CC 11-21-2023 Item No. 2 Mitigation Fee _Supplemental ReportCC 11-21-2023
#2
Mitigation Fee Act
Supplemental Report
CITY COUNCIL STAFF REPORT
SUPPLEMENTAL 1
Meeting: November 21, 2023
Agenda Item #2
Subject
Mitigation Fee Act – the Annual & Five-Year Report for Fiscal Year (FY) 2022-2023.
Recommended Action
Adopt Resolution No. 23-____ entitled “A Resolution of the City of Cupertino City
Council approving the Annual & Five-Year Mitigation Fee Report for Fiscal Year
ending June 30, 2023, and making required findings” to:
1) Make the required findings; and
2) Approve the Annual & Five-Year Mitigation Fee Report for the Fiscal Year ending
June 30, 2023, as required by Government Code Section 66000 et seq.
Background:
Staff’s responses to questions received from councilmembers are shown in italics.
Q1: CMC 14.05 references a Park Maintenance Fee which would be deposited in the
Park and Recreational Facilities Acquisition and Maintenance Fund. I think this
would qualify as a Development Impact Fee and the CMC indicates that a nexus
study was done, however I am unable to locate this fund in the report and need
assistance. (Reference: CMC 14.05.040) This fund would be separate from fund 280. Is
that correct? (Moore)
Staff response:
The Park and Recreational Facilities Acquisition and Maintenance Fund referenced in CMC
14.05 relates to Fund 280 – Park Dedication.
Q2: CMC 14.02 Transportation Impact Fee Program has a matching TIF Account
which I believe is fund 271 Traffic Impact, is this correct and may the fund names be
something like Transportation Impact Fee? (Moore)
Staff response:
Fund 270 – Traffic Impact collects revenue from traffic impact fees and expends these funds as
projects are approved and is named to capture the fund’s general purpose.
Q3: CHAPTER 19.148: REQUIRED ARTWORK IN PUBLIC AND PRIVATE
DEVELOPMENTS has an in lieu of payment for developments which appears to
qualify as an AB 1600 Development Impact Fee. The City did collect funds from
Westport for this fund. Because the fund has a codified, intended purpose it should
probably have a separate fund in the budget and appear in the AB 1600 report? I
noticed that Union City has an art fund in their AB 1600 report, for example.
(Reference: CMC 19.148.090) (Moore)
Staff response:
As identified in the staff report, art in-lieu fees are considered to be imposed under the City’s
police power to regulate development and are not considered impact fees for purposes of the
Mitigation Fee Act. However, the City has included reporting on the art in-lieu fees to
provide consistency and clarity.
Q4: CMC 19.172 Below Market Rate Housing Program, I believe is fund 265 BMR
Housing, does not have the fees listed by Ordinance which some other cities do, or
the name of the account the fees would go into, it does however reference the
Residential Housing Mitigation Program rules and regulations. Would it be better to
have the fee and fund name codified? (Reference: 2018 Storm Drain Master Plan)
(Moore)
Staff response:
Generally, development fees may be established by ordinance or resolution. Chapter 19.172 is
somewhat unusual in that it references General Plan requirements as the basis for the
imposition of fees under the Residential Housing Mitigation Program, but the unusual
structure does impact the ability to enforce or collect the fee. If the City Council revisits the
Residential Housing Mitigation Program in future legislation, it may wish to consider
imposing impact fee requirements in the Municipal Code or in a resolution that is separate
from the General Plan. Staff would likely recommend maintaining the flexibility to adopt
Residential Housing Mitigation Program rules and regulation by resolution.
Q5: Fund 215 Storm Drain AB 1600 is another fund which is not codified however,
was adopted by Resolutions 633 and 4422 from 1962 and 1977 per Attachment A for
this agenda item. The fee costs appear to still be based off of 1977 values without
update? While the city does have two storm drain fees in the CMC, it would seem
that the Development Impact fee needed to be reviewed if the fees truly haven’t been
updated since 1977. (Moore)
Staff response:
As identified in Attachment A, the master storm drain fees are adjusted by the Construction
Cost Index annually with the approval of the fee schedule.
Q6: Attachment A (11/07/23 Agenda item) which is the City’s AB 1600 report, has
multiple, unique, Public Works Projects funded by Conditions of Approval of various
past projects. Some of the projects have changed since last year’s report, such as TM-
2012-04 which used to state it was for Rodriguez and Pacifica but now states Stevens
Creek Blvd. Class IV bikeway. Additionally, I could not locate any of these unique
funds in the city financial reports to verify there is no commingling? (Moore)
Staff response:
Some in-lieu funds have been reallocated to fund different projects. These projects are
consistent with the original purpose for which the fees were collected\ and tracked with the
City’s ERP software to ensure uses are still applicable
Q7: The June 30, 2022 and June 30, 2023 Fund Balances are included as attachments.
These balances are off in all instances from the amounts shown in the AB 1600 report.
Where is the City getting the balance numbers from and in what bank account is the
interest being derived from? Are we to assume these funds are in the Chandler
account or elsewhere? (Moore)
Staff response:
The provided fund balances assume all activity (revenues and expenses) are collected or
disbursed within the fiscal year, regardless of accounting timing differences, and will not be
located in any other City report. The City’s ACFR accounts for non-cash transactions such as
investment mark-to-market and treasury reports are a snapshot in time showing actual cash
in hand and do not account for timing differences.
Q8: CMC 13.08 Park Land Dedication Fee has a matching “Park dedication in-lieu fee
fund” which I believe is fund 280 “Park Dedication,” is this correct and may the fund
name be made to match the CMC wording? The Lawrence Mitty purchase of about
$3M does not appear to be reflected in the report, please help me locate it. (Moore)
Staff response:
Lawerence Mitty was purchased in FY 2020-21 for a total of $2,690,000 plus $7,964 in title
and escrow fees.
Attachments Provided with Original Staff Report:
A. Annual & Five-Year Report for FY 2023
B. Draft Resolution
Attachments Provided with Supplemental 1:
None