168(c)(2) of Title 14 of the California Code of Regulations, the adoption of this ordinance does not require additional review under the California Environmental Quality Act, Public Resources Code Section 21000 et seq. ("CEQA") because the proposed amendments to the Municipal Code are within the scope of the project covered by the Environmental Impact Report for the City's General Plan (State Clearinghouse No. 2012071033); and
Ord No. (CM) 2
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
WHEREAS, on March 1, 2022, the Planning Commission held a duly noticed public hearing to receive public testimony on the proposed Ordinance to appraise all relevant information pertaining thereto, and after considering all relevant public testimony as well as all materials in the staff report and accompanying documents, the Planning Commission adopted Resolution No. 03-22 (PC) recommending to the City Council approval of Ordinance No. _______ (CM) and recommends that the Council find that Ordinance No. ______ (CM) does not require further environmental review under CEQA; and
WHEREAS, the Parks and Recreation Commission reviewed this proposed Ordinance at its regular meeting on March 7, 2022, and after considering all relevant public testimony as well as all materials in the staff report and accompanying documents, the Parks and Recreation Commission recommended to the City Council approval of Ordinance. No. _______ (CM).
WHEREAS, on March 8, 2022, the City Council held a duly noticed public hearing to receive public testimony on Ordinance No. ______ (CM) and to appraise all relevant information pertaining thereto, and considered all public testimony as well as all materials in the staff report and accompanying documents.
Table of Contents
SECTION 1. ENACTMENT. ............................................................................................ 3 TITLE 13 SUBDIVISIONS AND MAPS ........................................................................... 3 CHAPTER 6 DEDICATIONS AND RESERVATIONS ..................................................... 3 ARTICLE 2. QUIMBY PARK LAND DEDICATION OR FEES IN LIEU........................ 3 Sec. 13-6.01 Findings and purpose...................................................................... 3 Sec. 13-6.02 Definitions. ...................................................................................... 4 Sec. 13-6.03 Reserved......................................................................................... 5 Sec. 13-6.04 Requirements for residential subdivisions. ...................................... 5
Ord No. (CM) 3
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
Sec. 13-6.05 Land requirement. ........................................................................... 7 Sec. 13-6.06 Density formula. .............................................................................. 7 Sec. 13-6.07 Procedure........................................................................................ 8 Sec. 13-6.08 Calculation of fair market value. ...................................................... 8 Sec. 13-6.09 Calculation of requirement. ............................................................. 9 Sec. 13-6.10 Credit............................................................................................... 9 Sec. 13-6.11 Quimby Park Land In-Lieu Fee Fund Requirement....................... 15 Sec. 13-6.12 Exclusions. .................................................................................... 16 SECTION 2. RENUMBERING. ..................................................................................... 17 SECTION 3. CEQA....................................................................................................... 17 SECTION 4. SEVERABILITY. ...................................................................................... 17 SECTION 5. PUBLICATION......................................................................................... 18 SECTION 6. EFFECTIVE DATE................................................................................... 18 SECTION 7. EXECUTION. ........................................................................................... 18 o-0-o
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. ENACTMENT.
Chapter 6 (Dedications and Reservations) of Title 13 (Subdivisions and Maps) of the Watsonville Municipal Code is hereby amended by repealing Article 2 (Parkland Dedications and Payment of In-Lieu Fees) in its entirety and adding a new Article 2 entitled Quimby Park Land Dedication and Fees in Lieu to read in words and figures as follows:
TITLE 13 SUBDIVISIONS AND MAPS
CHAPTER 6 DEDICATIONS AND RESERVATIONS
ARTICLE 2. QUIMBY PARK LAND DEDICATION OR FEES IN LIEU
Sec. 13-6.01 Findings and purpose.
The City Council hereby finds that development of residential subdivisions have a significant effect on the use and availability of park and recreation space and facilities,
Ord No. (CM) 4
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
and that the limited open space and recreation amenities provided by these residential developments are insufficient to meet the needs of the residents for open space and recreational facilities. The intent of this chapter is to require that such developments contribute their fair share toward the purchase, development and/or improvement of park and recreational facilities. The provisions of this chapter are enacted pursuant to the Charter, the open space section of the environmental management chapter of the general plan and the park and open space plan of the city as well as Sections 66477 and 66479 of the Government Code of the State of California, as may be applicable.
