To: Board of Supervisors
Department or Agency Name(s): County Administrator’s Office
Staff Name and Phone Number: Travis Shenk 707-565-1269, Maggie Luce 707-565-1796, Jennifer Larocque 707-565-1242
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
AB 1600 Development Fees Annual Reports for FY 2023-24
End
Recommended Action:
Recommended action
A) Receive, accept, and review the information contained in the AB 1600 Development Fees Annual Reports for FY 2023-2024 for the Regional Parks Department, the Sonoma County Public Infrastructure Department, the Sonoma Valley Fire District and the Sonoma County Fire District.
B) Adopt a Resolution approving and making findings related to said Annual Reports.
end
Executive Summary:
AB 1600 enacted Government Codes Sections 66000-66008, which applies to all development impact fees that are established, increased, or imposed on or after January 1, 1989. AB 1600 requires that local agencies prepare annual reports on all such fees collected on new developments to finance construction costs associated with public facilities. Certain development impact fees collected by the Regional Parks Department and the Sonoma County Public Infrastructure Department are covered by AB 1600.
On March 23, 2021 the Board of Supervisors adopted an ordinance establishing fire impact fees on behalf of the Sonoma Valley Fire District and the Sonoma County Fire District pursuant to the Mitigation Fee Act, which authorizes the collection of development impact fees on new residential and nonresidential developments within each of these Districts to fund the development-related costs of expanding the Districts’ facilities, apparatus, and equipment needed to maintain existing levels of service. The Ordinance requires the Fire Districts to prepare annual reports to the Board of Supervisors, in compliance with Government Code section 66006 and 66001(d), on the development impact fees annually collected. This is the third reporting period for the fire districts.
In August 2023, the Board of Supervisors adopted the sixth cycle General Plan Housing Element. As required by State law, the Housing Element analyzed government constraints to housing, including development fees and affordable housing fees, and concluded that “when considered together, processing time and total fees are lower for multifamily development than single-family development and facilitate the development of housing at all income levels.” The adopted Housing Element includes a program to ensure that new impact fee studies and resulting fees will meet the requirements of applicable impact fee laws, including transparency and proportionality requirements under AB 602 (Government Code section 66016.5).
Existing Parks and Transportation fees are based on nexus studies that predate AB 602 requirements and accordingly are not based on project square footage. To comply with AB 602, any new development impact fees on housing development projects must be calculated proportionately to the square footage of the units of the development. Further, AB 602 requires that nexus studies be updated at least every eight years, as of January 1, 2022.
Although AB 602 would not require an updated nexus study until the end of 2029, general industry best practice is to review nexus studies every three to five years. in November 2024, the Board directed staff to initiate a Request for Proposals to conduct a Nexus Study for Parks and Transportation development impact fees.
The FY 2023-24 impact fees collected were $1,012,948 and $514,920 respectively for Roads and Parks. While $47,188 and $167,793 were collected by Sonoma Valley Fire District and the Sonoma County Fire District.
Discussion:
Annually, the Regional Parks Department and the Public Infrastructure Department provide reports on fee programs under their jurisdictions in compliance with AB 1600 <https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=1.&title=7.&part=&chapter=5.&article=> <https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=1.&title=7.&part=&chapter=5.&article=>, as well as applicable County Code sections. This is the third year that the Sonoma Valley Fire District and the Sonoma County Fire District will present annual reports on their respective fire impact fees programs.
Since they are outside the purview of AB1600, the reports do not include discussion of fees charged for processing development applications, development agreements, or reimbursement agreements. The report is due 180 days (6 months) after the close of each fiscal year and report concerning each fee fund must be made available to the public.
Each report includes the following components:
1. A narrative summary of the financial statement.
2. A brief project status statement for each capital project referenced in the financial statement.
3. The financial statement.
Among other fee and project information, balances of any fee deposits that are five or more years old are required to be reported in the fifth fiscal year following their first deposit into the account or fund, and every five years thereafter if still unexpended.
