4.1. HISTORICAL CONTEXT FOR MITIGATION FEES

Prior to World War II, development in California was held responsible for very little of the cost of public infrastructure. Public improvements were financed primarily with general funds and utility charges. It was not uncommon during this period for speculators to subdivide tracts of land without providing any public improvements, expecting the closest city to eventually extend to the project and provide public improvements and services.

However, starting in the late 1940s, the use of impact fees grew with the increased planning and regulation of new development. During the 1960s and 1970s, California courts broadened the right of local government to impose fees on developers for public improvements that were not located on project sites. More recently, with the passage of Proposition 13, the limits on general revenues for new infrastructure has resulted in new development being held responsible for a greater share of public improvements, and both the use and levels of impact fees have grown substantially. This greater level of fees was undoubtedly driven in part by a need to offset the decline in funds for infrastructure development from other sources.

The levy of impact fees is one authorized method of financing the public facilities necessary to mitigate the impacts of new development for an increased population. A Fee is "a monetary exaction, other than a tax or special assessment, which is charged by a local agency to the applicant in connection with approval of a development project for the purpose of defraying all or a portion of the cost of public facilities related to the development project..." ⁴⁰ A fee may be levied for each type of capital improvement required for new development, with the payment of the fee occurring prior to the beginning of construction of a dwelling unit or retail/non-retail building (or prior to the expansion of existing buildings of these types). Fees are often levied at final map recordation, issuance of a certificate of occupancy, or more commonly, at building permit issuance.

⁴⁰ California Government Code, Section 66000.

4.2. REQUIREMENTS TO ESTABLISH A DEVELOPMENT IMPACT MITIGATION FEE

Assembly Bill ("AB") 1600, which created Section 66000 et seq. of the Government Code, was enacted by the State of California in 1987. Section 66000, also called the Mitigation Fee Act, requires that all public agencies satisfy the following requirements when establishing, increasing or imposing a fee as a condition of new development:

1. Identify the purpose of the fee. (Government Code Section 66001(a)(1))
2. Identify the use to which the fee will be put. (Government Code Section 66001(a)(2))
3. Determine that there is a reasonable relationship between the fee's use and the type of development on which the fee is to be imposed. (Government Code Section 66001(a)(3))
4. Determine how there is a reasonable relationship between the need for the public facility and the type of development project on which the fee is to be imposed. (Government Code Section 66001(a)(4))
5. Discuss how there is a reasonable relationship between the amount of the fee and the cost of the public facility or portion of the public facility attributable to the development on which the fee is imposed.

Identifying these items will help a fee to meet the nexus and rough proportionality requirements of the Mitigation Fee Act and other requirements of state and federal law.

This section of the Mitigation Fee Nexus Report has been prepared to satisfy the requirements of the Mitigation Fee Act and establish a rational and substantial nexus between new development in the MSHCP Plan Area and the imposition of a Local Development Mitigation Fee ("LDMF").

4.3. THE FEE AS ONE COMPONENT OF THE OVERALL FINANCING PROGRAM

As discussed in Section 5, funding is an essential component of the MSHCP and will be used to mitigate the effects of public and private Development projects that will be facilitated by the MSHCP. Funding for the MSHCP will come from federal, State, and local sources. State funding will mitigate the effects of State projects by State permit holders in proportion to their impacts within the Plan Area. Caltrans and the State Department of Parks and Recreation are State Permittees under the MSHCP with specific projects included as Covered Activities as discussed in Section 2.3.7.

Of the 153,000 acres of Habitat to be conserved by implementation of the MSHCP (Figure 4.1), state and federal acquisition and mitigation for State Permittees will account for 56,000 acres or approximately 37% of the Additional Conservation Area Lands. Local Permittees are responsible for the remaining 97,000 acres with Local Development Review Processes expected to contribute 41,000 acres to the Conservation Area Assembly and the remaining 56,000 acres being acquired (i.e. purchased).

The main funding source for these local acquisitions is the imposition and collection of the LDMF by the County and participating Cities.

In addition to land acquisition for Conservation purposes, other local program costs (which are discussed in Section 5 of the Nexus Report) include: management, monitoring, adaptive management, and administration. It is important to note that the mitigation fee will be used only for Habitat acquisition and other appropriate uses. No LDMF monies will be used for management, monitoring, or adaptive management activities. Local funding sources that may be used for management, adaptive management, and monitoring include: mitigation for regional infrastructure, landfill tipping fees, and other potential new revenue sources as discussed in Section 5.

4.4. PURPOSE OF THE FEE (GOVERNMENT CODE SECTION 66001(A)(1))

The Hearing Draft General Plan designates a total of 179,940 acres for community development land uses, 294,900 acres for rural land uses, 439,530 acres for open space land uses, and 30,610 acres for agricultural land uses within unincorporated County lands in the MSHCP Plan Area⁴¹ . According to the General Plans of the cities, a total of 222,530 acres would be designated for community development, 12,190 acres for rural use, 29,840 acres for open space, and 7,670 acres for agriculture.⁴² As Development occurs within western Riverside County, land that would otherwise remain in an open space or undeveloped state will become developed.

At build out, approximately 491,300 acres of currently vacant and agricultural lands are anticipated to shift to community development/rural uses to accommodate projected growth within the Plan Area. The majority of the last remaining intact Habitat is owned by public agencies and private landowners, who are required to mitigate the loss or degradation of this Habitat in order to develop their respective lands.

The LDMF is to be charged throughout the Plan Area to all future development within the western part of the County and the Cities in order to provide a coordinated conservation area and implementation program that will facilitate the preservation of biological diversity, as well as, maintain the region's quality of life. The reason for the imposition of the Fee over the entire region is that the loss of habitat for endangered species is a regional problem resulting from the cumulative impacts of continuing development throughout all of the Jurisdictions. In fact, biologists have identified most of Western Riverside County as belonging to its own separate "South Coast Bio-Region," with its own diverse plant and animal life, of which numerous animal species and narrow endemic plants have been granted special status under FESA and/or CESA.

⁴¹ Hearing Draft General Plan, April 2002.

⁴² WRCOG City General Plan land use database, October 2000.

As noted in the Public Hearing Draft General Plan and the MSHCP itself, the MSHCP was specifically designed to cover a large geographical area so that it would protect numerous endangered species and habitats throughout the region:

"The [Western Riverside County MSHCP Program] plan is the largest HCP ever attempted and covers multiple species and multiple habitats within multiple jurisdictions. The plan covers a diverse landscape from urban cities to undeveloped foothills and mountain forests. In addition to the presence of multiple habitats, the plan stretches across the Santa Ana Mountains, Riverside Lowlands, San Jacinto Foothills, San Jacinto Mountains, Aqua Tibia Mountains, Desert Transition and San Bernardino Mountains bio-regions."⁴³

It is the projected cumulative effect of future development that has required the preparation and implementation of the MSHCP to protect multiple habitats and multiple endangered species. Each development will contribute to the need for new regional infrastructure which, in turn, will adversely affect species and habitats. Without future development, existing habitat would not be in danger of permanently disappearing, and those endangered species currently residing within that habitat could be sustained. Even future development projects that may not be located on property that is suitable for habitat purposes contribute to impacts on species because they are an interactive component of a much greater universe of development located throughout the Plan Area. First, the property owners and/or the tenants associated with any potentially non-habitat development regularly utilize and benefit from public roads, flood control facilities and other regional infrastructure, some of which are located on properties that are suitable for habitat purposes. Second, these property owners and tenants are dependent on and, in fact, may not have chosen to utilize their development, except for residential, retail, employment and recreational opportunities located nearby on other existing and future development, some of which has been or will be located on sites that constitute suitable habitat. Third, the availability of residents, employees and customers from this non-habitat development has a growth-inducing impact without which some of the development on habitat properties would not have occurred. As a result, all development projects within the region contribute to the cumulative impacts of development that constitute one of the primary reasons for the disappearance of suitable habitat for endangered species throughout the region. In addition, the purchase of habitat properties for preservation purposes with regionally-generated fees not only mitigates the endangered species habitat issue, but also helps resolve other regional problems related to the retention of open space and historic viewsheds which, in turn, promote flood protection and water re-charge measures.

⁴³ Draft MSHCP, November 15, 2002, Volume 1 - The Plan, page 1-1 and Volume 4 - EIR/EIS, page 1.1-7.

Furthermore, it is the very nature of a habitat conservation plan that requires a regional solution. The concept of purchasing small, unattached piecemeal properties located throughout the Jurisdictions in order to provide habitat located near to every development project would not be conducive to the survival of most endangered species. As documented in the MSHCP, it is a basic principal of Conservation Biology that "Large Habitat Blocks" be conserved and that these blocks and other Conservation Area areas must be contiguous and connected. Considerable empirical evidence is cited in the MSHCP regarding the importance of "wildlife movement corridors and Habitat Linkages between core Habitat areas." In fact, the MSHCP notes "connectedness through landscape Linkages and movement corridors are important because Habitat fragmentation and isolation lead to extinction of local populations and are the most serious threats to biological diversity."⁴⁴ Only by accruing financial resources such as impact fees on a regional-wide basis and utilizing these monies to purchase those critical sites throughout the region that are best suited (or most appropriately priced) for habitat purposes can the region's endangered species be best protected with the limited funding sources available.

