HomeMy WebLinkAbout03/21/2006, SS 3 - TRANSPORTATION IMPACT FEE UPDATE � n
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CITY O F SAN L U I S O B I S P O
FROM: Bill Statler, Director of Finance& Information Technology �`�
Carolyn Dominguez, Finance Manager
SUBJECT: TRANSPORTATION IMPACT FEE UPDATE
CAO RECOMMENDATION
1. Review and discuss the update of the City's transportation impact fee program.
2. Provide direction on key policy issues and direct staff to return at a subsequent meeting with
implementing documents for Council approval.
DISCUSSION
Overview
The purpose of this study session is to review the results of the attached update to the City's
transportation impact fees, which was prepared with the assistance of MuniFinancial, who
specializes in preparing these types of studies. As discussed below, there are two key policy
issues that require Council direction before we can implement the findings of the update.
1. Given their cost and past Council policy direction, should we exclude the Bishop Street
extension and the railroad grade separation (overpass) at Orcutt Road from the cost base in
calculating fees?
2. Should we continue the 50% subsidy for retail and hotel uses?
Background
The attached report presents an update of the City's transportation impact fee program, which
was originally established in 1995 based on the Transportation Impact Fee Study prepared for
the City by David M. Griffith & Associates. Since over ten years have passed since these fees
were last reviewed on a comprehensive basis, an update to project cost and funding source
assumptions is warranted.
Fee Purpose The.purpose of the fee is to fund the transportation improvements required to
accommodate new development within the City. It is the City's policy to ensure that new
development pays for its fair share of the cost of transportation improvements, and the
transportation impact fee program is one of the City's key strategies for doing so.
Methodology. The State has established comprehensive requirements for the preparation and
administration of impact fees (commonly referred to as AB 1600), which are discussed in the
attached report. This update has been prepared in accordance with these rigorous requirements.
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Transportation Impact Fee Update Page 2
Key Policy Issues and Summary of Findings
The table below summarizes four fee change options compared with current fees based on the
following key policy issues:
1. Reduced Project Base. The current project cost base (which is a key driver in determining
fee amounts), includes the extension of Bishop Street ($10 million) and railroad grade
separation (overpass) at Orcutt Road ($12 million). The total cost for these two projects is
$22 million, of which $5.9 million would be funded from transportation impact fees
(accounting for 7% of the "full cost recovery" fee option), with the balance of$16.1 million
from "other sources." While these two projects are included in the City's General Plan, it is
uncertain where the "other sources" would come from; and the Council has taken several
actions in the past indicating that pursing these projects is a low priority at best.
Policy Issue: Should the City continue to include these two projects in the cost base?
2. 50% RetaiUHotel Subsidy. In adopting fees in 1995, the Council set transportation impact
fees (TIF) for retail and hotel/motel uses at 50% of their allocated costs in recognition of the
General Fund fiscal benefits of these types of uses.
Policy Issue: Should the City continue this subsidy?
Current Fee Compared with Four New Fee Options
Fees
New Fee Options
Full Cost Recovery 50% Hotel/Retail Credit
Option 1 Option 2 Option 3 Option 4
All Reduced All Reduced
Land Use Category Basis Current Projects Project Base Projects Project Base
Single Family Residential _ Dwelling Unit $1,569 $3,160 $2,930 $3,160 $2,930
Multi Family Residential Dwelling Unit 1,392 2,804 2,600, 2,804 2,600
Retail 1,000 Sq Ft 2,477 13,306 12,344 6,653 6,172
Office 1,000 Sq Ft 3,150 6,336 5,875 6,336 5,875
Service Commercial 1,000 Sq Ft 1,708 3,436 3,186 3,436 3,186
Industrial 1,000 Sq Ft 908 1,830 1,697 1,830 1,697
Hospital 1,000 Sq Ft 2,819 5,370 4,980 5,370 4,980
Motel/Hotel Room 728 2,932 2,719 1,466 1,360
Service Station/Pump Pump 1,348 7,483 6,927 7,483 6,927
Other ADT 147 296 274 296 274
Sq Ft:Square Feet ADT:Average Daily Trip
As reflected above, significant increases are proposed under all of the options. As detailed in the
report, there are three primary reasons for this:
1. Higher Project Costs. In virtually all cases, estimated project costs are much higher than the
1995 study, even with the inflation cost adjustments that have been made since then. Total
project costs (excluding financing costs) have increased by$86.1 million, from $48.7 million
in 1995 to $134.8 million in 2006. This three-fold increase in project cost assumptions is the
single largest reason for the increase in proposed fees.
