Title
Natomas Basin Habitat Conservation Plan (HCP) Fee - 2024 Adjustment [Noticed February 16, 2024 and February 22, 2024]
FileID
File ID: 2024-00399
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Location
Location: Natomas Basin, District 1, Represented by Councilmember Kaplan and District 3
Mayor Pro Tem Talamantes
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Recommendation
Recommendation: Conduct a public hearing and upon conclusion, adopt a Resolution adjusting the amount of the Natomas Basin Conservation Plan (HCP) fee, to be effective in 60 days.
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Contact
Contact: Cheryle Hodge, Principal Planner, (916) 808-5971, chodge@cityofsacramento.org; Kelly Boyle, Associate Planner, (916) 808-2022, kboyle@cityofsacramento.org Community
Development Department
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Presenter
Presenter: Kelly Boyle, Associate Planner, (916) 808-2022, kboyle@cityofsacramento.org,
Community Development Department
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Attachments
Attachments:
1-Description/Analysis
2-Background
3-Resolution to Adjust the Habitat Conservation Fee
4-TNBC Board of Directors HCP Fee Resolution
5-TNBC NBHCP 2024 Finance Model
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Description/Analysis
IssueDetail
Issue Detail: The annual re-evaluation of the Natomas Basin Habitat Conservation Plan (NBHCP) Finance Model is required by §3.2.6 and 4.9.2 of the Implementation Agreement and is performed by the City’s NBHCP Plan Operator - The Natomas Basin Conservancy (TNBC). On December 18, 2023, TNBC’s Board of Directors recommended that the City of Sacramento increase the fee due to an increase in administration, operations, and maintenance costs in addition to an increase in costs associated with mitigation land restoration and enhancement.
Developers of land covered by the NBHCP within North and South Natomas currently pay an HCP fee of $45,565 per gross acre of development ($29,815 per acre with land dedication). TNBC’s economic consultant - Economic & Planning Systems (EPS) - completed an update of the HCP Finance Model based on actual costs, as well as estimated costs, that indicates a necessity to adjust fees in order to successfully implement the HCP. Under the terms of the 2003 NBHCP Implementation Agreement between the City and the state and federal wildlife agencies, the City agreed to have its NBHCP “Plan Operator” (TNBC) update the HCP Finance Model annually for the life of the HCP. The HCP Fee revenue pays for the land acquisition, restoration and enhancement, administration and operations and maintenance, operations and maintenance endowment, and supplemental endowment funds associated with implementing the HCP and mitigating impacts of urban development on the species covered under the NBHCP. Based on the Finance Model update and the judgment of TNBC Board, the City Council is being requested to approve an increase of $444 for the HCP fee that does not have land dedication and an increase of $2,444 to the HCP with land dedication, resulting in a 2024 fee of $46,009 per gross acre of development ($32,259 with land dedication). There is no obligation of the General Fund associated with this requested fee adjustment.
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PolicyConsiderations
Policy Considerations: The 2003 NBHCP was approved by City Council on May 13, 2003, the federal Incidental Take Permit (ITP) was issued by U.S. Fish and Wildlife Service on June 27, 2003, and the amended state ITP was issued by California Department of Fish and Game on July 10, 2003. On an annual basis, the City considers a fee adjustment to ensure adequacy of the funding to implement the 2003 NBHCP and comply with the ITP and the related Implementation Agreement.
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EconomicImpacts
Economic Impacts: Not applicable.
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EnvironmentalConsiderations
Environmental Considerations:
California Environmental Quality Act (CEQA): The City Council’s action in approving this resolution is solely for the purpose of establishing an adequate Habitat Conservation Plan (HCP) fee to be used to implement the HCP and is therefore not a project for the purpose of the CEQA pursuant to Guidelines section 15378(b)(4). Previous environmental review has been conducted related to the North Natomas Community Plan, the 2003 NBHCP, and the Comprehensive Drainage Plan, among others.
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Sustainability
Sustainability: Periodic review and adjustment of the HCP fee is consistent with and supportive of the sustainable practice of preservation of prime farmland and critical habitat resources.End
Commission/CommitteeAction
Commission/Committee Action: TNBC Board of Directors reviewed the proposed fees on December 6, 2023 and recommended an increase be made to the NBHCP fee. Their adopted resolution is included as Attachment 4.
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RationaleforRecommendation
Rationale for Recommendation: The HCP fees are adjusted annually, prior to the commencement of the grading season (May 1). TNBC recommends an increase to the current fee. (See Attachment 4 - TNBC’s resolution to increase the HCP fee 2024 rate.)
