HomeMy WebLinkAbout04/20/2010, C14 - TRANSPORTATION IMPACT FEE CREDITS AND REIMBURSEMENT FOR THE PREFUMO CREEK COMMONS PROJECT councit MSDw 4/20/10
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C I TY O F SAN L U I S O B I S P O
FROM: Jay D. Walter, Director of Public Works
Prepared By: Timothy Scott Bochum,Deputy Director of Public Works
SUBJECT: TRANSPORTATION IMPACT FEE CREDITS AND REIMBURSEMENT FOR
THE PREFUMO CREEK COMMONS PROJECT
RECOMMENDATION
1. Approve crediting of transportation impact fees for the LOVR Sub Area Fee and Citywide
Transportation Impact Fee programs for the Prefumo Creek Commons Project.
2. Approve the reimbursement of approximately $166,000 to Madonna Enterprises in LOVR
Sub Area Fees previously collected from area developers.
DISCUSSION
Background
The Prefumo Creek Commons (PCC) project is proceeding to construction and final processing of
the various discretionary requirements of project approval. As part of that process, the developer
and the City need to fmalize transportation impact fee credits for the project that reflect prior work
completed by the developer as part of the Costco and Irish Hills West project. In addition, the PCC
project is constructing improvements that are eligible for some Transportation Impact Fee (TIF)
crediting. In December 2009, the City received a letter from the project developer requesting that
the City consider adding the Froom Ranch Way extension into the City's TIF program to help
spread the cost of the project to other developments in the City. Staff has reviewed this request and
recommends not amending the TIF program to include this project at this time, but is
recommending that the PCC project developer receive a nominal TIF credit ($80,000) for the costs
of acquiring the off-site Right-of-Way (ROW) from San Luis Coastal Unified School District
(SLCUSD), which was not held in ownership by the developer but is essential for the connection of
Froom Ranch Way to Los Osos Valley Road (LOVR).
LOVR Sub Area Fee Credits
Calle Joaquin ROW Compensation/LOUR Sub-Area Fee Credits
As part of the Calle Joaquin Relocation project completed by Costco, a substantial part of the new
roadway was built on property owned by the developer near the relocation area. Because of the
accelerated pace of the relocation project, the City along with Costco and Irish Hills Development
agreed to defer the crediting of the cost of the road ROW and construction easements until a later
time. Staff has calculated a reimbursement/credit amount of $342,613 for the ROW, slope
easements and construction easements that are needed to complete this project (Attachment 1). This
cost includes the acquisition of approximately 53,000 sq. feet of ROW, miscellaneous construction
cry i
Transportation Impact Fee Credits-Prefumo Creek Commons Project Page 2
and slope easements. This amount will be credited against the City's LOVR hiterchange Sub-Area
Fee charged to the PCC project.
US 101/LOVR Interchange Interim Improvements/LOVR Sub-Area Fee Credits
Prior to submitting the PCC project for City consideration, the developer voluntarily completed
street improvements at the US 101/LOVR interchange area that included the widening of the
westbound bridge approaches of LOVR to install a pedestrian sidewalk connection, signal
modification and protective fencing as well as striping the No. 2 westbound lane across the bridge.
These improvements relieved traffic congestion that was occurring at the interchange and are
eligible for LOVR Sub-Area Fee crediting for the PCC project. The cost of this work was $234,000
and will be credited against the PCC LOVR Sub Area Fees.
These two projects combine for a total of$576,613 in LOVR Sub-Area Fee credits/reimbursements
that will be claimed as part of the PCC project. The City has retained approximately $166,000 in
LOVR Sub-Area Fee paid by projects constructed in the vicinity. This amount was held in order to
help reimburse for part of the Calle Joaquin ROW costs for the project. This amount will be
reimbursed to the PCC developer with the difference of approximately $410,013 being taken as fee
credits for the project. All remaining LOVR Sub-Area Fees owed by the project will be paid prior
to Building Permit issuance. Attachment 1 includes a full listing of the estimated credits and fees to
be paid by the project.
Transportation Impact Fee (TIF) Credits
Los Osos Valley Road, No. 3 Westbound Lane near Madonna
The Environmental Impact Report (EIR) for the PCC project requires the project to complete
improvements near the intersection of Madonna Road/LOVR. The improvements consist of
constructing a No. 3 westbound through lane from south of Madonna Road to past Royal Way. Part
of this work is eligible for crediting against project TIF fees. The final amount of eligible crediting
will be based upon the final engineer's cost estimate (yet to be provided for the work). Eligible
costs for credit calculations includes construction costs for the intersection work as well as the Fire
Station #4 access relocation and soft costs for design. Final calculation of the TIF credit will take
place when final improvement plans have been submitted for review and encroachment permit
approval.
