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ACTION ON THE STOCKTON ECONOMIC STIMULUS PLAN
recommended action
RECOMMENDATION
Council is asked to consider the information provided in determining how to implement incentives for development in Stockton by waiving the collection of Public Facilities Fees and asking staff to propose specific additional fee reductions for South Stockton and Downtown Stockton.
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Summary
Per Council request to the City Manager, information has been provided for consideration during deliberation of the Mayor’s Stockton Economic Stimulus Plan and an alternative proposal put forth with Council concurrence. The Mayor introduced the Stockton Economic Stimulus Plan (SESP) for Council consideration. City staff prepared a report on the financial impact of the SESP and provided a status update on the General Plan. Council directed the City Manager to place the SESP on the November 3, 2015 agenda for consideration. Additionally, Council requested more information to evaluate how to implement a program to create an incentive for targeted development and determine the financial effect of waiving the collection of fees. On October 20, 2015, Councilmember Zapien with the concurrence of Council requested the consideration of another proposal to refine or replace the SESP.
Prior to a city approving new or increased development impact fees, or establishing or increasing other fees which have no specific statutory notice requirement, a city is required to hold at least one public hearing with appropriate legal notice published at least 10-days prior to the public hearing. A waiver, reduction or elimination of a fee does not require a public hearing. This meeting was noticed as a public hearing to allow the Council the flexibility to act in any way it deems fit, including establishing a new fee or increasing an existing fee.
DISCUSSION
Background
Mayor’s Stockton Economic Stimulus Plan
On August 18, 2015, the Mayor introduced the SESP for City Council consideration (see Attachment A - Stockton Economic Stimulus Plan, UOP Study, and City of Lodi staff report August 15, 2012). The City Manager was directed to report on the financial impacts of the SESP and the status of the General Plan.
Although City staff endeavored to schedule the study session within 30 days, a study session was not scheduled due to the Council members’ incompatible calendars. At the regularly scheduled Council meeting on October 6, 2015, the Council members scheduled study session for October 13, 2015 to discuss the SESP. At the study session, Council discussed the SESP (Item 15-2115) and moved to approve placing the item on the November 3, 2015 agenda to consider a proposed stimulus plan to reduce fees effective within 30 days of Council passage.
The SESP was authored by the Building Industry Association of the Greater Valley (BIA) and calls for a reduction of Public Facilities Fees (PFF). City staff prepared and presented a report to Council regarding the SESP, potential financial impact of a fee waiver program and an update of the General Plan efforts at the study session. This report includes the information from the October 13, 2015 staff presentation and the additional information requested of the City Manager by Council. It should be noted that the SESP was modified by the BIA in a letter dated October 6, 2015 and introduced at the City Council meeting of October 13, 2015 (Attachment B). Staff has included that letter in a summary bullet form to provide a concise analysis for the Council (Attachment C).
The BIA uses an analysis completed by the University of the Pacific (UOP) as an argument in favor of the SESP. The UOP study estimated the economic value of building 1,000 single family homes per year. This UOP study was commissioned by the BIA and uses expenditure data provided by the BIA with input from builders and contractors. This study estimates the broad economic benefits from home construction and does not distinguish the economic effect in Stockton from the whole of San Joaquin County, let alone the direct effect on City revenues and expenditures. Further, the UOP study does not include an analysis of the baseline conditions or projected levels of construction in Stockton. Finally, the analysis does not provide a policy recommendation for incentivizing development through the reduction in fees. The study is simply an estimate of the general economic impact in the region of home construction. From a regional perspective, construction in Lodi or Tracy would have similar impact given similar costs for materials, labor and land. The UOP study is attached to this staff report in in its entirety (see Attachment A).