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FinancialConsiderations
Financial Considerations: There is no obligation of the General Fund associated with this requested fee adjustment.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): Not applicable.
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Background
Background:
History of the NBHCP Fee
On August 7, 1997, the City Council added Chapter 84.10 to Title 84 (currently Chapter 18.40 of Title 18) of the City Code, which created and established the authority for the NBHCP fee to fund the costs of implementing the NBHCP (Ord. No. 97-046). Chapter 18.40 directs the City Council, by resolution, to set the amount of the fee. The chapter also contemplates the periodic revision of the fee by resolution of the Council.
The history of the NBHCP fee rate is shown in the graphics and table below. As shown, it increased dramatically following the approval of the 2003 NBHCP and the years immediately following. This increase was due to the enhanced mitigation necessitated by ligation and set forth in the 2003 revised NBHCP, as well as a continued and sustained increase in land prices. The fee is adjusted when required and has only been adjusted four times since 2014 after four years of annual decreases. In 2017, there was a decrease of $659 in the fee largely due to an increase in estimated crop land lease revenue per acre used to offset the Administration and Operation and Maintenance Costs. In 2018, there was an increase in the fee of $1,491 which reflected the change in the estimated annual Endowment fund management fees paid by TNBC. The most recent adjustment in 2023 amounted to an increase of $1,597 which was largely attributable to negative investment earnings and increases in administration and restoration and enhancement costs.
Graphic - Fee History 2004 through 2024
History of NBHCP Fees
|
Date |
HCP Fee / Gross Acre |
Resolution No. |
|
October 31, 1995 |
$2,240 [Interim Fee] |
95-060 |
|
September 2, 1997 |
$2,656 |
97-508 |
|
August 17, 1999 |
$3,292 |
99-473 |
|
September 12, 2000 |
$3,942 |
2000-538 |
|
June 12, 2001 |
$10,021* (incl. $4,028 premium) |
2001-391 |
|
May 21, 2002 |
$11,962* (incl. $4,028 premium) |
2002-300 |
|
June 24, 2003 |
$12,270 |
2003-460 |
|
April 20, 2004 |
$16,124 ($8,624 w/ land dedication) |
2004-285 |
|
April 5, 2005 |
$24,897 ($12,397 w/ land dedication) |
2005-223 |
|
May 4, 2006 |
$41,182 ($18,682 w/ land dedication) |
2006-301 |
|
February 13, 2007 |
$38,445 ($18,445 w/ land dedication) |
2007-092 |
|
February 19, 2008 |
$38,133 ($20,633 w/ land dedication) |
2008-097 |
|
February 17, 2009 |
$38,133 ($20,633 w/ land dedication) |
N/A |
|
March 9, 2010 |
$44,050 ($26,550 w/ land dedication) |
2010-127 |
|
March 22, 2011 |
$37,547 ($22,547 w/ land dedication) |
2011-157 |
|
February 21, 2012 |
$32,861 ($21,611 w/ land dedication) |
2012-037 |
|
January 29, 2013 |
$27,419 ($18,669 w/ land dedication) |
2013-027 |
|
February 4, 2014 |
$32,259 ($21,009 w/ land dedication) |
2014-0034 |
|
January 13, 2015 |
$32,259 ($21,009 w/ land dedication) |
N/A |
|
February 9, 2016 |
$32,259 ($21,009 w/ land dedication) |
N/A |
|
January 17, 2017 |
$31,600 ($20,350 w/ land dedication) |
2017-0043 |
|
January 30, 2018 |
$33,091 ($21,841 w/ land dedication) |
2018-0051 |
|
February 26, 2019 |
$33,091 ($21,841 w/ land dedication) |
N/A |
|
February 27, 2020 |
$40,032 ($25,032 w/ land dedication) |
2020-0062 |
|
April 13, 2021 |
$40,032 ($25,032 w/ land dedication) |
N/A |
|
March 1, 2022 |
$43,968 ($27,718 w/ land dedication) |
2022-0067 |
|
February 21, 2023 |
$45,565 ($29,815 w/ land dedication) |
2023-0052 |
|
February 27, 2024 |
$46,009 ($32,259 w/ land dedication) |
Proposed |
* In 2001, the Council increased the fee to $10,021 per gross acre to implement the 1997 NBHCP and the Settlement Agreement. The fee included a base fee of $5,993 per gross acre and a premium fee of $4,028 per gross acre to acquire reserve lands in prioritized areas of the Basin in order to comply with the agreement. In 2002, the Council increased the fee to $11,962 per gross acre - a base fee of $7,934 and a premium fee of $4,028 for the agreement.
