The Hollister City Council unanimously passed a resolution at its May 16 meeting to provide future annexation of territory to the city’s Community Facilities District 2 (CFD #2), and to levy a special tax within the annexed territory to finance police and fire services. In passing the resolution, it also gave notice of a public hearing on the levy and collection of the special tax.
David Rubcic, interim city engineer, said the estimated impact fee will be $423.42 for each residential unit. He said the resolution is intended to create an annexation after a public hearing to be held June 20. After the meeting, he said several more subdivisions will be brought before the council to be considered for annexation into CFD #2.
Mayor Ignacio Velazquez questioned the fee, stating that he didn’t think it covered the cost of police and fire services.
“I want to make sure this is covering the cost to run our departments so we’re not always short of staff,” he said and then asked Rubcic, “Where do these numbers come from?”
City Manager Bill Avera answered for Rubcic, saying, “CFD #2 was created in 1995, and started out with a base rate of $250, and the number that you’re seeing right now of $423 is essentially the CPI (Consumer Price Index) for all consumers as it increased on an annual basis.”
Avera reminded the mayor that he had asked staff to conduct a new public safety study and said it could be expedited by working with a consultant to possibly create a new CFD that would make it possible to increase the fee for new annexations. He recommended that the council adopt the resolution presently before it while the staff continued to work on a new CFD or perhaps a public safety Mello-Roos (a district where a special tax is imposed on property owners through the sale of bonds to finance public services), in which future developments would be annexed.
Rubcic added, “This action tonight is a resolution of intention and that the June 20 public hearing would involve action items in order for it to be enacted.” Velazquez questioned why the city could not just wait until the new numbers were determined. Rubcic said the resolution would apply to current subdivisions in order to “capture something” in regards to fees. Velazquez again questioned why it wasn’t advisable to wait and wondered what the issue was. Rubcic said if the city waited until after the development was built and homes sold it would be necessary to go to each homeowner rather than a single landowner who could commit to the annexation.
The mayor wanted to be clear that the issue was that as long as the vote took place before there were homeowners it would be easier to move forward rather than have to deal with individual homeowners who might not want to pay an extra fee. City Attorney Brad Sullivan interjected, “Optimally, you’d have it done before the final (subdivision) map,” and the mayor countered, “Optimally, we’d be charging a lot more” and then added, “We’re not going to accept this number if it’s not going to cover the costs.”
Sullivan said the staff, city engineer and himself recommended the resolution be enacted. He said the mayor was correct, but that the city should not miss out on collecting a fee that would address some impacts.
Councilman Raymond Friend ask if the project being discussed was far enough along in the annexation process that it was not included in a legal judgment that had declared the city did not have an annexation agreement. Rubcic said it wasn’t, and went on to explain that the word “annexation” was being used in two different contexts: annexation into the city limits and annexation into a district, which was the case for the resolution before the council. He said the action presently under discussion was only to expedite the inclusion of the property into CFD #2, and that the June 20 meeting would formulize the creation of the district. He said if the goal was to collect higher fees, the study mentioned by Avera would have to take place first, which would take time that would possibly result in the city missing opportunities to collect fees from a number of projects.
“Basically, we’re filling in the gap,” Rubcic said, “until we have another CFD in place to meet what you’re talking about, Mr. Mayor.”
Rubcic added that if the council doesn’t start the process and hold the public hearing there were 200 to 300 lots that would not be included in CFD #2. The mayor said there would be no issue if the city did not issue building permits. He said it only becomes an issue after the property is sold, which would give the new owner the right to vote against the fee. He said his point remained that the problem should be addressed now. He said the numbers being discussed clearly would not provide enough revenue to cover public safety services. Sullivan said the subdivisions under discussion have already been approved.
“They could come in without this and we’d have nothing, or we could take this step, which facilitates their annexation at some point in the future,” Sullivan said. “It would be cutting off our nose to spite our face if we were to wait for perfection and give up most—”
The mayor interrupted with, “We’ve already cut off our nose because we didn’t take care—”
“Our predecessors did, yeah,” Sullivan interjected, “and we don’t need to double down on not collecting enough. This is a way to collect almost all, and then we will do the study…and we will have some of the information that we can find out what other impacts the city would have.”
Friend commented, “In the words that Marty (Richman) would say, ‘Once it’s etched in stone it will never change,’ so we’ll never get more money out of this.”
Avera tried to assure Friend, “Just because you’re taking this action, it doesn’t mean that everything in the future is going into this. It depends on what condition we place in the future. Does that make sense?”
“No,” said Friend.
“We can’t raise some of these impact fees after the action,” Sullivan explained. “When a tentative map is approved, that sets the time of the mitigation fees than can be applied to a particular development. A subdivision is approved then you add a later fee, you cannot apply that.”
The mayor hypothesized, “Unless the builder decides he’s alright with it.”
Sullivan said a builder doesn’t have to and there is no coercive measure the city could take, and it would be illegal to try to force the developer pay a greater fee than what the city had already committed to.
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