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HomeMy WebLinkAboutItem 8.3 - 1779 Public Facility Fee Overview Page 1 of 6 STAFF REPORT CITY COUNCIL DATE: January 9, 2018 TO: Honorable Mayor and City Councilmembers FROM: Christopher L. Foss, City Manager SUBJECT: Overview of Public Facility Fee Program Prepared by: Linda Smith, Assistant City Manager EXECUTIVE SUMMARY: The City Council will receive an overview on the City's Public Facility Fee program and provide Staff with direction on the establishment of a Repayment Policy for loans or advances from the General Fund. STAFF RECOMMENDATION: Receive the report and provide direction on the establishment of a loan repayment policy for the Public Facility Fee Program. FINANCIAL IMPACT: None. DESCRIPTION: Staff has prepared an informational report on the Public Facility Fee Program to help answer questions about the impact fee, such as what the program is designed to accomplish, how fees are collected, what expenses are eligible, as well as provide a discussion of the current fund balance and project priorities. Additionally, Staff is seeking feedback on a proposed approach to repay the General Fund for advances made to the Public Facility Fee Program. What is a Public Facility Fee Program? The Public Facility Fee (PFF) is one of the City's development impact fees. Development impact fees are fees charged to developers for the purpose of paying all or a portion of the cost of public facilities needed to serve future residents of the development project. Development impact fees are subject to strict requirements. If a development impact fee does not relate to the impact created by development or exceeds the reasonable cost of providing the public facility, then the fee may be declared a special tax and would then be subject to a two-thirds voter approval. In addition, the revenues generated from a development impact fee may only be used Page 2 of 6 for the purpose for which they were collected. In the case of the PFF, this means that the revenues can only be used to fund the proposed public facilities that were used to justify the fee. In 1996, the City of Dublin adopted a Public Facilities F ee program as one means of paying for infrastructure needs due to new development. As part of the Program adoption, the City developed public facilities plans (Parks and Recreation Master Plan, Civic Center Master Plan, Library Master Plan, etc.) for public improvements that are necessary through buildout. The objective is to ensure that adequate public facilities will be available to meet the projected needs of the City as it grows and to further ensure that the facilities planned are consistent with the adopted General Plan. What development impact fees does the City collect from new development? The City can collect impact fees can to fund many types of public facilities. State law defines public facilities (Government Code section 66000(d)) fairly broadly. For example, public facilities can include public improvements such as fire stations, libraries, sewer plants, traffic improvements, and city administrative buildings, but does not include schools. The City of Dublin collects various impact fees including the Public Facility Fee, Fire Impact Fee, Eastern Dublin Traffic Impact Fee, Downtown Traffic Impact Fee, Tri- Valley Transportation Development Fee, Freeway Interchange Fee, Noise Mitigation Fee, Affordable Housing In-lieu Fee (residential and nonresidential) and Dublin Ranch West and East Side Storm Drain Benefit Districts. This report focuses solely on the City's PFF Program, which collects fees from new development to build parks, recreational, and administrative facilities within the City of Dublin. Currently, the PFF collects funds to support the development of five facility types: 1. Parks 2. Civic Center 3. Library 4. Community Buildings 5. Aquatics Within the parks category, the City collects a land acquisi tion fee and an improvement fee for the following types of parks: 1. Neighborhood Parkland Fee 2. Neighborhood Park Improvement Fee 3. Community Parkland Fee 4. Community Park Improvement Fee 5. Nature Community Parkland Fee 6. Nature Community Park Improvement Fee As previously mentioned, various studies and plans provide standards for the amount or size of the facilities the City needs to have available to provide adequate services to the population within the community. For example, the Parks and Recreation Page 3 of 6 Master Plan established a standard that for every 1,000 residents, the City will provide five-acres of parkland to provide sufficient recreational and cultural opportunities. To mitigate the cumulative impact, a public facilities fee is charged so that the new development, both residential and commercial, bears its fair share of the increase in service demands on its facilities. What are eligible expenditures? As indicated above, different fee categories have been established to mitigate the impact of new development on the City's public facilities. The City can use the fees to design and construct the facilities identified in the program. This includes construction costs, as well as soft-costs such as staff time for project management; contract services for design, engineering, testing, etc.; furnishings, fixtures and equipment; as well as miscellaneous costs such as printing, legal noticing, etc. What has the program funded? Since the adoption of the Public Facilities Fee Program in 1996, the City has acquired 175-acres of parkland, improved 118-acres of parks, built the Senior Center, Library, Shannon Community Center, and c onstructed The Wave facility. What facilities still need to be constructed? The following list includes the public buildings that either needs to be constructed or improved and the associated costs funded by the PFF. In the case of public buildings, one building must be constructed (EGRAC Phase II), while three are improvements to existing buildings (see chart below). In total, the City must expend $36 million on future public buildings/space. The City must also acquire an additional 21.5 acres of parkland with approximately $50 million in anticipated PFF revenue, along with improvements to more than 58 acres of current and future parkland totaling approximately $42 million. Public Buildings Amount Funded by Fee Program Civic Center: Public Safety Complex $13,512,200 Library: Library Improvements (Phase