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increase if the fee amount is recalculated and adopted by the City Council following a nexus study. In that event, persons who deferred payments will have 90 days from the date of notification by the City of the fee increase to pay at the old amount, before the fee is changed to the recalculated amount. The estimated cost to the City for lost interest income due to the deferred payment of City development impact fees is between $500 and $1,250 annually per $25,000 in deferred payments (depending on interest rates in the next two years). The revenue implication of not adjusting participant's deferred City fees based on revised construction cost indices to account for annual inflation is expected to be negligible in the next 24 month period. The financial benefits to the City and the community that will be gained from the proposed Deferred Fee Program will more than likely offset interest income and inflation revenue impacts. In terms of administrative provisions, the proposed Deferred Fee Program would be available to persons obtaining building permits for residential projects through June 2011, with the City Manager given the discretion to extend the Deferred Fee Program in six month increments for up to an additional two years upon notice to the City Council. In addition, the City Manager would consider any dispute about the applicability of the program to specific residential projects, or could refer any such disputes to the City Council. The proposed Deferred Fee Program documents, including a sample form of Promissory Note, sample form of Deed of Trust with covenant regarding gas connection and a sample form of Reconveyance are included as Attachment 1. Staff envisions that these documents would be available at the Building and Planning Departments' counters to all persons submitting applications for residential projects. Submitted by: ~~ ~~~~ ~~ -~ Emily Wagner Fiscal Officer Fiscal Revview: David P. Culver Finance Director Approved y: %` Nelson Fialho City Manager ~amela Ott conomic Development Director Attachments: 1. Proposed Deferred Fee Program for Deferring the Payment of City Development Impact Fees for Residential Development Page 4 of 4