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HomeMy WebLinkAbout11/5/2003 - STAFF REPORTS (19) DATE: November 5, 2003 TO: City Council FROM: Director of Public Works/City Engineer Assistant City Manager- Administration SUBJECT: SEWER FACILITY FEE - EXTEND PARTIAL SUSPENSION RECOMMENDATION: It is recommended that City Council approve a Resolution suspending full collection of the Sewer Facility Fee currently assessed on new construction within the City. It is further recommended that the City Council authorize a refund to qualifying individuals and/or corporations of 40%of the Sewer Facility Fee paid on permits issued between July 1, 2003 and November 5, 2003. SUMMARY: Approval of this Resolution will suspend full collection of the Sewer Facility Fee that is assessed on new construction within the City for a two (2) year period commencing July 1, 2003 through June 30, 2005. BACKGROUND: g The City's Sewer Facility Fee is charged at time of issuance of a Building Permit and was established via Resolution No. 11247 which was adopted in November of 1974. The purpose of the fee had been to fund capital improvements at the treatment plant necessary due to increased development in the City. On May 17, 2000, the City Council adopted Resolution No. 19795 partially suspending full collection of the Sewer Facility Fee as an incentive to economic development within the community. This suspension,which reduced the Facility Fee by 40%, expired as of July 1, 2003 and the fees have since reverted to their former levels. Concerns have been raised by the development community since the suspension has expired. In fact,the City has received correspondence from K. Hovnanian Companies of California,which is building approximately 500 homes near Sunrise and Racquet Club Drive, indicating that the higher fee amount will have a severe and adverse impact on their project. A copy of this correspondence is attached. In light of the current upswing in development activity and the City Council's previous commitment to remove both actual and perceived barriers to economic development within the community, staff believes that it would be prudent to suspend collection of the full Sewer Facility Fee for an additional two (2) years. Although the City has used this fee to fund capital improvements, including expansion of the treatment plant, staff has evaluated the capital improvement needs at the plant and believes that those costs will not exceed $2,000,000 over the next five (5) years. I /7/ i J } v Sewer Facility Fee Staff Report November 5, 2003 Page 2 Moreover,with the scheduled retirement of the existing debt on the plant at the end of this Fiscal Year, staff believes that there will be adequate capital funds available over the next two (2)years to justify a reduction in the Sewer Facility Fee. If the City Council approves the proposed Resolution, the necessity of a revised fee study should be evaluated in the 2004/2005 Fiscal Year. DAVID J. BARAKIAN "ant Director of Public Works/City Engineer er APPROVE -may/_ � ATTACHMENTS: 1. Resolution 2. Letter from K. Hovnanian Companies 1 ; '..� 27 0� Companies of California 2495 Campus Drive, Irvine CA 92612 O (949)660-1130, FAX(949)660-9087 October 22, 2003 i Troy Butzlaff Mr. David H. Ready, City Manager 0072 7 2003 Assistant City Manager City Manager y r` City of Palm Springs City of Palm Springs z "CLr 3200 E. Tahquitz Canyon Way 3200 E. Tahquitz Canyon Way ��-- P. O. Box 2743 P.O. Box 2743 Palm Springs, CA 92263 Palm Springs, CA 92263-2743 Subject:, Tract#'s 30054, 30058 & 31525 Dear Troy Butzlaff: Our company, K. Hovnanian Companies of California, LLC, is currently in development of approximately 500 homes in the City of Palm Springs. We count it a great privilege to be participating in the exciting growth of this great City. The City staff at all levels has been very helpful and supportive of our efforts, and we find this very refreshing indeed. With that said, and as you and I have discussed recently, we were caught completely by surprise with respect to the "sewer connection fee" increase that became effective June 2003. We had no forewarning, or for that matter, foreknowledge of any such fee increase. In the 37' quarter of 2002, our company was performing our typical feasibility and due diligence analysis, as to the purchase consideration of the projects noted above. Our Land Development Manager and Civil Engineer, both made inquiry of the City of Palm Springs Planning, Public Works, Engineering and Building Departments, as to all applicable fees that would be associated in developing these projects. Not only did we obtain your"comprehensive fee schedule" dated June 25, 2002,but we even went as far as to request that the Building Department provide us an"estimate" of building permit fees, on their form. Both the "comprehensive fee schedule" as well as the Building Department's "estimate"noted that the "sewer connection fee"was $2,408 per unit, with no indication, either verbalized, or written, that there was a forth coming "sewer connection fee" increase. On October 16, 2003, and in the process of obtaining our building permits, the building department verbally informed us, that effective June 2003, this fee had automatically reverted back to a previous fee amount of$4,014 per unit, as it had been several years ago. This amounts to a fee increase of$1,606 per unit over and above what we were led to believe was the "sewer connection fee" for the City . When questioning city staff about this fee increase, we were informed that an "asterisk" on their"comprehensive fee schedule"now noted this increase. We requested a faxed 1 copy of the new schedule, of which they did transmit to its on October 16, 2003. Once received, we noted that it was still dated June 25, 2002, the very same date as the "comprehensive fee schedule"we had obtained back in the third quarter of 2002. Also, we were not able to locate an "asterisk" alluding to a"sewer connection fee" increase anywhere on the current fee schedule. For several months now, we have been processing our engineering and architectural plans