Normal Mitigation Fee Cycle:
Each Agency establishes Mitigation Fees based on the estimated cost of the development to their agency – city, school district, parks & rec., library, hospital, etc.
Developer pays ENTIRE amount of mitigation fees to agencies at the start of the development project so agencies will have the needed facilities in place when the property owners begin to occupy the homes.
Funds are deposited into an Escrow Account to collect the maximum interest and to properly account for the money.
Agencies then use the mitigation fees to build the infrastructure so the fire stations, hospitals, schools, and roadways needed to accommodate the influx of population is ready when the homes become occupied.
When the Mitigation Fees are properly accounted for there is no question as to how much money is available for individual infrastructure projects.
Beaumont Cycle:
City establishes mitigation fees without any basis and includes mitigation fees that should be paid to the Parks and Recreation Department.
Flooding the housing market combined with astronomical Mello Roos taxes has resulted in foreclosures, abandoned houses, and home values that are far lower than anywhere else in the region.
Because of the depressed value of houses the Developers would have no incentive to build houses in Beaumont legally.
Developers agree to pay mitigation fees to the City if the City Agrees to reimburse all of the mitigation fees with Mello Roos Municipal Bond Funds.
Developer pays mitigation fees to city per house built, not in a lump sum.
Money is deposited into the City’s General Fund Bank Account and spent on lawyers, consultants, and parties; leaving an $8 – $10 Million Deficit EVERY YEAR.
‘Council Approves’ Budgets that are dependent on using Mitigation Fees Collected for Daily Operations.
‘Council Approves’ spending mitigation fees on lawyers, consultants, and city operations.
‘Council Approves’ illegal Mello Roos Bond acquisition and use.
Developer submits Invoice to City for reimbursement of Mitigation Fees and other expenses incurred.
City Staff/Council issues Requisitions to Bond Trustee with direction to reimburse developer for mitigation fees.
All Mello Roos Bond money is used to reimburse Mitigation Fees or pay ‘Administration Fees’ and infrastructure is never built.
The City also budgeted $4 Million for CFD Administration fees even though the City has no Administration Staff and can’t produce any CFD records.
The 2015/2016 Budget Dept. 35 Mitigation Fees REVENUES $4,234,970.00.
The 2015/2016 Budget Dept. 14 CFD Services and Capital REVENUES $20,282,845.
The Beaumont City Council made 1/2 of their Budget dependent on illegally trading bond money for mitigation fees and then spending the mitigation fees collected on daily operations instead of for the use collected.
Building Permits, Planning Revenue, Public Works are all recorded in Department 01 – Administration (City Manager). Even the Fees collected for police services are recorded in Administration, not Police.
The City should have a separate Escrow Account collecting the highest Interest Rate possible for each Mitigation Fee Collected:
- Basic Services and Facilities
- General Plan
- Traffic Signal
- Railroad X’ing
- Fire Stations
- Fair Share BRB Facilities
- Regional Park
- Sewer Capacity
- Recycled Water
- Sewer Application
- Lower Potrero Sewer
- Southern Trunk Main
- Emergency Preparedness
- MSHCP Fee DA Exempt
- Noble Creek Sewer
- Willow Springs Sewer
- Oak Valley Sewer
- Forth Street Extension
- Transportation
General Ledger Reports from July 1, 2015 thru March 31, 2016 record $4,220,686.95 in Mitigation Fees collected and $426,000 paid to Western Riverside County Conservation Association.