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ADOPT A RESOLUTION TO REVISE AND EXTEND THE NON-RESIDENTIAL PUBLIC FACILITIES FEE AND MITIGATION FEE SHORT-TERM DEFERRAL PROGRAM
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RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Approve revisions to, and the extension of, the Non-residential Public Facilities Fee and Mitigation Fee Short-term Deferral Program for new construction projects through December 31, 2027, effective immediately;
2. Authorize the City Manager, or designee, to execute Fee Deferral Agreements in accordance with the terms of the Non-residential Public Facilities Fee and Mitigation Fee Short-term Deferral Program guidelines; and
3. Authorize the City Manager, or designee, to take necessary and appropriate actions to carry out the purpose and intent of the resolution.
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Summary
City Council adopted the current Non-residential Public Facilities Fee and Mitigation Fee Short-term Deferral Program (the “Program”) in 2017 (Attachment A -Resolution 2017-01-24-1210) with a five-year lifespan. The Program has incentivized the development of more than 1.86 million SF of industrial warehouse space in Stockton, creating hundreds of jobs. The City Council recognizes economic development and downtown/neighborhood revitalization as key goals for Stockton. Staff is recommending revisions to the guidelines and extension of the Program to support the continued development of new commercial and industrial spaces throughout the city.
DISCUSSION
Background
In 2017, the City Council approved a resolution to create the Program to incentivize economic development in underutilized and undeveloped land by reducing up-front costs for new non-residential construction projects within the city. The Program’s goal is to encourage development, attract new businesses and create additional job opportunities for Stockton’s community.
The Program provides short-term relief from up-front development costs by allowing a developer with a qualified project to elect to defer payment of certain eligible Public Facilities Fees until the first certificate of occupancy, whether temporary or final, or two years from the first building permit issuance, whichever is less.
To qualify for the Program, the project must be a new non-residential construction project with eligible impact fees exceeding $20,000. The following fees are eligible for short-term deferral under the Program guidelines:
Eligible Public Facilities Fees:
• City Office Space
• Delta Water Supply System
• Fire Station
• Library
• Police
• Street Improvements
• Water Utility Connection
• Wastewater Connection
• Community Recreation Center
Eligible Mitigation Fees:
• Agricultural Mitigation Fee
• Air Quality Mitigation Fee
The City does not have the authority to defer “pass-through” fees, such as the San Joaquin Multi-Species Habitat Conservation and Open Space Plan Mitigation Fee, Regional Transportation Impact Fee, and San Joaquin County Facilities Fees.
New, non-residential construction projects identified as commercial or industrial developments may be eligible to apply. Applications for the program must be submitted to the Economic Development Department before issuing a building permit. A fee deferral agreement between the applicant and the City must be executed. A temporary or final certificate of occupancy can be issued by the City when all required fees, including those that were deferred, have been paid in full.
Present Situation
The current Program was adopted in 2017 with a five-year lifespan unless extended by City Council. Since its adoption, the Program has helped incentivize development in Stockton’s industrial areas with the development of a 164,000 SF industrial warehouse near the airport and a 187,000 SF logistics facility, 388,000 SF logistics facility, and 1.1 million SF logistics facility near the Burlington Northern Santa Fe Railroad Internodal facility, bringing in companies and creating hundreds of job opportunities for Stockton’s community.
The City Council’s FY 2021-22 One Page Strategic Plan identified prioritizing economic development as one of its goals with action items including developing business incentives and leveraging the City’s logistics and multi-modal transport assets.
Additionally, due to the current economic climate, supply-chain issues, and inflation, obtaining building materials has been difficult for some developers delaying their buildout timelines.
Presently, the Program defers fees for a period of up to two years. Staff recommends revising the Program guidelines to allow the City Manager discretion to defer fees for a period of greater than two years where special circumstances exist. Additionally, staff recommends a revision which allows the City Manager to enter into fee deferral agreements on behalf of the City in amounts greater than the City Manager’s expenditure authority, which is currently $100,000.
Staff also recommends extending the program through December 31, 2027, as residential development continues in north Stockton, requiring much-needed commercial development. This Program can encourage the improvement of undeveloped properties throughout the City and further supports the ongoing industrial development in south Stockton near the various intermodal transportation facilities.
FINANCIAL SUMMARY
There is no negative financial impact to the City’s General Fund or any other unrestricted fund associated with modifying and extending the Program. The Program merely defers payment of certain fees.
Attachment A - Resolution 2017-01-24-1210