⁴⁴ Draft MSHCP, November 2002, Volume 1, page 3-4.

The LDMF provides funding to mitigate the direct, indirect, and cumulative impacts to Habitat associated with the construction, operation, and maintenance of certain transportation facilities needed to serve future planned development within the Plan Area. As stated in Section 1, the population in western Riverside County will increase by almost 100% in the next 20 years. As a result of increased population, new homes, roads, and other public infrastructure (i.e. utilities, park facilities, etc.) must be constructed in a timely manner if Future Development is to proceed in an orderly, efficient and cost effective fashion. One of the purposes of the LDMF is to provide mitigation to offset impacts caused by new regional infrastructure necessitated by all new Development in the Plan Area. The Incidental Take permit associated with the MSHCP and the Covered Activities discussed in Section 2.3.7 will permit the construction of the public infrastructure and private projects needed to serve future development resulting from the population growth projected in the Plan Area.

The LDMF and MSHCP will ensure habitat conservation and species protection on a basis not experienced before in western Riverside County. This level of protection provides an unprecedented level of development certainty to the County, participating Cities, state and federal wildlife agencies; development, agriculture, and environmental communities; and the public at large.

The LDMF will reduce the need to list additional species in the future by funding the assembly of a regional conservation system to promote the biological viability and recovery of Western Riverside County's ecosystems, Habitats, and the species dependent thereupon. The comprehensive scope of the MSHCP provides a means to coordinate, standardize, streamline, and ensure closure regarding the mitigation requirements of FESA, CESA, NEPA, CEQA, and the NCCP Act within the Plan Area.

The overall goal of the MSHCP is to enhance and maintain biological diversity and ecosystem processes while allowing future economic growth in western Riverside County. This goal is based on goals and principles stated in a Planning Agreement that was drafted between the Wildlife Agencies and participating local entities. Specifically, Section 3 of the Planning Agreement includes the following goals and principles for development of the MSHCP:

• Develop a comprehensive MSHCP that promotes the biological viability and recovery of Western Riverside County's ecosystems and Habitats and species dependent thereupon, toward a goal of reducing the need to list additional species in the future.
• Through MSHCP conservation actions, promote the recovery of species that occur within the Plan Area that are listed as threatened or endangered under CESA and/or FESA; taking into account factors related to the range of each species.

The MSHCP provides for actions that will minimize the decline of Covered Species within the Plan Area. This is reflected in the Biological Goal for each of the Covered Species to "Conserve Covered Species and their Habitats", with Conservation defined as:

"To use, and the use of, methods and procedures within the MSHCP Conservation Area and within the Plan Area as set forth in the MSHCP Plan, that are necessary to bring any listed species to the point at which the measures provided pursuant to FESA and the California Fish and Game Code are no longer necessary. However, Permittees will have no duty to enhance, restore or revegetate MSHCP Conservation Area lands unless required by the MSHCP Plan or agreed to through implementation of the Plan."

The LDMF, by funding regional habitat planning and conservation of habitat in functional blocks as opposed to the current process of piecemeal ad hoc conservation, will minimize, if not eliminate, the uncoordinated preservation of scattered habitat areas set aside as mitigation for individual project impacts. This will eliminate the traditional project-by-project habitat/species mitigation process for resolving conflicts between species preservation and development in advance, thus allowing future Development to proceed in an orderly, efficient and cost effective manner. The MSHCP, by addressing the requirements of the State and Federal Endangered Species Acts on a regional basis, allows the County and participating Cities to better control local land use decisions and maintain a strong economic climate within the region.

The fee and subsequent implementation of the MSHCP will conserve large areas of land for habitat, habitat linkages, and hillside areas and thus provide a secondary benefit of enhancing the overall aesthetic value of western Riverside County.

As one of several funding sources to be used to implement the MSHCP, the primary purpose of the LDMF is to acquire Habitat through the assembly of land for the conservation of natural Habitats and the constituent wildlife populations associated therewith and other appropriate costs, including administration. As discussed in Section 2.3.5 of the Nexus Report, the Conservation Area system financed in part by the LDMF is a regional system that will conserve large habitat blocks geographically arranged to provide movement corridors between core Habitat areas to facilitate wildlife movement. This type of regional planning is consistent with national and state policies as reflected in the legal requirements of FESA/CESA and the NCCP Act.

In addition to implementing national and state policy, the MSHCP implements the policies of the County and the Cities as articulated in their General Plans. Some of these General Plans have goals or policies that promote the implementation of regional programs designed to conserve biological resources and to conserve open space as follows:

• The RCIP Vision directs: "Conservation Area multi-purpose open space is viewed as a critical part of the County's system of public facilities and services required to improve the existing quality of life and accommodate new development. Strategies and incentives for voluntary preservation on private land are an integral part of the County's policy/regulatory system and are referred to nationwide as model approaches."⁴⁵
• Jointly acquire environmentally sensitive lands through a joint powers agreement with other cities or the County.⁴⁶
• Use the consortium of RCHCA, WRCOG and Riverside County Park and Open Space to promote the multi-species approach to habitat management programs which can be used to mitigate expected impacts on biological resources of future development within the General Plan study area.⁴⁷
• The City should participate with the County, State, and Federal Governments in developing and implementing both a long-term Habitat Conservation Plan for the Stephens' Kangaroo Rat and a county-wide multi-species Habitat Conservation Plan.⁴⁸
• The City should continue to participate and cooperate with Western Riverside Council of Governments and Riverside County on their efforts to develop and implement a long-term Multi-Species Habitat Conservation Plan (MSHCP) that provides the proper balance between recreational uses (equestrians, bicyclists, and hikers) and conservation use for habitat and species.⁴⁹
• Work with state, federal and local agencies in the preservation of sensitive vegetation and wildlife in the City.⁵⁰
• Coordinate with the County of Riverside and other relevant agencies in the adoption and implementation of the Riverside County Multi-Species Habitat Conservation Plan.⁵¹

⁴⁵ County of Riverside, General Plan Public Hearing Draft, Multipurpose Open Space Element, April 2002.

⁴⁶ City of Perris, General Plan Conservation/Open Space/Recreation Element, October 1991.

⁴⁷ City of Hemet, General Plan Resource Management, August 1993.

⁴⁸ City of Riverside, General Plan Resource Conservation, September 1994.

⁴⁹ City of Norco, General Plan Conservation Element, February 2002.

⁵⁰ City of Calimesa, General Plan Resources Management Element, April 1994.

⁵¹ City of Temecula, General Plan Open Space/Conservation Element, November 1993.

In addition to goals specific to regional habitat issues, the General Plans of the participating Cities include goals associated with the MSHCP objectives to plan, acquire, or set aside, areas for the purpose of diverse Habitat Conservation. The participating Cities' General Plans include nearly identical goals in regards to conservation of natural resources. The goals relating to the protection of biological resources include protection of rare, threatened, and endangered species and vegetation. The following presents a sampling of goals shared by and characteristic for all participating Cities that address conservation of biological resources:

• To conserve, protect and enhance the City's natural resource and open space inventory for the benefit of the City's residents and the region.⁵²
• To protect the biotic communities and critical habitats for endangered species throughout the general plan area.⁵³
• Conservation of important biological habitats and protection of plant and animal species of concern, wildlife movement corridors, and general biodiversity.⁵⁴
• To conserve and protect natural plant and animal communities, as well as critical habitats for endangered species.⁵⁵
• Conserve biotic resources in both natural and urban environments.⁵⁶
• The management of rare, endangered, and candidate species and their habitats through appropriate and accepted preservation programs.⁵⁷

Such goals extend into concrete policies, which allow new development to continue while protecting species, habitat, and open space within an area under one of the Cities or County oversight. The following policies are characteristic:

• Areas that contain significant natural habitat shall be included in the development and implementation of a wildlife and habitat management plan. The goal of the wildlife and habitat management plan will be to set forth specific development guidelines to ensure the preservation and survival of sensitive, unique, or locally limited flora and fauna that currently exist in the general plan area.⁵⁸
• The city should design its plans, policies and implementation techniques to protect key wildlife habitats, habitats of rare, threatened, or endangered species, wetlands and other significant environmentally sensitive areas.⁵⁹
• Assess residential, commercial, and industrial developments in foothill, canyon, and mountain areas for their potential impacts on existing biological resources. Where the potential for significant impacts exists, require the developer to provide appropriate mitigating measures to ensure long-term preservation of significant biological resources.⁶⁰
• Mitigate the reductions of rare or endangered wildlife and vegetation through natural communities' conservation programs in Specific Plans.⁶¹
• Minimize to the extent feasible the disruption of wetlands and habitat, and provide a replacement program for wetlands or habitats removed by development.⁶²
• In areas that may contain important plant and animal communities, require developments to prepare biological assessments identifying species types and locations and develop measures to conserve sensitive species to the maximum extent possible.⁶³
• In accordance with the Federal and State Endangered Species Acts, protect and conserve open space areas which serve as endangered plant and animal species habitats and land containing unique geographic features, through acquisition, dedication or other means of preservation.⁶⁴
• Conserve multi-species habitat resources in the County of Riverside through the multi-species habitat conservation planning process.⁶⁵
• Provide incentives to landowners that will encourage the protection of significant resources in the County beyond the preservation and/or conservation required by policy.⁶⁶
• Prevent unnecessary extension of public facilities, services, and utilities, for urban uses, into Open Space-Conservation designated areas.⁶⁷

⁵² City of Corona, General Plan Conservation Element, 1978/79.

