Article VI — CONSTRUCTION OR DEDICATION IN-LIEU OF DEVELOPMENT IMPACT FEES

Except where the context clearly indicates a different meaning, the following words, terms, and phrases when used in this article shall have the meanings ascribed to them in this section:

Developer means any person legally responsible for payment of a development impact fee pursuant to this Code, ordinance, or resolution of the city.

Development means any project undertaken for the purpose of developing real property for residential, commercial, industrial or other uses, including a project involving the issuance of a permit for construction, reconstruction rehabilitation or expansion, but not a permit to operate.

Development impact fees means monetary exactions other than taxes or special assessments, established by either resolution or ordinance of the city council for a broad class of developments, or for a specific development on an individual basis, that is imposed by the city on a development in connection with the city's approval thereof for the purpose of defraying all or a portion of the cost of public improvements, public services, and community amenities.

In-lieu agreement means an agreement between the city and a developer executed pursuant to, and in compliance with, the provisions of this article.

(Ord. No. 1236, § 1, 2-3-98)

The purpose of this article is to establish a policy allowing in-lieu agreements between the city and developers to provide an alternative method for satisfying a developer's obligation to mitigate impacts from his or her or its development other than through payment of development impact fees. In

allowing developers to construct public improvements or dedicate property in-lieu of paying development impact fees, this article is intended to provide the city and developers flexibility in mitigating impacts from development while ensuring that the health, safety, and welfare of the community is preserved.

(Ord. No. 1236, § 1, 2-3-98)

(a)

In-lieu agreements. The city manager, or his or her designee, is hereby authorized to enter into an agreement, at his or her sole discretion and satisfactory in form to the city attorney, with any developer to provide that in exchange for partial or complete satisfaction of certain development impact fees which the developer is obligated to pay, the developer agrees to perform either, both, or a combination of, the following:

(1)

Design, construct, and dedicate certain public improvements which the city engineer, or his or her designee, determines to be equivalent in value to the amount of development impact fees satisfied by such agreement. The determination of value shall be based upon the reports, studies, programs and other documents used to establish the development impact fees.

(2)

Dedicate real property or interests in real property which the city engineer, or his or her designee, determines to be equivalent in value to the amount of development impact fees satisfied by such agreement. The determination of value shall be based upon the reports, studies, programs and other documents used to establish the development impact fees.

(b)

Construction standards. All public improvements required by an in-lieu agreement shall be designed and constructed in accordance with all city and other governmental agency rules, codes, standards, ordinances, and regulations.

(Ord. No. 1236, § 1, 2-3-98)

An in-lieu agreement in which the amount of development impact fees satisfied through construction and/or dedication exceeds $20,000.00 shall not be valid unless approved by the city council.

(Ord. No. 1236, § 1, 2-3-98)

(a)

Type of security. For in-lieu agreements requiring the design or construction of public improvements, performance shall be guaranteed by the one of the following types of security, determined by the city engineer or his or her designee in his or her sole discretion and subject to approval by the city attorney:

(1)

A bond or bonds by one or more duly authorized corporate sureties.

(2)

A deposit, either with the city or a responsible escrow agent or trust company, at the option of the city, of money or negotiable bonds of the kind approved for securing deposits of public moneys.

(3)

An instrument of credit from an agency of the state, federal, or local government when any agency of the state, federal, or local government provides at least 20 percent of the financing for the portion of the in-lieu agreement requiring security, or from one or more financial institutions subject to regulation by the state or federal government pledging that the funds necessary to carry out the act or agreement are on deposit and guaranteed for payment, or a letter of credit issued by such a financial institution.

(4)

Any form of security, including security interests in real property, which is acceptable to the city attorney.

(b)

Amount of security. Security furnished by the developer to guarantee the performance of an in-lieu agreement shall be in the following amounts:

(1)

An amount of not less than 100 percent of the total development impact fees which are satisfied by the in-lieu agreement, conditioned upon the faithful performance of the in-lieu agreement;

(2)

An amount of not less than 100 percent of the total development impact fees which are satisfied by the in-lieu agreement, securing payment to the contractor, subcontractors, and persons furnishing labor, materials, or equipment to them for performance of the in-lieu agreement; and

(3)

An amount of not less than 20 percent of the total development impact fees satisfied by the in-lieu agreement to guarantee and warranty the work required by the in-lieu agreement for a period of one year following completion and acceptance thereof against any defective work or labor done, or defective materials furnished.

(c)

Release of security. Security furnished by the developer pursuant to this section shall be released in whole or in part in the following manner:

(1)

Security furnished pursuant to subsection (b)(1) of this section shall be released upon the developer's final completion and the city's acceptance of the work required by the in-lieu agreement, or, at the city council's sole and absolute discretion, partially released upon the partial performance and acceptance of the work required by the in-lieu agreement, if provided for in the in-lieu agreement.

(2)

Security furnished pursuant to subsection (b)(2) of this section shall be released after acceptance of the work required by the in-lieu agreement, after passage of the time within which claims of lien are required to be recorded pursuant to Civil Code § 3114, et seq., and after reduction by an amount equal to the total claimed by all claimants for whom claims of lien have been recorded and notice thereof given in writing to the city. If no such claims have been recorded, the security shall be released in full.

(3)

Security furnished pursuant to subsection (b)(3) of this section shall be released after a period of one year following completion and acceptance of the work required by the in-lieu agreement, and after reduction by an amount equal to the costs, if any, of correcting any defective work or labor done, or defective materials furnished.

(Ord. No. 1236, § 1, 2-3-98)