The table above shows the History of the NBHCP Fees. As shown in the table, the HCP Fee reached a high in 2010 at $44,050 per gross acre ($26,550 w/land dedication). Fourteen years later, the HCP is not significantly higher.
TNBC is the plan operator of the NBHCP. TNBC acquires mitigation land and implements management and enhancement measures necessary to meet the mitigation requirements of the NBHCP. With best available information regarding current and projected costs associated with implementation of the 2003 NBHCP, TNBC staff worked with its economic consultant EPS to update the HCP Finance Model. Based on the economic model and the judgment of the TNBC, an increase adjustment is needed to accurately reflect the current costs of operating the HCP and thus should be reflected in the HCP fee.
Justification for Adjusting the HCP Fee
In order to implement the HCP, each December, TNBC recommends that the City Council approve a fee adjustment, if an adjustment is deemed necessary to implement the NBHCP given current assumptions. The current fee is $45,565 per gross acre of development ($29,815 per acre with land dedication); the proposed fee would be increased to $46,009 ($32,259 per acre with land dedication) based on the NBHCP Finance Model and TNBC’s analysis.
The NBHCP Fee is made up of five major parts:
1) Land Acquisition,
2) Restoration and Enhancement,
3) Administration and Operation and Maintenance (O&M),
4) O&M Endowment, and
5) Supplemental Endowment.
The fifth component - the Supplemental Endowment -- was added (at the request of the City) in June 2001 to provide assurances that the last 200 acres of required mitigation land will be purchased after all the fee revenue has been collected. The Supplemental Endowment may also be used for unforeseen circumstances expenses.
Unlike the Supplemental Endowment part of the fee, the O&M Endowment Fund is used to maintain the preserve lands in perpetuity after build-out of the plan area and all development fee revenue has been collected.
A small sixth component is allocated to the City for fee collection (2% of the fee).
Compared to the 2023 fee, the proposed 2024 fee represents a fee increase of 1.0% (without land dedication) or a 8.2% fee increase (with land dedication). The increase is largely attributable to increases in projected marsh maintenance costs and Restoration and Enhancement costs.
Mitigation Fee Summary (per acre of development) without land dedication
|
Fee Component |
2023 Adopted |
2024 Proposed |
Change from 2023 |
|
Land Acquisition (land, transaction, and contingency) |
$16,500 |
$14,500 |
($2,000) |
|
Restoration & Enhancement |
$1,840 |
$2,019 |
$179 |
|
Administration / Operations & Maintenance |
$16,061 |
$17,449 |
$1,388 |
|
O&M Endowment |
$9,637 |
$10,469 |
$832 |
|
Supplemental Endowment |
$634 |
$670 |
$36 |
|
Fee Collection Administration |
$893 |
$902 |
$9 |
|
Total |
$45,565 |
$46,009 |
$444 |
Mitigation Fee Summary (per acre of development) with land dedication
|
Fee Component |
2023 Adopted |
2024 Proposed |
Change from 2023 |
|
Land Acquisition (land, transaction, and contingency) |
$750 |
$750 |
$0 |
|
Restoration & Enhancement |
$1,840 |
$2,019 |
$179 |
|
Administration / Operations & Maintenance |
$16,061 |
$17,449 |
$1,388 |
|
O&M Endowment |
$9,637 |
$10,469 |
$832 |
|
Supplemental Endowment |
$634 |
$670 |
$36 |
|
Fee Collection Administration |
$893 |
$902 |
$9 |
|
Total |
$29,815 |
$32,259 |
$2,444 |
The Conservancy is obligated to submit a fee recommendation each year that ensures its ability to successfully implement the NBHCP. A copy of the full fee study (dated December 18, 2023) is available for review at the City Planning Office, 300 Richards Blvd., 3rd Floor, Sacramento, CA 95811, and as Attachment 5 of this report.
Land Dedication Requirement
Since 2003, all large mitigation efforts have been accomplished through land dedication by the developers to TNBC, as opposed to payment of the Land Acquisition portion of the NBHCP fee. In April 2005, the City Council voted to require developers of 50+ acres to dedicate land in lieu of the full fee payment - unless the Conservancy deemed it had adequate surplus land such that accepting fees over dedication was helpful to the NBHCP’s implementation. On May 4, 2006, the City Council extended this provision to May 1, 2007. On February 13, 2007, the City Council extended the land dedication in-lieu requirement without a sunset date. No change in this requirement is proposed in this report.
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