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HomeMy WebLinkAbout02/01/1994, 2 - TRANSPORTATION DEVELOPMENT IMPACT FEES Illu II 111JIIJII�I ONGA MEETING DATE: p 11111ci o san Luis osispo COUNCIL AGENDA REPORT ITEM NUMBER FROM: William C. Statler, Director of Finance („ Prepared by: Linda Asprion, Revenue Manager SUBJECT: TRANSPORTATION DEVELOPMENT IMPACT FEES CAO RECOMMENDATION Introduce an ordinance to print establishing transportation development impact fees and adopt a resolution establishing fee amounts to be effective May 2, 1994. REPORT-IN-BRIEF In June, 1993, Council referred transportation development impact fees to the Economic Strategy Task Force (ESTF) to determine if impact fees should be implemented, and if so, at what levels. The ESTF has completed their review and is recommending transportation impact fees be implemented in an amount adequate to mitigate regional, long-term cumulative traffic impacts. Additionally, the ESTF is providing some recommended principles on which the fees should be based. In general, staff is supportive of the recommendations made by the ESTF, and they have been incorporated into the proposed ordinance and resolution. A detailed summary of the ESTF recommendations and staffs response is provided later in this report. Based on the ESTF recommendations, the fees provided in the attached proposed resolution have been reduced approximately by half from those previously recommended to the Council. For example, proposed fees for a single family residence have been reduced from $2,152 to $1,180. This is due to two key factors: exclusion of two projects (widening of highway 101 and Monterey Street) and the decreased cost of one project (railroad bikeway). Appendix A provides the complete listing of improvements and estimated costs on which the revised fee is based, with Appendix B providing calculations of the fee for the various land use types. The stringent requirements under AB 1600 regarding the procedural requirements related to the calculation, adoption, administration and enforcement of impact fees remain valid as provided in the Impact Fee Study developed by David M. Griffith & Associates. DISCUSSION Overview The implementation of transportation development impact fees ensures that new development pays for itself, which will prevent existing residents and businesses from subsidizing new developments. The need to address the implementation of development impact fees has been under serious discussion since 1987 when the City's long-term financial health was identified as a major objective during the 1987-89 Financial Plan process. As such, there are two compelling reasons for adopting transportation impact fees. ��►���i�►��IIIIIII�iIIlllll City Of San tui S OBISPO MijS COUNCIL AGENDA REPORT ■ It is adopted City policy that new development should pay its fair share of the cost of constructing the community facilities that are necessary to serve it, and impact fees are one of the key ways of implementing this policy. ■ If we do not adopt transportation impact fees, one of two outcomes will result: ♦ We will not construct the transportation facilities necessary to accommodate our General Plan and all residents will see circulation service levels decline as a result. ♦ We will construct the facilities, but at the expense of other important community services - police, fire, recreation, parks, cultural, and social services - that do not have alternative revenue sources available to them. These factors were important in 1987, when impact fees were first discussed as necessary for the City's long-term health. Given our current fiscal situation, they are even more important today insuring our long-term ability to deliver important services to our community. Background Implementing transportation development impact fees has been the subject of in-depth discussion over the past five years. In June, 1993 this item was agendized for Council consideration. Attached for Council's convenience is Exhibit 1, the complete Council Agenda Report presented in June, 1993, and Exhibit 2, the Transportation Impact Fee Study prepared by David M. Griffith & Associates. In June, 1993, Council discussed concerns about fairness, appropriateness, and the timing of the fees; impacts on industry and the economy; and the need to provide revenues to build infrastructure. Council then referred this issue to the ESTF to explore the following: ■ Is the basic concept of transportation impact fees appropriate? ■ If so, how much should the fee be? The ESTF has completed their review of transportation impact fees and has provided the Council with their recommendations (Exhibit 3). The following summarizes the ESTF recommendations regarding transportation impact fees along with staff comments on these recommendations. Recommendations from the Economic Strategy Task Force On November 29, 1993, the ESTF adopted their recommendations regarding transportation impact fees (Exhibit 3). The ESTF concurs that there should be a transportation impact fee and that it should be in an amount adequate for mitigation of regional, long-term cumulative traffic impacts. The principles on which the ESTF recommends the fees be based are discussed below along with staff comments. L� l��n�►�►►��IIIIIII�I�n �U�II city of San Luis OBISPO NiS COUNCIL AGENDA REPORT General Concepts ■ ESTF Recommendation: The City should look to alternatives to the single occupant vehicle to meet its transportation needs between now and build-out. Staff Comment: Staff concurs. This goal is already set forth in the draft Circulation Element. ■ ESTF Recommendation: The use of"peak hour" congestion as a criterion in traffic planning tends to encourage the City to spend too much of our limited resources on solving short-term problems. The City should be careful about using p.m. peak as the criterion for road problems. Some congestion is necessary if we want to change peoples' car-dependent behavior. The City should accept Level of Service (LOS) "E" under some peak conditions. Staff Comment: Staff generally concurs. The downtown is already experiencing LOS "E" and other areas are very close if not already at LOS "E". Currently the Circulation Element suggests LOS "D" as a standard for arterial streets outside the downtown and LOS "E" within the downtown. This standard can be changed to accept LOS "E" for all arterial streets within the urban reserve if the community is willing to live with higher congestion levels. ■ ESTF Recommendation: The transportation impact fee program should not emphasize road projects, except those necessary for public safety. Staff Comment: The Circulation Element is the City's policy document concerning road development. Transportation impact fees are the mechanism for implementing the Circulation Element by requiring growth to pay for its impacts on the regional street network and to pay for alternative transportation. This concern should be addressed at the time projects are reviewed for inclusion in the Circulation Element. Subsidies and Exceptions ■ ESTF Recommendation: The City should offer reductions in the transportation impact fees charged to new development if such development has an effective Transportation Demand Management Plan (TDM) or similar program that will reduce or redistribute trips by automobiles, or if the nature of the business is such that it generates fewer trips per square foot than other projects in the same zoning category. Staff Comment: Staff concurs with this concept. The transportation impact fees are based on average vehicle ridership of 1.6 as recommended in the Circulation Element and prescribed by the Air Pollution Control District for trip reduction plans. Therefore, if average vehicle ridership (AVR) is sustained at a higher level, up to a 50% credit should be provided on the streets portion of the transportation fee. The credit would not include any portion of the fee paid for transit or bicycle facilities. �,��►►�N�IVIIIIIII�II� ��p1 city of San LUIS OBISpo COUNCIL AGENDA REPORT The process for receiving this credit, consisting of providing documentation of a sustained higher AVR than is used in the fee calculation, is included in the proposed ordinance. ■ ESTF Recommendation: The transportation impact fee program should offer reductions for projects that improve the transient occupant tax and sales tax. Staff Comment: Staff concurs. A 50% reduction in the fee for retail and hotel/motel developments is included in the recommended transportation impact fee program. ■ ESTF Recommendation: Low and very low income housing should be exempt from the transportation impact fee; other below market rate housing projects should be granted reductions or exemption from transportation impact fees; this may involve a sliding scale tying the amount of the reduction to the cost of housing. Staff Comment: Staff does not concur with this recommendation. Consistent with our policy on water and sewer impact fees, which recognizes that production of affordable housing requires the same infrastructure support as other development, the transportation impact fee recognizes the effect of new development on the City's transportation system. However, low income housing is offered the same incentives as discussed above for sustained reduction in average vehicle ridership. Specific Projects That Should Be Included in the Transportation Impact Fee ■ ESTF Recommendation: Bike and transit projects should be included in the transportation impact fees. Staff Comment: Staff concurs. Bike and transit projects are included in the fees. ■ ESTF Recommendation: The Railroad Bike Path project should be included in the transportation impact fee, but the transportation impact fee should not pay for more than $2.4 million of its cost. Staff Comment: Staff concurs. Based upon an updated estimated cost figure for the railroad bike path, which is decreased from $12 million to $8 million, and applying the percentage for new development of 30.6% brings the impact fee share to $2,448,000. Specific Projects That Should Not Be Included in the Transportation Impact Fee ■ ESTF Recommendation: The transportation impact fee should not include widening of the freeway to six lanes nor used for Monterey Street right-of-way acquisition or widening. a- i��n�►�ii�IIiIIII�pn�u�i��I�II city of San WIS OBISp0 COUNCIL AGENDA REPORT Staff Comment: Staff concurs. The transportation impact fees proposed for adoption do not include these two projects. However, if these two projects are ultimately included in the Circulation Element, they should be included in the transportation impact fees. In this case, staff will return to Council with a recommendation amending transportation fees to include the cost of these projects. Implementation and Administration ■ ESTF Recommendation: The fee ordinance should consider phased implementation and payment of the fee at occupancy (as opposed to issuance of building permits) and/or over time. Staff Comment: Staff does not concur with either of these recommendations. A phase-in period means the City would subsidize or advance the funding for projects approved during that period. Additionally, these fees have been under discussion for over three years, which in itself represents a "phase - in" of these fees. For Administrative consistency with the City's other impact fees, it is recommended that transportation impact fees be collected at the time the building permit is issued. Further, there is normally tremendous pressure placed on staff as a project nears completion to allow occupancy. If a difficulty arises at this stage in the development process relative to fee payment (such as a lack of funds or dispute regarding the amount due), the pressure to occupy could undermine the City's ability to favorably resolve the matter. Other Funding Sources for Transportation Systems Improvements ■ ESTF Recommendation: The City Council should endorse proposals to increase the gas tax and to earmark such funding for alternative transportation. Staff Comment: Staff concurs. In summary, the proposed transportation impact fee program reflects all of the recommendations of the ESTF with three exceptions: ■ Limiting fees for road projects to only those required for public safety - this determination should be made through adoption of the Circulation Element, not the transportation impact fee program. ■ Exempting low and very low income housing from the fee. ■ Phasing implementation of the fees and collecting them at occupancy rather than building permit issuance. ��S �iIIH�IINI�IIIIIN���NNUIII��II City of San WAS OBISPO A COUNCIL AGENDA REPORT FISCAL IMPACT As previously mentioned, the proposed fees for adoption have been reduced by removing two projects - highway 101 and Monierey Street widening - and decreasing the cost of the railroad bikeway, all recommendations of the ESTF. With the removal/reduction of these projects, the proposed transportation impact fees are approximately half of those previously reviewed by Council in June, 1993. A complete listing of these fees is attached as Table 1 to the resolution. Adjusting the total impact fee share of $18,485,720 by the 50% credit for retail and hotel/motel development reduces the expected funding from the fees to $14,326,400. Assuming a 30 year timeframe for build-out of these projects provides for an average annual collection of $477,500 in transportation impact fees. Based on current trends, significantly less revenue,will be generated on an annual basis in the near term (next 2 - 3 years). However, this provides a reasonable estimate of the long-term financial resources that will be generated from this fee. SUMMARY The ESTF has completed their review of the transportation impact fees and concurs that fees should be implemented to mitigate regional, long-term cumulative traffic impacts. Transportation impact fees will generate funding that will assist in meeting the City's financial requirements for future transportation facilities. As such, it is recommended that the Council adopt an ordinance implementing the transportation impact fees and adopt a resolution establishing feel levels effective May 2, 1994. ATTACHMENTS ■ Ordinance implementing transportation impact fees ■ Resolution establishing amounts for transportation impact fees APPENDICES A. Improvements and estimated costs for transportation impact fee B. Future development weighted trip generation EXHIBITS 1. Council agenda report from June 1, 1993 meeting on transportation development impact fees 2. Transportation impact fee study prepared by David M. Griffith & Associates 3. Recommendations regarding transportation impact fees from the Economic Strategy Task Force a- ORDINANCE NO. (1994 SERIES) AN ORDINANCE OF THE CITY OF SAN LUIS OBISPO ADDING CHAPTER 4.56 IMPLEMENTING TRANSPORTATION IMPACT FEES FOR ALL NEW DEVELOPMENT WITHIN THE CITY OF SAN LUIS OBISPO WHEREAS, the City Council has held a public hearing to consider proposed fees to mitigate the impacts of new development on transportation facilities in the City of San Luis Obispo; and, WHEREAS, the impact fees are to be used to implement the goals and objectives, policies,programs, and standards of the San Luis Obispo General Plan, Short Range Transit Plan, and Bikeway Element of the County Regional Transportation Plan, and are consistent therewith; and, WHEREAS, the Community Development Director has determined that this ordinance is exempt from the provisions of the California Environmental Quality Act pursuant to Article 18, Sections 15061 (a) and 15273 (a) (4) of the California Environmental Quality Act Procedures and Guidelines; and, WHEREAS, the proposed ordinance promotes the public health safety and general welfare; WHEREAS, the proposed ordinance complies with the provisions of Government Code Section 66000, et seq; NOW THEREFORE BE IT ORDAINED by the City Council of the City of San Luis Obispo as follows: SECTION 1. A new Chapter 4.56 is hereby added to read as follows: Chapter 4.56 TRANSPORTATION IMPACT FEES A. Purpose. In order to implement the goals and objectives of the Circulation Element of the City of San Luis Obispo General Plan, the 1991 Short Range Transit Plan, and the Bikeway Element of the 1990 San Luis Obispo County Regional Transportation Plan, and to provide adequate.transportation facilities to serve new development in the City of San Luis Obispo and to mitigate the impacts of that new development, certain public facilities and improvements must be, or had to be, constructed or purchased. The City Council has determined that transportation impact fees are needed in order to finance these facilities and improvements and to pay for new development's fair share of the construction or purchase costs of these facilities and improvements. In establishing the fee described in the following sections, the City Council has found the fee to be consistent with the City's General Plan, and pursuant to Government Code Section 65913.2, has considered the effects of the fee with respect to the City's housing needs as established in the Housing Element of the said General Plan Land Use Element. B. Transportation Impact Fees. 1. Transportation impact fees are hereby established as a condition of any new development for which any of the following approvals or permits is required: (a) Approvals of land divisions pursuant to Title 16 of the San Luis Obispo Municipal Code, including approval of lot line adjustments,certificates of compliance,parcel maps, tract maps and condominium conversions; (b) Land use approvals pursuant to Title 17 of the San Luis Obispo Municipal Code, including rezonings or the approval of development plans, site plans,minor use permits, variances, but excepting approval of San Luis Obispo General Plan/Land Use Ordinance amendments; (c) For the issuance of any occupancy permit or final building inspection, and (d) All other approvals of real property development, which approvals are subject to the jurisdiction of the City of San Luis Obispo and which approvals are subject to the exercise of the discretion of the City Council, Planning Commission, or Community Development Director. For purposes of this chapter, new development includes any change of use or occupancy which increases the traffic service requirements of a development. 