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Transportation Impact Fee Update Page 3
2. Financing Costs. No debt financing costs were included in the 1995 study. However, based
on subsequent funding plans developed since then, it is likely that the TIF portion of the
Prado Road and Los Osos Valley Road (LOVR) interchanges and the Prado Road bridge
widening will be debt financed, and as such, $24.6 million for financing costs have been
included in the fee analysis.
3. Revisions in Outside Funding. Based on updated information, in several cases we have
reduced outside funding sources.
In short, other than updating project costs and funding sources, this update is based on the same
projects and the same fee methodology as the 1995 study.
Comparison with Other Cities
Provided in Table 4 of the report (page 15) is a survey of transportation impact fees in
comparable California cities as well as cities in the County.
Residential Uses. The table shows that all of the fee options for residential uses are well within
range compared to these cities. For example, the"full cost recovery, all projects" fee (Option 1)
for single family residential for San Luis Obispo is $3,160 compared to:
$5,132 in Atascadeo
$4,643 in Davis
$4,520 in Paso Robles
$5,424 in Petaluma
$6,940 in Santa Maria
$5,245 in Ventura
$4,059 in Visalia
$3,160 in San Luis Obispo (Option 1)
In fact, of the ten surveyed cities with adopted transportation impact fees, only three (Grover
Beach, Pismo Beach and Arroyo Grande) have lower fees for residential than any of the options
presented in this report.
Non Residential Uses. Fees for non-residential uses are also generally within the range of other
cities, with the notable exception of retail uses, where City fees will be at the high end of the
range if the 50% subsidy is continued; and will be much higher than any other surveyed city if it
is not.
Impact on Development Costs
Provided in Table 5 of the report (page 17) is a summary of the impact of'the proposed fee
options on"typical' developments in the City. As reflected in this table, the proposed fees under
all options will have a very modest impact on residential development costs: about 4%.
However, the impacts on non-residential projects are much more significant, especially for retail
uses: other than retail, most non-residential uses will see increases ranging from 13% to 38%,
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Transportation Impact Fee Update Page 4
depending on the type of use and fee option; and retail uses will see even larger increases,
ranging from 39%to 162%,depending on the size and fee option.
Stakeholder Notification
We have notified over 50 groups and interested individuals about this study session (and the
likelihood of significant fee increases), representing a wide range of community interest, such as
the Chamber of Commerce, Building Industry Association, Property Owners Association,
Residents for Quality Neighborhoods, Sierra Club and ECOSLO. No comments have been
received at this time from these groups, although we expect attendance from many of them at the
study session.
Next Steps
With Council direction on key policy issues from this study session, we plan to return to the
Council with an implementing resolution at a public hearing in April 2006. In accordance with
AB 1600, which requires at least 60 days between adoption of increased fees and their effective
date, we would recommend an effective date of July 1, 2006.
CONCURRENCES
The Department of Public Works concurs with this recommendation.
FISCAL IMPACT
This depends on the options implemented by the Council. However, to the degree that
transportation impact fees do not cover the cost of improvements needed to serve new
development, there will be one of two outcomes:
1. The General Fund will need to make-up the difference, which will be very difficult to do
given the fiscal challenges currently facing the General Fund; or
2. Needed improvements will not be made, adversely impacting both existing and new residents
and businesses.