LOVR/Madonna Road Miscellaneous Intersection Improvements
The PCC developer has voluntarily offered to construct intersection improvements at Madonna
Road/LOVR that include widening the southwest (Neal Truesdale) corner of the intersection and
restriping the southbound approach lanes on Madonna Road for operational improvements. This
corner improvement was part of the Phase 1 action plan improvement program for the Laguna
Village Shopping Center driveway adopted by City Council on September 15, 2009. The cost of
completing this work is TIF eligible. Eligible costs for credit calculations include construction costs
for the intersection work and soft costs for design. Final calculation of the TIF credit will take place
when final improvement plans have been submitted for review and encroachment permit approval.
Staff would like to see all of the work at the intersection commence as soon as possible and be
completed prior to Target opening.
Transportation Impact Fee Credits- Prefumo Creek Commons Project Page 3
Staff estimates that the total costs for these two projects will be near $250,000 and will use that
amount as an estimate for calculating TIF credits for the PCC project until the final plans and
estimates are completed.
Froom Ranch Way TIF Crediting Request
In December 2009, the City received a letter from Madonna Enterprises formally requesting that the
City consider amending all, or part, of the Froom Ranch Way extension project into the City's TIF
program. The primary rationale for the request was that the street would serve more than just users
of the PCC center as a collector road. Cost estimates for the entire Froom Ranch Way extension
project (including the future segments that could connect to Dalidio Drive) were estimated by the
PCC engineers at over$10 million. This represents approximately 13% of the current TIF program.
City staff has considered the request that the City amend the Citywide TIF program to include all,
or part, of the Froom Ranch Way extension project and has concluded that a formal amendment of
the project into the TIF program is not appropriate at this time. Many other similar projects not
included in the TIF are the direct responsibility of the benefitting properties and as such, the City
needs to be consistent in its approach of how infrastructure for new development is paid for.
Examples of these include: the Prado Road Extension across the Margarita Area, the collector street
systems proposed in the draft Orcutt Area and the Buckley Extension in the Airport Area. We
believe that the Froom Ranch Way extension is a similar situation, and as such, City staff does not
support the request to amend the TIF program.
With this said, staff recognizes that the Froom Ranch Way extension across the Prefumo Creek
Commons project property required land acquisition from adjacent properties that was not owned
by the developer and that the need to acquire this property serves a higher purpose than local access.
This necessary ROW for the road extension project was acquired by the developer from the school
district and the project will install improvements across this frontage that may not have been
immediately.needed to serve the PCC project. In addition, the developer is working with the City to
realign the intersection of Froom Ranch Way/LOVR to accommodate future traffic that will use the
intersection when the extension is complete and these are improvements that are needed to serve
new development in the area. When completed, the Froom Ranch Way extension will alleviate
traffic along currently congested corridors such as Madonna and US 101. Although not project
specific, the current TIF program does include eligible costs for small congestion relief projects that
are used by the City to address these types of situations.
Staff therefore has determined that some form of TIF crediting should be allowed for a portion of
this work. Staff recommends that the Council approve crediting of TIF fees in the amount of the
purchase price ($80,000) for the ROW that was acquired from the school district and that it allow
the TIF credit for the PCC project to be taken. Any additional amount would require a
comprehensive reevaluation of TIF program costs and benefits.
Why not undertake the full analysis at this time?
There are at least three disadvantages to considering a full amendment to the TIF program to
include this project at this time:
elq- 3
Transportation Impact Fee Credits- Prefumo Creek Commons Project Page 4
1. It will require at least one year to complete the analysis and the public review process.
2. The results of that analysis, from both an analytical perspective and to be consistent with
current policy, may in fact result in a higher cost share for the PCC project.
3. Depending on the final analysis, the costs for inclusion of the project may require significant
amendment to the TIF program that is not easily absorbed,by other development projects.