2. The said transportation impact fees are established in order to pay for needed facilities and improvements reasonably related to new development within the City. From time to time, the City Council shall, by resolution, set forth the specific amount of the impact fees, the specific public improvements to be financed and their estimated cost, a-r describe the reasonable relationship between the fees and the various types of new developments, and set forth the time of payment of the fees. Said resolution shall provide for a method of adjusting the amount of the impact fees on an annual basis to account for changes in the cost of construction or other considerations affecting the reasonable relationship between the fees and the cost of facilities and improvements on which the fees are based. (a) For any development other than residential, the resolution shall provide for payment of fees at the time of building permit issuance. (b) For residential development, the resolution shall provide for the payment of fees at the time of building permit issuance, except where the provisions of Section 66007 of the California Government Code require the collection of fees to be delayed until the time of final inspection or issuance of a certificate of occupancy. 3. The City Council shall, at least once every five years, review the basis for transportation impact fees to determine whether said fee is still reasonably related to the impacts of development, and whether the facilities and improvements for which the fees are charged are still needed. C. Exemptions. The fees imposed under this ordinance shall not apply to the following: 1. Other government agencies. 2. That portion of a structure which existed before the addition of dwelling units or the enlargement of floor area in a non-residential structure. If a structure is destroyed or demolished, and replaced within two years from the date of demolition, the impact fees shall be based on the service requirements of the new development less the service requirements of the development which it replaced. D. Applicant Construction of Facilities or Improvements. If the applicant for approval of any development project is required by the City, as a condition of approval, to construct facilities whose cost'has been used in the calculation of impact fees which apply to that project, the applicant shall receive a credit for that portion of the total fees otherwise payable that are attributable to those facilities. If the credit exceeds the amount of the transportation impact fee due on the development, a reimbursement agreement with the applicant shall be offered. The reimbursement amount shall not include the portion of the improvement needed to provide services or mitigate the need for the facility or the burdens a-� created by the development. E. Limited Use Of Fees. The revenues raised by payment of the transportation impact fees shall be placed in a separate account along with any interest earnings on that account, and shall be used solely to: 1. Pay for the design and construction, including construction management, of transportation improvements described in resolutions adopted pursuant to Section B, or to reimburse the City for funds advanced from other sources to pay for said design and construction. 2. Reimburse developers who have been required or permitted to install portions of said facilities or improvements pursuant to Section D, hereof. F. Fee Adjustments. 1. Each development is independent and no reductions to impact fees will be transferrable to another development nor will an excess be refunded. .2. Any person whose new development is subject to impact fees may request a refund, of up to 50% percent of the street portion of the fee paid, if the sustained average vehicle ridership (AVR) is in excess of 1.6 AVR. A sustained period is considered to be one year. The percentage of refund will be the same as the percentage in excess of the 1.6 AVR standard. 3. Any person whose new development is subject to impact fees may appeal to the City Council for a reduction or adjustment of those fees, or a waiver of those fees, based on the absence of any reasonable relationship between the impacts of that new development and either the amount of the fees or the type of facilities or improvements funded by the fees. The appeal shall be made in writing and filed with the City Clerk, together with any required appeal fee, within ten (10) days following notification that the fee is to be imposed. The appeal shall state in detail the factual basis for the claim of waiver, reduction or adjustment. The City Council shall consider the appeal at an appeal hearing to be held within sixty (60) days after the filing of the appeal. The hearing may be continued from time to time. The decision of the City Council on the appeal shall be final. If a reduction, adjustment or waiver is granted, any change in the permitted type or intensity of land use within the approved development project shall invalidate the reduction,adjustment or waiver of the fee. a-io G. Unexpended Transportation Impact Fee Revenues. 1. Notwithstanding Section B.3., whenever any impact fee, or portion of an impact fee, remains unexpended or uncommitted five (5) or more years after payment of the fee, the City Council shall-make findings once each fiscal year with respect to the unexpended amount. The City Council shall identify the purpose for which the fee is to be used, and demonstrate a reasonable relationship between the fee and the purpose for which it was charged. The findings required by this section need be made only for monies in the possession of the City, and need not be made with respect to any letters of credit, bonds or other items given to secure payment of the fee at a future date. 2. The City shall refund to the then-current owner or owners of the new development project or projects, on a prorated basis the unexpended or uncommitted portion of the impact fees for which need cannot be demonstrated pursuant to this section. The City may refund the unexpended or uncommitted revenue by direct payment, by providing a temporary suspension of impact fees or by any other means consistent with the intent of this section. The determination of the means by which those fees are to be refunded is.a legislative act. 3. If the City Council determines that the administrative costs of refunding unexpended or uncommitted impact fees pursuant to this section exceed the amount to be refunded, the City Council, after a public hearing, notice of which has been published pursuant to Section 6061 of the California Government Code and posted in three prominent places within the area of the new development project, may determine that the said fees shall be allocated for some other purpose for which impact fees are collected and which serves the new development project on which the fees were originally imposed. SECTION 2. A summary of this ordinance, together with the names of Councilmembers voting for and against, shall be published once in full, at least five (5) days prior to its final passage, in the Telegram-Tribune, a newspaper published and circulated in the City. Pursuant to Government Code 66017, the ordinance shall go into effect at the expiration of sixty (60) days after its final passage. INTRODUCED AND PASSED TO PRINT by the Council of the City of San Luis Obispo at its meeting held on the day of , 1994, on motion of and seconded by and on the following roll call vote: AYES: NOES: ABSENT: Mayor Peg Pinard ATTEST: City Clerk, Diane Gladwell APPROVED: *rg/ese Ci Attorney RESOLUTION NO. (1994 SERIES) RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO SETTING THE AMOUNT OF TRANSPORTATION IMPACT FEES WHEREAS, the City of San Luis Obispo has prepared studies to determine the need for transportation facilities and improvements to serve new development; and, WHEREAS, a study entitled City of San Luis Obispo Transportation Impact Fee Study, dated March 15, 1993, by David M. Griffith & Associates, Ltd. (hereinafter called "Impact Fee Study"),which is incorporated herein by reference,has analyzed the relationship between future development and the cost of needed transportation facilities and improvements; and, WHEREAS, the Economic Strategy Task Force (ESTF) has reviewed the transportation impact fees to determine if the basic concept of the fees is appropriate and if so, to make recommendations regarding the implementation of the fees. WHEREAS, that study was made available for public inspection and review ten (10) days prior to a public hearing held on this matter on February 1, 1994; and public notice was provided ten (10) days prior to the public hearing; and WHEREAS, this Resolution shall become effective sixty (60) days from final passage of Ordinance No. NOW, THEREFORE, the City Council of the City of San Luis Obispo finds and resolves that: 1. Findings. A. The purpose of the transportation impact fees is to provide adequate street improvements, transit improvements, and bicycle facilities to satisfy the needs of new development and to mitigate the impacts of new development on the City's transportation facilities. B. The transportation fees collected pursuant to this resolution shall be used only to pay for street, transit, and bikeway facilities and improvements and shall not be in lieu of any other fee or tax. C. There is a reasonable relationship between the types of development on which the fees are imposed and (1) the use of the fees and (2) the need for the facilities and improvements. D. There is a reasonable relationship between the amount of the fee and the cost of the facilities and improvements attributable to the developments on which the fees are imposed. The estimated costs of facilities and improvements, including financing costs, to be paid for by transportation fees is shown in the Impact Fee Study as subsequently modified and provided in Appendices A and B. Those costs have been allocated to new development on the basis of dwelling unit type (residential) or type of development and size of development (non-residential), which are reasonably related to traffic generation by the development project. 2. Cost Estimates. At any time that the actual or estimated costs of facilities identified in Appendix A significantly changes, the Finance Director shall review the transportation fees and determine whether the change significantly affects the amount of the fees. If the fees are significantly affected, the Finance Director shall, within thirty (30) days, recommend to .the City Council a revised fee. 3. Amount of Transportation Fees. The amount of the transportation impact fees is set forth in Table 1 attached hereto. Unless otherwise acted upon by the City Council, the amount of the fees will automatically be adjusted on July 1 of each subsequent year by the percentage change in the U. S. Bureau of Labor Statistics consumer price index for all urban consumers (CPI-U), all-cities average for the prior calendar year. 4. Time of Payment. A. Transportation impact fees for any development project or portion thereof shall be payable prior to issuance of the building permit. B. For any development project or portion thereof, impact fees shall be assessed at the time of application and remain valid for as long as the application is proceeding through valid processing as per the Uniform Administrative Code. 5. Separate Accounts. The Finance Director shall deposit fees collected under this resolution in a separate transportation impact fee fund as required by Government Code Section 66006. Within sixty (60) days of the close of each fiscal year, the Finance Director shall make available to the public an accounting of the fund, and the City Council shall review that information at its next regular public-meeting. Upon motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT. the foregoing resolution was adopted this day of , 1994. Mayor Peg Pinard ATTEST: City Clerk, Diane Gladwell APPROVED: �4 evzo,44�� rg se Ci Attorney a-�� TABLE 1 TRANSPORTATION IMPACT FEES Land Use Category Impact Fee per Unit of Development Single Family Residential $ 1,180/DU Multi-Family Residential $ 1,047/DU Retail' $ 1,861/KSF` Office $ 2,367/KSF Service Station $12,209/KSF Service Commercial $ 1,284/KSF Industrial $ 684/KSF Hospital $ 2,120/KSF Motel/Hotel' $ 548/Room' Other $ 110/Trip Fees for retail and hotel/motel are set at 50% of .the adjusted study costs in recognition of the fiscal benefits these developments bring to the City. DU = Dwelling Unit KSF = 1,000 Square Feet CQ_1/ APPENDIX A IMPROVEMENTSAND ESTIMATED COSTS TRA NSP OR TA TIONIMPACT FEE STUDY STREET IMPROVEMENTS PROJ IMPROVEMENT IMPROVEMENT ESTIMATED % FOR IMPACT N0.[51 LOCATION DESCRIPTION COST NEW DEV FEE SHARE II.C.2 Hwy 101/Los Osos Widen Bridge/ $3,000,000 100.0% $3,000,000 Valley Rd Modify ramps II.B.2 Higuera St/ High St to Marsh St Widen (west side) $2,000,000 100.0% $2,000,000 II.8.7 Higuera St/ Widen $1,000,000 100.0% $1,000,000 Madonna Rd to City Limit 11.0.1 Orcutt Rd/SPRR Grade separation $4,000,000 20.0% [11 $800,000 II.8.6 Prado Rd Bridge/ Widen bridge $1,000,000 100.0% $1,000,000 Hwy 101 II.A.7 South St Extend to connect $4,250,000 20.0% [2] $850,000 w/Bishop St Various locations 20 traffic signals $2,000,000 100.0% $2,000,000 Madonna Rd/ Hwy 101 Widen/101 bridge $2,300,000 30.6% [3] $703,800 Higuera St/ Madonna Rd to High St Widen $775,000 30.6% [3] $237,150 Various Congestion mgmt $2,000,000 100.0% [4] $2,000,000 projects Subtotal Street Improvements $22,325,000 60.9% $13,590,950 Notes: 11j Assumes 80% funding from Public Utility Commission as railroad safety project. Project required to serve new development. [2] Assumes 80% benefit to existing development. [31 Project cost apportioned according to future development share of total traffic (See Table 1-1). Impact fees will be used to recoup funds advanced by the City. improvements as a condition of approval for a shopping center project. [4] The Circulation Element sets a standard of LOS 'D'for arterial streets and highways outside the downtown area, and LOS'E'for downtown streets. [5] Project numbers refer to the 5/92 Draft Circulation Element(See Appendix C). APPENDIX A IMPROVEMENTSAND ESTIMATED COSTS TRANSPORTATIONIMPACT FEE STUDY TRANSIT IMPROVEMENTS PROJ IMPROVEMENT IMPROVEMENT ESTIMATED % FOR IMPACT NO. LOCATION DESCRIPTION COST NEW DEV FEE SHARE Mobile Fleet expansion $1,500,000 50.0% [8) $750,000 (7/ (5 buses) Various locations Bus Stop Amenities $175,000 30.6% $53,550 Downtown Transfer Center $2,740,000 15.3% [9) $419,220 Subtotal Transit Improvements $4,415,000 27.7% $1,222,770 Notes M Fleet expansion based on 43.3% increase in travel demand as represented by trip generation. [81 Assumes that 50%o1 acquisition cost will be funded by grants. [9]Assumes that 50%of transit center cost will be funded by grants, with the balance shared by existing and future development in proportion to travel demand. BICYCLE FACILITIES PROJ IMPROVEMENT IMPROVEMENT ESTIMATED % FOR IMPACT NO.[51 LOCATION DESCRIPTION COST NEW DEV FEE SHARE I.C. SPRR Right of Way New bikeway 1101 $8,000,000 30.6% $2,448,000 I.B. Various Bikeway imprvmts, $4,000,000 30.6% $1,224,000 bicycle facilities Subtotal Bicycle Facilities $12,000,000 30.6% $3,672,000 Notes: [5] Project numbers refer to the 5/92 Draft Circulation Element (See Appendix C). [10] Assumes adoption of Bicycle Transportation Program 3.13 in the Draft Circulation Element as Indicated in Figure 4: Transportation Capital Projects(attached). GRAND TOTAL $38,740,000 47.7% $18,485,720 A-2 ��/ g cm m �_ $ 8 8 S c8i• 8 (8f� � dap � co N r r r O r C7 � o f00 N Y r 0!A co co cn T 80H80 xm oW0 M o ° . E O O Y a ' m ONi HCM S O O O v 0 cocn B OHO a y C Db N U. O N r O N r N r n (6 (q d Y n r E9 fA N cc O fa d 0 o L CD 0 0 co 0 CL O m Y 0 r C7 O 0 r 0 N T O Q L ` 5 O O f4 N mac O. 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I co L LL (m to ci c;$ g ao o a Ld aLD l C6 m `�° J. m o y rn a °� —°m m W � 2N m T N r a� o �� : m o CL-a m � > 3 Y �. m c o 3 6 x -0 y 0) O U O It pp pp o ��pp ap t O C O7 C CA O 8 of (CI C W f0D •a y N C •C coOD O ¢ � LL �' o C) o o r- LO cq ycO� � d E `o3 Z Y r a o c m v p d o m � > 32 N Op m .. cc o m CM2 L N Or7 fQ Iwo N CO S c O.