II) $1,660,000 Community Buildings: Emerald Glen Recreation and Aquatic Complex (Phase II) $15,330,000 Community Buildings: Cultural Arts Center $5,600,000 Total: $36,102,200 Public Parks Neighborhood Park Land $13,168,800 Neighborhood Park Improvements $13,020,955 Community Park Land $26,892,000 Community Park Improvements $36,800,359 Nature Park Land $0 Nature Park Improvements $1,710,324 Total: $91,592,438 Page 4 of 6 What is the current fund balance in the Program? Fiscal Year 2016-17 fund balance in the Program is approximately $16.1 Million. At the end of the current Five-Year Capital Improvement Program, the PFF will have a fund balance of approximately $2.0 Million. This does not include the Public Safety Complex Project as the future repayment from the PFF has not been included in this period. How are project priorities set? Project priorities are set by the City Council and are adopted as part of the City's Capital Improvement Program on an annual basis at a noticed Public Hearing. The CIP includes projects that Staff recommends for funding and shows the timeline for when certain portions of a project will proceed. Importantly, it is a funding program that is designed to be self-sustaining and separate from the City's other sources of revenue. What are the City’s current spending priorities in the PFF? The current Five Year CIP includes several improvements: Sean Diamond Park (to be completed 2018) Cultural Arts Center at Dublin Civic Center Fallon Sports Park Phase 2 (to be completed 2018) Loan repayment to Dublin Crossing for acquisition of 8.7-acre parkland parcel; Wallis Ranch Community Park (three separate parcels totaling 10 acres); and The City’s financial contribution to the developer-built Dublin Crossing Community Park (8.7 acres improved) What are the future, remaining projects not included in the Five-Year CIP? Iron Horse Trail Nature Park (12 acres) Jordan Ranch Neighborhood Square (2 acres) Two future 5-acre neighborhood parks planned on Croak Property Fallon Sports Park Final Phase (14 acres) Future 7-acre community park planned on Chen Property Future phase of Emerald Glen Recreation and Aquatic Complex - a 21,000 sf gymnasium and community building Full buildout of the Library - tenant improvements to approximately 5,000 additional square feet Additional parkland acquisition and improvements needed to meet the City’s overall acreage requirement (approximately 10 acres, including a Downtown Square) What happens when the City receives the Public Facility Fees? Funds received under the PFF program are segregated from the General Fund and used solely, as required by State law, for the purposes of acquiring and developing new parks and public facilities. When a developer remits PFF fees to the City, the fees are deposited into the Public Facilities Fund, for which the balance is reported in the City's Comprehensive Annual Financial Report (CAFR). While the fees collected are held in this one fund, within the City's accounting system, Staff tracks the receipts and expenditures of fees by fee category (Library, Civic, Neighborhood Park, Community Park, Community Buildings, etc.). This ensures at build-out the City can account for how the fees were spent on the intended facilities. Page 5 of 6 Will the General Fund need to loan funds to or subsidize the Program in the future? The short answer is yes. The City adopted its first fee program in 2003 and didn’t adopt another comprehensive fee update until 2015. During that period of time, the City did not generate sufficient revenues to fully fund facilities to serve new develop ment. With the most recent 2017 update, it is estimated that, without adjustments to future facility or park needs and/or creative solutions, the City’s General Fund will need to subsidize the Program with approximately $6.7 million. In terms of loaning funds to the Program, the City’s General Fund is currently contributing $15 million to the Public Safety Complex, of which $13.5 million, as noted above in the table, will be reimbursed by future PFFs. The City Council received the $15 million as a Community Benefit Payment as part of the negotiated development agreement with the Dublin Crossing Project. Additionally, in 2014, the City Council created a reserve and set aside $6 million to provide any bridge funding necessary to initiate, fund or complete any of the future projects included in the PFF. How is a loan different than a "gift"? It should be noted that, in addition to the anticipated loan, the City Council allocated $4.8 million as a "gift" from the General Fund to two PFF projects to pay for enhancements to the EGRAC ($3.0 million towards the natatorium) and Fallon Sports Park ($1.8 million toward synthetic turf and field lighting for the soccer fields) that were not anticipated in the PFF program. These contributions were characterized as "gifts" or "grants" because they paid for enhancements to projects in the PFF and, therefore, are not eligible for repayment from the PFF in the future. Loan Repayment Policy - Options When the City Council was presented this overview in 2015, Staff present ed a recommendation to develop a reimbursement policy to ensure that the revenue that has been loaned or advanced to the PFF is returned to the General Fund in a responsible manner because at that time, it was anticipated that a loan would be necessary in the near term. Between 2015 and today, cash flow into the PFF increased over estimates which make the loan unnecessary. However, with the anticipated start of the Public Safety Complex this year, Staff believes it is now prudent to develop a policy on repayment to the General Fund. Staff is proposing that the City Council establish an annual repayment policy from PFF collected. Staff would recommend a minimum of $250,000 annually starting with the next budget cycle to be adopted in May/June 2018. The p olicy should offer the City Council the flexibility to accelerate payments from the PFF should it be necessary to balance the budget or cover certain General Fund operating expenses. Ongoing repayments out of the PFF to the General Fund will likely result in a timing delay for future projects. Upon receipt of direction by the City Council, Staff will prepare a written interfund loan policy that will be adopted with the next Fiscal Year Budget. Page 6 of 6 NOTICING REQUIREMENTS/PUBLIC OUTREACH: None. ATTACHMENTS: None.