Sec. 13-6.02 Definitions.
As used in this chapter:
(a) "Affordable housing" for purposes of this chapter shall mean housing which costs a very low-, low- or moderate-income household no more than approximately thirty (30) percent of its gross monthly income as defined in 14-46.030 of the City Code. (b) “City Code” shall mean the Watsonville Municipal Code. (c) "Historic resource" is as defined in Section 5020.1 of the California Public Resources Code."
(d) "Land dedication," "dedicate land" or "land to be dedicated" and other such references to land dedicated pursuant to this chapter shall mean, for purposes of this chapter, land dedicated to the city in fee simple ownership. (e) "Privately owned/publicly accessible open space" (POPA) shall mean a parcel of private land made accessible to the public that meets the requirements set forth in 14-16.1900-1903 of the City Code.
Ord No. (CM) 5
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
(f) "Subdivider" shall mean a person, firm, corporation, partnership or association who proposes to divide, divides or causes to be divided real property into a subdivision.
(g) "Subdivision" shall mean the same as defined in Section 66424 of the California Government Code.
(h) "Subdivision map" shall mean any map filed pursuant to any proceedings for subdivision as defined in Title 13 of this City Code.
Sec. 13-6.03 Reserved.
Sec. 13-6.04 Requirements for residential subdivisions.
As a condition of approval of any final subdivision map, the subdivider shall dedicate land, pay a fee in lieu thereof, or both, at the option of the city, for park or recreational purposes according to the following standards:
(a) Dedication of sites. Where a park or recreational facility has been designated in the parks and recreation section of the open space section of the environmental management chapter of the general plan, a precise plan or the park and open space plan of the city, and the park or facility is to be located in whole or in part within the proposed subdivision, to serve the immediate and future needs of the residents of the subdivision, the subdivider shall be required to dedicate land for park and recreational facilities sufficient in size to serve the residents of the subdivision area. The parkland to be so dedicated shall conform to locations and standards set forth in the general plan, a precise plan, if applicable, and the park and open space plan of the city.
The slope, topography and geology of the site, as well as its surroundings, must be suitable for the intended park or recreation purpose. The amount of land to be provided
Ord No. (CM) 6
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
shall be determined pursuant to the standards set forth in 13-6.06 of this chapter establishing the formula for land dedication or for payment of fees in lieu thereof. (b) If parkland is dedicated in accordance with this section, the development standards for a project, as set forth in Title 8 of the Watsonville Municipal Code or an adopted precise plan or master plan, shall be calculated to include the dedicated parkland for floor area, lot size and density.
(c) Fees in lieu of land dedication. If there is no park or recreational facility designated or required in whole or in part within a proposed subdivision which meets the requirements set forth herein, the subdivider shall be required to pay a fee in lieu of land dedication equal to the value of the land that would otherwise be dedicated as determined by Section 13-6.06 of this chapter.
A fee in lieu of land dedication hereunder shall be required when:
(1) A subdivider is subdividing land on which no park is shown or proposed in the general plan, a precise plan or the park and open space plan; or (2) When dedication is impossible, impractical or undesirable as determined by the City as appropriate; or
(3) When the proposed subdivision contains fifty (50) parcels of land or less.
(d) Dedication and fees required. In certain subdivisions in excess of fifty (50) parcels of land, a combination of land dedication and fee payment may be required. These shall be subdivisions in which:
(1) Only a portion of the land to be subdivided is proposed in the general plan, a precise plan, or the park and open space plan as the location for a park or
Ord No. (CM) 7
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
recreational facility, in which case that land, or a portion thereof within the subdivision, shall be dedicated for park purposes, and a fee shall then be required in lieu of any additional land that would have been required to be dedicated under this chapter; or
(2) A major part of the park or recreation site falling within the subdivision has already been acquired, and only a small portion of land is needed from the subdivider to complete the park or recreation site, in which case the land needed shall be required for dedication, and a fee shall then be required in lieu of the additional land that would have been required to be dedicated under this chapter. (e) Use of and basis for in-lieu fees. The fees collected pursuant to this chapter are to be used only for the purpose of providing park or recreational facilities to the fullest extent permissible under Sections 66477 and 66479 of the Government Code of the State of California.
Sec. 13-6.05 Land requirement.