� O) W m N c v 1: o ri r r CO ° _ 3 � � � � a � tR m 0L O U Q m M C c ep 'DCD Of N m U Q 03 y N nm CD 8 8 O CO 8 X00• W 0co v00 m WE CD m O r � Q Oi r 07 N r r` Cd r 3 a p z w �-z p T T r r p �Nmvcn cc c: ai CDA r N M t� W � � r T �0Y w C O a 0 CO ¢ W Lu aa ¢ = w z ¢ F a4 ¢ � p p pap OCL w m CO 0 � a ¢ w _ 0 g =¢ w w0¢ p C=_7 w Z F- Q m O m Lst1 � 3m w w I w 3 m j U > Q W z 2I O w J wa M- 0 x z x o as o a q wi O cD *' T r co m Q r O AS 2 ai o o c c�i T C7 o a � W ay ¢ a z a c b co S s r rcr) 8cf) 8 � b c O O O N (7 T C7 O m O p L O OH 01 2' m a y 0 -CD Ss `$ 8 rn 8 8 8 c9• 8 M 8 � ac `o m + N O m O 0 T <D N r (O O m T y E U o f r T T o M c� CL a. m Q ��pp p a °G r E y C v C7 O may„ cA 8 S 7 fD O C O. E y ctl L C N T O C T V* d j a > y d y Z.e CL ° a O W CD W NN a ro a `—� E 9 c r"i. $ 8 8 o 8 a P n 8 R o r °-`o 5 0 mO a N v v o T M N � r m E m 0� _ y d U = aY u9 � =` mem m ' c O � � (� C N �+� pD Eac��ac� � a 1z O ylI ts 8 ie S N O N 93 N 8 y C C . c Q`p O C u� O 7 m Y O CV O O r O <O L m cc �' E O. U m cc � c r E ., c o .. o e - r 5 m 9 •- L 0) I ' 8 8 8 8 �, 4i 8 � � 3a� 'm $ m8. > W Z O V/ n T U) O r r r O O O 0 gym•. C Q 3 U m X U � JY m T n .Q� oma- ay 'o � c pR0mE vv wO mNO oN C Oaco yOQm{L a) cm C13 > N ay Canc09i LO O c•Q N � a-•C m N O C N m m O m d LL v c4i• 8 8 8 8 8 cQi 8 cm a E ` CL CD m m2Ycm a o W ci r CO°' T aca a+ N N U c(�p �p p an d C O OH .SZ O U. It 0CI 8 T O c0 O SN ao Rj Sm 0 E > O O r7 m ._ 11 r rn N w (D a0ZU. a3 aZ � VJ rNMIqM c01� W A W LL, r N c7 �f 4a 0 ¢ O ¢ a > OY W p O n 0 a ¢ W N MM3 ~ a 6 v g ¢ op ap pLL a0 w m W a H w _ 0 J =Fes- Q m O m C=-'J {Oji p - W WMW W I W 3 m 5 0 3 � W z m Q N O Q as = 2 Z 2 0 a cO D a LLLL ��O Exhibit=. PR city of sari LUIS OBISPO MEETING[!ATE: ACOUNCIL AGENDA REPORT ITEM NUMBER: FROM: William C. Statler, Director of Finance �J Prepared by: Linda Asprion, Revenue Manager SUBJECT: TRANSPORTATION DEVELOPMENT IMPACT FEES CAO RECOMMENDATION Introduce an Ordinance to print establishing transportation development impact fees and adopt a resolution establishing fee amounts to be effective July 1, 1993. REPORT-IN-BRIEF Implementing development impact fees has been the subject of in-depth discussion over the past four years and is consistent with recommendations from various Council adopted policy documents and community groups. The proposed fees have been calculated under the stringent standards of AB 1600, which set forth requirements related to the calculation, apportionment, administration, and enforcement of impact fees. The recommended transportation development impact fee for a single family residence is $2,152, with fees for non-residential projects varying based on their land use type and square footage. It should be noted that the fees developed in the accompanying impact fee study are recommended to be implemented at the levels identified in this comprehensive study with the exception of fees for retail and motel/hotel developments. Implementation of the fees for retail and hotel/motel are recommended to be 507o of the study costs in recognition of the fiscal benefits these developments bring to the City. OVERVIEW Wlry should the City adopt transportation impact fees? There are two. compelling reasons for adopting transportation impact fees. ■ It is adopted City policy that new development should pay its fair share of the cost of constructing the community facilities that are necessary to serve it,and impact fees are one of the key ways of implementing this policy. ■ If we do not adopt transportation impact fees, one of two outcomes will result: • We will nor construct the transportation facilities necessary to accommodate our General Plan and all residents will see circulation service levels decline as a result. • We will construct the facilities, but at the expense of other important community services - police, fire, recreation, parks, cultural, and social services - that do not have alternative revenue sources available to them. as livaglig►��'���U� City of San L.-iS OBISPO Maimb COUNCIL AGENDA REPORT These factors were important in 1987, when impact fees were first discussed as necessary for the City's long-term health. Given our current fiscal situation, they are even more important today insuring our long-term ability to deliver important services to our community. DISCUSSION Background The implementation of transportation development impact fees ensures that new development pays for itself, which will prevent existing residents and businesses from subsidizing new developments. The need to address the implementation of development impact fees has been under serious discussion since 1987 when the City's long-term financial health was identified as a major objective during the 1987-89 Financial Plan process. In response to this objective, a Comprehensive Financial Management Plan (CFMP) was prepared in 1959 which addresses the City's financial needs through the year 2000. Implementing development impact fees was identified in the CFMP as a key source of new revenue to support the City's long-term financial health, Recent economic trends underscore the need to develop resources outside of the General Fund to finance the infrastructure costs of new development. In January 1990, the Council identified the need for citizen participation and involvement in developing programs to ensure the City's long-term financial health. The Citizens' Advisory Committee (CAC) was assigned this task and completed their extensive review and evaluation of the City's long-term financial needs. The CAC's report, which was submitted to Council at their February 5, 1991 meeting, recommended that the City establish development impact fees at sufficient levels to ensure that new development pays its fair share of the cost of constructing necessary community facilities. This recommendation was subsequently adopted in the City's 1991-93 Financial Plan (page B-5). In summary, implementing the recommended transportation development impact fee is consistent with findings from our previous long-term planning efforts and the 1991-93 Financial Plan policies as well as with the existing Short Range Transit Plan, Council adopted revenue programs, and the Draft.Circulation Element. Assembly Bill 1600 On January 1, 1989, the legislature enacted AB 1600 which addresses the development and implementation of local impact fees. Although AB 1600 does not limit local governments' ability to impose regulatory fees,it does impose substantive procedural requirements related to the calculation, adoption, administration and enforcement of impact fee ordinances. AB 1600 requires that a "reasonable relationship" must exist between the need and the cost for a public facility and the development on which the fee is imposed. This requires documentation for capital improvements attributable to new growth, which must be consistent with applicable general plans and adopted specific plans. city o f san ._.Is OBISp0 COUNCIL AGENDA REPORT David M. Griffith and Associates, Ltd. (DMG) was hired to prepare a comprehensive analysis of speck transportation projects and their costs required to support future development in the City as well as to perform a compliance review of the allocation policies and "reasonable relationship" requirements as stipulated in AB 1600. This study has been completed and accompanies this report. Methodology for the Development Impact Fees . The transportation impact fee study prepared by DMG comprehensively details the analysis performed to determine the amount of the fees to be charged, and the direct relationship of the fees to the capital improvement projects, or portions thereof, required to support future development. AB 1600 establishes certain requirements that must be met by any ' local agency establishing, increasing, or imposing fees which are imposed as a condition of development project approval. To satisfy these requirements the City must: 1. Identify the purpose of the fee. 2. Identify the use of the fee. 3. Determine that there is a reasonable relationship between the: a. Use of the fee and the development type on which it is imposed. b. Need for the facility and the type of development on which the fee is imposed. C. Amount of the fee and the facility cost attributable to the project. Each of these key requirements is specifically addressed in the accompanying impact fee study. The development impact fee must be reviewed annually to account for any changes in the cost of the capital improvement projects or any other consideration affecting the "reasonable relationship" between the fees and the cost of the improvements on which the fees are based. Wliat projects are included in calculating transportation impact fees? The.Draft Circulation Element accepted by the Council in April of 1992 as the basis for preparing the General PIan EIR is the primary source for identifying projects to be funded by transportation impact fees. Cost estimates for the following projects were used to calculate impact fees. While the Draft Circulation Element is the primary source for identifying projects, not all projects identified in that document are listed below: projects that.should be the direct responsibility of new development to design and construct have not been included in the cost base. This distinction is discussed further in the cost study, and projects which should be the direct responsibility of new development are identified. a-a� 11kyao1gp�rZ, city of san L-IS OBISpo NORA 11 COUNCIL AGENDA REPORT Street Projects The following street improvements proposed in the Draft Circulation Element have been included in calculating transportation impact fees. ■ Widen Bridge and Modify Ramps Highway 101/Los Osos Valley Road ■ Widen West Side Higuera Street/High Street to Marsh Street ■ Widen Higuera Street/Madonna Road to City Limit ■ South Street extension to connect with Bishop Street ■ Widen Monterey Street/Santa Rosa to Grand Avenue ■ Grade Separation Orcutt Road/Southern Pacific Railroad ■ Widen Road and Bridge Prado Road/Highway 101 to Higuera ■ 20 Traffic Signals at Various Locations ■ Widen Bridge Madonna Road/Highway 101' ■ Wien Higuera Street/Madonna Road to High Street" ■ Widen Highway 101 through City ■ Various Congestion Management Projects These two projects have already been constructed. Since they were designed to serve current and future traffic needs, a portion of their costs have been included in the impact fee program consistent with AB 1600. Transit Projects The following transit improvements approved in the 1991 Short Range Transit Plan have been included in calculating transportation impact fees. ■ Fleet Expansion of 5 Buses ■ Bus Stop Amenities at Various Locations ■ Downtown Multi-modal Transfer Center Bikeway Projects The following bicycle facilities proposed in the Bikeway Element of the 1990 San Luis Obispo County Regional Transportation Plan and the Draft Circulation Element have been included in calculating transportation impact fees. ■ New Bikeway in the Southern Pacific Railroad Right of Way ■ Bicycle Improvements and Facilities at Various Locations As noted in the impact fee study, new development creates impacts on some or all public facilities and services provided by the City by increasing the demand for those facilities or services. If the supply of services is not increased to meet that new demand, the quality of service declines for the existing community. When the City provides facilities or services to satisfy the demand created by new development, it is producing a benefit corresponding to the impact. As such, a reasonable benefit relation is present as long as the facilities for which fees are collected and spent are available to serve new development. In this case, the facilities and equipment addressed in this study would provide the necessary benefit by accommodating the transportation needs of new development. �r �w'r�� city o� San .is OBISPO COUNCIL AGENDA REPORT Don't some of these projects benefit current residents and businesses? Yes, but the fees have been calculated with the improvement costs apportioned between existing and future development. Only that portion attributable to new development has been used in calculating the proposed fees. This apportionment is based on transportation planning and traffic modeling by the City's Community Development .and Public Works Departments. How are costs allocated between different opes of land uses? As detailed inthe accompanying study, the impact fees are based upon average daily trips/miles (ADTM's), with the per trip impact fee rate calculated at $201.00. The number of ADTM's per land use type have been calculated based upon data used by the Community Development Department in projecting traffic impacts of future development based upon traffic modeling which were used in preparing the Draft Circulation Element. Who pays development impact fees? How will they affect affordable housing? The proposed development impact fees will be paid in a lump sum by the applicant when the building permit is issued. Companies and individuals building projects for resale include the fees in calculating the. cost of the house/facility and apply their profit margin accordingly. In this sense, these fees may be passed on to the buyers of the new housing or community development and reflected in the purchase price, but only to the degree that it is profitable for the developer to do so. Because of the many factors that determine the price of housing, it is very difficult to determine the effect of these impact fees on affordable housing. For example, there are many cities with high impact fees which have affordable housing, and many cities with low impact fees and little or no affordable housing. However, production of affordable housing, along with all other developments, requires sufficient transportation infrastructure and facilities to support the new development, and that is the ultimate purpose of these proposed fees. Are there any special policy considerations? As a part of the City's strategy for economic stability,. it is recommended that retail and hotel/motel developments receive a 50% reduction to the fee identified in the impact fee study. By reducing fees for these developments, there may be a shortfall of revenue needed to construct transportation projects on which the fees are based, and AB 1600 does not allow that shortfall to be made up by increasing fees for other types of development. However, the shortfall can be subsidized using other sources of revenue such as sales tax and tra2nsient occupancy tax revenues produced by the developments. As such, in recognition of the fiscal benefits that retail and hotel/motel developments bring to the City, it is recommended that the reduced fees be implemented. city of san L._.,s OBISPO COUNCIL AGENDA REPORT Are any credits, adjustments, or exemptions available? The proposed ordinance provides for credits and exemptions under the following circumstances: ■ Construction of facilities or improvements by applicant. If the applicant for approval of any development project is required by the City, as a condition of approval, to construct facilities whose cost has been used in the calculation of impact fees which apply to that project, the applicant shall receive a credit for that portion of the total fees otherwise payable that are attributable to those facilities. If the credit exceeds the amount of the transportation impact fees due on the development, a reimbursement agreement with the applicant shall be offered. The reimbursement amount shall not include the portion of the improvement needed to provide services or mitigate the need for the facility or the burdens created by the development. For example, let's assume an applicant is required to install an S80,000 traffic signal as part of a development (which is an improvement identified in the calculation of the impact fees) and the transportation impact fees payable by the applicant are $100,000, the $50,000 will be credited against the fees, reducing the amount payable to $20,000. Or, same scenario, but the applicant only owes $50,000 in transportation impact fees. In this situation, a reimbursement agreement in the amount of$30,000 will be offered the applicant. However, credits and reimbursements are not allowed for any improvement that is a specific condition of development but was not included in calculating the impact fee. For example, a road extension or widening may cost $300,000 in addition to the $100,000 in impact fees. However,if the improvement is a condition of development, and was not identified as part of the project base in calculating the. fees, no credit would be applied. ■ Exemptions. The fees imposed under this ordinance shall not apply to the following: • Other government agencies. The rationale for this exemption is first, cities do not have authority to charge counties, school districts, the State of the Federal Government any fees which are not sanctioned by these agencies; and secondly,the need for expanding governmental facilities is driven by increased -demands for service resulting from new development, so it is appropriate that this cost be included in the fee for private sector uses. • That portion of a structure which existed before the addition of dwelling units or the enlargement of floor area in a non-residential structure. If a structure is destroyed or demolished, and replaced within two years from the date of demolition, the impact fees shall be based on the service requirements of the new development less the service requirements of the development which it replaced. ,� : i11�flliu iVJj city or san L.