Based on the example used in the UOP Study, staff developed geographic based permit fee scenarios (Attachment D) for different areas within Stockton. The UOP Study included one example of a 2,070 square foot Single Family Home in the Lodi Unified School District (LUSD), which would be emblematic of the development of open land in North Stockton (the geographic distinction is noteworthy since the Stockton Unified School District (SUSD) has different fees than LUSD). Staff used this example as a template and built additional sample scenarios for Central and South Stockton. The additional scenarios provide additional information as requested by Council during the study session, and is meant to help determine whether incentive programs to encourage development in downtown and historically disadvantaged communities would be worthwhile.
The additional scenarios include two models for Single Family Residences and a model for a 10 unit Multi-Family Residences. In all, seven building permit scenarios were modeled with fee analysis for single family and multi-family residential in the North, Central and South parts of Stockton to illustrate the difference in total fees amounts. Staff used green brackets to identify PFFs and to specify the dollar amounts that are allocated to the specific public facility for each scenario. The City of Stockton categorizes PFFs into 4 types of fees: (1) public buildings and streets, (2) utilities, (3) mitigation, and (4) pass through or other agency fees.
PFF amounts for each category are assessed and calculated using the following factors:
• the construction type of a building, i.e. single family home
• the square footage or units of the building
• the construction value of the building
• the use of the building
Excerpt from “Stockton Economic Stimulus Plan” from August 18, 2015 City Council meeting, Item 15.1, Attachment:
“Beginning in 2007 construction activity, and specifically residential construction, went into a long and sustained recession nationally, regionally, and locally. Today residential activity nationally, regionally, and locally is recovering to pre-recession levels including in surrounding cities such as Lodi, Lathrop, Manteca, and Tracy. However, the City of Stockton is not participating in this recovery.
In March of 2015 the University of Pacific conducted an Economic Impact Study for the City of Stockton analyzing the impacts of 1,000 new homes built in the City. Along with multiple millions of dollars in local economic activity the construction of 1,000 new homes will create 3,700 new jobs.
If the Stockton Economic Stimulus Plan is fully implemented with 1,000 new homes citywide plus an additional 50 units in all six council districts getting built within 36 months $22,100,000 will go uncollected on those homes using the current fee structure. The key phrase is “under the current fee structure.”
The current fee structure is based on an outdated General Plan that was replaced by the updated General Plan in 2007. Since the 2007 General Plan update the Public Facility Fees have not been updated to reflect the 2007 changes. In addition, even the 2007 General Plan is commonly accepted to be unrealistic. Former Community Development Director said the 2007 General Plan is “broken” and “represents a failed dream.” For these reasons the current Public Facilities Fees are not substantially related to the infrastructure needed to accommodate future growth in the near term. Until a new General Plan update is completed the true infrastructure needs are uncertain. This uncertainty offers the Council the opportunity to reduce the PFF for a limited period of time to stimulate the local economy.”
Legal Framework for PFF
In order to implement the goals and objectives of the City of Stockton General Plan and to mitigate impacts caused by new development within the City, Public Facilities Fees are necessary citywide. The fees are needed to finance Public Facilities and to assure that new development projects pay their fair share for these facilities.
Title 7, Chapter 5, section 66000 et seq. (Mitigation Fee Act) of the California Government Code provides that Public Facilities Fees may be enacted and imposed on development projects. The City of Stockton has found and determined that new development projects cause the need for construction, expansion or improvement of Public Facilities within the City and create new permanent spending obligations. PFFs are established as new development projects cause the need for construction, expansion or improvement of public facilities within the City of Stockton. In some jurisdictions, PFFs are known as Impact Fees or Development Impact Fees.
Utilization of a PFF program allows for the allocation of improvement costs across development projects. Absent a city-wide PFF program, improvement costs would not be apportioned and the full cost of mitigation improvements would be borne by the first project that established the need for the improvement. Such an approach would be in some instances a barrier to development given the disproportionate costs to early development projects. This was the basis of the City establishing its PFF program beginning with the 1990 General Plan and the establishment of the original fees in 1991. In other words, the 1990 General Plan established the growth patterns and policies and the PFF program was established to collect impact fees to address facility impacts from those growth policies.
