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HomeMy WebLinkAboutAgenda Packet 2002/05/21 CITY OF CHULA VISTA SPECIAL MEETING OF THE CITY COUNCIL AGENDA May 21, 2002 COUNCIL CONFERENCE ROOM 3:30 P.M. CITY HALL 276 FOURTH AVENUE CALL TO ORDER ROLL CALL: Councilmembers Davis, Padilla, Rindone, Salas, and Mayor Horton 1. URGENCY ORDINANCE AMENDING CHAPTER 3.50 OF THE CHULA VISTA MUNICIPAL CODE RELATING TO UPDATES 1N THE PUBLIC FACILITIES DEVELOPMENT IMPACT FEES (PFD1F) TO PAY FOR VARIOUS PUBLIC FACILITIES WITHIN THE CITY OF CHULA VISTA'S GENERAL PLAN AREA BOUNDARY (4/5THS VOTE REQUIRED) On April 23, 2002, Council approved Urgency Ordinance No. 2855-B, which is effective for thirty days only, amending Chapter 3.50 of the Chula Vista Municipal Code to increase Public Facilities Development Impact Fees (PFDIF) from $2,618 to $4,888 per equivalent dwelling unit. The Urgency Ordinance contained other minor amendments to Municipal Code Chapter 3.50, as detailed in "Public Facilities DIF, 2002 Update", and as presented to Council at the regular meeting on March 26, 2002. Ordinance No. 2855 was adopted by Council on April 9, 2002. Adoption of the proposed urgency ordinance will enable the City to continue to collect the updated fees during the 60-day waiting period before Ordinance No. 2855 becomes effective. (Director of Budget and Analysis) Staff recommendation: Council adopt the urgency ordinance. ORAL COMMUNICATIONS ADJOURNMENT to the Regular Meeting of May 28, 2002 at 6:00 p.m. in the Council Chambers, and thence to an Adjourned Regular Meeting on Thursday, May 30, 2002 at 4:00 p.m. COUNCIL AGENDA STATEMENT Item ~ Meeting Date 05/21/02 ITEM TITLE: AN URGENCY ORDINANCE NO. 2855-C OF THE CITY OF CHULA VISTA, CALIFORNIA, AMENDING CHAPTER 3.50 OF THE CHULA VISTA MUNICIPAL CODE RELATING TO UPDATES IN THE PUBLIC FACILITIES DEVELOPMENT IMPACT FEE (PFDIF) TO PAY FOR VARIOUS PUBLIC FACILITIES WITHIN THE CITY OF CHULA VISTA'S GENERAL PLAN AREA BOUNDARY. (4/5ths Vote: Yes ~X No __) SUBMITTED BY: Director of Budget and Analysis REVIEWED BY: City Manage'"~"r~l,// BACKGROUND: On April 23, 2002, Council approved Urgency Ordinance No. 2855-B, which is effective for thirty days only, amending Chapter 3.50 of the Chula Vista Municipal Code to increase Public Facilities Development Impact Fees (PFDIF) from $2,618 to $4,888 per equivalent dwelling unit. The Urgency Ordinance contained other minor amendments to Municipal Code Chapter 3.50, as detailed in "Public Facilities DIF, 2002 Update", and as presented to Council at the regular meeting on March 26, 2002. Ordinance 2855 was adopted by Council on April 9, 2002 and becomes effective 60 days thereafter. Adoption of the proposed Urgency Ordinance 2855-C will enable the City to continue to collect the updated fees during the 60-day waiting period. RECOMMENDATION: That City Council adopt an urgency ordinance amending various sections of Chapter 3.50 of the Chula Vista Municipal Code to include increasing the total Public Facilities Impact Fees from $2,618 to $4,888, effective for a period of thirty (30) days from the date of adoption. BOARDS AND COMMISSIONS: Presentations were made to the Chula Vista Economic Development Commission, the Growth Management Oversight Commission, and the Housing Advisory Commission. Staff answered ali questions of these boards and commissions, but did not seek endorsements. Page 2, Item ~ Meeting Date 05/21/02 DISCUSSION: This discussion represents a brief recap of more detailed information contained in the "Public Facilities DIF, 2002 Update". Public Facilities Development Impact Fee Increase: Overall, projects included in the PFDIF total slightly more than $265 million, of which 68%, or $181 million is the responsibility of the PFDIF program. To date, approximately $40 million in fee and interest revenue has been collected. The proposed impact fee is calculated solely on the PFDIF's remaining obligation for project costs. Thirty-one percent of project costs ($82 million) is the City's share for correcting pre- existing deficits and for joint-impetus projects. Approximately 33% ($27.1 million) of the City share has already been expended. The remaining City share will be paid over the next 20-30 years. The largest remaining component of that share will be the Police Facility. The PFDIF is proposed to increase from $2,618 to $4,888, an increase of $2,270 per equivalent dwelling unit. The proposed increase for commercial/industrial development is also shown below. The fee increase, adjusted for financing costs and earned interest, is broken down as follows: PFDIF Component Current New Fee Change Fee per EDU Civic Center $480 $1,202 + $722 Police $735 $1,635 + $900 Corporation Yard $386 $707 + $321 Libraries $638 $716 + $78 Fire Suppression System $203 $449 + $246 Administration $134 $149 + $15 GIS, Computer Systems, Records Management System, Telecommunications $42 $30 - $12 Residential $2,618 $4,888 + $2,270 Commercial/Industrial $13,090 $20,860 + $1,554 ~ Cornmerc al/industnal ~s assessed at the rate of 5 EDUs per acre. The table presents the increase per acre, expressed as a Uper EDU" increase ($20,860 - $13,090 = $7,770 + 5 = $1,554/EDU). Page 3, Item / Meeting Date 05/21/02 DISCUSSION (continued): Major component changes are highlighted below. Police Facilities and Equipment Component: The fee is proposed to increase from $735 per EDU to $1,635 per EDU, representing the largest increase of any component. The increase is attributable to revised estimates supported by more detailed information now available from the new Police Facility Master Plan, in the key areas of building construction, design, project management and construction administration. A change in facility location also increased site acquisition costs. The new Master Plan, approved by City Council in July 2001, reflects increased staffing requirements generated by higher-than-expected call for service demand in newly developed areas. The Master Plan also added new planned facilities such as a quartermaster area, a larger short-term holding space, and an indoor vehicle exam area. These significant cost increases required the financing period for the new facility to be increased from 20 to 30 years, further contributing to the fee increase. The police facility will be constructed as a design-build project with future project costs not expected to change significantly, with the possible exception of changes in borrowing rates in the very near future. The PFDIF share of the new Police Facility has been capped at 48.5% of the basic $63 million project, plus applicable financi'ng charges. The cap does not include extraordinary costs (costs that could not be reasonably foreseen at the time the project budget was developed, such as the significant increase in insurance costs after 9/11), possible inflationary changes, and extraordinary EDU changes as defined in the following "Prepayment of Fees" section. Civic Center Expansion Component: The $722 increase in this fee component is attributable to increases in construction-related costs similar to those for the Police Facility, and costs not included or underestimated in the 1997 Civic Center Master Plan, but identified in the more detailed Master Plan update, approved by Council in July 2001. Increases reflect added costs to relocate Fire Station #1, rewiring and telecommunication upgrades particularly in the existing Police building, and additional modifications to common and public areas. Financing costs for the Civic Center expansion add significantly to the overall project. It is important to note that the proposed fee increase also incorporates a number of cost savings due to re-use of the vacated police building and reductions in square footage and parking-related needs. Corporation Yard: The fee is proposed to increase from $386 to $707 per EDU, primarily reflecting increases in'site preparation requirements, and the addition of 11,000 square feet of office space to accommodate the staff to be relocated from the Civic Center. The PFDIF share of the new corporation yard has been capped at 47.1% of the basic $35.1 million project cost, plus applicable financing costs. Page 4, Item / Meeting Date 05/21/02 DISCUSSION (continued): Libraries: The fee for the Library component is proposed to increase from $638 to $716 per EDU, principally attributable to spreading costs only to residential units. Previously, library costs had been spread to both residential and commercial/industrial land uses, which lowered the cost per EDU. The update reflects changes in library usage since the 1990's. The full Library component fee increase has, however, been partially offset and may be reduced even further. The City will be submitting a State Libraries grant application for the Rancho del Rey library (under Proposition 14). If obtained, the grant would pay for 65% of construction costs, thereby providing an offset to the PFDIF of $4.4 million. The proposed fee already incorporates half of this projected offset. Future fee adjustments will depend on whether the grant is awarded. Fire Suppression System: The fee is proposed to increase from $203 to $449 per EDU. The increase primarily reflects updated construction costs for future fire stations and a 51% increase in the cost of fire apparatus. There were no additional costs for external financing. Administration: The fee is proposed to increase by $15 per EDU. The major factors in this change include an enhanced need to develop financial tracking systems for the various building projects detailed above. Prepayment of Fees: As requested by developers, and at the discretion of the City Manager, developers have been allowed to prepay the Police Facility component fee at a reduced rate of $865 per EDU, and/or to prepay