HomeMy WebLinkAbout07/17/2007, COMMUNICATION - COMMUNICATION ITEM - REIMBURSEMENTS council mEm0nan0um
(ALV01. SM)� , [LINot;ispu. CAtV Ct,t11,CAl MEETING AGENDA
DATE Z/,:Z/n 7 ITEM # cmc
DATE: July 3, 2007
TO: City Council -,
FROM: David F. Romero ---
SUBJECT: Communication Item— Reimbursements
From time to time, usually for City convenience, the City requires that development improve
streets or traffic control devices in amounts in excess of the requirements that would normally be
imposed for the project.
The City often prepares a reimbursement agreement which over time will compensate the
original developer for his excess costs. Currently, this can be as long as 15 years, creating some
financial hardship, and for me, an ethical concern as we refund with cheaper dollars at some
future date.
We are reimbursing streets costs with TIF fees, which because of our ever-increasing traffic
congestion, never truly catches up. These are always going to be in short supply, meaning there
is never a "best time" to pay our reimbursement obligation.
I would like to have the City Council adopt a timely reimbursement policy. I propose that we
direct staff to return to Council with discussion of our present practice and policy options for
shortening the payback period. I propose that staff prepare this report for consideration no later
than when the 2007-08 Mid-Year Report comes to Council.
G\Council Support&Corresp\Cny Council Correspondence%RonerolComn.,n,cal.on item;Comm.
RED FILE
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DATElZb ITEM # JUL 1 1 1007
Dan M. Lemburg SLO CITY COUNCIL
3212 Broad St., Suite 200
San Luis Obispo, CA 93401 *COUNCIL CDD DIR
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Mayor Dave Romero t9 ATTORNEY ;�PW DIR July 9, 2007
City of San Luis Obispo $7 CLERKiORIG a POLICE CHF
990 Palm Street ❑ DEPT HEADS IevREC DIR
San Luis Obispo, CA 93401 7UTIL DIR
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Dear Mayor Romero, Z C 4c
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I would like to petition your support for an initiative I understand Mayor Romero will be bringing
before the Council next week. This initiative will allow small property developers to be reimbursed
the allowable up-front costs for required street construction in a timely manner.
My history with this issue is as follows: Several years ago now I built a small retail development
on Broad Street at Orcutt Road. This required me to spend some$425,000 on road and traffic
light reconfiguration, paving, utilities, etc. My agreement with the city stated that they would
reimburse me for certain of these costs subsequent to finishing construction.
When the time came to be reimbursed, I had great difficulty in getting the public works department
to agree to an adequate amount of reimbursement. We finally compromised on January 25, 2006
on a figure of$204,625.56 (which took into account TIF credits of$47,654.54 1 had received).
But since their reimbursement account had only$40,600 in it, I had no choice (other than the
disagreeable notion of bringing a lawsuit against the city) but to accept a payment schedule which
could drag out fifteen years for the remaining balance—and this without interest! Subsequently I
received another TIF credit of$13,303.97 and an additional payment of$36,000 when I
discovered more funds had dropped into the reimbursement account. This left a balance of
$114,721.59.
Jay Walter inserted this amount in the current budget proposal to be approved in June, 2006, but
it was eliminated in a cost cutting move. He told me in a letter dated June 27, 2007 that he then
included it in year three of the financial plan which would mean that the reimbursement would
take place after July 1, 2009—but once again subject to Council budget approval meaning that
realistically this could drag out for the full fifteen years.
I consider it to be very unfair that the city would agree to reimburse a small developer such as
myself for up-front costs and then in effect renege on that agreement by forcing one to accept
terms that only benefit the city. After all, dollars paid at no interest fifteen years after the fact
reduces the value of that money by approximately two-thirds. This means that the value of
the original payment of$114,721.59 is in reality not more than $40,000.
Since people such as myself are not deep-pockets individuals, the city's current policy poses a
great economic burden. Therefore, I am asking that the city adopt a policy that would enable
people like myself to be treated in an equitable manner by timely paying what is justly owed.
Thank you for your consideration in this matter.
Sy yours,
in ,
Dan Lem u
544-1144