As an alternative, staff also considered establishing a separate reimbursement area for the Froom
Ranch Way extension project as part of this request. This would be similar to how the costs for the
Calle Joaquin Relocation project were handled; however, this approach would require an additional
fee area be developed (in addition to the already substantial LOVR interchange fee) that would need
public review and establishment by Council. Because there are only two major undeveloped
properties that front the road extension and the majority of costs for the extension project reside on
the Dalidio property, a reimbursement agreement may not ultimately be of financial benefit to the
PCC project. This would be a major new work element for the City, may not ultimately be
supported by the effected property owners and could equally be addressed through private
agreements between the affected property owners.
FISCAL IMPACT
There is no fiscal impact to the General Fund as part of this issue. Approval of the
recommendations will result in fee crediting/reimbursement to the PCC project for 1) work already
completed, 2) upcoming improvements constructed as part of the PCC project and 3) ROW for the
SLCUSD acquisition for Froom Ranch Way in either the LOVR Sub-Area Fee or Transportation
Impact Fee programs.
Current Credits Owed to PCC:
TIF:
Costs for Madonna/LOVR Intersection Improvements (estimated): $250,000
Costs for SLCUSD ROW: $80,000
Subtotal: $330,000
LOVR Sub Area Fee:
Reimbursement for Calle Joaquin Right of Way: $342,613
Credit for LOVR Interchange Interim improvements
No. 2 WB lane and sidewalk extension: $234,000
Subtotal: $576,613
Note: Attachment I (Madonna Enterprise response letter) included a mathematical error incorrectly sting the TIF credit
at$320,000.The above shown$330,000 in potential credit is the correct amount.
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Transportation Impact Fee Credits-Pretumo Creek Commons Project Page 5
The City has retained approximately $166,000 in the LOVR Sub-Area Fee account for this purpose
and this amount will be reimbursed to the project. The remaining $410,013 will be allowed to be
taken as fee credit for the Target project for a portion of their required LOVR Sub-Area Fee.
Total TIF credits are estimated to be $330,000 for the project. This amount will be credited against
the payment of TIF fees when building permits are issued.
ALTERNATIVE
Direct staff to conduct further analysis for full TIF amendment or other reimbursement
mechanism. The City Council may chose to direct staff to initiate a full analysis of the TIF program
(or other reimbursement mechanism) as part of this request. Staff does not recommend this at this
time since there is no assurance that the TIF program can ultimately absorb and additional project
cost of this magnitude and there are other infrastructure projects (as identified above) that may
appear to be equally deserving of TIF program inclusion.
ATTACHMENTS
1: City Response Letter Dated 3-29-2010
2: Letter Dated 12-22-2009 Madonna Enterprises TIF Request
T:\Council Agenda Repotts\PubGc Works CAR\2010\Development Review\PCC Impact Fee Credits\CAR PCC Impact Fee Credits.doc
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Attachment 1
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Public Works Department • 919 Palm Street• San Luis Obispo, CA 93401-3218
March 29,2010
Mr. Clint Pearce
Madonna Enterprises
284 Higuera Street
San Luis Obispo, California 93401
Dear Clint,
The City is in receipt of your letter dated December 22, 2009 in which you have requested
consideration of incorporating all, or part, of Froom Ranch Way east of Los Osos Valley
Road into the City's citywide Transportation Impact Fee (TIF) program. This letter
responds to that request and also outlines other transportation fee credits that we have
determined for work that has been completed as part of other projects that you have
undertaken.
LOVR Sub Area Fee Credits
Calle Joaquin Riaht of Way Compensation/Los Osos Valley Road (LOVR) Sub Area Fee
Credits
We have calculated a reimbursement/credit amount of$342,613 for the right--of-way, slope
easements and construction easements needed to complete this project. Attachment 1
itemizes these amounts for the project.
US 101/LOVR Interchanee Interim Improvements/LOVR Sub Are Fee Credits
We have reviewed the costs that you have submitted for the work completed at the US
l01/LOVR Interchange and have approved crediting $234,000. This credit was for work
completed that included the widening of the bridge approaches of LOVR to install a
pedestrian sidewalk connection, signal modification and protective fencing as well as
striping the 2°d westbound lane across the bridge.
These two projects combine to form a total of $576,613 in LOVR Sub-Area Fee
credits/reimbursements that you are eligible to claim as part of the Prefumo Creek Project
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Page 2 of 3
Transportation Impact Fee(TIF) Credits
Los Osos Valley Road 3`d Westbound Lane near Madonna
The EIR for the Prefumo Creek Commons project required the project to complete
improvements near the intersection of Madonna Road/LOVR. The improvements consist of
constructing a 3`d westbound through lane from south of Madonna Road to past Royal Way.