If the fees collected for construction, expansion or improvement of Public Facilities to accommodate the increased demands of new development are waived, the requirement to mitigate the impact of development does not go away. If PFFs are waived, installation of Public Facilities could be indefinitely delayed absent another funding source and the result could be inadequate Public Facilities within the City. Consideration of a complete waiver of PFFs would effectively eliminate the benefits of the cost allocation model described above, and delay development. In other cases, it would violate City contractual obligations or invoke CEQA creating significant new issues. The PFF program enables individual projects to move at their own pace based on the proportionate cost and allows for incremental development.
Stockton PFF History
The City of Stockton uses three categories of fees for each permit. These categories are Processing Fees, Special Fees, and PFFs. Processing Fees are charges to issue and approve permits, such as Plan Check services and inspection services. Special Fees are charges dedicated to a specific function or program within the Community Development Department such as Flood Plain Management, Technology, and General Plan Maintenance and Implementation. PFFs are charges to offset increased City capital project costs caused by new development.
The City of Stockton has established four categories of PFFs: 1) Public Buildings, Street Improvements, and Parks; 2) Utilities; 3) Mitigation; and 4) Pass Through/Other Agency.
• Public Buildings, Street Improvements, and Parks includes fees for new Fire Stations, Police Department expansion, Library, Parks, City Office Space, Street Improvements, and Community Recreation Centers. A fee reduction in this category may have the adverse impact of either delaying the timing of the building of public facilities or require an alternate funding source (usually the General Fund) to make up the difference. It may also have the ability to reduce the amount of grant monies available for this category if the City is not able to provide matching funds. It should be noted that a reduction of the fees collected would amount to the PFF fund balances having significant funding shortfalls so it would not be practical to fund CIP projects to meet our adopted General Plan development policies and standards. This also positions the PFF fund balances of having the practical effect of being eliminated as a funding source.
• Utility includes fees for Delta Water Supply, Water Surface Fee, Water Connection Fee, Waste water fees, and Administration fees. The Delta Water Supply is mainly applicable in North Stockton. As these collected fees are pledges on MUD bonds, a reduction in the fee does not change the City’s obligation to pay the debt. A reduction also minimizes the main funding source to meet the City’s established bond covenants and maintain the City’s credit rating. This can be mitigated by user rate increases or spending down of existing fund balances. The two main funds are the Water fund and the Wastewater fund. In recent years, the Water fund has had negative net annual activity and fund balance is being used to cover costs. The Wastewater fund has not had negative net annual activity, but it should be noted that the Wastewater fund will have major projects in the near term (in excess of $150,000,000) which will be funded through debt and will be another draw on the fund.
• Mitigation includes Air Quality and Agricultural Land Mitigation fees which were litigation enacted or environmental mitigation fees. A fee reduction in this category could violate legal agreements and settlements. In some cases, alternate mitigation measures would have to be committed to during project entitlements. These two systematic fees have been established as system wide programs to focus on air quality mitigation projects such as traffic signal synchronization programs and Ag Land mitigation. A reduction to these fee categories may entail further California Environmental Quality Act (CEQA) review to determine whether master planned projects relied upon these system wide mitigation measures to mitigate their individual project impacts. Alternatively, individual development projects may employ their own individual mitigations.
• Pass Through/Other Agency includes fees charged by other government entities such as San Joaquin County or State of California or school districts in which the City collects but rebates the amount to the appropriate entity. The City has no direct control over the Pass Through/Other Agency fees. As an example of the considerations regarding reductions to a pass-through or other agency fee, the BIA’s October 6th letter included a reduction to the Regional Transportation Improvement Fee (RTIF). As a result of a specific option of that proposal, the San Joaquin Council of Governments (SJCOG) staff viewed it as contrary to the agreement between the City and SJCOG and viewed such a reduction as contrary to regional agreement amongst the cities and SJCOG (Attachment E).
