HomeMy WebLinkAboutRequest to Defer the Collection of TUMF Fees ���.� CITY OF PALM DESERT
� � OFFICE OF THE CITY MANAGER
STAFF REPORT
REQUEST: That the City Council Express Preferences for the Timing of the
Collection of Transportation Uniform Mitigation Fee (TUMF)
DATE: June 12, 2008
CONTENTS: Coachella Valley Association of Governments staff reports dated
February 15, 2008 and April 11, 2008
SUBMITTED BY: Carlos L. Ortega, City Manager
Recommendation: By Minute Motion, that the City Council express preferences for the
timing of the collection of Transportation Uniform Mitigation Fee (TUMF).
Executive Summary:
TUMF is currently collected at the time of building permit issuance per CVAG Resolution No.
07-007. However, State law(California Government Code, Section 66007) allows residential
development fees to be deferred and paid at the time a Certificate of Occupancy is issued for
the development project or upon final inspection, whichever comes first.
The Building Industry Association is requesting that CVAG and participating jurisdictions
entertain delaying the collection of TUMF to the time of issuance of Certificate of Occupancy
or final inspection, whichever comes first.
Payment of the fee may be deferred, for residential development only, to the date of
Certificate of Occupancy or final building inspection, whichever comes first, provided CVAG
amend the language in the current Resolution No. 07-007, reviewed and approved by the City
Attorney and City Council.
CVAG has analyzed the request and its position is that delaying the collection by one year
only has an effect on the first year, and thereafter they will be collecting the fees on schedule.
However, under the current process, the cities are the ones burdened with collecting the fee
on behalf of CVAG. Currently CVAG Resolution 07-007 states that the cities must collect it at
the issuance of a building permit which is at a specific time, and it is relatively easy to collect.
If the cities choose to collect it, for residential units, at either the time of final inspection or
G.ICINMGRU(ARENRUSSOIAGENDAREPORTS20081COLLECTIONOFlUMFFEES.DOCX I
Certificate of Occupancy, whichever comes first, then the cities would need to establish a
different process because the final inspection or Certificate of Occupancy may be done at
different times. There is also the concern that the person or persons seeking the final
inspection or Certificate of Occupancy may not be the ones who pulled the building permit at
the beginning of the project.
Because cities are ultimately the ones burdened with the responsibility of collecting TUMF
and have the responsibility to turn the money over to CVAG, CVAG wants the cities' opinion to
see if they are in favor of this change before they go through the process of changing the
CVAG Resolution.
The current TUMF is $1837 per housing unit. The fees for a 2,500 square foot home being
built in Palm Desert are $24,892. This includes fees paid to the City, School District, etc.
The TUMF is a small amount relative to the total fees.
Staff's recommendation would be that the collection of the Transportation Uniform Mitigation
Fee not be changed and remain being collected at the time of building permit issuance.
Submitted By:
CITY COUNCIL ACTIdN:
�''J APPROVED DENIED
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* By Minute Motion, directed that the City of Palm
Desert not change its currer.t process for the collection
of TUMF at this time. 5-0
G:ICITYMGRUCARENRUSSOIAGENDAREPORTS20081COLLECTIONOFTUMFFEES.DOCX ^
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COACHELLA VALLEY ASSOCIATION of GOVERNMENTS
DATE: February 15, 2008
TO: TEGHNICAL ADVISORY COMMITTEE
FROM: Allyn S. Waggle, Deputy Executive Director
SUBJECT: Consider Changes in Collection of the Transportation Uniform Mitigation Fee
(TUMF)
STAFF RECOMMENDED MOTION: That the Technical Advisory Committee Consider the
Information Presented Regarding Changes in Col{ection of the Transportation Uniform
Mitigation Fee and Provide Further Direction.
BACKGROUND: Recently a number of issues have been raised regarding the collection of the
TUMF fee. The issues can be summarized as follows:
When should TUMF be collected?
Where should TUMF be collected, in order to maintain the integrity of the program?
What consideration, if any, should be made for "Special Events" to pay TUMF?
After nearly nineteen years of the same TUMF fees being collected in the Coachella Valley, and
after completing a significant process ta analyze the TUMF fee schedule, in Jufy, 2006, the
Executive Committee approved an increase in the TUMF fee schedule, to become effective on
January 1, 2007. Immediately after the increased TUMF fees began to be collected it became
obvious there were discrepancies in the TUMF collection policies of some of the CVAG
jurisdictions,most notably by eastern Riverside County's building department secfion,which raised
issues which had not become apparent until the fees were changed. These issues could not be
resolved even after the jurisdictions received an analysis from CVAG's General Counsel, in
November 2006, that all TUMF fees were due and payable at the issuance of a projecYs building
permit.