the Civic Center Expansion component fee at a reduced rate of $708 per EDU. The prepaid fee is lower than the standard fee because it does not include financing. However, since financing costs are removed from both the prepaid fee and the total project cost, the standard fee remains unchanged for developers who do not elect to prepay. The prepaid EDU fee will be adjusted to account for any of the following events: * Extraordinar~costs as defined previously; · A change in EDU totals in excess of 2,000 EDUs, which would have a substantial effect on fee levels; Page 5, Item / Meeting Date 05/21/02 DISCUSSION Prepayment of Fees (continued): · Normal annual adjustments that are not already incorporated into project totals. Such adjustments would be for inflation according to the Consumer Price Index (CPI) as published by the Bureau of Labor Statistics, or for construction costs increases according to the Building Construction Index (BCI) as published by the ENR. The deadline for the prepayment of Police Facility fees to the City Finance Department was May 3, 2002. Civic Center Expansion fees were prepaid by May 17, 2002 by all interested developers/builders, except for developers and builders of "future developments". ("Future developments" are defined as those for which no permits had been pulled by May 17, 2002). Such future developments may prepay Civic Center fees in a lump sum on the date their first permit is pulled, up to June 30, 2003, which is three months prior to the date the City intends to solicit financing for the Civic Center project. Prepayment represents a drawdown account - not a fixed number of EDUs. Should the prepayment fee be increased for any of the reasons cited above, the number of EDUs covered by the drawdown account will similarly change. As with all other PFDIF fund balances, the City will retain any earned interest on the prepaid funds, to be used for any allowable PFDIF purpose. Developers who transfer all or any portion of a remaining prepayment for use by a merchant builder, must notify the City in writing of the transfer before the merchant builder will be allowed to draw down the prepayment balances. As part of the prepayment process, an agreement stipulating to the terms above, must be entered into with the City. Recreation Facilities: The addition of a new PFDIF component to fund public recreation facilities has not been included with this update pending further study and adoption of the Parks Master Plan. The master plan was accepted by the Parks and Recreation Commission on March 27, 2002 with a recommendation to go forward to Council. City staff have determined that the Park Acquisition and Development (PAD) fee, calculated in 1991, has for some time been insufficient to meet the costs of planned major recreation facilities such as community centers, gymnasiums, and swimming pools. These facilities are needed to serve the growing City population due to new development. Page 6, Item ~ Meeting Date 05/21/02 DISCUSSION Recreation Facilities (continued): Staff have also determined that funds to pay for those facilities may be more suitable for collection through the PFDIF than through the PAD. Developers were informed of the City's intention to establish the new PFDIF component in October 2001. At that time, staff and developers agreed to delay discussions on the new Recreation Facilities component until after an update of the existing 10 components (the subject of this report) was adopted by the City Council. Discussions concerning the new Recreation Facilities component commenced in May 2002. When implemented, the new Recreation Facilities fee will not be spread to commercial/industrial development due to the absence of an appropriate nexus. Affordable Housing The Housing Advisory Commission (HAC) has raised concerns with regard to the impacts of a significant fee increase on affordable housing project costs. Municipal Code section 3.50.070 currently allows developers of Iow and/or moderate-income housing projects to prepay up to 500 EDUs as approved by the City Manager. Staff have been working with the Housing Division to ensure that develoPers of affordable housing projects that are planned to commence before March 2005 (a 3-year period from the current fee update), will be able to lock in the pre-March 2002 fee rate ($2,618 per EDU) and to pay said fees over a 5-10 year period. Because housing costs and thus related fees are projected to rise over the long term, it is expected that the HAC will develop proposals for future Council consideration which would help offset fee increases that occur after March 2005. URGENCY: It is necessary that the City's development impact fee increases for public facilities go into effect immediately in order that all developers of properties in the Eastern territories of the City pay their fair share of the cost of public facilities improvements