Regional Parks
The Regional Parks Department’s report covers Park Mitigation fees under Chapter 20, Article X - Development Fees for Parks and Chapter 25, Article VI - Public Improvements of the Sonoma County Code <http://library.municode.com/index.aspx?clientId=16331> <http://library.municode.com/index.aspx?clientId=16331>. First established in 1986, the purpose of the ordinance is to assist the County in acquiring and developing parks to meet the growing population as a direct correlation to the development and construction of new homes. There is a reasonable relationship between the fee and the purpose for which it is charged in that park mitigation fees provide funds needed to acquire and develop park facilities, in conformance with Sonoma County General and Specific Plan requirements, to meet the demands caused by the increasing urbanization of Sonoma County’s unincorporated areas. The fee is based on estimated cost of developing regional and community park facilities to service the county.
The Sonoma County Code and Government Code Section 66006 requires the Director of Regional Parks to report to the Board annually on the income and appropriations in each of the seven areas covered by the Park Mitigation Fee Ordinance. This information is contained in the attached report. In addition, Government Code Sections 66006 requires an annual report be made available to the public with specific information about the fee - the amount of the fee, the purpose of the fee, the projects that were funded by the fee, etc. Moreover, Government Code section 66001(d) requires that all agencies imposing development impact fees make specific findings regarding the balances of any fees deposits that are five or more years old. Fees which remain unexpended for five years or more total $133,843.76 and have been committed to the following capital projects in FY 2024-25: Schopflin Fields and Maddux Park Phase 4. The required findings for the unexpended funds are also contained in the report.
The Regional Park Mitigation rate for FY 2023-24 was $3,678 per developed unit. The FY 2023-24 beginning fund balance in the Park Mitigation Fund (seven areas) was $1,415,393.26. Total fees collected and miscellaneous revenue were $514,920.00. Interest earned was $44,994.89. Refunds were $3,678.00. Thus, the total fees, less refund, plus interest earned in the Park Mitigation Fee Fund in FY 2023-24 was $556,236.89.
A total of $478,219.11 was transferred to 21 Capital Projects for the planning, acquisition, design and construction of new and expanded park facilities. The year’s ending fund balance was $1,493,411.04. The attached report includes a full breakdown of fees collected and funds appropriated for each of the seven areas.
Park Mitigation Fees were used to leverage grants and other matching contributions at an approximate ratio of 8 to 1. This means that each dollar generated by mitigation fees helps leverage about $8 in additional funding for Park acquisitions and development, which was primarily from State and Federal sources. In FY 2023-24 there was $133,843.76 in the Area 7 Park Mitigation Trust Account that were collected in or before FY 2018-19 and remain unspent. No funding collected on or before FY 2018-19 remains unspent in any of the remaining six Park Mitigation Fee Trust Accounts as of June 30, 2024.
Public Infrastructure Department
In order to implement the goals and objectives of the General Plan, including the Circulation and Transit Element of the General Plan, and to mitigate the traffic impacts caused by new development in Sonoma County, certain public roadway improvements must be constructed to ensure a safe and efficient level of service. The purpose of the traffic mitigation fees adopted by ordinance <http://library.municode.com/HTML/16331/level2/CH26SOCOZORE_ART98DEFE.html> <http://library.municode.com/HTML/16331/level2/CH26SOCOZORE_ART98DEFE.html> (Section 26-98 of the Sonoma County Code <http://library.municode.com/index.aspx?clientId=16331> <http://library.municode.com/index.aspx?clientId=16331>) is to pay the costs of roadway facilities and improvements in accordance with the provisions of the General Plan. Under AB 1600 and the Sonoma County Code, the Sonoma Public Infrastructure Department reports on the following traffic mitigation fee programs:
Countywide Traffic Mitigation - In May 1990, the Board established the Countywide Development Fees (currently, Sonoma County Code Sec. 26-98-600 <https://www.municode.com/library/ca/sonoma_county/codes/code_of_ordinances?nodeId=CH26SOCOZORE_ART98DEFE_S26-98-605CODEFEIMAR> et seq. <%3chttps:/www.municode.com/library/ca/sonoma_county/codes/code_of_ordinances?nodeId=CH26SOCOZORE_ART98DEFE_S26-98-605CODEFEIMAR%3e%20et%20seq.>), which apply to all unincorporated lands within the county except for those lying within the boundaries of the Sonoma Valley development fee impact area. The FY 2023-24 beginning balance was $12,907,800. Collected fees total $1,011,720 and interest earned was $422,132. Funds expended total $1,582,573, and refunds were $8,082. The total ending balance, as of June 30, 2024, was $12,750,898.