The public interest, convenience, health, welfare and safety require that three (3) acres of property for each one thousand (1,000) persons residing within the city be devoted to public parks and recreational facilities.
Sec. 13-6.06 Density formula.
In calculating dedication and in-lieu fee requirements under this chapter, the following table, derived from the density assumptions of the general plan, shall apply:
Table 13-6.06
Density Formula
Dwelling Unit
Size in Sq Ft
Acres per
Capita
Population per
Unit
Acres per
Unit
<600 0.003 1.32 0.0040
600-900 0.003 2.31 0.0069
Ord No. (CM) 8
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
>900-1,200 0.003 3.28 0.0098
>1,200-2,100 0.003 4.15 0.0124
>2,100-2,500 0.003 4.59 0.0138
>2,500 0.003 4.96 0.0149
Sec. 13-6.07 Procedure.
The public works director, zoning administrator, subdivision committee or City Council, as appropriate, shall, upon approving a residential development or subdivision map, determine the conditions necessary to comply with the requirements for park land dedication or fees in lieu thereof as set forth in this chapter, and said conditions shall be attached as conditions of approval. The establishment of said conditions for projects other than a subdivision map shall comply with Government Code Section 66001.
Sec. 13-6.08 Calculation of fair market value.
(a) The “fair market value” shall be based on an appraisal of vacant residential land within the City completed no more than 60 days prior to the project application and submitted by the applicant concurrently with the project application. The appraisal shall be obtained at the applicant’s sole cost and expense and prepared by an appropriately licensed and qualified appraiser approved by the City. (b) The city shall determine the parkland dedication requirement within the adopted range of fair market values set forth in the appraisal for the applicable density of the project at the time a formal application for a residential development is submitted.
Nothing shall preclude the City from recalculating the parkland dedication requirement based on modifications to the application or any preexisting site or development conditions.
(c) If a residential development application is resubmitted more than sixty (60) days after the original submittal with modifications that results in a change in the project's
Ord No. (CM) 9
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
dwelling density category per Table 13-6.06, then the applicant must obtain and submit a then current update to the appraisal submitted pursuant to subparagraph “a,” above.
Sec. 13-6.09 Calculation of requirement.
For the purpose of the formula established by this section, the following definition shall apply:
"A" equals the parkland dedication acreage required per dwelling unit within the proposed residential subdivision for park and recreational facilities as set forth herein. "B" equals the number of new dwelling units in the proposed residential development.
"C" equals the fair market value per acre of land in the proposed residential development.
"F" equals the in-lieu fee required.
"L" equals the land required for dedication.
The following formula shall be used in calculating the land required for dedication under this chapter, in acres:
A × B = L
The following formula shall be used in calculating the in-lieu fees required to be paid under this chapter:
A × B × C = F
Sec. 13-6.10 Credit.
Privately owned/publicly accessible (POPA) open space credit. (a) Credit amount. Privately owned/publicly accessible (POPA) open space proposed in a residential or mixed-use residential development that meets the eligibility
Ord No. (CM) 10
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
requirements set forth herein may receive a credit up to seventy-five (75) percent of the value of the land devoted to the POPA open space against the land dedication or fees in-lieu thereof required by this chapter.
(b) Eligibility criteria. To be eligible for POPA open space credit, the POPA open space must meet either the general requirements set forth in subsection (a) or the alternate proposal requirements set forth in subsection (b). (c) General requirements.
(1) A minimum size of 0.4 acre or, if the residential development is located within a precise plan or master plan with identified open space, the minimum size of the identified open space in the precise plan or master plan. (2) The space shall conform with the provisions of the parks, open space and community facilities chapter of the general plan and provisions of the parks and open space plan.
(3) The POPA open space shall be located with frontage of a public street(s) or with a prominent and highly visible entrance and, in all cases, have minimum dimensions of one hundred (100) feet on all sides. (4) The POPA open space complies with the city's guidelines for hydration stations and restroom buildings in city parks. (5) The POPA open space will include a sign(s) with notification of the area as public open space and posted hours, name and contact information for maintenance. The sign shall be reviewed and approved through a sign permit pursuant to Chapter 8-6 of the City Code.
Ord No. (CM) 11
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
(6) Required elements. The entirety of the POPA open space shall consist of any combination of elements, but not less than one (1) element, meeting the minimum requirements as defined in Table 13-6.10. The selected elements must be supported by the required analyses as set forth in subsection d.2.(b), Process.
