MOUNTAIN HOUSE COMMUNITY SERVICES DISTRICT To provide responsive service to our growing community that exceeds expectations at a fair value STAFF REPORT AGENDA TITLE: Approval of Shea Homes Annexation Fee Resolution MEETING DATE: July 11, 2018 PREPARED BY: Edwin Pattison, General Manager RECOMMENDATION: Staff recommends that the Mountain House Community Services District (District) Board of Directors (Board) adopt the annexation fee resolution for Shea Homes (Shea). BACKGROUND: On September 13, 2017, the MHCSD Board approved by resolution (included as Attachment A) annexation of Shea lands into the MHCSD boundaries (See Attachment B map of annexation lands). Annexation allows the MHCSD service boundary to expand to include these annexed lands. Annexation also requires calculation of an Annexation Fee which includes the annexing property s fair share of the costs of infrastructure, facilities, plans and programs that benefit the annexing property. The annexing property receives a credit against future fee obligations up to the amount of reimbursements owed to a developer for privately funded formation costs, community facilities, transportation improvements, utility facilities, interim CSD funding and CSD projects identified in the annexation fee calculation. The annexation fee is used to reimburse developer(s) for oversizing of infrastructure and to fund the costs of other community facilities, transportation improvements and utility facilities. The Annexation Fee Ordinance, MH-3-1404, (adopted by the San Joaquin County Board of Supervisors, acting as the Board of Directors of MHCSD, August 22, 2000), established the process for calculation of the annexation fee. MHCSD retained Harris & Associates (Harris) to update the CFF and TIF fee programs (sometimes referred to as the developer reimbursement program ) in anticipation of this and other annexations. As a result, Harris has developed a Microsoft Excel Workbook that takes into consideration all applicable community facilities, transportation improvements, and utility infrastructure constructed to date, applies the provisions of the relevant fee ordinances and technical reports, and calculated Shea s proportional share that resulted in the annexation fee calculation below. 230 S. Sterling Drive, Suite 100, Mountain House, CA 95391 Tel (209) 831-2300 Fax (209) 831-5610 1201573-3
DISCUSSION: Following the September 13, 2017 Board meeting at which the annexation of Shea lands was approved, Trimark approached MHCSD with additional information regarding facilities that should be included in an annexation fee calculation. In addition, MHCSD has continued to work to understand the various agreements that pertain to developer reimbursement under the CFF and TFF fee programs. As this review was conducted, it became clear that the annexation fee consists of two components, one that is reimbursable and/or creditable under the CFF and TIF fee program, and one that is non-reimbursable and is a one-time payment to the master developer for costs above and beyond the fee program capped costs. These findings resulted in the following analysis and initial calculation of the Shea annexation fee, which is detailed in the memo from Harris & Associates dated June 28, 2018, provided as Attachment C. Total Annexation Fee: $6,976,945.05 Portion of Fee for which Shea will not receive a credit against future fees: $652,076.50 Portion of Annexation Fee for which Shea will receive a credit against future $6,324,868.56 fees: This initial annexation fee calculation is based on cost estimates provided by the developers that constructed the facilities and infrastructure that are to be included in the annexation fee calculation. Many of the costs submitted have yet to be certified. Therefore, the annexation fee, once paid by Shea Homes and collected by MHCSD, will be held in trust and no funds will be released to reimburse developers until the costs have been certified. Once all costs have been certified, the annexation fee will be adjusted in accordance with the