-dls OBISPO COUNCIL AGENDA REPORT How do we compare with other cities? In October.1991, the State Department of Transportation released results of a survey they performed to determine the extent of local traffic impact fee structures and transportation funding sources presently in place by local agencies within District 5. The results of the survey indicated that out of 31 cities and counties surveyed, a total of 17 imposed some form of impact fee. While most of the jurisdictions imposing such fees negotiate the amount of the fee with developers on a case by case basis, many cities throughout the State have established fees using calculations based on either dwelling units, square footage, peak hour trips (PHT), or average daily traffic (ADT). The following chart summarizes impact fees charged by comparable cities for single family residential (SFR) uses: Single Family City Residential Fee Brentwood $6,922 Camarillo 54,240 Half Moon Bay $1,450 Livermore $22240 Napa $1,853 Oxnard $3,826 Pismo Beach* S336 - $3042 San Clemente* $13200 - $69100 Tracy* $4,586 - $8,047 Vacaville $5,812 Ventura $5,245 San Luis Obispo (Proposed) $21152 * These cities are divided into zones with each zone having a different rate. The chart shows that the proposed development impact fees for San Luis Obispo are comparable with other cities. How wX these fees affect development costs? The following summarizes the impact of the proposed fees on development by using some recently completed projects to show what fees would have been paid. 1 illiif� � ;� city-of san 1.,�1s OB1sp0 COUNCIL AGENDA REPORT Fee Calculation Total Fee The Crossroads Credit for 6 SFR units (demolished) $(12,912) Six Multi-family Residential Units 11,460 Retail - 17,528 square feet 59,473` Service - 5,125 square feet 11,993 Total $ 70,014 s Calculation based on recommended fee at 509o' of the study costs in recognition of the fiscal benefits these developments bring to the City. O'Leary Building Office - 7,609 square feet S 32,833 Service - 1,300 square feet 3.042 Total $ 35,875 Walters' Bros. Bldg Office - 43,269 square feet $186,706 Exhibit A provides a comparison of the proposed City impact fees on these projects and some hypothetical projects, with the fees that other cities would charge for these same projects. When will the increase be implemented? Pursuant to the Government Code, the Ordinance may go into effect 60 days after its final passage. Within this context, it is recommended that the fees become effective on Thursday, July 1, 1993 to simplify implementation. How will the fees be used? AB 1600 requires the City to "earmark" the development impact fees by category of capital improvement. The funds may be invested, with any interest earned added to the fees, and can be expended only for the purpose for which the fee was collected. This has been interpreted to mean that a specific capital project on which the fee was based can be changed, but the funds must be used for the general stated purpose, i.e. transportation improvements. The Director of Finance must annually report on the fees collected and related expenditures. After five years, if the fee has not been expended or committed, and the City cannot establish a reasonable relationship between the fee remaining and the purpose for which it was charged, the unexpended or uncommitted fees (together with any interest accrued) must be refunded to the current recorded owner of the property. How will fees be adjusted over time? Unless otherwise acted upon by Council, the amount of the fees will automatically be adjusted on July 1st of each subsequent year by the percentage change in the U. S. Bureau of Labor Statistics consumer price index for all urban consumers (CPI-U), all-cities average for the prior calendar year. . _ r�� �u1u�ili�I��l► V City of San JIS OBISpo MaGa COUNCIL AGENDA REPORT COMMUNITY PARTICIPATION As discussed above, the Citizen's Advisory Committee has comprehensively reviewed the City's long-term financial health, including the appropriate use of development impact fees. In concluding their review, the CAC recommended the implementation of impact fees to ensure that development pays its fair share of constructing community facilities and as a part of the bigger picture, to help ensure the City's long-term financial health. Their recommendation was approved by the Council and incorporated into the 1991-93 Financial Plan. On October 19, 1992, a meeting was held with the Chamber of Commerce and the Building Industry Association of the Central Coast (BIACO) to introduce the proposed.impact fees. After the meeting, the Chamber coordinated correspondence between the BIACO and the City addressing specific questions and requesting additional information (Exhibits B & C). A concluding meeting with the Chamber and BIACO was held on January 29, 1993, where some concerns were expressed regarding two specific projects - one included and one excluded - in the fee calculation. The discussion of these two projects was as follows: ■ Prado Road. The BIACO expressed their concern that Prado Road interchange and extension from South Higuera to Broad was not included in the impact fee calculation. This project is identified in the Draft Circulation Element as being built as a condition of development since the benefits of the project are so site specific. Accordingly, this project is not included as part of the base for determining transportation impact fees. ■ SPRR Bike Path. The BIACO expressed particular concern regarding the inclusion of the Southern Pacific Railroad right of way for the new bike path with an estimated cost of $12,000,000 and an impact fee share of 30.6% ($3,672,000). This project is included in the Bikeway Element of the 1990 San Luis Obispo County Regional Transportation Plan and the Draft Circulation Element as a specific program, and as such, it has been included as part of the fee base. The BIACO has requested this project be deleted from the impact fee calculation. Deleting this project from the fee calculation would reduce the bicycle improvement fee portion by $13.28 (from $17.71 to $4.43 per average daily trip) and the total impact fee from $201 to $188 per average daily trip. For example, this would reduce the proposed single family residence fee from $2,152 to $2,139. CONCURRENCES The Community Development, Public Works, City Attorney, and Administration staffs have reviewed the proposed fees, and they concur with the recommendation. city of San tuts OBISpo COUNCIL AGENDA REPORT FISCAL IMPACT Under the City's current residential growth management plan (17o annually), the following revenues are projected to be generated annually from the proposed transportation impact fee: Residential $354,000 Non-Residentia? $195.000 " Non-residential fees have been calculated based on the historic relationship between Total $549,000 residential and non-residential development Based on current trends, significantly less revenue will be generated on an annual basis in the near term (neat 2 - 3 years). However, this provides a reasonable estimate of the long- term financial resources that will be generated from this fee. ALTERNATIVES There are seven basic alternatives available to the Council: ■ Approve fees which are less than recommended. The Council could approve fees that are less than those supported by the impact fee study. However, with the "reasonable relationship" being established within the study and the costs directly apportioned, this alternative would be inconsistent with adopted City policy, and as such, it is not recommended. ■ Do not implement transportation impact fees. Based upon the City's long-term financial needs and adopted Council policy regarding the responsibility for new development to pay its fair share of constructing necessary public facilities, this alternative is not recommended. Not adopting the fees would cause existing residents and businesses to pay a greater share of future transportation improvements projects, or would result in fewer General Fund resources available to support other City services such as police, fire, recreation, parks, and street maintenance. ■ Approve subsidy for retail and hotel/motel use that is different than the recommended level. The Council could approve a subsidy for retail and hotel/motel fees that is greater or less than the 509o' reduction recommendation. The recommended level recognizes the trade-off on a 50/50 basis between the need for new development to pay for itself and the fiscal benefits of these types of development. ■ Approve subsidies for other uses. Although there may be fiscal benefits associated with other types of projects, retail and motel/hotel uses clearly have significant definable fiscal benefits that distinguish them from other types of development. In the interest of straightforwardly communicating the strategic benefits of retail and tourist-oriented developments - consistent with our adopted City Mission Statement r F,u�51N,111111111u��diu city of san L.Js OBISPO ffiii% COUNCIL AGENDA REPORT of promoting the City as a "regional .trade, recreation, and tourist center" - no expansion of this subsidy is recommended at this time. The City's economic development strategies are currently under review. If, as part of this process, other strategic business types are identified that should also receive a subsidy, the impact fee resolution can be amended at that time, with the recognition that the City will produce less money to pay for future improvements. M Developer financing options. In lieu of direct subsidies, or in conjunction with them, the City could assist developers in financing these fees (as well as other impact fees such as water and sewer)by establishing community facility districts on a case-by-case basis that would offer long-term, tax exempt financing of these fees. v Delete selected projects. The Council could delete any project from the improvement listing. It should be noted, however, that these projects are based several key transportation and alternative transportation documents which serve as the foundation for planning future transportation projects. Recalculating the fee based on including or excluding specific projects is a very straight-forward and simple process. If the Council has concerns with specific projects, those projects should be discussed and retained or deleted, as adoption of some development impact fee is preferable for the long-term benefit of the City over not having such a fee. ■ Timing. Although the BIACO does not support this fee, they have suggested that the City consider deferring or phasing in the fees. Although it is recommended that the fees be implemented in full on July 1, 1993, adopting the fees with a deferred or phased schedule is recommended over not adopting the fees at all. SUMMARY Implementing transportation impact fees has been the subject of in-depth discussion over the past several years. The proposed fees will be set at comparable levels With similar communities while generating funds that will assist in meeting the City's financial requirements for funding future transportation facilities. As such, it is recommended that the Council adopt an ordinance implementing the transportation impact fees and adopt a resolution establishing fee levels effective July 1, 1993. ATTACHMENTS ■ Ordinance implementing transportation impact fees ■ Resolution establishing amounts for transportation impact fees ',ti�'40111111►1 llfcity of San Luis oaIspo i COUNCIL AGENDA REPORT EXHIBITS A. Transportation impact fee comparison with other cities B. November 18, 1992 letter from Chamber of Commerce and Building Industry Association of the Central Coast C. December 14, 1992 letter responding to the Chamber of Commerce and Building Industry Association of the Central Coast ENCLOSURE ■ Transportation Impact Fee Study, David M. Griffith, March 15, 1993 ORDINANCE NO. (1993 SERIES) AN ORDINANCE OF THE CITY OF SAN LUIS OBISPO ADDING CHAPTER 4.56 IMPLEMENTING TRANSPORTATION IMPACT FEES FOR ALL NEW DEVELOPMENT WITHIN THE CITY OF SAN LUIS OBISPO WHEREAS, the City Council has held a public hearing to consider Proposed fees to mitigate the impacts of new development on transportation facilities in the City of San Luis Obispo; and, WHEREAS, the impact fees are to be used to implement the goals and objectives, policies,programs, and standards of the San Luis Obispo General Plan, Short Range Transit Plan, and Bikeway Element of the County Regional Transportation Plan, and are consistent therewith; and, WHEREAS, the Community Development Director has determined that this ordinance is exempt from the provisions of the California Environmental Quality Act pursuant to Article 18, Sections 15061 (a) and 15273 (a) (4) of the California Environmental Quality Act Procedures and Guidelines; and, WHEREAS,'the proposed ordinance promotes the public health safety and general welfare; WHEREAS, the .proposed ordinance complies with the provisions of Government Code Section 66000, et seq; NOW THEREFORF, BE IT ORDAINED by the City Council of the City of San Luis Obispo as follows: SECTION 1. A new Chapter 4.56 is hereby added to read as follows: Chapter 4.56 TRANSPORTATION IMPACT FEES A. Purpose. In order to implement the goals and objectives of the Circulation Element of the City of San. Luis Obispo General Plan, the 1991 Short Range Transit Plan, and the Bikeway Element of the 1990 San Luis Obispo County Regional Transportation Plan, and to provide adequate transportation facilities to serve new development in the City of San Luis Obispo and to mitigate the impacts of that new development, certain public facilities and improvements must be, or had to be, constructed or.purchased. The City Council has determined that transportation impact fees are needed in order to finance these facilities and. improvements and to pay for new development's fair share of the construction or purchase costs of these facilities and improvements: In establishing the fee described in the following sections, the City Council has found the fee to be consistent with the City's General Plan, and pursuant to Government Code Section 65913.2, has considered the effects of the fee with respect to the City's housing needs as established in the Housing Element of the said General Plan Land Use Element. B. Transportation Impact Fees. 1. Transportation impact fees are hereby established as a condition of any new development for which any of the following approvals or permits is required: (a) Approvals of land divisions pursuant to Title 16 of the San Luis Obispo Municipal Code,including approval of lot line adjustments,certificates of compliance,parcel maps, tract maps and condominium conversions; (b) Land use approvals pursuant to Title 17 of the San Luis Obispo Municipal Code,includin rezorings or the approval of development plans, site plans, minor use permits, variances, bttt excepting approval of San Luis Obispo General Plan/Land Use Ordinance amendments; (c) For the issuance of any occupancy permit or final building inspection, and (d) All other approvals of real property development,which approvals are subject to the jurisdiction of the City of San Luis Obispo and which approvals are subject to the exercise of the discretion of the City Council, Planning Commission, or Community Development_Director. For purposes of this chapter, new development includes any change of use or occupancy which increases the traffic service requirements of a development. 2. The said transportation impact*fees are established in order to pay for needed facilities and improvements reasonably related.to new development within the City. From time to time, the City Council shall, by resolution, set forth the specific amount of the impact fees, the specific public improvements to be financed and their estimated cost, a-C� describe the reasonable relationship between the fees and the various types of new developments, and set forth the time of payment of the fees. Said resolution shall provide for a method of adjusting the amount of the impact fees on an annual basis to account for changes in the cost of construction or other considerations affecting the reasonable relationship between the fees and the cost of facilities and improvements on which the fees are based. (a) For any development other than residential, the resolution shall provide for payment of fees at the time of building permit issuance. (b) For residential development, the resolution shall provide for the payment of fees at the time of building permit issuance, except where the provisions of Section 66007 of the California Government Code require the collection of fees to be delayed until the time of final inspection or issuance of a certificate of occupancy. 3. The City C:ounciI shall, at least once every five years, review the basis for transportation impact fees to determine whether said fee is still reasonably related to the impacts of development, and whether the facilities and improvements for which the fees are charged are still needed. C. Exemptions. The fees imposed under this ordinance shall not apply to the following: 1. Other government agencies. 2. That portion of a structure which existed before the addition of dwelling units or the enlargement of floor area in a non-residential structure. If a structure is destroyed or demolished, and replaced within two years from the date of demolition, the impact fees shall be based on the service• requirements of the new development less the service requirements of the development which it replaced. D. Applicant Construction of Facilities or Improvements. If the applicant for approval of any development project is required by the City, as a condition of approval, to construct facilities whose cost has been used in the calculation of impact fees which apply to that project, the applicant shell receive a credit for that portion of the total fees otherwise payable that are attributable to those facilities. If the credit exceeds the amount of the transportation impact fee due on the development, a reimbursement agreement with the applicant shall be offered. The reimbursement amount shall not include the portion of the improvement needed to provide services or mitigate the need for the facility or the burdens a�s created by the development. E. Limited Use Of Fees. The revenues raised by payment of the transportation impact fees shall be placed in a separate account along with any interest earnings on that account, and shall be used solely to: 1. Pay for the design and construction, including construction management, of transportation improvements described in resolutions adopted pursuant to Section B, or to reimburse the City for funds advanced from other sources to pay for said design and construction. 