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Department of Transportation recommending the Board consider the following pertaining to the Major Update of the Traffic Impact Fee (TIF) Program and the Capital Improvement Program (CIP) and consider the following:
1) Direct staff to reduce the residential and non-residential offset percentages to the proposed Traffic Impact Fees using the proposed Scenario 2 to account for the reduction in assumed grant funding; and
2) Direct staff to return on December 3, 2024, with the appropriate resolution for adoption of the Major Update to the TIF Program, and to incorporate the changes to the CIP with the 2025 Annual Update.
FUNDING: Traffic Impact Fee Program.
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DISCUSSION / BACKGROUND
Over recent years, Grant funding opportunities for roadway-capacity-increasing projects, like those included within the TIF Program, have significantly decreased following the passage and enactment of new laws focused on reducing greenhouse gases (GHG) and vehicle miles traveled (VMT).
To address this issue, staff identified the need to reduce the amount of grant funding assumed within the TIF Program to ensure the Program is fully funded and consistent with General Plan Policies. As a result, on August 13, 2024 (Legistar Item 24-1412), the Board received information from staff on, potential, reduced grant funding scenarios, and selected a 25% reduction to the assumed revenue from federal grant programs, which resulted in approximately $57 million available for use within the TIF Program. The current Nexus Model assumes approximately $69 million of grant funding for the TIF Program.
Within the TIF Program, these grant funds cover the costs associated with external trips (vehicle trips that affect level of service (LOS) on County roads but that do not originate, or end, within the unincorporated west slope of the County) and the affordable housing TIF offset program, which equates to $20 million over the 20-year planning horizon of the TIF Program. During previous major updates, the Board has also directed staff to utilize alternate funding sources (i.e., state and federal grants) to offset the high cost of residential and non-residential fees in certain zones. If the Board elects to continue applying these offsets, the amount of offsets applied will need to be reduced to account for the reduction to assumed grant funding.
This same issue was also identified and discussed with the Board during the 2020 Major Update. As part of the 2020 TIF Program Nexus, the Board directed staff to provide offsets to residential fees in Zones A and B of 65% and 20%, respectively, and to apply a 30% offset to the non-residential fees in Zone B.
To provide the Board with information and alternatives, Staff has developed three preferred offset alternatives from which the Board may select. Each of the following scenarios is based on the Board's direction from the August 13, 2024 workshop regarding reduced state and federal grant funding and assumes a 25% reduction to the revenue from the two TIF-appropriate federal grant programs, while maintaining affordable housing offsets, including offsets for Accessory Dwelling Units. The fee schedules without any offsets applied, and with each of the scenarios described below are provided as Attachment B to this item. The current fee schedule that is based on the Nexus Model from the 2020 Major Update in also included for reference as Attachment C.
Scenario 1 follows a similar approach to how the offsets were applied during the previous major update, and is focused on reducing fees in the rural areas of the west slope for both residential and non-residential uses. Under this scenario, fees are reduced by the following percentages:
Scenario 1:
Zone A Offset: 65% Residential, 50% Non-Residential
Zone B Offset: 0% Residential, 10% Non-Residential
Zone C Offset: 0% Residential, 0% Non-Residential
Scenario 2 still applies a significant offset to Zone A residential fees, but also applies larger offset percentages to non-residential fees in Zone A, Zone B, and Zone C, as well as a small offset to Zone C residential fees.
Scenario 2:
Zone A Offset: 55% Residential, 50% Non-Residential
Zone B Offset: 0% Residential, 5% Non-Residential
Zone C Offset: 5% Residential, 20% Non-Residential
Scenario 3 applies a 15% reduction to the residential fees in Zone C, given the significant increase in that category. To account for this, the offsets in Zone A are less than in the other scenarios, which will increase its corresponding fee amounts.
Scenario 3:
Zone A Offset: 25% Residential, 30% Non-Residential
Zone B Offset: 0% Residential, 5% Non-Residential
Zone C Offset: 15% Residential, 0% Non-Residential
Based on the information and analysis provided, staff is recommending that Scenario 2 be applied within the TIF Program Nexus matrix to reduce the fees, as shown above. This will continue to reduce the fees in the more rural areas of the West Slope, while also reducing non-residential fees in all three zones to lessen the impacts experienced by businesses coming into the County.
After receiving direction from the Board, staff will generate the updated TIF fee schedule based on the analysis performed over the last 12 months. Transportation will return on December 3, 2024, with the appropriate resolution for adoption of the Major Update to the TIF Program, including the updated fee schedule. Changes to the projects included in the TIF Program will be incorporated into the CIP with updates to the CIP Book in Spring 2025.
ALTERNATIVES
The Board could select one of the other two scenarios presented here or direct staff not to apply any residential and/or non-residential offsets for the purpose of calculating the new TIF Program fee schedule to be brought back to the Board on December 3rd for final adoption.
PRIOR BOARD ACTION
On December 5, 2023 (Legistar Item 23-2051), the Board received the El Dorado Countywide Housing and Employment Projections, 2018 -2045 memorandum and presentation pertaining to the Major Update to the TIF Program.
On January 9, 2024 (Legistar Item 23-2241), the Board adopted an annual residential growth rate of 0.62% and an annual employment growth rate of 0.62% through 2045.
On April 2, 2024 (Legistar Item 24-0548) the Board received and approved the El Dorado Countywide Housing and Employment Projections, 2023 to 2034 Memorandum pertaining, including growth allocations, pertaining to the Major Update of the TIF Program.
On August 13, 2024 (Legistar Item 24-1412), the Board approved using the proposed, current percentage of local-serving jobs (61 percent) as the basis for shifting non-residential uses to residential uses in the TIF Program, received information from staff on potential grant funding scenarios, and selected a 25% reduction to the federal grant programs and assumes approximately $57 million (an 18% reduction from the previous major update).
OTHER DEPARTMENT / AGENCY INVOLVEMENT
Planning and Building Department, Long Range Planning Division
County Counsel
CAO RECOMMENDATION / COMMENTS
Consider the information presented and provide direction as requested.
FINANCIAL IMPACT
There is no change to Net County Cost associated with this agenda item. The costs related to updating and administering the TIF Program are included in the fees collected.
CLERK OF THE BOARD FOLLOW UP ACTIONS
N/A
STRATEGIC PLAN COMPONENT
Priority: Enhance communication about funding and resources for transportation-related capital improvement plans (CIP)
Action Items: Complete a needs assessment, project cost update, prioritization and funding needs; New project determination / evaluation
CONTACT
Rafael Martinez, Director
Department of Transportation