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ADOPT A RESOLUTION APPROVING THE SAN JOAQUIN MULTI-SPECIES HABITAT CONSERVATION AND OPEN SPACE PLAN 2021 DEVELOPMENT FEE SCHEDULE
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RECOMMENDATION
It is recommended that the City Council adopt a Resolution approving the San Joaquin Multi-Species Habitat Conservation and Open Space Plan 2021 development fee schedule.
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Summary
On November 14, 2000, the San Joaquin Multi-Species Habitat Conservation and Open Space Plan (“Plan”) was established by San Joaquin Council of Governments, Inc. (SJCOG, Inc) to provide a strategy for balancing the need to convert open space, agricultural lands, and potential habitat for protected species as result of urban development and provide permanent preservation areas in San Joaquin County. On February 20, 2001, the City of Stockton adopted the Plan. Participation in the Plan is voluntary and available to the development community as an option to simply pay a fee to mitigate habitat impacts because of their development projects. Developers can fulfill mitigation obligations more efficiently with Plan participation and avoid negotiating mitigation measures with various federal and state environmental protection agencies for their individual projects. Fees are updated on a yearly basis and require adoption by City Council to be effective.
On August 27, 2020, the SJCOG, Inc. Board approved the 2021 Plan fee schedule (Attachment A - SJCOG Staff Report). SJCOG, Inc. proposes an approximate 35.4% increase in the Open Space and Agricultural and Natural habitat classifications for the 2021 Plan, which are the two most common areas impacted by development projects. The increase is primarily due to a rise in land sale prices for habitat preserve land. The City Council is requested to approve the proposed fee schedule. Habitat Fee pay zones for Stockton are mostly located on the outer areas of the City where development may or may not be initiated. See Attachment B - Habitat Fee Areas.
Plan fee rates are determined from a financial model that SJCOG Inc. maintains and requires update at 5-year increments to address changes in land sales market conditions and inflation. This year requires the 5-year financial model update to determine new fee rates for year 2021. The financial model consists of three main categories:
• Category A - Acquisition
• Category B - Enhancement
• Category C - Land Management/Administration
Over the last six months, SJCOG, Inc., the Habitat Technical Advisory Committee (HTAC) and Financial Subcommittee engaged in a review of the land sales market data and analysis. The HTAC consists of planning staff from local county and cities agencies (including Stockton), Building Industry Association, state and federal environmental protection agencies. The HTAC Committee recommended approval of the financial model update and new calculated fee rates to the SJCOG Inc. Board. The Habitat Fee must be adopted by each local jurisdiction to take effect in that community.
The fees collected are used to purchase land throughout San Joaquin County. According to the 2019 annual report, 18,204 acres were acquired. The funds also pay to preserve lands. In 2019, 59 existing preserves were monitored. There are associated costs with restoring the land, monitoring and reporting. The funds pay for biological review of the land and administration of the overall plan. The fees are collected by SJCOG, Inc.
There are no preserve areas located within the City of Stockton. However, of the lands preserved and monitored, the Hansen Preserve and the Wing Levee Road Preserve are the closest to the City of Stockton. The Hansen Preserve is a 304-acre field crop preserve located east of N. Tully Road and to the north of Frazier Road northeast of the City of Stockton. Enhancements will support species such as the Swainson’s Hawk, Burrowing Owl, Tri-colored Blackbird and the Yellow Warbler. The Wing Levee Road Preserve is a 355 acre Preserve located on the eastern boarder of Union Island along Middle River, southwest of the City of Stockton and north of the City of Tracy. The property serves as habitat for the Swainson’s Hawk, Burrowing Owl, and Valley Elderberry Longhorned Beetle.
From January 2019 to June 2019 (most recent report available from SJCOG) there were 3 participating projects in the City of Stockton totaling $384,587.
DISCUSSION
Background
On February 20, 2001, the Stockton City Council adopted three Resolutions as follows:
1. Resolution No. 01-0099 -- Certifying the Final Environmental Impact Report/Environmental Impact Statement (Final EIR/EIS), adopting the related California Environmental Quality Act (CEQA) Findings and Mitigation Reporting/Monitoring Program, and adopting the San Joaquin County Multi-Species Habitat Conservation and Open Space Plan;
2. Resolution No. 01-0100 -- Adopting the Implementation Agreement of the San Joaquin County Multi-Species Habitat Conservation and Open Space Plan authorizing the filing of the related Federal Endangered Species Act Section 10(a)(1)(B) Incidental Take Permit application with the U.S. Fish and Wildlife Service; and
3. Resolution No. 01-0101 -- Approving amendments to the Joint Powers Agreement with the SJCOG, Inc. authorizing SJCOG, Inc. to assume responsibilities specified in the San Joaquin County Multi-Species Habitat Conservation and Open Space Plan.
