TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: RN Mendoza, Financial Analyst
SUBJECT:
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AB 1600 Annual Report of the Development Impact Fees for the Fiscal Year ended 2023/24
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RECOMMENDATION
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Receive and File the AB 1600 Annual Report of the Development Impact Fees for the Fiscal Year ended 2023/24.
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PRIOR ACTION/VOTE
On July 19, 2016, the City Council adopted Resolution No. 16-3602, replacing Resolution No. 98-612, and establishing a new Development Impact Fee Schedule, and imposing a phased-in approach for some residential and office development for projects with entitlements no later than December 31, 2016 (Vote: 4-1).
On April 16, 2024, the City Council held a public hearing and adopted Resolution No. 24-4733 approving an Update of the Public Facilities Development Impact Fee Schedule, and Resolution No. 24-4734, adopting a Development Impact Fee Nexus Study, which includes the Five-Year Fee Report (AB 1600) for the Fiscal Year 2022/23 and Making Findings Required by the Mitigation Fee Act (Vote: 3-2).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
A Development Impact Fee (DIF) is a monetary exaction charged by a local government to a developer in connection with the implementation of an approved development project. DIFs can vary widely between jurisdictions because of differing facility needs. With the passage of Assembly Bill 1600, known as the 1987 Mitigation Fee Act (Government Code Section 66000 and following), the State of California recognized the burden on local governments from the rising costs associated with needed infrastructure and population increases associated with new development. The Mitigation Fee Act secured a system for identifying and collecting specific fees, dedications, reservations, and other exactions that local jurisdictions could regularly impose when properties are developed.
On September 15, 1996, Senate Bill 1693 was passed. The bill required that local agencies make available to the public specified information relating to fees deposited in the account or fund within 180 days after the last day of each fiscal year. The bill also required that local agencies identify the public facility or facilities the fee would be used to finance at the time the fee is imposed.
On October 11, 2023, Assembly Bill 516 amended sections 66006, 66008, and 66023 of the California Government Code relating to development fees. This amendment expanded requirements on the expenditure reports and audits sections of the government code. The bill required the report to include an identification of each public improvement identified in a previous report, whether construction began on the approximate date noted in the previous report, the reason for the delay, if any, and a revised approximate date that the local agency will commence construction, if applicable.
On April 16, 2024, the City Council, adopted Resolution Nos. 24-4733 and 24-4734, approving an update of the Public Facilities Development Impact Fee Schedule and Amending the City’s Fee Schedule, and adopting a Development Impact Fee Nexus Study, which includes the Five-Year Fee Report for the Fiscal Year with the amendments to extend the grandfather clause to August 30, 2024, and extend the “Pay by Date” to August 30, 2025.
This annual financial report complies with AB 1600 and includes the annual expenditures that reflect the 2016 Nexus Study rates through the fiscal year that ended June 30, 2024. Next year's annual report of development impact fees will include the new fees reflected in the 2023 DIF Nexus Study.
FISCAL IMPACT
The annual reporting requirements under Government Code Section 66006 do not constitute a fiscal impact. DIF revenue is budgeted in the Operating Budget while expenditures are budgeted in the City’s Annual Capital Improvement Plan Budget. The monies received in each development impact fee fund are audited annually by the City’s external independent auditors.
ATTACHMENTS
1. 2016 Nexus DIF Study Impact Fee Summary Page
2. AB 1600 Annual Report Fiscal Year 2023/24