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HomeMy WebLinkAbout75C - PH - ORDINANCE TEMP DEFER DEVELOPMENT IMPACT FEESREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: FEBRUARY 7, 2011 TITLE: PUBLIC HEARING - ORDINANCE TEMPORARILY DEFERRING COLLECTION OF DEVELOPMENT IMPACT FEES CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ? As Recommended ? As Amended ? Ordinance on I" Reading ? Ordinance on 2nd Reading ? Implementing Resolution ? Set Public Hearing For_ CONTINUED TO FILE NUMBER 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 Development activity in Orange County continues to experience the effects of the economic slow- down. Although there have been recent indications that development activity is beginning to increase, it is anticipated to be a slow recovery. In 2008, the City Council adopted a one-year development impact fee deferral program to help stimulate development. Programs similar to Santa Ana's were adopted by a number of cities in Orange County and more than 75 jurisdictions statewide. Santa Ana, like most cities, collects various fees to offset impacts created by new development. These impact fees provide funding for both new infrastructure and for improvements to existing infrastructure, including street circulation and park development. Development impact fees can represent a sizable up-front cost, and in some cases be the deciding factor in the financial feasibility of a project. Allowing these fees to be deferred until the project is nearly complete provides a valuable incentive to both the developer and lender by reducing the time between the investment of money into a project and realizing a return on that investment in the form of sales or leasing of the building and/or units. Allowing construction to commence with a deferment has the potential to benefit the City in a variety of ways including: (a) accelerating increases in property tax valuation due to assessment as improved land; (b) collection of sales tax on building materials purchased locally; (c) revenue from business license taxes from contractors and design professionals; and (d) employment of construction personnel and their spending in the local area. 75C-1 Ordinance Temporarily Deferring Collection of Development Impact Fees February 7, 2011 Page 2 Although the fee deferral program was not utilized during its original approval period from 2008 to 2009, there are several sizable developments proposed within the City that could benefit from this program if approved. Applicable projects include residential developments like Lyon Homes, a 300- unit development near Hutton Center, TAVA Homes, a new single-family development in the Portola Park neighborhood and commercial projects such as a new 15,000 square foot Rite Aid near Harbor Boulevard and First Street, the expansion of the Discovery Science Center and the One-Broadway Plaza office building. 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 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. 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 J ?Trev i no Executive Director Planning & Building Agency MF:rb mflreportsTee deferral RFCA 75C-2 January 13, 2011 Mr. Jay Trevino Executive Director Planning & Building Agency City of Santa Ana 20 Civic Center Plaza Santa Ana, CA 92702 Re: Fee Deferral Extension Request Mr. Trevino, I am writing on behalf of the membership of the Building Industry Association of Southern California, Orange County Chapter (BIA/OC) to formally request an extension to the City of Santa Ana's Development Impact Fee (DIF) deferral program. It is no secret that the last few years have been extremely difficult for our industry. We have seen numerous bankruptcies and hundreds of lay-offs. This economy has been unforgiving to say the least. However, there have been some bright spots. Many local government agencies like the City of Santa Ana have worked in partnership with our association to accelerate the recovery process. One of the most beneficial actions by local agencies has been the development fee deferral program. State-wide, over 75 individual jurisdictions have deferred fees. Locally, 13 individual jurisdictions, including the first school district (AUHSD), have adopted temporary fee deferral programs. The results have been better than expected. In high growth cities like Anaheim and Orange, construction has resumed putting local residents back to work. Jurisdictions have realized the benefits of this stimulus by way of increased revenue to their general funds. Agencies are now going through the process of extending programs that are set to expire. Our industry anticipates residential development will resume in the next 18 months, and we are confident that the extension of fee deferrals will create an incentive opportunity. BIA/OC and our membership is grateful that the City of Santa Ana is considering to extending the original fee deferral program. We appreciate the willingness of Santa Ana to partner with our industry during these difficult times. The result will be a mutually beneficial path to local economic recovery. Thank you for your thoughtful consideration. Sincerely, 1 Bryan M. Starr Deputy Executive Officer, BIA/OC Orange County Chapter Huddms II'd-II, Associan on of Suulh-, Cahf("ma 17744 Sky Park Circle Suite 170 Irvine, California 92614 949.553.9500 fax 949.553.9507 wlvw.biaoc.com ?Tw?r,ne?chamcsrn Rtch.com four inductrvs armprehen?ice online-gwdc W nea homes PRESIDENT BILL WATT SAYWOOD DEVELOPMENT VICE PRESIDENT MICHAEL McCANN CALMAR DEVELOPMENT 2"' VICE PRESIDENT CHRIS HAINES PULTE GROUP TREASURER DAVE BULLOCH STANDARD PACIFIC HOMES SECRETARY BRIAN DOYLE WILLIAM LYON HOMES IMMEDIATE PAST PRESIIDENT DAVE BARTLETT BROOKFIELD HOMES TRACE CONTRACTOR COUNCIL V P. TOM RHODES TWR ENTERPRISES ASSOCIATE VICE PRESIDENT MARK HIMMELSTEIN NEWMEYER & DILLION, LLP MEMBER-AT-LARGE MIKE WINTER SARES-REGIS GROUP KRISTINE THALMAN CHIEF EXECUTIVE OFFICER 75C-3 75C-4 (ROH 02/07/11) 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 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, et 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. 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 revenues for the City. C. 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. D. The Request for Council Action for this ordinance dated 2011, shall by this reference be incorporated herein, and together with this ordinance, any amendments or supplements and the oral testimony before the City Council at this meeting, shall additionally constitute the necessary findings for this ordinance. E. All provisions of the Santa Ana Municipal Code which are repeated herein are repeated solely in order to comply with the provisions of Section 418 Ordinance No. NS-XXX Page 1 of 6 75C-5 of the City Charter. Any such restatement of existing provisions of the Code is not intended, nor shall it be interpreted, as constituting a new action or decision of the City Council, but rather such provisions are repeated for tracking purposes only in conformance with the Charter. 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 with concurrence of the City Manger, 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, including a deed of trust, by and between the Applicant and the City in a form acceptable to the City Attorney, which is a prerequisite requirement for approval for any fee deferral under this ordinance. The Fee Deferral Agreement shall include provision for the payment of the City's reasonable costs in preparing. "Nonresidential" means (a) those commercial business activities which are permitted or allowed in the C1, C2, 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. Ordinance No. NS-XXX Page 2 of 6 75C-6 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: • 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 City Manager and in a form acceptable to the City Attorney. D. The maximum deferral period shall be: 1. Prior to 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 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. An additional up-front charge shall be added to the unpaid amount to cover the administrative costs incurred in processing the fee deferral application and administering the fee deferral program. Ordinance No. NS-XXX Page 3 of 6 75C-7 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 senior, unsubordinated recorded lien on the Subject Property which shall be enforced 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 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. 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 for twelve (12) months from the adoption date, and as of that date is repealed unless a City Council adopts a further ordinance of resolution to extend that sunset date for an additional period not to exceed twelve (12) months. Section 6. 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. Ordinance No. NS-XXX Page 4 of 6 75C-8 Section 7. 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 any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. ADOPTED this day of , 2011. Miguel A. Pulido Mayor APPROVED AS TO FORM: Joseph Straka, City Attorney By: Ryan O. Hodge Assistant City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers Ordinance No. NS-XXX Page 5 of 6 75C-9 CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, 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 75C-10