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HomeMy WebLinkAboutStaff Report 2409-3457CITY OF PALO ALTO CITY COUNCIL Special Meeting Monday, January 13, 2025 Council Chambers & Hybrid 5:30 PM     Agenda Item     3.Review and Acceptance of Annual Report on Development Impact Fees for Fiscal Year 2024 and Adoption of a Resolution Making Statutory Findings for all Development Impact and In-Lieu Fee Funds; CEQA status - Not a Project. City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Administrative Services Meeting Date: January 13, 2025 Report #:2409-3457 TITLE Review and Acceptance of Annual Report on Development Impact Fees for Fiscal Year 2024 and Adoption of a Resolution Making Statutory Findings for all Development Impact and In-Lieu Fee Funds; CEQA status - Not a Project. RECOMMENDATION Staff recommends that the City Council review and accept the Annual Report on Development Impact Fees for the period ending June 30, 2024, and adopt the resolution making statutory findings for all development impact and in-lieu fee funds (Attachment B). EXECUTIVE SUMMARY This report contains the annual report on the City of Palo Alto’s Development Impact Fees for the Fiscal Year (FY) 2024. This report meets the annual reporting requirements in Government Code section 66006 and 66013. This report also contains a resolution making the finding required by Government Code section 66001. BACKGROUND Development Impact Fees Local agencies commonly impose fees on development projects to help offset the costs of funding the public facilities impacted by those developments. These fees are known as development impact fees. State law (Government Code section 66000 et seq. or “the Mitigation Fee Act”) requires local agencies that impose development impact fees to prepare an annual report providing specific information about those fees. The City assesses 12 development impact fees. Within 180 days after the close of the fiscal year, the agency that collected the fees must make available to the public the following information regarding each fund or account:  Brief description of the type of fee in the fund.  Amount of the fee.  Beginning and ending balance in the fund.  Amount of fees collected, and interest earned, if applicable. Identification of each public improvement on which (Attachment): o Fees were expended o Amount of the expenditure on each improvement o Total percentage of the cost of the public improvement that was funded with fees. Identification of an approximate date by which the construction of a public improvement will commence, if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement. Description of each interfund transfer or loan made from the account or fund, including the public improvement on which the loaned funds will be expended, and in the case of an interfund loan, the date on which the loan will be repaid and the rate of interest that the account or fund will receive on the loan. Amount of any refunds made due to inability to expend fees within the required time frame. The Mitigation Fee Act requires that the City Council review the annual report at its first regularly scheduled public meeting no less than 15 days after the information is made available to the public. Staff published the report on the City’s website on December 27, 2024. In addition to the annual reporting requirement, the Mitigation Fee Act requires, for the fifth fiscal year following the first deposit into the fund and every five years thereafter, that the City Council make findings with respect to any portion of the fee(s) remaining unexpended, whether committed or uncommitted. The findings must: Identify the purpose to which the fee is to be put. Demonstrate a nexus between the fee and the purpose for which it was originally charged; and Identify all sources and amounts of funding anticipated to complete financing of incomplete improvements Designate the approximate dates on which the anticipated funding is expected to be deposited into the fund. If the agency no longer needs the funds for the purposes for which they were collected, or if it fails to make required findings or perform certain prescribed administrative tasks, it may be required to initiate a refunding process as outlined in the statute. The City has chosen to make these findings on an annual basis. In-Lieu and Other Development-Related Fees In-lieu fees provide developers with an alternative means of satisfying the City’s requirement to provide or construct certain improvements or amenities as part of their projects. While In-lieu fees do not have statutory reporting requirements, they are included in this report in the interest of transparency. These fees include the Parkland Dedication Fee/Quimby Act fee imposed under Government Code section 66477, the Residential Housing In-Lieu Fee, the Public Art In-Lieu Fee, and the water and wastewater connection and capacity fees imposed under Government Code section 66013. ANALYSIS Development Impact Fees The annual report for FY 2024 is included as Attachment A. Staff published the report on the City’s website on December 27, 2024. The report contains the statutorily required information for the following fees: Stanford Research Park/El Camino Real traffic impact fees (PAMC Ch. 16.45): Fee for new nonresidential development in the Stanford Research Park/El Camino Real Service Commercial zone, to fund capacity improvements at eight intersections. The City ceased collecting this fee effective fiscal year 2020. San Antonio/West Bayshore Area traffic impact fees (PAMC Ch. 16.46): Fee for new nonresidential development in the San Antonio/West Bayshore area to fund capacity improvements at four intersections. The City ceased collecting this fee effective fiscal year 2020. Housing impact fees imposed on commercial developments (PAMC Ch. 16.65): Fee on commercial and industrial development to offset the demand that new jobs create for low income and moderate-income housing in the City by supporting below-market rate housing at various levels of affordability. General Government facilities: (PAMH Ch. 16.58) – Fee on residential and non-residential development to fund improvements to those facilities used by the City to provide basic governmental services and public facilities maintenance services, exclusive of public safety. Parks, Community Centers, and Libraries impact fees (PAMC Ch. 16.58): Fee on new residential and non-residential development