• Note: The obligations and agreements that the City has entered guide the framework for current and future courses of action. An important clarification regarding the utility fees mentioned above is PFF fund balances go towards paying the debt service for these funds. Pass Through/Other agency obligations are similar and analogous to the binding agreements the City has with bond holders. For example, in the utilities case, the obligations are to bondholders while in the RTIF case, the obligations are to SJCOG.
PFFs have had adjustments to policy and fee amounts intermittently since program inception. In 2003, PFFs were increased by a one-time amount of 35% to account for the lack of an inflationary factor between 1991 through 2002. In 2005, an amended nexus study was completed. This led to the 2035 General Plan being adopted in 2007. Technical infrastructure studies were completed in 2008 for the General Plan but were not adopted. Consequently, PFFs were not updated to reflect the 2035 General Plan. Fees remained the same and continue to be based on the 1991 Nexus Study after adjusting for inflation factors.
Current PFF Reduction Program and Processing Fee Reduction
In 2010, the City established the current PFFs reduction program. In September 2010, the City Council adopted resolution #10-0308 which authorized the reduction in residential and non-residential projects. There are three aspects to this program under this resolution.
First, the Greater Downtown Area receives a 100% discount in PFFs identified as “Public Buildings, Street Improvements and Parks.” This area is defined as land generally bordered by Harding Way, Charter Way/Dr. Martin Luther King Jr. Boulevard, Pershing Avenue, and Wilson Way.
Secondly, non-residential projects located anywhere in the City receive a 50% reduction for PFF components for City Office Space, Community Recreation Centers, Libraries, Fire Stations, Police Stations, and Street Improvements.
Third, residential projects located anywhere in the City receive a 50% reduction for PFF components for City Office Space, Community Recreation Centers, Libraries, and Street Improvements.
All the above programs have been re-authorized by the City Council each year and the current programs expire on December 31, 2015.
Finally, the City Council also included multi-family housing in the PFF reduction program in October 2010 with resolution #10-0377. The program has been renewed annually and the current program expires on December 31, 2015.
Despite the fee reduction programs in existence since 2010, there has not been a notable increase in development until recently. The increase in permit activity in recent years appears to be directly related to specialized incentive programs (photovoltaic installations) for residential customers and commercial projects. In the last year, the total valuation (labor and materials) of permits issued in Stockton has increased and appears to be related to the broader economic recovery.
On August 18, 2015, the City Council adopted resolution 2015-08-18-1601 by a motion of 6-0 to amend the FY 2015-16 fee schedule and provide for an overall reduction of 24% to the City’s development related permit processing fees. (See Figure 2 below which displays permit and processing fees constitute 11% of total permit fee cost.)
PRESENT SITUATION
The City is witnessing increased economic activity by way of permit valuation with a total valuation increase between FY 2010-11 to FY 2014-15 of 103% (from $105.9 million to $214.9 million). Between FY 2010-11 to FY 2014-15, the valuation for non-residential projects has increased 126% (from $57.8 million to 130.9 million). During the same time period, the valuation for residential projects has increased 75% (from $48 million to $84 million). See Figure 1 on the following page.
At the City Council meeting October 13th, there was significant discussion regarding infill and South Stockton development and the need to encourage infill core development. At the end of the October 20th Council meeting, a proposal was introduced by Councilmember Zapien, seconded by Councilmember Fugazi, to include as a policy discussion regarding PFF for the November 3rd meeting (Attachment F).
City staff has reviewed the information provided by the City Council on October 20, 2015. The modified proposal calls for a 40% reduction of PFF for Residential and Non-Residential development. The additional 40% reduction represents a total overall PFF reduction to 30% of the original fee. The modified proposal also advocates the 50% reduction of PFF for Residential and Non-Residential development within areas of the city designated as “Disadvantaged Communities” as described under SB 535. The additional 50% reduction represents a total overall PFF reduction to 25% of the original fee. Additionally, the proposal calls for increased funding of the Down Payment Assistance Program.
Currently, there are a total of 3,179 vacant lots in the City. However, not all of these lots are buildable. Staff estimated the number of buildable lots using the 5,000 square foot lot size designated by Stockton Municipal Code for a single family home. There are 2,165 vacant residential lots over 5,000 square feet in the City of Stockton. While there is still a margin of error, this is a reasonable methodology for planning purposes information.
The following table provides the distribution of lots by Council district:
Vacant residential lots are located throughout the city, in new growth areas, infill areas, older core areas, and South Stockton (Attachment G). The 2,165 lots are spread throughout the city with a concentration in District 1 (667 lots), District 5 (482 lots), and District 6 (566 lots). In a general review of these lots, it can be seen that the majority of these lots and opportunities are in existing developed areas. Developed areas signify streets, utilities, and other municipal facilities have been built. As a general rule, opportunity infill sites are shovel ready absent significant density changes or failing systems. As the PFF program was developed in the early 1990’s with a citywide fee perspective in mind, and adjustments have not been comprehensively conducted, the fees in these infill areas may be higher than would be expected. To the extent that vacant lots are also in-fill lots in areas with existing City infrastructure the cost of development would be lower. Therefore, it is reasonable that less PFFs are needed for these particular sites and a fee waiver may be consistent with lower costs. However, the best practice is to follow a sequence including a General Plan Update, Infrastructure analysis, and then PFF cost studies.
UOP Study and Current Permit Fee Example
As expressed in the Mayor’s Stockton Economic Stimulus Plan (SESP), the UOP Study outlined a permit fee for a Single Family Home in Stockton. As a percentage of the total fee, Special Fees were 4% and Permit, Plan Check and Processing Fees were 7% of the total permit fee amount. PFFs consist of the remainder of fees including Public Buildings, Street Improvements, and Park PFF at 23%, Utilities at 37%, Mitigation Fees at 4%, and Pass Through/Other Agency Fees at 25% (see Figure 2 on the following page).
The UOP Study highlighted a permit fee for a Single Family Home in Stockton as a primary example of the benefits that would occur with a PFF reduction. The study highlights economic benefits from the construction of 1,000 new Single Family Homes, including: 3,700 jobs in San Joaquin County, $492 million in economic output for San Joaquin County, $244 million value added, $56 million in permit and fee revenue for local governments, and $64 million in tax revenue to federal, state, and local government. The UOP study also states approximately 80% of the economic benefits will accrue to the City of Stockton. The author of the study was quoted as being “neutral” on the SESP and commented that the study was “not meant as a policy analysis on how to achieve that” (Stockton Record quote of Dr. Jeffrey Michael-October 12, 2015). The UOP study does not illustrate baseline information such as market projections. The study cites new single family permits have remained under 100 units for the past 3 years, but does not discuss changes in the projected baseline housing market for years 2016 and 2017. The purpose was to estimate the potential economic impact of building 1,000 homes per year for three years in the City of Stockton. It should be noted while the UOP Study considers the economic impact of building 1,000 Single Family Residences, the SESP proposal advocates for 1,300 Single Family Residences to be built over three years. Yet, the SESP uses the economic and financial impact conclusions of the UOP Study.
On June 6th, 2013, the City commissioned Economic Planning Systems (EPS) to review and prepare an analysis of the City’s overall impact fees that addressed market conditions of the City’s housing market. Specifically, the review consisted of how fees affect the feasibility of housing construction. The preliminary conclusions of the City commissioned study estimated City of Stockton housing market conditions will continue to improve and recovery is expected by 2017. It was estimated that upon economic recovery, new housing construction would normalize at 700 units per year. The conclusions also noted impact fees do not directly influence price - the housing market sets price.
As noted above, the City implemented an Economic Development Fee Reduction Program in September 2010. However, there has not been a notable increase in development until recently. Market conditions and a number of other factors (such as existing housing supply) will drive residential construction in the Greater Downtown Stockton Area (GDSA), and not necessarily the reduction of impact fees. If substantially increased fee reductions are adopted such as the SESP proposed, the City Council should weigh the costs of such a program and the corresponding loss of infrastructure financing capacity with the amount of development that is expected above baseline projections. In other words, how many more units will be constructed compared to what is projected without intervention, and what is the cost of the lost revenue compared to the marginal increase.
