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HomeMy WebLinkAbout10/06/2009, PH 3 - FIRE ENGINE/TRUCK IMPACT FEES council 10/6/2009 agcnoA RepoRt �N CITY OF SAN LUIS OBISPO FROM: Bill Statler, Director of Finance & Information Technology 9 � Debbie Malicoat, Finance Manager SUBJECT: FIRE ENGINE/TRUCK IMPACT FEES RECOMMENDATION Adopt a resolution establishing fire engine/truck impact fees for new construction over fifty feet in height. DISCUSSION Background The City has in service one 75-foot aerial ladder "Quint" fire engine/truck purchased in 1993, which serves as both afire engine and ladder truck. Based on its front-line useful life of 16 years, (followed by at least four years in reserve status), it is scheduled for replacement in 2009-10. While the current Quint is generally adequate to service existing buildings in the City, the Fire Department has recommended that the replacement Quint have a 100-foot ladder to adequately plan for the City's fire service needs over the next twenty years. The Council has approved doing so in the 2009-11 Financial Plan. The need for a 100-foot aerial ladder fire engine/truck is specifically required to adequately provide fire service to future t o buildings that are over 50-feet - tall. The cost difference between a fire engine/truck with a 100-foot aerial ladder versus with a 75- foot aerial ladder is $340,000 ($1.04 million versus $700,000). A taller ladder truck is not solely a function of height, but also of building set-back. For example, the fire protection needs of the Anderson Hotel — one of the City's tallest buildings —can be met t a 4 with a 75-foot ladder, because its walls are at a 90-degree angle ` u to the ground. However, under the City's current design guidelines and particularly those focusing on buildings over 50 }rI � feet, tall buildings in the future will have setbacks on the top a 0:, ° P floors and this requires a ladder longer than 75 feet. In short, as d p the length of the ladder needed on ' a reflected in the sidebar picture, a fire engine/truck is determined by the hypotenuse of the triangle formed by the ladder, not by the height of the building. Fire Engine/Truck Impact Fees Page 2 Allocating the Added Cost to New Development There are a variety of ways by which the cost difference for the 100-foot aerial ladder fire engine/truck could be funded. The City's Capital Financing policy states that new development should pay its fair share of the added costs to the City resulting from its development. Similar to other existing fee programs, staff has proposed an impact fee to fund the $340,000 cost difference necessary to purchase a fire engine/truck with a longer ladder. The impact fee would be applicable to the developers of new tall buildings which will be direct beneficiaries within the City limits from this added fire service capacity. Thus, the impact fee is limited to new development within the City limits that benefit from the added fire service capacity (buildings taller than 50 feet) with the proposed fee proportional to the added benefit. Under this approach, existing residents and businesses continue to be responsible for funding the replacement of firefighting equipment needed to meet existing needs. Calculating the Impact Fee The underlying methodology used to assess the fire engine/truck impact fee is based on the amount of building square footage above 50 feet. Two factors were used in determining the fee: 1. Applicable cost of the purchase (cost base). 2. Allocation of that cost among participants (allocation base). Cost Base. In this case, the cost is relatively easy to calculate: it is the difference between the purchase price of a 100-foot aerial ladder and a 75-foot aerial ladder, or $340,000. In addition, where debt financing is a component of a purchase or project, it is the City's policy to include the debt financing costs in the total costs. Debt financing costs are estimated at $167,200, based on an assumption of financing $340,000 for a 16 year term at an interest rate of 5.25%. This results in a total cost of $507,200, summarized as follows: Cost Base to IN`ew Development 100-foot aerial ladder $1,040,000 75-foot aerial ladder 700,000 Differential $340,000 Interest costs on $340,000 for 16 years-at 5.25% 167,200 Total costs to allocate to new development $507,200 Allocation Base. In determining how to spread this cost base among new development, Finance and IT worked closely with Community Development to determine developable square footage above 50 feet. In looking at the General Plan and other City documents Community Development staff estimated that there is approximately 535,800 square feet above 50 feet that have the potential for development over the next 20 years. Though,just because it is possible for a site to accommodate a building over 50 feet in height does not mean that it will. For example, the Chinatown project originally included approximately 66,000 square feet over 50 feet; and the Garden Street Terraces (GST) project originally included about 49,400 square feet over 50 feet. The most recent proposals from these developments now include no square footage above 50 feet in the case of the Chinatown project; and about 21,000 square feet above 50 feet for the GST project. Given the current development climate, anticipated slow recovery from the Recession in the development sector, and the challenges presented to constructing to a maximum height -Pff 3 --1 Fire Enginelrruck Impact Fees Page 3 potential, staff has proposed that the potential square footage be discounted by half in determining the allocation base TAI Buildings: Square Footage AI)ove SO Feet Community Development analysis of candidate square footage 535,800 above 50 feet Estimate of 50%developed to full height within next 20 years 267,900 Totalsquare footage subject to impact fee 267,900 Using the calculated cost and allocation basis results in a development impact fee of$1.89 per square foot for space above 50 feet in height. Cost $507,200 Allocation base total s uare foots e 267,900 Fee er s uare foot above 50 feet in height $1.89 Example of Application of the Proposed Fire Engine/Truck Impact Fee The GST project can be used as an example of the application of the new fire engine/truck impact fee. Based on the most recent application for the GST project, it has approximately 21,000 square feet that would be subject to the fire engine/truck impact fee. The proposed fee of$1.89 per square foot would result in a fire engine/truck impact fee of $39,758 for this development in addition to all the other normal fees applicable to a project. Compliance with State Requirements for Establishing Development Impact Fees Section 66000 of the Government Code, commonly refereed to as "AB 1600," sets forth comprehensive requirements for establishing and administering development impact fees. The proposed fire engine/truck impact fee has been developed in accordance with these rigorous requirements. This includes clearly identifying the purpose of the fee and how revenues will be used; and ensuring a reasonable relationship ("nexus") between the fee and the benefit received by the new development. Stakeholder Notification In accordance with the notification requirements of AB 1600, notices regarding this hearing were mailed to all of the groups and individuals on an established fee notification mailing list (about 60 of the recipients are on the list based on requests to be notified of any and all fee changes). Representative groups or organizations on the notification list include: the Downtown Association, San Luis Obispo Chamber of Commerce, Building Industry Association, Property Owners Association, Residents for Quality Neighborhoods, Sierra Club and ECOSLO (Attachment 2). This list also includes the GST project developer. As of the date of report preparation, no comments regarding the proposed fees had been received. `t fn 3 — 3 Fire Engine/Truck Impact Fees Page 4 Effective Date AB 1600 requires at least 60 days between adoption of increased fees and their effective date. Accordingly, December 6, 2009 is recommended as the effective date for the new impact fee. CONCURRENCES The Fire and Community Development Departments concur with the proposed fire engine/truck impact fee. FISCAL IMPACT The City will need to purchase the new truck in 2009-10 but will not collect the fire engine/truck impact fee immediately. Because the impact fees will be collected at the time of development, these costs will be reimbursed to the Fleet Replacement Fund over the course of the next 20 years as development over 50 feet occurs. The precise total fire engine/truck impact fees collected will be dependent upon the level of development activity,but is estimated to be $507,200 (in 2009 dollars). ALTERNATIVES 1. Do not include debt service costs in the calculation. The City's policy is to include related interest costs when calculating impact fees if the associated projects or purchases will be debt financed. For example, this was the case when adopting sub area transportation impact fees for the Los Osos Valley Road interchange project and when adopting water impact fees for the Nacimiento water pipeline. If Council chose not to include the debt service costs, the fee would be $1.27 per square foot. This would result in collecting $167,200 less than the full cost of acquisition attributable to new development. 2. Change the square footage allocation base. Discounting the possible developed square footage by 50% is staff's attempt to forecast the development activity that will happen in the next 20 years. This is difficult to forecast at this time and as such staff has taken a "middle ground" approach. Council could increase or decrease the absorption assumption. The following summarizes the impact on the fee at differing absorption assumptions: Absorption ,kssumptions: lZesulting Fee 1)er Square Foot Assumption Square Feet Fee 50% (Recommended) 267,900 $1.89 100% 535,800 0.95 75% 401,900 1.26 40% 214,300 2.37 33% 176,800 2.87 25% 134,000 3.79 Based on an allocated cost of$507,200 IN3-`f Fire Engine/Truck Impact Fees Page 5 3. Apply the fee to "large"buildings, not just `tall"buildings. The "hypotenuse" concern discussed above also conceptually applies to very large buildings in addition to very tall ones. Expanding the allocation base to include large buildings is not recommended at this time because the City's setback requirements are different. In the case of"large" buildings, staff believes the existing 75-foot ladder can accommodate them; and for this reason, the need for a longer aerial ladder has not surfaced in previous mitigations