A total of $1,582,573 was transferred from the Countywide Traffic Mitigation fund (11054) to the Roads Fund. This transfer to the Roads Capital Improvements fund (11051) was for expenses associated with Mark West Springs Sidewalks project (C21303).
California Government Code 66001 requires that a local agency make certain findings for funds remaining unexpended in the fifth fiscal year following the first deposit into the fund, and every five years thereafter if still unexpended. Such ‘five-year findings’ were last made in conjunction with the FY 2018-19 Development Fees Annual report presented to the Board on December 10, 2019. Accordingly, the attached “AB 1600 Development Fees Annual Report” outlines the fee and project information relative to the 5-Year Report findings for the Countywide Traffic Mitigation fund.
Pursuant to Sonoma County Code section 26-98-650(b), the adequacy of the Countywide Development Traffic Impact Fees shall be reviewed at least every three years. As discussed, the Countywide Development Traffic Impact Fees are adjusted annually based on changes to Engineering News Record Construction Cost Index. While there are a variety of standards for quantifying changes to project costs (such as using the U.S. Bureau of Labor Statistics’ Consumer Price Index), the Construction Cost Index is specific to the public works construction industry and remains the most reliable, accurate, and widely-used for identifying changes to public works construction costs. Especially given that Development Impact Fees are collected in advance based on each development project’s proportional contribution, obtaining complete cost recovery from each development project is not always feasible.
Notwithstanding, currently-collected fees remain sufficient and critical for funding associated mitigation projects consistent with the County’s Capital Improvement Plan (CIP) priorities and schedules, even though additional funding sources may sometimes be used. For example, certain projects have been completely funded with Countywide Development Traffic Impact Fees (Dry Creek Road @ Highway 101 S. project, in 2020), whereas other projects have been substantially financed with Countywide Development Traffic Impact Fee funds (Airport Boulevard widening - 21% funding). Accordingly, the Countywide Development Traffic Impact Fees remain adequate for the purposes for which they are collected.
Sonoma Valley Traffic Mitigation - In 1989, the Board established development fees (currently, Sonoma County Code Sec. 26-98-010) to finance the improvements of certain public facilities and services within the Sonoma Valley area. The FY 2023-24 beginning balance was $317,017. Collected fees were $1,228, interest earnings total $9,798 and expenditures incurred were $56,556 during the reporting period. The FY 2023-24 ending balance, as of June 30, 2024, was $271,488.
No 5-Year Report under California Government Code 66001 is due, since no fees remain unexpended for five years within the Sonoma Valley Traffic Mitigation fund.
Pursuant to Sonoma County Code section 26-98-070, the adequacy of the Sonoma Valley Development Traffic Impact Fees shall be reviewed at least every three years.
As discussed, the Sonoma Valley Development Traffic Impact Fees are adjusted annually based on changes to Engineering News Record Construction Cost Index. While there are a variety of standards for quantifying changes to project costs (such as using the U.S. Bureau of Labor Statistics’ Consumer Price Index), the Construction Cost Index is specific to the public works construction industry and remains the most reliable, accurate, and widely-used for identifying changes to public works construction costs. Especially given that Development Impact Fees are collected in advance based on each development project’s proportional contribution, obtaining complete cost recovery from each development project is not always feasible. Notwithstanding, currently-collected fees remain sufficient and critical for funding associated mitigation projects consistent with the County’s Capital Improvement Plan (CIP) priorities and schedules, even though additional funding sources may sometimes be used. For example, certain projects have been completely funded with Sonoma Valley Development Traffic Impact Fees (2023 PPP Highway 12 near Encinas Lane at Waterman Ave), whereas other projects have been substantially financed with Sonoma Valley Development Traffic Impact Fee funds (121 @ 8th St Intersection Improvements Contribution - 50% funding).
Accordingly, the Sonoma Valley Development Traffic Impact Fees remain adequate for the purposes for which they are collected.
