Title
Department of Transportation recommending the Board consider the following:
1) Approve a Traffic Impact Fee Deferral in line with Board of Supervisors Policy B-3 for tenant improvements for commercial buildings within the Crossings at El Dorado project;
2) Direct County Counsel and the Department of Transportation to work with Crossings at El Dorado, LLC, to prepare the agreement(s) and documents for recordation prior to the issuance of the respective building permits; and
3) Authorize the Director of Transportation to execute any necessary documents and/or agreements to process the deferral request, subject to County Counsel approval.
(District 3)
FUNDING: Developer Funded.
Body
DISCUSSION / BACKGROUND
The Crossings at El Dorado project, formerly Sundance Plaza, was originally approved in 1998, though it was not constructed at that time. The project as a whole includes an approved Development Plan (PD97-0011), a rezone (Z97-22), an approved tentative map (P97-0017), and a now-expired Development Agreement (DA98-0001). It is located on Missouri Flat Road, in Placerville, in the County of El Dorado, from approximately 380 feet North of Plaza Drive to approximately 525 feet North of Headington Road.
Phase 1 of Crossings at El Dorado includes multiple retail locations, several of which have already been constructed or are currently under construction, including the 7-Eleven gas station and convenience store, Dutch Bros. Coffee, and America’s Tire.
Additional retail spaces are planned within the project limits. Permits #0372339, #0372340, and #0372886 for retail shell buildings were issued on June 12, 2024. Each shell building contains two retail storefronts, each having separate building permits issued for the respective tenant improvements.
Prior to issuance of the shell building permits, Crossings at El Dorado, LLC (Developer) requested deferral of the traffic impact fees (TIF) for the shell buildings to the issuance of the certificate of occupancy. A short-term deferral for commercial projects is authorized via Resolution 067-1997, and the request was approved by the Department of Transportation. A total of $216,750.60 was deferred across the three building permits. Construction of the shell buildings is currently underway and is expected to be completed Summer 2025; full payment of the deferred TIF will be required prior to the issuance of any certificates of occupancy for the shell buildings.
Five prospective tenants have submitted building permit applications, and one tenant has paid all fees and received a building permit. The Developer has requested deferrals for the remaining four prospective tenant improvements located within the shell buildings. The estimated TIF due for the four remaining tenants under the current adopted fee schedule is $418,593.56. The actual deferrals will reflect the fees in effect at the time of executing the deferral agreements and other documents, as outlined below.
Board Policy B-3 allows for the deferral of TIF on commercial/industrial projects under certain conditions. Program One under the policy is effective for building permits on which $10,000 or more in TIF is due. Deferrals under this program require payment of 20% of the total TIF at the time of deferral, along with the execution of a Promissory Note and Deed of Trust to secure against the future payment of the deferred portion of the fee. The specific terms of the deferral and repayment are included in a deferral agreement, to be drafted in form as approved by County Counsel. Deferred fees are paid in installments over a five-year period with interest per the Board Policy; while Policy B-3 specifies the use of the 11th District Cost of Funds Index (plus one point), that index was discontinued after the publication of the December 2021 rate by the index’s issuer, Federal Home Loan Bank of San Francisco. A suitable alternative index will be used to calculate the interest rate charged on the deferred fees. The deferral process further requires the services of an escrow company and an up-to-date appraisal for the underlying property with title insurance, the costs for which are to be borne by the Developer.
Because there are four individual tenant improvements requesting deferral across three shell buildings, the County and the Developer may execute between one and four deferral agreements, as decided mutually between the parties. The deferral agreement(s) will be provided to the Clerk of the Board for attachment to this item upon final approval and execution.
Upon the Board’s approval of the deferral in concept, Transportation will coordinate with County Counsel, Community Development Finance & Administration, and the Developer to create the necessary documents, including but not limited to deferral agreements, Promissory Notes and Deeds of Trust, and fee payment schedules. Any documents which require recording will be processed accordingly, and the Developer shall be responsible for any recording fees.
Upon execution and recording of all required documents and collection of the initial 20% payment of TIF, Transportation will clear the building permit for issuance, subject to the Building Department’s normal permit issuance procedures.
ALTERNATIVES
The Board may decline to defer the fees as requested. In that case, the fees would be due in full prior to the issuance of each respective building permit, as is County policy.
PRIOR BOARD ACTION
N/A
OTHER DEPARTMENT / AGENCY INVOLVEMENT
County Counsel, Chief Administrative Office, Community Development Finance & Administration Division
CAO RECOMMENDATION / COMMENTS
Approve as recommended.
FINANCIAL IMPACT
Deferring the fees will alter the cash pro-formas for the TIF Program, as collection of the fees would be delayed over time rather than being collected at the time of permit issuance. The Developer is responsible for the costs related to the development and processing of the fee deferral and its required documents.
While approval of the deferral delays the collection of the Traffic Impact Fees, it encourages economic development and expedites the collection of property and sales tax associated with the project.
CLERK OF THE BOARD FOLLOW UP ACTIONS
N/A
STRATEGIC PLAN COMPONENT
Priority: N/A
Action Item: N/A
CONTACT
Rafael Martinez, Director
Department of Transportation