through the city with absolutely no indication whatsoever, that there was even a remote possibility of a fee increase of any kind, let alone one of this magnitude. This fee increase will have a severe and adverse impact to our project of approximately 500 homes, and of, which is situated in the City of Palm Springs Redevelopment Area. Our project is an "age restricted"development, for "active adults" 55 years old and better, most of who are on fixed incomes and looking for a primary home at an affordable price point. The fee increase as noted above, would by necessity increase the prices of our homes offered, with potentially damaging effects to our sales efforts. We are hereby submitting our request to the City that the"sewer connection fee" of $2,408 per unit, as we had understood that this fee was all along, remains as the "sewer connection fee" for our development. We thank you for you time and consideration in reviewing this matter and are hopeful that the City will accommodates request. Sin r y, Michael gar Vice President/Director of Development K.Hovnanian Companies of California. 2 ��- b f•.� C� n��n.�s July 22, 1998 Mr. Allen Smoot Director of Transportation City of Palm Springs P.O. Box 2743 Palm Springs, California 92263-2743 Re: Sewer Hookup Fees Dear Al: During the recent public hearing concerning the fate of the Wastewater Treatment Plant I appeared on behalf of the Building Industry Association and I wanted to follow up on one of my comments to the City Council. The matter in question is the current sewer hookup fees and how they have been generated. It is clear that the City has the highest sewer facilities fee in the area and if the matter is fully researched I believe the fee could be greatly reduced and still cover the future costs of expansion. Having been on staff during several of the past wastewater plant expansions, I recall the studies developed as background used some water usage/sewer generation statistics that were carried over from earlier studies without being updated as to current trends. The study used a higher sewer generation factor per unit than was subsequently being processed by the plant. The studies therefore concluded a much larger expansion than necessary. This then has the effect of calculating a "per-unit' fee that is significantly higher than necessary when the hookup fees are being adopted. I believe the current fee could be as much as 40% to 50% too high. If the City is serious about promoting quality growth in the community, a reduction in this fee could be very helpful. I would be glad to discuss this with you at your convenience. Very truly yours, Marvin D. Roos, AICP Director of Planning Services mdr:cm cc: Mayor William Kleindienst Ed Kibbey, Director Building Industry Association RESOLUTION NO. OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, SUSPENDING COLLECTION OF 40% OF THE f CITY SEWER FACILITY FEE CHARGED FOR CONSTRUCTION WITHIN THE CITY LIMITS, FOR THE PERIOD COMMENCING JULY 1, 2003 TO JUNE 30, 2005 AND AUTHORIZING A REFUND OF 40% OF THE SEWER FACILITY FEE PAID BY ALL INDIVIDUALS AND CORPORATIONS ON BUILDING PERMITS ISSUED BETWEEN JULY 1, 2003 AND NOVEMBER 5, 2003. --------------- WHEREAS, in November of 1974, the City Council approved Resolution No. 11247 establishing a Sewer Facility Fee on all new construction within the City limits; and WHEREAS, this fee has been used to fund capital improvements at the City's wastewater treatment plant; and WHEREAS, over the years the City Council has worked hard to remove actual and perceived barriers to economic development of the community; and WHEREAS, on May 17, 2000, the City Council adopted Resolution 19795 partially suspending the.Sewer Facility Fee for a period of two years to help stimulate economic growth and development; and WHEREAS, the suspension, which reduced the Sewer Facility Fee by 40%, expired on July 1, 2003, and the fees have since reverted to their former level; and WHEREAS, the City is currently experiencing a significant increase in development activity; and WHEREAS, the City Council is concerned that the higher fee will be viewed as a disincentive to development of the community; and WHEREAS, the City has determined that for the immediate future and for the period specified herein, the lower fee will not adversely affect the City's ability to finance needed sewer plant expansion; and WHEREAS, by suspending instead of amending the fee, the City Council intends to retain the authority to lift the suspension and reestablish the full fee when needed for facility expansion. NOW THEREFORE BE IT RESOLVED that for the period commencing July 1, 2003 through June 30, 2005, the City shall suspend collection of the full sewer facility fee charged for construction within the City and shall for such period,collect the lesser amount specified below (an approximate 40% reduction rounded to the nearest dollar), but reserves the right to repeal or modify this suspension by Resolution when necessary at the direction of the City Council for purposes of financing sewer facilities construction. Such repeal or modification of this suspension shall not be construed as an imposition of a new or increased fee. The existing rate and the rate charged following suspension shall be as follows: Resolution No. Suspension 19757 Rate Rate A. Residential Units (single-family, $4014/Unit $2408/Unit apartments, co-op apartments, condominiums and mobile home park spaces). Resolution No. November 5, 2003 I Page Two Resolution No. Suspension 19757 Rate Rate B, Commercial and Industrial Units $388/Fixture Unit $203/Fixture Unit C. Hotel Room Without Kitchens $1744/Unit $1046/Unit With Kitchens $1998/Unit $1198/Unit D. Recreational Vehicle Spaces $3121/Space $1873/Space BE IT FURTHER RESOLVED, that the City Council does hereby authorize a refund of 40% of the Sewer Facility Fee paid by all individuals and corporations on building permits issued between July 1, 2003 and November 5, 2003. ADOPTED this day of 2003. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By: City Clerk City Manager REVIEWED AND ADOPTED AS TO FORM: