title
APPROVE PUBLIC FACILITIES FEE INTRA-FUND LOAN REPAYMENT PLAN
recommended action
RECOMMENDATION
It is recommended that the City Council approve a resolution to:
1. Approve the Public Facilities Fee Intra-Fund Loan Repayment Plan; and
2. Authorize the City Manager to take appropriate and necessary actions to carry out the purpose and intent of this resolution.
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Summary
Public Facility Fees are used to pay for infrastructure and facilities necessary to meet the demands attributable to new development. In past years, the City approved intra-fund loans with Public Facilities Fees. According to the Mitigation Fee Act (section 66006) intra-fund loans are permissible, but require a repayment plan. A plan has been developed to establish repayments for the outstanding loans (Attachment A). The repayment plan was included in the Fiscal Year 2018-19 Annual Budget contingent upon review by the Development Oversight Commission and subsequent specific action of the Council. This plan has been reviewed by the Development Oversight Commission and is now being presented to Council without modification. It is recommended that Council adopt the proposed Public Facilities Fee Intra-Fund Loan Repayment Plan consistent with statutory requirements.
DISCUSSION
Background
The Public Facilities Fee (PFF) program has been in effect in Stockton since FY 1988-89. These fees are collected at the time of issuing building permits, to mitigate impacts of new development on public facilities. The revenues are used to finance the acquisition, construction, and improvement of public facilities to provide service to new development. The PFF program allows for the transfer of funds between the PFFs. However, state law requires that these transfers be treated as interfund loans and a repayment plan is required.
There are existing interfund loans in the PFF funds that do not have an established plan. The loan balances were as follows on June 30, 2017:
|
Loan From |
Loan To |
Unpaid Balance |
|
Street Improvement PFF Fund |
Community Recreation Centers Fund |
$2,906,770 |
|
Street Improvement PFF Fund |
Police Stations PFF Fund |
$1,248,169 |
|
Street Improvement PFF Fund |
Fire Stations PFF Fund |
$589,504 |
|
Library PFF Fund |
Fire Stations PFF Fund |
$1,966,866 |
|
Capital Improvement Fund |
Community Recreation Center Fund |
$991,737 |
Present Situation
Due to the economic downturn and corresponding stoppage of new development, PFF program revenues declined dramatically and loan repayment was not possible. It is recommended that a payment plan be established to repay the loans in a realistic timeframe. As outlined in the Settlement Agreement (dated July 13, 2009) between the Building Association of the Greater Valley (BIA) and the City, adoption of the repayment plan is contingent on review by the Development Oversight Commission (DOC), which is an advisory commission. The DOC met on July 12, to review the plan. The DOC recommended forwarding the plan to Council with no modifications to the plan as included in the FY 2018-19 Annual Budget. The plan is presented to Council for formal adoption.
The conditions of this proposed repayment plan are outlined below in accordance with the PFF program guidelines:
1. The loans will be settled in 20 years or earlier based on available balances.
2. Available fund balances as of June 30, 2017, will be used to make the first loan re-payment in FY 2017-18.
|
Fund |
Available Fund Balance |
|
Community Recreation Centers Fund |
$308,442 |
|
Police Stations PFF Fund |
$234,284 |
|
Fire Stations PFF Fund |
$703,899 |
3. In subsequent years, all fees and revenues collected by these three funds will be used to make the annual payments until the loans are paid off in full.
4. Police Stations PFF and Fire Stations PFF loans will incur the same rate of interest at the City’s pooled interest rate.
5. Community Recreation Center PFF fund will incur interest at 1 percent flat rate due to the fund’s limited capacity for repayment.
6. Revenues in the Community Recreation Center PFF are projected to be insufficient to complete the loan pay-off in 20 years. The unpaid balance on Community Recreation Center PFF fund loan will be paid off by another funding source, potentially the General Fund, at the end of 20 years (FY 2037-38).
7. The loan from the General Capital Improvement Fund be written off due to the Community Recreation Center PFF fund’s lack of capacity for repayment.
The repayment plan will be reviewed annually and revised as needed through the City’s annual budget process. All loan repayments will be reported through the PFF Annual Report.
FINANCIAL SUMMARY
Available fund balances as of June 30, 2017, will be used to make the first loan re-payment in FY 2017-18. A summary of the fund balances is included:
|
Fund |
Available Fund Balance |
|
Community Recreation Centers Fund |
$308,442 |
|
Police Stations PFF Fund |
$234,284 |
|
Fire Stations PFF Fund |
$703,899 |
In subsequent years, all fees and revenues collected by these three funds will be used to make the annual payments until the loans are paid off in full. The payments will be incorporated into the City’s annual budgeting process and the payments will also be reflected in the PFF Annual Report.
The General Fund will potentially be impacted by the payment of the balance for the Community Center PFF fund loan at the end of the 20-year term (FY 2037-38). This loan will incur interest at a 1 percent flat rate for the duration of the term. The loan from the General Capital Improvement Fund will be written off due to the Community Recreation Center PFF fund’s lack of capacity for repayment.
Attachment A - Repayment Plan Proposal