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HomeMy WebLinkAbout8.2 East Dub TIF Program'~ 1 ~~ -~-~ /~ ~/~ CITY CLERK File # ^Q~~-Q~ AGENDA STATEMENT CITY COUNCIL MEETING DATE: September 1, 2009 SUBJECT: Proposed Downtown and Eastern Dublin Traffic Impact Fee Deferral Program Report Prepared by: Linda Maurer, Assistant to the City Manager ATTACHMENTS: 1. Resolution with Downtown and Eastern Dublin Traffic Impact Fee (TIF) Deferral Program attached as Exhibit A RECOMMENDATION: Adopt a Resolution Approving a Deferral Program for the Downtown Dublin Traffic Impact Fee and Eastern Dublin Traffic Impact Fee FINANCIAL STATEMENT: Based on current development projections and assuming full participation in the TIF Deferral Program, the potential fiscal impact would be approximately $213,000 of deferred payment to the City's Traffic Impact Fee Program. DESCRIPTION: One of the City Council's Fiscal Year 2009-2010 High Priority Goals and Objectives is to develop an Economic Incentive Program. This objective is a carryover from the City Council's 2008-2009 Goals and Objectives. Last Fiscal Year, in January 2009, the City Council adopted the Sales Tax Reimbursement Program as the first of possibly many programs that the City would create to stimulate economic development activities in the City. The second major incentive that Staff is recommending is the establishment of the Traffic Impact Fee (TIF) Deferral Program for non-residential projects (attached as Exhibit A to Attachment 1). To summarize, the TIF Deferral Program would allow commercial developers to defer Downtown and Eastern Dublin Traffic Impact Fees from building permit issuance to the issuance of the first permanent utility meter for the project (This step is just prior to taking occupancy of the building). The benefit of allowing the deferment during the construction window enables, in most cases, the project developer to shift the financing of the fees from the construction loan into the fixed financing for the project. Staff is proposing that the program be in place for this Fiscal Year and in Fiscal Year 2010-2011 and that an annual report to the City Council be required to report on projects participating in the program. Payment of the fee, due when the first permanent utility meter is issued, will be subject to the rate established at the time the fee is paid. All fees will be due prior to June 30, 2013, which is two years following the Program's conclusion, if not paid for earlier. To participate in the TIF Deferral Program, COPY TO: Page 1 of 2 ITEM NO. D • L II/ Staff is recommending that interested developers complete an application and pay a related deposit fee in an amount not to exceed $5,000 to cover the City staff time, as well as associated legal costs in creating the necessary agreements. As part of any agreement to participate, Staff is recommending that a security of payment be required, to ensure that the City is able to recover any outstanding fee amount should the participating project not be completed. Working with the City's legal counsel, Staff has identified a few security options that the City can require, including a deed of trust, irrevocable letter of credit, a surety bond, as well as a reservation of funds in escrow or an assigned bank account/deposit (outlined in Exhibit A to Attachment 1). In making this recommendation, Staff reviewed all of the options for fee deferrals, as well as the number of anticipated projects, possible fiscal impacts to the City and the City's adopted Capital Improvement Program. Staff also discussed the proposed fee deferral program with key members of the City's development and brokerage community and they were supportive of the concept. Staff will continue to look at other fee deferral options that may encourage economic development activities, including the feasibility of fee deferrals for multi-family and transit-oriented residential development. The addition of the TIF Deferral Program will enhance the City's current fee incentive program -the Statewide Community Infrastructure Program (SCIP). SCIP is a financing program that enables non- residential developers to pay most impact fees and finance public improvements through an acquisition agreement that qualify under the 1913/1915 Act (excluding school fees) via tax-exempt bond issuance proceeds. The program can be used to enable developers to pay for, or be reimbursed for, all eligible impact fees or for a single impact fee. If a developer participates in the SCIP program, a full payment is made to the City out of the resulting bond proceeds and an assessment is placed on the property tax roll for the associated parcel. RECOMMENDATION: Adopt a