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CC 2024-02-27_09c Ord re Dev Impact FeesItem 9.c. MEMORANDUM TO: City Council FROM: Nicole Valentine, Administrative Services Director SUBJECT: Consideration of Adoption of an Ordinance Amending Section 3.36.030 of the Arroyo Grande Municipal Code Regarding Development Impact Fees DATE: February 27, 2024 SUMMARY OF ACTION: Adopting the Ordinance will amend the Arroyo Grande Municipal Code (AGMC) regarding Development Impact Fees. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: Development Impact Fees (DIFs) reflect and mitigate impacts of new development. They do not represent profit making by the City. RECOMMENDATION: 1) Adopt the Ordinance amending Section 3.36.030 regarding Development Impact Fees; and 2) Find that the Ordinance does not qualify as a project under the California Environmental Quality Act (CEQA) because the Ordinance has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment (State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3)). BACKGROUND: In Arroyo Grande, DIFs are collected at the time a building permit is issued. Fees are used to finance the acquisition, construction and improvement of public facilities needed as a result of this new development. A separate fund is maintained to account for the receipt and expense of each category of DIF funds. On February 13, 2024, City Council heard a presentation from the City’s consultant, Willdan Financial Services, regarding the DIF Nexus Study; adopted a Resolution updating Development Impact Fees; and introduced an Ordinance amending the AGMC Section 3.36.030 regarding DIFs. In compliance with State law, the updated DIF rate will become effective 60 days after adoption of the Resolution. An effective date of April 15, Page 46 of 299 Item 9.c. City Council Consideration of Adoption of an Ordinance Amending Section 3.36.030 of the Arroyo Grande Municipal Code Regarding Development Impact Fees February 27, 2024 Page 2 2024, would result in two and a half months of collecting the new fees during the remainder of the fiscal year. ANALYSIS OF ISSUES: The Ordinance amendment is now ready for adoption. The Ordinance amendment will become effective thirty (30) days after adoption. ALTERNATIVES: The following alternatives are provided for the Council’s consideration: 1. Adopt the Ordinance, as proposed; 2. Modify the Ordinance and direct staff to return at a future public hearing to re - introduce the Ordinance; or 3. Provide other direction to staff. ADVANTAGES: Adopting the Ordinance will update the AGMC and the City will be able to recover the estimated cost of providing infrastructure to offset the impact caused by new development. DISADVANTAGES: Implementing the recommended DIF will result in an increased cost to new development. ENVIRONMENTAL REVIEW: The Ordinance does not qualify as a “project” under CEQA because the Ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment (State CEQA Guidelines Section 15060, subd. (c)(2)-(3)). Here, the Ordinance will not result in any construction or development, and it will not have any other effect that would physically change the environment. Approval of the proposed Ordinance therefore does not qualify as a project subject to CEQA. PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2. ATTACHMENTS: 1. Proposed Ordinance Page 47 of 299 ATTACHMENT 1 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE AMENDING SECTION 3.36.030 OF THE ARROYO GRANDE MUNICIPAL CODE REGARDING DEVELOPMENT IMPACT FEES AND FINDING THE ORDINANCE EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT WHEREAS, the City of Arroyo Grande (the “City”) has conducted an updated nexus fee study (the “Nexus Study”) for its development impact fees (“DIF”) in connection with the approval of development projects for the purpose of defraying all or part of the costs of providing public facilities related to said development projects in compliance with the Mitigation Fee Act, commencing with California Government Code section 66000; and WHEREAS, the City Council has adopted the Nexus Study and the 2024 DIF schedule related to the Nexus Study by resolution; and WHEREAS, the Nexus Study has created different and/or additional categories of DIF than is currently provided for in the Arroyo Grande, California Municipal Code (“AGMC”); and WHEREAS, on February 13, 2024, the City Council conducted noticed public hearings to receive input on the Nexus Study and the adoption of the 2024 DIF schedule and adopted a Resolution approving the 2024 DIF schedule; and WHEREAS, without a change to the AGMC, City regulations are inconsistent with the DIF categories included in the newly adopted 2024 DIF schedule; and WHEREAS, the City Council now desires to amend the AGMC section 3.36.030 to reflect the newly adopted 2024 DIF categories. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES ORDAIN AS FOLLOWS: SECTION 1. Incorporation. The above recitals are true and correct and are incorporated herein by this reference. SECTION 2. Environmental. The City Council finds that this Ordinance is exempt from the California Environmental Quality Act ("CEQA") because the Ordinance does not qualify as a “project” under CEQA and because the Ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment. (State CEQA Guidelines section 15060, subd. (c)(2), (3).) Section 15378 of the State CEQA Guidelines defines a project as the whole of an action, which could potentially result in either a direct physical change, or reasonably foreseeable indirect physical change, in the environment. Here, the Ordinance will not result in any construction or development, and it will not have any other effect that would physically change the environment. The Ordinance therefore Page 48 of 299 ORDINANCE NO. PAGE 2 -2- does not qualify as a project subject to CEQA. SECTION 3. Code Amendment. Section 3.36.030 of the AGMC is hereby amended to read as follows (additions shown in underline and deletions shown in strikethrough), all other provisions of Chapter 3.36 of the AGMC remain in effect: “This chapter establishes development impact fees which are imposed as a condition of approval upon all development projects for which a building permit is issued on or after the effective date of the ordinance codified in this chapter. Those impact fees are established for the following public facilities: A.Fire Protection feesFacilities; B.Police Facilities fees; C.Community center feesPark Facilities; D.Park improvement feesRecreation Facilities; E.Water Facilities fees; F.Traffic signalization feesTransportation Facilities; G.TransportationStorm Drain Facilities fees.; H. Wastewater Facilities. These impact fees are established in order to pay for the capital costs of public facilities reasonably related to the needs of new development in the city. At least once every five years, the council shall review the basis for the impact fees to determine whether the fees are still reasonably related to the needs of new development. In establishing these fees, the council has considered the effect of the fees with respect to the city's housing needs as established in the housing element of the general plan .” SECTION 4. Publication. A summary of this Ordinance shall be published in a newspaper published and circulated in the City of Arroyo Grande at least ten days prior to the City Council meeting at which the proposed ordinance is to be adopted. A certified copy of the full text of the proposed ordinance shall be posted in the office of the City Clerk. W ithin 15 days after adoption of the Ordinance, the summary with the names of those City Council members voting for and against the Ordinance shall be published again, and the City Clerk shall post a certified copy of the full text of such adopted Ordinance. SECTION 5. Effective Date. This Ordinance shall become effective 30 days after adoption. SECTION 6. Severability. Should any provision of this Ordinance, or its application to any person or circumstance, be determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise void, that determination shall have no effect on any other provision of this Ordinance or the application of this Ordinance to any other person or circumstance, and, to that end, the provisions hereof are severable. The City Council declares that it would have adopted all the provisions of this Ordinance that remain valid if any provisions of this Ordinance are declared invalid. Page 49 of 299 ORDINANCE NO. PAGE 3 -3- SECTION 7. Records. The documents and materials associated with this Ordinance that constitute the record of proceedings on which the City Council’s findings and determinations are based are located at 300 E. Branch Street, Arroyo Grande, CA 93420. The City Clerk is the custodian of the record of proceedings. On motion by Council Member , seconded by Council Member , and by the following roll call vote to wit: AYES: NOES: ABSENT: This Ordinance was adopted at its second reading on the ____ day of ____________, 2024. Page 50 of 299 ORDINANCE NO. PAGE 4 -4- CAREN RAY RUSSOM, MAYOR ATTEST: JESSICA MATSON, CITY CLERK APPROVED AS TO CONTENT: MATTHEW DOWNING, CITY MANAGER APPROVED AS TO FORM: ISAAC ROSEN, CITY ATTORNEY Page 51 of 299