final certified costs. At that time, the Board will consider a final annexation fee calculation. Shea Homes has agreed to indemnify MHCSD against certain claims, costs or damages MHCSD may incur arising from or resulting from the adoption of this Annexation Fee Resolution and such indemnification shall be provided by Shea Homes upon the Board of Director s adoption of this Resolution. FISCAL IMPACT: Due to the complexity of the developer reimbursement program, outside consultants and legal staff have been necessary to assist staff in updating the program and calculating the annexation fee. Development is reimbursing MHCSD for much of this cost, but as this continues to be a work in progress, the exact amount is uncertain at time of publication. The Community Facility Fee (CFF) and Transportation Impact Fee (TIF) programs require three-percent (3%) of the CFF/TIF fees collected to pay MHCSD for administration of the program, which helps offset any costs associated with the program update and calculation of the annexation fee not reimbursed by development. STRATEGIC PLAN IMPLEMENTATION: Approving the Annexation Fee Resolution for Mountain House Investors will help staff achieve the following Public Works Goals and Objectives: 230 S. Sterling Drive, Suite 100, Mountain House, CA 95391 Tel (209) 831-2300 Fax (209) 831-5610 1201573-3
Goal PW-J: Support Development for buildout of the community. Objective J.5: Administer the LAFCO process Objective J.6: Monitor and update the TIF and CFF programs ACTION FOLLOWING BOARD APPROVAL: The General Manager will cause MHI to deposit the annexation fee into a special account and disburse the money to the appropriate developers. ATTACHMENTS: Attachment A: MHCSD Annexation Resolution R-2017-65 Attachment B: Map of Shea Homes Annexation Lands Attachment C: Shea Homes Annexation Fee Technical Memorandum (6-28-2018) Attachment D: Annexation Fee Resolution R-2018-43 c: District Counsel 230 S. Sterling Drive, Suite 100, Mountain House, CA 95391 Tel (209) 831-2300 Fax (209) 831-5610 1201573-3
ATTACHMENT A
ATTACHMENT A
ATTACHMENT A
ATTACHMENT B
ATTACHMENT B
ATTACHMENT B
ATTACHMENT C MEMO Date: 6/28/2018 To: Ed Pattison and Nader Shareghi, MHCSD From: Alison Bouley, Harris & Associates Subject: Shea Homes Annexation Fee Calculation Subject to Certification of Costs Background On August 22, 2000, the Board of Directors of the Mountain House CSD (MHCSD) adopted Ordinance 4081 which established that all properties annexing into MHCSD are subject to an annexation fee. The purpose of the fee is to reimburse the prior developers for each annexing properties fair share of the projects, operations and activities to date. The Ordinance requires that the board adopt a resolution at the time of annexation, establishing the annexation fee amount under Government Code Section 66000 et. seq. which is also known as the Mitigation Fee Act. Shea Homes and Trimark had entered into a private settlement agreement under which Shea Homes is to pay Trimark $3,206,211. However, under the CSD s Annexation ordinance, the CSD is required to prepare the annexation fee calculation. At this time, MHCSD has requested that annexation fee calculations for Shea Homes be completed. These findings and the associated analysis are summarized in the subsequent sections of this memo. Shea homes has deposited their private agreement amount and that amount will satisfy the payment due to Trimark under this agreement and will be released to Trimark within 30 days of the LAFCO hearing. The annexation fee consists of costs submitted by Trimark, MHI and Mountain House Developers (MHD). The Trimark costs include their certified costs less the cost for facilities that were considered to serve only their own developments. For both MHI and MHD, the developers submitted costs for the projects which have been constructed or are under construction. The MHI and MHD costs have not been certified except for MHD s Water Treatment Plant and Sewer Outfall projects. MHCSD worked with the developers to review and