Resolution Approving a Deferral Program for the Downtown Dublin Traffic Impact Fee and Eastern Dublin Traffic Impact Fee a O~ a, i~~ RESOLUTION NO. XX- 09 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN APPROVING THE TRAFFIC IMPACT FEE DEFERRAL PROGRAM WHEREAS, one of the City Council's Fiscal Year 2009-2010 High Priority Goals and Objectives is to develop an Economic Incentive Program; and WHEREAS, in January 2009, the City Council adopted the Sales Tax Reimbursement Program as the first of possibly many programs that the City would create to stimulate economic development activities in the City; and WHEREAS, after careful review of additional incentive options, Staff recommends the establishment of the Traffic Impact Fee (TIF) Deferral Program for non-residential projects, attached as Exhibit A to this Resolution; and WHEREAS, the creation of the TIF Deferral Program will potentially impact the collection of approximately $213,000 in traffic impact fees over the next two fiscal years; and WHEREAS, the TIF Deferral Program does not adversely impact work associated with current Capital Improvement Projects (CIl'), as the active CIP projects involve the repayment of loans associated with improvements already completed; and WHEREAS, to the extent funds are collected on a deferred basis, timeframe for repayment of loans will also be extended, resulting in increased interest costs to the TIF program; and WHEREAS, notwithstanding the provisions of Resolutions 210-04, 211-04, 111-04 and 20-07, adopting the Downtown TIF and Eastern Dublin TIF and the associated Administrative Guidelines, traffic impact fees for non-residential projects may be deferred from payment at building permit to the issuance of the first permanent utility meter for the development; and WHEREAS, payment of the deferred TIF will be the amount in effect at the time of payment. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby approve the Traffic Impact Fee Deferral Program for the Fiscal Years of 2009/2010 and 2010/2011. PASSED, APPROVED AND ADOPTED this 15` day of September, 2009 by the following vote: AYES: NOES: ABSENT: ABSTAIN: '~~ ~ ~.~ ~ /~ ~~~ ATTACHMENT 1 any Mayor ATTEST: City Clerk 3~ y DOWNTOWN AND EASTERN DUBLIN TRAFFIC IMPROVEMENT FEE (TIF) DEFERRAL PROGRAM Overview: o Program to run for two fiscal year periods - 2009/2010 and 2010/2011. o Program for non-residential project only. o A fee. deferral agreement will be required. Agreement will be recorded against the property and payment will be secured through one or more of the following options: o Assigned bank deposit/account o Irrevocable letter ofcredit -letter shall remain valid throughout the duration of the construction project and can only be released upon City approval when the fees are paid. o Surety bond o Reservation of funds in escrow account of the senior lender, solely for the benefit of the City to assure payment. o Property Lien/Deed of trust (no subordination allowed; no existing liens on the property) o An application with a $5,000 not-to-exceed deposit will be required to participate in the program. This amount will cover staff and legal time, as well as fixed costs. o City staff would be able to defer traffic impact fees from building permit issuance to, in most instances, prior to the first request for occupancy (see detail next). Payment of the fee will be subject to the rate established at the time the fee is paid. o Trigger for payment is the issuance of a utility meter for the project. No meter will be issued until full payment is received on all outstanding items including all outstanding processing costs (Finance Control Number - FCN). o All program participants, regardless of building permit issuance date, must pay the TIF by June 30, 2013 (two years after the program's conclusion) if not paid for earlier prior to occupancy. o Staff will report back to City Council at the end of the first year to determine the program's effectiveness. EXHIBIT A TO ATTACHMENT 1 1 of 2 ~~~ Benefits: o Time/value of money - Allows a development project to carry the TIF costs over several months, enabling them to package the fees into their fixed financing - as opposed to at the time of the construction loan. Fiscal Impact: o Based on current projections and assuming full participation in the program, there is potential for a deferral of approximately $213,000 in TIF. o No significant impact on current CIP projects. The active CIP projects involve the repayment of loans associated with improvements already completed. To the extent that funds are collected on a deferred basis, it will extend the timeframe for repayment and increase interest costs to the TIF program. 2 of 2