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HomeMy WebLinkAbout11/29/2011BAKERSFIELD Rhonda Smiley, Assistant to the City Manager AGENDA SUMMARY REPORT Special Meeting of the HOUSING INCENTIVE TASK FORCE Tuesday, November 29, 2011 -12:00 p.m. City Hall North First Floor-Conference Room A 1600 Truxtun Avenue, Bakersfield, CA 93301 The meeting was called to order at 12:07 PM. 1. ROLL CALL Present: Councilmember David Couch, Chair Councilmember Harold Hanson Councilmember Ken Weir Staff Present: David Couch, Chair Harold Hanson Ken Weir Alan Tandy, City Manager Ginny Gennaro, City Attorney Rhonda Smiley, Asst. to the City Manager Joshua Rudnick, Deputy City Attorney Steven Teglia, Asst. to the City Manager Andrew Heglund, Associate Attorney Chris Huot, Administrative Analyst Nelson Smith, Finance Director Raul Rojas, Public Works Director Brad Underwood, Asst. Public Works Director Jim Eggert, Planning Director Phil Burns, Building Director Dianne Hoover, Recreation and Parks Director Others Present: Scott Tobias, Association of Realtors Jeanne Radsick, Association of Realtors Angie Trigueiro, Association of Realtors Donna Carpenter, Association of Realtors Will Winn, Kern Transportation Foundation Dave Turner, Dave A Turner Homes Leigh Ann Cook, Bakersfield Ch. Of Commerce Nancy Newman, Bakersfield Resident Roger Mcintosh, Mcintosh & Associates 2. PUBLIC STATEMENTS None 3. NEW BUSINESS Housing Incentive Task Force Agenda Summary Report November 29, 2011 Page2 Vernon Gunter, Miramar International Jim Murphy, Miramar Realty Carrie Williams, McMillin Homes Matt Towery, Towery Homes Pat Henneberry, Castle & Cooke Bruce Freeman, Castle & Cooke David Cates, Lenox Homes Gary Fussel, Bakersfield Homeowner Antonie Boessenkool, Bakersfield Californian A. Discussion and Recommendations to Stimulate the Building of New Homes- Tandy/Smiley Assistant to the City Manager Rhonda Smiley stated that considerable analysis and discussion has previously taken place in the Planning and Development Committee and with the full City Council regarding this issue. She recapped a report previously presented at a Planning and Development Committee meeting and included with an August 7, 2011 City Council administrative report which addressed the concept of spreading all, or a portion, of the Transportation Development Fees on the County Tax Roll, similar to the payment of Sewer Connection Fees over time for financial hardship cases. She indicated it could result in a heavy administrative burden and cause financial risks for the City. In addition, spreading the cost over a period of time could negate the goal if a lender requires the purchaser to pay off the lien as a condition of loan approval. There is also the risk that the property owner might default on their tax bill, and it could take several years to collect the full amount of the City fees. Deferral or inability to collect the fees would place the City in a risky legal position and affect the defense of our nexus document. Assistant to the City Manager Smiley summarized several ideas, which had been previously reviewed and discussed, but are currently the only ideas which are practical and realistic. • The Statewide Community Infrastructure Program (SCIP), through California Communities, enables developers to pay most impact fees and finance public improvements through an acquisition agreement and does not place the City at risk with regard to the nexus document, nor will it cause damage to our financial standing when we need to bond for our transportation projects. Housing Incentive Task Force Agenda Summary Report November 29, 2011 Page 3 • Consider resuming discussions with the County regarding a temporary economic recovery period fee reduction. Committee member Ken Weir asked staff to clarify how the SCIP program works. Finance Director Nelson Smith stated the SCIP program functions very similarly to the formation of assessment districts with the exception that the program removes the City from the administrative process. Typically, a developer can use the program to finance fees and/or costs of public improvements on a tract of homes. He indicated he was not familiar with the concept of a developer financing the fees on a single residence. Committee member Weir asked if there is a minimum or a maximum amount to be financed through the SCIP program. Finance Director Smith stated there is no m1n1mum amount disclosed in the SCIP program literature. The statewide program processes bond issuances, as needed; they combine all the financing needs of various developments in California through a state bond issue once or twice a year. However, with the current development demand, the State has not done a bond issue recently. Committee Chair David Couch asked how this program would apply to a developer who has only one or two houses to build; would they apply once the bond issuance is ready to happen or before they acquire a building permit, or do they apply and then are approved at a later date. Finance Director Smith stated that there is an application process and a development agreement may be needed to identify what public improvements and/or fees are going to be financed with the Joint Power Authority. A developer may need to begin the application process three to six months before they acquire a building permit. City Manager Alan Tandy stated that Councilmember Johnson indicated the League of California Cities was willing to do an onsite education forum on the SCIP program for anyone interested in attending and they could ask those types of detailed questions. Committee Chair Couch asked staff to contact the League for additional details pertaining to date and time. Committee member Harold Hanson asked the developers present if anyone had looked into the program. Donna Carpenter, representing the Association of Realtors and the Homebuilders Association, stated that a Legislative Committee meeting was held to specifically discuss the SCIP program. There is a minimum of $5 million to bond; if there are Housing Incentive Task Force Agenda Summary Report November 29, 2011 Page4 developers needing to finance amounts less than $5 million, they would have to submit their application and wait until the bonds are sold. Ms. Carpenter also stated that she believed that the League meeting will be held in the central valley in early February, 2012. Assistant to the City Manager Steven Teglia clarified that the $5 million minimum is a statewide collection needed to go to bond. It is not the designated amount for one particular project. Committee member Hanson also asked if the SCIP program was cost effective and how expensive is it to apply for the program. Ms. Carpenter stated she was aware there is an application fee but was unaware of an exact amount. Assistant to the City Manager Smiley stated that the fee is $1 ,500 per application. City Manager Tandy stated that the program is similar to an assessment district bond and interest has varied throughout the development community, based on their