to provide funds for improvements to community facilities including parks, community centers, libraries. Residential (Rental) impact fees (PAMC Ch. 16.65) Fee on rental residential developments (including mixed use with rental housing) to offset the demand that new market-rate rental housing creates for low and moderate-income housing in the City. Charleston-Arastradero Corridor pedestrian and bicyclist safety fees (PAMC Ch. 16.60): Fee on new development and re-development within the Charleston-Arastradero Corridor to provide for streetscape improvements designed to increase pedestrian and bicyclist safety in the corridor. Citywide Transportation impact fees (PAMC Ch 16.59): Fee on development in all parts of the City to fund transportation enhancements, or public facilities and programs to reduce congestion. New Public Safety facilities (PAMH Ch. 16.58): Fee on residential and non-residential development to fund the construction, acquisition, and/or upgrade of police and fire facilities, including fire apparatus and vehicles. University Avenue Parking In-Lieu Fund (PAMC Ch. 16.57): Fees collected from non- residential development within the University Avenue Parking Assessment District to fund the cost of public parking facilities to serve non-residential development projects that do not provide adequate new off-street parking spaces to satisfy the requirements of the zoning code. Development Impact Fee Five-Year Findings (Government Code section 660001) The City has elected to conduct an annual review of findings for all development impact fees. The proposed findings are presented in Attachment B, and the unexpended balances as of June 30,2024 for each fund are outlined below: The Stanford Research Park/ El Camino Fund is $1,275,357. The San Antonio/West Bayshore Fund is $427,121. The Commercial Housing Impact Fee Fund is $4,207,369. The General Government Facilities Fund is $191,973. The Community Facilities-Park Development Fee Fund is $2,384,330. The Community Facilities- Community Center Development Fee Fund is $970,142. The Community Facilities- Library Development Fee Fund is $617,837. The Residential Housing Impact Fee Fund is $1,155,034. The Charleston-Arastradero Corridor Pedestrian & Bicyclist Safety Fee Fund is $17,253. The Citywide Transportation Fund is $1,883,518. The Public Safety Facility Fee Fund is $151,288. The University Avenue Parking In-Lieu Fund is $15,189,652. In addition to development fee funds that are required to be reported under AB 1600, the following funds are reported for information purposes only and are not required to be reported under AB 1600: Residential housing in-lieu fees (PAMC Ch. 16.65): Fee on residential ownership developments in-lieu of providing required below-market rate to low-and moderate- income households. Parkland Dedication (CA Government Code Section 66477-Quimby Act): Fees on parkland dedication imposed on new residential and non-residential development. Public Art Fund (PAMC Ch. 16.61): Fees imposed on new commercial developments (including mixed use projects), including new construction, remodels, additions and reconstruction that (i) have a floor area of 10,000 sq. ft. or more, and (ii) have a construction value of $200,000, or more, exclusive of costs for architecture, design, engineering, and required studies; and all new residential projects of five or more units to fund public art for private developments. Water and Wastewater Collection (California Government Code Section 66013): Connection and Capacity fees charged to developers that are adding load to the water and sewer systems effective July 1,2005. FISCAL/RESOURCE IMPACT There is no direct fiscal impact associated with the review and acceptance of the annual report. The various fee funds are reviewed annually for any unallocated or unexpended balances as part of the development of the City’s five-year capital improvement plan. If the council does not make the findings contained in Attachment B, the development fees described therein might be required to be refunded. This would have a potential fiscal impact of up to $28,470,873. STAKEHOLDER ENGAGEMENT This report has been prepared by the Accounting Division in Administrative Services and reviewed by partner departments including the City Attorney’s Office, the Planning and Development Services Department, the Office of Transportation, Public Works, Library, and the Community Services Department. ENVIRONMENTAL REVIEW Council action on this item is not a project as defined by the California Environmental Quality Act (CEQA) in that the report and findings required by the Mitigation Fee Act is a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4). ATTACHMENTS Attachment A: Development Impact Fees FY 2024 and Use of Fees Summary Attachment B: Resolution Making Findings Regarding the Continuing Need for Unexpended Development Impact Fees APPROVED BY: Lauren Lai, Administrative Services Director City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2024 Stanford Research Park/El Camino Real San Antonio/West Bayshore Area FUND Transportation Impact Fee Transportation Impact Fee Description of the Type of Fee Amount of the Fee $12.85/sq. ft.; City ceased collecting effective FY 2020 $2.65/sq. ft.; City ceased collecting effective FY 2020 Fund Balance July 1, 2023 $1,220,842 $407,697 FY 2024 Activity Revenues Interest Earnings 31,614 10,555 Unrealized Gain/(Loss) Investments 22,902 8,869 ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Revenues $54,516 $19,424 Total Expenditures - - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2024 $1,275,358 $427,121 Total Reserves - - ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Net Funds Available $1,275,358 $427,121 Traffic impact fees imposed on new non-residential development in the Stanford Research Park/El Camino Real Commercial Service zone to fund improvements at eight identified intersections. (PAMC 16.45) Traffic impact fees imposed on new non-residential development in the San Antonio/West Bayshore area to fund capacity improvements at four indentified intersections. (PAMC 16.46) City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2024 Commercial Housing FUND Impact Fee General Government Facility Development Fee Description of the Type of Fee Fees imposed on commercial and industrial development to offset the demand that new jobs create for low and moderate-income housing in the City. (PAMC 