ATTACHMENT
Transportation Impact Fee Update Report
G:Financerrcansportation Impact Feet2006 Revision/Council Agenda Report 3-21-06 Study Session
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TRANSPORTATION IMPACT FEE UPDATE
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MARCH 2006
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MuniFinancial
Oakland Office Corporate Office Other Regional Offices
1700 Broadway 27368 Via Industria Lancaster,CA
Sixth Floor Suite 110 Pensacola, FL
Oakland, CA 94612 Temecula, CA 92590 Phoenix,AZ
Tel: (510) 832-0899 Tel: (800) 755-MUNI(6864) Seattle,WA
Fax: (510) 832-0898 Fax: (909)587-3510
www.muni.com
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TABLE OF CONTENTS
1. Introduction...:.:.:............:....................................................................1
Summaryof Findings ...................................................:......:.........:.......::.......:.......:1
KeyPolicy Issues......................................,:..........;......................:...........................2
PolicyBackground.............................::.:...:,.. ..........................................................3
2. Mitigation Fee Act Findings...............................................................4
Purposeof Fee...........:.................:...........................................................................4
Useof Fee Revenues ...............................................................................................4
BenefitRelationship................................................................................................5
BurdenRelationship................................................................................................5
Proportionality.................................................:........... .:..........:.:.:.::.......................6
3. Transportation Improvements & Costs............................................7
Transportation Impact Fee Funding Sources.:.........................................................9
OtherFunding Sources. ........................................................................................10
4. Fee Calculation & Schedule ..................................................:.::.....:.11
Transportation Impact Fee Survey.........................................................................14
Impact on Development Costs...............................................................................16
5. Implementation..................................................................................18
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1. INTRODUCTION
This report presents an update of the City's transportation impact fee program, which was
originally established in 1995 based on the Transportation Impact Fee Study prepared for the
City by David M. Griffith & Associates.
The purpose of the fee is to fund the transportation improvements required to accommodate new
development within the City. As further discussed below, it is the City's policy to ensure that
new development pay for its share of transportation improvements, and the transportation impact
fee is one of the key strategies for doing so.
summary of Fin4hrigFS
Table 1 below summarizes four fee change options compared with current fees based on the
following key policy issues:
1. Reduced Project Base. The current project cost base (which is a key driver in determining
fee amounts), includes the extension of Bishop Street ($10 million) and railroad grade
separation (overpass) at Orcutt Road ($12 million). The total cost for these two projects is
$22 million, of which $5.9 million would be funded from transportation impact fees
(accounting for 7% of the "full cost recovery" fee option), with the balance of$16.1 million
from "other sources." While these two projects are included in the City's General Plan, it is
uncertain where the "other sources" would come from; and the Council has taken several
actions in the past indicating that pursing these projects is a low priority at best. As such,
should the City continue to include these two projects in the cost base?
2. 50% RetaibWotel Subsidy. In adopting fees in 1995, the Council set transportation impact
fees (TIF) for retail and hotel/motel uses at 50% of their allocated costs in recognition of the
General Fund fiscal benefits of these types of uses. Should the City continue this subsidy?
Table 1. Current Fee Com ared with Four New Fee Options
Fees
Opt-ionsNew Fee
Full Cost Rec 1 50%Hotel/Retail Credit
Option 1 Option 2 Option 3 Option 4
All Reduced All Reduced
Land Use Category Basis Current Projects Project Base Projects Project Base
Single Family Residential Dwelling Unit $1,569 $3,160 $2,930 $3,160 $2,930
Multi Family Residential Dwelling Unit 1,392 2,804 2,600 2,804 2,600
Retail 1,000 Sq Ft 2,477 13,306 12,344 6,653 6,172
OffiCe 1,000 Sq Ft 3,150 6,336 5,875 6,336 5,875
Service Commercial 1,000 Sq Ft 1,708 3,436 3,186 3,436 3,186
Industrial 1,000 Sq Ft 908 1,830 1,697 1,830 1,697
Hospital 1,000 Sq Ft 2,819 5,370 4,980 5,370 4,980
Motel/Hotel Room 728 .2,932 2,719 1,466 1,360
Service Station/Pump Pump 1,348 7,483 6,927 7,483 6,927
Other ADT 147 296 274 296 274
Sq Ft:Square Feet ADT:Average Daily Trip
As discussed above, fees for retail and hotel/motel uses are currently set at 50% of the 1995 study costs in
recognition of the General Fund fiscal benefits these developments bring to the City.
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As reflected above, significant increases are proposed under all of the options. As detailed in
Table 2 on page 8, there are three primary reasons for this:
1. Higher Project Costs. In virtually all cases, estimated project costs are much higher than the
1995 study, even with the inflation cost adjustmentsthat have been made since then. Total
project costs (excluding financing costs) have increased by$86.1 million, from $48.7 million
in 1995 to $134.8 million in 2006. This three-fold increase in project cost assumptions is the
single largest reason for the increase in proposed fees.
2. Financing Costs No debt financing costs were included in the 1995 study. However, based
on subsequent funding plans developed, since then, it is likely that the TIF portion of the
Prado Road and Los Osos Valley Road (LOVR) interchanges and the Prado Road bridge
widening will be debt financed, and as such, $24.6 million for financing costs have been
included in the fee analysis.
3. Revisions in Outside Funding. Based on updated information, in several cases we have
reduced outside funding sources.
In short, other than updating project costs and funding sources, this update is based on the same
projects and the same fee methodology as the 1995 study.
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As highlighted, there are two key policy issues facing the City with this update:
1. Should we exclude the Bishop Street extension and railroad grade separation (overpass) at
Orcutt Road from the cost base in calculating fees?
Reasons to include them. These two projects are included in the City's General Plan
Circulation Element, and this argues for including in them in the cost base. Additionally, if
the City does not include funds for them now in the TIF program, then it will be $5.9 million
short in funding these projects if they do go forward.
Reasons not to. These two projects account for a significant portion of the TIF program
(about 7% of the proposed fee), and past Council actions would indicate that these are low
priority projects at best. For example, when recently presented with the option of funding
further study of the Orcutt grade separation that would be fully funded by grant revenues, the
Council chose not to do so after receiving a initial presentation on what such an overpass
might look like. Moreover, in addition to revenues from the TIF program, the City will need
to find another $16.1 million from "other sources." It is uncertain where the "other sources"
would come from. In short, it may be inappropriate to collect funds for projects that have a
high likelihood of not being built,
2. Should we continue the 50%subsidy for retail and hotel uses?
Reasons to continue the subsidy. As noted above, the Council has set transportation impact
fees (TIF) for retail and hotel/motel uses at 50% of their allocated costs in recognition of the
General Fund fiscal benefits of these types of uses, and the concern that assessing the full fee
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would significantly discourage them. As reflected in Table 1, this concern is even larger in
2006: even if we continue the subsidy, retail and hotel uses will see major increases; and they
will be even greater if we discontinue the subsidy. (The impact of these changes is further
demonstrated in Table 5 on page 17, which summarizes the affect of the four options on
"typical" development projects.)
Reasons not to. If the subsidy continues, there will be a shortfall in revenues to support
Circulation Element projects of$12.4 million. Given the City's current fiscal situation, it is
uncertain as best where these funds will come from; and without adequate funding, this
means that key improvements will not be made, adversely impacting both existing and new
residents and businesses.
Policy Background:
The transportation impact fee is based on City policy contained in its General Plan adopted in
1994. The Land Use Element states that:
The cost of public facilities and services needed for new development shall be borne by
the new development...The City will adopt a development impact fee program;..so that
new development pays its share of the costs of new services and facilities needed to serve
it.,
Implementation policies in the Circulation Element include a policy stating that:
Development projects should bear the costs of new transportation facilities or upgrading
existing facilities needed to serve them.2
The Circulation Element(CE) goes on to list programs to support these implementation policies,
including adoption of a transportation impact fee ordinance to mitigate citywide development
impacts.3
Current Fee Program
The City's transportation impact fee was originally established in 1995 at a level of$1,234 per
single family residential dwelling unit, with separate fees for other major land uses. The fee was
based on the Transportation Impact Fee Study prepared for the City by David M. Griffith &
Associates. As set forth in the adopting resolution, from 1995 to 2006 the City has increased the
transportation impact fee each year to account for changes in construction costs based on
changes in the U.S. Consumer Price Index. The current fee of$1,569 reflects an increase of 23%
since 1995 based on these changes.
1 City of San Luis Obispo,Garral Plan Lard Use Elamrn,policy LU 1.14.
2 City of San Luis Obispo,Garra1 Plan C7�Elarerq policyCl 15.7,p.40.
3 Ibid.,polirya 15.13,p.41.
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2. MITIGATION FEE ACT FINDINGS
Development impact fees, also referred to as public facility fees, are one-time fees typically paid
when a building permit is issued and imposed on development projects by local agencies
responsible for regulating land use (cities and counties). To guide the widespread imposition of
public facilities fees, the State Legislature adopted the Mitigation Fee Act (the Act) with
Assembly Bill 1600 in 1987 and subsequent amendments. The Act, contained in California
Government Code Sections 66000 through 66025, establishes requirements on local agencies for
the imposition and administration of fee programs. The Act requires local agencies to document
five findings when adopting a fee.
