Agenda Item Wording:
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2024/25 AB 1600 Report - Request for City Council to receive, review, and file the 2024/25 Impact Fee Report as required by State Law.
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Prepared by: Renee Nagel, Finance and Technology Director,559-713-4375, Renee.Nagel@visalia.gov; Amee Swearingen, Budget Analyst, 559-713-4170, Amee.Swearingen@visalia.gov
Department Recommendation: The 2024/25 Impact Fee Report has been prepared and submitted in compliance with California Government Code Section 66006(a) and (b), and no Council action is required other than to receive, review, and file the report.
Summary:
Development impact fees are a funding mechanism used by California cities to pay for the new or expanded infrastructure needed to serve growth and development. Impact fees are imposed by a local government on new development to pay for the proportionate costs attributable to providing public infrastructure to serve each new development. Impact fees are a charge on new development which helps fund and pay for the construction or needed expansion of offsite capital infrastructure improvements which include roads, parks, storm drains, public safety and other public facilities.
In the 2024/25 Fiscal Year, the Impact Fee funds received $22.3 million in revenues which is an increase of 13.6% ($3.0 million) from the previous year (FY 23/24 revenues $19.3 million). The $22.3 million consists current year impact fee revenue, prior year revenue adjustments, and interest earnings as shown in the table below.
As shown in the Impact Fee report (Attachment 1), a total of $15.4 million was spent on impact fee related projects in the 24/25 Fiscal Year. The funds collectively hold $93.0 million in cash; however, these funds will need to collect an additional $201.9 million by FY 29/30 to fund the projects listed in the current 6-Year Capital Improvement Plan. Projects are planned based upon the resources projected to be available in each respective fund, and the Capital Improvement Plan is updated every two years with the biennial budget to make any necessary adjustments. Most Impact fees are used to fund large infrastructure projects that take several years to design and acquire land. For this reason, funding needed for construction must be programmed over multiple years as shown in the 6-Year Capital Plan (included in the Impact Fee Report attached), allowing cash to accumulate and fund these large projects.
In addition, the Police Impact Fee fund has a debt payment obligation for the Visalia Emergency Communication Center (1st phase of the civic center project). The are currently no impact funds that have a General Fund advance. Three of the funds will be contributing to the 2nd phase of the civic center project. These funds currently have enough cash this year but could need an advance as construction gets further along.
The debt and previous advances were anticipated and are being managed as part of each fund’s capital program.
Past Impact Fee actions are summarized below for informational purposes.
• June 7, 2010, during the Great Recession, Council approved the reduction of the Transportation Impact Fees (TIF), Park Impact Fee, and Waterways Impact Fee by 15%. The Park Acquisition Fee and the Waterways Acquisition Fee were reduced based on the analysis that showed land acquisition costs had dropped.
• In March 2013, an increase was made to the TIF of 6.5% to reflect 09/10 Engineering News Record Construction Cost Index (ENRCCI) adjustment not taken in FY 09/10.
• June 6, 2015, Council approved the TIF fees to increase by 11%.
• In addition to the adjustments summarized above, the fees are adjusted each year by the ENRCCI rate as part of the City’s annual Rates and Fees process.
With ongoing increases in land and construction costs, staff will continue to review the capital needs of the impact fee funds and perform analysis in order to make recommendations on the adjustment of these fees.
Background Discussion:
When based on a comprehensive plan and used in conjunction with a sound capital improvement plan, impact fees can be an effective tool for ensuring adequate infrastructure to accommodate growth where and when it is anticipated. It is important that communities rely on zoning and other land use regulations, consistent with a comprehensive plan, to influence patterns of growth and to accurately predict new infrastructure needs. However, in areas facing development postponement due to the lack of adequate public facilities, impact fees may be viewed not as growth controlling measures, but rather as growth facilitators when they provide needed funding for required infrastructure. Typically, impact fees are:
• Levied on an "up-front" or "front-end" basis, usually at the time of building permit issuance or subdivision approval; and
• Dedicated to a specific public use, such as transportation facilities, sewer facilities, water facilities, or parks and recreation facilities, etc.; and
• Calculated based upon the number of residents or bedrooms in a dwelling, the square footage of a building, the linear footage of the front property line, or as a flat fee per unit or building lot, or some other formulation; and
• Prescribed by ordinance.