relating to the impacts caused by their development. In addition, GMOC thresholds call for timely analysis of development impact fee activity, including fee adjustments, to ensure that funding is available when facilities need to be built. Furthermore, immediate implementation of this fee increase is necessary due to the current and immediate threat to public safety that will result should there be a shortfall in the amount of money necessary to pay for the various needed public facilities, thereby resulting in a decline in police and fire service levels. _The prospect of a shortfall and the inadequacy of public safety facilities constitute a current immediate threat to the public health, welfare and safety justifying the immediate imposition of this fee. Page 7, Item Meeting Date 05/21/02 FISCAL IMPACT: Staff recommends increasing the total Public Facilities Development Impact Fee by $2,270 - from $2,618 to $4,888 per EDU. Current and future projects included in the PFDIF total $265,109,171 of which 68% ($181,086,819) is the responsibility of the PFDIF program. To date, 24% or $50,471,027 of the PFDIF obligation, including earned interest, has been paid. Financing: Of the four major building projects that are planned to commence between 2002 and 2006, the PFDIF share for the new Police Facility and the Civic Center expansion will require external financing. Conversely, the PFDIF obligation for the Rancho del Rey Library and the Otay Ranch Village 2 Fire Station are planned to be directly financed from fund balances, as are all building projects targeted for 2006 and beyond. Currently, the annual PFDIF debt service is $1.5 million. By the year 2004, the PFDIF debt service is projected to rise to $3.3 million, and reach $5.7 million in 2006. The annual PFDIF debt service will be approximately $4.2 to $5.5 million through the year 2022 for all projects. Police Facility debt service will extend to 2030 at approximately $1.8 million annually. At the direction of the Assistant City Manager, staff conducted a "worst case" growth scenario to assess the City's risk should development slow. The study concluded that at the new fee level, the City could withstand a significant slowdown in building activity (down to approximately 1,000 EDUs per year) over several years. Such a slump would, of course, necessitate a change in project phasing and a fee adjustment to account for lower interest earnings on PFDIF fund balances. /-7 ORDINANCE NO. 2855-C AN URGENCY ORDINANCE OF THE CITY OF CHULA VISTA, CALIFORNIA, AMENDING CHAPTER 3.50 OF THE CHULA VISTA MUNICIPAL CODE RELATING TO UPDATES IN THE PUBLIC FACILITIES DEVELOPMENT IMPACT FEE (PFDIF) TO PAY FOR VARIOUS PUBLIC FACILITIES WITHIN THE CITY OF CHULA VISTA'S GENERAL PLAN AREA BOUNDARY WHEREAS, the City Council adopted Ordinance 2855 on April 9, 2002, which will increase the development impact fees to finance public facilities within the City of Chula Vista; and WHEREAS, pursuant to Government Code Section 66017(a), the fees increased by that ordinance will not become effective until sixty (60) days after its adoption; and WHEREAS, developments in the City which will impact various public facilities will be applying for building permits during the interim period before the development impact fee increase becomes effective; and WHEREAS, Government Code Section 66017(b) authorizes the City to adopt an interim fee as an urgency measure upon making a finding describing the current and immediate threat to the public health, welfare, and safety; and WHEREAS, state law requires said urgency ordinance to be adopted by a four-fifths vote; and WHEREAS, cost estimates for the current list of needed public facilities, have been updated; and WHEREAS, new master plans for the police facility and civic center expansion - the two most costly PFDIF projects - were approved by Council on July 17, 2001, containing updated costs that necessitate a fee increase; and WHEREAS, current developers of Iow/moderate-income housing may need to defer or prepay impact fees at the current rate for up to 500 EDUs, in order to financially protect the public-purpose project; NOW, THEREFORE, the City Council of the City of Chula Vista does ordain as follows: SECTION 1: FINDINGS The City Council finds that developers of land within Chula Vista's General Plan area boundary should be required to mitigate the burden created by development through the payment of an impact fee for construction of public facilities within the boundaries of the development and for public facilities outside the boundaries of the development which are needed to provide service to the development in accordance with City standards; and The City Council finds that the legislative findings and determinations set forth in Ordinance No. 2810 continue to be true and correct and incorporate those findings herein; and The City Council