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    22.    
City Council Regular
Meeting Date: 11/13/2018  

SUBJECT:
DEVELOPMENT IMPACT FEE PROGRAM EVALUATION
RECOMMENDATION:
Introduce an ordinance entitled:
 
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHINO HILLS, CALIFORNIA, AMENDING CHINO HILLS MUNICIPAL CODE SECTION 3.40.120 TO ADOPT A PROVISION TO ANNUALLY AUTOMATICALLY ADJUST THE GENERAL FACILITIES FEE AND PARKS AND RECREATION FEE CONSISTENT WITH THE PRICE INDEX FACTOR  PURSUANT TO AND IN ACCORDANCE WITH GOVERNMENT CODE SECTION 66000 ET SEQ, TO MAKE FIVE-YEAR FINDINGS REQUIRED BY GOVERNMENT CODE SECTION 66001 REGARDING UNEXPENDED TRAFFIC, WATER, SEWER, STORM DRAIN, PARKS AND RECREATION, AND GENERAL CITY FACILITIES FEE FUNDS, TO FIND THAT EACH OF SUCH FEES COMPLIES WITH CHAPTER 3.40 AND APPROPRIATELY MITIGATES IMPACTS OF NEW DEVELOPMENT PROJECTS AND TO DETERMINE THIS PROJECT IS EXEMPT FROM REVIEW UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY ACT.
BACKGROUND/ANALYSIS:
The City of Chino Hills has been undergoing development since its incorporation. In order to finance various public facilities necessitated by new development and to also retire debt incurred to fund infrastructure throughout the City, the City imposes certain fees on new development through the Development Impact Fee (DIF) program.  The DIF is based upon a Public Facilities Implementation Plan (PFIP) that was prepared in August 1998 by Keyser Marston Associates (KMA) to update certain fees determined by the County of San Bernardino prior to the City's incorporation.
 
The PFIP included an update and restructuring of a number of development fees including the Traffic Facilities Fee, the Water Facilities Fee, the Sewer Facilities Fee, the Storm Drain Facilities Fee, the Parks and Recreation Facilities Fee, and General City Facilities Fee, collectively, "Facilities Fees.”
 
Over the years, the City has reviewed and updated the DIF and PFIP several times.  The following provides a listing of prior Council actions related to the DIF:
 
  • September 8, 1998 - Adopted Ordinance No. 109 which reorganized the City’s previous development fee program and imposed a new development fee program.
  • November 24, 1998 - Adopted Ordinance No. 111 in order to adjust the amount of certain Facilities Fees and clarify certain provisions provided in Ordinance No. 109.
  • April 11, 2000 - Adopted Ordinance No. 128 to update the Facilities Fees.
  • September 23, 2014 - Adopted Ordinance No. 277 to amend Ordinances Nos. 109, 111, and 128. The purpose was to modify the fee program, apply an annual escalation factor, based on the Engineering News Record’s 20-City Construction Index, to Traffic, Water, Sewer, and Storm Drain Facilities Fees, and amend the Chino Hills Municipal Code accordingly.
 
Section 3.40.120 of the Chino Hills Municipal Code requires that the City Council review the DIF program every three years.  Under the State Mitigation Fee Act, the City is also required to review the DIF program and make certain findings every five years regarding any unexpended funds.  The City Council also reviews and approves an annual DIF Public Disclosure per Government Code Sections 66006(b) and 66001(d).  A copy of the December 12, 2017 City Council staff report containing the Annual Development Impact Fee Financial Report for Fiscal Year 2016 -17 is attached (Exhibit A).  Staff will bring the Annual Public Disclosure for Fiscal Year 2017-18 to an upcoming Council meeting.
 
In 2017, David Taussig & Associates (DTA) was hired to evaluate and review the status of the DIF program.  In August 2018, DTA completed an updated analysis (Exhibit B) of the Traffic, Water, Sewer, Storm Dain, Parks and Recreation, and General City Facilities Fee.  The evaluation was conducted to determine the status of these fee programs and evaluate their ability to pay for the remaining facilities, not yet built but contemplated, by the PFIP.  The report provides the information enabling the City Council to fulfill its duty under both the City’s and State’s requirements described above.
 