⁵³ City of Riverside, General Plan Resource Conservation, September 1994.

⁵⁴ City of Temecula, General Plan Open Space/Conservation Element, November 1993.

⁵⁵ City of Norco, General Plan Conservation Element, February 2002.

⁵⁶ City of Murrieta, General Plan Conservation and Open Space Element, June 1994.

⁵⁷ City of Hemet, General Plan Resource Management, August 1993.

⁵⁸ City of Murrieta, General Plan Conservation and Open Space Element, June 1994.

⁵⁹ City of Riverside, General Plan Resource Conservation, September 1994.

⁶⁰ City of Banning, General Plan Open Space and Habitat Conservation Element, May 1986.

⁶¹ City of Beaumont, General Plan Natural Resources and Conservation Element, May 1993.

⁶² City of Beaumont, General Plan Natural Resources and Conservation Element, May 1993.

⁶³ City of Calimesa, Resources Management Element, April 1994.

⁶⁴ City of Calimesa, General Plan Resources Management Element, April 1994.

⁶⁵ County of Riverside General Plan Public Hearing Draft, Multipurpose Open Space Element, April 2002.

⁶⁶ County of Riverside, General Plan Public Hearing Draft, Multipurpose Open Space Element, April 2002.

Hence, the fee will be used to implement national, state, and local policies with respect to the conservation of species and their habitat.

The discussion in this section of the Nexus Report sets forth the purpose of the LDMF as required by Section 66001(a)(1) of the California Government Code.

4.5. THE USE TO WHICH THE FEE IS TO BE PUT (GOVERNMENT CODE SECTION 66001(a)(2))

The LDMF will be used for Habitat acquisition and other appropriate costs. Since the MSHCP does not identify a "hard-line" Conservation Area the Habitat to be acquired will largely be within the MSHCP Criteria Area unless specifically required elsewhere in order to meet the requirements of the MSHCP (Figure 4.2) and contribute to the overall plan to provide regionally significant, large scale, integrated Habitat for the preservation of over 100 Covered Species addressed in the Plan. The need for a "fee-based funding plan that will generate sufficient revenue to contribute to the Conservation Area's funding needs" is a specific MSHCP goal cited among the Project Objectives in the Draft EIR/EIS for the MSHCP.⁶⁸

Approximately 56,000 acres will be conserved either through direct acquisition from willing sellers or through the purchase of conservation easements or other mechanisms that results in permanent Conservation of land. The Habitat Evaluation and Acquisition Negotiation Strategy (HANS) process will result in the creation of a list of properties to be acquired on a first-in-first-out basis as funding becomes available. In addition, acquisitions may occur outside of the HANS process as opportunities arise to conserve important properties that will benefit the MSHCP Conservation Area. Acquisitions may be used to fill in critical gaps in the MSHCP Conservation Area and strategically consolidate holdings in an area to allow the conservation value of previously conserved properties to be fully realized.

⁶⁷ County of Riverside, General Plan Public Hearing Draft, Multipurpose Open space Element, April 2002.

⁶⁸ Draft MSHCP, November 15, 2002, Volume 4 - EIR/EIS, page 1.2-5.

The LDMF will also contribute to the cost of administration of the assembly of the Conservation Area system. In order to ensure that the land acquired with the fees meets the Conservation goals of the MSHCP, a Regional Conservation Authority ("RCA") has been created. The RCA is responsible for identification of and decisions regarding local Conservation Area Land acquisitions and local funding priorities based on adopted MSHCP Conservation Area Design Criteria and conservation strategy. In making these decisions the RCA will receive input from the Funding Coordination Committee. In order to provide for an integrated Conservation Area System that will mitigate the direct, indirect, and cumulative impacts on a regional basis, these decisions will be compatible with the Property Owner Initiated HANS process as set forth in Section 6.1.1 of Volume I of the Draft MSHCP.

By being part of a comprehensive integrated plan for Conservation and eliminating or reducing the need for project by project analysis and mitigation, the LDMF allows better local control over land use decisions, provides a sense of certainty for new Development, and contributes to the overall economic vitality of the Plan Area.

The acquisition of property for the MSHCP will also benefit the public by providing large interconnected areas of land which (1) promote species viability, (2) may reduce the need to list additional Covered Species, and (3) provide a secondary benefit of enhancing the overall aesthetic value of western Riverside County.

The discussion presented in this section of the Nexus Report identifies the use to which the fee is to be put as required by Section 66001(a)(2) of the California Government Code.

4.6. DETERMINE THAT THERE IS A REASONABLE RELATIONSHIP BETWEEN THE FEE'S USE AND THE TYPE OF DEVELOPMENT PROJECT UPON WHICH THE FEE IS IMPOSED (BENEFIT RELATIONSHIP) (GOVERNMENT CODE SECTION 66001(A)(3))

As thoroughly discussed in Sections 4.4 and 4.5, it is the projected cumulative effect of future development that has required the preparation and implementation of the MSHCP to protect multiple habitats and multiple endangered species. Each development will contribute to the need for new regional infrastructure which, in turn, will adversely affect species and habitats. Without future development, existing habitat would not be in danger of permanently disappearing, and those endangered species currently residing within that habitat could be sustained. Even future development projects that may not be located on property that is suitable for habitat purposes contribute to impacts on species because they are an interactive component of a much greater universe of development located throughout the Plan Area. First, the property owners and/or the tenants associated with any potentially non-habitat development regularly utilize and benefit from public roads, flood control facilities and other regional infrastructure, some of which are located on properties that are suitable for habitat purposes. Second, these property owners and tenants are dependent on and, in fact, may not have chosen to utilize their development, except for residential, retail, employment and recreational opportunities located nearby on other existing and future development, some of which has been or will be located on sites that constitute suitable habitat. Third, the availability of residents, employees and customers from this non-habitat development has a growth-inducing impact without which some of the development on habitat properties would not have occurred. As a result, all development projects within the region contribute to the cumulative impacts of development that constitute one of the primary reasons for the disappearance of suitable habitat for endangered species throughout the region. In addition, the purchase of habitat properties for preservation purposes with regionally-generated fees not only mitigates the endangered species habitat issue, but also helps resolve other regional problems related to the retention of open space and historic viewsheds which, in turn, promote flood protection and water re-charge measures.

As the Plan Area is developed, all types of Development (i.e. residential, commercial, industrial, and public infrastructure) will use up more and more available habitat areas. In general terms, all types of Development will have an impact on Covered Species and Habitat because it is the depletion of land in its natural state and the introduction of inhospitable land covers that severely impact the viability and conservation of species and thus increases the probability for extinction.⁶⁹ Indeed private development activity and related public infrastructure improvements necessarily deplete, both directly and cumulatively, open space and Habitat area that would otherwise remain available to support the goals of the various general plans, some of which are presented in Section 4.4. Of particular importance are the cumulative impacts associated with new Development, all of which are to be taken into account when determining the benefit relationship.

⁶⁹ Beier, P. and S. Loe. 1992. A checklist for evaluating impacts to wildlife movement corridors. Wildlife Society Bulletin 20: 434-440.

The regional nature of the LDMF is similar to that of the impact fees that are levied by most municipalities for purposes of funding regional roads, flood control facilities, parks and other infrastructure. All new development within a municipality contributes to the construction of major regional arterials that are built at appropriate sites (e.g., connected to freeway off-ramps), even though some of the development paying road impact fees is not located directly adjacent to many of these arterials. Similarly, a water retention facility may be purchased by a municipality at the bottom of a hill because that is the most appropriate location for such a facility, even though properties throughout the drainage basin contribute fees to fund the facility. Regional parks are also developed at certain key locations based on site availability, scenic beauty and other factors, yet new development throughout a municipality is required to pay for these parks. The acquisition of Habitat utilizing MSHCP fees collected throughout a region is based on the same concept.

As set forth in Sections 4.4 and 4.5 of the Nexus Report, the LDMF will be expended to purchase Habitat lands and other authorized uses, as that is the purpose for which the LDMF is collected. The LDMF will be used to acquire the mitigation lands required by FESA, NCCP Act, and related environmental statues. Numerous biological studies document the species and Habitat presently existing in the Plan Area. (See Volumes III and IV of the Draft MSHCP.) As discussed in Section 2.3.5, several conservation biology principals were incorporated into the Conservation Area design. One of the significant features of the MSHCP Conservation Area is connectedness through landscape Linkages and movement corridors. Connectedness is important because Habitat fragmentation and isolation may lead to extinction of local populations and threaten biological diversity. By providing a source of funding to acquire large pieces of interconnected Habitat, the LDMF promotes biological diversity and helps reduce the potential for extinction of local populations.

Moreover, this impact is generally equalized among all types of Development because it is the conversion of land from its natural state, whether for a private development project or a public infrastructure project to serve and support the private development project, that creates the impact upon species and open space opportunities. For the foregoing reasons, there is a reasonable relationship between the purchase of Habitat and all Developments in the Plan Area as required under Section 66001(a)(3) of the Mitigation Fee Act.

4.7. DETERMINE HOW THERE IS A REASONABLE RELATIONSHIP BETWEEN THE NEED FOR THE PUBLIC FACILITY AND THE TYPE OF DEVELOPMENT PROJECT UPON WHICH THE FEE IS IMPOSED (IMPACT RELATIONSHIP) (GOVERNMENT CODE SECTION 66001(a)(4))

As set forth in Sections 4.4, 4.5, and 4.6, all new development contributes to the cumulative impacts on habitat and species. In fact, it is the projected cumulative effect of future development that has required the preparation and implementation of the MSHCP to protect multiple habitats and multiple endangered species. Each development will contribute to the need for new regional infrastructure which, in turn, will adversely affect species and habitats. Without future development, existing habitat would not be in danger of permanently disappearing, and those endangered species currently residing within that habitat could be sustained. Even future development projects that may not be located on property that is suitable for habitat purposes contribute to impacts on species

because they are an interactive component of a much greater universe of development located throughout the Plan Area. First, the property owners and/or the tenants associated with any potentially non-habitat development regularly utilize and benefit from public roads, flood control facilities and other regional infrastructure, some of which are located on properties that are suitable for habitat purposes. Second, these property owners and tenants are dependent on and, in fact, may not have chosen to utilize their development, except for residential, retail, employment and recreational opportunities located nearby on other existing and future development, some of which has been or will be located on sites that constitute suitable habitat. Third, the availability of residents, employees and customers from this non-habitat development has a growth-inducing impact without which some of the development on habitat properties would not have occurred. As a result, all development projects within the region contribute to the cumulative impacts of development that constitute one of the primary reasons for the disappearance of suitable habitat for endangered species throughout the region. In addition, the purchase of habitat properties for preservation purposes with regionally-generated fees not only mitigates the endangered species habitat issue, but also helps resolve other regional problems related to the retention of open space and historic viewsheds which, in turn, promote flood protection and water re-charge measures.

At present and in recent years, as proponents of public and private Developments in both the incorporated and unincorporated areas of Riverside County have been required to obtain project specific Incidental Take permits from Wildlife Agencies for impacts to Endangered, Threatened, and rare Species and their Habitats. Not only does this practice result in costly delays to public and private Development projects, it has also resulted in an assemblage of unconnected Habitat areas, which is counter productive to sustaining wildlife mobility, genetic flow, or ecosystem health. Large, interconnected natural areas are needed for species viability;⁷⁰ consequently a comprehensive coordinated regional effort is needed to mitigate the effects of Development on Species and their Habitats.

⁷⁰ With, K. and A. King. 1999. Extinction Thresholds for Species in Fractal Landscapes. Conservation Biology: 314-326.

For the reasons presented herein, there is a reasonable relationship between the need for the public facility and all new development in the Plan Area as required under Section 66001(a)(4) of the Mitigation Fee Act.

4.8. THE RELATIONSHIP BETWEEN THE AMOUNT OF THE FEE AND THE COST OF THE PUBLIC FACILITY (HABITAT ACQUISITION) ATTRIBUTABLE TO THE DEVELOPMENT UPON WHICH THE FEE IS IMPOSED ("ROUGH PROPORTIONALITY" RELATIONSHIP) (GOVERNMENT CODE 66001(a)

As set forth above, each Development in the Plan Area impacts the supply of available land for Habitat. Moreover, each individual Development project and its related necessary infrastructure improvements, when examined along with the cumulative impacts of all development in western Riverside County, will have an adverse impact on the availability of open land, Habitat, and species in the Plan Area. Thus, imposition of the LDMF to finance the acquisition of Habitat and appropriate costs associated therewith is the most efficient, practical, and equitable method of permitting development to proceed in an environmentally responsible manner and in a manner that complies with the overall intent of RCIP and the MSHCP.

New Development impacts species and habitat directly, indirectly, and cumulatively. In fact, without any future Development, the MSHCP would not be necessary as existing habitat would not be in danger of permanently disappearing, and those endangered species currently residing within that habitat could be sustained. New residential and non-residential development directly impacts species and habitats by converting natural Habitat to inhospitable land covers. When Habitat conversion takes place between occupied or potential Habitat areas, not only is there an overall loss in Habitat quantity, the quality of the aforementioned remaining occupied or potential Habitat is degraded since these areas may become isolated and impede species movement. Direct, indirect, and cumulative impacts to Habitat result from Future Development's need for public facilities and infrastructure. New public buildings, road improvements, flood control, and water and sewer facilities will need to be constructed or existing facilities expanded to serve new residents and employees, resulting in a loss and/or degradation of natural habitat.

New Development located outside the Criteria Area contributes to the loss and/or degradation of habitat since the property owners and/or the tenants associated with this future Development will utilize and benefit from public roads, flood control facilities and other regional infrastructure, which will be constructed within the Criteria Area. Furthermore new Development outside the Criteria Area has a growth-inducing impact without which some of the Development within the Criteria Area would not take place. Consequently, all Development projects within the region contribute to the cumulative impacts of development that constitute the main reason for the disappearance of suitable habitat for endangered species throughout the Plan Area.

4.8.1 LOCAL ACQUISITION AND OTHER APPROPRIATE COSTS

The amount of the fee is a function of the costs to acquire 56,000⁷¹ acres of Habitat subject to the acquisition criteria and the administrative expenses associated with implementing the MSHCP. The MSHCP document provides a rough estimate of the costs to acquire 56,000 acres of Habitat and makes reference to the Nexus Study to develop an appropriate fee amount.⁷² While the type of general estimate contained in the MSHCP is useful for policy and planning purposes, a more refined analysis is required for purposes of determining the fee amount and satisfying the rough proportionality requirement of the Mitigation Fee Act.

Since the MSHCP is a criteria based plan, there is no "hard-line" boundary that identifies the specific areas to be conserved. The MSHCP Conservation Area will instead be assembled over time based on the Criteria and assurances incorporated in the MSHCP. In order to derive cost estimates that will be used to calculate the amount of the LDMF, a "Probable Overall Value" was developed for each General Plan Land Use Foundation Element.⁷³.

⁷¹ Less already acquired land as discussed in Section 4.8.1.1

⁷² Draft MSHCP, Volume 1, November 2002, page 8-15.

⁷³ The four General Plan Land Use Foundation Elements are: Community Development, Rural, Agricultural, and Open Space.

4.8.1.1. Existing Local Acquisition to the MSHCP

As discussed throughout this Nexus Report, the MSHCP Reserve Area includes Local Acquisitions totaling 56,000 acres of new mitigation land. As of February 2003, local sources, that is sources other than the state and federal government, have provided a total of 2,454 acres of new mitigation land, which may be applied to meeting the goal of the Local Acquisition of 56,000 acres, resulting in a remainder of 53,546 acres to be acquired using the LDMF. Therefore, the projected acquisition cost for the Local Acquisitions will be based on 53,546⁷⁴ acres.

4.8.2 PROBABLE OVERALL VALUE METHODOLOGY

In order to estimate the costs to acquire 53,546 acres of new mitigation land, an analysis was undertaken to determine the probable overall value of property within the Criteria Area. This analysis is summarized in this section, with the entire report included as Appendix B to the Nexus Report.

The probable overall valuation analysis for the MSHCP estimates a probable per acre value for the different Foundation Components⁷⁵ within each of the 16 Area Plans within the Plan Area. Sufficient land sales within the Plan Area were gathered and over 300 land sales within Riverside County and adjacent counties were reviewed in order to estimate a probable per acre value for each of these 16 Area Plans.

Each Area Plan was broken into three Foundation Components, and each Foundation Component was valued separately. ⁷⁶ Exact values for specific parcels within western Riverside County have not been determined. Instead, probable per acre values for the Foundation Components within general areas of Western Riverside County have been estimated for use in the Nexus Report.

Of the Foundation Components, Community Development land uses are estimated to have the highest probable per acre value ranging from $20,000 per acre to $80,000 per acre, with the highest probable value per Community Development acre being within the Cities of Riverside/Norco Area Plan. Rural & Agricultural land uses are projected to have a probable per acre value much lower than Community Development land uses, ranging from $5,000 per acre to $25,000 per acre, with the highest probable value per Rural & Agricultural acre being within the Cities of Riverside/Norco Area Plan. Open Space land uses have the lowest projected probable per acre value ranging from $2,500 per acre to $10,000 per acre, with the highest probable value per Open Space acre being equal in the Eastvale, Highgrove, Southwest, and Temescal Canyon Area Plans.

⁷⁴ This number may be updated and the LDMF recalculated accordingly prior to adoption of the Ordinance implementing the LDMF.

⁷⁵ Foundation Components as identified in the Hearing Draft General Plan dated April 5, 2002.

⁷⁶ For the probable valuation analysis, the Rural and Agricultural components were combined.

4.8.3 ELIGIBLE USES OF THE LDMF

Eligible uses of the LDMF include the acquisition of approximately 53,546 acres of Habitat and other appropriate uses, each of which are discussed in the following paragraphs.

4.8.3.1. Land Acquisition Costs

The MSHCP is an incentive and criteria driven plan in which Habitat acquisition is one of many tools that will be used to assemble the conservation area. As a criteria based plan, there is no "hard-line" boundary that identifies the specific property to be conserved. Habitat acquisition will take place in accordance with the provisions of the MSHCP as both funding and appropriate land becomes available.