Applicants that participate in the Plan benefit from a pre-determined streamlined process. By participating in the Plan, the applicant may choose from a menu of options to mitigate impacts:
1. Pay the Plan Fee;
2. Redesign the project to avoid/minimize impacts;
3. Provide land in lieu of the Plan Fee; or
4. Any combination of the above options.
Alternatively, a project can choose not to participate in the Plan and fulfill mitigation requirements on its own with the respective permitting agencies. Based on City Staff’s experience, this option is very rarely chosen by developers.
From the beginning, the City collected Plan fees at the time of building permit issuance, like other development impacts fees in the City’s Public Facilities Fee Program. Plan fees for individual projects (e.g., house on a single parcel) are adjusted to ensure that the per-acre fee as established by SJCOG, Inc. is collected for the entire (gross) project area. For example, a house built on a parcel within a large subdivision relies on additional land to support the residential use (e.g., road in front of the house). The adjusted development fee includes this supporting land so that all of the acreage is accounted for within a given project area, and the appropriate Plan fee is paid.
On December 15, 2009, the City Council adopted Resolution Number 09-409, which authorized an amendment to the Public Facility Fee Program’s Administrative Guidelines to establish SJCOG, Inc. as the entity responsible for the collection of the Development Fee. This change was to ensure the accurate calculation and collection of Plan fees due and a result of the significant volume of City projects participating in the Plan.
Each year, SJCOG, Inc. uses comparable agricultural land sales within San Joaquin County that meet certain criteria adopted by the Board. Easement acquisition costs are a primary consideration, as are comparable land sale costs. As shown in Table 1 below, Plan fees can be quite different from year to year. The rise and fall of Plan fees is primarily a result of the land acquisition category component of the fee calculation model.
Table 1 - Plan Fees 2016-2021 (Rate per acre)
|
TYPE/YEAR |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
|
Open Space |
$7,807 |
$8,905 |
$9,701 |
$6,700 |
$6,412 |
$8,682 |
|
AG/Natural |
$15,596 |
$17,808 |
$19,400 |
$13,399 |
$12,822 |
$17,363 |
|
Vernal Pool (grasslands) |
$46,869 |
$66,437 |
$72,523 |
$54,576 |
$52,833 |
$71,544 |
|
Vernal Pool (wetted) |
$90,273 |
$109,737 |
$116,871 |
$101,033 |
$100,788 |
$161,286 |
Present Situation
On August 27, 2020, the SJCOG, Inc. Board approved the proposed 2021 Development Fee increase based on 2020 San Joaquin County Multi-Species Habitat Conservation and Open Space Plan (SJMSCP) 5-year Financial Model Update. The fee model uses three main categories: Category A - Acquisition; Category B - Enhancement; and Category C - Land Management/Administration to calculate fee rates.
I. Category A (Acquisition) - Comparables:
This category addresses land valuation and is based on comparable land sales in San Joaquin County. To be included in the analysis, the land sale must have occurred in specific zones of the SJMSCP area (Central Zone, Central Southwest Transition Zone and Delta Zone) over an established 2-year period. Each year, all qualified comparable land sales in each zone, including SJCOG, Inc. easements, are evaluated to establish a weighted cost per acre using the methodology in previous Financial Analysis Updates, but without SJCOG, Inc. easement appraisals.
This 2020 fee model revises the valuation percentage method for determining the cost of the land in the model to be lowered to 56%. This calculation will be reviewed in 5 years by SJCOG staff and their consultant. The model update results in a 44% increase in the Agricultural/Natural Habitat types of Category A (Acquisition) component to be $11,740.00. The reason for the increase is the rise in comparable land sale values.
II. Category B (Assessment & Enhancement) - Refined Cost Factors/Redistribution of Habitat/Consumer Price Index
The recommended changes to this category include updated cost factors for biological site assessment, preserve improvement, and management planning. The analysis redistributes preserve land between grasslands and agricultural landscapes to more accurately reflect the purposes of preserving the land described in the adopted SJMSCP.