The purpose of this report is to disclose the City’s collection and use of impact fees and to demonstrate that these monies were appropriately spent on impact related projects. The 2024/25 Impact Fee Report is in compliance with Government Code Section 66006 which requires agencies to provide information on each fund or account established for the collection of impact fees. Within 180 days after the last day of each fiscal year this information must be made available to the public for the period covered by that fiscal year. The report must include the following:
1. A brief description of the type of fee in the fund.
2. The amount of the fee.
3. The beginning and ending balances of the fund.
4. The amount of fees collected, and the interest earned.
5. An identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the improvement that was funded with fees.
6. An identification of an approximate date by which the construction of the public improvement will commence if the City determines that sufficient funds have collected to complete financing on an incomplete public improvement.
7. A description of each inter-fund transfer or loan made from the fund, including the public improvement on which the transferred or loaned fees will be expended, and in the case of an inter-fund loan, the date on which the loan will be repaid and the rate of interest that will be received on the loan.
8. The amount of refunds made per Government Code Section 66001 (e).
The availability of the 2024/25 Impact Fee Report was published in the Visalia Times Delta on November 25, 2025. Once the information is available to the public, but not less than 15 days from the date it is made available, the City Council must review the information at its next regularly scheduled meeting. A notice of the time and place of this meeting, including the address where the information may be reviewed, must be mailed at least 15 days prior to the meeting to any interested party who files a written request with the City for mailed notice of the meeting.
The 2024/25 Impact Fee Report provides information on the following Impact Fee Funds:
All Impact Funds are in compliance with the State Law, as shown below in Table 1: Summary Report 2024/25 Impact Fee Funds. This table is also provided in the report (attachment 1).
Table 1 is a summary of all the Impact Funds and shows the future revenue required in each fund to pay for both current projects and future projects included in the Capital Budget plan through fiscal year 2029/30. As new development occurs, additional impact fees will be collected to fund the projects reflected in the “Future Revenue Needed” column of Table 2. Five funds are shown as not needing future revenue at this time due to projects not being listed in the current 6-year plan. These funds are the Civic Center fund, Library Impact, Sewer Connection fund, Vehicle Miles Traveled fund and the Northeast Capital Improvement fund. Below is more detail on the funds:
• Civic Center-Public Facility Fees (102) is being used to help fund Phase 2 of the Civic Center project which will construct the Public Safety Office Building, Evidence Building, and Council Chambers. In addition to impact fees, Civic Center Phase 2 will receive funding from other sources. There is currently enough funds to cover the money appropriated for this project and contract. The remaining fund balance will be used for any change orders and the design of Phase 3 of the Civic Center project.
• The Library Impact Fees (104) contributed to a joint project with Tulare County for the rehabilitation and expansion of the Visalia branch of the Tulare County Library. The rehabilitation project was completed in 2010 and the total amount of the loan from the General Fund to pay the impact fee portion of the project was $269,189. The loan was paid off last fiscal year. There are no projects currently identified for the fund and will be reviewed with the upcoming two-year budget process that will be adopted in June 2026. Staff is currently working with Tulare County to identify future projects.
• Sewer Connection Fund (232) does not have any future projects due to the sewer master plan being updated. The plan is currently under contract and being updated by the Engineering Department. Once the plan is updated, staff will return to Council to propose increasing the fee and fund several new projects.
• Vehicle Miles Traveled Fund (286) is a new fund with a new fee that was collected in FY 22/23. There are no projects currently identified for the fund and will be reviewed with the upcoming two-year budget process that will be adopted in June 2026.
• Northeast Capital Fund (291) has no future projects identified in the current 6-year plan to allow funds to accumulate to be able to fund projects. The fund will be reviewed with the upcoming two-year budget process that will be adopted in June 2026.
The Waterways Fund (261) shows that there is no future revenue needed because they currently have enough fund balance to cover the projects that are currently budgeted and the projects programmed out in the current 6-year capital plan. Staff will be reviewing the fund with the upcoming two-year budget process that will be adopted in June 2026.
The Impact Fee Report shows an amount required for future projects. This future project amount is taken from the 6-Year Capital Plan that was adopted with the City’s 2 Year Budget in June 2024. The Capital Plan is amended throughout the year as Council approves projects that need to move forward or as opportunities arise.
Fiscal Impact: The Annual Impact Fee Report summarizes actual data from events that have already occurred. There is no fiscal Impact which will result from review and acceptance of the report.
Prior Council Action: The Annual Impact Fee Report is brought to Council within 180 of the last day of each fiscal year. The report was last reviewed by Council on December 3, 2024
Other: N/A
Alternatives: N/A
Recommended Motion (and Alternative Motions if expected):
recommendation
I move that Council receives, reviews, and files the 2024/25 AB1600 Report.
Environmental Assessment Status: N/A
CEQA Review: N/A
Deadline for Action: 12/31/2025
Attachments: Attachment 1: City of Visalia Impact Fee Report for Fiscal Year 2024-25