Part of this work is eligible for TIF crediting against project TIF fees. The final eligible
crediting will be based upon a final engineer's cost estimate (yet to be provided for the
work). Eligible costs for credit calculations includes construction costs for the intersection
work as well as Fire Station #4 access relocation and soft costs for design. Final calculation
of the TIF credit will take place when final improvement plans have been submitted for
review.
LOVR/Madonna Road Miscellaneous Intersection Improvements
You have offered to construct intersection improvements at Madonna Road/LOVR that
includes widening the southwest (Neal TruesdaIe) comer of the intersection and restriping
the Southbound approach lanes on Madonna Road for operational improvements. Eligible
costs for credit calculations include construction costs for the intersection work and soft
costs for design. Final calculation of the TIF credit will take place when final improvement i
plans have been submitted for review. We would like to see this work at the intersection
(along with the 3`d westbound lane) commence as soon as possible and be completed prior
to Target opening).
We estimate that the total costs for these projects will be near$250,000 and we will use that
amount as an estimate for calculating TIF credits for the Prefumo Creek Commons project
until such time as we see the final plans and estimates.
Froom Ranch Way TIF Crediting Request
As we have discussed, City staff has considered your request that the City amend the
Citywide TIF program to include all, or part, of the Froom Ranch Way extension project.
Many other similar projects not included in the TIF are the direct responsibility of the
benefitting properties and as such, the City needs to be consistent in our approach of how z
infrastructure for new development is paid for. We believe that the Froom Ranch Way
extension is a similar situation, and as such, City staff does not support your request to
amend the TIF program.
3
With this said, we recognize that the Froom Ranch Way extension across the Prefumo {
Creek Commons project property required land acquisition from adjacent properties that
was not owned by you. This necessary right-of-way for the road extension project was
acquired by you from the school district and you have agreed to install improvements
across this frontage. In addition, you are working with the City to realign the intersection of
Froom Ranch Way/LOVR to accommodate future traffic that will use the intersection when
the extension is complete.
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Page 3 of 3
We therefore have determined that some form of TIF crediting should be allowed for a
portion of this work. Staff will recommend to the Council that the purchase price ($80,000)
for the right-of-way that you acquired from the school district will be allowed to be taken as
TIF credit for the PCC project. Any additional amount would require a comprehensive
reevaluation of TIF program costs and benefits. There are at least two downsides to this:
1. It will require up to one year to complete the analysis and the public review process.
2. The results, from both an analytical perspective and for consistency with current policy,
may not result in a lower cost for your project: in fact, the opposite could be the case.
We also considered establishing a reimbursement area for the Froom Ranch Way extension
project. However,because there are only two major properties that front the road extension
and the majority of costs for the extension project reside on the Dalidio property, a
reimbursement agreement may not ultimately be of financial benefit to you,either. We can
consider this in more detail if you should request a full calculation of what the financial
responsibilities would be under a program such as this. However, this will take added time
to do this as well.
SUMMARY
Estimates for the work you are completing at the intersection of Madonna Road/LOVR as
well as the Froom Ranch Way credit brings a total estimates TIF credit for your Prefumo
Creek Commons project to $320,000 at this time.
Attachment 2 contains a listing of fee credits for the Prefumo Creek Commons project
reflecting the$320,000. as discussed in this letter.
We have tentatively set this issue for Council approval at the April 20Th meeting. If you
would like to request additional consideration of a higher TIF amount than recommended,
this will allow you an opportunity to address the Council and ask that they consider
amendment of the full TIF program as a follow up to the other crediting amounts.
If you have questions,please contact me or at(805)781-7207.
