PURPOSE:

The purpose of this staff report is to present the annual adjustment to the Development Impact Fees in accordance with the current Construction Cost Index as required by Ordinance 3340.

ANALYSIS:

Ordinance No. 3340 establishes procedures for adoption of certain Development Fees in compliance with the provisions of Government Code Section 66000 through 60017, which enables the City to adopt such fees. The Development Impact Fees approved under Ordinance No. 3340 in 1993 are required to be adjusted annually on the first day of January.  To meet the adoption deadline, the adjustment is based on the Construction Cost Index published in the Engineering News Record as of December 1 of each calendar year. 

The Construction Cost Index (CCI), as published in Engineering News Record (ENR), is a value based on a 20-city cost average for specific quantities of milled steel, fabricated steel, portland cement, and lumber, as well as the cost of 200 hours of common labor.  The 20 cities include: Atlanta, Baltimore, Birmingham, Boston, Chicago, Cincinnati, Cleveland, Dallas, Denver, Detroit, Kansas City, Los Angeles, Minneapolis, New Orleans, New York, Philadelphia, Pittsburgh, San Francisco, Seattle, and St. Louis. 

This year the increase in construction costs is 3.7%, based on the latest data available published in the Engineering News-Record in November 2006.  This percentage represents a national average and is not specifically representative of any single region.  ENR also publishes individual CCI information for each of the 20-cities.  However, the annual adjustment to Burbank�s Development Impact Fees has traditionally been based on the percentage of inflation for the 20-city average.

BMC Sec. 31-2207(b) does permit the Council to increase or decrease the fee adjustment regardless of the published CCI.  Consistency with previous fee adjustments favors the proposed 20-city CCI through November, or 3.7 % for 2006.  If the Council acts on the exception in 31-2207, it may be possible to adopt the highest monthly rate throughout the year for the Los Angeles area, or the highest 20-city average rate, or adopt the median rate from either index.

For 2006, the highest monthly rate for the Los Angeles area was 4.6% in January, the lowest rate was 1.0% in September, and the median rate would be about 2.3%.  The highest monthly rate for the 20-city average was 5.4% in February, the lowest rate was 3.0% in September, and the median rate would be about 4.2%.

This year, based on the latest data available from Engineering News-Record, the increase in November construction costs is 3.7%, which is the cost average of 20-cities.  By comparison, the Los Angeles rate for November is 4.1%.

Based on a 3.7% increase, the adjustments to the Development Impact Fees are:

RECOMMENDATION:

Staff recommends that the City Council approve the adjustment to the Development Impact Fees in accordance with the current Construction Cost Index as required by Ordinance 3340 and adopt the attached resolution.

ATTACHMENTS:

Exhibit A: Adjusted Transportation Fee Schedule for 2007

Exhibit B: Adjusted Community Facilities Fee Schedule for 2007

Exhibit C: Certificate of Adjustment of Development Impact Fees

Exhibit D: Construction Cost Index

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