Table 13-6.10
Open Space Credit Elements
Element Minimum Requirements
Open,
usable field
Must be level, with proper irrigation and water amenities to support active field recreation. Minimum total area of 0.3 acre with a minimum dimension of sixty (60) feet on all sides of the element.
Dog park Have separate areas for large dogs and small dogs. Adequate amenities such as bag dispensers and dog-friendly hydration stations.
Minimum total area of 0.25 acre for the dog park with a minimum dimension of sixty (60) feet on all sides of the element.
Game
courts
Must contain at least one (1) full game court that meets the standards of the professional association for the type of activity proposed.
Playgrounds Must have at least two (2) structures (climbable apparatus): one (1) for tots (ages two (2) to five (5)) and one (1) for youth (ages five (5) to twelve (12) populations.
Picnic area Must be able to sit at least fifteen (15) individuals and have one (1) barbecue for every two (2) tables. Must be distinguishable from other elements in the open space.
Exercise
area
Must be able to support ten (10) people using equipment at the same time and include ADA-accessible equipment.
Park trail Must be a designated, multi-use, class 1 trail as listed in the Caltrans Highway Design Manual—Bikeway Designations for the entire length of the proposed trail. The trail must provide a clear and direct path, with appropriate signage, through the project site, connecting any of the following:
• Existing or planned public facilities (e.g., public buildings, transit stops and centers, schools, parks, etc.).
• Expand, or allow for future expansion of, the existing city park trail network. Provides more than a public trailhead or crossing. • A new connection that expands an identified network in the city's bicycle transportation and pedestrian master plans to a major public facility or major public street, or significantly reduces the time or length of travel by providing an alternative connection from an identified network in the adopted bicycle transportation and pedestrian master plans.
Ord No. (CM) 12
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
Table 13-6.10
Open Space Credit Elements
Maintained
natural
habitat
space
• The element must be planted (existing or new) to provide an estimated sixty-five (65) percent to seventy-five (75) percent tree canopy coverage within five (5) years of construction completion. • All foliage and plants should be California native species or approved by the forestry and roadways manager.
• Area must provide seating for a minimum of ten (10) people. • Area shall be landscaped and maintained to be traversed by all population demographics.
• If applicable, include informational or educational signage about native landscape and plants within the element.
Alternate
element
• An applicant may submit a request to include one (1) alternate element in the POPA open space not listed in this Table 13-6.10. • Must similarly serve the public as the elements set forth in this Table 13-6.10.
(7) Exclusion from credit.
(i) Yards, court areas, setbacks, decorative landscape areas, bike and pedestrian paths, and other open areas required with residential site design by a precise plan, master plan or zoning code shall be excluded from the credit computation of POPA open space.
(ii) Irregularly shaped land with limited utility, accessibility or topographic conditions that are unsuitable for elements described in Table 13-6.10 shall not be eligible for credit.
(d) Alternate proposals. An alternate proposal is a unique, high-quality open space proposal that may not otherwise be achieved through the general requirements in subsection (a).
An applicant may be eligible for a POPA open space credit if greater than one (1) acre of single, contiguous land is provided and the POPA open space:
(1) Serves a diverse park user population; and
Ord No. (CM) 13
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
(2) Provides design benefits greater than the general requirements set forth in subsection (a).
Term and maintenance. All POPA open spaces shall be maintained as set forth in this section.
(a) The POPA open space shall be publicly accessible during the operating hours of city parks.
(b) The POPA open space shall be wholly owned and maintained by the property owner(s), homeowner association(s) or some combination thereof of the residential development awarded the credit.
(c) The right of the public to access and use the open space shall be recorded against the property by an easement, covenant or restrictions subject to review and approval by the city attorney, and such right shall run with the land in perpetuity. (d) The property owner shall enter into an agreement with the city in conjunction with, or as part of, the easement, covenant or restrictions to identify maintenance responsibilities, procedures for future modifications or upgrades to the POPA open space and violation and/or penalties for noncompliance subject to review and approval by the city attorney. The agreement shall indemnify the city for use of the POPA open space by the public.
