HomeMy WebLinkAbout22- Administrator's Office CITY OF SAN BERNARDINO - REQUEST r--OR COUNCIL ACTION
From: Fred Wilson Subject: Consideration of request for
Assistant City Administrator deferment of development impact
Dept: Administrator ' s Office fees .
Date: January 25, 1996
Synopsis of Previous Council action:
01/16/96 -- Housing Committee requested the City Administrator ' s Office
prepare a report relative to the request of Michael John
Enterprises, for a deferment of the development impact
fees .
Recommended motion:
That the City Administrator be directed to establish guidelines for
the deferment of development impact fees as noted in Attachment "A" ;
and that the City Attorney be directed to amend the applicable
ordinances and resolutions to authorize this action.
�ik
Signature
Contact person: Fred Wilson Phone: 5122
Supporting data attached: Yes Ward: 5
FUNDING REQUIREMENTS: Amount:
Source: (Acct. No.)
(Acct. Description)
Finance:
Council Notes:
2.15
BACKGROUND
The Housing Committee at their January 15, 1996 meeting, requested
that the City Administrator's Office prepare a report on the issue
of deferment of certain development impact fees until final
inspection and occupancy.
The request for the deferral of fees was made by Michael John
Enterprises (MJE) for Tract Map 14400, a 24 lot subdivision in the
Verdemont area. The request was made by MJE due to their
difficulty of obtaining construction financing for this project.
Because of the long term downturn in the local real estate economy,
MJE indicated that construction lenders are only providing limited
financing for projects of this type. (see attached letter) .
This issue was previously reviewed by the Legislative Review
Committee in September of 1993 and discussed by the Mayor and
Common Council in October 1993 . On October 21, 1993 , the request
by MJE Enterprises to defer development impact fees was denied.
Since that time, staff has received other requests from developers
in the Verdemont area relative to the deferral of infrastructure
fees.
Discussion
The City presently requires the payment of development impact fees
at the time building permits are issued for development projects.
These impact fees represent a significant portion of the combined
cost of fees and permits paid by the developer. According to MJE's
figures, the payment of the impact fees listed in Attachment A
total approximately $5, 700 per lot.
A survey of surrounding cities was made to determine other
approaches to the collection of development impact fees. The
following summarizes the results of the survey:
CITY POLICY SECURITY
Rialto At option of developer, payment of Developer signs
development impact fees maybe statement acknowledging
deferred until prior to the fees to be paid.
issuance of the C of O or 18 months
from the issuance of building
permits, whichever time is shorter.
Highland Payment of development impact fees Record lien on each
can be delayed until issuance of C parcel .
of 0.
Yucaipa Payment of development impact fees Record lien on each
can be delayed until issuance of C parcel .
of 0.
an Jacinto Payment of development impact fees "Green Tag" each parcel .
conditioned upon close of escrow of
each home.
f
If the Mayor and Common Council support the concept of deferral of
development impact fees, a number of issues would need to be
addressed including:
1. City Attorney's Office should review each of the fees listed
on Attachment A to see if they can legally be deferred beyond
the Building Permit issuance.
2 . A legal mechanism must be devised to ensure that certain
safeguards are provided at the time of the issuance of the C
of O to ensure payment by the developer. A maximum deferment
period should be established (possibly 18 months) for the
payment of fees.
3 . A processing fee should be established to cover the cost of
preparing the necessary documents to defer fees.
4 . Should such a policy be established for a certain period of
time only? (i. e until local economic conditions improve) .
Although the developer had requested that consideration be given to
the deferral of all the fees noted in the attached letter, it is
staff's position that, consideration be given only to the deferral
of the development impact fees noted in Attachment A. The other
fees which are listed are either assessment district established
fees or general fund fees.
Recommendation
Although the establishment of a program to defer certain
development impact fees involves addressing a number of issues, it
can be implemented. It is recommended that, if the Mayor and
Council support the concept of deferral of certain impact fees,
that a fee deferral program similar to the approach utilized by the
City of Rialto be considered.
Attachment A
DEVELOPMENT IMPACT FEES
Sewer Line Connection Fee
Storm Drain Construction Fee
Traffic Systems Fee
Verdemont Infrastructure Fee
Park Development Fee
'0 MJEO
Michael John Enterprises
1950 Sawtelle Blvd. Suite 280 • Los Angeles, CA 90025
Tel: 2+9- 479 4933 • FAX: 213 - 312 - 0830
January 17", 1996
Fred Wilson
Assistant City Administrator
City Administration
City of San Bernadino
300 North"D"Street
San Bernadino,CA 92418
Re: Deferral of Fees-Tract Map 14400-24 Lots
Dear Fred:
We would like to thank you and your staff for your effort in preparing a report to the City Council
regarding the above referenced topic.
Enclosed herewith is our 1996 Critical Path Schedule for Phase 1 (11 Lots) of Tract Map 14400. Please
note that the critical date is three weeks prior to the recordation of the construction loan. The construction
loan, as stated within the critical path, is scheduled to record in the second to third week of April, 1996.