finds, after consideration of the evidence presented to it including the "Public Facilities DIF, 2002 Update", that certain amendments are necessary in order to assure that there are sufficient funds available to finance police and fire facilities necessary to maintain public safety service levels; and The City Council finds, based on the evidence presented at the meeting, the City's General Plan, and the various reports and information received by the City Council in the ordinary course of its business, that the imposition of public facilities impact fees on all development in the eastern territories for which building permits have not been issued is necessary in order to protect the public health, safety and welfare and in order to assure effective implementation of the City's General Plan; and The City Council finds that the amount of the amended fees levied by this ordinance does not exceed the estimated cost of providing the public facilities. SECTION 2: Finding of Urgency That the City Council of the City of Chula Vista finds that it is necessary that its development impact fee update for public facilities remain.in effect on an urgency basis for an additional thirty (30) days until Ordinance 2855 becomes effective sixty (60) days after its second reading and adoption on April 9, 2002. The City Council finds that an Urgency Ordinance is necessary in order that all developers of properties in the eastern section of the City pay their fair share of the cost of public facilities improvements relating to the impacts caused by their development. Ongoing implementation of this fee is necessary due to the current and immediate threat to public safety that will result should there be a shortfall in the amount of money necessary to pay for the various public facilities thereby resulting in a decline in police and fire service levels. The City Council finds that the prospect of a shortfall, inadequacy of public safety facilities and concems about an increased charge to remaining property owners constitutes a current immediate threat to the public health, welfare and safety justifying the immediate imposition of this fee. SECTION 3: That Sections 3.50.020, 3.50.030, 3.50.050, 3.50.070, and 3.50.090 of the Chula Vista Municipal Code shall be amended to read as follows: 3.50.020 Definitions. For the purposes of this chapter, the following words or phrases shall be construed as defined in this section, unless from the context it appears that a different meaning is intended. A. "Building permit" means a permit required by and issued pursuant to the Uniform Building Code as adopted by reference by this city. B. "Developer" means the owner or developer of a development. C. "Development permit" means any discretionary permit, entitlement or approval for a development project issued under any zoning or subdivision ordinance of the city. D. "Development project" or "development" means an~, activity described as the following: 1. Any new residential dwelling unit developed on vacant land; 2. Any new commercial/office or industrial development constructed on vacant land; 3. Any expansions to established developments or new developments on non-vacant land in those land use categories listed in 1 and 2 above, if the result is a net increase in EDUs. The fee shall be based solely on this net EDU increase. 4. Any new or expanding special land use project; 5. Any special purpose project developed on vacant land or non- vacant land, or expanded within a pre-existing site, if the result is a net increase in EDUs. The fee shall be based solely on this net EDU increase. 6. Any other development project not listed above but described in Section 65927 and 65928 of the State Government Code. E. "Community purpose facility" means a facility which serves one of the following purposes: 1. Social service activities, including such services as Boy Scouts and Girl Scouts, Boys and Gids Club, Alcoholic Anonymous and services for the homeless; 2. Public schools; 3. Private schools; 4. Daycare; 5. Senior care and recreation; 6. Worship, spiritual growth and development; F. "Special land use" means any non-residential, non-commercial/office or non-industrial development project (e.g. Olympic Training Center, hospitals, utilities), or non-special purpose project. G. "Special purpose project" means any for-profit community purpose facility (e.g. daycare). H. "Engineer report" refers to the April 20, 1993 "development impact fees for public facilities" report. I. "Extraordinary project cost increases" means increases resulting from costs that could not have been reasonably foreseen at the time a project budget was established. J. "Extraordinary EDU change" means an increase or decrease in the number of remaining planned equivalent dwelling units (EDUs) for which building permits have not yet been pulled, which changes the existing total by more than 2,000 