2. Reimburse developers who have been required or permitted to install portions of said facilities or improvements pursuant to Section D, hereof. F. Fee Adjustments. 1. Each development is independent and no reductions to impact fees will be transferrable to another development nor will an excess be refunded. 2. Any person whose new development is subject to impact fees may appeal to the City Council for a reduction or adjustment of those fees, or a waiver of those fees,based on the absence of any reasonable relationship between the impacts of that new development and either the amount of the fees or the type of facilities or improvements funded by the fees. The appeal shall be made in writing and filed with the City Clerk, together with any required appeal fee,within ten (10) days following notification that the fee is to be imposed. The appeal shall state in detail the factual basis for the claim of waiver, reduction or adjustment. The City Council shall consider the appeal at an appeal hearing to be held within sixty (60) days after the filing of the appeal. The hearing may be continued from time to time. The decision of the City Council on the appeal shall be final. If a reduction, adjustment or waiver is granted, any change in the permitted type or intensity of land use within the approved development project shall invalidate the reduction,adjustment or waiver of the fee. G. Unexpended Transportation Impact Fee Revenues. 1. Notwithstanding Section B3., whenever any impact. fee, or portion of an impact fee, remains unexpended or uncommitted five (5) or more years after payment of the fee, the City Council shall make findings once each fiscal year with respect to the unexpended amount. The City Council shall identify the purpose for which the fee is to be • �i "�lO used, and demonstrate a reasonable relationship between the fee and the purpose for which it was charged. The findings required by this section need be made only for monies in the possession of the City, and need not be made with respect to any letters of credit, bonds or other items given to secure payment of the fee at a future date. 2. The City. shall refund to the then-current owner. or owners of the new development project or projects, on a prorated basis the unexpended or uncommitted portion of the impact fees for which need cannot be demonstrated pursuant to this section. The City may refund the unexpended or uncommitted revenue by direct payment, by providing a temporary suspension of impact fees or by any other means consistent with the intent of this section. The determination of the means by which those fees are to be refunded is a legislative act. 3. If the City Council determines that the administrative costs of refunding unexpended or uncommitted impact fees pursuant to this section exceed the amount to be refunded, the City Council, after a public hearing, notice of which has beenpublished pursuant to Section 6061 of the California Government Code and posted in three prominent places within the area of the new development project, may determine that the said fees shall be allocated for some other purpose for which impact fees are collected and which serves the new development project on which the fees were originally imposed. SECTION 2. A summary of this ordinance, together with the names of Councilmembers voting for and against, shall be published once in full, at least five (5) days prior to its final passage, in the Telegram-Tribune, a newspaper published and circulated in the City. Pursuant to Government Code 66017, the ordinance shall go into effect at the expiration of sixty (60) days after its final passage. INTRODUCED AND PASSED TO PRINT by the Council of the City of San Luis Obispo at its meeting held on the day of . 1992, on motion of . and seconded by and on the following roll callvote: AYES: NOES: ABSENT: Mayor Peg Pinard ATTEST: City Clerk, Diane Gladwell APPROVED: City Attorney RESOLUTION NO. (1993 SERIES) RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO SETTING FORTH THE AMOUNT OF TRANSPORTATION IMPACT FEES, PROVIDING FOR THE COLLECTION AND ADJUSTMENT OF SAID IMPACT FEES, IDENTIFYING THE TRANSPORTATION SERVICES TO BE FUNDED BY THE FEES, AND ESTABLISHING A REASONABLE RELATIONSHIP BETWEEN THE FEES AND VARIOUS TYPES OF NEW DEVELOPMENT WHEREAS, the City of San Luis Obispo has prepared studies to determine the need for transportation facilities and improvements to serve new development; and, WHEREAS, a study entitled City of San Luis Obispo Transportation Impact Fee Study, dated March 15, 1993, by David >\i. Griffith & Associates, Ltd. (hereinafter called "Impact Fee Study"),which is incorporated herein by reference, has analyzed the relationship between future development and the cost of needed transportation facilities and improvements; and, WHEREAS, that study was made available for public inspection and review ten (10). days prior to a public hearing held on this matter on April 6, 1993; and public notice was provided fourteen (14) days prior to the public hearing; and WHEREAS, this Resolution shall become effective sixty (60) days from final passage of Ordinance No. NOW, THEREFORE, the City Council of the City of San Luis Obispo finds and resolves that: 1. Findings. A. The purpose of the transportation impact fees is to provide adequate street improvements, transit improvements and bicycle facilities to satisfy the needs of new development and to mitigate the impacts of new development on the City's transportation facilities. B. The transportation fees collected pursuant to this resolution shall be used only to pay for street, transit, and bikeway facilities and improvements and shall not be in lieu of any other fee or tax. C. There.is a reasonable relationship between the types of development on which the fees are imposed and (1) the use of the fees and (2) the need for the facilities and improvements. D. There is a reasonable relationship between the amount of the fee and the cost of the facilities and improvements attributable to the developments on which the fees .are imposed. The estimated costs of facilities and improvements, including financing costs, to be paid for by transportation fees is shown in the Impact Fee Study. Those costs have been allocated to new development on the basis of dwelling unit type (residential) or type of development and size of development (non-residential), which are reasonably related to traffic generation by the development project. 2. Cost Estimates. At ary time that the actual or estimated costs of facilities identified in the Impact Fee Study significantly changes, the Finance Director shall review the transportation fees and determine whether the change significantly affects the amount of the fees. If the fees are significantly affected, the Finance Director shall, within thirty (30) days, recommend to the City Council a revised fee to be incorporated into this resolution. 3. Amount of Transportation Fees. The amount of the transportation impact fees for the 1992-93 fiscal year is set forth in Table 1 attached hereto. Unless otherwise acted upon by the City Council, the amount of the fees will automatically be adjusted on July 1 of each subsequent year by the percentage change in the U. S. Bureau of Labor Statistics consumer price index for all urban consumers (CPI-U), all-cities average for.the prior calendar year. 4. Time of Pavment. A. Transportation impact fees for any development project or portion thereof shall be payable prior to issuance of the building permit. B. For any development project or portion thereof, impact fees shall be assessed at the time of application and remain valid for as long as the application is proceeding through valid processing as per the Uniform Administrative Code. 5. Separate Accounts, The Finance Director shall deposit fees collected under this resolution in a separate transportation impact fee fund as required by Government Code Section 66006. Within sixty (60) days of the close of each fiscal year, the Finance Director shall make available to the public an accounting of the fund, and the City Council shall review that information at its next regular public meeting. e Upon motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of . 1993. Mayor Peg Pinard ATTEST: City Clerk, Diane Gladwell APPROVED: City Attorney e TABLE 1 TRANSPORTATION IMPACT FEES Land Use Cate;1y Impact Fee per Unit of Development Single Family Residential $ 2,152/DU Multi-Family Residential $ 1,910/DU Retail' $ 3,393/KSF= Office $ 4,315/KSF Service Station $22,261/KSF Service Commercial $ 2,340/KSF Industrial $ 1,246/KSF Hospital $ 3,865/KSF Motel/Hotel' $ 999/Room` Other $ 201/Trip s Fees for retail and hotel/motel are set at 507o of the study costs in recognition of the fiscal benefits these developments bring to the City. DU = Dwelling Unit KSF = 1,000 Square Feet O O t7 C.)!19 CO) N N V O O O N 0 tone nQ n o Q o Exh �' Q J r m . 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D. xswPI..:..;i,:..,:uC ..a.t.:...,.: ..c ...,-::yvx..: O N - - U H Occ � " 6 �oO � Ca C" m E W (n A N U m t�o A 0] ,o O U) LO v C% N U o y cQ m E w N L In A O -0 1 1- r: I O ti_ a �p epo E U- V' m v CL U m l o _ r v d l 1 00 -� = 41 o U u _ c 10 m x o m � J u � � u d O o » 0 7 a N ~ a'�� D x C C L� yQ 0FO- OON O 3O UQ CN CN Wnr • � Exhibit OSan Luis Obispo Chamber of Commerce 1California039 Chorro Street Sin W's Obispo, Califo 93401-3278 (805) 781-2777 • FAX (805) 543-1255 • David E. Garth, Executive Director November 18, 1992 Mr. Bill Statler Finance Director _ City of San Luis Obispo 990 Palm Street Box 8100 San Luis Obispo, CA 94403-8100 Dear Bill: On behalf of the Chamber of Commerce, I want to thank Ken Hampian and yourself for taking time to share your plans for the proposed Transportation Impact Fees with us. Following your presentation of October 19, we met again to review your materials. Noted below are the questions we have pertaining to the conclusions in the material. 1) Regarding the Street Improvements noted in Appendix A, Exhibit 2, we have several questions. -- Has the current level of service (LOS) been determined for the various projects? We might suggest indicating those levels, if they've been determined. -= How were the specific improvements chosen to be included in this study? 2) Regarding the Future Development/Weighted Trip Generation charts in Appendix B (B-1, B-2) , Exhibit 3b, we have one question. -- How was the Projected New Development (4] determined for each Land Use Type? ACCREDITED C..re[e o[moc[•et o- ..n.m co..c•c[ Bill Statler/Transportation Impact. Fees November 18, 1992 Page 2 3) Other general questions include: -- The language of AB160O requires that their be a direct relationship between the projected cost of the improvement and its use. Can this be justified in all the projects noted? -- What version of the General Plan was used in preparing this report? (Is it the same version for which the EIR is being prepared?) -- What version of the Airport Area Specific Plan was used? (Was it the Conceptual Plan approved by the City Council?) -- Can you provide us with the projected fees (sewer, water, parks, water meter, traffic, retrofit, housing) for a new 50, 000 sq. ft. commercial building in San Luis Obispo. -- Can you explain the rationale behind exempting government from sharing in these costs? We look forward to meeting with you and Ken in the near future to continue the discussions for these proposed fees. The answers to the above questions will help us better understand how you determined the fee structure. I will be happy to distribute your answers to our Chamber group, as well as arrange a future meeting. Thank you for your help with this. Sin erely, anCans Di ector, Governmental Affairs cc Ken Hampian Exhibit Ijl . I city of sAn WIS OBISPO All 990 Palm Street/Post Office Box 8100 • San Luis Obispo,CA 93403.8100 December 14, 1992 Mr. Lance Evans Director, Governmental Affairs San Luis Obispo Chamber of Commerce 1039 Cborro Street San Luis Obispo, CA 93IT 01 Dear Lance, Thank you for your letter of November 18, 1992. We are pleased that the Chamber of Commerce and the Building Industry Association are actively participating in reviewing the proposed Transportation Impact Fees. For ease in continuity we have repeated your questions in the same order as presented in your letter with our response directly following. 1. Regarding the Street Improvements noted in Appendix A, Exhibit 2, we have several questions. A. Has the current level of service (LOS) been determined for the various projects? We might suggest indicating those levels, if they've been determined. B. How were the specific improvements chosen to be included in this study? Response. The specific street improvements listed in Appendix A are included in the Hearing Draft of the General Plan Circulation Element. In May, 1992, the City Council accepted the draft element for purposes of starting the preparation of an EIR. The City has developed a computer traffic model that estimates existing Level of Service (LOS) for City arterial streets and state highways. "LOS" is a measure of traffic. flow. Free flowing traffic is rated as LOS "A" or "B" while high levels of congestion is rated as LOS "E" or "F". Most City streets are currently at LOS "C' or better. The Circulation Element sets a standard of LOS"D"for arterial streets and highways outside the downtown, and LOS "E" for dox;vntown streets. The street improvements in Appendix A are needed to serve future growth and to maintain adequate traffic flow (eg. traffic flow that meets the LOS standards included in the Circulation Element). While the intent of Appendix A in the Transportation Impact Fee Study is to simply identify the projects and the percentage of the project cost associated with new development for the basis of the proposed fee calculation, we M11 either provide general LOS information as a footnote or reference the Circulation Element as a source for specific street LOS standards. 2. Regarding the Future Development/Weighted Trip Generation charts in Appendix B (B-11 B-2), Exhibit 3b, we have one question. A. How was the Projected New Development [4] determined for each Land Use Type? Response. The Hearing Draft of the General Plan Land Use Element (February, 1992) was used to project future development. Projections %were based on the development of vacant land within the City (called "infill'), further development of under used land or the replacement of old buildings with bigger buildings (called "intensification") and the annexation and development of land at the periphery of the • City (called "expansion"). These land use projections were used to develop. a computer model %which . provides forecasts of future traffic conditions. The improvement costs were then allocated to different types of development using a weighted trip generation index based on average trip lengths adjusted for "pass-by" trips. Appendix B of the Transportation Impact Fee Study provides this calculation by land use type. 3. Other general questions: A. The language of AB1600 requires ,that there be a direct relationship between the projected cost of the improvement and its use. Can this be justified in all the projects noted? Response. Yes. AB1600 requires there to be a "reasonable relationship" between the amount of the fees and the portion of the cost of the facilities needed to serve future development. The primary purpose of the Transportation Impact Fee Study is to document this "reasonable relationship" and the updated Circulation Element serves as a source document. B. What version of the General Plan was used in preparing this report? (Is it the same version for which the EIR is being prepared?) Response. The Hearing Drafts of both the General Plan Land Use Element (February, 1992) and the Circulation Element (May, 1992) were used to prepare this report. The EIR currently being prepared uses these two documents to define the "project"for which it is being prepared. (\Tote: Public Hearings to consider adoption of the Land Use and Circulation Elements are slated for Winter quarter, 1993.) a -47 C. What version of the Airport Area Specific Plan was used? (Was it the Conceptual Plan approved by the City Council?) Response. The conceptual plan for the Airport Area Specific Plan was reflected in the February, 1992 General Plan Land Use Element which has been accepted by the Council for the purpose of preparing the EIR. D. Can you provide us with the projected fees (sewer, water, parks,water meter, traffic, retrofit, housing) for a new 50,000 sq. ft. commercial building in San Luis Obispo. Response. Currently, the City does not have, nor is there any work in progress to develop impact fees for parks or housing. The retrofitting requirement is not a fee paid to the City and as such it isnot shown as an impact fee. However, the City is exploring the possibility of providing credit.toward water impact fees based upon