Our lender, however, is likely to require that the deferral of fees be approved prior to their final loan
approval and preparation of the loan documents. Final loan approval and document processing is estimated
to take approximately three weeks. Thus, if we are to maintain our schedule, it is important that the fee
deferral be approved by the second to third week in March, 1996.
From a sales and marketing standpoint, it is very important for us to maintain our schedule. As it stands,
our model homes would open in August of 1996. Any delays would cause our sales efforts to begin much
nearer the Thanksgiving and Christmas holidays,which,as you know, is the poorest time of year to begin a
marketing program.
Listed below are fees that we request to be deferred by the City of San Bernadino,as follows:
Description Per House Phase 1 (I1) Phase 2(13) Total 24
Parks&Recreation: $1,431 $15,741 $18,603 $34,344
Sewer Connection: 1,342 14,762 17,446 32,208
Tree Removal Permit: 176 1,936 2,288 4,224
Verdemont Infra Fee: 1,500 16,500 19,500 36,000
Electric Energy Fee: 180 1,980 2,340 4,320
Storm Drain Assess: 1,781 19,591 23,153 42,744
Traffic System: 149 1,639 1,937 3,576
Box Culver Fee: 250 2,750 3,250 6,000
Drainage Fee: 1,533 16,863 19,929 36,792
Palm Ave Assess: 516 5,676 6,708 12,384
Total Fees: $8,858 $97,438 $115,154 $212,592
A Real Estate Development Corporation • General Contractors License Nn_ 55P75P
Finally,we would like to reemphasize the importance of the deferral. Five years ago, construction lenders
would normally provide construction financing in an amount equal to 80% of the appraised value of the
project. City and agency fees would be directly paid from the construction loan. However, due to the
long-term downturn in the real estate economy, construction lenders are much more conservative and are
currently limiting their loans to 65%to 70%of the appraised value. The problem is further compounded
by very conservative fair market appraisals. You can see the problem. We expect that our largest home,
as an example, will appraise for$200,000. The difference in Loan to Value Ratios is 10%to 15%. Thus,
on this home, we would have to add $20,000 to $30,000 of our own cash to be able to proceed with the
project. We, like most builders, do not have additional cash reserves necessary to make up the difference
in the LTV Ratios. This is especially true considering the lean years experienced by the home building
industry.
In conclusion, I would like to suggest that the deferral of fees be conditioned upon our escrow providing
you with irrevocable escrow instructions that would instruct escrow to disburse the fees directly to the City
upon close of escrow. The City would be protected by withholding the C of O until such time as the
escrow instructions for each individual house was received by the City. The City of San Jacinto has
implemented a similar program and with positive results. They currently have 6 or 7 projects underway. I
would further suggest that you talk to Brian McNabb, Assistant City Manager. His telephone number is
(909)654-7337.
Bill Bryden has asked to be included in the discussions for we also have a request to the Water District for
fee deferrals. The ideal would be to have identical mechanical programs for the City and Water District.
I will contact you in several days and would appreciate your comments and advice. Thanks.
Yours Sincerely,
C en. 6MML
Ronald N.Goodwyn,Project Managtrt
Spring Mountain Homes,Estate Series I,
a California Limited Partnership,
Michael John Enterprises,General Partner
cc: Bill Bryden
Dave Mylnarski
r X
X
X
Ail x
x
x
x
X
x
x x
x x x
x x x
x x x
x X X
x X x
X X X
X X X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
x x X X x
x x X
X x
E X X
X
X
X
X
X
X X X x X
X X X
X X X
X X X
X X x
x x
x x
x x
x x
x X
X x x
X
X X
X X _
x x m
X X
cl x X X a
222111 x X
X
X X
X
X
X X X
X x E X X X X
X x
X X
X
X
X X X
X x X X x X x X
x X x X X X
X X X X X X
X
x X x X X
X x X X X
x x x X X
T x X x X
fl X X X X
x x X
V RI X X
Q ' X X
X X
C C
W J to u7 0
�O `n ai iri c C E — Q
=
co = ai E S '� m J .gyp.
Z W U o U = .3 0 p c a p �, 0 0 ui o p o
Q N d= ) 0 m ° CL Np O 0 m c C c `p d U U
F' O = cm c co U p ca c ai ri. c a� m as p ,
ca c 0 cu .. E m w U 0 V 0 w °
= Q a ti 2 J w o� ` a0i a�i • cn06 0 c •c c
O (L C c5 > c �c �c o �c C �c iii c i» ° iti N o E a) O a) Z) � 'cn
Ow Q � mn st ms m L tn thU oL rnrn .9xs nEa o aUi o � a .o .0 L)
— rnm0m rn
Q Q ~ 0 N •°1 N C c fD a C n C C = ° m p D 0 0 0 0 0 N c CO � � 00
d S oC d s 0 o cc ca c co ca p p a) o m c� m aa)i m 0 0 0 0. � o o 0
U) IL 0 o ao = ami� aaaammc Do car) 7cncnininm 0maQ- w
I