EDUs. 3.50.030 Public Facilities to be Financed by the Fee. A. The public facilities ("facilities") which are the subject matter of the fee include buildings, equipment and related one-time start-up costs or portions thereof, as detailed in Subsection C below and in the engineer report on file in the office of the city clerk. B. The city council may modify or amend this list of facilities by written resolution in order to maintain compliance with the city's general plan or the capital improvement program. C. The facilities are as follows: 1. Civic Center Expansion 2. Police Department Facilities and Equipment 3. Corporation Yard Relocation/Expansion 4. Library System Expansion 5. Fire Suppression System Expansion 6. Geographic information system ccmputcr .... ~-- · ,z ...... expansion; 7. Computer system expansion; ~ 8~. Telecommunication system upgrcdc expansion; & 9__. Records management system expansion. 3.50.050 Establishment of Fee. A development impact fee ("fee"), to be expressed on a per equivalent dwelling unit ("EDU") basis, is hereby established to pay for the facilities within the territory. The fee shall be paid upon the issuance of building permits for each development project within the city of Chula Vista, except that, at the discretion of the city manager, a developer may prepay all or part of civic center expansion and/or police facilities fees that would be applicable to the developer's future development proiects. Prepayment would occur at the then current rate; however, the developer has sole responsibility for paying subsequent fee increases resulting from (1) "extraordinary project cost increases", (2) normal annual adjustments in the Consumer Price Index (CPI) or Building Construction Index (BCI), or (3) "extraordinary EDU changes". 3.50.070 Time to Determine Amount Due. The fee for each development shall be calculated at the time of building permit issuance and shall be the amount as indicated at that time, and not when the tentative map or final map were granted or applied for, or when the building permit plan check was conducted, or when application was made for the building permit, except that a developer of a development project providing Iow and/or moderate-income housing in accordance with Section III, Objective 1 of the 1991 housing element of the general plan may request authorization to prepay or defer the fee for up to 500 EDUs and said request may be approved at the sole ity " .............* ~-~ -' .... ' ..... · ~:.~ discretion of the c manager. ,.,~,~,,, ~,, order to facilitate those Iow and/or moderate-income proiects which are planned for construction throuflh March 24, 2005, the fee for said projects shall be the fee existing as of March 25, 2002. 3.50.090 Amount of Fee. A. The fee shall be the amounts set forth in Section 3.50.090.B and C. The city council may adjust the amount of this fee as necessary to reflect changes in the costs of the facilities as may be reflected by such index as the council deems appropriate, such as the Engineering-News Record Construction Index, or such other basis; changes in the type, size, location or cost of the facilities to be financed by the fee, changes in land use designation in the city's general plan, and upon other sound engineering, financing and planning information. Adjustments to the fee may be made by resolution amending this section. B. The fee shall have portions which are, according to the engineer report, allocated to a specific facility ("fee components") which correspond to the costs of the various facilities, plus the administration cost for the fee, which is a percentage of the fee components' total cost divided by total EDUs, as indicated in Section 3.50.090. / --t2- C. The fee shall be the following, depending on land use: Land Use Fee Residential $.-,..'~ ~.,.o 4,888/dwelling unit Commercial/Office ~...,,-....~ nn,~ 20,860/acre Industrial ..... 0 20,860/acre Special land use ~, ..,w,.~nn 20,860/acre Olympic Training Center ,.,._,~ '~'~.. 6,110/acre Public purpose Exempt Nonprofit community purpose facility Exempt Special purpose project, including for-profit day care ~ 14,664/acre SECTION 4: Time limit for protest and iudicial action Any judicial action or proceeding to attack, review, set aside, void or annul this ordinance shall be brought within the time period as established by law. In accordance with Government Code Section 66020(d)(1), the ninety-day approval period in which parties may protest begins upon the effective date of this ordinance. SECTION 5: Expiration of this urgency ordinance This urgency ordinance shall be of no further force and effect 30 days after its adoption. SECTION 6: Effective Date This urgency ordinance shall become effective immediately upon four- fifths vote. Presented by Approved as to form by ~-~-,_~er~FFru_chter /~,i'~'(~n M. Kahehy D~rector of Budget and Analys~s ~ty Attorney