In particular, the issues which needed to be formalized included confirmation of CVAG General
Counsel's opinion that the TUMF accrual date would be the date of issuance of a building permit.
A second major element to be confirmed was the time limit within which the jurisdictions must
transmit the TUMF fees to CVAG. A final important issue dealt with the refund of TUMF fees paid
if an issued building permit is never undertaken, such that no construction occurs.
Following discussions with Riverside County,and otherjurisdictions which requested further clarity,
Resolution Number 07-007, copy attached, was drafted to respond to the issues presented. The
resolution was also meant to address any questions raised by potentially conflicting tanguage in
the California Government Code, as well as individual jurisdictions' collection policies.
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COACHELLA VALLEY ASSOCIATION of GOVERNMENTS
When should TUMF be collected?
The issue has now again been raised that the Government Code,particutarly Section 66007,allows
local jurisdictions to collect the TUMF fee for residential developments on "the date of the final
inspection, or the date the Certificate of Occupancy is issued, whichever occurs first." However,
the Government Code also provides that"the local agency may require the payment of those fees
or charges at an earlier time," in compliance with specific conditions, which the Coacheila Valley
TUMF process satisfies.
Resolution Number 07-007 has been adopted by all the Coachella Valley TUMF collection
jurisdictions through a Model Ordinance and was meant to accommodate the appropriate
provisions of the Government Code. Resolution 07-007 provides the TUMF fee is collected at the
issuance of a building permit for all construction, while the Government Code allows collection of
the TUMF at final inspection or issuance of the Certificate of Occupancy onfy for residential
construction.Anyjurisdiction considering a change in the current CVAG policy will need to establish
a tracking process to regulate this multi-tiered time frame. CVAG has no estimate of the fiscal or
personnel impacts that tracking a multi-tiered collection system would impose.
The current practice of collecting the TUMF fees at residential building permit issuance provides
a significant control point to assure collection; if no fee is paid, no building permit is issued. It would
be more difficult to track, and to assure collection of the TUMF fees, if the collection of the
residential TUMF fee was timed to follow final inspection, or upon issuance of the Certificate of
Occupancy. Reported{y, one CVAG jurisdiction does not issue a Certificate of Occupancy when
a residential unit completed. They depend on a release by the utility companies to signal the unit
fit to occupy. This variation of procedures would seem to create a more complicated counter
process for each TUMF collecting jurisdiction. In western Riverside County, approximate{y half the
jurisdictions collect TUMF at bu�lding permit issuance, the others in accordance with the
Government Code. The TUMF rates in western Riverside County have been increased with
significant frequency, which has caused a substantial impact for jurisdictions which have been
requested to return paid TUMF fees.
The TUMF fees are meant to address mitigation issues resulting from new development. These
issues do not arise only after the residential unit is occupied, but also include the impacts of
construction and sales activities, which begin as soon as construction on a residential unit is
started, which likely would occur soon after building permit issuance.
The adopted CVAG TUMF process provides for periodicafly increasing the fee schedufe due to
inflation or other factors. Under present policy, once the TUMF fees are paid, they are locked in,
regardless of how long it may take to complete construction. If the TUMF fees are not collected
unti! fina{ inspection, or upon issuance of the Certificate of Occupancy, there is more likefy to be
an instance where the TUMF fees will increase between the date of project approval,when building
permits could be issued, and the date of TUMF fee callection, which will add yet another level of
difficulty and/ or confusion to the TUMF collection process.
It has been proposed that if developers are allowed to pay the TUMF fees at nearer the sale of the
residence,instead of when the building permit is first issued,their cash flow situation could be more
beneficial, making payment of the fees easier.According to the local Building Industry Association
(BIA), this would assist the slumping housing market. However, it may also be true that in a down
market, as we are now experiencing in the Coachella Valley, it could be more difficult for a
developer to pay fees before a property sale closes if he has disbursed the majority of his project`s
funding source in earlier-paid fees and construction costs.
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COACHELLA VALLEY ASSOCIATION of GOVERNMENTS
Where shoutd TUMF be collected, in order to maintain the integrity of the program?
One response to assuring that the TUMF fees are paid before final inspection for occupancy,
regardless of whether it occurred at issuance of building permit or the date of final inspecfion, is
for the TUMF fee to be paid at CVAG, similar to what is now being done with the fringed toed lizard
fee which CVAG collects for several jurisdictions. CVAG would collect the fee, based on the
calculations performed by the issuing jurisdiction, and issue some sort of certificate which the
builder/owner would then use to either obtain a building permit or to set the date of final inspection.