The total cost for Category B is a function of the SJMSCP Annual Report updated annually with the acres remaining to be acquired and the number of years remaining in the permit term. The unit cost factors (per acre or per year for some items) will be adjusted only by the California Consumer Price Index (CPI). The model update results in a 29% increase in the Agricultural/Natural Habitat types of Category B (Assessment & Enhancement) component to be $4,942.00.
III. Category C (Management & Administration) - Refined Cost Factors/Long Term Investment/Consumer Price Index
The recommended changes to this category include updated monitoring costs and updated management and administration cost factors that are based on analysis of SJCOG, Inc. spending in these categories. This includes an update to the approach to post-permit costs and implementation of a diversified investment strategy for a higher return on investment yield that provides for a net annual yield of 3.5% after absorbing inflation and management costs.
Annual cost updates will continue to use the California Consumer Price Index (CPI), as reported by the California Department of Finance, for the preceding 12-month fiscal year (e.g. July - June) to keep up with inflation on an annual basis. The model update results in a 20% decrease in the Agricultural/Natural Habitat types of Category C (Management, Monitoring & Administration) component from prior years to be $681.00.
Plan Mitigation Fee Formula = Proposed 2021 Plan Fees
The formula for fee calculation is categorized into three distinct components (discussed above) to calculate a supported fee per acre [FEE = Category A (acquisition) + Category B (assessment & enhancement) + Category C (management & administration)].
For comparison purposes, the existing 2020 SJMSCP (Plan) Development Fees and calculations are shown in Table 2, and the proposed 2021 Plan Fees and calculations are shown in Table 3. Compared to 2020, the proposed 2021 Plan Fees reflect an overall increase of 35.4% in the Open Space and Agricultural and Natural habitat classifications. The fees for the Vernal Pool Upland and Wetted habitat classifications increased 35.42% and 60.01%, respectively, based on potential land acquisition and enhancement/restoration costs associated with the creation of those habitat types. Staff analysis of the financial model results concluded that the increase in fees is due primarily to land sale prices increasing in Category A land acquisition costs. It should be noted that the Vernal Pool area for Stockton is very small and located on peripheral properties that may never be developed.
Table 2 - 2020 SJMSCP Development Fees
|
Habitat Type |
Category A |
Category B |
Category C |
Total Fee |
Rounded Fee |
|
Open Space |
$4,072.00 |
$1,916.00 |
$424.16 |
$6,412.16 |
$6,412 |
|
AG/Natural |
$8,144.00 |
$3,831.00 |
$847.22 |
$12,822.22 |
$12,822 |
|
Vernal Pool (grasslands) |
$34,978.00 |
$15,274.00 |
$2,580.93 |
$52,832.93 |
$52,833 |
|
Vernal Pool (wetted) |
$34,399.00 |
$63,915.00 |
$2,533.80 |
$100,787.80 |
$100,788 |
Table 3 - Proposed 2021 SJMSCP Development Fees
|
Habitat Type |
Category A |
Category B |
Category C |
Total Fee |
Rounded Fee |
|
Open Space |
$5,870.00 |
$2,471.00 |
$341.00 |
$8,682.00 |
$8,682 |
|
AG/Natural |
$11,740.00 |
$4,942.00 |
$681.00 |
$17,363.00 |
$17,363 |
|
Vernal Pool (grasslands) |
$57,036.00 |
$12,826.00 |
$1,682.00 |
$71,544.00 |
$71,544 |
|
Vernal Pool (wetted) |
$56,057.00 |
$103,580.00 |
$1,649.00 |
$161,286.00 |
$161,286 |
Although the City adopted several public facility fee reduction programs and a fee deferral program for specified fees within the City’s control, fees such as this Countywide Habitat Conservation Plan (HCP) Fee are subject to a regional agreement that was promulgated by the Federal and State Endangered Species Act. The administration of this fee is detailed in the Countywide HCP, where SJCOG Inc. is the designated Administrator and methodologies and fees analyses are overseen by SJCOG HTAC and Financial subcommittees. As a result, these “development fees” are not subject to reduction and deferral programs.
PUBLIC NOTICE
A Public Notice of this hearing was published in The Record on October 9, 2020.
FINANCIAL SUMMARY
There is no direct financial impact to the City of Stockton, as this Development Fee is collected directly by SJCOG, Inc.
Attachment A - Staff Report - August 12, 2020
Attachment B - Fee Areas