In order to estimate the costs associated with the acquisition of 53,546 acres of Habitat, it is assumed that Habitat will be acquired from each Area Plan in proportion to that Area Plan's share of the sum of the median number of acres within the Criteria Range for all Area Plans. For example, if the median number of acres in the Criteria Range for the Eastvale Area Plan is 220 and the sum of the median number of acres in the Criteria Range for all of the Area Plans in the MSHCP is 159,405, it is assumed, for purposes of this Nexus Report, that 0.14% of the 53,546 acres of Habitat to be acquired, or 74 acres, will be acquired within the Eastvale Area Plan.

Within a given Area Plan, it is reasonable to assume for purposes of this Nexus Report, that the amount of Habitat to be acquired from each Foundation Component is in proportion to that foundation component's share of that Area Plan's Criteria Area. Using the Eastvale Area Plan as an example, if the Criteria Area within the Eastvale Area Plan is: 8% Community Development, 0% Rural, 0% Agricultural, and 92% Open Space, then 8% of the Habitat to be acquired, or 6 acres, is assumed to be designated as Community Development property. Based on these assumptions the following methodology was used to estimate Local Acquisition costs.

1. Using the Criteria Area acreage ranges presented in Volume I of the MSHCP and summarized below, estimate the median number of acres of habitat to be conserved on private lands within each Area Plan and calculate each Area Plan's pro rata share (expressed as a percentage) of the Habitat to be conserved on private land. The results of this are presented in Table 4-1.

2. Allocate the 53,546 acres of Habitat to be acquired to each Area Plan based on the percentages determined in step 1 and identified in the column under the heading "Portion of Conserved Area" in Table 4-1, above. Table 4-2 presents the results of this step.

3. Using GIS data developed as part of the MSHCP, determine the number of acres within the Criteria Area of each General Plan Foundation Component for each Area Plan.⁷⁷ The data collected in this step is summarized in Table 4-3

⁷⁷ A report summarizing the amount of privately owned property by land use type and Area Plan is included in Appendix C.

4. Using the acreage within each Foundation Component presented in Table 4-3, above, determine the percentage of Habitat for each Foundation Component type based on the acreage within the Criteria Area in each Area Plan. The results of this calculation are presented in Table 4-4.

5. Assign the 53,546 acres to be acquired to each Foundation Component in each Area Plan based on the total acres to be acquired in each Area Plan as determined in Table 4-2 and the percentages for each Foundation Component from Table 4-4 to determine the number of acres to be acquired in each Foundation Element in each Area Plan. The results of this step are presented in Table 4-5.

6. Project the probable acquisition cost by (a) multiplying the probable overall value per acre (from Appendix B) times the number of acres in each Foundation Component (from Table 4-5) to determine the projected acquisition costs for each Foundation Component for each Area Plan; (b) Add the results from clause (a) to determine the projected acquisition cost for each Area Plan; (c) Add the results from clause (b) to determine the projected acquisition costs for the entire 53,546 acres. The results of these calculations are presented in Table 4-6 below.

As indicated in Table 4-6, the Probable Acquisition Cost is $876,729,808, which results in an average acquisition cost of approximately $16,400 per acre.

4.8.3.2. Other Appropriate Costs

The MSHCP will be implemented, overseen, and administered by the Western Riverside County Regional Conservation Authority (‘RCA"). The RCA will be a joint regional authority formed by the County and the Cities pursuant to the requirements of the California Government Code and other statutes as applicable. The RCA will be authorized to carry out the requirements of the MSHCP and will have overall program responsibility for the assembly of the Local Acquisitions. Consequently, costs associated with the RCA's efforts to acquire Habitat, either by acquisition or some other means, are appropriate costs and will be financed with LDMF funds.

RCA's estimated annual budget is approximately $1,198,650 per year in 2003 dollars.⁷⁸ Since the Nexus Report addresses certain financial needs of the MSHCP for a 25 year period, RCA's annual budget was multiplied by 25 with the resulting product representing the overall administrative costs for the acquisition period (in 2003 dollars). Using this methodology, RCA's budget for the 25 year acquisition period is approximately $30 million, which is approximately 3% of the Probable Acquisition Costs.

4.8.3.3. Total Cost to be Financed Through Mitigation Fee Program

As discussed in Section 4.8.3, the LDMF may be used for habitat acquisition and Other Appropriate Costs. The total cost to be financed through the LDMF program is the sum of the Probable Acquisition Costs ($876,729,808) plus the Other Appropriate Costs⁷⁹ ($30,000,000) for a total LDMF program cost of $906,729,808.

4.8.4 AREA OVER WHICH THE LDMF IS TO BE IMPOSED (WHY A REGIONAL FEE?)

It is the projected cumulative effect of future development that has required the preparation and implementation of the MSHCP to protect multiple habitats and multiple endangered species. Each development will contribute to the need for new regional infrastructure which, in turn, will adversely affect species and habitats. Without future development, existing habitat would not be in danger of permanently disappearing, and those endangered species currently residing within that habitat could be sustained. Even future development projects that may not be located on property that is suitable for habitat purposes contribute to impacts on species because they are an interactive component of a much greater universe of development located throughout the Plan Area. First, the property owners and/or the tenants associated with any potentially non-habitat development regularly utilize and benefit from public roads, flood control facilities and other regional infrastructure, some of which are located on properties that are suitable for habitat purposes. Second, these property owners and tenants are dependent on and, in fact, may not have chosen to utilize their development, except for residential, retail, employment and recreational opportunities located nearby on other existing and future development, some of which has been or will be located on sites that constitute suitable habitat. Third, the availability of residents, employees and customers from this non-habitat development has a growth-inducing impact without which some of the development on habitat properties would not have occurred. As a result, all development projects within the region contribute to the cumulative impacts of development that constitute one of the primary reasons for the disappearance of suitable habitat for endangered species throughout the region. In addition, the purchase of habitat properties for preservation purposes with regionally-generated fees not only mitigates the endangered species habitat issue, but also helps resolve other regional problems related to the retention of open space and historic viewsheds which, in turn, promote flood protection and water re-charge measures.

⁷⁸ Source: County of Riverside Transportation and Land Management Agency, January 21, 2003.

⁷⁹ Program Administration

As previously discussed in the Nexus Report, the past practice of piecemeal and ad hoc mitigation on a local or project by project basis has resulted in fragmented, uncoordinated, and unconnected habitat areas. While this practice may have addressed project specific impacts associated with individual development projects, it has resulted in costly delays, conflicts over species conservation, and has negatively impacted the ability of local jurisdictions to plan and build regional infrastructure needed to support planned development and sustainable economic growth, both of which are necessary to maintain a high quality of life in the County. Uncoordinated efforts at habitat mitigation are both costly and time consuming and the resulting habitat may not create large interconnected natural areas needed to sustain wildlife mobility, genetic flow, or ecosystem health.⁸⁰ The proponents of both private and public development projects are expending significant amounts of time and money on mitigation, but as these efforts are not coordinated the result is habitat fragmentation. Habitat fragmentation is an extremely serious threat to biological diversity since isolated local populations of species are more likely to become extinct. Accruing financial resources such as the LDMF on a region-wide basis and utilizing these monies to purchase those critical sites throughout the region that are best suited (or most appropriately priced) for habitat purposes will provide the best protection for the region's endangered species given the limited funding sources available

A regional LDMF is both appropriate and justifiable, since the MSHCP was designed to mitigate direct, indirect, and cumulative impacts resulting from new Development and the infrastructure necessary to support and serve such development. All new Development in the Plan Area, plus the additional roadways and public facilities needed to serve such Development impact the supply of open space and habitat on an individual and cumulative basis. Even future development projects that may not be located on property that is suitable for habitat purposes contribute to impacts on species because they are an interactive component of a much greater universe of development located throughout the Plan Area and:

• regularly utilize and benefit from public roads, flood control facilities and other regional infrastructure, some of which are located on properties that are suitable for habitat purposes;
• are dependent on and in fact may not have chosen to utilize their development, but for residential, retail, employment and recreational opportunities located nearby on other existing and future development, some of which has been or will be located on sites that constitute suitable habitat; and
• create indirect, cumulative, and growth-inducing impacts without which some of the development on habitat properties would not have occurred.

⁸⁰ With, K. and A. King. 1999. Extinction Thresholds for Species in Fractal Landscapes. Conservation Biology: 314-326.

Although it is far more common to deal with regionalization in relation to transportation, flood control, or other utilities, the MSHCP is no different. Every project adds trips to local roads but also to the regional transportation system. Likewise every new development project increases the demand for water or sewer capacity, libraries and other public facilities. In these instances contribution to regional needs or a regional system is well established. The impacts to habitat and species are much the same through impacts resulting from increased urbanization and from the construction of new infrastructure to meet the demands of new development. A regional approach provides equity in addressing the impacts to species and habitat of new development.

For the reasons articulated above as well as those previously articulated in Sections 2, 3, and 4, it is appropriate that all new Development participate in the mitigating these impacts.

4.8.5 DEVELOPMENT HORIZON USED IN THE NEXUS REPORT

The LDMF calculations presented in the Nexus Report are based on new development projected to occur in the Plan Area in the next 25 years. The main rationale for the selection of this development horizon is the MSHCP calls for assembly of the Reserve Area within a 25 year period. In order to obtain an Incidental Take Permit ("ITP"), which will allow planned development and public infrastructure to take place within the Conservation Area, a habitat conservation plan (HCP) must be approved. Approval of an HCP requires that the applicant ensure "adequate funding" is provided. In the specific instance of the MSHCP, adequate funding includes the costs to complete the Local Acquisitions within the first 25 years after the ITP is issued, as well as, the costs for Program Administration, both of which will be provided by the LDMF. The other costs, adaptive management, reserve management, and biological monitoring will be funded from other sources as discussed in Section 5.

