REPORT TO THE CITY COUNCIL FROM: SCOTT L. MOZIER, PE, Director Public Works Department BY: ANDREW J. BENELLI, PE, City Engineer/Assistant Director Public Works Department, Traffic Operations and Planning Division SUBJECT ..Title Actions pertaining to executing a Consultant Agreement with NBS Government Services: 1. Authorize the Public Works Director to execute a Consultant Agreement with NBS Government Services in the amount of $48,500 with a $4,800 contingency, for assistance with the formation of a Community Facilities District (CFD) for Police and Fire Services (Council Districts 1 and 3) 2. ***RESOLUTION - 29th Amendment to the Annual Appropriation Resolution (AAR) No. 2021-178 to appropriate $61,500 from developer contributions of $37,500 and future CFD assessment district revenue of $24,000 to assist in funding the formation of a Community Facilities District for Police and Fire Services (Requires 5 Affirmative Votes) (Subject to Mayor's Veto) ..Body RECOMMENDATION Staff recommends the City Council authorize the Public Works Director to execute a Consultant Agreement with NBS Government Services in the amount of $48,500 with a $4,800 contingency, for assistance with the formation of a Community Facilities District (CFD) for Police and Fire Services. Staff is also recommending approval of an Annual Appropriation Resolution to allocate $61,500 for the new Police and Fire Services CFD formation process and consultant study, utilizing $37,500 in developer contributions and $24,000 in future CFD revenue. EXECUTIVE SUMMARY The Dakota Hayes Annexation No. 4 (Fanucchi Annexation) was processed with a standalone tax sharing agreement that allocates the property tax revenue for new annexations at a rate of 62% accruing to the County and 38% accruing to the City. The City's General Plan requires all new annexations to be revenue neutral. A simple analysis by City staff indicated that new annexations west of Route 99 are not revenue neutral. Staff is recommending that the City retain NBS Government Services to conduct a more detailed analysis of revenue and expenses related to providing police and fire services in the newly annexed areas. NBS will also assist City staff with the formation of a CFD assessment district to help fund Police and Fire services in the newly annexed properties west of Route 99. The Scope of Services for NBS also includes annexing three tentative tract maps into the new CFD. The developers of two of the three tracts have deposited $37,500 to assist in paying for the study, the formation, and the annexation into the CFD. The third tentative map will be required to deposit $12,500. BACKGROUND The City and County Memorandum of Understanding dated January 6, 2003, a master tax sharing agreement, expired on August 29, 2020. The Dakota Hayes Annexation No. 4 (Fanucchi Annexation) was processed with a Standalone Tax Sharing Agreement. The Standalone Tax Sharing Agreement allocates 62% of the property taxes to the County and 38% of the property taxes to the City. The Standalone Tax Sharing Agreement also requires the Developer to make up for revenue shortfalls through an appropriate mechanism. Staff has performed a simple analysis of the property tax revenue that will be generated by all the properties included in the annexation area. That analysis indicates that there will be a revenue shortfall that is not adequate to fully fund Police and Fire services in the new subdivisions. Staff is recommending that all the new subdivisions are annexed into a new Community Facilities District to generate additional revenue and fully fund Police and Fire Services. City staff recommends retaining NBS Government Services to perform additional fiscal impact analysis and determine the appropriate assessment rate for the new developments. NBS will also prepare the formation documents for the new CFD. Three of the proposed subdivisions will be annexed into the CFD with the approval of the formation. NBS Government Services has agreed to complete the fiscal impact analysis, the CFD formation, and the annexation of three tracts for $48,500. Staff is recommending including a contingency fund for approximately 10% of the contact amount for any out-of-scope work or if the completion date of the formation is delayed by circumstances that the consultant cannot control. The total amount of the contract including the contingency is $53,300. If approved by City Council, the AAR will allocate $61,500 to fund the consultant contract, City staff costs and incidental expenses. ENVIRONMENTAL FINDINGS Pursuant to CEQA Guidelines Section 15268(b)(3), approval of a consultant agreement is a ministerial action and is exempt from the requirements of CEQA. LOCAL PREFERENCE Local preference was not considered because this resolution does not include a bid or award of a construction or services contract. FISCAL IMPACT The City has received deposits totaling $37,500 from two developers that are processing tentative maps in west Fresno. A third tentative map has also been approved. That developer will be making a $12,500 deposit. The total amount anticipated from the developer deposits is $50,000. Future revenue from CFD annexations and assessments is being allocated toward the consultant contract, staff costs and incidental expenses in order to fully fund the CFD formation process. Attachments: Resolution Consultant Agreement