Figure 3 on the following page highlights a further breakdown of the Building Permit used in UOP study. Permit fee information was compiled by Dr. Michael and colleagues using BIA estimates, City on-line fee estimator, SJCOG, and Lodi USD website.
• The first column describes the Fee Type.
• The second column represents a Grand Total Fee of $57,351 which is the amount of the fee without a PFF reduction program.
• The third column represents the amount used in the UOP study with a Grand Total of $49,701 and characterizes the current PFF reduction program.
• The fourth column represents the SESP with a Grand Total Fee of $32,701 after the utilizing the current PFF reduction program and the Stockton Economic Stimulus Proposal PFF fee reduction.
• The fifth column represents the total reduction per unit with a Grand Total of $24,650 with the current reduction plan and SESP combined.
Figure 4 on the following page highlights a typical permit fee scenario using the same characteristics contained in the UOP Study. The example uses a 2,070 foot square home with a $322,000 valuation in the North Stockton area in the Lodi Unified School District.
Figure 4 illustrates the staff processing fees and then the costs of the PFFs. City staff calculated the permit fee information. This figure shows the existing PFF reduction program amount of $7,538 and leaves a remainder of $12,459. There are two essential observations related to the remaining PFF amount. First, the SESP fee reduction amount exceeds the remaining $12,459 for public buildings, street improvements and parks category. Any significant reduction to this fee category will reduce the financial capacity to construct related PFF programmed facilities and result in immeasurable delays unless areas are identified where these improvements are not required. Second, because the proposed $17,000 reduction exceeds the amount remaining for public buildings, street improvements and parks, the balance would have to be reduced from other categories. Reductions in the remaining categories directly affect financing obligations, required mitigation efforts or fees determined by and collected for other agencies. Any reductions to the amounts identified as fees for utilities, mitigation measures or pass through/other agency risk the need for an immediate backfill from the General Fund.
General Plan Update and Considerations Impacting PFF
The General Plan update is in process. The key factors to reset development impact fees (PFF) include an update of land use assumptions, adjust service standards and policies to current expectations, and review best practices in other jurisdictions. The best practice implementation sequence is listed below:
• General Plan update
• Infrastructure and technical analysis
• Nexus Study of surrounding communities
• PFF analysis and fee determination
• City Council determination of PFF based on city priorities and preferences
Regarding the City of Stockton process, on October 13, 2015, the Community Development Department during the study session identified that a revised Development Impact Fee and Nexus Study is the best practice for adjusting PFF. Once these steps have been completed, the City will be in a position to recommend appropriate PFF that tie to new expectations. A PFF reduction program may impact PFF fund balances resulting in a change in development review practices. As a consequence, paying PFF may no longer be an option that can be considered during the entitlement process. This would require modifications to the current methodology used to review and condition projects.
City of Lodi
The City of Lodi, followed the typical General Plan sequence to evaluate and establish its fee structure. The City of Lodi staff report (Attachment A pages 14-16) indicated that after the General Plan was completed the “preparation of the Impact Mitigation Fee Program (IMFP) report and fee schedules was a 24-month collaborative effort between the City Council, staff and the development community. Five informal informational presentations were made to the Lodi City Council. Fourteen meetings were held with the project team, including staff, consultants and the development community. Five of those meetings were focused on determining the assumptions, objectives, and scope of work needed to complete the update to the existing IMFP. These occurred prior to award of the consulting contract to Harris & Associates, the project engineering and planning consultant. Nine additional meetings focused on the step-by-step development of project descriptions, costs analyses, nexus relationships and fee calculations.”
The City of Lodi also adopted a fee reduction program to lower the IMFP fees. The potential financial impact based upon the development forecast was estimated to be approximately $4 million over the ensuing seven years due to the economic conditions in 2012. However, it was also noted that the financial impact could be as much as $7.5 million over that same time period. As evidenced by comments from City of Lodi staff included in the report, Lodi held the same perspective that replacement funding would be required to fulfill the City’s improvement obligations. Specifically, City of Lodi staff commented that without the IMFP fee revenue from new development “other City revenue would be utilized.”
