Summary: Staff proposes the Board consider amending Resolution 2009-01 to extend the Regional Transportation Mitigation Fee (RTMF) program to Dec. 31, 2027, coinciding with the current term of the RTMF joint powers authority (JPA), direct staff to begin soliciting the cities and County to amend the JPA, and authorize an RFP for a consultant firm to begin updating the required nexus study.
The proposed actions are for discussion purposes to allow the Board to fully comprehend this complex interaction between the Transportation Authority and the RTMF Board. Staff will duplicate this presentation to the Transportation Authority and share the RTMF Board comments. Staff will then bring the direction provided by the Transportation Authority back to the RTMF Board for action.
Background: California Government Code Section 66000 et.seq., the Mitigation Fee Act, allows governmental agencies to impose a development fee on housing and commercial development to mitigate future development costs based on a nexus study. The nexus must identify the anticipated cost of candidate projects, designate funding sources available, and prorate a percentage of the project cost between existing need and future need, based on an assessment of a general plan’s build-out. The fee can only pay to mitigate the cost of future development. Any existing need must be funded with other revenues.
In 2007, Measure C extended the 1986 sales tax measure, mandating each agency in Fresno County to enact an RTMF fee and remit the proceeds to the Fresno County Transportation Authority (FCTA) to supplement the Regional Transportation Program. The fee’s inclusion was intended to make up for reductions in the Regional program from 75% of the total sales tax collected per the 1986 Measure to 30%. The ballot measure contained enforcement provisions to ensure all agencies participated. The ballot also directed Fresno COG to hire a consultant to prepare the nexus and guide program implementation.
Fresno COG hired an engineering firm and convened a committee of public officials and administrators to develop the Regional Transportation Mitigation Fee (RTMF) program. The process collectively resulted in a recommendation to form a joint powers authority to implement one uniform fee structure rather than have 16 separate fees enacted by the individual agencies. This resulted in the Fresno County RTMF Agency. The board of directors comprises city and County elected representatives to the Fresno COG Board and has identical quorum and voting requirements. The JPA’s term is effective through Dec. 31, 2027. Extension of that term requires an amendment to the Joint Powers Agreement requiring action by each individual city council and the County’s Board of Supervisors.
Implementation: The FCRTMFA approved Resolution 2009-01, effective Jan. 1, 2010, adopting the nexus and implementing the fee program. The adopting resolution provided the fee’s term to coincide with the Measure C extension, which expires June 30, 2027. Subsequently the nexus has been updated and revised per State law in five-year intervals, including 2015 and 2020. To identify future development, the 2020 nexus was required to look beyond the potential sunset date of the Measure and provides justification to continue the program beyond June 30, 2027 as a stand-alone fee apart from the Measure.
The nexus initially evaluated the Measure C Regional Program Tiers 1 and 2 lists and a list of freeway deficiency projects that appeared on the 2006 ballot. However, rapid project cost-inflation occurring between the November 2006 election and the final NEXUS required the eligible candidate list to be pared down to State highway projects on the Tier 1 list to keep the fee at a reasonable level. This satisfied Caltrans, which, prior to the ballot, had imposed a state fee during the CEQA process on city and County developments to mitigate the State highway system.
RTMF programs around the state generally require some sort of debt financing mechanism because future development often takes years to happen. Nevertheless, transportation projects often must be built in advance to help facilitate development, meaning costs are incurred far in advance of the fee collection.
Rather than hire an underwriting team to sell bonds and incur millions in interest expense, Fresno COG and FCTA staff worked with County Counsel and the County Auditor-Controller to develop an internal loan program wherein Measure C loaned the RTMF Fund cash to build the projects. As the mitigation fees come in, they are used to pay back the Measure. This way, interest and principal can be rolled back into the program, adding millions to the project list over time.
Fee collection
The city or county advises the developer of the fee at issuance of a building permit and provides a record-of-payment form. The fee must be paid prior to final inspection. The fee is paid at the Fresno COG office. Fresno COG staff deducts a handling fee and remits to the Auditor Controller which deposits it in the Authority’s RTMF fund.
How the loan works
A major project is typically be funded through a variety of sources, including Measure, STIP, RTMF or others. The nexus determines the amount of RTMF the project is eligible to receive; however, the project is scheduled for construction based on a combination of its priority and funding source availability. When the project is listed for construction, typically the RTMF fund does not have a significant cash balance. However, the RTMF expense must be recognized to continue collecting the fee. As construction costs are incurred, the Auditor Controller recognizes RTMF expenses and transfers Measure cash to the RTMF fund to cover the expenses. This represents the loan and it is completely internal to the Transportation Authority. There is no loan between the RTMF agency or Fresno COG. The authority is loaning money to itself in order to recognize the RTMF expense necessary to justify collecting the fee.
The Auditor Controller prepares an annual statement of RTMF that Fresno COG collected and remitted, recognizing the debt service and interest on the loan and transfers a commensurate amount of RTMF cash back to the Measure account from which the loan originated.