identified for large buildings. For example, current large buildings over 100,000 square feet (such as Costco and Home Depot) are not multi-storied and therefore the risk of occupants being trapped and needing ladder rescue are minimal. Additionally, there are two significant methodological constraints. First, it would be difficult to define in the fee resolution when the "large building" fee would be applicable. For example, a relatively large but narrow building may have a substantial number of square feet, but would not require a longer ladder to provide adequate firefighting capacity. Second, compared with tall buildings, it is difficult to project the added space due to "large" buildings over the next twenty years; and a reasonable estimate is needed in calculating the fee in accordance with State law. 4. Reduce the project cost by Cal Poly's contribution. The City currently has a contract with California Polytechnic State University (Cal Poly) to provide emergency services to the campus. In order to better meet the campus' tall building needs, the contract with Cal Poly includes a provision in the second year for an added payment of$25,000 if the City moves forward with the purchase of a 100-foot ladder fire engine/truck. An option in calculating the fee would be to reduce project costs by the amount of this contribution. However, because Cal Poly's contribution is not guaranteed, staff does not recommend this option. In addition, given uncertainty in other factors, such as the amount of developable square footage over the next twenty years, staff believes that apportioning costs solely on development needs within the City's limits as envisioned in the General Plan is the most appropriate assumption in calculating this fee. ATTACHMENTS 1. Resolution establishing fire engine/truck impact fees for new construction over fifty feet in height. 2. Notification \\chstore2\Team\Council Agenda Reports\Finance&IT CAR\2009\CAR to adopt fire truck impact fee.doc FT 3-- �__ I �\ 1 Attachment 1 RESOLUTION NO. (2009 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO ESTABLISHING DEVELOPMENT IMPACT FEES FOR FIRE ENGINE/TRUCK ACQUISITION WHEREAS, the City currently has in service one fire engine/truck with a 75-foot aerial ladder; and WHEREAS, replacing the engine/truck with a 100-foot ladder is approved in the 2009-11 Financial Plan in order to adequately address the City's needs over the next twenty years; and WHEREAS, the beneficiaries of the taller ladder are new developments with heights over fifty feet; and WHEREAS, it is consistent with City policy for new development to pay its fair share of necessary community facilities, and WHEREAS, the.proposed fee complies with the provisions of Section 66000 of the Government Code(AB 1600). NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo that: SECTION A. FINDINGS 1. The purpose of the fees is to acquire a new fire engine/truck with a 100-foot aerial ladder to meet the public safety needs of the City. The proposed mitigation fee would fund the cost difference between a 75-foot aerial ladder and a 100-foot aerial ladder from new tall buildings in the future, which will be sole beneficiaries within the City limits from this added capacity. With this approach, existing residents and businesses are responsible for funding the replacement of firefighting equipment needed to meet existing needs. However, to the degree that added capacity is required to meet the needs of new development, it is consistent with City policy for new development to fund its fair share of this added cost. Only new development within the City limits that would benefit from the added capacity (buildings taller than 50 feet) would participate in the fee program; and fees for these would be proportional to the added benefit. The methodology assesses the fee based on the amount of building square footage above 50 feet. SECTION B. AMOUNT OF IMPACT FEES Effective December 6, 2009, fire engine/truck development impact fees shall be in the amount of $1.89 per square foot of building space above 50 feet in height. Unless otherwise acted upon by the Council, the amount of the fees will automatically be adjusted on July 1 of each year by the annual 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. Resolution No. (2009 Series) Attachment 1 Page 2 SECTION C. ONGOING REVIEW OF COST ESTIMATES 1. At any time that the actual or estimated costs of the acquisition or amount of projected square footage above 50-feet changes, the Director of Finance & Information Technology(Director) shall review the impact fees and determine whether the change affects the amount of the impact fees. If the impact fees are significantly affected, the Director shall, within thirty(30) days, recommend to the Council a revised fee for their consideration. 2. At least once every five years, the Council will review the basis for this fee to determine whether: it still reasonably related to the impacts of development; the equipment for which the fees are charged are still needed; and the cost estimate is still valid. SECTION D. TIME OF PAYMENT 1. As provided in Government Code Section 66007(b), the fees set forth shall be payable prior to issuance of building permits required for that development and shall be collected by the Building Official. 2. 