16.65) Fees imposed on residential and non-residential development to fund facilities associated with municipal administration. (PAMC 16.58) Amount of the Fee Hotel / Retail / Other Residential: (ADUs under 750 sq. ft are exempt) Non-Residential: $26 per sq. ft. Single family $1,684.20 per unit Multi-family $1.346.36 per unit Office/R&D: $77 per sq. ft. Non-Residential: Commercial $939 per 1,000 sq. ft. or fraction thereof Industrial $312 per 1,000 sq. ft. or fraction thereof Office/Institutional $1,256 per 1,000 sq.ft. or fraction thereof Fund Balance July 1, 2023 $27,033,611 $121,165 FY 2024 Activity Revenues Fees Collected 438,546 66,695 Interest Earnings 320,494 4,014 Unrealized Gain/(Loss) Investments 56,927 98 --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Revenues 815,967 70,807 Expenditures Salaries and Benefit (11,893) - Liability Insurance (753) - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Expenditures (12,646) - ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Ending Balance June 30, 2024 $27,836,932 $191,972 Reserves Notes Receivable (see detail below)(23,629,563) - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Reserves (23,629,563) - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Net Funds Available $4,207,369 $191,972 Notes Receivable Detail: $1,290,000 for 2811 Alma; $4,137,278 for 801 Alma; $7,700,000 for Buena Vista Mobile Home Park; $10,502,309 Wilton Court City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2024 FUND Park Development Fee Community Centers Development Fee Description of the Type of Fee Amount of the Fee Residential: (ADUs under 750 sq ft are exempt)Residential: (ADUs under 750 sq ft are exempt) Single family $65,308.60 per unit Single family $5,047.71 per unit. Multi-Family $48,302.43 per unit Multi-Family $3,734.03 per unit Non-residential: Non-residential: Commercial/Industrial $19,150 per net new 1,000 sq ft.Commercial/industrial $1480 per 1,000 sq ft. Hotel/Motel $3,250 per 1,000 sq ft.Hotel/Motel $252 per 1,000 sq ft. Fund Balance July 1, 2023 $1,671,754 $771,619 FY 2024 Activity Revenues Fees Collected 1,409,596 174,306 Interest Earnings 43,637 14,175 Unrealized Gain/(Loss) Investments 110,640 10,042 ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Revenues $1,563,873 $198,523 Expenditures - Operating Transfer to Capital Projects Fund (851,297) - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Expenditures ($851,297) - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2024 $2,384,330 $970,142 Total Reserves - - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Net Funds Available $2,384,330 $970,142 Fees imposed on new residential and non-residential development approved after Jan 28, 2002 to fund acquisition of land and improvements for neighborhood and district parks. (PAMC 16.58) Fees imposed on new residential and non-residential development approved after Jan 28, 2002 to to fund development and improvements to community centers. (PAMC 16.58) City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2024 Residential Housing FUND Library Development Fee Impact Fee Description of the Type of Fee Fees imposed on new residential and non-residentual development approved after January 28, 2002 to fund development and improvements to libraries. (PAMC 16.58) Fees imposed on all rental residential developments (including mixed-use with rental housing) to offset the demand that the new market-rate rental housing creates for low-income and moderate- income housing in the City. (PAMC 16.65) Amount of the Fee Residential: (ADUs under 750 sq ft are exempt)Single and Multi-Family: $25 per sq. ft. apartment (rentals) Single family $3,008.38 per unit Multi-family $2,224.72 per unit Non-residential: Commercial/industrial $883 per net new 1,000 sq ft. Hotel/Motel $150 per net new 1,000 sq ft. Fund Balance July 1, 2023 $944,041 $1,050,978 FY 2024 Activity Revenues Fees Collected 82,859 54,475 Interest Earnings 15,708 28,118 Unrealized Gain/(Loss) Investments 32,246 21,463 --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Revenues $130,813 $104,056 Expenditures Operating Transfer to Capital Projects Fund (457,017) - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Expenditures (457,017.00) - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2024 $617,837 $1,155,034 Total Reserves - - ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Net Funds Available $617,837 $1,155,034 City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2024 Charleston-Arastradero Corridor Citywide Transportation FUND Pedestrian and Bicyclist Safety Impact Fee Impact fee Description of the Type of Fee Fees collected from new development and redevelopment Transportation impact fees imposed on new development in within the Charleston-Arastradero Corridor to provide for all parts of the City to fund congestion reduction projects. pedestrian and bicyclist safety improvements. (PAMC 16.60)(PAMC 16.59) Amount of the Fee Residential: $1,684 per residential unit Commercial: $0.49 per sq ft (ADUs exempt) $9,754.23 each; per net new PM peak hour trip Fund Balance July 1, 2023 $1,172 $1,622,961 FY 2024 Activity Revenues Fees Collected 14,891 567,097 Interest Earnings 194 42,465 Unrealized Gain/(Loss) Investments 996 45,995 --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Revenues $16,081 $655,557 Expenditures Operating Transfer to Capital Projects Fund - (395,000)--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Expenditures - ($395,000)---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Ending Balance June 30, 2024 $17,253 $1,883,518 Total Reserves - - ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Net Funds Available $17,253 $1,883,518 City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2024 University Avenue Non-residential Development FUND Public Safety Facility Development Fee Parking In-Lieu Fee Description of the Type of Fee Fees imposed on residential and non-residential development to fund police and fire facilities, including fire apparatus and vehicles. (PAMC 16.58) Fees collected from non-residential development within the University Ave. Parking Assessment District area in lieu of providing the required off-street parking spaces. (PAMC 16.57) Amount of the Fee Residential:$130,823.17 per space Single family $1,336.38 per unit Multi-family $1,069.91 per unit Non-residential: Commercial $746 per 1,000 sq ft. or fraction thereof Industrial $249 per 1,000 