The five statutory findings required for adoption of the maximum justified public facilities fees
documented in this report are presented in this chapter and supported in detail by the report that
follows. All statutory references are to the Act.
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For the first finding the City must:
Identify the purpose of the fee. (§66001(a)(1))
The policy of the City of San Luis Obispo is that new development will not burden existing
development with the cost of public facilities, including transportation improvements, required to
accommodate growth. The purpose of the transportation impact fee is to implement this policy
by providing a funding source from new development for transportation improvements to serve
that development.
For the second finding the City must:
Identify the use to which the fee is to be put. If the use is financing public facilities, the
facilities shall be identified. That identification may, but need not, be made by reference
to a capital improvement plan as specified in Section 65403 or 66002, may be made in
applicable general or specific plan requirements, or may be made in other public
documents that identify the public facilities for which the fee is charged. (§66001(a)(2))
The transportation impact fee will fund new or expanded facilities to serve new development..
All planned facilities will be located within the City, based on the adopted Urban Reserve line.
These facilities included in the findings presented here include:
1. Roadway widening
2. Interchange construction
3. Intersection signalization and improvements
4. Other roadway,transit and bikeway improvements in the City
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Planned transportation improvements are identified in this report. This report provides the cost
estimate for each planned facility. More detailed descriptions of certain planned facilities,
including their specific location, are included in various facility master plans and other City
planning documents. The City may change the list of planned transportation improvements to
meet changing circumstances and needs, as it deems necessary.. The fee program should be
updated if these changes result in a significant change in the fair share cost allocated to new
development.
Planned facilities to be funded by the fee are described in the Transportation Improvements and
Costs chapter.
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For the third finding the City must:
Determine how there is a reasonable relationship between the fee's use and the type of
development project on which the fee is imposed. (§66001(a)(3))
The City will restrict fee revenues to the acquisition of land and construction of transportation
improvements that serve new development. Improvements funded by the fee will provide a
Citywide network of transportation facilities accessible to the additional residents and employees
associated with new development. Thus, there is a reasonable relationship between the use of
fee revenues and the residential and nonresidential types of new development that will pay the
fee.
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Planned facilities to be funded by the fee are described in the Transportation Improvements and
Costs chapter.
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For the fourth finding the City must:
Determine how there is a reasonable relationship between the need for the public facility
and the type of development project on which the fee is imposed. (§66001(a)(4))
Dwelling units and building square footage and the associated generation of trips are an indicator
of the demand for transportation improvements needed to accommodate growth. The amount of
the fee allocated to new development is based on engineering reports prepared by Fehr & Peers
and the City that quantify the expected transportation impacts of new development. For
transportation impact fee projects not fully attributable to new development and where other
funding sources, such as grants, are not anticipated, the City's traffic model is used to calculate
the cost percentage that should be passed on to the TIF program. In this case, the cost of those
projects that benefit both existing and new development, costs are allocated based on the ratio of
base-year trips versus trips at build-out. This results in a ratio of costs attributable to new
development of 35%, which is slightly higher than the percentage used in the existing TIF
program(30%) due to changes in the urban reserve since 1994.
5 Proportionality
For the fifth finding the City must:
Determine how there is a reasonable relationship between the amount of the fee and the
cost of the public facility or portion of the public facility attributable.to the development
on which the fee is imposed. (§66001(b))
This reasonable relationship between the transportation impact fee for a specific development
project and the cost of the improvements attributable to that project is based on the estimated
trips the project will add to public roadways. The fee schedule converts the estimated
development into a fee based on the number of trips. Larger projects of a certain land use type
will have a higher trip generation and pay a higher fee than smaller projects of the same land use
type. Thus, the fee schedule ensures a reasonable relationship between the transportation impact
fee for a specific development.project and the cost of the facilities attributable to that project.
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3. TRANSPORTATION IMPROVEMENTS & COSTS
Table 2 provides a list of the transportation improvements and the associated costs for the
transportation impact fee. It identifies costs related to improvements for:
1. Street and highway projects
2. Transit projects
3. Bikeway projects
The table compares the cost from the previous 1995 study to the updated 2006 cost estimates
completed by City staff and allocates the amount attributable to new development based on trip
generation factors. The 2006 estimates have been tabulated using the most recent cost estimates
for each project, summarized as follows.
Total project costs, excluding financing costs, have increased by $86.1 million, from $48.7
million in 1995 to $134.8 million in 2006.
The TIF portion of project costs have correspondingly increased by $32.2 million, from $19.3
million to $51.5 million. This excludes financing costs of$24.6 million for funding the Prado
Road and Los Osos Valley Road (LOVR) interchanges and the Prado Road bridge widening.
Including these financing costs, the full cost recovery fee increases from $19.3 million to $76.1
million.
Table 2 also identifies the Citywide and subarea costs associated with the Prado Road and Los
Osos Valley Road interchanges, based on previous cost analyses and fee programs approved by
the Council.
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1'ransportation Impact Fee Funding Sources
Notes to Table 2
1. Highway 101/LOVR Interchange Improvements. Subarea fees have been previously
established for this project that allocate 63.7% of the project cost directly to properties in this
area, with the balance (36.3%) allocated to other new development in the rest of the City.
The subarea fee analysis also assumes that $13.4 million of the $27 million project cost
(about 50%) will be funded from grant sources and other reimbursements, resulting in a net
allocation of project costs to the TIF program of 18.2% ($4.9 million).
2. South Higuera Street Widening. The City has applied for and received preliminary
approval for grant sources that will pay for about 25%of the project cost.
3. Orcutt/UPRR Grade Separation. Project funding sources assume that 80% of project cost
will be paid by grants dedicated by the State for railroad grade crossings.
4. Orcutt/UPRR at Grade Improvements. This project reflects a phased approach to
improvements at this railroad crossing for the acquisition of needed properties and at-grade
improvements. Based on grants approved to-date that fund about 31.6% of project costs,
68.4% of project costs are allocated to the TIF program.
5. Allocation of Project Costs Between Existing and New Development. For TIF-related
projects not fully attributable to new development and where other funding sources, such as
grants, are not anticipated, the City's traffic model is used to calculate the cost percentage
that should be passed on to the TIF program. In this case, the cost of those projects that
benefit both existing and new development, costs are allocated based on the ratio of base-
year trips versus trips at build-out. This results in a ratio of costs attributable to new
development of 35%., which is slightly higher than the percentage used in the existing TIF
program (30%) due to changes in the urban reserve area since 1994.
6. Highway 101/Prado Road Interchange. Based on prior detailed funding analyses, 70.1%
of this project cost has been allocated directly to new development in the Dalidio, Prado and
Margarita areas, with the balance (29.9%) allocated to new development in other areas of the
City.
7. Santa Barbara Street Widening. Project funding sources assume that 70% of project costs
will be funded by grants and other reimbursements.
8. Transit Grant Funded Projects. In accordance with current federal guidelines, assumes
that 80% of these project cost will be funded grants.
9. Financing Costs. No debt financing costs were included in the 1995 study. However,based
on subsequent funding plans developed since then, it is likely that the TIF portion of the
Prado Road and Los Osos Valley Road (LOVR) interchanges and the Prado Road bridge
widening will be debt financed, and as such, $24.6 million for financing costs have been
included in the fee analysis. This is based on a 30-year term and an "all-in true interest cost"
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of 6.25%, net of costs related to the reserve fund (these will be used to make the final year
debt service payment), including estimated interestearnings on the reserve.
The City anticipates using existing revenue sources or developing new sources to fund the non-
fee share of planned facility costs. As discussed above, "subarea" fees are major funding source
for the Prado Road and LOVR interchanges. Other likely potential sources of revenue include
existing or new general fund revenues and grants.
MsacFiranval 10
3 -��
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4. FEE CALCULATION & SCHEDULE
Table 3 presents the transportation impact fee calculation and schedule based on full cost
recovery for all projects. The fee is calculated by summing the capital costs related to following
three components shown in Table 3:
1. All projects listed in Table .2 except the Prado Road and Los Osos Valley Road
interchanges
2. Prado Road interchange
3. Los Osos Valley Road interchange
Fehr & Peers provided trip rates by land use type. Total trips were multiplied by a pass=by factor
to determine the discounted trip rate. Pass-by trips are related to stops at points midway between
the origin and destination of a trip so these trips do not represent additional demand on the
transportation system.