particular business interests. Committee member Weir asked under what circumstances would staff contact the County for discussion. City Attorney Ginny Gennaro stated any changes done to the nexus document, whether to increase or decrease fees, can be done by the City Council without the County, but this can increase the City's exposure to litigation. We are not required to consult with the County, but the exposure to litigation would decrease if the County was in agreement with the City and the change done concurrently. Committee member Weir asked what would occur if a developer used the SCIP program for a project, but only completed 30 percent of the improvements and then walks away from the project. Finance Director Smith stated the City would not have any financial liability or be involved in any collection efforts, since SCIP issued the bond. Public Works Director Raul Rojas stated one way to prevent such a scenario would be a requirement that all improvements would be completed during the initial phase of construction, prior to any tracts being built. However, the development community would likely not favor the idea. City Manager Tandy stated this idea would apply to a developer wanting to do roads, walls, or other public improvements. As an example, if fees were the only item financed and only 17 percent sold, the developer would have the obligation to pay the assessment for the remaining properties they own. Matt Towery, with Towery Homes, stated the building community is concerned about lots that are finished with streets and improvements completed, but the maps have expired, causing the fees to double. He asked the Committee to discuss ideas, such as Housing Incentive Task Force Agenda Summary Report November 29, 2011 Page 5 decreasing map fees, attaching the fees to the land, or anything to help stimulate the economy now and help builders get closer to the foreclosure resale markets. Committee Chair Couch asked if a program to target specific areas where tracts are mapped and partially built with a few streets and houses would eliminate or decrease the previously discussed administrative issues and financial risks if some of the fees were collected with the issuance of a building permit and a portion was also collected on the property tax roll. There would be a specific limit to the number of tracts allowed and a specific time frame. City Manager Tandy stated the primary concern would be a delay in receiving the money necessary to match the monies of the TRIP projects for bonding purposes. The bonding capacity would also be affected and decreased if receipt of the money was extended over a longer period of time, because a preceding five year history would be used to calculate the bonding capacity. It would be difficult to assess the work load and financial risks without a specific figure. City Attorney Gennaro stated from a legal stand point it would be preferable for the Committee to do a temporary economic recovery, because this would allow a more flexible result. It would allow for the make up of losses in future years. Public Works Director Rojas stated there are approximately 2,000 to 3,000 lots that are currently mapped and partially built with expired maps. He also indicated it would be problematic to allow some property owners not to pay the fees, because the next owner would pay a lot more than their fair share. Bruce Freeman of Castle and Cooke inquired if it would be possible for the map fee to revert to the previous fee, and blending the difference with remaining maps that are not completed yet. Roger Mcintosh with Mcintosh and Associated stated that the one year extension on a final map that is recorded has vesting rights for one year. The policy was changed to allow maps that didn't expire prior to May 18, 2011 to be extended for an additional year. Mr. Freeman is referring to tentative maps with multiple phases that are not all recorded. He is paying the $13,000 fee, because his recorded map expired after one year; but for the tentative maps that have not recorded he is paying the lower fee because they are vested. He suggested that if the fee was reduced, that amount could be added to the fees paid for the remaining tentative maps, and the City could collect the full fee over time. Committee Chair Couch asked staff to review the concept and report back at the next meeting. Committee Chair Couch also asked Mr. Mcintosh to submit the idea to staff in writing. Housing Incentive Task Force Agenda Summary Report November 29, 2011 Page 6 City of Bakersfield resident Nancy Newman stated that the City should not be involved in reducing fees. The City Council should not try to stimulate a single industry when several industries are being affected by the economy. Committee member Weir asked staff to compile the number of permits for residential and commercial which have been pulled for the last three years, what percentage are paying the new rate and what percentage are paying the older rates. Committee member Weir also asked what bonding companies are searching for when reviewing revenue streams. Committee chair David Couch asked staff to also provide a list of all the fees paid with the building permits. Finance Director Smith stated that bonding companies review the current fee structure, the historical revenue generation, and the aggregate, focusing on the most recent five years, although they can review longer histories. They will also look at recent Council action as to how the Council treats these fees, as well as any associated risks. City Manager Tandy indicated the bond companies may also review revenues and any threats to those sources, including any possible State Legislature forfeitures. There is also a potential consequence to the General Fund or the ability to complete the TRIP program if transportation fees are collected over a period of time or can not be collected. Committee Chair Couch asked if spreading any portion of fees on the property tax bill, as previously discussed would necessitate an agreement between the homeowner and the City. He also asked if a district could be created to encompass the entire city and when an annexation occurred, would the owner also annex into the transportation improvement district. In addition, he asked if there would be an assessment tax applied to a portion of a fee. City Attorney Gennaro stated the idea would have to be researched because of all the associated legal parameters. City Manager Tandy stated the SCIP program functions as that same idea, with the exception of the defined size. Assistant to the City Manager Teglia stated one other exception is that the City is paid the fees up front and then placed on the property taxes. 4. COMMITTEE COMMENTS Committee Chair Couch tentatively scheduled the next Housing Incentive Task Force meeting for December 20, 2011, with the possibility of delaying the meeting if there are conflicts with the Committee members' calendars. 5. ADJOURNMENT The meeting adjourned at 1 :18 cc: Honorable Mayor and City Council