sq. ft. or fraction thereof Office/Institutional $996 per 1,000 sq ft or fraction thereof. Fund Balance July 1, 2023 $95,093 $15,664,946 FY 2024 Activity Revenues Fees Collected 52,982 Interest Earnings 3,159 349,058 Unrealized Gain/(Loss) Investments 53 (47,054) --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Revenues $56,194 $302,004 Expenditures General Expense - (727,298) Operating Transfer to Capital Projects Fund - (50,000) --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Expenditures - (777,298.00) --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2024 $151,287 $15,189,652 Total Reserves - - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Net Funds Available $151,287 $15,189,652 City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2024 Residential Housing In-Lieu Fee Parkland Dedication Fee FUND (INFORMATION ONLY)(INFORMATION ONLY) Description of the Type of Fee This fee is not subject to AB1600 reporting requirements and is included only for information purposes. Fees collected from ownership residential developments of three or more units(including mixed used with ownership in housing) in-lieu of providing the required below-market rate unit(s) to low and moderate income households. (PAMC 16.65) This fee is not subject to AB1600 reporting requirements and is inlcuded only for information purposes. Fees on parkland dedication imposed on new residential and non-residential development. (PAMC 21.50; Gov. Code Sec. 66477 and 66479) Amount of the Fee Single-family $96 per sq. ft. single-family detached; $64 per sq. ft. single-family attached. Multi-family $64 per sq. ft. condos. Single Family: $76,029.40 per unit; Multi-Family: $54,472.24 per unit. This applies only to residential projects that require a subdivision or parcel map. Land dedication is required for subdivisions resulting in more than 50 parcels. Parkland Dedication Fee -Land: Single Family: 531 sq. ft. per unit; Multi-Family: 366 sq. ft. per unit. When parkland dedication applies, park impact fees do not apply. Fund Balance July 1, 2023 $29,320,569 $2,240,408 FY 2024 Activity Revenues Fees Collected 164,834 1,453,944 Interest Earnings 214,508 81,285 Unrealized Gain/(Loss) Investments 265,714 75,368 --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Revenues $645,056 $1,610,597 Expenditures Salaries and Benefit (11,892.84) - Liability Insurance (752.76) - Contract Service/General Expense (79,195.93) - Operating Transfer to Capital Projects Fund - (250,000) --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Expenditures (91,842)($250,000) --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2024 $29,873,783 $3,601,005 Reserves Reserve for Encumbrances & Reappropriations (99,082) - Reserve for Notes Receivable (28,258,078) - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Reserves ($28,357,160) - ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Net Funds Available $1,516,623 $3,601,005 $375,000 for 3053 Emerson; $3,504,850 for Tree House Apts.; $3,000,000 Grant Ave; $747,734 for Sheridan Apts. $2,285,026 for 801 Alma; $842,338 for Palo Alto Housing Project; $600,000 for 2811-2825 Alma St.; $203,561 for Colorado Park Housing; $149,968 for El Dorado Palace; $6,800,000 for Buena Vista Mobile Home Park; $8,249,601 for Wilton Ct.; $1,500,000 for 525 E. Charleston Rd. Residential Housing In-Lieu Fund, Notes Receivable Detail: City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2024 Public Art In-Lieu Fee FUND (INFORMATION ONLY)Water Connection/Capacity Fees Description of the Type of Fee This fee is not subject to AB1600 reporting requirements and is included only for information purposes. The Public Art In-Lieu fee is used to fund public art for private developments that elect not to provide public art onsite. The fee is imposed on new commercial developments and mixed-use projects that (i) have a floor area of 10,000 sq. ft. or more, and (ii) have a construction value of $200,000, or more, exclusive of costs for architecture, design, engineering, and required studies, as well as all new residential projects of five or more units. (PAMC 16.61) Water connection and capacity fees are imposed on new development and redevelopment to buy into existing water distribution system and to recover the proportionate cost of system improvements required to serve the new customers of increased loads of existing customers. These are one-time fees paid before water services are upgraded or installed. Capacity fees recieved are used exclusively for water capital improvement projects. (Gov. Code Sec. 66013) Amount of the Fee 1% of first $128.06 million construction valuation and 0.9% of construction valuation for valuation in excess of $128.06 million Water Capacity Fees: 5/8 in., 3/4 in E-Meter. $3,750, 1 in. E-Meter $6,250, 1 1/2 in. E-Meter $18,850, 2 in. E-Meter $31,250, 4 in. Compound Meter by est. $125/FU (min. 5,000 FU) , 6 in. Compound Meter by est. $125/FU (min. 7,000 FU) Fire Service Capacity Fees: 2 in. $750, 4 in. $8,425, 6 in. $18,250, 8 in. $30,950, 10 in. $48,110 Fund Balance July 1, 2023 $2,091,434 - FY 2024 Activity Revenues Fees Collected 244,528 Connection Fees Collected 1,661,229 Capacity Fees Collected 254,925 Interest Earnings 55,253 - Unrealized Gain/(Loss) Investments 36,328 - Transfers in from other funds 184,000 - ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Revenues $520,109 $1,916,154 Expenditures Salaries and benefits (293,728) - Contract Services/Other (64,103) (1,916,154.00) Liability Insurance (3,767) - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Expenditures ($361,598)($1,916,154) --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2024 $2,249,945 - Reserves Encumbrances & Reappropriations (5,294) - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total Reserves (5,294) - ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Net Funds Available $2,244,651 - City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2024 FUND Wastewater Connection/Capacity Fees Description of the Type of Fee Wastewater connection and capacity fees are imposed on new development and redevlopment to buy into the existing wastewater collection systems and to recover the proportionate cost of system improvements required to serve the new customers of increased loads of existing customers. These are one-time fees paid before the wastewater services are upgraded or installed. Capacity fees recieved are used exclusively