Sonoma Valley Fire District
In 2021, the Sonoma Valley Fire District Board of Directors requested the County of Sonoma adopt an ordinance to establish development impact fees for Sonoma Valley Fire’s service areas. On March 23, 2021, the County adopted an ordinance <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=4853125&GUID=F04591C0-7768-434B-B6AD-3770E6841155> <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=4853125&GUID=F04591C0-7768-434B-B6AD-3770E6841155> authorizing the collection of the impact fees outlined in the Sonoma Valley Fires District’s Nexus Study, beginning on July 1, 2021. The Nexus Study established the legal and policy basis for the imposition of fire impact fees on new residential and non-residential development to fund the development-related costs of expanding facilities, apparatus, and equipment needed to maintain existing service levels. The Board also approved a collection agreement which enables Permit Sonoma to collect and pass-through fees collected on behalf of the Sonoma Valley Fire District.
Pursuant to Government Codes Sections 66000-66008, the Sonoma Valley Fire District prepared a FY 2023-24 AB 1600 report, which indicates that $46,244.53 was collected in the reporting period and was used to reimburse the purchase of a new Type 3 engine purchased on July 20, 2021. The report further indicates that no refunds were remitted from Permit Sonoma during the applicable time period. The AB 1600 report was approved by the Sonoma Valley Fire District Board on October 8, 2024, and was made available to the public as required by law.
California Government Code 66001 requires that a local agency shall make findings for funds remaining unexpended, whether committed or uncommitted in the fifth fiscal year following the first deposit into the fund, and every five years thereafter. As FY 2023-24 is the third year of collection, no fees remain unexpended for five years within the Sonoma Valley Fire Mitigation fund.
Sonoma County Fire District
In 2021, the Sonoma County Fire District Board of Directors requested the County of Sonoma adopt an ordinance to establish development impact fees for Sonoma County Fire District’s service areas on February 16, 2021. On March 23, 2021, the County adopted an ordinance <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=4853125&GUID=F04591C0-7768-434B-B6AD-3770E6841155> <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=4853125&GUID=F04591C0-7768-434B-B6AD-3770E6841155> authorizing the collection of the impact fees outlined the in Sonoma County Fires District’s Nexus Study beginning on July 1, 2021. The Nexus Study established the legal and policy basis for the imposition of fire impact fees on new residential and non-residential development to fund the development-related costs of expanding facilities, apparatus, and equipment needed to maintain existing service levels. The Board also approved a collection agreement which enables Permit Sonoma to collect and pass-through fees collected on behalf of the Sonoma County Fire District.
Pursuant to Government Codes Sections 66000-66008, the Sonoma County Fire District prepared a FY 2023-24 AB 1600 report, which indicates that $159,893.74 collected in the reporting period was remitted to the Sonoma County Fire District Impact Fund and will remain in the dedicated fund until a compliant project is approved by the Sonoma County Fire District Board of Directors. The report further indicates that a refund in the amount of $4,543.71 was issued and $14,511.53 was accrued since the funds were remitted from Permit Sonoma. The AB 1600 report was approved by the Sonoma County Fire District Board on September 17, 2024, and was made available to the public as required by law.
California Government Code 66001 requires that a local agency shall make findings for funds remaining unexpended, whether committed or uncommitted in the fifth fiscal year following the first deposit into the fund, and every five years thereafter. As FY 2022-23 is the third year of collection, no fees remain unexpended for five years within the Sonoma County Fire Mitigation fund.
The requested Board action includes the adoption of the attached resolution approving and making findings related to the AB 1600 Development Fees Annual Reports for the Regional Parks Department, Department of Public Infrastructure, Sonoma Valley Fire District, and Sonoma County Fire District.
Strategic Plan:
N/A
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
The Board has annually approved AB 1600 Development Fee Reports, with the most recent report approved on 12/5/23.
Fiscal Summary
Narrative Explanation of Fiscal Impacts:
There is no impact to the FY 2024-25 budget associated with the AB 1600 Development Fees Annual Report. This report is administrative and intended to document development impact fees accumulated and investment activities completed in FY 2023-24.
Narrative Explanation of Staffing Impacts (If Required):
N/A
Attachments:
1. Resolution
2. AB 1600 Development Fees Annual Report
3. Sonoma Valley Fire District Board Resolution
4. Sonoma County Fire District Board Resolution
Related Items “On File” with the Clerk of the Board:
N/A