(e) Any future redevelopment of a project site granted a POPA open space credit shall submit a formal development application and be required to provide the minimum acreage of the POPA open space as originally credited. The POPA open space shall be subject to compliance with the requirements of this chapter in place at the time of application submission.
Ord No. (CM) 14
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
Historic resource. Where a historic resource is preserved or rehabilitated as part of a residential development, a credit may be given against the requirement of land dedication or fees in lieu thereof due on the residential development, required by this chapter, up to a maximum of fifty (50) percent of the value of the land dedication or fees in lieu thereof required by this chapter. This section may also apply to the relocation of a historic resource provided it is preserved or rehabilitated in conjunction with the relocation. The developer, as part of the application for a credit, shall file an application for a historic preservation permit pursuant to Section 8-13.04 et seq. of the City Code.
Credit may be awarded pursuant to subsections d. and e. of this section when it is in the public interest to do so.
Process.
(a) To request a credit pursuant to this section, the applicant shall submit a written request specifying the credit being [sought] at time of a formal development application submittal, which shall include a description of how the request meets the credit requirements in this chapter. Each request for a credit shall also include the information required under subsections (2), (3) or (4) as applicable. (b) For the POPA open space credit, the applicant shall also submit the following with a formal development application:
1) Dimensional site, design and landscaping plans that detail the proposed POPA open space and elements; and
(2) Analyses.
Ord No. (CM) 15
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
(3) A demographic analysis of the area within one (1) mile of the proposed POPA open space (measured from the project site boundary), including the target demographics of the new residential development. (4) An analysis of the elements at the closest public parks and/or POPA open spaces within one (1) mile of the project site, up to a maximum of five (5) parks and/or POPA open spaces.
(5) For the historic resource credit, the applicant shall also submit with a formal development application an itemized cost estimate of planned rehabilitation or relocation costs for the historic resource.
Approval.
(a) POPA open space and historic resource credits may be awarded by the city council with written findings that the applicable requirements are met. (b) The affordable housing credit may be awarded when the public works director, community development director, community services director, subdivision committee or city council, as appropriate to the development application, makes written findings that the applicable requirements are met.
Sec. 13-6.11 Quimby Park Land In-Lieu Fee Fund Requirement.
The City Council hereby establishes a special fund designated as “Quimby Park Land in-Lieu Fee Fund.” All funds from the imposition of the fees provided herein, shall be deposited in such Fund to be used exclusively for the purpose of developing new or rehabilitating existing neighborhood or community park or recreational facilities to serve the subdivision (dedicating the land or paying the fees). In-lieu fees may be used for the purpose of developing new or rehabilitating existing park or recreational
Ord No. (CM) 16
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
facilities in a neighborhood other than the neighborhood in which the subdivision paying the fees is located, if certain conditions are met, as defined by statute.
Sec. 13-6.12 Exclusions.
(a) Nothing in this Chapter shall be construed to limit the city's power to require fees or land dedication for park or recreation purposes as a condition of approval of a tentative map or preliminary parcel map pursuant to the Subdivision Map Act of the State of California or Chapter 6 of the City Code; nor shall they apply to the repair of damages caused by natural disasters such as earthquakes, floods or fires as determined by the city; nor shall they apply to the construction of any nonresidential buildings or structures; nor shall they apply to any unit for which the park and recreation fee had been paid based on the then existing and established fee density formula; nor shall they apply to an existing building that is altered or expanded where no additional residential units are created and where the use is not changed; nor shall they apply to the first single-family dwelling unit in a single-family residential district (R1) as described in Section 14-16.200 of the City Code; nor shall they apply to single room occupancy (SRO) living unit facilities as defined in Section 14-18.708 of the City Code.
(b) The requirements established by Article 2 of Chapter 6 relating to subdivisions shall not apply to commercial or industrial subdivisions, nor do they apply to nonresidential condominium units, nor do they apply to projects or stock cooperatives which consist of the subdivision of air space in an existing apartment building which is more than five (5) years old when no new dwelling units are added, nor do they apply to parcel maps for a subdivision containing less than five (5) parcels and not used for
Ord No. (CM) 17
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
residential purposes; nor do they apply to a maximum of two (2) dwelling units that exist on a property if, at the time the subdivision is approved, the existing units are to remain on the property, nor do they apply to any units for which the park and recreation fee required by this Article had been paid based on the then existing and established density formula.
SECTION 2. RENUMBERING.