for sanitary sewer capital improvement projects. (Gov. Code Sec. 66013) Amount of the Fee Sewer Capacity Charges: 4 in. connection with 5/8 in Water Meter (WM) $5,250, 4 in connection. with 1-in WM $10,500, 4 or 6 in. connection with 1-1/2 in WM $31,668, 6 in. connection with 2 in. WM $52,500, 6 in. and larger connection with 4 in. or larger WM by est. at $210/FU Fund Balance July 1, 2023 - FY 2024 Activity Revenues Connection Fees Collected 476,333 Capacity Fees Collected 15,750 ------------------------------------------------------------------------------------------- Total Revenues $492,083 Expenditures Contract Services/Other (492,083) ------------------------------------------------------------------------------------------- Total Expenditures ($492,083) ------------------------------------------------------------------------------------------- Ending Balance June 30, 2024 - Total Reserves - -------------------------------------------------------------------------------------------Net Funds Available $0 Fund Name Project FY 2024 Expenditures Total Project Cost % of Total Project Cost Construction Start Date Stanford Research Park/El Camino Real Transportation Impact Fee Page Mill Road/El Camino Real Intersection Improvements None N/A N/A Mid-2025 San Antonio/West Bayshore Area Transportation Impact Fee San Antonio/Charleston Road Intersection Improvements None N/A N/A 2026 Commercial Housing Impact Fee Affordable Housing Development Projects 12,646$ N/A N/A N/A General Government Facility Development Impact Fee PE-15001 New Public Safety Building None 118,602,789$ N/A February 2021 Community Facilities Parks Development Impact Fee PE-08001 Rinconada Park Improvements 46,367$ 10,176,326$ 0.5% Summer 2019 PF-23001 Roth Building Rehabilitation Phase 1 350,000$ 11,367,366$ 3.1%Summer 2023 PG-18001- Dog Park Installation and Renovation 294,500$ 338,904$ 86.9%Recurring PG-19000- Park Restroom Installation 160,430$ 2,003,799$ 8.0%Recurring Community Center Impact Fee PE-24001 Electrification of City Facilities None 1,799,238$ N/A N/A PF-02022 Facility Interior Finishes Replacement None 1,069,488$ N/A N/A Community Facilities Library Developers Impact Fee LB-21000 Library Automated Material Handling (AMH)157,017$ 1,898,292$ 8.3%February 2025 PF-23001 Roth Building Rehabilitation Phase 1 300,000$ 11,367,366$ 2.6%Summer 2023 Residential Housing Impact Fee Affordable Housing Development Projects None N/A N/A N/A Charleston-Arastradero Corridor Pedestrian & Bicyclist Safety Impact Fee PL-04010 - Bike Ped Implementation Plan None N/A N/A N/A Citywide Transportation Impact Fee PL-05030 Traffic Signal and ITS Upgrades 395,000$ ongoing N/A ongoing Public Safety Facility Development Impact Fee PE-18004 Fire Station 4 Replacement None 18,255,946$ N/A Spring 2022 University Ave Non Residential Development Parking In-Lieu Fee Refund paid to Hamilton and High LLC 727,298$ N/A N/A N/A PE-15007 New Downtown Parking Garage 50,000$ 5,398,000$ 0.9%Summer 2026 Residential Housing In-Lieu Fee Affordable Housing Development Projects 91,842$ N/A, ongoing N/A N/A Parks Dedication Fund PE-24004- Rinconada Pool Family Changing Room 250,000$ 1,397,698$ 17.9%November 2025 PE-18006- Byxbee Park Completion None 3,699,189$ N/A Fall 2024 Public Art In-Lieu Fee Public Art Program (acquisition of new artwork, repair and maintenance, conservation and insurance, project management, and program administration) 361,598$ N/A N/A N/A Water Fund Capacity Fees WS-80013 Customer Connection, Annual 1,229,105$ N/A N/A Recurring WS-15002 Water Main Replacement Project 29 681,678$ 9,500,000$ 7.2%Winter 2022 WS-16001 Water Main Replacement Project #30 5,371$ 9,804,371$ 0.1%Fall 2025 Wastewater Fund Capacity Fees WC-19001 Sewer Sanitary Rehabilitation Project 31 492,083$ $9,500,000 5.2% July 2023 City of Palo Alto FY 2024 Use of Fees Summary *NOT YET APPROVED* Attachment B 1 0290006_20241223 Resolution No. _____ Resolution of the Council of the City of Palo Alto Accepting the Annual Report on Development Impact Fees for the Period Ending June 30, 2024 and Making Findings Regarding the Continuing Need for Development Impact Fees Collected but Not Expended R E C I T A L S A. Government Code Sections 66000 et seq., commonly known as the Mitigation Fee Act, regulates the imposition, collections, expenditure, and reporting of development impact fees; and B. Government Code Section 66006 requires that certain information be made available to the public regarding development impact fees on an annual basis; and C. Government Code Section 66001 requires the City Council to make findings describing the continuing need for impact fees every five years specifying the intended use of any unexpended impact fees; and D. The City of Palo Alto imposes various development impact fees, and has prepared the Development Impact Fee Report for the Period Ending June 30, 2024, which contains the information required by Government Code 66006 for these fees; and E. The City of Palo Alto also imposes in-lieu fees and dedication fees in connection with development projects and although the Mitigation Fee Act’s requirements do not apply to these fees, the Development Impact Fee Report for the Period Ending June 30, 2024 includes information regarding those fees in its annual report in the interest of transparency. F. The Development Impact Fee Report for the Period Ending June 30, 2024 was published on the City of Palo Alto website on December 2, 2024. G. The City Council has read and considered the Development Impact Fee Report for the Period Ending June 30, 2024. The Council of the City of Palo Alto RESOLVES as follows: Section 1. The City Council accepts the Annual Report on Development Impact Fees for the Period Ending June 30, 2024 as required by Government Code 66006. Section 2. Based on the Development Impact Fee Report for the Period Ending June 30, 2024, and the Schedule of Improvements and Expenditures attached as Exhibit 1 to this resolution, the City Council makes the following findings as required by Government Code Section 66001 with regard to fees collected but not expended for the following fees: Stanford Research Park/El Camino Real Traffic Impact Fee *NOT YET APPROVED* Attachment B 2 0290006_20241223 A. The purpose of this fee is to fund traffic-related improvements at eight designated intersections within the Stanford Research Park/El Camino Real CS zone. B. The fee is reasonably related to