City Council Agenda
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Memo to: |
Manteca City Council |
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From: |
Jose Jasso, Assistant City Manager |
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Prepared by: |
Brad Wungluck, Deputy Director of Development Services |
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Date: |
October 1, 2024 |
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Subject: |
Hold a Public Hearing and Adopt the Government Building Facilities Nexus Fee Study, Capital Improvement Plan, and Fee Schedule Update |
Recommendation:
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Conduct a public hearing and adopt a resolution adopting the Government Building Facilities Nexus Fee Study and Capital Improvement Plan and establishing a fee schedule for the Government Building Facilities Fee.
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Background:
The City of Manteca currently collects a Government Building Facilities Fee with each building permit issued for the construction of new residential dwelling units or additional commercial square footage. The purpose of the Government Building Facilities Fee is to fund new development’s portion of the costs of future government building improvements. Some examples include the addition or construction of new public facilities such as the Civic Center - City Hall, Library, and Police Facility. The fee that is collected is used to finance the portion of the costs of these new public facilities that can be attributed to new development. The facilities that will be funded with the fee revenues are necessary to mitigate the impacts of new growth on the City’s government buildings and facilities. The fees collected and the projects identified assist in achieving the City’s adopted level of service for general government facilities. Impact fee revenues, such as the Government Building Facilities Fee, are used to cover the cost of constructing capital and infrastructure improvements required to serve new development and growth in the area in which they apply. As such, impact fees must be based on a nexus that shows that the fees are roughly proportionate to the impacts of new development. Impact fee revenues cannot be used to cover the operation and maintenance costs of these or any other facilities and infrastructure. In addition, impact fee revenue cannot be collected or used to cover the cost of preexisting infrastructure needs or deficiencies.
AB 1600 was enacted by the State of California in 1987 creating the Mitigation Fee Act -
Section 66000 et seq. of the Government Code. There have been recent changes in the Mitigation Fee Act which governs the collection of impact fees. Assembly Bill 602 went into effect in 2022 and added Section 66016.5 to the Mitigation Fee Act and imposed several new requirements on impact fees. Two of those requirements directly impact the Government Building Facilities Fee. First, AB 602 requires that nexus studies be updated every eight years, from the period beginning on January 1, 2022. Second, AB 602 requires that all fee studies shall calculate a fee imposed on a housing development project proportionately to the square footage of proposed units in the development, unless certain findings are made, and a local agency that imposes the fee utilizing this method shall be deemed to have used a valid method to establish the reasonable relationship between the fee charged and the burden posed by the development.
The City completed the last nexus study for the Government Building Facilities Fee in 2006. At that time the list of projects was amended and the fees for both residential and commercial were updated based upon the revised project list and revised project construction costs; however, the city has not completed a fee study for the Government Building Facilities Fee since then. Because of the extended amount of time, the need to update the project list and construction costs, and to comply with AB 602, the City began a new nexus fee study for the Government Building Facilities in 2019 with Harris & Associates. Unfortunately, because of the COVID-19 pandemic, the fee study was not completed. At the March 3, 2020, City Council meeting, the City Council provided direction as to the facilities to be included in the updated nexus fee study. Utilizing that direction, the City restarted the Government Building Facilities fee update in 2022, again with Harris & Associates, and has been working since that time on completing the fee study based on the updated facility list from 2020, additional projects since 2020, revised construction costs, and ensuring compliance with AB 602.
To support the City’s goal of an involved process, City staff also met with building industry representatives to discuss methodology and to answer questions. In June 2024, the City met with the development community through the Building Industry Association (BIA) as part of the process to receive feedback on the draft report and the proposed fee schedule. After that meeting, staff also had several communications regarding the study with BIA representatives. Additionally, the California Housing Defense Fund (CalHDF) submitted a comment letter regarding the City’s proposed fee update. Comments from the BIA and CalHDF and staff’s responses to those comments are set forth in Attachment 5, to be considered by the City Council pursuant to Government Code section 66019.
The purpose of the Nexus Study is to demonstrate that all fee components comply with the Mitigation Fee Act. The assumptions, methodologies, facility standards, costs, and cost allocation factors that were used to establish the nexus between the fees and the development on which the fees will be charged are summarized in the Nexus Study.