It would also need to be determined whether TUMF could be paid at any time between building
permit issuance and final inspection. Given the direction to CVAG staff to increase the TUMF,
relative to inflation, after 2009, any such increase which occurred during the time period between
these two events could generate additional TUMF calculation issues for the jurisdictions/ CVAG,
create pressure to complete a final inspection or increase TUMF appeals based on timing conflicts
for the final inspection to occur.
Were CVAG to begin collection of the TUMF, it would likely be necessary for CVAG to increase
staff in order to provide this additional service with a 40-hour per week availability. Collection of
TUMF at CVAG would also require that builder/ owners make the trip to CVAG, which maintains
different office hours and holiday schedules than some of our jurisdictions. And, though CVAG is
centraliy located in the Coachella Valley, the trip could be considered an additional time delay and
cost factor for those traveling from our further jurisdictions.
What consideration, if any, should be made for "Special Events" to pay TUMF?
Another recently raised issue has to do with the impacts on the regiona! road system caused by
the traffic generated by "Special Events", which otherwise would not pay any TUMF since there
typically is no building permit issued for these events. As stated above, the TUMF fees are meant
to address mitigation issues resulting from increased traffic levels. Should the same logic be
followed for"Special Events"which generate substantial traffic loads on existing streets?There are
many so-called special events in the Coachelta Valley which generate significant traffic impacts
ranging from the Coachella Fest to art festivals. These events have proven to attract several
hundred thousand visitors, and their related vehicles. Is there an interest in quantifying these type
of events to determine a way to justify collection of TUMF fees?
The TAC is processing a TUMF Appeal from the H{TS development (Horse Shows In The Sun).
The H1TS developer believes the TUMF classification used for that fand use is inaccurate and does
not reffect the correct traffic load to be anticipated, and thus, the correct TUMF to be paid. Similar
to the Coachella Fest and the Stagecoach Fest, the HITS event utilizes a large open space, on an
infrequent basis, which attracts a large number of vehicles over a short period of time. The reason
that HITS is being assessed TUMF is that a building permit/ land use permit was required by
Riverside County before the land could be developed. This permit triggered the requirement for
payment of the TUMF. No such"triggering" permit is issued for the two events in Indio. The TUMF
program is meant to be fair and impartial in its administration, and does not consider the attraction
for tourists, the local identification or the economic impacts of the these infrequent "Special
Events."
ln a related issue, at their meeting in October, 2007, CVAG's Executive Committee approved the
increase of the Notice of Appeal Period for the Transportation Uniform Mitigation Fee from 15 Days
to 90 Days from imposition of the fee. The original TUMF Model Ordinance, prepared in
coordinafion with the adoption of the original Measure A period beginning in July, 1989, included
a section on the recommended Appea! Process which provided that an app{icant who disputes the
TUMF fee may file a written notice of appeal with the CVAG Executive Committee within 15 days
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COACHELLA VALLEY ASSOCIATION of GOVERNMENTS
of imposition of the fee. The appeai process further provides that the Executive Committee must
decide the appeal by a majority vote and within 60 days of the filing of the appeal. A version of the
model ordinance was adopted by each of the TUMF collecting jurisdictions and the 15-day appeal
period is currently in effect.
During the discussion of a recent TUMF appeal hearing by the Technical Advisory Committee a
question was raised as to whether the CVAG TUMF appeal period was in conformance with state
law. The California Government Code presently provides that a protest of the imposifion of certain
fees may be filed within 90 days of the imposition of those fees on a development project. The
Government Code section further provides that each local agency shall provide to the project
applicant a notice in writing at the fime of imposition of the fees that the 90-day approval period in
which the applicant may protest has begun.
Given that it might be argued that the CVAG TUMF appeal process language conflicts with the
California Government Code,-staff recommended that CVAG amend its appeal process by
increasing the TUMF notice of appeal period from 15 days to 90 days. Any changes to this appeal
period would require each jurisdiction to amend their TUMF ordinance in order to become effective.
CVAG's General Counsel has prepared a draft ordinance providing language which may be used
by the TUMF collecting jurisdictions in order to effect this approved change in the appeal filing
period. CVAG invites any comments the TAC may have to offer, and will submit this draft ordinance
to the appropriate representatives at the jurisdictions.
FISCAL ANALYSIS: A change in the TUMF collection process to provide payment of the TUMF
at final inspection or upon issuance of the Certificate of Occupancy,for residential units only, could
create a substantial tracking requirement to assure that all completed projects are correctly
assessed and paid. Whether this increase in staffing should occur at the individual jurisdictions,
or at CVAG, the costs of this service would still be a function of the TUMF program.