its purpose because the fee is imposed on new non- residential development, which is expected to generate an average of eighty percent of new commute period traffic at the designated intersections, and the amount of the fee is based upon the estimated cost of the capacity improvements at the designated intersections. C. The sources and amounts of funding anticipated for incomplete improvements are set forth in Exhibit 1 to this resolution. D. The approximate dates on which the funding is expected to be deposited into the appropriate account are set forth in Exhibit 1 to this resolution. San Antonio/West Bayshore Area Traffic Impact Fee A. The purpose of this fee is to fund the cost of capital expenditures needed to provide operational improvements at certain intersections in the San Antonio/West Bayshore Area. B. This fee is reasonably related to its purpose because the fee is imposed on new development in the San Antonio/West Bayshore Area, and the San Antonio/West Bayshore Environmental Impact Report (EIR) showed that these improvements are necessary to mitigate the demonstrated significant traffic impacts of such new development. C. The sources and amounts of funding anticipated for incomplete improvements are set forth in Exhibit 1 to this resolution. D. The approximate dates on which the funding is expected to be deposited into the appropriate account are set forth in Exhibit 1 to this resolution. Commercial Housing Impact Fee A. The purpose of this fee is to offset the demand that new jobs create for low and moderate-income housing in the city as a result of commercial and industrial development by supporting below-market rate housing at various levels of affordability. B. The fee is reasonably related to its purpose because the fees are expended exclusively to provide new and preserve existing housing affordable to very low income, lower income, and moderate income households in the city, consistent with the goals and policies contained in the City's housing element and for administration and compliance monitoring of the City’s affordable housing program. C. The Planning and Development Services Department released a Notice of Funding Availability (NOFA) for eligible facilities/services in September 2024. D. The unexpended fund balance should be allocated in FY 2025 and later years through the NOFA process, which awards grants to eligible projects on an annual basis; however, a minimum balance will be maintained to account for unrealized losses as these funds are invested until the time of disbursement. *NOT YET APPROVED* Attachment B 3 0290006_20241223 General Government Facilities Fee A. The purpose of this fee is to fund the cost of improvements to those facilities used by the City to provide basic governmental services and public facilities maintenance services, exclusive of public safety. B. The fee is reasonably related to its purpose because new residential and non-residential development in the city will generate additional residents and employees who will increase the demand for services, including municipal services and general government functions. Population and growth has a direct impact on the need for government services and facilities, thus a reasonable relationship exists between new development and government facilities, which will have to be acquired to meet the increased demand. A. The sources and amounts of funding anticipated for incomplete improvements are set forth in Exhibit 1 to this resolution. B. The approximate dates on which the funding is expected to be deposited into the appropriate account are set forth in Exhibit 1 to this resolution. Park Development Fee A. The purpose of this fee is to fund the cost to design, acquire, install, and construct park facilities. B. The fee is reasonably related to its purpose because the fees will be collected from new residential and non-residential development in the city for park facilities that will be necessary due to increased demand for such facilities resulting from new development. New development will generate additional residents and employees who will increase the demand for active and passive park facilities within the city. Land will have to be purchased and improved to meet this increased demand. C. The sources and amounts of funding anticipated for incomplete improvements/facilities is set forth in Exhibit A to this resolution. D. The approximate dates on which the funding is expected to be deposited into the appropriate account is set forth in Exhibit A to this resolution. Community Center Development Fee A. The purpose of this fee is to fund the cost to design, acquire, install, and construct community center facilities. B. The fee is reasonably related to its purpose because the fees will be collected from new residential and non-residential development in the city for community center facilities that will be necessary due to increased demand for such facilities resulting from new development. New development will generate additional residents and employees who will increase the demand for community center facilities within the city. Land will have to be purchased and improved to meet this increased demand. C. The sources and amounts of funding anticipated for incomplete improvements/facilities is set forth in Exhibit A to this resolution. D. The approximate dates on which the funding is expected to be deposited into the appropriate account is set forth in Exhibit A to this resolution. *NOT YET APPROVED* Attachment B 4 0290006_20241223 Library Development Fee A. The purpose of this fee is to fund the cost to design, acquire, install, and construct library facilities. B. The fee is reasonably related to its purpose because the fees will be collected from new residential and non-residential development in the city for library facilities that will be necessary due to increased demand for such facilities resulting from new development. New development will generate additional residents and employees who will increase the demand for library facilities within the city. Land will have to be purchased and improved to meet this increased demand. C. The sources and amounts of funding anticipated for incomplete improvements/facilities is set forth in Exhibit A to this resolution. D. The approximate dates on which the funding is expected to be deposited into the appropriate account is set forth in Exhibit A to this resolution. Residential Housing Impact