The proposed Nexus Fee Study and Capital Improvement Plan utilize the updated facility list and include space for City Administration / Civic Center - City Hall, Library Expansion, Multi-Use Community Facility, Animal Shelter Expansion, Police Station, Public Safety Training Facility, Police Range, Parks and Public Works Corporation Yard, Additional Maintenance Facilities, and a Parks Corporation Satellite Yard. The Nexus Study utilized the updated facility list and the current construction costs to determine the total cost of improvements needed, which totaled over $239 million. The study then determined the cost of improvements that were attributable to new development at buildout to be between 53% and 91% depending upon the facility, based on the projected service population at the buildout of the most recently adopted General Plan. After deducting the current fund balance, the Nexus Study determined that the total revenue obligation that could be imposed on new development was approximately $133,367,575. Lastly, the cost per capita was calculated utilizing the total costs allocated to new development and the change in service population, and then assigned to the appropriate land use categories for both residential (Single-Family or Multifamily) and non-residential (Commercial, Office, Industrial, or Hotel). This resulted in some increases and decreases in the fees as seen below. Overall, due to the changes in facilities, increases in construction costs, level of service, and new land use calculations there is a proposed increase in the fees of approximately 1% as is necessary per the nexus fee study.
The Performing Arts Center was originally included in the fee update but has been removed because the City intends to include it in the upcoming Parks and Recreation Master Plan and Fee Study. Although the Performing Arts Center was included in the 2006 update, as demonstrated by the Nexus Study, the City has significant other facilities costs that exceed the current General Government Facilities Fee Fund balance. The City intends to spend revenues collected under the current fee on other eligible projects included in the 2006 study, such as the police station. Even with the exclusion of the Performing Arts Center, the Nexus Study demonstrates that a modest fee increase is still necessary to cover the costs of providing facilities to serve new growth. All the facilities included in the fee update and the Capital Improvement Plan are expansion related projects that will provide additional square footage necessary to serve new development. The City Council will annually review the General Government Facilities Fee Capital Improvement Program and update it as necessary pursuant to the Mitigation Fee Act.
The city recognizes that because there has not been an update to the Nexus study since 2006 one of the maximum allowable fees, specifically Office, would be a considerable increase over the existing fee currently applied to development. For example, the maximum fee per the Nexus Study for some Office developments would be a 54% increase above the existing fee. The General Plan calls for the “development and intensification of employment centers including high-quality professional office complexes” (General Plan Land Use Goal LU-5.1), and the attraction of “businesses and industries to provide a variety of jobs allowing career growth potential while focusing on high-wage and/or high-sales tax producers” (General Plan Fiscal Sustainability Goal EF-4.2). As the City has a significant need for these types of employment centers to provide higher-wage jobs and meet the goals of the General Plan, city staff is proposing a reduction for this land use category. It is important to note that while there is a reduction proposed the increase across all fee categories is still only 1% higher than the existing fees.
Implementation of this Nexus Study is necessary to provide ongoing funding for the identified facilities. In accordance with the user fee nexus study, staff recommends an annual inflationary increase to these fees occur every July 1st based on the increase in the ENR 20-City CCI.
The proposed revised fees would become effective sixty days (60) after the adoption of the resolution.
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Land Use |
Existing Fee |
Maximum Allowable (Per Nexus Study) |
Proposed |
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Previous Land Use |
Proposed Land Use |
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Fee |
% Change |
Fee |
% Change |
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Residential |
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Very Low and Low-Density Residential |
Single-Family |
$ 2.48 |
$ 2.82 |
14% |
$2.82 |
14% |
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Medium Density Residential |
Single-Family |
$ 4.52 |
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-32% |
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-32% |
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Multi-Family |
$ 4.52 |
$ 4.00 |
-3% |
$4.00 |
-3% |
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High-Density Residential & Mixed Use Residential |
Multi-Family |
$ 4.06 |
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-1% |
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-1% |
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Non-Residential |
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Commercial |
Commercial |
$ 1.68 |
$ 1.52 |
-9% |
$1.52 |
-9% |
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Heavy Industrial |
Industrial |
$ 0.64 |
$ 0.78 |
23% |
$0.78 |
23% |
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Light Industrial |
Industrial |
$ 0.87 |
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-10% |
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-10% |
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Business Park Industrial |
Office |
$ 1.68 |
$ 2.53 |
51% |
$2.21 |
32% |
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Business Professional |
Office |
$ 2.21 |
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15% |
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0% |
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Hotel (per room not s.f.) |
Hotel per Room |
$630.00 |
$623.28 |
-1% |
$609.00 |
-3% |
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Average Increase |
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1% |
Fiscal Impact:
The adoption of the revised fee schedule will allow for the collection of an estimated $133,367,575 that will fund the assist in the construction of government building facilities as detailed in the Nexus Fee Study.
Documents Attached:
1. Attachment 1 - Resolution
2. Attachment 2 - Exhibit “A” to Resolution - Government Building Facilities Nexus Fee Study
3. Attachment 3 - Exhibit “B” to Resolution - Capital Improvement Plan
4. Attachment 4 - Exhibit “C” to Resolution - Government Building Facilities Fee Schedule
5. Attachment 5 - Comments Received
6. Attachment 6 - PowerPoint