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HomeMy WebLinkAbout75A - PH DEVELOPMENT IMPACT FEES CITY COUNCIL MEETING DATE: REQUEST FOR COUNCIL ACTION CLERK OF COUNCIL USE ONLY: AUGUST 18, 2008 TITLE: PUBLIC HEARING - ORDINANCE TEMPORARILY DEFERRING COLLECTION OF DEVELOPMENT IMPACT FEES APPROVED o As Recommended o As Amended o Ordinance on 15t Reading o Ordinance on 2nd Reading o Implementing Resolution o Set Public Hearing For ~ ~. ;g CITY MANAGER CONTINUED TO FILE NUMBER RECOMMENDED ACTION Adopt an ordinance amending various sections of the Santa Ana Municipal Code to temporarily defer collection of development fees until the issuance of certificates of occupancy/compliance. DISCUSSION Santa Ana like most cities collects various fees to offset impacts created by new development. These impact fees are used to provide and upgrade infrastructure, facilities and equipment to properly serve new development. Examples of these fees include: . Parks Acquisition and Development Fee . Drainage Area Master Plan Fee . Transportation System Improvement Assessment (TSIA) . Major Thoroughfare and Bridge Fee . Fire Facilities Fee Under the current system, these impact fees must be paid before building permits are issued. However, given the general slowdown in the economy the Building Industry Association of Orange County (BIA/OC) has requested that cities consider deferring collection of these fees to the point when projects are complete and certificates of occupancy/compliance are issued. When combined, these fees can represent millions of dollars. Therefore, deferring payment of the fees can present a significant cash flow benefit for developers, which according to BIA/OC may mean the difference between projects that move forward and those that do not. A temporary one-year deferral program is recommended as a stimulus for both residential and non-residential development. To ensure that fees are paid prior to certificate of occupancy/compliance, provisions in the 75A-1 Deferring Collection of Development Impact Fees August 18, 2008 Page 2 draft ordinance require a developer to execute a contract to pay the fees, with interest, prior to issuance of the certificate of occupancy/compliance. This contract will be recorded with the Orange County recorder and constitute a lien for the payment of the fees. Alternatively, the obligation will be secured by an irrevocable letter of credit from the developer. So as to avoid any fiscal impact to the City, the ordinance further provides that a developer will offset the City's costs to implement and administer the fee deferral program. Additionally, this ordinance authority to extend plan check to one year, without the need pay new fees. will temporarily grant the City the review or inactive building permits for up for the developer to submit new plans and The ordinance will be in effect for one year, unless extended for one additional year by further action of the City Council. FISCAL IMPACT There is no fiscal impact associated with this action. ~ino Executive Director Planning and Building Agency JMT:rb rb\reportS\Defer Devel Impact Fees 75A-2 ORDINANCE NO. NS-XXX AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA TO TEMPORARILY SUPERSEDE CERTAIN PROVISIONS OF THE SANTA ANA MUNICIPAL CODE AND TO PERMIT DEVELOPERS TO DEFER PAYMENT OF CERTAIN DEVELOPMENT IMPACT FEES, AND TO PERMIT THE EXTENSION OF INACTIVE BUILDING PERMITS AND PERMIT APPLICATIONS THE CITY COUNCIL OF THE CITY OF SANTA ANA DOES ORDAIN AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. The Mitigation Fee Act (Government Code section 66000, ef seq.) authorizes the City to adopt and regulate monetary exactions for the purpose of defraying all or a portion of the public facility costs relating to a development project. The development impact fees are charged as a condition of approval and are used to alleviate the effects of development on the community by financing public improvements, services, or programs that bear a reasonable relationship to the development. Virtually all California cities, including Santa Ana, require applicants to pay mitigation fees as a precondition to issuing a building permit. The City may determine when such fees are to be paid. B. Due to recent changes in the economic conditions throughout the United States relating to new residential, commercial and industrial development, construction of development projects previously approved and fully entitled by local cities have been put on hold by developers. C. The City relies on new development to stimulate the local economy and to provide direct and indirect benefits to its residents and business by creating construction jobs, new market-rate and affordable housing, and new tax-base and revenues for the City. D. This ordinance is intended to alleviate certain barriers to development, in light of the challenges facing the development industry in a fluctuating market economy, by allowing eligible project applicants to defer certain development impact fees. 75A-3 Ordinance No. NS-XXX Page 1 of _ Section 2. Definitions. The following words and phrases are defined for purposes of this ordinance as follows: "Applicant" means the owner or owners of record of the real property for which a fee deferral is sought pursuant to this ordinance. "Code" means the Santa Ana Municipal Code. "Executive Director" means the Executive Director of the Planning and Building Agency of the City. "Eligible Applicant" means an Applicant meeting the Eligibility Criteria for deferral of impact fees. "Eligibility Criteria" means an objective standard established by the Executive Director, which may be amended from time to time as deemed necessary, used to determine appropriateness for incentives under this Chapter. "Fee Deferral Agreement" means an agreement, secured as provided in Section 4, below, which is a prerequisite requirement for approval for any fee deferral under this ordinance. "Nonresidential" means (a) those commercial business activities which are permitted or allowed in the C 1, C2, C3, C3A. C4, or C5, or in commercial CR, SP or SD zoning districts as set forth in Title 41 of this Code, or (b) those industrial business activities which are permitted or allowed in the M1 or M2 zoning districts as set forth in Chapter 41 of this Code. "Subject Property" means the real property owned by the Applicant subject to the Fee Deferral Agreement. "Residential" means those activities which are permitted or allowed in the RE, R1, R2, R3, R4, PD, or in residential CR, SP or SD zoning districts, as set forth in section 41-143 of this Code, and includes a live-work community as set forth in section 41-101.5 of the Code. Section 3. Deferral of