agree upon the submitted costs and to determine the properties who benefit from each improvement. Once MHCSD completes the review and certification of all MHI and MHD submitted project costs, the annexation fee will be recalculated based on actual certified costs. Until the costs are certified, MHCSD will hold Shea s annexation payment for those facilities. Trimark Costs MHCSD certified the Trimark facilities through a series of three cost certification letters. Harris completed a review of the three cost certification letters and the facilities that did not benefit the entire MHCSD area were removed. These removed facilities included portions of the Raw Water Pump Station, Water Treatment Plant, and Wastewater Treatment Plant, as well as all neighborhood parks and 1 P a g e
Shea Homes Annexation Fee Calculation ATTACHMENT C neighborhood water, sewer, and storm drainage costs. The remaining facilities were included in the annexation fee calculation. Trimark also incurred formation costs that, per the Annexation Fee ordinance, are reimbursable through the annexation fee program. This included costs for such items as the preparation of master plans, technical studies, and fee studies. To be consistent with the policy documents, the costs incurred by Trimark for the completion of planning and engineering studies related to the formation of the community that were certified as part of Cost Certification Letter Number 2 are included in the annexation fee. Table 1 summarizes the Trimark costs included in the annexation fee. Table 1 - Trimark s Cost to Spread Summary Category Certified Costs 1 Facilities Total Cost to Removed 2 Spread Sewer $ 75,458,332.01 $ (49,874,471.43) $ 25,583,860.59 Water $ 42,027,357.78 $ (3,655,491.65) $ 38,371,866.13 Storm Drainage $ 24,371,898.85 $ (1,605,920.67) $ 22,765,978.18 TIF - Traffic $ 130,578,961.84 $ - $ 130,578,961.84 CFF - Park & Library Facilities $ 16,043,706.39 $ (1,778,631.40) $ 14,265,074.98 CFF - Public Safety & Admin Facilities $ 6,615,999.48 $ - $ 6,615,999.48 Formation $ 4,268,730.69 $ - $ 4,268,730.69 TOTAL $ 299,364,987.04 $ (56,914,515.15) $ 242,450,471.89 Notes: 1) Trimark's certified costs based on the 3 cost certification letters. 2) Removes neighborhood park costs as well as neighborhood water, sewer, and storm drainage. Also removed water and sewer treatment plant costs for components that were not oversized. MHI Costs MHI submitted project costs of completed projects for inclusion in the annexation fee calculation. MHCSD and developer group reviewed the costs and agreed upon the projects to be included in the annexation fee as well as the properties who benefit from each improvement. MHI has submitted cost certification binders for these projects. Once the project costs are certified, the annexation fee will need to be modified to reflect the actual certified costs. MHI will not receive reimbursement until this process has been completed. The projects, costs and benefitting area are summarized in Table 2 below. 2 P a g e
ATTACHMENT C Table 2 MHI Cost to Spread Summary Project Type Project Cost ENR'd Cost Construction Year Benefit Zone Total Backbone Infrastructure $ 311,166.86 $ 395,556.36 2008 SP 3 Sew er Backbone Infrastructure - Sew er $ 77,791.72 $ 98,889.09 2008 SP 3 Water Backbone Infrastructure - Water $ 77,791.72 $ 98,889.09 2008 SP 3 Storm Drainage Backbone Infrastructure - Storm Drainage $ 77,791.72 $ 98,889.09 2008 SP 3 TIF Backbone Infrastructure - TIF $ 77,791.72 $ 98,889.09 2008 SP 3 TIF Central Parkw ay $ 4,598,373.13 $ 5,845,467.41 2008 SP 3 CFF - Park & Library Facilities Community Park $ 80,718.53 $ 102,609.67 2008 SP 3 TIF De Anza Boulevard $ 1,579,190.07 $ 2,007,471.74 2008 SP 3 Storm Drainage Drainage - A $ 878,815.08 $ 1,117,152.69 2008 SP 3 Storm Drainage Drainage - B $ 668,451.34 $ 849,737.59 2008 SP 3 Storm Drainage Drainage - Clean $ 2,331,714.98 $ 2,964,083.94 2008 SP 3 TIF Grant Line Road $ 2,615,336.34 $ 3,324,624.36 2008 SP 3 TIF Joint Trench - Central Parkw ay (SPII, SPIll) $ 168,481.20 $ 214,173.87 