Fee A. The purpose of this fee is to offset the demand for low and moderate-income housing in the city as a result of market rate residential development by supporting below-market rate housing at various levels of affordability. B. The fee is reasonably related to its purpose because the fees are expended exclusively to provide new and preserve existing housing affordable to very low income, lower income, and moderate income households in the city, consistent with the goals and policies contained in the City's housing element and for administration and compliance monitoring of the City’s affordable housing program. C. The Planning and Development Services Department released a Notice of Funding Availability (NOFA) for eligible facilities/services in September 2024. D. The unexpended fund balance should be allocated in FY 2025 and later years through the NOFA process, which awards grants to eligible projects on an annual basis; however, a minimum balance will be maintained to account for unrealized losses as these funds are invested until the time of disbursement. Charleston-Arastradero Corridor Pedestrian and Bicyclist Safety Impact Fee A. The purpose of this fee is to fund the cost to implement the Charleston-Arastradero Corridor Plan, a series of streetscape improvements designed to increase pedestrian and bicyclist safety in the corridor. B. The fee is reasonably related to its purpose because the fees will be collected on residential and non-residential development within the Charleston-Arastradero Corridor Plan area and used to construct improvements identified in the Charleston-Arastradero Corridor Plan. C. The sources and amounts of funding anticipated for incomplete improvements/facilities is set forth in Exhibit A to this resolution. D. The approximate dates on which the funding is expected to be deposited into the appropriate account is set forth in Exhibit A to this resolution. *NOT YET APPROVED* Attachment B 5 0290006_20241223 Citywide Transportation Impact Fee A. The purpose of this impact fee is to fund the cost of citywide transportation enhancements, or public facilities and services that relieve citywide traffic congestion caused by new development projects. B. The fee is reasonably related to its purpose because the fee is imposed on development projects that cause traffic congestion on a citywide basis, calculated based on the additional traffic impacts attributable to the project, and fee funds are used only on eligible citywide transportation enhancements. C. The sources and amounts of funding anticipated for incomplete improvements are set forth in Exhibit 1 to this resolution. D. The approximate dates on which the funding is expected to be deposited into the appropriate account are set forth in Exhibit 1 to this resolution. Public Safety Facilities Impact Fee A. The purpose of this fee is to fund the construction, acquisition and/or upgrade of Police and Fire Facilities and equipment. B. The fee is reasonably related to its purpose because new residential and non-residential development will generate additional residents and employees who will require additional service calls increasing the need for trained Police and Fire personnel. Buildings and vehicles used to provide these services will have to be expanded, constructed, or purchased to meet this increased demand. Thus a reasonable relationship exists between the need for Public Safety facilities and the impact of residential and non-residential development. C. The sources and amounts of funding anticipated for incomplete improvements/facilities is set forth in Exhibit A to this resolution. D. The approximate dates on which the funding is expected to be deposited into the appropriate account is set forth in Exhibit A to this resolution. University Avenue Parking In-Lieu Fee A. The purpose of this fee is to fund the cost of providing public parking facilities to serve nonresidential development within the University Avenue parking assessment district area that does not provide adequate new off-street parking spaces to satisfy the requirements of the zoning code. B. The fee is reasonably related to its purpose because the fees will be used for the construction of additional public parking spaces within the University Avenue parking assessment district area. C. The sources and amounts of funding anticipated for incomplete improvements are set forth in Exhibit 1 to this resolution. D. The approximate dates on which the funding is expected to be deposited into the appropriate account are set forth in Exhibit 1 to this resolution. *NOT YET APPROVED* Attachment B 6 0290006_20241223 Residential Housing In-Lieu Fee A. The purpose of this fee is to offset the demand for low and moderate-income housing in the city as a result of market rate residential development by supporting below-market rate housing at various levels of affordability. The fee allows developers of market-rate residential ownership projects to fulfill their obligation to provide affordable ownership units by paying an in-lieu fee after demonstrating that providing such units as part of the project would be infeasible. B. The fee is reasonably related to its purpose because the fees are expended exclusively to provide new and preserve existing housing affordable to very low income, lower income, and moderate income households in the city, consistent with the goals and policies contained in the City's housing element and for administration and compliance monitoring of the City’s affordable housing program. C. The Planning and Development Services Department released a Notice of Funding Availability (NOFA) for eligible facilities/services in September 2024. D. The unexpended fund balance should be allocated in FY 2025 and later years through the NOFA process, which awards grants to eligible projects on an annual basis; however, a minimum balance will be maintained to account for unrealized losses as these funds are invested until the time of disbursement. Public Art In-Lieu Fee A. The purpose of this fee is to fund the cost of providing publicly visible art displays that enhance the built environment in the city when private developers opt not to commission on-site art displays as part of their projects. B. The fee is reasonably related to its purpose because the fees will be collected from development projects that exceed a minimum size that do not include on-site art displays and used to acquire and