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HomeMy WebLinkAboutMINUTES - 06022009 - C.18RECOMMENDATION(S): INTRODUCE Ordinance No. 2009-14 authorizing the realignment of certain impacts fee by allowing for the deferral of impact fee payments for residential and non-residential projects through December 31, 2011; WAIVE reading and FIX Tuesday, June 9, 2009 as the date of adoption. FISCAL IMPACT: Implementation of a development impact fee realignment program will result in costs to the County. The additional costs to the County are a result of: • Increased staff time to administer and service the program (partly off-set by proposed one-time service fee); and • Lost interest to the impact fee accounts during the deferment period While difficult to quantify, the expected returns to the County are in the form of increased economic activity. APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 06/02/2009 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Gayle B. Uilkema, District II Supervisor Mary N. Piepho, District III Supervisor Susan A. Bonilla, District IV Supervisor Federal D. Glover, District V Supervisor Contact: Jim Kennedy. 335-7225 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: June 2, 2009 David J. Twa, County Administrator and Clerk of the Board of Supervisors By: EMY L. SHARP, Deputy cc: C.18 To:Board of Supervisors From:Jim Kennedy, County Redevelopment Director Date:June 2, 2009 Contra Costa County Subject:Development Impact Fee Realignment Program BACKGROUND: The economic recession has had a particularly severe impact on new housing construction. Since 2005 new residential construction starts in Contra Costa County have fallen by 70%. Construction starts of new single family homes have fallen by 82%. In 2008, only 983 single family home permits were issued within the entire County--Cities and unincorporated area (Real Estate Research Council of Northern California). The drop in new housing starts has been more precipitous in Contra Costa County than the 9-County Bay Area (-50% drop) or California (-67.7% drop). The same holds true for new single family homes where Contra Costa County’s 82% drop in construction starts exceeds the drop in the Bay Area (-68.8%) or California (-78.7%). The drop in new housing construction in the Contra Costa County unincorporated area tracks the foregoing—In 2005 the County issued 1909 single family building permits; in 2008 only 422 building permits were issued. This represents a 75% drop in single family housing construction. Similarly, planning applications between 2006 and 2008 fell from 692 to 478. The measures being taken at the Federal level to stimulate the economy generally should have a salutary effect in the medium to long term as the economy stabilizes and achieves a sustainable level of growth. A limited part of the stimulus package –the First Time homebuyer tax credit was aimed specifically at inducing new housing construction. Homebuilders are facing the prospect of additional years of limited construction activity, which will continue to be a drag on the local economy and local government revenues. The Home Builders Association of Northern California and Shapell Homes have both requested that the County consider realigning the collection of development impact fees until homes sell. Easing the home builders cash flow requirements may make the difference between moving forward on construction, or waiting until the market has clearly turned around. Locally the City of Brentwood and the Mt. Diablo Unified School District have adopted development impact fee deferral programs. Sacramento County has had an impact fee deferral program since 2001. Placer County adopted a program in 2008. In response to their requests, the Department of Conservation and Development and the Public Works Department established a technical group to evaluate options and prepare a recommendation for Board of Supervisors consideration. The remainder of this report discusses issues and options and sets forth the recommended approach. I. Affected Development Impact Fee Programs Many development impact fees are collected by the County at the time of issuing a building permit for a variety of infrastructure and facility requirements. Most of these impact fees are imposed by special districts such as water, sewer, and school districts. In addition, some development impact fees are imposed by regional agencies, the East Contra Costa Regional Fees and Financing Authority for example. The County Board of Supervisors does not have the authority to modify the development impact fee collection time for these special districts and regional authority programs. Exhibit A of the ordinance identifies the development impact fees that are controlled solely by the Contra Costa County Board of Supervisors. The following development impact fee programs are within the control of the County Board of Supervisors/Flood Control District: • Area of Benefit Fees; • Child Care Fees; • Inclusionary Housing Fees; • Park Impact Fees; • Police Service Fees (Minor Subdivision) • Traffic Impact Fees Not subject to a fee collection deferral program determined by the County are: • Mulit-jurisdictional fees involving joint powers agencies; • Fire District fees (state law already permits developers to defer); • School Impact Fees (State law permits schools to defer); • Fees derived from conditions of approval rather than ordinance • Fee programs funding services, e.g., Dougherty Valley Transit Fee Program; • Planning/Engineering application fees; and • Building Permit fees In addition it has been