HomeMy WebLinkAboutCouncil Reading File - 10-17-2017 Item 01 - Preliminary Results of the Capital Facilities Fee ProgMeeting Date: 10/17/2017
FROM: Michael Codron, Community Development Director
Prepared By: Xzandrea Fowler, Deputy Director - Long Range Planning
SUBJECT: PRELIMINARY RESULTS OF THE CAPITAL FACILITIES FEE PROGRAM
NEXUS STUDY AND THE WATER AND WASTEWATER CAPACITY AND
CONNECTION FEE PROGRAM STUDY: STUDY SESSION
RECOMMENDATION
1. Participate in a study session and receive a presentation on the preliminary results of the
Capital Facilities Fee Program Nexus Study and the Water and Wastewater Capacity and
Connection Fee Program Study; and
2. Receive public input and provide guidance to staff regarding fee options (questions for
discussion are provided at the conclusion of this report); and
3. Direct staff to return on November 7, 2017, with applicable ordinances and resolutions to
implement the updated Capital Facilities Fee Program as directed by City Council.
REPORT-IN-BRIEF
The City’s Community Development, Public Works, Parks and Recreation, Police, Fire, and
Utilities departments are in the process of updating the fees charged to new development for a
range of transportation, parks, general government, public safety, and water and sewer capital
facilities that are important to the City’s future and quality of life. The economic vitality of the
City is linked to critical investment in its urban infrastructure system. While the current
configuration of the existing development impact fee programs has served an important role in
funding infrastructure improvements throughout the City over the last twenty years, changing
economic circumstances, new Specific Plans, and the City’s recently adopted public financing
policies warrant an update of these programs.
This project is a key implementation of the 2014 Land Use and Circulation Element General
Plan Update. The infrastructure identified in this study has been identified because it is necessary
to support build-out of the current General Plan. The project also builds off the City’s Economic
Development Strategic Plan and four prior study sessions held with the City Council to discuss
policies and practices for infrastructure financing. As the City Council and community review
the information contained in this report, it will be important to remember that these development
impact fees are one of a few possible sources of funding for the projects included in the fee
program. For any given project, multiple sources of funding may be necessary to ensure project
feasibility (e.g. a relatively small portion of a new police headquarters facility can and should be
assigned to new development through an impact fee).
The question of how these fees burden future development, such as new housing projects, and
impact project feasibility is a central issue for this study session. The study illustrates that the fee
burden associated with all potential impact fees may be too great when applied to a project, and
that policy decisions by the City are necessary to reduce the fee burden so that development
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remains feasible. This issue is most clearly reflected in the retail fees associated with
development in the southern City fee area. Various options are available to the City to “fine
tune” the fees for a given development type and in each area to ensure that the fee program
delivers important capital facilities needed for the City to complete these projects while making
sure that the development subject to these fees is still feasible and can still move forward.
Previous study sessions with the City Council have resulted in specific recommendations and
direction to staff to keep all options on the table and pursue multiple funding sources for City
infrastructure projects. Where the City Council lands with respect to the development impact fee
program will help determine the size and scope of other funding mechanisms needed to provide
funding and deliver important City infrastructure in the future.
The studies provide the City with an opportunity to ensure that the identified set of development
impact fees generates revenue sources that will help the City to meet the demands of future
growth. The fee programs will supplement rates and other local, State, and Federal funding
programs by having new development pay a proportional share of the costs of these needed
facilities. If appropriately updated and implemented, the Capital Facilities Fee (CFF) Program
and the Water and Wastewater Capacity and Connection Fee Program will serve as important
stimulus for economic development, providing certainty to developers about the rules and
financial obligations they will face while ensuring that adequate infrastructure will be available
to support growth and enhance competitiveness.
DISCUSSION
Mitigation Fee Act
With the passage of Proposition 13 in 1978, which resulted in the decline of local government
revenues, local governments increasingly relied on impact fees to mitigate the impacts created by
new development. In response, developers lobbied the State Legislature to curtail the growing
use of impact fees. Because of the widespread imposition of public facilities fees at the local
level and in response various exactions cases from the California courts and U.S. Supreme Court,
the State Legislature passed the Mitigation Fee Act (Assembly Bill 1600) in 1987. The Act,
contained in California Government Code Section 66000 et.seq., established constitutional limits
and “ground rules” for the imposition and administration of impact fee programs. The Act
became law in January 1988 and requires local governments to document the following when
adopting an impact fee:
1. Identify the purpose of the fee;
2. Identify the use of the fee revenues;
3. Determine a reasonable relationship between the use of the fee and the type of
development paying the fee;
4. Determine a reasonable relationship between the need for the fee and the type of
development paying the fee; and
5. Determine a reasonable relationship between the amount of the fee and the cost of the
facility attributable to development paying the fee.
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In summary, a fee cannot be more than the cost of the public facility needed to accommodate the
new development paying the fee, and the fee revenues can only be used for their intended
purpose.