2008 SP 3 TIF Joint Trench - De Anza Boulevard $ 546,456.64 $ 694,657.52 2008 SP 3 TIF Joint Trench - Grant Line Road $ 1,058,206.10 $ 1,345,195.16 2008 SP 3 TIF Mountain House Parkw ay Widening $ 989,662.27 $ 1,258,062.01 2008 SP 3 Water College Park BPS and Water Tanks 1 $ 6,338,947.90 $ 8,058,091.92 2008 SP 3 Sew er Sew er - Central Parkw ay $ 541,160.04 $ 687,924.47 2008 SP 3 Sew er Sew er (De Anza Blvd. north of Grant Line Rd., Grant Line Road, Grant Line Road - Central to Alameda County) $ 450,706.11 $ 572,939.13 2008 SP 3 Sew er Sew er Trunk Line $ 383,844.33 $ 487,944.21 2008 SP 3 TIF Utility Corridor Landscaping $ 28,709.27 $ 36,495.32 2008 SP 3 Water Water - Central Parkw ay $ 1,096,782.50 $ 1,394,233.61 2008 SP 3 Water Water - De Anza Boulevard $ 617,250.97 $ 784,651.51 2008 SP 3 Water Water - Grant Line Road $ 51,072.67 $ 64,923.75 2008 SP 3 Storm Drainage Water Quality Basin $ 393,219.06 $ 499,861.39 2008 SP 3 Water Westside Booster Pump Station 1 $ 1,137,357.28 $ 1,445,812.40 2008 SP 3 1 Total cost multiplied by 53% to account for SP3 share. Total Cost to Spread: $ 26,865,622.67 $ 34,151,670.02 3 P a g e
ATTACHMENT C MHD Costs MHD submitted their project costs for projects that are completed or currently under construction for inclusion in the annexation fee calculation. The MHD costs have not been certified by MHCSD except for the Water Treatment Plant and Sewer Outfall projects. Once the projects are certified, the annexation fee will need to be modified to reflect actual certified costs. MHD will not receive reimbursement of uncertified costs until this process has been completed. MHCSD and the developer group reviewed the MHD submitted costs and zone of benefit. The projects, costs and benefitting areas are summarized in Table 3 below. Table 3 MHD Cost to Spread Summary Reimb. Type Facility MHD Cost Date of Construction ENR Percent Increase ENR Inflated Cost Status (design, under construction, complete) Zone of Benefit (SP2, SP3, MH) WATER Utilities Water Treatment Plant $ 50,540,948 2007 34.38% $ 67,917,312 MHCSD Accepted SP 2 & 3 SEWER Utilities Sewer Outfall $ 1,795,312 2007 34% $ 2,412,554 MHCSD Accepted Master Plan Utilities Byron Road Sewer $ 48,520 2009 26% $ 61,036 Complete Master Plan STORM DRAIN Utilities Byron Road Storm Drain $ 759,155 2009 26% $ 954,989 Complete Master Plan ROADS TIF Byron Road (GVP to $ 5,797,053 2009 26% $ 7,292,479 Partial complete Master Plan MHP) TIF Central Parkway $ 2,789,650 2018 0% $ 2,789,650 MHCSD Accepted Master Plan (Mustang to Grant Line) TIF Great Valley Parkway $ 2,005,340 2007 34% $ 2,694,791 MHCSD Accepted Master Plan (DeAnza to Byron) TIF Great Valley Parkway $ 1,660,268 2018 0% $ 1,660,268 Under Construction Master Plan (Mustang to Grant Line) TIF Mustang (GVP to $ 513,630 2017 0% $ 513,630 Complete Master Plan Central) TIF Central Parkway Flyover $ 4,461,691 2009 26% $ 5,612,643 Complete Master Plan Total $ 70,371,567.17 $ 91,909,353.32 Community Facilities Fee (CFF) and Transportation Impact Fee (TIF) The CFF and TIF component of the annexation fee represents a pre-payment of fees by the annexing party. As such, the annexing party receives a credit against their future fees in the amount of their annexation fee for these components. Based on a review of all of the documents, the CFF and TIF program reimbursement identifies cost limits contained in the CFF and TIF technical reports, updated by ENR. The following statement is contained in Section 7b of each of the developers (Trimark, MHD, and MHI) Master Acquisition and Reimbursement Agreement (MARA). Amount of Reimbursement. The Reimbursement amount to [DEVELOPER] for Oversizing a Community or Transportation Facility shall be equal to the full Certified Costs for the Oversizing that was paid by [DEVELOPER], which amount shall not exceed the cost estimate reflected in the CSD Community Facilities or Transportation Improvement Fee calculation for the portion of the Facility that was Oversized. Eligible Costs for Oversizing shall include the allocated Eligible Costs of the Facility, including the cost items referenced in Section 6.B. hereof, attributable to the Oversizing. The developer who built the facilities is eligible for the entire certified cost through the annexation fee based on MARA sections 1.H and 1.I. The difference between the amount in the CFF and TIF program 4 P a g e