the cost of retrofitting. It is anticipated that this proposal to modify the calculation of water and sever impact fees based on retrofitting costs will go before Council at the same time as Transportation Impact Fees. Water and sewer impact fees are based upon meter size and type of tenants, which of course depends on the anticipated use of the commercial facility. For this example we have projected a 1 1/2" meter and retail only tenants. Water S 10,510 -Sewer S 8,870 Water Meter S 370 ,Transportation SSSS- /6�37s Total Estimated Impact Fees S -52,8-25 These fees are exclusive of development review fees for planning, engineering, and building permits. These fees vary significantly based on the types of discretionary approvals necessary. For illustrative purposes only, the following is an outline of the development review fees required based on the following assumptions: No Iot creation is required Built on three acres; 100 foot frontage Construction costs = 52,875,000 . Public Improvement Costs = $112,500 Planning Fees Planned Development Permit S 1,547.00 Environmental Review 516.00 Use Permit 670.00 Architectural Review 650.00 Total Planning S31383.00 Building Safety Fees Grading Permit Fees S 66.00 Plan Check Fees 61818.00 Building Permit Fees 10,490.00 Total Building & Safety Fees $17,374.00 Engineering Fees Improvement Plan Check S 1,893.50 Construction Inspection 3,328.50 . Total Engineering Fees S5,222.00 Total Development Review Fees S25,979.00 E. Can you explain the rationale behind exempting government from sharing in these costs? Response. First, cities do not have authority to charge counties, school districts, the State, or the Federal Government any fees which are not sanctioned by these agencies. Secondly, the need for expanding governmental facilities is driven by increased demands for service resulting from new development, so it is appropriate that this cost be included in the fee for private sector uses. We hope that these.responses assist.in determining how the fee structure was determined. We appreciate your handling the distribution of this response both to the Chamber and the Business Industry Association. We anticipate taking the proposed Transportation Impact Fees to the Council in early 1993. Your cooperation in distributing this information and arranging a future meeting is greatly appreciated. Thank you for your assistance. Sincerely, William C'Statler Director of Finance CQ Ken Hampian, Assistant City Administrative Officer Terry Sanville, Principal Planner J Exhibit CITY OF SAN LUIS OBISPO TRANSPORTATION BIPACT FEE STUDY MARCH 15, 1993 ® David M. Griffith & Associates, Ltd. 5715 Marconi Avenue, Suite A Carmichael, CA 94608 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY CITY OF SAN LUIS OBISPO Project Coordinator: Linda Asprion, Revenue Manager Administration Ken Hampian, Assistant City Administrator Community Development Department Terry Sanville, Principal Transportation Planner Paul Barker, Computer Graphics Technician Finance Department Bill Stader, Director of Finance Linda Asprion, Revenue Manager Public Works Department Wayne Peterson, City Engineer Jerry Kenny, Supervising Civil Engineer I DAVID M. GRIFEEM & ASSOCIATES. LTD. Joe Colgan, Project Manager March 15, 1993 David M. Griffuh & Associates, Ltd. Page i C17Y OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY TABLE OF CONTENTS Executive Summary 1 Section 1 - Introduction 3 Requirements of AB 1600 3 Purpose of the Fees 4 Use of the Fees 4 Reasonable Relationship Requirement 5 Impact Relationship 5 Benefit Relationship 6 Proportionality Relationship 6 Section 2 - Street Improvements 8 Service Area 9 Level of Service 9 Trip Generation 9 Impact Fee Calculation - Street Improvements 9 Section 3 - Transit Improvements 11 Service Area 11 Level of Service 11 Cost Allocation 12 Impact Fee Calculation - Transit Improvements 13 I Section 4 - Bicycle Facilities 14 Service Area 14 Level of Service 14 Cost Allocation 15 Impact Fee Calculation - Bicycle Facilities 15 March 15, 1993 David M. Griffuh & Associates, Ltd. Page U a -e5 C;1 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY TABLE OF CONTENTS (Cont'd) Section 5 - Implementation 17 Summary of Impact Fees 17 Impact Fees by Land Use Type 17 Potential Impact Fee Revenue 18 Adoption 19 Cost Escalation 19 Administration 20 Subsidies 22 Training 22 Appendix A A-1 Appendix B B-1 Appendix C C-1 .March 15, 1993 David M. Griffith &Associates, Ltd Page iii CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY EXECUTIVE SUMMARY This report analyzes proposed transportation improvement projects to determine what costs should be imposed on future development projects in the form of impact fees. Facilities covered by this analysis are: 0 street improvement projects • transit improvement projects • bicycle facilities Sections 66000, et seq. of the California Government Code (also known as AB 1600) require certain findings to support the establishment, increase or imposition of fees which are required as a condition of approval for development projects. The primary purpose of this study is to determine how the costs of capital improvements should be allocated to future users, and to document that there is a "reasonable relationship" between the amount of the fees and the cost of facilities, or portions of facilities needed to serve future developments. This analysis allocates the costs of transportation facilities according to the travel demand requirements of various types of development. Travel demand is represented in this study by vehicle trip generation rates for each development type. Obviously those rates do not relate directly to travel by transit or bicycle. However, the best available information on travel demand is in the form of vehicle trip generation studies, and since transit and bicycle transportation provide an alternative to travel by private motor vehicle, it is reasonable to assume that the distribution of demand is similar. March IS, 1993 David M. Griffith & Associates, Ltd. Page 1 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY Impact fees have been computed in this study for a fairly large number of distinct land use types. The share of improvements attributable to future development has been determined using the forecast of future development contained in the Draft Land Use and Circulation Elements of the General Plan (herinafter called "General Plan"). The costs were allocated using weighted trip generation rates for each type of development. The weighting factors were based on average trip lengths by trip purpose as estimated by the City's traffic model. Adjustments were made in trip generation rates for commercial uses to account for "pass-by" trips which are diversions of trips made for other purposes. Those adjustments were based on case studies of pass-by trips documented in Trip Generation, a manual published by the Institute of Transportation Engineers (ITE). Table ES-1, below, is reproduced from Section 5 of this report. TABLE ES-1 IMPACT FEES BY LAND USE CATEGORY Land Use Impact Fee per Category Unit of Development Single Family Residential $2,152/DU Multi-Family Residential $1,910/DU Retail $6,786/KSF Office $4,315/KSF Service Station $22,261/KSF Service Commercial $27340/KSF Industrial $1,246/KSF Hospital $3,865/KSF Motel $1,997/Room 11 Other $201/Trip Notes: DU = Dwelling Unit. KSF = 1,000 Square Feet. March 15, 1993 David.til. Griffuh & Assodares, Ltd. Page 2 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY SECTION 1 INTRODUCTION REQUMEMENTS OF AB 1600 AB 1600 (California Government Code, Sections 66000, et seq.) establishes certain requirements that must be met by any local agency establishing, increasing or imposing fees which are im- posed as a condition of development project approval. Those requirements that relate to the amount and types of fees are pertinent to this study. To satisfy those requirements the City must: 1. Identify the purpose of the fee; 2. Identify the use of the fee; and 3. Determine that there is a reasonable relationship between: a. The use of the fee and the development type on which it is imposed; b. The need for the facility and the type of development on which the fee is imposed; and C. The amount of the fee and the facility cost attributable to the development project. Each of those points is addressed below. In addition, the law establishes certain requirements for collection, accounting, reporting and refunding of fees. Those requirements should be addressed in the adoption and implementation of these impact fees. March 15, 1993 David M. Criffuh & Associates, Ltd. Page 3 CITY OF SAN LUIS OBISPO TRANSPORTATION INIPACT FEE STUDY PURPOSE OF THE FEES Development impact fees are imposed under the police power delegated to local governments by the State of California. As with any police power regulation, their purpose must be to further some aspect of the public health, safety and general welfare. It is the responsibility of the local governing body to decide what regulations are required to protect public health, safety and welfare. The imposition of development impact fees as a means of providing adequate public facilities to support orderly development has been upheld as a legitimate exercise of police power in a number of court cases. The fees addressed in this study will be used to pay for street, transit and bikeway improvements identified in the City's General Plan and various facility master plans. The City has determined that those facilities are essential to promote orderly development and insure that traffic associated with future growth does not produce unacceptable impacts on all residents of the City. USE OF THE FEES AB 1600 provides that if the use of a fee subject to its requirements is to finance public facilities, those facilities must be identified. The specific facilities to be funded by the proposed fees, and the estimated cost of each, are listed in Appendix A. In general they include: • Certain street improvements proposed in the May, 1992 Draft Circulation Element of the City of San Luis Obispo General Plan (EIR Hearing draft). • Transit improvements proposed in the SLO Transit September, 1991 Short Range Transit Plan. • Bicycle facilities proposed in the Bikeway Element of the 1990 San Luis Obispo County Regional Transportation Plan, and the May, 1992, EIR Hearing Draft Circulation Element. llarch 15, 1993 David M. Griffith & Associates, Lid. Page 4 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY It should be noted that, in addition to paying impact fees for these improvements, developers would also be responsible for any transportation improvements needed primarily to serve their projects. That is a continuation of past policy. REASONABLE RELATIONSHIP REQUIREMENT AB 1600 requires that a reasonable relationship be demonstrated between: [1] the use of the fee and the type of development on which it is imposed (herein referred to as "benefit"); [2] the need for a facility and the type of development on which the fee for that facility is imposed (herein referred to as "impact"); and [3] the amount of the fee and the facility cost attributable to the project on which the fee is imposed (herein referred to as "proportionality"). All new development creates impacts on some or all public facilities and services provided by local government, by increasing the demand for those facilities or services. If the supply of services is not increased to meet that new demand, the quality of service declines for the existing community. When the City provides facilities or services to satisfy the demand created by new development, it is producing a benefit corresponding to the impact. The other dimension of this relationship, proportionality, depends on the fees being calculated in a way that fairly apportions costs according to the relative impacts of various types of development. IMPACT RELATIONSHIP The apportionment of improvement costs between existing and future development is based on transportation planning and traffic modeling by the City of San Luis Obispo Community Development and Public Works Departments. The allocation of costs among land use types is based on travel demand as represented by trip generation rates weighted to account for trip lengths by purpose and adjusted to account for pass-by trips related to commercial development. The improvements to be funded by impact fees are required to mitigate the impacts of development proposed in the Land Use Element of the General Plan. March 15, 1993 David M. Griffith & Associates, Ltd. Page 5 a-� g C17Y OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY BENEFIT RELATIONSHIP A reasoflable benefit relationship is present as long as the facilities for which fees are collected and spent are available to serve new development. In this case, the facilities and equipment addressed in this study would provide the necessary benefit by accommodating the transportation needs of new development. PROPORTIONALITY RELATIONSHIP A reasonable proportionality relationship must be established through the procedures used in calculating impact fees for various type of development. The first step is to identify the facility costs attributable to future development. The second step is to allocate those costs in proportion to the demands created by future development projects. The improvements included in this study have been evaluated by the City to apportion costs for each project based on the share of need attributable to future development. The apportionment of costs for each project is shown in Appendix A. Costs are split between existing and future development, based on relative shares of overall travel demand. The best available measure of travel demand is vehicle trip generation, and this analysis will use trip generation figures prepared by the City's Community Development Department in its traffic modelling program. The. shares of total traffic attributable to existing and future development are summarized in Table 1-1. March 15, 1993 David M. Giff ith & Associates, Ltd. Page 6 a- s� CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY TABLE 1-1 SHARES OF TRAFFIC AT BUILDOUT Component Trips Percentage Existing Development 576,757 ADT 69.4% Future Development 254,274 ADT 30.6% TOTAL 8312031 ADT 100.0% Note: ADT = average daily traffic. March 15, 1993 David M. Griffith & Associates, Ltd. Page 7 C17Y OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY SECTION 2 STREET EMPROVEN=S The Community Development and Public Works Department have developed a list of street improvement projects which are required, at least in part to serve new development anticipated in the General Plan. That list is based on the May, 1992, Draft Circulation Element, and is presented in Appendix A. The costs for each project have been apportioned to reflect the share of cost attributable to future development. Figure#4 from the Draft Circulation Element, which lists the transportation capital projects recommended in the Circulation Element, is included in Appendix C. In cases where a street project is needed entirely because of planned future development, the City's entire.cost will be included in the impact fee calculations. Where funding from other sources, such as Caltrans, is expected to be available, only the City's anticipated share of the cost is included. Some projects contained in the Draft Circulation Element have not been included in the impact fee program because it is assumed that they will be constructed as a condition of approval for specific development projects. Prado Road is one example. A listing of all Draft Circulation Element projects is provided in Appendix C. Each project included in the traffic impact fee calculation is identified in that list. For projects which are needed to serve both existing and future traffic, the costs have been apportioned according to shares of total traffic as shown in Table 1-1. Where other considerations have resulted in a different cost sharing approach, the allocation of costs, and the reasons for that allocation are noted in Appendix A. The total estimated cost of the street improvement projects included in the impact fee program is $44,325,000. The share of these street improvement costs to be paid by future development through impact fees is $27,590,950, or 62.2% of the total. March 15, 1993 David M. Griffith & Associates, Ltd. Page 8 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY SERVICE AREA The area served by the street improvements included in this study is the area encompassed by the City San Luis Obispo General Plan. Impact fees calculated in this section of the report will apply to all future development in that area. LEVEL OF SERVICE The Circulation Element establishes level of service "D" as the standard for all arterial streets in the City except for the downtown San Luis Obispo where level of service "E" is the standard. The projects included in this analysis are needed to maintain that level of service while accommodating the traffic generated by future development anticipated in the General Plan. TRIP GENERATION The trip generation and land use data used by the Community Development Department in pro- jecting the traffic impacts of future development are shown in Appendix B. Trip generation rates are broken down by trip purpose and are weighted by average trip length for each trip purpose category. Trip generation and trip length data were derived from the City of San Luis Obispo traffic model. Adjustments were made in trip generation rates for commercial uses to