HomeMy WebLinkAbout- - Council Policy 500-15 - 7/6/2010CITY COUNCIL AGENDA REPORT
MEETING DATE: JULY 6, 2010
ITEM NUMBER:
SUBJECT: CITY COUNCIL POLICY 500-15 FOR A DEVELOPMENT IMPACT FEE DEFERRAL
PROGRAM
DATE: JUNE 25, 2010
FROM: DEVELOPMENT SERVICES DEPARTMENT
PRESENTATION BY: MEL LEE, SENIOR PLANNER
KIMBERLY BRANDT, DIRECTOR
FOR FURTHER INFORMATION CONTACT: MEL LEE
(714) 754-5611 (mleea_ci.costa-mesa.ca.us)
RECOMMENDATION
Recommend to the City Council adoption of City Council Policy 500-15 for a development
impact fee deferral program.
BACKGROUND
Pursuant to Council direction, staff has prepared City Council Policy 500-15 to establish a
development impact fee deferral program. This program would be instituted for a trial one-
year period, and may be renewed on an annual basis by City Council.
Definitions
A "user fee" is a charge for a specific service which is paid by the customer prior to the
service being rendered. This includes building permit fees, plan check fees, building
inspections, electrical/plumbing inspections, planning application fees, etc. The user fee
recoups the cost for providing these specified services.
A "development impact fee" is a one-time charge applied to new development to raise
revenue for the construction or expansion of capital facilities or services that would benefit
the development. These fees include traffic impact fees, drainage fees, and park fees.
Meeting Summary
At the December 14, 2009 Planning Commission meeting, the Commission considered various
alternatives for a possible development user fee waiver and/or development impact fee deferral
program. Of the alternatives presented in the report, the Commission recommended a one-
year program similar to ones adopted by other Orange County Cities.
Council Policy 500-15
Planning Commission also considered waiver of user fees for residential projects to stimulate
new development. However, given the financial implications of the loss of revenue for fee
waivers, Commission was not interested in developing a fee waiver program at this time.
On January 19, 2010, City Council authorized staff to prepare a one-year Development Impact
Fee Deferral Program.
ANALYSIS
The intent of an impact fee deferral program is to provide financial flexibility to defer the
collection of impact fees and therefore encourage new development within the community
during the economic downturn. Currently, impact fees are collected prior to issuance of
building permits. In other words, these expenditures are collected before development
occurs.
This program allows the Development Services Director (or the Building Official as her
designee) to defer development impact fees (i.e., traffic impact fees, parkland impact fees,
etc.), from payment at time of issuance of building permits (before construction of the project
begins) to either one of the following:
1. The end of the project construction (usually prior to issuance of a certificate of occupancy
for the building) or;
2. One year from the date of issuance of building permits, whichever occurs sooner.
While impact fees will still be collected, the intent is to change the timing of the collection to
provide more flexibility for construction financing. A copy of the draft Council Policy 500-15 is
attached to this report for reference.
Current Fee Waiver/Deferral Programs in Other Cities
A summary of existing impact fee deferral programs in other cities, based on a survey
conducted by the Building Industry Association/Orange County Chapter (BIA/OC), is
summarized in the Table A.
Table A
Summary of Impact Fee Deferral Programs
Summary of
Development Impact Fee Deferral Programs
in Other Orange
County Jurisdictions
Jurisdiction
Program
Deferral
Amount Per
Unit
Maximum
Approval Date
Expiration Date
Extension
Date
Orange Cit
Permanent Deferral
$13,000.00
Aril 2008
None
N/A
Orange Count
1 Year Deferral
$40,000.00
May 2008
May 2009
May 2010
Irvine
1 Year Deferral
$33,000.00
July 2008
July 2009
18 Months
Anaheim
2 Year Deferral
$10,000.00
July 2008
July 2010
N/A
Mission Viejo
Permanent Deferral
$20,000.00
July 2008
None
N/A
OC San. Dist.
1 Year Deferral
$5,000.00
July 2008
July 2009
July 2010
Santa Ana
1 Year Deferral
$15,852.00
August 2008
October 2009
Pending
Tustin
1 Year Deferral
Based on
Density
October 2008
N/A
Pending
Huntington Beach
1 Year Deferral
$30,000.00
December 2008
December 2009
Pending
Anaheim Union
High School Dist.
1 Year Deferral
Based on Sq. Ft.
and Unit Count
December 2008
N/A
Pending
N/A — Not Applicable
Source: BIA/OC Survey, November 2009
02
Council Policy 500-15
Annual Renewal Required
If adopted, Council Policy 500-15 shall be effective for a one-year trial period. Staff will
return to Council the following year(s) to request authorization to renew the program for
another 12 -month period, otherwise this policy will be deleted.
ALTERNATIVES:
City Council may consider the following alternatives:
1. Adopt policy for Fee Deferral Program which requires renewal on an annual basis by
City Council, or
2. Receive and file report.
FISCAL REVIEW:
The Impact Fee Deferral Program will not have any impacts to the City's fiscal budget, given
that the fees are not collected in any interest-bearing accounts.
LEGAL REVIEW:
No legal review is required on this item.
ENVIRONMENTAL REVIEW:
No environmental review is required on this item.
CONCLUSION:
The purpose of this report is to implement Council's direction from the January 2010 meeting
to prepare a one-year Development Impact Fee Program. Staff has drafted Council Policy
500-15 to provide the framework for this program. Council action is required to renew this
program on an annual basis.
Zv�c eZ� 1 �, I -
MEL LEE, AICP KIMBERL NDT' ICP
Senior Planner Develop vs. Dir ctor
Attachment: 1. Draft City Council Policy 500-15 for a development impact fee deferral
program
cc: City Manager
Asst. City Manager
City Attorney
Acting Asst. Dev. Svs. Director
Public Services Director
City Clerk (2)
Staff (4)
Planning Staff (8)
File (2)
File: 070610CouncilPolic 500-15 Date: 062510 Time: 3:30 p.m.
3
Council Policy 500-15
City of Costa Mesa
COUNCIL POLICY
SUBJECT: Development Impact Fee
POLICY
EFFECTIVE DATE:
Deferral Program
NUMBER
Page _
500-15
PURPOSE:
The purpose of this policy is to establish municipal policy and procedures for Development Impact
Fee Deferral Program.
POLICY:
To encourage new development within the community, development impact fees may be deferred, at
the discretion of the Development Services Director (or the Building Official as the designee).
Development impact fees are collected prior to issuance of a building permit. This program allows
the collection of these impact fees to occur at a late date, as specified as follows:
1. The end of the project construction (usually prior to issuance of a certificate of occupancy for
the project) or;
2. One year from the date of issuance of building permits, whichever occurs sooner.
The development impact fees subject to deferral is strictly limited to the following:
• Park and recreation fees, as described and defined in Costa Mesa Municipal Code Title 13,
Chapter XI, Article 5; and
• Traffic impact fees, as described and defined in Costa Mesa Municipal Code Title 13, Chapter
XII, Article 3.
This policy shall be effective for a one-year trial period from July 6, 2010 to July 6, 2011. Planning
staff shall report to Council for the following year(s) to request authorization to renew the program for
another 12 -month period, otherwise this policy will be deleted.
PROCEDURE:
1. The applicant shall submit a written request for fee deferral to the Development Services
Director. The request shall be specific as to which of the two options noted above (i.e.,
deferral of fees prior to project occupancy or one year from building permit issuance).
2.' The Development Services Director shall review the fee deferral request with the Building
Safety Division and the Transportation Safety Division.
3. The Development Services Director shall issue a written notice of the decision to defer fees
within 10 working days of receipt of the request.
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