Shea Homes Annexation Fee Calculation ATTACHMENT C and the certified amount, however, represents a one-time, non-reimbursable payment by the annexing party for which the annexing party does not receive a credit against future fees. Table 4 summarizes the CFF and TIF costs to spread for the annexation fee. The MHI costs as well as the MHD TIF costs have not been certified. Once the costs are certified, the annexation calculation will need to be modified. For Trimark s costs, the column labeled Total Certified Minus Cap Cost represents the cost that exceeded the TIF and CFF program limits as set forth in the TIF and CFF technical reports. These costs are included in the annexation fee calculation, however Shea Homes will not receive a credit against their fees for their portion of this cost. Table 4 CFF and TIF Cost to Spread Summary MHI 1 MHD 2,3 Costs to Spread Costs to Spread Certified Cost ENR to Dec 2017 Cost to Spread Summary Table 5 summarizes the costs submitted to date by MHI, MHD, and Trimark that are being spread to all of the benefitting properties within MHCSD as part of the annexation fee calculation. The MHI costs are being spread to either Specific Plan 2 and 3 or just Specific Plan 3 depending on who benefits. MHD costs are being spread to either all properties or to just Specific Plan 2 and 3, again depending on the area determined to benefit. Trimark costs are being spread to all land within the MHCSD. The MHI costs as well as most of the MHD costs identified above in Table 3 have not been certified and the annexation fee calculation will need to be modified once certification is completed. Table 5 Cost to Spread Trimark 3 Certified with TIF/CFF Cap ENR to Dec 2017 Total Certified Minus Cap Cost TIF - Traffic $ 14,825,036 $ 20,563,462 $ 130,578,962 $ 81,329,677 $ 49,249,284 $ 165,967,460 CFF - Park & Library Facilities $ 102,610 $ - $ 14,265,075 $ 13,153,579 $ 1,111,496 $ 14,367,685 CFF - Public Safety & Admin Facilitie $ - $ - $ 6,615,999 $ 4,327,645 $ 2,288,355 $ 6,615,999 Total $ 14,927,646 $ 20,563,462 $ 151,460,036 $ 98,810,901 $ 52,649,135 $ 186,951,144 Notes: 1) MHI Budgeted Cost reflect the costs from the Mountain House Investors Project Cost Summary received 5/21/2018 2) MHD Budgeted Cost reflect the costs from the Mountain House Developers Project Cost Summary 5/22/2018 3) Removes neighborhood park costs as well as neighborhood water, sewer, and storm drainage MHI 1 Cost to Spread to SP3 Certified ENR'd Cost to Spread to All Non-Certified ENR'd Cost to Spread to All Certified ENR'd Cost to Spread to SP 2&3 Certified Cost with ENR Certified with TIF/CFF Cap with ENR Total Cost to Spread Total Certified Minus Cap Cost Sewer $ 1,847,697 $ 2,412,554 $ 61,036 $ - $ 25,583,861 $ 25,583,861 Water $ 11,846,602 $ - $ - $ 67,917,312 $ 38,371,866 $ 38,371,866 $ - Storm Drainage $ 5,529,725 $ - $ 954,989 $ - $ 22,765,978 $ 22,765,978 TIF - Traffic $ 14,825,036 $ - $ 20,563,462 $ - $ 130,578,962 $ 81,329,677 $ 49,249,284 CFF - Park & Library Facilities $ 102,610 $ - $ - $ - $ 14,265,075 $ 13,153,579 $ 1,111,496 CFF - Public Safety & Admin Facilities $ - $ - $ - $ - $ 6,615,999 $ 4,327,645 $ 2,288,355 Formation $ - $ - $ - $ - $ 4,268,731 TOTAL $ 34,151,670 $ 2,412,554 $ 21,579,487 $ 67,917,312 $ 242,450,472 $ 185,532,606 $ 52,649,135 MHD 2 Notes: 1) MHI Budgeted Cost reflect the costs from the Mountain House Investors Project Cost Summary received 5/21/2018 2) MHD Budgeted Cost reflect the costs from the Mountain House Developers Project Cost Summary 5/22/2018 3) Only oversized portion of WWTP is spread 4) Only oversized portion of WTP is spread Trimark 3,4 5 P a g e
