The URL can be used to link to this page

Home My WebLink About08.a. Consider expiration of progam re Deferred Payment of Connection Fees0M 8. 0.. Central Contra Costa Sanitary District ' BOARD OF DIRECTORS POSITION PAPER Board Meeting Date: May 19, 2011 subject: DETERMINE WHETHER THE PROGRAM FOR DEFERRED PAYMENT OF CONNECTION FEES SHOULD BE ALLOWED TO EXPIRE ON JUNE 30, 2011, PURSUANT TO RESOLUTION 2010 -033; IF THE PROGRAM IS TO BE CONTINUED, SET JUNE 16, 2011, AS THE DATE FOR A PUBLIC HEARING TO CONSIDER EXTENDING THE PROGRAM AND SETTING FEES TO RECOVER ADMINISTRATION COSTS OF THE PROGRAM Submitted By: Initiating Dept. /Div.: Jarred Miyamoto - Mills, Principal Engineer Engineering /Environmental Services REVIEWED AND RECOMMEND D FOR BOARD ACTION: v OV�r J. amoto -Mills Swanson A. Farrell K. Alm James M. ally, General Manager ISSUE: At its June 4, 2009 regular meeting, the Board of Directors (Board) adopted Resolution No. 2009 -034 establishing a one -year program for deferred payment of connection fees. The program was extended for one year by the Board's adoption of Resolution 2010 -033 on June 3, 2010. On July 1, 2010, the Board adopted Ordinance 260 establishing fees to recover the District's costs for administering the program. The extended program will expire on June 30, 2011, unless it is further extended by the Board. RECOMMENDATION: Staff recommends that the program be allowed to expire on June 30, 2011, due to low participation and relatively high program cost. FINANCIAL IMPACTS: Writing procedures, creating documents and completing legal review required about $6,000 in staff labor and District Counsel effort; this was a one time cost. During the first year of the program, administration of the program, including preparing and notarizing documents, corresponding with owners, recordkeeping and recording of agreements and releases with the Contra Costa County Recorder required about 220 hours of staff time at a cost of about $27,500, including the District's usual and customary overhead rate. In addition, the opportunity cost of foregone interest was about $6,500. In the program's second year, costs were about $6,500 for administration and foregone interest on first -year deferrals, since no new deferrals were processed in the second year. Thus, the total cost for the program to date is about $46,500, or about $210 per residential unit where fees were deferred, none of which has been reimbursed by program users. Excluding the setup costs, the District spent about $185 per residential unit that participated in the program. Page 1 of 3 POSITION PAPER Board Meeting Date: May 19, 2011 subject DETERMINE WHETHER THE PROGRAM FOR DEFERRED PAYMENT OF CONNECTION FEES SHOULD BE ALLOWED TO EXPIRE ON JUNE 30, 2011, PURSUANT TO RESOLUTION 2010 -033; IF THE PROGRAM IS TO BE CONTINUED, SET JUNE 16, 2011, AS THE DATE FOR A PUBLIC HEARING TO CONSIDER EXTENDING THE PROGRAM AND SETTING FEES TO RECOVER ADMINISTRATION COSTS OF THE PROGRAM ALTERNATIVES /CONSIDERATIONS: The Board may wish to consider continuing the program. The Building Industries Association of the Bay Area has requested that an option for deferral of fees for new development be continued. BACKGROUND: In the spring of 2009, the homebuilding community contacted counties, cities and special districts including CCCSD, requesting that each agency consider allowing deferred payment of impact and utility connection fees at the close of escrow for new homes, rather than continuing the practice of collecting these fees when a building permit is issued or utility service connections are made. The homebuilders believed that the then - prevailing economic recession, specifically the credit and cash flow crisis, had resulted in an inequitable and unjust situation for builders. The Board considered the homebuilders' request, and at its June 4, 2009 regular meeting, approved a one -year program for deferred payment of connection fees, finding that the situation constituted a "special circumstance" requiring suspension, modification and relief from application of District Code provisions pertaining to the time for payment of fees. The approved program allowed builders the option of signing a promissory note and recordable agreement calling for payment of fees either upon close of escrow, first occupancy, or after expiration of a two -year period from the issuance of the Connection Permit, whichever event occurred first. During the first year of the program, two developers (Shapell Homes and Brookfield Homes) and three owners of individual lots opted to defer fees under the program. In the spring of 2010, the Building Industries Association of the Bay Area and Shapell Homes requested that the program be continued, and on June 3, 2010, the Board adopted Resolution 2010 -033, extending the program for an additional year. On July 1, 2010, the Board adopted Ordinance 260 establishing fees to recover the District's costs for administering the program. The program will expire on June 30, 2011, if not further extended by the Board. No one has opted to use the program since fees to recover costs were established. While administration of the program for subdivisions has been relatively straight- forward, tracking occupancy for the three individual lots that participated required regular drive -bys by District Inspectors, and collecting monies due required extraordinary efforts. In one case, the property owner was unresponsive to staff attempts to establish contact, the fees owed were eventually declared delinquent and subsequently, the Board placed the fees, delinquency charge and penalties on the 2010 -11 property tax roll for collection. Page 2 of 3 POSITION PAPER Board Meeting Date: May 19, 2011 subject. DETERMINE WHETHER THE PROGRAM FOR DEFERRED PAYMENT OF CONNECTION FEES SHOULD BE ALLOWED TO EXPIRE ON JUNE 30, 2011, PURSUANT TO RESOLUTION 2010 -033; IF THE PROGRAM IS TO BE CONTINUED, SET JUNE 16, 2011, AS THE DATE FOR A PUBLIC HEARING TO CONSIDER EXTENDING THE PROGRAM AND SETTING FEES TO RECOVER ADMINISTRATION COSTS OF THE PROGRAM Amounts that were deferred and paid to date are as follows: Number of Amount Amount Amount Owner Units Deferred Paid Outstanding Shapell Homes 180 $1,078,670 $1,078,670 0 Brookfield Homes 34 239,066 239,066 0 Gallegos 1 5,298 5,298 0 Bragg 1 5,298 5,298 0 Maggi 4 21,192 5,451 15,894* TOTALS: 220 units $1,349,524 $1,333,783 $ 15,894 * Final payment will be due prior to December 2011. The Budget and Finance Committee reviewed the status of the program when staff recommended deleting fees for the program from the Schedule of Development - Related Rates and Charges. At that time, the committee concurred that the program be allowed to expire due to its relatively high cost and low participation. However, at its regular meeting on May 16, 2011, the committee will discuss program alternatives in light of the recent request from the Building Industries Association. RECOMMENDED BOARD ACTION: Take no action; allow the Program for Deferred Payment of Connection Fees to expire on June 30, 2011. Alternatively, the Board may wish to consider continuing the program. If that is the case, staff recommends that the Board set June 16, 2011, as the date for a public hearing to receive comments and consider adoption of an ordinance: Finding that special circumstances require continuing suspension, modification and relief from application of District Code Section 6.08.040 and Subsection 6.12.030D, pertaining to the time for payment of connection fees; 2. Approving a one -year (or longer) extension of the program and limiting its application to connections in subdivisions; and Adding fees to the Schedule of Environmental and Development - Related Rates and Charges pursuant to Chapter 6.30 of the District Code to recover administration costs of the program. Page 3 of 3