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HomeMy WebLinkAbout08/17/1999, 3 - PARK-IN-LIEU FEE UPDATE councit ° j 17- accn da Report 3 I®Nvm6c CITY OF SAN LUIS OBISPO FROM: Bill Statler,Director of Finance Prepared By: Linda Asprion,Revenue Manager SUBJECT: PARK-IN-LIEU FEE UPDATE CAO RECOMMENDATION Adopt a resolution updating park-in-lieu fees based on an analysis of current market values. DISCUSSION Background California Government Code Section 66477 authorizes cities to require dedication of land, the payment of fees in-lieu thereof, or a combination .of both for park and recreational purposes. Accordingly, park-in-lieu fees are included in the City's subdivision regulations that require subdividers to dedicate land or pay fees in-lieu of dedicating land for parks based on fair market values. Under the City's municipal code, subdividers are required to dedicate 5 acres of parkland for every. 1,000 residents projected to live in their development area. Rather than dedicating land, there are occasions when paying an in-lieu fee in an amount of comparable value is the preferred method of meeting this parkland dedication requirement. Current park in-lieu fees were originally set by Resolution No. 8373 adopted by the Council in November of 1994. Section 3 of the Resolution provides for the fees to be: "...adjusted annually on July 1 n by the change in the Consumer Price Index (CPI- U.S. City Average) by the most recently published information available. The base rate for the fees shall be reviewed at least every five years." Beginning July 1, 1995, and each July 1' thereafter the fee has been adjusted by the consumer price index. Additionally, in April, 1999, we contracted with Economic Research Associates (ERA) to research land values in San Luis Obispo so that the City's park-in-lieu fees can be updated to reflect current market values. ERA was previously hired by the City in the Spring of 1994, and performed extensive work as an independent economic consulting firm to research not only the current market values of land but also the best method of updating and implementing park-in-lieu fees. Their recommendations were the basis for restructuring park-in-lieu fees at that time. Accordingly, it is appropriate for ERA to provide the analysis and recommendations for the five year update of the fees. Updated Land Values Provided in Exhibit A is the report from ERA recommending a 12.6% increase in both the single family residential and multi-family residential units. This increase is based on an analysis of the current market values of residential land within the City. ERA reviewed the assessed valuation for each parcel as reported by the City's land use database. Specifically, they reviewed the 51 Council Agenda Report—Increase for Park-In-Lieu Fees Page 2 of land valuation to total property valuation focusing on property's whose base year assessed valuation was 1999, which was the last assessed market value. This resulted in a ratio of land value to total property value of 51% for single family homes and 48% for multi-family properties. Vacant residential lots and acreage were reported directly. The proposed increase per residential unit is as follows: Amount Current-Fee Proposed Fee of Increase. Single family residential unit $3,594 $4,046 $452 Multi-family residential unit $21849 $3,208 $359 Provided in Exhibit B is a listing of individuals and organizations who have been notified about this proposed increase. The proposed implementation date is 60 days after adoption of the attached resolution. Accordingly, if approved, the proposed fee increases will be effective October 18, 1999. CONCURRENCES Both the Parks & Recreation .and Community Development Departments concur with the recommendation FISCAL MPACT The amount of additional revenue that will be generated from the increase on the park-in-lieu fees depends entirely on the.number of residential subdivisions whose parkland requirements will be met through fees rather than dedications. For 1999=00, $20,000 in park-in-lieu fee revenues have been projected. Assuming this level.of activity, the new fees would generate about $2;500 to $3,000 in additional annual revenues. ALTERNATIVES Retain the existing fees. Given the community's need.for parks and our current limited ability to fund them, staff does not recommend-retaining the lower fees, since they no longer reflect the current market value of residential land within the City. ATTACHMENT Resolution updating park-in-lieu fees EXHIBITS A. ERA recommendations regarding the City's parkin-lieu fees B. User fee notification list 3-2 Attachment RESOLUTION NO. (1999 SERIES) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO UPDATING PARK-IN-LIEU FEES WHEREAS, California Government Code Section 6647 authorizes the Council to enact an ordinance requiring dedication of land, the payment of fees in-lieu thereof, or a combination of both, as a condition of approval for a final tract or parcel map; and WHEREAS, the City has adopted such requirements in its subdivision regulations (Municipal Code Sections 16.40.060 through 16.40.100),which allow the Council,by resolution,to establish criteria for determining and procedures for collecting fees; and WHEREAS, an independent economic consulting fine has researched residential land costs as they apply to the City's park land dedication in-lieu fee. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo that: SECTION 1. Resolution No. 8373 (1994 Series)is hereby rescinded. SECTION 2. Park-in-lieu fees are established as follows: a. Each potential additional single family dwelling unit in the C/OS and R-1 zones within the subdivided area $4,046 b. Each potential additional multi-family dwelling unit in zones other than C/OS and R-1,within the subdivided area $3,208 . SECTION 3. Park-in-lieu fees shall be effective October 18, 1999 and adjusted annually on July 1' by the change in the Consumer Price Index (CPI-U, U.S. City Average) for the prior calendar year. The base rate for the fees shall be reviewed at least every five years. SECTION 4. Any required fee in-lieu of park land dedication shall be paid when the final map is recorded, unless another time schedule for payments has been approved as a condition of tentative map approval. 3-3 Resolution No. (1999 series) Page 2. On motion of _ seconded by and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was passed and adopted this of 1999. Mayot Allen Y_ Settle ATTEST` Lee Price,City Clerk APPROVED AS TO FORM: Je ey Jorgensen, City Attorney 3-4 Exhibit Economics Research Associates June 18, 1999 Mr.William Statler Director of Finance City of San Luis Obispo 990 Palm St. P.O.BOX 8100 San Luis Obispo, CA 93403-8100 ERA Project No. 13157 RE: Recommendations regarding the City's park dedication in-lieu fee Dear Mr. Statler: This letter report presents our recommended update to the City's parkland dedication in- lieu fee. The City's regulations regarding parkland dedication,and fees in-lieu of dedication,are described in the City's subdivision regulations,sections 16.40.050 through 16.40.110. With regards to this assignment,the most pertinent sections are stated as follows: Section 16.40.050,paragraph A - "...each new subdivision shall dedicate land equivalent to five acres for each one thousand residents expected to reside within the subdivision, except as provided in Sections 16 40.060, 16.40.07016.40.100." Section 16.40.080,paragraph A - "The amount of such in-lieu fee shall be the fair market value of the land which otherwise would be required to be dedicated.." Section 16.40.080,paragraph B- "The fair market value... shall be based on the portion of the land proposed to be subdivided which is intended for development and shall reflect the market value at the time the tentative map is approved" 964 51h Avenue Suite 214 San Dego. CA 92101 3-5 619.5 a 4.1402 FAX 619.544.1404 www.erasl,com/erast ERA is affiliated with Drivers Jonas Los Angeles San Francisco San Diego Chicago Dallas Washington DC London Section 16.40.080;paragraph C- "Fees collected in lieu o(land dedication shall be used for enlarging or improving local parks serving the area in which the subdivision is located. " While this ordinance provides the policy for in-lieu fee determination,the actual fee is based on Resolution No. 8373, adopted in 1994,which establishes a base rate that is updated annually per the Consumer Price Index(CPI). The current park in-lieu fee is $3,537 per single family dwelling and$2,804 per multi-family dwelling, effective July 1, 1998. The fee is scheduled to increase to$3,594 for single-family units and$2,849 for multi-family units on July 1, 1999. The resolution calls for a review of the base rate every five years. Our assignment was to review current residential land values in the city in order to provide the basis for a revised park in-lieu fee. The land value analysis is for general planning efforts only and is not an appraisal. We met with you and city staff to collect the City's current park dedication and in-lieu fee ordinance and to review where the City may require future parks. We searched for recent residential property transactions within the city from secondary data sources. We also collected and reviewed a recent appraisal that Schenberger,Taylor, McCormick&Jecker, Inc.prepared for the City. This appraisal included residential land transactions in the City's peripheral areas where subdivision proposals are most likely. We reviewed the assessed valuation for each parcel as reported by the City's land use database. In particular,we reviewed the ratio of land valuation to total property valuation. We focused on property's whose base year assessed valuation,when the property was last assessed at market value,was 1999. The average ratio of land value to total property value was 51 percent for single-family homes and 48 percent for multi-family.properties. Based on the above landhotal value relationships,we estimated what proportion of the reported sales price for recent transactions was attributable to land value. We cross-referenced these parcel transactions with the City's land use database to determine parcel sizes so that prices could be evaluated on a per acre basis. Property transactions for vacant residential lots and acreage were reported directly. The results of this analysis are presented tables 1 through 6. As shown in Table 2,the estimated value for unimproved land per gross acre for single- family homes in the City's built arras is$310,500. As shown in Table 4,the estimated value for unimproved land per gross acre for multi-family property in the City's built areas is $280,000. The City's peripheral areas include new subdivisions, such as large lot developments like Stoneridge,and undeveloped acreage planned for residential development. As shown in Table 5, the estimated value for unimproved land per gross acre for lot sales programs is$279,000 after discounting for amenity premiums. As shown in Table 6,the modified average value for recent residential acreage transactions is$130,000. 