Development Impact Fees for Residential and Nonresidential projects. A. Notwithstanding any other provisions of this Code, some or all of the development impact fees imposed on new Residential or Nonresidential buildings and structures located in the City may, upon application by an Eligible Applicant and approval of the Executive Director, be deferred subject to the provisions set forth below. Fees eligible to be deferred shall be: Ordinance No. NS-XXX Page 2 of 6 75A-4 · Parks Acquisition and Development Fee · Drainage Area Master Plan Fee · Transportation System Improvement Fee (TSIP) · Major Thoroughfare and Bridge Fee (to the extent, if any, it is both collected and retained by the City) . Fire Facilities Fee · Sewer Connection Fee B. Prior to the City's consideration of an application for deferral of impact fees, the Applicant shall provide to the Executive Director, at the Applicant's sole cost and expense, a current preliminary title report on the Subject Property. C. No deferral shall be effective until the Applicant provides security to the City in the form of a Fee Deferral Agreement as set forth in section 4 of this ordinance, approved by the Executive Director and in a form acceptable to the City Attorney. D. The maximum deferral period shall be the earlier of: 1. The final inspection or issuance of a temporary certificate of occupancy or final certificate of occupancy for the new building or structure on the Subject Property, whichever comes first, or 2. One (1) year from the date of issuance of the building permit for the Subject Property. E. Notwithstanding any provision to the contrary, the deferred impact fees not paid at the time of building permit shall be subject to: 1. Interest on unpaid fees at the annual rate of interest which the City earns on its investment of pooled funds which shall accrue from the date of issuance of the initial building permit until the deferred impact fees and all accrued interest is paid, and 2. A charge, due and payable upon execution of the Fee Deferral Agreement, to cover the City's reasonable administrative costs incurred in processing the fee deferral application and administering the fee deferral program. 75A-5 Ordinance No. NS-XXX Page 3 of _ Section 4. Form of Security for Unpaid Development Impact Fees. A. As a condition of the deferral, the City shall require the property owner, or lessee if the lessee's interest is of record, to execute prior to and as a condition of issuance of a building permit, a Fee Deferral Agreement which shall provide that the deferred development impact fees shall be paid within the time set forth in section 4.D. of this ordinance, and secured by an obligation that shall inure to the benefit of, and be enforceable by the City, evidenced by either: 1. a promissory note secured by a senior, unsubordinated recorded lien on the Subject Property which shall be enforceable against successors in interest to the property owner or lessee, releasable when the obligation is paid in full, which shall in the case of a Residential project include requirement for an escrow instruction providing for payment out of escrow from sale proceeds of the deferred fees prior to disbursing proceeds to the seller; or, at the Applicant's option, 2. an direct draw irrevocable letter of credit from the Applicant in a form approved by the City Attorney, which shall be releasable when the obligation is paid in full. B. The payment of such development impact fees shall be deemed a debt due and owing to the City at such time as set forth herein, which debt shall only be deemed satisfied and discharged upon payment in full to the City. The City may pursue collection through all available legal and administrative means including, but shall not be limited to, judicial or non-judicial foreclosure of the recorded lien against the Subject Property, a demand upon the irrevocable letter of credit, and/or civil judgment against the Applicant for breach of the Fee Deferral Agreement and/or the security provided hereunder. Section 5. Extension of Inactive Plan Check and Building Permits. A. Notwithstanding Section 3 of Ordinance No. NS-2760, amending Appendix Chapter 1, section 105.3.2 of the California Building Code, 2007 Edition, the building official may grant (i) extensions of applications for a permit for a period of up to one (1) year, and (ii) more than one extension per application, both without resubmission of plans and payment of new plan review fee. B. Notwithstanding Section 3 of Ordinance No. NS-2760, adopting Appendix Chapter 1, section 105.5 of the California Building Code, 2007 Edition, the building official may grant (i) extensions of building permits for a permit for a period of up to one (1) year, and (ii) more than one extension per permit, both without resubmission of plans and payment of new fees. Ordinance No. NS-XXX Page 4 of 6 75A-6 Section 6. Applicability. This ordinance and the incentives derived hereunder shall apply only to new development projects that have not obtained a building permit from the City at the time this ordinance is adopted by the City Council. This ordinance shall remain in effect through Monday, October 5, 2009, and as of that date is repealed unless a City Council adopts a further ordinance or resolution to extend that sunset date for an additional period not to exceed twelve (12) months. Section 7. Ordinance to Operate Exclusively. Except as set forth in this ordinance, all other provisions of the Code shall remain in full force and effect. Nothing contained in this ordinance is deemed to authorize or permit the deferral of payment of any fee or charge imposed upon Residential or Nonresidential development in the City except for those development impact fees expressly set forth in section 2 above. Section 8. Severability. If any section, subsection, sentence, clause, phrase or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Santa Ana hereby declares that it would have adopted this ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that anyone or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. ADOPTED this day of ,2008 Miguel A. Pulido Mayor Ordinance No. NS-XXX Page 5 of _ 75A-7 APPROVED AS TO FORM: Joseph W. Fletcher, City Attorney By: Benjamin Kaufman Chief Assistant City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, PATRICIA E. HEALY, Clerk of the Council, do hereby attest to and certify that the attached Ordinance No. NS-XXX to be the original ordinance adopted by the City Council of the City of Santa Ana on , and that said ordinance was published in accordance with the Charter of the City of Santa Ana. Date: Clerk of the Council City of Santa Ana Ordinance No. NS-XXX Page 6 of 6 75A-8