account for "pass-by" trips which are diversions of trips made for other purposes. Those adjustments were based on case studies of pass-by trips documented in Trip Generation, a manual published by the Institute of Transportation Engineers (ITE). The improvement costs are allocated to development using a weighted trip generation index for which we will use the term average daily trip-miles (ADTM). rv[PACT FEE CALCULATION - STREET IMPROVEMENTS The determination of impact fee rates in this situation is done by dividing the allocated cost of street improvements by the total ADTM to be generated by all future development. The fee for a particular type of development is determined by multiplying the impact fee rate per ADTM March 15, 1993 David M. Griffith & Associates, Ltd Page 9 a-& A CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY times the number of ADTM generated by the appropriate unit of development such as a dwelling unit, a motel room, or 1,000 square feet of commercial building area. Table 2-1 shows the calculation of a per-trip impact fee rate for street improvements. TABLE 2-1 IlVIPACT FEE CALCULATION - STREET MPROVEMENTS Future Development Future Development Impact Fee Cost Share ADTM Share Rate $27,590,950 276,437 ADTM $99.81/ADTM The impact fee rate from Table 2-1, along with fee rates for transit and bikeway improvements will be combined into an overall impact fee rate for transportation improvements. That combined impact fee rate is used in Appendix B to calculate impact fees per unit of development for various land use types. march 15, 1993 David Af. Griffith & Associates, Lid Page 10 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY SECTION 3 TRANSIT IMPROVEMENTS One key goal of the City's Circulation Element is to encourage the use of alternative modes of transportation as a way of reducing motor vehicle traffic. That reduction would have environmental benefits and would also minimize the need for additional street improvements. Public transit is an important element of a balanced transportation system and convenient transit service is essential to reducing dependence on automobile transportation. The City of San Luis Obispo is served by a City-owned transit system called SLO Transit. SLO Transit has developed a short range transit plan which identifies capital facilities and equipment needed to expand service and increase the availability and convenience of transit in San Luis Obispo. The City intends to fund certain of those improvements by charging impact fees to future development. SERVICE AREA The area served by the transit improvements included in this study is the area encompassed by the City San Luis Obispo General Plan. Impact fees calculated in this section of the report will apply to all future development in that area. LEVEL OF SERVICE Two important considerations in defining the level of service provided by a transit system are its geographic coverage and the frequency of service. According to the September 1991 Short Range Transit Plan prepared by Nelson/Nygaard, more than 90% of San Luis Obispo residents currently live within 1/4 mile of a transit route. The system is made up of four bus routes with service approximately once per hour. Weekday service is offered generally from 6:30 A.M. to 7:00 P.M., with the exception of one route which operates until 10:30. Weekend service is offered on two routes from 9:00 A.M. to 6:00 P.M. .March 15, 1993 Darid M. Griffith & Associates, Ltd. Page 11 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY The purchase of additional buses, as proposed in the Short Range Transit Plan is intended to bring-the existing level of transit service up to an acceptable standard. The cost of those buses will not be included in the cost basis for impact fees. However, the cost of additional buses needed to maintain the same ratio of buses to average daily traffic as the City grows is attributable to new development and the City's share of that cost will be allocated to future new development in the impact fee calculations. The cost of other facilities, such as bus stop shelters and a larger downtown transit center will be split between existing and new development in proportion to shares of ADT. COST ALLOCATION As discussed previously,-traffic generation will be used in this report as a measure of total travel demand. It will be assumed that the impact of new development on the transit system will be proportional to total travel demand. Using that approach, the total cost of transit improvements, will be apportioned between existing and future development in proportion to the shares of traffic generated by each. We will assume that 50% of the cost of additional buses and the transit center will be funded by grants. The local share of cost for expanding the bus fleet in response to growth is being allocated entirely to future development. The entire cost of bus stop amenities and the local share of transit center costs is being split between existing and future development in proportion to shares of total trip generation as shown in Table 1-1. Future development, then, is responsible for 30.6% of those costs. The amount allocated to future development is shown in Table 3-1. Appendix A shows the allocation of costs for each type of transit improvement. March 15, 1993 David M. Griffith & AssoeiWes, Lid. Page 12 a -�kg C17Y OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY E1PACT FEE CALCULATION - TRANSIT UYIPROVEMENTS The determination of impact fee rates in this situation is done by dividing the allocated cost of transit improvements by the total ADTM to be generated by all future development. As explained in Section 2, ADTM is a weighted trip-mile index which is being used to measure the impact of,various types of development on the transportation system. The fee for a particular type of development is determined by multiplying the impact fee rate per ADTM times the ADTM generated by the appropriate unit of development such as a dwelling unit, a motel room, or 1,000 square feet of commercial building area. Table 3-1 shows the calculation of a per-trip impact fee rate for transit improvements. TABLE 3-1 EAPACT FEE CALCULATION - TRANSIT UVOROVEMENTS Future Development Future Development Impact Fee Cost Share ADTM Share Rate $1,222,770 276,437 ADTM $4.42/ADTM The impact fee rate from Table 3-1, along with impact fee rates for street improvements and bicycle facilities will be combined into an overall impact fee rate for transportation improve- ments. That combined impact fee rate is used in Appendix B to calculate impact fees per unit of development for various land use types. March 15, 1993 David MI Griffith & Associates, Ltd. Page 13 (9_66 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY SECTION 4 BICYCLE FACILITIES As discussed in the previous section on transit, a key goal of the City's Draft Circulation. Element is to encourage the use of alternative modes of transportation as a way of reducing motor vehicle traffic. Accommodating bicycle travel is another aspect of that strategy. The City's planned bikeway improvements are part of the San Luis Obispo County Regional Transportation Plan, and are intended to complete a comprehensive bikeway system serving the entire City. The specific improvements to be addressed in this analysis include the development of a bikeway on a portion of the Southern Pacific Railroad right of way, and various other bikeway improvements and related amenities. SERVICE AREA The area served by the bicycle facilities included in this study is the area encompassed by the City San Luis Obispo General Plan. Impact fees calculated in this section of the report will apply to all future development in that.area. LEVEL OF SERVICE The level of service for the City's bikeway system cannot be characterized as neatly as was the case for streets and transit. Existing bikeways do not form a complete system. That situation forces cyclists to use unsafe and inconvenient routes in certain areas, which hinders cycling generally, but particularly discourages the use of bicycles for transportation. The proposed improvements will maximize the safety and convenience of bicycle travel throughout the City and will do a great deal to improve the useability of bicycles for transportation. Since the proposed expenditures for bicycle facilities will increase the level of service for all users of the system, costs must be shared between existing and future development. March 15, 1993 David M. Griffith & Associates, Ltd. Page 14 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY COST ALLOCATION As discussed previously, traffic generation will be used in this report as a measure of total travel demand. It will be assumed that the impact of new development on bicycle facilities will be proportional to total travel demand. Using that approach, the total cost of the bicycle facility improvements will be apportioned between existing and future development in proportion to the shares of traffic generated by each. The cost of proposed bicycle facilities and bikeway improvements is being split between existing and future development in.proportion to shares of trip generation shown in Table 1-1. Future development is responsible for 30.6% of those costs. Appendix A shows the allocation of costs for specific bicycle facilities. IMPACT FEE CALCULATION - BICYCLE FACILITIES The determination of impact fee rates in this situation is done by dividing the allocated cost of bicycle system improvements by the total ADTM to be generated by all future development. As explained in Section 2, ADTM is a weighted trip-mile index which is being used to measure the impact of various types of development on the transportation system. The fee for a particular type of development is determined by multiplying the impact fee rate per ADTM times the ADTM generated by the appropriate unit of development such as a dwelling unit, a motel room, or 1,000 square feet of commercial building area. Table 4-1 shows the calculation of a per-trip impact fee rate for transit improvements. TABLE 4-1 IMPACT FEE CALCULATION - BICYCLE IMPROVEMENTS Future Development Future Development Impact Fee Cost Share ADTM Share Rate $4,8967000 276,437 ADTM $17.71/ADTM March 15, 1993 David M. Griffith &Associates, Ltd. Page 15 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY The impact fee rate from Table 4-1, along with impact fee rates for streets and transit improvements will be combined into an overall impact fee rate for transportation improvements. That combined impact fee rate is used in Appendix B to calculate impact fees per unit of development for various land use types. :March 15, 1993 David M. Griffuh & Associates, Ltd. Page 16 a-�9 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY SECTION 5 IMPLEMENTATION This section contains recommendations for the adoption and administration of an impact fee program. - Impact fees are imposed on development projects as a condition of approval in connection with discretionary action by the City. SUMMARY OF IMPACT FEES In the foregoing sections of this report, impact fee rates were calculated for three types of transportation improvements: streets, transit and bicycle facilities. Rates for all three components were calculated and the overall transportation impact fee rate will be the sum of those three components, as shown in Table 5-1. TABLE 5-1 TRANSPORTATION IMPACT FEE RATE SUMMARY Component Impact Fee Rate Street Improvements $99.81/ADTM Transit Improvements $4.42/ADTM Bicycle Facilities $17.71/ADTM TOTAL $121.94/ADTM TRANSPORTATION IMPACT FEES BY LAND USE TYPE Improvement costs attributable to new development are allocated using a weighted trip generation index which we will refer to as average daily trip-miles (ADTW. In order to determine the amount of the transportation impact fee to be applied to a particular development project, it is necessary to multiply the impact fee rate per ADTM from Table 5-1 by the ADTM .March 15, 1993 David M. Griffith & associates, Ltd. Page 17 a-7o CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY generated by a unit of development for each land use category. The calculation of impact fees pe'r unit of development for various land use types are calculated in Appendix B and summarized in Table 5-2. TABLE 5-2 IMPACT FEES BY LAND USE CATEGORY Land Use Impact Fee per Category Unit of Development Single Family Residential $29152/DU Multi-Family Residential $1,910/DU Retail $6,786/KSF Office $4,315/KSF Service Station $221261/KSF Service Commercial $2,340/KSF Industrial $1,246/KSF Hospital $3,865/KSF Motel $1,997/Room Other 5201/Trip Notes: DU = Dwelling Unit. KSF = 1,000 Square Feet. POTENTIAL EPACT FEE REVENUE The impact fee rates calculated in previous sections of this report are intended to cover the entire share of improvement costs which is attributable to future development. Therefore, if development occurs as planned, the potential total impact fee revenue will be approximately equal to the total of those costs. It should be noted that all improvement costs are stated in 1992 dollars. In order to maintain the relationship between fee rates and improvement costs, it will be necessary to adjust fee annually to account for changes in construction cost levels. March 15, 1993 David M. Griffth & Associates, Ltd. Page 18 �f / I CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY ADOPTION Impact fees may be adopted by ordinance or resolution. In many cases, the fee program is established by ordinance and the actual fee amounts are adopted and updated by resolution. We recommend this procedure. The California League of Cities has drafted a model ordinance and resolution.which may be useful in the establishment of a fee program. It is very important under AB 1600 to include appropriate findings in ordinances and resolutions establishing fees. Those findings must address the purpose and use of the fees, as well as the reasonable relationship between the fees and the developments paying them. Those requirements are discussed in detail in Section 1 of this report. Any ordinance or resolution establishing an impact fee program should provide for annual adjustments in the fees to keep pace with inflation. The fee rates recommended in previous sections of this report are stated in terms of traffic generated by various types of development. In this form, they are applied by determining the number of trips generated by a particular development project, and multiplying that number by the impact fee rate shown in Table 5-1. In some cases it may be useful to restate these trip- based fees in terms of standard units of development as shown in Table 5-2. COST ESCALATION The fees recommended in this report are stated in current dollars and the fees should be adjusted annually to account for price changes. For projects to be contracted in the future, the Engineering News Record Construction Cost Index is recommended as the basis for those adjustments. For debt-financed projects which have been previously contracted or constructed, the Consumer Price Index may be more appropriate. If project cost estimates change significantly, the fees should be recalculated to reflect those changes. March 15, 1993 David M. Griffith & Associates, Ltd. Page 19 �-7A CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY ADMINISTRATION Several requirements of AB 1600 address the administration of impact fee programs, including collection and accounting procedures, refunds, updates and reporting. References to code sections in the following paragraphs pertain to the California Government Code. Collection of Fees. Section 66007, provides that a local agency shall not require payment fees for residential development prior to the date of final inspection, or issuance of a certificate of occupancy, whichever occurs first. In a residential development project of more than one dwelling unit, the agency may choose to collect fees either for individual units or for phases, upon final inspection, or for the entire project upon final inspection of the first dwelling unit completed. An important exception allows fees to be collected at an earlier time if they will be used to reimburse the agency for expenditures previously made, or spent for improvements or facilities for which an account has been established and money appropriated. The agency must also have adopted a construction schedule or plan for the improvement to qualify for this exception. In any case, utility service fees may be collected at the time an application for service is received. These restrictions do not apply to non-residential development. Procedures for collection of fees should be reviewed with the City Attorney to insure compliance with these restrictions. Accountability. Section 66006 specifies that fees shall be deposited "with the other fees for the improvement in a separate capital facilities account or fund in a manner to avoid any commingling of the fees with other revenues and funds of the local agency, except for temporary investments, and expend those fees solely for the purpose for which the fee was collected." Interest earned on the fee revenues must also be place in the capital account and used for the same purpose. The law does not specify any requirement to segregate funds for individual projects. A common practice is to maintain separate funds or accounts for impact fee revenues March 15, 1993 David M. Griffith & Associates, Lid. Page 20 o� 73 CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY collected for each type of facility but not