CONCLUSION
Council has clearly expressed interest in promoting development in Stockton by lowering the cost of development through a waiver of the collection of PFFs. Further, Council has expressed an interest in infill, multi-family affordable housing and development in targeted areas. As discussed by Council, a program for targeted areas would include maintaining waivers for the greater downtown area and expanding the waiver program to historically disadvantaged communities such as South Stockton.
Based on the available information, a waiver program may have an incremental positive influence on developers already considering projects in Stockton by lowering the cost. However, the experience with the existing waiver program demonstrates that a waiver program cannot overcome prevailing economic forces and development is likely to occur when warranted by market forces. A waiver program may accelerate development activities that are likely to occur, but is unlikely to encourage development beyond anticipated baseline levels that can be supported by the market. The UOP economic analysis of the SESP only analyzed the economic impact of building single family homes, and included no estimates of the baseline level of building anticipated with economic recovery. The UOP study was not a policy endorsement of the SESP and does not predict that such a waiver program would lead to the construction of 1,000 homes above the anticipated units. In large part, the economic benefit from new construction is likely to be achieved at a time when the market will support development regardless of whether a fee waive program is offered.
Establishing a fee waiver program in anticipation of revisions to the Public Facility Fee program after completion of the General Plan process and associated nexus study would be reasonable. Because fees can only be used to construct new infrastructure, a PFF program that takes into account existing City infrastructure is worthy of consideration during the General Plan process. However, it is important to remember that new development and additional population will always have an impact on the level of services required, such as police and fire, regardless of whether there is existing infrastructure. Waiving fees related to services, mitigation efforts or collected on behalf of other agencies is not advised as it leads to an immediate cost. Consequently, the PFF program will require a thorough review during the General Plan process. In advance of completing the General Plan process, waiving fees for infrastructure such as roads, parks, libraries and fire stations for areas that already have this infrastructure could be reasonable. Limiting the fee reductions to these categories will mitigate the adverse legal and financial impacts of impacting other sources, however, the current fees are less than the amount of money proposed to be reduced. Consequently, this would result in a negative number for the fee to be charged. In order to create the $17,000 proposed reduction, this leaves the option of either reducing fees from categories which will trigger adverse impacts and addressing those impacts separately or providing a direct subsidy from the General Fund. With respect to South Stockton or infill in general, the Council could consider a reduction in the same PFF category with parameters aimed at facilitating development in a specific geographic area or a specific type of construction (i.e. infill) in order to achieve a specific policy objective.
FINANCIAL SUMMARY
The options presented would have potential financial impacts based upon a particular direction or action taken. To date the PFF reduction plan has reduced Public Facilities Fees by $4.8 million dollars over the time period of September 10, 2010 through June 30, 2015. This averages to almost $1 million per year. The challenge is to balance the need for redevelopment and economic development with the level of investment the City can afford. The new economic activity forecast in the UOP study is different from the amount of new revenues that will flow into the City of Stockton coffers. The proposed PFF reduction would reduce fees by $22.1 million and would amount to a cumulative reduction of $27 million when combined with the pre-existing fee reduction program. Requirements to mitigate the impact of development are not reduced when PFF revenue is reduced. The lost revenue could lead to immeasurable delays in improvements and result in inadequate services in the City. Similar to the City of Lodi, other City revenues would have to be utilized.
In the event of a PFF reduction, City staff recommend the City Council reduce only the PFFs identified as Public Buildings, Street Improvements, and Parks to maximum amount of $12,459.
Attachment A - Stockton Economic Stimulus Plan
Attachment B - SESP modified 100615
Attachment C - SESP Summary
Attachment D - Scenario Analysis
Attachment E - SJCOG email
Attachment F - Council considerations 102015
Attachment G - Residential vacant land