DEVELOPMENT IMPACT FEES AB 1600 UPDATE April 10, 2018

Background General Plan Update & AB 1600 Fees In 2015, the City adopted a new General Plan for the planned and orderly development of the city. Included as part of the General Plan Goals, Policies, and Actions were provisions that all new development projects be responsible for “paying their own way” A key implementation tool for new development projects to finance their required infrastructure and public service obligations is the payment of development impact fees.

Background (continued) Development Impact Fees (AB 1600): Authorized by the Mitigation Fee Act (Government Code Section 66000 et. Seq.), Used to defray all or a portion of the cost of public facilities related to new development projects. Public facilities include public improvements, public services and community amenities. These fees cannot include costs attributable to existing deficiencies in public facilities. Used to achieve the adopted levels of service that is consistent with the General Plan.

Background (continued) Development Impact Fees (AB 1600): The City last completed a comprehensive update to the Development Impact Fee program (DIF) in March of 1992, following the adoption of the 1990 General Plan. With the adoption the 2015 General Plan as well as the Brighton Landing and Roberts Ranch Specific Plan projects, it is appropriate (and necessary) to initiate a comprehensive update to the City’s DIF program

Background (continued) Development Impact Fees (AB 1600): The City released a Request for Proposals in February of this year for the DIF Update study and received four responses from qualified firms. After evaluating responses and checking references, staff is recommending that the City contract with Economic & Planning Systems Inc. (EPS) at a cost not too exceed $115,000. EPS is a land use economic consulting firm with offices in Oakland, Sacramento, Los Angeles and Denver. EPS has completed hundreds of development impact fee nexus studies for jurisdictions throughout California which have included comprehensive infrastructure and services studies such as the type of study the City of Vacaville is currently undertaking.

Background (continued) Development Impact Fees (AB 1600): One of EPS’s key abilities is its broader finance and economics practice that: (1) allows EPS to ensure development impact fees are effectively integrated with the City’s other financing mechanisms and resources, and (2) allows EPS to evaluate the real estate development feasibility and economic development implications of fee programs.

Background (continued) Development Impact Fees (AB 1600): Other key factors that made EPS the top consultant selection was their experience with many of the key issues facing the City as part of this DIF Update process. These include: Optimal use of citywide, subarea, and project specific requirements for fees (e.g. Community Benefit Contribution). Experience with fee program land use categories and the appropriate ways to differentiate between them as well as within them (e.g. adjustments for infill and mixed use developments as well as different size residential units). Identifying the best practices for allowing fee credits, reimbursements, phased-in increases, and other fee program implementation considerations.

Background (continued) Development Impact Fees (AB 1600): Of equal importance to EPS’s technical financial skills is their broad experience with critical public outreach meetings and presentations. As part of this DIF Update process, staff is proposing to conduct at least two, possibly three outreach meetings to key stakeholders, including: Chamber of Commerce; Local Builder’s Industry Association (BIA); and, local builders, architects, and engineers. Early and continuous transparency and communication with the above stakeholders will be critical for the success of this project.

Background (continued) Development Impact Fees (AB 1600): Once the contract is completed, a team comprised of City staff from all applicable departments will begin meeting with EPS which is expected to begin by the end of April. The entire DIF Update process is expected to require approximately nine months to complete in order to address all of the key issues associated with this subject. A more detailed discussion of those key issues is provided below.

Background (continued) Technical Issues: Will the City utilize one large “citywide fee” or a combination of a “citywide fee” and “specific plan area fees” (e.g. Northeast Plan Area)? What General Plan development assumptions will be used for calculating the new DIF amounts? How are these development numbers translated into an equivalent development unit (EDU) for purposes of calculating fees for different land use types? What specific facilities, services, and community amenities (e.g. roadways, water and sewer infrastructure, public buildings, and parks) are included in the DIF?

Background (continued) Policy Issues: Will credits and reimbursements be allowed to continue? Is there a desire to provide incentives for target projects or mixed use projects? Will there be a fee reduction for “infill” projects (due to the presence of existing facilities and services)? When in the development approval process will the DIF be collected (e.g. issuance of building permit or occupancy)? Are the City’s current service levels (for infrastructure and public services) at the proper level? Can all or portions of the City’s Community Benefit Contribution Fee be incorporated into the updated DIF?

Background (continued) Policy Issues: How do the proposed fees compare with other surrounding jurisdictions and do the fees have the potential to adversely impact new development in Vacaville? What are the total fees collected for a new development project in Vacaville (including fees from other agencies such as school impact fees and County fees)? Are there any other funding options that can be included as part of the financing plans for public improvements and services? Are there options for the implementation of the proposed fees when the DIF Update is completed?  

Background (continued) The final component of this DIF Update process being proposed by staff is a comprehensive evaluation of the City’s development approval process. The “development approval process” refers to the multiple stages a new development project is required to go through in order to be constructed in the city. This evaluation will address every stage in the process (from “idea to opening”) that a prospective developer (our customer) must go through. The purpose for this exercise is to ensure that the City’s permitting processes are streamlined, efficient, predictable and reliable for staff and our customers.

By simple motion, adopt the subject resolution. RECOMMENDATION:   By simple motion, adopt the subject resolution.