Given the current development pressure within the Criteria Area, if the Local Acquisitions are not completed in the next 25 years, important resources may become developed, or surrounded by new development to the extent that the land may become isolated from other habitats. This is significant since the loss of important habitats over the next 25 years will preclude assembly of the Conservation Area. The MSHCP calls for the Local Acquisitions to be completed within 25 years to ensure that the resources, particularly those related to linkages, are still available.

If the LDMF does not generate sufficient revenue within a 25 year period to fund acquisition of the 53,546 acres, the MSHCP will not be able to meet the FESA condition that adequate funding is provided and the ITP cannot be issued.

After assembly of the Reserve Area, the MSHCP will have ongoing financial obligations and the fee program will not end in 25 years. New Development in year 26 and beyond will still have the obligation to mitigate per CEQA, as well as, finance ongoing Program Administration. If revisions are made to the California Government Code at some future date, the LDMF could possibly be collected to finance adaptive management, reserve management and/or biological monitoring.

4.8.6 EXISTING DEFICIENCIES

With respect to deriving the LDMF, David Taussig & Associates, Inc. ("DTA") has determined there are no existing deficiencies in habitat lands that are mitigated by the MSHCP. The MSHCP Conservation Area was neither sized nor designed to "make-up" for existing deficiencies in habitat land. Rather, the MSHCP is a prospective plan and provides mitigation for the direct, indirect, and cumulative impacts to Covered Species and their Habitats resulting from new Development and the additional roadways and other public facilities needed to serve such Development in the Plan Area. Therefore, the entire cost of the Local Acquisitions and program administration component of the MSHCP is eligible to be allocated to new development.

The MSHCP provides take authorization for future development. If no additional new development occurred within the Plan Area there would be no "take" of habitat and no need for the MSHCP or the LDMF. The mitigation required and provided under the MSHCP is that which is necessary to mitigate the impacts of future development. While the loss of habitat in the past may have resulted in a situation where further loss of habitat threatens the survival of many species, the fact is that if no new development or infrastructure needed to serve said new development were constructed, there would be no need to mitigate direct, indirect, or cumulative impacts to the Covered Species or their Habitat.

However as discussed in Sections 1 and 2, a significant amount of new development and new infrastructure is anticipated in the Plan Area and state and federal laws, as well as local land use policies, require new development to mitigate or avoid impacts to species and their habitats. Since, as previously discussed in Section 4.4, 4.5, 4.6, and 4.7 of the Nexus Report, all new development in western Riverside County will impact the Covered Species or their habitat either directly, indirectly or cumulatively.

The MSHCP calls for new development in the Plan Area to provide 103,000 acres of new habitat. The LDMF will finance only the acquisition of 56,000 acres (less those that have already been locally conserved). Out of a total reserve system of 500,000 acres the LDMF is contributing only slightly over 10% of the total Conservation Area.

4.8.7 CALCULATION OF MITIGATION FEE AMOUNTS

4.8.7.1. What Type of Fee Methodology is Appropriate for the LDMF?

Government Code 66000 does not specify the manner in which an impact fee must be derived. It does, however, set forth a series of requirements that a public agency must satisfy before establishing, increasing, or imposing a fee as a condition of new development. These requirements, specifically the requirements regarding the presence of a reasonable relationship between the need for the facility and the type of development project upon which the fee is to be imposed, the requirement that a reasonable relationship exist between the amount of the fee and the cost of the public facility and the requirement for a reasonable relationship between the amount of the fee and the costs of the facilities, will shape the methodology used to establish mitigation fees for a specific project.

In making a determination as to the type of fee methodology to be used for a specific project, one generally starts with identifying the impacts that are being mitigated by the facility being financed with the fee revenues. Typically this is a straightforward analysis. For example a mitigation fee to finance domestic water facilities would most likely be a function of the water meter size or the expected water consumption. A fee to mitigate flood control improvements would most likely be based on lot size and runoff coefficients.

However as discussed in Sections 1 and 2, a significant amount of new development and new infrastructure is anticipated in the Plan Area and state and federal laws, as well as local land use policies, require new development to mitigate or avoid impacts to species and their habitats. Since, as previously discussed in Section 4.4, 4.5, 4.6, and 4.7 of the Nexus Report, all new development in western Riverside County will impact the Covered Species or their habitat either directly, indirectly or cumulatively.

The MSHCP calls for new development in the Plan Area to provide 103,000 acres of new habitat. The LDMF will finance only the acquisition of 56,000 acres (less those that have already been locally conserved). Out of a total reserve system of 500,000 acres the LDMF is contributing only slightly over 10% of the total Conservation Area.

4.8.7 CALCULATION OF MITIGATION FEE AMOUNTS

4.8.7.1. What Type of Fee Methodology is Appropriate for the LDMF?

Government Code 66000 does not specify the manner in which an impact fee must be derived. It does, however, set forth a series of requirements that a public agency must satisfy before establishing, increasing, or imposing a fee as a condition of new development. These requirements, specifically the requirements regarding the presence of a reasonable relationship between the need for the facility and the type of development project upon which the fee is to be imposed, the requirement that a reasonable relationship exist between the amount of the fee and the cost of the public facility and the requirement for a reasonable relationship between the amount of the fee and the costs of the facilities, will shape the methodology used to establish mitigation fees for a specific project.

In making a determination as to the type of fee methodology to be used for a specific project, one generally starts with identifying the impacts that are being mitigated by the facility being financed with the fee revenues. Typically this is a straightforward analysis. For example a mitigation fee to finance domestic water facilities would most likely be a function of the water meter size or the expected water consumption. A fee to mitigate flood control improvements would most likely be based on lot size and runoff coefficients.

As established in the Nexus Report, implementation of the MSHCP will allow the Development of not only private projects but also the public infrastructure necessary to serve the private development. That is, implementation of the MSHCP will provide mitigation for more than the loss of biological resources. In recognition of the wide variety of impacts mitigated by implementation of the MSHCP, the Nexus Report will derive mitigation fees using methodologies based on different criteria - gross acreage, density, equivalent dwelling units (EDUs), and equivalent benefit units (EBUs).

The LDMF calculations presented in the Nexus Report are based on new development projected to occur in the Plan Area in the next 25 years. However, the MSHCP will have ongoing financial obligations, and the fee program will not end in 25 years. Furthermore new Development occurring after the development horizon used in this Nexus Report, will still have the obligation to mitigate per CEQA as well as, finance ongoing Program Administration. If revisions are made to the California Government Code at some future date, the LDMF could possibly be collected to finance adaptive management, reserve management and/or biological monitoring.

4.8.7.2. Gross Acreage Based Fee Methodology

A fee based on the acreage of the area benefiting from the improvements is one way to structure a fee program. However, an acreage based fee structure is limited in the scope of its applicability since the basic assumption underlying this methodology is that every acre equally impacts the facility being financed. This methodology does not take into consideration differences in impacts resulting from differing land uses (i.e. residential vs. non-residential development) nor does it recognize that similar land uses have similar impacts irrespective of differing lot sizes. For example, with a straight gross acreage based fee structure, the fee amount for a single-family home on a 10 acre residential lot would be identical to the fee amount for a 10 acre business park, twice as high as the fee amount for a 5 acre strip commercial center, and 20 times as high as the fee amount for a mini market on a one-half acre lot. With respect to residential development, unless a cap is placed on the amount of acreage subject to the LDMF, the fee amount for a single-family home on a 10 acre lot would be 10 times as high as the fee amount for an identical home on a 1 acre lot, and 60 times as high as the fee for the same home on a 7,200 square foot lot.

The construction of individual single-family homes on existing legal parcels is a Covered Activity inside the criteria area.⁸¹ The Draft EIR/EIS for the MSHCP states the average lot size for units constructed in the criteria area between 1995 and mid-2002 is approximately 9 acres.⁸² In permitting the development of single-family homes in the criteria area on larger lots, the MSHCP recognizes that there is some conservation value associated with single-family residential development on large lots. In fact, the MSHCP states that rural residential development has less edge effect than more dense development. That is, the MSHCP acknowledges different types of land uses have different impacts on conservation and biological resources. In consideration of the recognition of the conservation value associated with rural and larger lot residential development, the gross acreage based LDMF proposed would be imposed on a maximum of 0.5 acres for single-family detached residential lots greater than 0.5 acres in size. Therefore if the gross acreage based LDMF as proposed is adopted, the LDMF for a 10 acre single-family residential lot would be the same as a 0.5 acre single-family detached residential lot and 3 times greater than a type of development, in this instance a 7,200 square foot residential lot, which provides less conservation value

Methodology Employed to Calculate an Acreage Based LDMF

1. Project the number of acres of rural, residential, commercial, industrial and business park, community center, and city mixed-use and city-special planning that will be developed in the next 25 years.
2. Divide the total cost to be financed through the mitigation fee program, $906,729,808 by the projected number of developed acres to determine the LDMF per acre.