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. SECTION E. EXEMPTIONS The fees established under this resolution do 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. SECTION F. LIMITED USE OF FEES The revenues raised by payment of these fees shall be placed in a separate account along with any interest earnings on that account, and shall be used solely to pay for the acquisition of the fire engine/truck including any debt service costs. PR r Resolution No. (2009 Series) Attachment 1 Page 3 SECTION G. FEE ADJUSTMENTS 1. Each development is independent and no reductions to impact fees will be transferable to another development nor will an excess be refunded. 2. Any person whose new development is subject to these impact fees may appeal to the 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 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 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. SECTION H. UNEXPENDED IMPACT FEE REVENUES 1. Notwithstanding Section C.2, 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 Council shall make findings once each fiscal year with respect to the unexpended amount. The 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 Council determines that the administrative costs of refunding unexpended or uncommitted impact fees pursuant to this section exceed the amount to be refunded, the 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. PH 3 -8� I � Resolution No. (2009 Series) Attachment 1 Page 4 SECTION I. SEPARATE ACCOUNTS The Director will deposit fees collected under this resolution in separate accounts as required by Government Code Section 66006. Within 180 days of the close of each fiscal year, the Director will make available to the public an accounting of these fees, and the 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 on October 6, 2009. Mayor David F. Romero ATTEST: Elaina Cano, Interim City Clerk APPROVED AS TO FO J nathan P. Lowell, City Attorney Attachment 2 ti City Of san 1Ui s OBI SPO August 31, 2009 PROPOSED FIRE ENGINENRUCK IMPACT FEE On October 6, 2009, the Council will consider establishing a development impact fee to assist in funding a replacement fire engine/truck in mitigating the fire-fighting impacts of new tall buildings. This proposed fee is based on the cost difference of$340,000 between the current 75-foot aerial ladder fire engine/truck, which is scheduled for replacement in 2009-10, and the need for a 100-foot aerial ladder engine/truck in meeting the needs of future tall buildings. The proposed fee would only be applicable to new construction taller than fifty-feet. Background. Currently, the City has in service one 75-foot aerial ladder "Quint" purchased in 1993, which serves as both a fire engine and ladder truck. Based on its front-line useful life of 16 years, it is scheduled for replacement in 2009-10. While the current Quint is adequate to meet the height needs of existing buildings in the City, the Fire Department has recommended that the replacement Quint have a 100-foot ladder in adequately planning for needs over the next twenty years, and the Council has approved doing so in the 2009-11 Financial Plan. The cost difference between a Quint with a 100-foot aerial ladder versus with a 75-foot aerial ladder is$340,000 ($1.04 million versus$700,000). Applicable Share for New"Tall Buildings." At the October 6, 2009 meeting,the Council will consider adopting a mitigation fee that would fund this cost difference in meeting the needs of future new buildings taller than fifty-feet. With this approach, existing residents and businesses will be responsible for funding the replacement of fire-fighting equipment needed to meet existing needs. However,to the degree that added fire-fighting capacity (and related added costs of$340,000) is required to meet the needs of new tall buildings, it is consistent with City policy for Tuesday, October 6, 2009 new development to fiord this added cost. 7:00 PM City Hall Council Chambers 990 Palm Street Only new development within the City limits that would benefit from the added fire-fighting capacity (buildings taller than 50 feet) would participate in the fee program; and fees for these would be proportional to the added benefit. The proposed methodology is to assess the fee based on the amount of new building square footage above 50 feet. The proposed fee is$1.89 per square foot above 50 feet. Want More Information? Upon request, we will be happy to meet with you or your organization at your convenience to discuss the proposed fee with you; or to provide you with more detailed written information about the methodology used in calculating the proposed fee. Electronic copies of the Council agenda report (in a PDF format) will be available by September 30, 2009 in two ways: via email upon request to me at bstatler(aslocity.org or downloaded from our web site at www.slocity.org. Hard copies will also be available upon request at our direct reproduction cost. Please call me at 781.7125 if you have any questions about the proposed impact fee. Sincerely, lj�tcte",i Bill Statler,Director of Finance&Information Technology® PKK The City of San Luis Obispo is committed to including persons with disabilities all of our services,programs and activities. t Telecommunications device for those with hearing impairments:(805)781-7410.