Shea Homes Annexation Fee Calculation ATTACHMENT C Annexation Fee Summary The annexation fee is calculated by using the total cost to spread column for each category and dividing it amongst the benefitting land based on the common use factor for each land use. The common use factor used for each category is summarized below: Sewer: Gallons per Day of Wastewater Generation Water: Gallons per Day of Water Consumption Storm Drainage: Run-off Coefficient Traffic: PM Peak Trip Rates CFF Park and Library Facilities: Number of Residents CFF Public Safety and Admin Facilities: Number of Residents and Worker Equivalents Planning/Formation: Parcel Acreage Shea Home s annexation fee is calculated by adding their fair share for all of their annexing land based on the assigned land use for those parcels. Shea Homes owns a total of 31.56 acres that will include 173 medium residential dwelling units and 9.31 acres of general commercial land. Shea Homes Annexation Fee Table 6 summarizes the Annexation Fee for Shea Homes. Because Trimark has been fully reimbursed for their CFF facilities, the CSD will not collect the CFF portion of the Trimark Annexation Fee. Trimark Share of Fee Component the Annexation Fee Sewer 2 273,678.88 Water 394,836.75 Storm 266,992.61 TIF 1,631,194.98 CFF 241,869.41 Formation 36,853.46 Total 2,845,426.09 Notes: Table 6 Shea Homes Annexation Fee Credit for fully Reimbursed Facilities 1 MHD Share of the Annexation Fee MHI Share of the Annexation Fee Total Annexation Fee $ $ 26,460.80 $ 891,175.02 $ 1,191,314.70 $ $ 1,002,679.20 $ 679,651.26 $ 2,077,167.21 $ $ 11,199.83 $ 341,483.93 $ 619,676.37 $ $ 256,879.17 $ 1,156,114.28 $ 3,044,188.43 $ $ 241,869.41 $ - $ 7,744.88 $ 7,744.88 $ $ - $ - $ 36,853.46 $ $ 241,869.41 $ 1,297,219.00 $ 3,076,169.37 $ 6,976,945.05 1 Trimark has been fully reimbursed for their CFF facilities so no annexation fee is due for these facilities. 2 Includes $3894 per EDU times 201 EDU's as payment to MHI for Shea's fair share of Wastewater Treatment Plant. Table 7 shows the portion of the annexation fee that is non-reimbursable and the amount of the annexation fee that Shea Homes is eligible to apply towards fee credits, or in the case of water, sewer and storm; receive reimbursement for. This non-reimbursable amount is their fair share of the Trimark facilities where the certified costs exceeded the cost in the applicable fee program. 6 P a g e
Shea Homes Annexation Fee Calculation ATTACHMENT C Fee Component Table 7 Creditable Amount Total Annexation Fee Non-Reimbursable Lump Sum Shea Homes Creditable Amount Sewer $ 1,191,314.70 $ - $ 1,974,008.70 Water $ 2,077,167.21 $ - $ 2,077,167.21 Storm $ 619,676.37 $ - $ 619,676.37 TIF $ 3,044,188.43 $ 615,223.04 $ 2,428,965.39 CFF $ 7,744.88 $ - $ 7,744.88 Formation $ 36,853.46 $ 36,853.46 $ - Total $ 6,976,945.05 $ 652,076.50 $ 6,324,868.56 The MHI costs as well as most of the MHD costs identified above in Table 3 have not been certified at this time. Once the costs are certified by MHCSD the annexation fee will be revised and the creditable portion will be adjusted. MHCSD will hold the non-certified amounts in an account and will not reimburse MHI or MHD for non-certified costs until such a time as the cost certifications are complete. AB1600 Findings Per Government Code 66000 et. seq., the following findings must be made when establishing or updating a fee in order to be compliant with the act. Requirement #1: Identify the purpose of the fee. The purpose of the annexation fee is to pay the annexing properties fair share of the projects, operations and activities funded by previous developers. This includes all road projects, utility projects, community facility, and formation costs incurred by Trimark. Requirement #2: Identify the use to which the fee will be put. The fee will be used to reimburse the costs incurred by previous developers for facilities they constructed. MHCSD will reimburse the developer within 60 days of receiving the annexing property s payment provided the improvements are certified. For improvements not yet certified, MHCSD will hold the payment until certification