It was anticipated the loans may not be completely paid off by the Measure’s sunset, in which case the loan balance would simply be written off and recognized as an expense of the Measure rather than RTMF. The journal entry is entirely cash-flow neutral and nets out completely. There is no gain or loss associated with the transfer. However, there is an option to extend the RTMF program beyond the Measure and roll the debt service back into a capital projects fund. The estimated status of the Loan program at the sunset of Measure C follows.
RTMF Expended
($ in Thousands)
Urban Program
Veterans Boulevard $59,342
SR 180 West $2,728
SR 99 North Cedar Interchange $31,800
SR 168, 41, 180 Braided Ramps $8,764
Total Urban $102,634
Balance of Loan $70,506 $70,506
Rural Program
SR 180 East $71,581
Balance of Loan $35,680 $35,680
$106,186
Staff estimates that $80 million in RTMF will be collected during the measure, of which $12 million is returned to the program as interest on the loan and $68 million is applied to the projects. The $106,186 unpaid loan balance represents a potential future source of cash flow to the capital projects program if the RTMF is extended beyond the measure.
RTMF beyond June 30, 2027
The proposed Measure S on the November 2026 ballot carries similar provisions regarding the RTMF that appeared in the 2007 Measure C ballot, mandating the fee’s adoption and providing enforcement provisions to ensure all agencies participate. Measure S provides that the JPA shall be extended by June 30, 2028; however, by then both the fee and the RTMF JPA will have expired unless action is taken to extend the program beyond the current expiration dates. It is noted that Measure S is a voter initiative and not a technical continuation of the 2007 Measure, which was formulated pursuant to Section 142000 et. seq. of the California Government Code. Consequently, the June 30, 2027 sunset date on Measure C provides a hard termination date for RTMF fee collection, unless Resolution 2009-01 is extended and the JPA is amended to extend the agency’s lifespan beyond December 2027.
As mentioned above, the fee program’s term expires on June 30, 2027; however the JPA’s term extends through Dec. 31, 2027. Staff proposes Resolution 2009-01 be amended to extend the fee program to Dec. 31, 2027 to coincide with the current term of the JPA and direct to staff to start the process of going to the cities and County to amend the JPA. Once the JPA is amended, the fee program can be extended commensurately. The term will be determined in large part by the success/failure of the proposed ballot initiative. If the initiative passes, it would make sense to set the term to coincide with the new program. If the initiative fails, the program by default becomes a stand-alone program and it makes sense to remove the term and make the RTMF Agency a going concern. Since the loan program was created and is internal to the Transportation Authority, it is appropriate that it makes the initial decision to request the RTMF Agency to extend collections beyond the sunset date of Measure C to continue the debt service.
2028 Nexus Update
State law requires the nexus study to be updated by Jan. 1, 2028. To meet this schedule, staff will bring forward a consultant proposal to start the process early in 2027. The Board will need to determine whether to add projects to the list or simply update the existing project list and continue the debt service.
Staff recommends the nexus be updated using only the existing project list to continue the debt service so that the $106.6 million in debt service will provide cash to add projects to the Regional Program beyond the Measure. Secondarily, while the current proposed ballot measure mandates continuation of the RTMF, the details of that continuation will have be adopted as part of a Strategic Implementation Plan (SIP) for Measure S. The proposed ballot also sets aside 4% to be used in a Regional Program that will also have to be further detailed in the SIP.
The Board will have to work all this out when and if the proposed ballot passes, and there is potential for project selection to be controversial. New projects added to the RTMF list will increase the fee, so there will be a trade-off between how much the fee is increased and how much it is deemed reasonable to add to the cost of family residences and commercial construction.
This could take time to sort out. By simply updating the NEXUS with the existing projects, the Board buys time to deal with these issues while keeping the program in place. The NEXUS must be updated every eight years at a minimum; however it can be updated at any time in between.
Schedule of Events
|
03/30/27 |
06/31/27 |
12/31/27 |
06/30/28 |
| Begin 2028 Nexus Study |
X |
|
|
|
| RTMF Fee program expires |
|
X |
|
|
| RTMF JPA term expires |
|
|
X |
|
| 2028 Nexus Study Adopted |
|
|
X |
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| Measure S Requires RTMF JPA Extension |
|
|
|
X |
Proposed Actions to Consider
- Direct staff to approach the Transportation Authority to request the RTMF Agency amend Resolution 2009-01 to extend the term of the RTMF program to December 31, 2027 coinciding with the existing term of the RTMF JPA.
- Recommend the Board direct staff to begin, as soon as practicable, the process of approaching the cities and county to amend the JPA to extend the term of the agency beyond 12/31/27.
- Recommend the Board direct staff to start the process of hiring a consultant to perform the 2028 NEXUS update considering only the existing project list with the provision that additional projects can be added during a future nexus update scheduled at the discretion of the board.
The proposed actions are for discussion purposes to allow the Board to fully comprehend this complex interaction between the Transportation Authority and the RTMF Board. Staff will duplicate this presentation to the Transportation Authority and share the RTMF Board comments. Staff will then bring the direction provided by the Transportation Authority back to the RTMF Board for action.
Action: Information and discussion. The Board may provide additional information at its discretion. This item will return for additional consideration in October.