To the extent that this amendment necessitates a renumbering of to the code sections that follow, such renumbering is hereby authorized by this ordinance.
SECTION 3. CEQA.
The City has complied with the California Environmental Quality Act in the approval of the subject regulations in that the adoption of this Ordinance establishing regulations for the payment of fees for park and recreational purposes creates and/or modifies a government funding mechanism which is not a physical change in the environment and therefore, is not a project under CEQA. 14 Cal. Code of Regulations §§ 15378(b)(4).
SECTION 4. SEVERABILITY.
Any provision of the Watsonville Municipal Code or appendices thereto inconsistent with the provisions of the Ordinance, to the extent of such inconsistencies and no further, are repealed or modified to that extent necessary to affect the provisions of this Ordinance. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council of the City of Watsonville hereby declares
Ord No. (CM) 18
C:\Program Files\eSCRIBE\TEMP\11261939809\11261939809,,,Ordinance - WMC 13-6 Quimby Park Land Dedication Fees.docx ri 3/4/2022 11:26:20 AM
that it would have adopted this Ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional.
SECTION 5. PUBLICATION.
This ordinance shall be published in the Watsonville Register-Pajaronian and/or Santa Cruz Sentinel in compliance with the provisions of the Charter of the City of Watsonville.
SECTION 6. EFFECTIVE DATE.
This ordinance shall be in force and take effect thirty (30) days after its final adoption.
SECTION 7. EXECUTION.
The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance.
******************************
Reso No. (CM) 1
RESOLUTION NO.__________ (CM)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WATSONVILLE APPROVING PARKS AND RECREATION IMPACT FEES
TO FINANCIALLY MITIGATE IMPACTS TO PARKS AND
RECREATIONAL FACILITIES AND APPROVING QUIMBY IN-LIEU FEES EFFECTIVE DATE: MAY 8, 2022
WHEREAS, the continuing growth of the City of Watsonville ("City), combined with the expectation of high-quality services by persons who live and work in the City, and reductions by the State of California in property tax allocations to local governments have been catalysts for the review of the City's existing and future public facilities and services made necessary by new development; and
WHEREAS, pursuant to Government Code Section 66000 et seq., ("Mitigation Fee Act") the City is authorized to impose fees and other exactions to provide necessary public facilities required to mitigate the negative effects of new development in the City; and
WHEREAS, pursuant to Government Code Sections 66477 et seq., ("Subdivision Map Act"), the City is empowered to require the dedication of land or impose a requirement of the payment of fees in lieu thereof, or a combination of both, for park or recreational purposes as a condition to the approval of a tentative map or parcel map; and
WHEREAS, the proposed fees are based upon the information contained in a document prepared by City staff and NBS Government Finance Group (“NBS”) entitled City of Watsonville Parks and Recreation Impact Fee Study" dated January 2022 (“Parks and Recreation Development Impact Fee Study Report"); and
WHEREAS, descriptions of the facilities, their approximate location, size, and their estimated costs are set forth in the Parks and Recreation Development Impact Fee Study Report; and
WHEREAS, a copy of the Parks and Recreation Development Impact Fee Study Report is on file in the City Clerk's office and has been made available for public review in accordance with state law, as more fully described below; and WHEREAS, the Parks and Recreation Development Impact Fee Study Report complies with California Government Code Section 66001 by establishing the basis for the imposition of fees in new development. In particular, the Development Impact Fee Report:
1. Identifies the purpose of the proposed fees;
2. Identifies the use to which the fees will be put;
3. Demonstrates a reasonable relationship between the fees' use and the types of projects on which the fees are imposed;
4. Demonstrates a reasonable relationship between the need for the public parks and recreation facilities and the types of developments on which the fees are imposed; and
5. Demonstrates a reasonable relationship between the amount of the fees and the cost of the public parks and recreation facilities or portions of the facilities attributable to the developments on which the fees are imposed; WHEREAS, the Parks and Recreation Development Impact Fee Study Report justifies the imposition of each development fee on new construction by analyzing the General Plan, assigning the costs on a fair-share basis to the various types of residential development, and assigning the resulting fee per dwelling unit, based on the anticipated burden of such new dwelling on City parks and recreation facilities and infrastructure and the need created by such dwelling unit for new and expanded parks and recreation facilities and infrastructure; and