occurs. Requirement #3: Determine how there is a reasonable relationship between the fee s use and the type of development project on which the fee is imposed. The annexation fee is based on the following common use factors and is only spread to parcels who benefit from the improvement: o o o o o o o Sewer: Gallons per Day of Wastewater Generation Water: Gallons per Day of Water Consumption Storm Drainage: Run-off Coefficient Traffic: PM Peak Trip Rates CFF Park and Library Facilities: Number of Residents CFF Public Safety and Admin Facilities: Number of Residents and Worker Equivalents Planning/Formation: Parcel Acreage By basing the fee on the common use factors for each land use, each development pays their proportionate share of the facilities in each category. This ensures that the fees are equitably imposed on each project since the fee is based on the usage factors. 7 P a g e
Shea Homes Annexation Fee Calculation ATTACHMENT C Requirement #4: Determine how there is a reasonable relationship between the need for the public facility and the type of development project on which the fee is imposed. Each new development project creates the need for water, sewer, storm drainage, roadway, and public facilities. Because the need for parks and libraries are typically only related to residential use, only residential land uses are subject to that portion of the fee. The infrastructure needs were determined based on engineering studies of the land within MHCSD. The use factors were also developed as part of those studies and are used to allocate the share of the facilities to each land use based on the their need for those facilities. Requirement #5: Determine how there is a reasonable relationship between the amount of the fee and the cost of the public facility or portion of the public facility attributable to the development on which the fee is imposed. The annexation fee is calculated by spreading the completed costs of all oversized facilities to each parcel based on the common use factor. By utilizing this method, each parcel is assigned a percentage share of the total cost of the facilities based on their use of that facility and ensures that each property pays for only their fair share of the required infrastructure projects. There are several costs that were removed due to the fact that they were not oversized and therefore could not be included in the annexation fee. Summary Harris was retained by MHCSD to determine the annexation fee for all annexing properties. Harris reviewed the guiding documents and worked with MHCSD to verify the costs that are included in the annexation fee calculation. The fair share of each property was calculated based on their fair share use of each infrastructure type. The annexation fee for Shea Homes, subject to final cost certification, is summarized in the table below: Total Annexation Fee: $6,976,945.05 Portion of Fee for which Shea will not receive a credit against future fees: $652,076.50 Portion of Annexation Fee for which Shea homes will receive a credit against future fees: $6,324,868.56 The annexation fees, costs and calculations are detailed in this memo and meet the requirements of AB1600 and the annexation fee governing documents. 8 P a g e
ATTACHMENT D BEFORE THE BOARD OF DIRECTORS OF THE MOUNTAIN HOUSE COMMUNITY SERVICES DISTRICT RESOLUTION R-2018-43 RESOLUTION ADOPTING THE ANNEXATION FEE FOR SHEA HOMES FOR LANDS PREVIOUSLY ANNEXED TO THE MOUNTAIN HOUSE COMMUNITY SERVICES DISTRICT WHEREAS, Section MH-3-1404 of the Ordinance Code of the Mountain House Community Services District ( MHCSD ) sets forth the procedure to establish the annexation fee for each annexation to MHCSD; and WHEREAS, MHCSD approved the submission of an application to the San Joaquin Local Agency Formation Commission ( LAFCO ) to annex certain real property called D2 and D4 into MHCSD, such real property is described at Exhibit 1 to this Resolution ( Annexing Property ); and WHEREAS, LAFCO approved the annexation on December 14, 2017; and WHEREAS, MHCSD, in