The impact fee for each land use category was calculated in the following manner. For each of
the three capital cost components, the cost per trip is calculated based on the project costs
including financing costs in Table 2 and the land use and total trips shown in Table 3. Next, total
capital costs are allocated to each land use category by multiplying the cost per trip by the total
trips for each land use. Finally, the fee per unit of development for each component is calculated
by dividing the share of total costs for each land use by the amount of projected development for
that land use. The retail fee per unit of development for each component is weighted to obtain a
single fee for retail land uses based on the four retail categories.
Fees for all categories are provided in Table 3 except for service stations, which are determined
based on 25.28 average daily trips (ADT) per pump, using the "other trips" fee of$296 per trip
(or$7,483 per pump).
City of San Luis Obispo staff provided the development assumptions. This included estimates of
total citywide development and within the Prado Road and Los Osos Valley Road subareas
separately.
The total transportation impact fee shown at the bottom of Table 3 sums the three components of
the fee. Development within the Prado Road interchange subarea and the Los Osos Valley Road
interchange subarea will separately finance their fair share of interchange facilities. For this
reason, the two subareas receive a credit against the total fee.
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Transportation ,
Table 4 presents a survey of transportation impact fees of comparable California cities as well as
cities in the County.
Residential Uses The table indicates that all of the fee options for residential uses are well
within range compared to these cities. For example, the "full cost recovery, all projects" fee
(Option 1) for single family residential for San Luis Obispo is $3,160 compared to:
$5,132 in Atascadeo
$4,643 in Davis
$4,520 in Paso Robles
$5,424 in Petaluma
$6,940 in Santa Maria
$5,245 in Ventura
$4,059 in Visalia
$3,160 in San Luis Obispo (Option l)
In fact, of the ten surveyed cities with adopted transportation impact fees, only three (Grover
Beach, Pismo Beach and Arroyo Grande) have lower fees for residential than any of the options
presented in this report.
Non Residential Uses. Fees for non-residential uses are also generally within the range of other
cities, with the notable exception of retail uses, where City fees wilt be at the high end of the
range if the.50% subsidy is continued; and will be much higher than any other surveyed city if it
is not.
MUMTF noal 14
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Inipact on DevelopmentCosts, J
Table 5 summarizes the impact of the proposed fee options on "typical" developments in the
City. As reflected in this table, the proposed fees under all options will have a very modest
impact on residential development costs: about 4%. However, the impacts on non-residential
projects are much more significant, especially for retail uses: other than retail, most non-
residential uses will see increases ranging from 13% to 38%, depending on the type of use and
fee option; and retail uses will see even larger increases, ranging from 39% to 162% depending
on the size and fee option.
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3 �3
5. IMPLEMENTATION
This section identifies tasks that the City should complete when implementing the fee programs.
Programming Revenues and Projects with the Capital Improvement Plan
The City should update its Capital Improvement Plan (CII') to program fee revenues to specific
projects. Use of the CIP in this manner documents a reasonable relationship between new
development and the use of fee revenues.
The City may alter the scope of the planned projects, or substitute new projects as long as the
project continues to represent an expansion of the City's transportation facility capabilities. If the
total cost of all planned projects varies from the total cost used as a basis for the fee, the City
should revise the fee accordingly.
For the four-year planning period of the CII', the City should allocate all existing fund balances
and projected fee revenue to specific projects. The City can hold funds in a project account for
longer than five years if necessary to collect sufficient funds to complete a project.
Identify Non-Fee Revenue Sources
The City must identify non-fee revenue sources to fully fund the planned facilities and justify the
maximum impact fee. The City should take any actions necessary to secure those funds.
Inflation Adjustment
The City should identify appropriate inflation indexes in the fee ordinance and adopt an
automatic inflation adjustment to the fee annually. The City should use separate indexes for land
and construction costs. Calculating the land cost index may require use of a property appraiser
every several years. The construction cost index can be based on the City's recent capital project
experience or taken from any reputable source, such as the Engineering News Record or U.S.
Consumer Price Index.. To calculate the fee increases, each index should be weighted by the
share of total planned facility costs represented by land or construction, as appropriate.
Reporting Requirements
The City should comply with the annual and five-year reporting requirements of Government
Code 66000 et seq. For facilities to be funded with a combination of impact fees and other
revenues, the City must identify the source and amount of the other revenues. The City must
also identify when the other revenues are anticipated to be available to fund the project.
MwaFbunial 18
3 a/