Sincerely,
av—
Jay D. alter,Director of Public Works
CC: Katie Lichtig, Timothy Scott Bochum, Bill Statler, Phil Dunmore
GADeve4menASUBDI VELONS and Lot Line AdjuhnentsNitmr Subdivisions104-0076-P efumo Creck Commons(Target)1Froom Ranch Way TIF
Re'quesNetter to cunt 3-1&2010 ROW and TWA= §
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Attachment 1
Calle Joaquin Right of Way Credit— Irish Mills LLC
(March 2010)
Total ROW for Calle Joaquin— 1.238 Acres (53,947.59 SF)
Slope Easements—0.313 Acres (13,619.93 SF)
Construction Easements—4,778 SF
Compensation/Credit Amounts:
ROW: $5.00/Square Foot
Slope Easements: Dedicated: $5.00/Square Foot
Construction Easement($1.00/ Square Foot)
Total ROW Credit calculation:
Right of Way:
53,948 Sq. Ft. X $5.00/Sq. Ft. = $269,740 in LOVR Fee Credits/Reimbursement
Slope Easement:
13,619 Sq. Ft. X $5.00/Sq. Ft. = $68,095 in LOVR Fee Credits/Reimbursement
Construction Easement:
4,778 Sq. Ft. X ($1.00/ Sq. Ft.) = $4,778 in LOVR Fee Credits/Reimbursement
Total ROW Credit/Reimbursement Due:
$342,613
Total LOUR IC Misc. Improvements Credit calculation:
Other Crediting issue (LOVR IC sidewalk completion and signal upgrade)
Irish Hills West performed miscellaneous improvements at the interchange to widen the NB
side of the bridge, installing a sidewalk, modifying the traffic signal and striping two NB
lanes.
This amount of work cost$234,000
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ATTACHMENT ,-
Current LOVR IC Fees in City Accounts
On October 19, 2007 we sent a letter to Costco informing them we were withholding
$250,000 for reimbursement of LOVR IC fee collected from Irish Hills West LLC because
we had not arrived at a compensation amount yet.
From Debbie Malicoat we currently have remaining $158,200 in this account along with
approximately $8,400 in encumbrances to Hamner Jewel & Associates that could be
disencumbered.
Thus, we could reimburse $166,600 to Irish Hills West as part of this issue and credit the
remaining to the first Building Permit for the Target Center.
Total Credit/Reimbursable to Irish Hills:
Right of Way: $342,613
LOVR IC Misc Work: $234,000
Total: $576,613
Reimbursement: $166,600
Credit on LOVR Fee: $4109013
ArfACHMENT
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Way Credit caics 1-2010.doc
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Attachment 2
MADOMM ENTERPRISES
December 22,2009
City of San Luis Obispo, Public Works Department
919 Palm Street
San Luis Obispo, CA 93401
Re: Inclusion of Froom Ranch Way East in City-wide TIF Program
Attn.: Tim Bochum
Dear Mr. Bochum,
Madonna Enterprises is the developer of Prefumo Creek Commons Shopping Center at
11980 Los Osos Valley Road on the property commonly known as.the Gap parcel. As
part of the project approvals,the City has required that Froom Ranch Way be extended to .
the western boundary of Prefumo Creek, and ultimately built to the City standards of a
"collector"street. Froom Ranch Way is part of the City's Circulation Plan, and will
ultimately serve the community at large as a significant thoroughfare. We request that
Froom Ranch Way East be included in the City-wide TIF program since its required
dimensions and construction costs are for serving the region,not just the single project.
Froom,Ranch Way West is the access drive from Los Osos Valley Road to Home Depot,
Costco and Irish Hills Plaza. Madonna Enterprises would agree to take over ownership
of Froom Ranch Way West if the City agrees to include Froom Ranch Way East in the
City-wide TIF and allows Madonna Enterprises reimbursement for its construction.
Thank you,
Clint Pearce
284 Higuera.Street San Luis Obispo CA 93.401 Fhone:.805-543-0300 Fax: 805-54I-3067
Attachment 2
PCC — Target Estimates of transportation fees
Transportation Impact Fees to be paid by Target phase of PCC(approximate):
TIF:
139,470 Sq. Ft. @ $5.587/Sq.Ft. _ $779,218
LOVR Sub Area Fee:
139,470 Sq. Ft. @ $13.230/Sq.Ft. _ $1,8459188
Current Credits Owed to PCC:
TIF:
Costs for Madonna/LOVR Intersection Improvements (estimated): $250,000
Costs for SLCUSD ROW: $80,000
Subtotal: $320,000
LOVR Sub Area Fee:
Reimbursement for Calle Joaquin Right of Way: $342,613
Credit for LOVR Interchange Interim improvements
2"d WB lane and sidewalk extension: $234,000
Subtotal: $576,613
Of this amount, $166,600 will be reimbursed from City LOVR Sub Area Fee account that
has retained this amount for said purposes. This leaves a total credit amount needed of:
$410,013
Net Fees owed by PCC(approximate):
TIF: $4599218
LOVR Sub Area: $1,435,175
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