Likewise, the lengthening of the notice of appeal period should not cause any delay in the receipt
of TUMF fees which are imposed on development projects. The amendment of the TUMF
ordinances by each of the TUMF-collecting jurisdictions may entail legal fees and staff time costs.
vU
COACHELLA VALLEY ASSOCIATION of GOVERNMENTS
DATE: April 11, 2008
TO: TECHNICAL ADVISORY COMMITTEE
FROM: Allyn S. Wagg4e, Deputy Executive Director
SUBJECT: Continued Discussion Regarding Considered Changes in CoNection of the
Transportation Uniform Mitigation Fee (TUMF)
STAFF RECOMMENDED MOTION: That the Technical Advisory Committee Consider the
Information Presented Regarding Changes in Collection of the Transportation Uniform
Mitigation Fee, and Provide Further Direction.
BACKGROUND:At their meeting of February 15'h the TAC reviewed a staff report(copy attached)
which considered the request by the Building Industry Association (BIA) to delay the collection of
the TUMF fee payment from the point of issuance of a building permit, as is the present policy, to
the date of the final building inspection, as is allowed by the California Government Code for
residential projects only. The staff report prepared for this discussion outlined several issues. Fred
Bell, Executive Director of the Desert Chapter of the BIA, also made a presentation. After
discussion, questions and answers, Fred Bell referred to a report prepared by the Rose Institute
for State and Local Government as supporting the justification for delaying the TUMF collection.
The TAC agreed to review the Rose Institute Report before further consideration of a change in
collection times for the TUMF fee. A copy of the Rose Institute Report, An lllustration of Implicit
Costs for Postponing Impact Fees, is also attached for review.
Staff does not dispute the logic nor the calculations presented in the report. Based on the reference
to the 35-unit residential project in Indio,the current single family residential TUMF fee of$1,837.44
represents 5.7% of the total fees amount of$32,054.90. Not all of the fees which result in this total
are collected at issuance of the building permit, when the TUMF fee is currently collected, and
when CVAG considers the impacts related to the TUMF fee will begin to accrue. Not all residential
construction fees are collected at the same time, nor do the impacts related to those various fees
accrue at the same time.
The period from issuance of a building permit to scheduling the final inspection can be allowed to
take up to one year before the permit expires and additional fees must be paid to re-issue the
building permit. Assuming the maximum period, the potential cost savings for builders is valid, but
once the one year period has passed, the TUMF fees are again in cycle to be collected and paid
to CVAG. Thus, the impact of a delay in collecting the TUMF fees will be a maximum one-year
grace period for that fee only. The tables shown in the report suggest the benefit of delaying all the
building related fees ($32,054.90} for one year, while the request for the TAC is to consider
delaying the TUMF fee ($1,837.44) fo� up to one year.
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COACHELLA VALLEY ASSOCIATION of GOVERNMENTS
Gary Leong, Director of Administrative Services, will separately provide information regarding the
gfobal impacts on the TUMF fee revenue stream if the BIA request is implemented.
The BIA request also raises the issue of the perceived uniformity of the Transportation Uniform
Mitigation Fee assuming some of CVAG's TUMF collecting jurisdictions agreed to collect the TUMF
at final building inspection instead of at issuance of the building permit. The recent action by the
Executive Committee was meant to clarify that issue amo�g our jurisdictions when the Executive
Committee dectared that the TUMF fee accrued at the issuance of the building permit.
The Rose Institute Report acknowledges the importance of permit revenues to the jurisdictions.
The delay of collecting the TUMF fee may provide temporary relief to the building community, but
it will only apply to residential building projects. As an alternate cost reduction theme, the TAC may
wish to consider recommendin that the planned increase in TUMF fees to $2,899.71, approved
for implementation on July 1, 2009 per single fami y we ing unit, be delayed for some period,
related to the current economic downturn in the housing industry.
FISCAL ANALYSIS: The transportation projects listed in the Transportation Project Prioritization
Study (TPPS) are proposed to be funded from multiple revenue sources, of which the TUMF fee
is an important part. Regional Measure A funds collected by CVAG during fiscal year 2005/2006
totaled $15,513,373.TUMF fees, or forfeited local Measure A funds from the non-TUMF collecfing
jurisdictions, collected by CVAG during fiscal year 2005/2006 totaled $10,125,100. A delay in
collectin the TUMF fee, for a maximum of up to one year, would have an obvious impac�o his
revenue asse , e revenue s ream rom c ec io s
wou d resume. - -.
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