Development Projections for the Acreage Based LDMF

In order to project the number of acres of new development expected to occur in the next 25 years, David Taussig & Associates, Inc. ("DTA") obtained data compiled for the Plan Area by RBF, the GIS consultant for the RCIP. The RCIP data provides undeveloped acreage by Area Plan for the following categories: rural residential, rural mountainous, rural desert, very low residential, low residential, medium residential, medium high residential, high residential, very high residential, commercial retail, commercial tourist, commercial office, light industrial, high industrial, business park, public facilities, community center, Indian lands, freeway, open space conservation, open space conservation habitat, open space rural, open space recreation, open space water, open space mineral resources, agriculture, city-mixed use, and city-special planning area. A table summarizing this data is included in Appendix D. DTA projected the number of developed acres expected within the next 25 as follows:

1. Sum the data from the RCIP database (Appendix D) to determine the number of gross acres of new development within each land use class at buildout (Table 4-7, column [1]).
2. To project the number of acres of rural residential development that will be subject to the LDMF, DTA applied a developable acreage factor of 75% and an absorption factor of 30% to the gross acres of rural land uses⁸³ to project the number of acres of new rural development expected in the next 25 years. The resulting product was divided by the average minimum residential lot size in the rural land use designations (10 acres)⁸⁴ to project the number of new single-family detached homes in the next 25 years, the resulting product was multiplied by 0.5, which represents the maximum acreage upon which the LDMF would be imposed for (Table 4-7, column [2]).
3. To project the number of acres of very low density residential development that will be subject to the LDMF, DTA applied a developable acreage factor of 75% and an absorption factor of 67% to the gross acres of very low density residential property⁸⁵ to project the number of acres of new very low density residential development expected in the next 25 years. The resulting product was divided by the average minimum very low density residential lot size (1.25 acres)⁸⁶ to project the number of new single-family detached homes in the next 25 years, the resulting product was multiplied by 0.5, which represents the maximum acreage upon which the LDMF would be imposed for (Table 4-7, column [2]).
4. To project the number of acres of all other land uses, DTA applied a developable acreage factor of 75% and an absorption factor of 67% to the gross acres of all other residential property, commercial, industrial and business park, community center, city mixed-use and city-special planning land uses⁸⁷ to project the number of acres of new development expected in the next 25 years (Table 4-7, column [2]).

Table 4-7 presents the development projections (columns [1] and [2]) and the recommended LDMF per gross acre (column [3]).

⁸¹ Refer to Section 7.3.2 of Volume I and page 4.1-32 of Volume IV of the Draft MSHCP.

⁸² Volume IV, Draft MSHCP, page 4.1-32.

⁸³ Volume I of the Draft MSHCP, November 2002, page 8-9.

⁸⁴ Rural land use designations as used in the Nexus Report are per the Hearing Draft General Plan (Table
LU-3, page LU-36) and include: (1) Rural Residential, which has a minimum lot size of 5 acres, (2)
Agriculture, Rural Mountainous, and Rural Desert, which have a minimum lot size of 10 acres, and (3)
Open Space-Rural, which have a minimum lot size of 5 acres.

⁸⁵ Volume I of the Draft MSHCP, November 2002, page 8-9.

⁸⁶ Very low density residential as used in the Nexus Report refers to the Very Low Density Residnetial land use designation per the Hearing Draft General Plan (Table LU-3, page LU-36), which allows lot sizes ranging from 0.5 - 2.5 acres.

⁸⁷ Extrapolated for 25 years based on 80% expected development in a 30 year period per Volume I of the Draft MSHCP, November 23002, page 8-9.

4.8.7.3. Density Methodology

Deriving mitigation fees based on the density of residential development provides a way to quantify different land use types in terms of their equivalence to a predefined unit where equivalence is measured in terms of density, which provides a correlation to potential use or benefit. A major advantage to a density weighted ("DW") methodology when compared to an acreage based methodology, is the ability to assign identical benefits to similarly used properties, e.g. all residential property within a density rage that is typical for a certain type (i.e. single-family vs. multiple-family residential development) may be assigned 1 DW, or assign different DWs to reflect differences in land uses, e.g. residential development vs. non-residential development.

The Nexus Report proposes a DW based fee structure where DWs are a function of the expected density of residential development. Using density as the basis for the fee program recognizes, in a qualitative sense, that more land may be available for biological resources and less infrastructure may be required when more people are housed on less land. For example, a 25 home residential project with a density of 7 units per acre would require approximately 3.5 acres of land whereas those same 25 units constructed at a density of 4 units per acre would require approximately 6.2 acres. A DW based fee program also provides a means to differentiate between the impacts associated with residential and non-residential development.

Assignment of Density Weights

Under the DTA's proposed DW methodology, 1 DW is assigned to each rural residential dwelling unit and to each dwelling unit constructed on residential property with a density from 0.4 to 8 dwelling units ("DU") per acre (Table 4-8). Residential property developed at a density between 0.4 and 8 dwelling units per acre represents single-family detached residential development⁸⁸ and becomes the basis upon which the impacts of other types of development are measured. Dwelling units constructed on rural residential property are assigned a DW of 1 even though they are constructed at a lower density because (i) this type of property will be developed with single-family detached residential units similar to those constructed in a 0.4-8 DU/acre project, and (ii) in recognition of the potential conservation value of rural development as previously discussed in the acreage based fee methodology section.

⁸⁸ County of Riverside Hearing Draft General Plan, April 2002, Table LU-3.

Expected development on residential property with a density between 8.1 and 14 DU/ acre includes attached residential units, townhouses, stacked flats and courtyard homes.⁸⁹ These types of units are more densely developed than traditional single-family detached housing and thus may cause less impact to biological resources by housing more people on less land. Furthermore, trip generation rates and population per unit are generally lower than that of single-family detached units as evidenced by data compiled by the Institute of Traffic Engineers and U.S Census 2000. As indicated in Table 4-8, 0.4 DW per unit is assigned to this type of development based on the relationship of the midpoint density for residential property with a density of 8-14 DU/acre (midpoint = 11 DU/acre) compared to the midpoint density for residential property with a density of 0.4-8 DU/acre (4.2).⁹⁰

A density weight (DW) is assigned to each acre of residential development with a density greater than 14 dwelling units per acre and commercial and industrial development based on actual expected density associated with residential property developed at 0.4-8 DU/acre. In order to determine this number, DTA divided the expected number of residential units with a density between 0.4-8 DU/acre by the expected number of acres for that land use. As indicated in Table 4-9, a total of 332,940 residential units with densities between 0.4-8 DU/acre are projected on 98,909 gross acres, which results in an DW assignment of 3.4 DWs per acre for residential projects with densities in excess of 14.1 DU/acre and 3.4 DWs per acre for commercial and industrial projects. The high and very high density residential projects are assigned the same number of DWs as commercial and industrial projects since high and very high density residential projects are more similar in nature to commercial projects than to single-family projects.

It is DTA's opinion that the density weighted LDMF is superior to the Gross Acreage methodology in that one can use a project's density to differentiate between "types" of development, both residential and non-residential. A shortcoming to the density weighted fee structure is that while there is a good rationale and data to support a difference in the fee amounts between different types of residential units, unless a large number of density categories are defined, the resulting fee structure may result in large breaks between density classes.

⁸⁹ County of Riverside Hearing Draft General Plan, April 2002, Table LU-3

⁹⁰ 0.4 DWs = 4.2 DU/acre divided by 11.0 DU/acre.

Methodology Employed to Calculate the Density Based LDMF

1. Project the number of new rural residential units, units constructed at a density between 0.4-8 DU/acre and units constructed at a density between 8-14 DU/acre in the next 25 years (Table 4-8, column [2]).
2. Project the number of acres of new residential projects with a density greater than 14 DU/acre, commercial, and industrial development in the next 25 years(Table 4-8, column [2]).
3. Apply the applicable DW factor to each land use type (Table 4-8, column [1])
4. For each land use category, multiply the number of expected dwelling units or developed acres times the applicable DW to determine the total number of DW units per land use category (Table 4-8, column [3]).
5. Sum the DW units for each land use category to determine the total DW units in 25 years.
6. Divide the total cost to be financed through the mitigation fee program, $906,729,808 by the projected number of DW units to determine the LDMF per DW ($2,412 as indicated in Table 4-8).
7. Multiply the LDMF per DW times the DWs assigned to each land use category to determine the LDMF per unit or LDMF per acre (Table 4-8, column [4]).

Development Projections for the Density Based LDMF

Traffic modeling and other analysis for the CETAP projects are projecting a total of 332,000 new dwelling units in the CETAP project area, which has the same boundaries as the MSHCP, in the next 25 years. This however is where the CETAP projections stop. Since DWs are assigned on the basis of density categories, it is necessary for DTA to project the number of dwelling units within each of the density categories used for the EBU based fees. DTA projected the number of developed acres expected within the next 25 years by:

1. Sum the data from the RCIP database (Appendix D) to determine the number of gross acres of new development within each land use class at buildout (Table 4-9, column [1]).
2. Apply an absorption factor of 30% to the gross acres of rural land uses⁹¹ to project the number of acres of new rural development expected in the next 25 years (Table 4-9, column [2]).
3. Apply an absorption factor of 67% to the gross acres of residential, commercial, and industrial and business park land uses⁹² to project the number of acres of new development expected in the next 25 years (Table 4-9, column [2]).
4. Multiply the projected acres of new residential development by the density midpoint for each residential land use category to project the number of dwelling units (the "DTA projected dwelling units, Table 4-9, column [4]). The DTA projected dwelling unit count is approximately 381,000, which is almost 15% higher than the CETAP projection of 332,000 units.
5. Determine the portion of DTA projected dwelling units within each residential land use category (Table 4-9, column [5]).
6. Allocate the CETAP projected units (332,000) based on the percentages derived in step 5 above (Table 4-9, column [6]).