accordance with Section MH-3-1404 of the Ordinance Code, established the annexation fee for the Annexing Property; and WHEREAS, the purpose of the annexation fee is to determine the owner of the Annexing Property s fair share of the costs of infrastructure, plans and programs identified in Section MH- 3-1404 which fee shall be used to reimburse the Master Developer and other developers for oversizing such projects and to fund the costs of other community facilities, transportation improvements and utility facilities; and WHEREAS, the costs of infrastructure, plans and programs that are included in this initial annexation fee calculation for Shea Homes have yet to be certified; and WHEREAS, the annexation fee, once paid by Shea Homes and received by MHCSD, will not be released to reimburse the Master Developer or other developers until all costs have been certified and a final annexation fee can be calculated accordingly; and WHEREAS, the specific uses of the facilities to be funded are implicit in the facilities names as set forth in the annexation fee calculation; and
ATTACHMENT D WHEREAS, in accordance with Section MH-3-1404, the reasonable relationship between the fees use and the Annexing Property s development is that the identified facilities and services will be available to and benefit the Annexing Property; and WHEREAS, the amount of the annexation fees is set forth below with a fair share calculation based on a reasonable relationship to the development of the Annexing Property; and WHEREAS, Shea Homes has agreed to indemnify MHCSD against certain claims, costs or damages MHCSD may incur arising from or resulting from the adoption of this Annexation Fee Resolution and such indemnification shall be provided by Shea Homes upon the Board of Director s adoption of this Resolution. NOW, THEREFORE, BE IT RESOLVED that the formula and process for calculating the Annexing Property s fair share of infrastructure, plans and programs is set forth in Exhibit 2, attached hereto and incorporated herein, and the initial annexation fee is: Total Annexation Fee: $6,976,945.05 Portion of Fee for which Shea will not receive a credit against future fees: $652,076.50 Portion of Annexation Fee for which Shea will receive a credit against future $6,324,868.56 fees: BE IT FURTHER RESOLVED that the initial annexation fee will be held in trust and no funds will be released to reimburse any developers until all infrastructure, plans and program costs have been certified and a final annexation fee can be calculated accordingly. BE IT FURTHER RESOLVED that upon calculation of a final annexation fee the General Manager shall allocate the annexation fee to accounts that relate to each item of the annexation fee, as set forth in Exhibit 2, as may be updated upon certification of final costs. BE IT FURTHER RESOLVED that, the Annexing Property Owner shall deposit, or cause to be deposited, into MHCSD s trust account the initial annexation fee as set forth above. BE IT FURTHER RESOLVED that the Annexing Property Owner shall make a lump sum payment of the Annexation Fee within fourteen (14) days of adoption of this Resolution in the form directed by the General Manager. BE IT FURTHER RESOLVED that the final annexation fee will be presented to the MHCSD Board of Directors and upon approval of the final annexation fee by the Board, the General Manager, at his discretion, shall release the final annexation fee, or a portion thereof, to the Master Developer and other developers for oversizing, consistent with the calculations contained in Exhibit 2, as may be amended.
ATTACHMENT D PASSED AND ADOPTED this 11 th day of July, 2018, by the following vote of the Board of Directors of the Mountain House Community Services District, to wit: AYES: NOES: ABSENT: MANUEL MORENO, PRESIDENT Board of Directors Mountain House Community Services District County of San Joaquin, State of California ATTEST: NICOLE M.F. ADAMO, Deputy Secretary Board of Directors of the Mountain House Community Services District nd prepared by Harris