for individual projects. We recommend that approach. However, the City Attorney should review the structure of capital accounts used for impact fees. Expenditure Time Limits and Refunds. Section 66001 requires, for any fee revenue remaining unexpended five years after it is collected, that the local agency make findings once each fiscal year to identify the purpose to which the fee is to be put, and to demonstrate a reasonable relationship between the fee and the purpose for which it was charged. This requirement applies only to money in the possession of the local agency, and not to letters of credit, bonds, or similar instruments. Any unexpended funds for which.a continued need cannot be demonstrated must be refunded, to the then current owners of lots or units in the development from which it was collected. The-procedures for such refunds are provided in Section 66001. Reporting. Section 66006 requires that once each year, within 60 days of the close of the fiscal year, the local agency must make available to the public an income and expenditure statement for each separate account established to receive fee revenues. The governing body is required to review those statements at the next regularly scheduled public meeting not less than 15 days after the statements are made public. Annual Update of Capital Improvement Plan. Section 66002 provides that if a local agency adopts a capital improvement plan to identify the use of impact fees, that plan must be adopted and annually updated by a resolution of the governing body at a noticed public hearing. Costs of Implementation. The ongoing cost of implementing the impact fee program is not included in the fees themselves. Those costs should be included in user charges and should properly be reflected in the fees charged for processing applications. March IS, 1993 David M. Griffuh & Associates, Ltd. Page 21 o? 7� CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY SUBSIDIES As part of its strategy for economic development, the City may choose to reduce the impact fees for certain types of development, specifically retail and motel uses, because the fees for those types of development may discourage projects which the City considers highly desirable. If the City chooses to implement reduced fees for certain types of development the result will be a shortfall of revenue needed to construct transportation projects on which the fees are based. The proportionality requirement of AB 1600 does not allow that shortfall to be made up by increasing fees for other types of development. However, the City may, we believe, cover the shortfall using other sources of revenue such as sales tax and transient occupancy tax revenues produced by the development paying reduced fees. TRAINING Adopting and administering an impact fee program requires considerable preparation and training. This is particularly true in cases where fees may vary by geographic area. In the beginning, even the agency staff may find the program confusing. It is important that those responsible for applying and collecting the fees, and for explaining them to the public, understand both the details of the fee program and its supporting rationale. We recommend that one employee be designated as the coordinator for the impact fee program, and be made responsible for training all staff who are responsible for fee-related activities. Before fees are imposed, a staff training workshop is highly desirable if more than a handful of employees will be involved in collecting or accounting for fees. It is also useful to give close attention to informational handouts which provide information to the public regarding impact fees. Impact fees should be clearly distinguished from user fees such as application and plan review fees, and the purpose and use of the fee should be made clear. :4larth 15, 1993 David M. Griffuh & Associates, Ltd. Page 21 a-7s CITY OF SAN LUIS OBISPO TRANSPORTATION IMPACT FEE STUDY Finally, everyone who is responsible for capital budgeting and project management be fully aware of. the restrictions placed on the expenditure of impact fee revenues. The fees recommended in this report are tied to specific projects and specific cost estimates. Fees must be allocated accordingly. AB 1600 limits an agency's flexibility to reprogram fee proceeds without revising the fees and making necessary accounting adjustments. March 15, 1993 David M. Griffuh & Associates, Ltd. Page 13 a -7� ISL0TR4FFIAPPENDX4 APPENDIX A IMPROVEMENTS AND ESTIMATED COSTS TRANSPORTATION IMPACT FEE STUDY STREET IMPROVEMENTS PRaJ IMPROVEMENT IMPROVEMENT ESTIMATED % FOR IMPACT NO. 16I LOCATION DESCRIPTION COST NEW DEV FEE SHARE II.C.2 Hwy 101/Los Osos Widen Bridge/ $3,000,000 100.0% $3,000,000 Valley Rd Modify ramps 11.8.2 Higuera St/ High St to Marsh St Widen (west side) $2,000,000 100.0% $2,000,000 I1.B.7 Higuera St/ Widen $1,000,000 100.0% $1,000,000 Madonna Rd to City Limit 11.6.1 Monterey St/ Widen $6,000,000 100.0% $6,000,000 Santa Rosa to Grand Av II.D.1 Orcutt Rd/SPRR Grade separation $4,000,000 20.0%(11 $800,000 II.B.6 Prado Rd Bridge/ Widen bridge $1,000,000 100.0% $1,000,000 Hwy 101 II.A.7 South St Extend to connect $4,250,000 20.0%[21 $850,000 w/ Bishop St Various locations 20 traffic signals $2,000,000 100.0% $2,000,000 Madonna Rdl Hwy 101 Widen/101 bridge $2,300,000 30.6%[3j $703,800 Higuera Stl Madonna Rd to High St Widen $775,000 30.6%[3] $237,150 11.6.9 Hwy 101/ Widen $16,000,000 50.0%(4] $8,000,000 Through City Various Congestion mgmt $2,000,000 100.0%[51 $2,000,000 projects Subtotal Street Improvements .$44,325,000 622% $27,590,950 Notes: f 1 Assumes 80% funding from Public Utility Commission as railroad safety project Project required to serve new development. 121 Assumes 8046 benefit to existing development. 131 Project cost apportioned according to future development share of total traffic (See Table 1-1). Impact fees will be used to recoup funds advanced by the City. improvements as a condition of approval for a shopping center project. (4/ Project required entirely to serve future development and regional tratfic. Funding assumes 500/0 funding by Caltrans to cover regional share. (51 The Circulation Element sets a standard of LOS "D' for arterial streets and highways outside the downtown area, and LOS "E"for downtown streets. (61 Project numbers refer to the 5/92 Draft Circulation Element(See Appendix C). A-1 3115193 ISLOTRAFFIAPPENDXA APPENDIX A IMPROVEMENTS AND ESTIMATED COSTS TRANSPORTATION IMPACT FEE STUDY TRANSIT IMPROVEMENTS PROJ IMPROVEMENT IMPROVEMENT ESTIMATED % FOR IMPACT NO. LOCATION DESCRIPTION COST NEW DEV FEE SHARE Mobile Fleet expansion $1,500,000 50.0% 18I $750,000 [71 (5 buses) Various locations Bus Stop Amenities $175,000 30.6% . $53,550 Downtown Transfer Center $2,740,000 15.3% [91 $419,220 Subtotal Transit Improvements . $4,415,000 27.7016 $1,222,770 Nates. [7I Fleet expansion based on 43.3% increase in travel demand as represented by trip generation. [8I Assumes that 5040 of acquisition cost will be funded by grants. 191 Assumes that 50% of transit center cost will be funded by grants, with the balance shared by exi and future development in proportion to travel demand. BICYCLE FACILITIES PROJ IMPROVEMENT IMPROVEMENT ESTIMATED % FOR IMPACT NO. 16I LOCATION DESCRIPTION COST NEW DEV FEE SHARE I.C. SPRR Right of Way New bikeway 110 $12,000,000 30.6% 53,672,000 I.B. Various Bikeway imprvmts, $4,000,000 30.6% $1,224,000 bicycle facilities Subtotal Bicycle Facilities $16,000,000 30.6% $4,896,000 Notes: [6] Project numbers refer to the 5192 Draft Circulation Element (See Appendix C). [10] Assumes adoption of Bicycle Transportation Program 3.13 in the Draft Circulation Element as indicated in Figure 4: Transportation Capital Projects (attached). 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T te r, :^ x Exhibit -3 RECOMMENDATIONS FROM THE ESTF REGARDING A TRANSPORTATION IMPACT FEE There should be a Transportation Impact Fee (TIF). It should be considered adequate mitigation for regional, long-term cumulative traffic impacts for purposes of CEQA and should be based on the principles listed below: General Concepts 1. The City should look to alternatives to the single occupant vehicle to meet its transportation needs between now and build-out 2.' The use of "peak hour" congestion as a criterion in. traffic planning tends to encourage the City to spend too much of our limited resources on solving short-term problems. The City should be careful about using p.m. peak as the criterion for road problems. Some congestion is necessary if we want to change peoples' car-dependent behavior. The City should accept Level of Service (LOS) .'E" under some peak conditions. 3. The TIF program should not emphasize road projects, except those necessary for public safety. Subsidies and Exceptions 4. The City should offer reductions in the TIF charged to new development if such. development has an-effective Transportation Demand Management Plan (TDM) or similar program that will reduce or redistribute trips by automobiles, or if the nature of the business is such that it generates fewer trips. per square foot than other projects in the same zoning category. 5. The TIF program should offer reductions for projects that improve the TOT and sales tax. 6. Low and very low income housing should be exempt from the TIF; other below market rate housing projects should be granted reductions or exemption from TIF; this may involve a sliding scale tying the amount of the reduction to the cost of housing. Specific Projects That Should Be Included in the TIF 7. Bike and transit projects should be included in the TIF. 8. The Railroad Bike Path project should be included in the TIF, but the TIF should not pay for more than $2.4 million of its cost. Page 2 ESTF Recommendations on 'TIF Specific Projects That Should Not Be Included in the TIF 9. The TIF should not include widening of the freeway to six lanes. 10. The TIF should not be used for Monterey Street right-of-way acquisition or widening. Implementation and Administration 11. The fee ordinance should consider phased implementation and payment of the fee at occupancy (as opposed to issuance of building permits) and/or over time. Other Funding Sources for Transportation System Improvements 12. The City Council should endorse proposals to increase the gas tax and to earmark such funding for alternative transportation. g:tif a -0k M ; .=SIN AGENDA 2 - Datr"t ITEM # San Luis Obispo Property Owners Association P.O.Box 12924 San Luis Obispo,CA 93406 27 January 1994 IPO�PUNCIL O C3D DIR Honorable Mayor and Councilmembers CAO N DIR San Luis Obispo City Council POKE;o FRNEY 0 FI DIR 990 Palm Street LER VC G p POLICE CHF San Luis Obispo, CA 93403 O MGMTTEAM 13 REC DIR O C EAD FIS ❑ U-1711.DIR RE: TRANSPORTATION DEVELOPMENT IMPACT FEES " a PERS DIR Ladies and Gentlemen, On behalf of the membership of the San Luis Obispo Property Owners Association, we respectfully request a continuance of the above captioned item from your February 1, 1994 agenda. Pursuant to the request of the Business Coalition, your previous motion to refer this issue to the Economic Strategy Task Force for discussion and recommendation displayed an awareness that this is just one of the critical issues in the overall economic picture in this community. Apparently, staff does not concur with Council regarding the importance of this issue as affirmed by the inadequate time allowed to review and prepare a response to the new staff report. It is curious that time and energy was spent to meet with the various organizations regarding the increased public safety fees (also on your February 1st agenda), while the reintroduction of the transportation impact fee was never mentioned. Our numerous concerns regarding this issue have not been alleviated. Our interest is to work toward an equitable solution to our infrastructure needs. Unfortunately, the only way to accomplish this is through open communication. Please allow us this additional time to inform our individual memberships and to prepare a well organized and thoughtful response. Thank you for your consideration. Respectfully yours, SAN LM OBISPO PROPERTY OWNERS ASSOCIATION C.M. Florence RECEIVED President 1994 �;AN 2 7 1994 cc: SLOPOA Board of Directors SAN crLUUIS OB SlSPO, CA Business Coalition 'AIZ�I�1 AGENDA DH 't ITEM # SLO ASSOCIATION OF MANUFACTURERS & DISTRIBUTORS 992 Monterey Street, Suite B San Luis Obispo, CA 93401 (805)545-8887 January 27, 1994 9 UNCIL ❑SP&bIR P9 1 kroN ❑ F CHIEF ORNEY Y DIR CLERIGORIG ❑ POUCE CHF Honorable Mayor& Councilmembers. ❑ MGF TEAM ❑ REG DIR City of San Luis Obispo ❑ o FILE ❑ UTIL DIR P.O. Box 8100 ❑ PERS DIR San Luis Obispo, CA 93403-8100 Dear Mayor Pinard and Councilmembers: I am writing on behalf of the San Luis Obispo Association of Manufacturers & Distributors to request a continuance on the Transportation Impact Fees issue currently on the council agenda for February 1, 1994. As you know, qur association is keenly interested in this issue. We testified at a public hearing on the subject in 1993, offering to work with you in developing a reasonable fee method. The local manufacturing community should be a key participant in the development of transportation impact fees, as these are the businesses likely to be jeopardized by new fees. We feel their special concerns should be considered in the development of any proposal. The staff report on this item was available only a week before the hearing date, leaving our association with insufficient time to review the report and draft a position. The transportation impact fee issue is one of critical importance and deserves more than a week's opportunity for review, questions and discussion, especially for an organization which specifically requested to be involved with it. We feel our interests have been overlooked and ask your help in continuing this item to allow us time to address it thoroughly. We appreciate your considering this request. Best regards, Maggie Cox Director, SLO Association of Manufacturers & Distributors RECEIVED JAN 28 1994 CITv couNClc slw Luis OBISPo.CA "FETING AGENDA i E!ITEM # From: Don Hubbard Local Govm't. Rep., S.L.O. Association of Realtors Member of S.L.O. Business Coalition To: City Council Members City of S.L.O., 990 Palm St. Subject: TRANSPORTATION DEVELOPMENT IMPACT FEES This letter is a request for Council to postpone the consideration of the above ordinance until the members of the Business Coalition have an opportunity to review the report. Initially, the 50% reduction in the fee is a welcomed improvement. However, in as much as the report was not obtained until 1/27/ 94, it is not realistic for our group to adequately review its contents before the Feb. 1,'94 meeting. T ou for your consideration, Don Hubbard . Local Govm't. Rep. S.L.O.Assoc. of Realtors Member S.L.O. Business Coalition COUNCIL ❑ CDD IR DIR ❑ FI HIEF g,AwW. Ey W DIR G ❑ POLICE CHF r3mGmTTEAM ❑ RECDIA REC1 VED ❑ C F LE ❑ URL DIR PIAN 2 Oop. �. ❑ PERS DIR ' 1994 CITY COUNCIL SM LUIS OBISJO,rA "rqING AGENDA E ') 9q ITEM # TLE MEMORANDUM j TO: Mayor Peg Pinard I� FROM: Lvnn BlocAv Administrator DATE: January 27 , 1994 RE: Transportation Impact Fees The Business Improvement Association Board of Directors would like to request that the Transportation Development Impact Fees be pulled from the February 1, 1994 City Council Agenda. The BIA is concerned about the impact of these fees to the economic vitality of our downtown and would like the opportunity to discuss the issue with the staff. The BIA did not receive notice of this item on the agenda in adequate time for a comprehensive review. i Thank you for assistance with this issue. I cc: John Dunn Bill Statler I - i I MOSPtlNCIL ❑ C�DIR W'FlN DIR r^G ❑ CHIEF 9� E1' ArOPW DIR CLERKIMG ❑ POUCE CHF ❑ MGMT TEAM ❑ RECDIR ii ❑ kQ Fjr O UTIL DIR ! f ❑ PERS DIR I RECEIVE® JAN 270 1994 CITY COUNCIL SAN LUIS oBISPo, CA J P.O.R1 1402-San Ls,ic 016mo•CA•937406•R11 V541-0286 KETING AGENDA ITEM # San Luis Obispo Chamber of Commerce . 1039 Chorro Street • San Luis Obispo, California 93401-3278 (805) 781-2777 • FAX (805) 543-1255 David E. Garth, Executive Director January 26, 1994 Honorable Mayor and City Council Members NCIL O c IA N IR City of San Luis Obispo O CHIEF 990 Palm Street Qr PW DIR San Luis Obispo,CA 93403-8100 CLERKIORIG O POUCE CHF O TEAM O REC DIR IR Dear Mayor and Council Members: n•pn�DIR RE: Transportation Impact Fees On behalf of the Chamber of Commerce I would like to request that the agenda item relating to Transportation Impact Fees scheduled for February 1,be postponed to a later date. The reason for this request is that the business community in general, and the Chamber of Commerce in particular, did not find out about this item until last Tuesday,January 25. The Chamber of Commerce found out about this item by word of mouth, and as you know,it is a very important issue to the business community. With such a late notice, the Chamber cannot appropriately react to the City staff recommendations. City staff has kindly noticed us on another item scheduled for this date, the Public Safety Service Fees. But,we were not apprised of the scheduling for Transportation Impact Fees. With such short notification, we respectfully request your consideration to postpone this very important item. Sincerely, Sheree Davis Director of Governmental Affairs San Luis Obispo Chamber of Commerce RECEIVED JAN 2 1 1994 CITY COUNCIL ACCREDITED SAN LUIS OBISPO.CA OIU••EIE OF OOEYEENOE C/,/.'V[ ^.DO )9, n4. CHAYDEH OF COOOEACE (// Of THE UNIIED STATES