COMMITTEE AGENDA MEMORANDUM
Board Policy and Monitoring Committee
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: title
Receive Update on Final Results for the Flood Control and Water Supply Development Impact Fee Analyses and Provide Recommendation to the Board as needed.
End
RECOMMENDATION: Recommendation
Receive update on final results for the Flood Control and Water Supply Development Impact Fee Analyses and provide recommendations to the Board as needed.
Body
SUMMARY:
NBS Government Finance Group was retained in 2021 to perform a comprehensive Water Supply and Flood Protection Development Impact Fee Analysis (Study) for Valley Water.
Broadly defined, a development impact fee is a one-time charge imposed by local governments on new construction projects to fund infrastructure to serve that development, such as water service or flood protection services. Development impact fees shift capital costs from general rate or tax payers to new developers, ensuring growth pays for its fair share of growth.
Local governments, like cities and counties (also referred to as land use agencies) typically collect development impact fees along with building permit fees. Valley Water is not a land use agency.
Phase 1 of the Study:
Over the last several years, separate analyses were conducted for both Water Supply and Flood Protection to determine if development impact fees are feasible, and if so, calculate what the fee could be. Attachment 1 is a PowerPoint summarizing methodology and results of the Study. Attachment 2 is the Final Report for the Study.
Phase 2 of the Study:
Pending Committee recommendations, and ultimately direction from the Board, Phase 2 of the project would be to engage with other agencies and the local development community to implement development impact fees.
Should the Board decide to pursue implementation of development impact fees, the first step would be to initiate discussions with all 15 Cities in Santa Clara County as well as the County of Santa Clara, to determine the feasibility/willingness of collecting development impact fees on behalf of Valley Water. Valley Water would need the voluntary cooperation of the Cities and Santa Clara County in order to implement.
Background:
In November 2017, Santa Clara Valley Water District (Valley Water) received a report from financial consultant, William C. Statler analyzing available revenue options that could potentially offset water rate increases. The report concluded that while there are fewer non-rate options for special districts compared with cities and counties, there was nonetheless a broad range of reasonable revenue options available to Valley Water. However, the ones with the greatest revenue potential would require either majority property owner approval (property-related fees or assessments) or two-thirds voter approval for special taxes.
The report further concluded that there is only one significant revenue option available to Valley Water that could be implemented by the Board without some form of voter approval: development impact fees.
A portion of the Valley Water Capital Improvement Plan (CIP) would likely benefit new development for both water supply and flood protection projects. The completed Study was prepared to assess new development’s share of cost, and the estimated potential development impact fee revenue and charges.
It should be noted that typically, this type of fee is collected by cities and counties along with building permit fees. However, wholesale agencies like Valley Water do not issue building permits. In these cases, wholesale agencies often enter into agreements with their Cities to collect these fees on the agency’s behalf and remit them monthly. Accordingly, Valley Water’s ability to charge and collect such fees is contingent on the cooperation of the Cities in Santa Clara County.
Next Steps:
The Study has progressed slower than anticipated, primarily due to limited bandwidth of Valley Water staff to support the effort. Consequently, the Capital Improvement Plan (CIP) data as well as the Water Supply Master Plan (WSMP) data used in the Study is outdated. Nevertheless, the resulting output is sufficiently accurate to provide the Board with a sense of what the development impact fee would be, as well as what the annual revenue collection would be. If the Board were to decide to pursue implementation of development impact fees as part of a Phase 2 effort, the CIP and WSMP inputs would be updated to reflect the most current data available.
Staff is seeking Committee feedback regarding Phase 1 results of the Study and a recommendation, if any, for the Board regarding whether or not to pursue Phase 2, which would initially entail engaging with all 15 Cities in Santa Clara County and the County of Santa Clara to determine feasibility/willingness of collecting Development Impact Fees on behalf of Valley Water.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with receiving information on the Study.
ATTACHMENTS:
Attachment 1: PowerPoint
Attachment 2: Final Study Report
UNCLASSIFIED MANAGER:
Manager
Darin Taylor, 408-630-2068