TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Evan Crockett, Management Analyst - Finance
SUBJECT:
title
Introduction of Assembly Bill 1600 Annual Report of Development Impact Fee Expenditures for Fiscal Year 2024/25
end
RECOMMENDATION
recommendation
Receive an introduction of the Assembly Bill (AB) 1600 Annual Report of Development Impact Fee expenditures for Fiscal Year 2024/25.
body
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 included the Five-Year Fee Report (AB 1600) for Fiscal Year 2022/23 and made 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.
DISCUSSION
A development impact fee (DIF) is a monetary charge imposed by a local government on developers in connection with an approved development project. DIFs can vary widely between jurisdictions due to differing facility needs. With the passage of AB 1600, known as the 1987 Mitigation Fee Act (Government Code Section 66000 and following), the State of California acknowledged the burden on local governments from the rising costs associated with needed infrastructure and population increases resulting from new development. The Mitigation Fee Act secured a system for identifying and collecting specific fees, dedications, reservations, and other charges that local jurisdictions could regularly impose when properties are developed.
On February 21, 1996, Senate Bill (SB) 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 requires local agencies to identify the public facilities for which the fee would be used to finance at the time the fee is imposed.
On October 11, 2023, AB 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 requires the Annual Development Impact Fee 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 September 19, 2024, SB 937 amended section 66007, establishing a different rule for designated residential development projects. A local agency may not require payment of fees or charges imposed for the construction of public improvements or facilities until the date the first certificate of occupancy or first temporary certificate of occupancy is issued, except in limited circumstances, such as when the fee reimburses the agency for prior expenditures or when construction does not begin within five (5) years of permit issuance.
Annually, the Finance staff compile a report of expenditures made with the Development Impact Fees collected and interest accrued during the year.
This item is being presented to introduce the report to the public. To allow sufficient notice to any interested party, this item will return on January 20, 2026, at which time staff will request that the City Council receive and file the attached report. That action will fulfill the state's requirements for reporting the activities of each DIF fund.
FISCAL IMPACT
All Development Impact Fee funds are programmed to be spent in accordance with the five-year Capital Improvement Plan. The monies received in each Development Impact Fee fund are audited annually by the City’s external independent auditors.
ATTACHMENTS
1. AB 1600 Annual Report of the Development Impact Fees for Fiscal Year 2024/25