determined that drainage fees collected on behalf of the Contra Costa County Flood Control and Water Conservation District are unable to be deferred because the Contra Costa County Flood Control and Water Conservation Act, which governs the flood control district, does not authorize the deferral of drainage fees past the building permit stage. The Board of Supervisors could determine to exclude one or more fee programs in any realignment of the fee collection program. Staff is recommending that the fee realignment program include all County imposed fee programs identified in yellow on Exhibit A, and apply to residential projects only. The Government Code section that authorizes local agencies to consider allowing development impact fees to be paid at a time other than the issuance of a building permit (Government Code Section 66007(a), (c)) does not apply to commercial projects The fee realignment program will only apply to residential projects in the unincorporated county and not in the cities. II. Time of Payment The attached ordinance provides for the payment of deferred fees on a pro-rata basis. A portion of the total amount of deferred fees is due and payable for each dwelling or structure in a development project upon the earliest of the following: (1) when a final inspection is requested for the dwelling or structure; (2) when a certificate of occupancy is requested for the dwelling or structure; or (3) when escrow closes for the dwelling or structure. The ordinance requires that all deferred fees must be paid no later than 24 months from the date of issuance of the development’s first building permit. III. Other Considerations 1. Application and Agreement: It is proposed that a developer be required to file an application with the county to participate in the fee realignment program. The approved participation in the program would be by agreement, the form of which is attached as Exhibit B to the ordinance. The Director of Conservation and Development, or her designee, would be authorized to execute the fee realignment agreement. The fee deferral agreement would be recorded and once recorded, would be a lien on the property to secure payment of the deferred fees. 2. Application Fee: The filing and processing of an application to participate in the program will require additional staff time to administer. A $500.00 one-time service fee is proposed. If the Board approves the fee realignment program a modification to the Conservation and Development Department’s fee schedule will be forwarded to the Board of Supervisors. 3. Impact Fee Amount: The proposed ordinance would not change the determination of fee amounts. The “vesting” provisions of existing State law would govern. 4. Approved Development Project: The fee realignment program would be available, upon application, to any residential development project that has received final discretionary action from the County and which has completed all environmental compliance requirements. 5. Interest: Provided a fee realignment agreement has been entered into, no interest would accrue during the period of deferral. In the event deferred fees are not paid when due it is recommended that the agreement require the payment of interest on the unpaid deferred fees, with the interest a one-time penalty equal to the annual rate of interest earned by the County on its investment of pooled funds from the date of the realignment agreement to the payment due date be imposed. Thereafter interest would accrue on the unpaid fee balance and the interest payment at the rate set forth in the Code of Civil Procedure Section 685.010. An alternative approach would require that interest accrue interest during the deferral period, and be paid at the time the fee is paid. Staff is not recommending this approach believing it is inconsistent with the goal of stimulating the home building industry. 6. Property Tax Obligation: In order to participate in the fee realignment program the applicant would be required to provide evidence that all property tax obligations for the subject property are paid in full. 7. Potential Loss of Revenue: Development ventures may be riskier now than in the recent past, setting aside the objective of deferring fees. In the event of developer bankruptcy, the value of the security instrument (the lien on the property) could be reduced or eliminated by a court action. IV. Sunset Date Most jurisdictions with a fee deferral program have included a sunset date in their ordinance. For example, Placer County set a sunset date of December 31, 2010, which was approximately two years from the date of adoption. A sunset date would permit completed applications to be filed until that date, and for a fee realignment agreement to be entered into thereafter. Any fee realignment agreement entered into prior to the sunset date would, of course, remain in full force and effect. Staff is recommending that a sunset date of December 31, 2011 be established. This will provide relief for approximately 2.5-years during which conditions in the economy generally and the housing markets particularly, should stabilize. If not, an extension to the sunset date could be considered at that time. The 2.5-year program period will also provide staff a sufficient amount of time to develop and implement the program and gain valuable experience on its impacts. CONSEQUENCE OF NEGATIVE ACTION: Development impact fees will continue to be collected in the traditional manner. Any stimulus effect associated with fee realignment would not be achieved. ATTACHMENTS Fee Deferral ordinance Exhibit A Exhibit B