⁹¹ Volume I of the Draft MSHCP, November 2002, page 8-9.

⁹² Extrapolated for 25 years based on 80% expected development in a 30 year period.

4.8.7.4. Equivalent Dwelling Unit - Population and Employee Based

An equivalent dwelling unit (EDU) provides a way to quantify different land use types in terms of their equivalence to a single-family residential dwelling unit, which is assigned 1 EDU. DTA proposes an EDU based fee in which the EDUs for multi-family residential property and non-residential property are assigned based on the expected number of people per dwelling unit or expected number of employees per acre, respectively. As with the EBU based fee proposal, an EDU based fee can reflect differences in impacts resulting from different land uses and densities. Using population and employment as the basis for the fee program implies that the main benefit to new development from the MSHCP is the public infrastructure and facilities that will likely be constructed once the MSHCP is implemented. As established in Section 2 of the Nexus Report, these public infrastructure facilities (particularly the transportation facilities) provide significant benefit to new development.

Assignment of EDUs

Under DTA's proposed EDU methodology, a single-family residential unit ("SFR") is defined as dwelling units with a density of less than or equal to 8.0 DU/acre. SFRs, which have a population of 3.1 persons per DU (Table 4-10, column [1]) are defined as 1 EDU. Multiple-family residential ("MFR") property is defined as dwelling units with a density between 8 and 14 dwelling units. MFRs have an expected population per dwelling unit of 2.5 persons⁹³ and are assigned 0.8 EDU per unit (Table 4-10. column [2]).⁹⁴ Commercial property,⁹⁵ which has an average of 20 employees per acre, is assigned 6.5 EDUs per acre⁹⁶ and Industrial property, which has an average of 10.5 employees per acre, is assigned 3.4 EDUs per acre.⁹⁷ Residential property with densities exceeding 14 DU/acre is assigned to the same land use category as commercial property since those types of high and very high density residential projects are more commercial than residential in nature.

⁹³ United States Census 2000.

⁹⁴ EDUs for multi-family dwelling = 2.5 people per MFR DU by 3.1 people per SFR DU = 0.8 EDU per MFR unit.

⁹⁵ Commercial property includes commercial land uses plus residential projects with a densities greater than 14 DU/acre.

⁹⁶ EDUS for commercial development = 20 employees/acre divided by 3.1 people per SFR DU = 6.5 EDUs/commercial acre.

⁹⁷ EDUS for industrial development = 10.5 employees/acre divided by 3.1 people per SFR DU = 3.4 EDUs/industrial acre

Methodology Employed to Calculate the EDU Based LDMF

1. Project the number of new SFR units and new MFR units in the next 25 years (Table 4-10, column [3]).
2. Project the number of acres of new residential projects with a density greater than 14 DU/acre, commercial, and industrial developments in the next 25 years (Table 4-10, column [3]).
3. Apply the applicable EDU factor to each land use type (Table 4-10, column [2]).
4. For each land use category, multiply the number of expected dwelling units or developed acres times the applicable EDU to determine the total number of EBUs per land use category (Table 4-10, column [4]).
5. Sum the EDUs for each land use category to determine the total EDUs in 25 years.
6. Divide the total cost to be financed through the mitigation fee program, $906,729,808 by the projected number of EDUs to determine the LDMF per EDU ($2,231 as indicated in Table 4-10).
7. Multiply the LDMF per EDU times the number of EDUs assigned to each land use category to determine the LDMF per unit or LDMF per acre (Table 4-10, column [5]).

Development Projections for the EDU Based LDMF

The EDU based LDMF uses the same development projections as does the density based LDMF.

4.8.7.5. Equivalent Benefit Unit Methodology

An equivalent benefit unit (EBU) provides a way to quantify different land use types in terms of their equivalence to a predefined unit where equivalence is measured in terms of potential use or benefit. A major advantage to an EBU structured methodology when compared to an acreage, density or population based methodology, is the ability to assign identical benefits to similarly used properties (e.g. all residential property is assigned 1 EBU irrespective of lot size) or assign different EBUs to reflect differences in land uses, (e.g. residential development vs. non-residential development).

The Nexus Report proposes an EBU based fee structure where EBUs for residential development are a function of (i) the expected lot size, (ii) trip generation rates, and (iii) expected population per household. Using a weighted factor for each of these items takes into consideration that the MSHCP is providing mitigation for direct, indirect, and cumulative impacts. An EBU based fee program also provides a means to differentiate between the impacts associated with residential and non-residential development.

Assignment of Equivalent Benefit Units

DTA's proposed EBU methodology has four categories of property, three residential categories defined by density ranges and one non-residential category. The residential categories are: (1) Residential, density between 0 and 8.0 dwelling units per acre, (2) Residential, density between 8.1 and 14.0 dwelling units per acre and (3) Residential, density greater than 14.1 dwelling units per acre. These density ranges were selected as they generally correspond to single-family, multiple-family, and high density multiple-family residential development, respectively.

For purposes of assigning EBUs, to residential property three equally weighted components were used: average lot size, average trip ends, and average population per household. For each of these components, an EBU of 1 is assigned to each dwelling unit constructed on residential property with a density from 0 to 8.0 dwelling units ("DU") per acre since this density range represents single-family detached residential development⁹⁸ and is the basis upon which the impacts of other types of development are measured. (columns [2], [4], and [6] in Table 4-11). The lot size, trip end and population factors (columns [2], [4], and [6] in Table 4-11) are added together with the resulting sum (column [7], Table 4-11) being the basis for the Overall EBUs (column [8], Table 4-11).

EBUs are assigned to non-residential development based actual expected density associated with residential property developed at 0.4-8 DU/acre. In order to determine this number, DTA divided the expected number of residential units with a density between 0.4-8 DU/acre by the expected number of acres for that land use category. As indicated in Table 4-9, a total of 332,940 residential units with densities between 0.4-8 DU/acre are projected on 98,909 gross acres, which results in an EBU assignment of 3.4 EBUs per acre of non-residential development.

Average Lot Size

Average lot sizes were determined for each residential density range in half acre increments. For purposes of determining the lot size component dwelling units constructed on rural residential property were assigned a lot size of 0.5 acres in recognition of the potential conservation value of rural development as previously discussed in the gross acreage based fee methodology section. The average residential lot sizes are presented in column [1] of Table 4-11. Appendix E contains the worksheet with the backup data.

Average Trip Ends

Average trip ends were determined for each residential density range using trip end factors from "Trip Generation, 5th Edition" published by the Institute of Transportation Engineers. For purposes of this analysis, DTA used trip generation rates for single-family detached housing (9.57 trips per dwelling unit) and apartments (6.63 trips per dwelling unit). The average trip ends are presented in column [3] of Table 4-11 with the backup data in Appendix E.

⁹⁸ County of Riverside Hearing Draft General Plan, April 2002, Table LU-3.

Average Population per Dwelling Unit

Average population per dwelling unit was determined for each residential density range using "Occupancy Rate per Household Unit" data from the United States Census Bureau, Census 2000 data. For purposes of this analysis, DTA used the occupancy rate for detached dwelling units for residential units with the densities between 0 and 8.0 DU/acre (3.266 people/DU). For residential units with densities between 8.1 and 14.0 DU/ac, DTA used the average of the occupancy rates for 1 attached unit in a structure through 19 units (2.639 people/DU). For residential units with densities greater than 14.1 DU/ac, DTA used the average of the occupancy rates for 19 attached units in a structure through 50 or more units in a structure (2.639 people/DU). These averages are presented in column [5] of Table 4-11 with the backup data in Appendix E.

Methodology Employed to Calculate the EBU Based LDMF

1. Project the number of new residential units constructed in the three density ranges in the next 25 years (Table 4-11, column [9]).
2. Project the number of acres of commercial and industrial development in the next 25 years (Table 4-11, column [9]).
3. Apply the applicable EBU factor to each land use type (Table 4-11, column [8]).
4. For each land use category, multiply the number of expected dwelling units or developed acres times the applicable EBU to determine the total number of EBUs per land use category (Table 4-11, column [10]).
5. Sum the EBUs for each land use category to determine the total EBUs in 25 years.
6. Divide the total cost to be financed through the mitigation fee program, $906,729,808 by the projected number of EBUs to determine the LDMF per EBU ($2,354 as indicated in Table 4-11).
7. Multiply the LDMF per EBU times the EBUs assigned to each land use category to determine the LDMF per unit or LDMF per acre (Table 4-11, column [11]).

For the reasons set forth in Section 4.8, including the manner in which the project cost to acquire the Conservation Area was derived and the methodologies proposed to calculate the amount of the LDMF, there is a reasonable relationship between the amount of the fee and the cost of the public facility upon which the fee will be imposed as required under the rough proportionality provision of Section 66001(a) of the Mitigation Fee Act.