install temporary or permanent works of art in public places, provide publicly accessible exhibitions of art, provide community-based public art events, and cover expenses associated with the Public Art Program. C. The Community Services Department, through the Public Art Commission, continually evaluates opportunities for public art displays, exhibitions, and community events using the Public Art Fund. The Public Art Fund also contributes to cost of administering the Public Art Program, however that contribution is limited to 20% of the project budget and for the repair, maintenance, conservation and insurance of those works. D. The sources and amounts of funding anticipated for incomplete improvements are set forth in Exhibit 1 to this resolution. E. The approximate dates on which the funding is expected to be deposited into the appropriate account are set forth in Exhibit 1 to this resolution. The unexpended fund balance is allocated on an ongoing basis as public art projects are considered and approved by the Public Art Commission. Parkland Dedication Fee This fee is under Government Code section 66477 and 66479 and therefore the requirement to make additional findings every five years does not apply. *NOT YET APPROVED* Attachment B 7 0290006_20241223 Water & Wastewater System Connection and Capacity Fees These fees are imposed under Government Code section 66013 and therefore the requirement to make additional findings every five years does not apply. Refer to the Development Impact Fee Report for the Period Ending June 30, 2024 for the information required by Government Code 66013(d). SECTION 3. The Council finds that adoption of this resolution is not a project as defined by the California Environmental Quality Act (CEQA) in that it is a fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4). INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ _____________________________ Chief Assistant City Attorney City Manager _____________________________ Director of Administrative Services Attachment B - Exhibit 1 City of Palo Alto Schedule of Improvements and Expenditures Fund/Project Name CIP Project Number Unexpended Balance FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Notes; Other Funding Sources/Amounts Stanford Research Park/El Camino Real Transportation Impact Fee 1,275,357$ Page Mill Road/El Camino Real Intersection Improvements N/A 1,276,358$ Project to be constructed by County of Santa Clara; additional project funding from County 2016 Measure B Expressway Program; anticipated construction start in mid-2025 San Antonio/West Bayshore Area Transportation Impact Fee Traffic Signal and Intelligent Transportation System Upgrades PL-05030 427,121$ 427,121$ San Antonio/Charleston Road Intersection Improvement Project; anticipated construction start in 2026Commercial Housing Impact Fee 4,207,369$ Notice of Funding Availability issued September 30, 2024 N/A 2,200,000$ The City annually issues Notices of Funding Availability (NOFA) to provide funding support for eligible affordable housing projects. Funding awards vary by project and the available balance in the this fund, and other funds managed throught City's affordable housing program. Specific projects to be funded through the FY 2025 NOFA process will be determined in January 2025. Additional NOFAs will be issued for FY 2026 and later years based on available funding. General Government Facility Development Fee 191,973$ Public Safety Building PE-15001 191,972$ See pp. 164-166 of FY 2025 Capital Budget; technical adjustments to capital budget approved by City Council October 21, 2024; additional technical adjustments to capital budget anticipated in Q1 of FY 2025. Park Development Fee 2,384,330$ Dog Park Installation and Renovation PG-18001 150,000$ 150,000$ See pp. 218-219 of FY 2025 Capital Budget.Park Restroom Installation PG-19000 629,590$ 559,342$ 559,342$ See pp. 254-256 of FY 2025 Capital Budget. Community Center Development Fee 970,142$ Electrification of City Facilities PE-24001 490,000$ See pp. 122-123 of FY 2025 Capital Budget. Facility Interior Finishes Replacement PF-02022 440,250$ See pp. 124-126 of FY 2025 Capital Budget.Library Development Fee 617,837$ Library Automated Material Handling LB-21000 382,983$ See pp. 138-140 of FY 2025 Capital Budget.Residential Housing Impact Fee 1,155,034$ Notice of Funding Availability issued September 30, 2024 N/A 400,000$ The City annually issues Notices of Funding Availability (NOFA) to provide funding support for eligible affordable housing projects. Funding awards vary by project and the available balance in the this fund, and other funds managed throught City's affordable housing program. Specific projects to be funded through the FY 2025 NOFA process will be determined in January 2025. Additional NOFAs will be issued for FY 2026 and later years based on available funding. Charleston-Arastradero Corridor Pedestrian & Bicyclist Safety 17,253$ Bike Pedestrian Transportation Plan Implementation Project PL-04010 17,252$ See pp. 308-310 of FY 2025 Capital Budget. Citywide Transportation Impact Fee 1,883,518$ Traffic Signal and Intelligent Transportation System Upgrades PL-05030 395,000$ 395,000$ 395,000$ 395,000$ 395,000$ See pp. 344-346 of FY 2025 Capital Budget. Public Safety Facility Development Impact Fee 151,288$ Fire Station 4 Replacement PE-18004 95,093$ 56,195$ See pp. 128-130 of FY 2025 Capital Budget. University Avenue Non-Residential Development Parking In-Lieu 15,189,652$ New Downtown Parking Garage PE-15007 15,498,600$ See pp. 160-162 of FY 2025 Capital Budget; technical adjustments to capital budget approved by City Council October 21, 2024; revised project budget and funding sources anticipated Q2 2025. Residential Housing In-Lieu 1,516,624$ Notice of Funding Availability issued September 30, 2024 N/A 500,000$ The City annually issues Notices of Funding Availability (NOFA) to provide funding support for eligible affordable housing projects. Funding awards vary by project and the available balance in the this fund, and other funds managed throught City's affordable housing program. Specific projects to be funded through the FY 2025 NOFA process will be determined in January 2025. Additional NOFAs will be issued for FY 2026 and later years based on available funding. Public Art In-Lieu 2,244,651$ Code: Art Community Event 2025 N/A 275,000$ Project funding approved by Public Arts Commission August 28, 2024.