The approximate dates on which the funding referred to in Table IV-A of the 2018 DTA Evaluation is expected to be deposited into the appropriate account or fund are set forth in Table A attached. Staff estimated the dates based on the project costs, projected revenue, and project priority.
 
Based on the development projections and current fees, the facilities’ costs and other funding sources indicate that the Traffic, Water, Sewer, Storm Drain, Parks and Recreation and General City Facilities Fee funds will be sufficient to cover the costs of outstanding projects at the anticipated development rate. Because no increase in funding is needed to complete the remaining facilities, no increase in the fees is recommended other than the addition of an annual construction cost escalator to account for inflation. The cost escalator is recommended to be added to the Parks and Recreation Facilities Fee and the General City Facilities Fee to ensure inflation does not erode the ability of these funds to pay for future planned facilities. This is consistent with the escalator already added in 2014 to the Traffic Facilities Fee, Water Facilities Fee, Storm Drain Facilities Fee and Sewer Facilities Fee.  The Engineering News-Record’s 20-City Average Construction Cost Index was chosen as the basis of the escalation factor, because it is tied to the increase in construction costs. 
 
In order to streamline the update efforts, staff also propose to align the City’s requirements with those of the State, by requiring the review and update of the program every five years.  If approved, the Municipal Code Section 3.40.120 will be amended to change the review cycle from three years to five years, which will also be consistent with the State’s requirements.
 
Public Notice:
Pursuant to Government Code § 66016, the City made the documents noted below available to the public regarding the cost, or estimated cost, of facilities being funded by the Facilities Fees and the other revenue sources anticipated to provide for the facilities.

Pursuant to Government Code §§ 66004 and 66018, on November 3, 2018, and on November 10, 2018, the City published notices pursuant to Government Code Section 6062a in the Champion Newspapers, a regularly published newspaper, providing notice of the time and place of the November 13, 2018 public hearing on the Facilities Fees.
 

Documents Made Available for Public Review:
 
In accordance with Government Code §66016, the following documents have been made available in the City Clerk's office on November 2, 2018, for public review:
  1. Development Impact Fee Program Evaluation dated August 2018;
  2. Traffic, Water, Sewer and Storm Drain Facilities Fee Evaluation dated April 2014;
  3. Public Facilities Implementation Plan (PFIP) dated August 1998;
  4. 2003 SCADA System Upgrade Study;
  5. Water, Recycled Water, and Sewer Master Plan dated October 2005;
  6. Parks, Recreation & Open Space Master Plan dated May 2007;
  7. Storm Drain Master Plan dated December 2008;
  8. General Plan Update dated February 2015;
  9. FY 2018-19 Capital Improvement Program Budget;
  10. FY 2016-17 Annual Public Disclosures; and
  11. draft of this Staff Report and attachments

 
ENVIRONMENTAL (CEQA) REVIEW:
This Ordinance is exempt from review under the California Environmental Quality Act (Cal. Pub. Res. Code §§ 21000, et seq.; "CEQA") and CEQA regulations (Cal. Code Regs. tit. 14, §§ 15000, et seq.) pursuant to Pub. Resources Code, § 21080(b)(8) because it modifies and restructures charges necessary to obtain funds for capital projects necessary to maintain service within existing service areas, and pursuant to Cal. Code Regs. tit. 14, § 15273 because it establishes, modifies, structures, restructures, and approves fees for capital projects needed to maintain existing Facilities Fee programs originally adopted in 1998 by the City Council.
FISCAL IMPACT:
The adoption of this Ordinance has no fiscal impact for the City's General Fund. The funding sources from Traffic, Water, Sewer, Storm Drain, Parks and Recreation, and  General City Facilities Fee as well as existing fund balances, loan repayments, and other funding is anticipated to cover costs of facilities through FY 2026/27 at the anticipated development rate.
REVIEWED BY OTHERS:
This agenda item has been reviewed by the City Attorney, the Finance Director, and the Community Development Director.
Attachments
Ordinance
Exhibit A - Annual DIF Financial Report
Exhibit B - Development Impact Fee Program Evaluation
Table A - Dates Funding Complete

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