2 3-6 These estimated average values represent residential property located throughout the city, including the urbanized areas that are already developed and highly valued,new subdivisions of lower density in the City's periphery, and raw acreage in outlying areas subject to subdivision development. Typically land values are lower the further properties are located from the city center, for a given density range. The City's fee is based on a two-tiered basis for unimproved residential land value in the city that averages urban land and peripheral land. Based on our review of recent transactions, we estimate an average of$295,000 per acre(an average of single-family and multi-family land) in the urban areas. We estimate an average of$204,600 per acre in the City's periphery(an average of the estimated average value of current lot sales programs and residential acreage transactions). The City desires a single basis for residential land value. Therefore, an average of these amounts, or approximately$249,800 per acre,would be appropriate. This recommendation is based on a nexus rationale that all parks serve all city residents. The City's fee is structured to differentiate between type of units (single-family)or multi- family)to account for different household sizes and their respective impacts. Single-family units would typically be assessed a higher fee than multi-family units. The City's fee also adds an additional charge to cover certain site preparation costs such as street improvements, utility connections, street trees and sidewalks, curb and gutters, fencing, drainage, and other improvements that it would normally require a developer to provide with dedicated park land,per the City's ordinance. Therefore,the in-lieu fee includes a 20 percent to cover the pro-rated share of these costs that the City would have to incur if it buys and improves park sites itself using in-lieu fees. Based on the City's park standard and current in-lieu fee structure,we would recommend the following park in-lieu fee: Per single-family residential unit 1990 Census average household size- 2.70 persons Acres required per household(5 ac./1,000 pop.) - 0135 acres Park land in-lieu fee per unit- @$249,800 per acre- $3,372 Plus 20%for improvements - 674 Total fee per single-family residential unit- $4,046 3 3-7 Per multifamily residential unit 1990 Census average household size- 2.14 persons Acres required per household(5 ac./1,000 pop.) - 0107 acres Park.land.in-lieu fee per unit @.$249,800 per acre- $2,673 Plus 20%for improvements - 535 Total fee per multi-family residential unit- $3,208 Please call if you have any questions or if we can serve you further. 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On 3-14 Exhi Downtown Association Home Builders Association Business Coalition b't 108 Garden Street 2078 Parker Street,#210 846 Higuera Street uite 205 Post Office Box 13010 Suite 2 an Luis Obispo,CA 93401 San Luis Obispo,CA 93401 San Luis Obispo,CA 93401 Bamber of Commerce ECOSLO Residents for Quality Neighborhoods irector of Governmental Affairs Post Office Box 1014 c/o Ray Nordquist 339 Chorro Street San Luis Obispo,CA 93406 750 Pasatiempo Drive an Luis Obispo,CA 93401 San Luis Obispo,CA 93401 RM Design Group SLO Association of Manufacturers& SLO Board of Realtors Association 026 South Higuera Street Distributors 443 Marsh Street an Luis Obispo,CA 93401 c/o Barnett&Cox San Luis Obispo,CA 93401 979 Osos Street,Suite F San Luis Obispo,CA 93401 LO Property Owners Association Siena Club Chorro Neighborhood Group ost Office Box 12924 c/o Pat Veesart c/o Carol Tangeman an Luis Obispo,CA 93406 1446 Morro Street 806 Murray Avenue San Luis Obispo,CA 93401 San Luis Obispo,CA 93405 ,on Smith SLO County Builders Exchange SLO Housing Authority 111 Vista Lago 3563 Sueldo Street,Suite G Attention: Executive Director an Luis Obispo,CA 93405 San Luis Obispo,CA 93401 Post Office Box 1289 San Luis Obispo,CA 93406 a. s Coastal Unified School District Assignment Editor The Tribune .ttn:Assistant Supt for Business Services KSBY TV Attention Mike Stover 499 San Luis Drive 467 Hill Avenue Post Office Box 112 an Luis Obispo,CA 93401-3099 San Luis Obispo,CA 93405 San Luis Obispo,CA 93406 fews Director CSU Cal Poly .GLO Radio Administrative Services ost Office Box 170 One Grand Avenue .rroyo Grande,CA 93421 San Luis Obispo,CA 93407 G:Lists/Fee Notifications 3-15