Development Impact Fee Program Considerations
Creating an impact fee program can be a costly and labor -intensive process that should not be
undertaken more often than necessary. A well-planned fee program can generate sufficient funds
to allow the city to adequately mitigate capital need impacts created by new development.
Conversely, a poorly planned fee can result in the city either collecting to little money and being
forced to close the funding gap through alternative funding sources, or collecting too much
money based on an unsupported fee program, thus exposing the city to a fee challenge. The
following principles guided staff and the consultant team through the creation of the Capital
Facilities Fee Program Nexus Study work effort:
Plan for future development. Utilize a recently updated General Plan as a guide to
anticipating where and how growth will occur the city. If most of the new development
is projected to occur in concentrated areas geographically, which are not necessarily
separated from existing development, a mix of new, stand-alone facilities, such as a fire
station, and expansion of existing facilities, such as a city hall, may be needed to support
the anticipated growth. This will have an impact on the cost of new infrastructure and, of
course on the uses to which the resulting fee revenues may be devoted. To address this, a
fee program that is based on a geographic area within the city, should be considered to
address that area’s specific needs.
Don’t try to fix every problem with one fee. It is important to tailor each fee to address
an impact. Broad-brush fees are subject to legal challenge under AB 1600. Each fee must
bear a reasonable relationship to the impact it is intended to mitigate. There must be
clear accounting for each fee collected. However, creating too many fee categories can
create administrative difficulties in implementing and accounting for fees once they are
collected.
Decide what level of service the city wants to provide. Fees should be designed to
collect sufficient funds to provide public facilities and infrastructure at a certain level of
service. The General Plan specifies the size and level of service at which certain types of
public infrastructure must be maintained. While a City cannot require new development
to pay for existing deficiencies, it can require new development to provide an acceptable
level of service. When considering new fees, the City should decide whether it wants to
raise the current level of service for public facilities. If so, the city could raise the level
of service for existing development through expenditures from the general fund, while
requiring new development to pay for a level of service above what is currently in place.
Don’t try to make new development pay more than its fair share. New development
cannot be required to pay for existing deficiencies, and the amount of any impact fee
must bear a reasonable relationship to the actual cost of providing the public services
demanded by the new development on which the fee is imposed.
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Keep Council informed. At the beginning of the process to enact fees, it is important to
ensure that the City council understands the nexus requirement. When a jurisdiction is a
slow-growth community, it is important to explain that new development cannot be
required to mitigate current deficiencies. When a jurisdiction is pro-growth, it is
important to explain that undercharging new development may mandate that general
fund monies be used to maintain required service levels.
Too many exactions might hurt, rather than help, the city’s economy. Although
California has seen a robust economy during the last five years, the reality is that
development can only absorb so many fees before development doesn’t “pencil out”.
Before a city starts creating multiple layers of fees, it should consider what types of
developments are most affected by high impact fees and whether the kinds of
development the city wants to encourage will be helped or hindered by new fees. For
example, housing advocates often argue that impact fees on residential projects can price
many low- and moderate-income wage earners out of the local housing market and
encourage developers to construct larger, more expensive homes because high -end
occupants can more easily absorb higher impact fees.
o Similarly, business groups argue that imposing fees on commercial development
may prevent that city from attracting businesses into the city. If the city is
interested in revitalizing its downtown area, high impact fees for commercial
development may drive commercial tenants to a neighboring city or into an
unincorporated area that has lower fees.
o One way to address such issues is to provide fee waivers/discounts for certain
types of development. For example, the City’s current fee program applies a 50%
reduction of the Transportation Impact Fee to retail projects. Such waivers should
be included in whatever fee legislation the city adopts. However, it is important
to note that waivers/discounts cannot be funded with fee revenues, as this cross-
subsidy would prove that fee payers are over charged. Other local government
revenues must be relied upon to backfill revenues that are lost due to fee
waivers/discounts.
Consider use of development agreements as appropriate. Agreements to pay fees or to
construct infrastructure, which are contained in development agreements evidence
contractual agreements between government and the developer, and are not constrained
by AB 1600 requirements. To be safe, include a provision in your development
agreement whereby the developer waives any right to contest fees under AB 1600 protest
provisions.
Organization of the Report
The first step in determining an impact fee begins with the selection of a planning horizon and
the identification of projects needed to support the projected population and employment. These
projections are used throughout the analysis of various facility categories.
General Government Facilities Impact Fee – city hall and the public works/community
development administrative facilities
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Public Safety Facilities Impact Fee – police and fire facilities
Parks and Recreation Facilities Impact Fee – parkland and recreational facilities
Transportation Facilities Impact Fee – interchanges, roadways (widening &
extensions), intersections, pedestrian/bicycle, and transit
Water and Wastewater Facility Impact Fees – capacity and connection facilities
Each category is organized under the following sections to clearly document the requirements of
the Mitigation Fee Act discussed above:
The sections begin with a statement identifying the purpose of the fee by stating the types
of facilities that would be funded.
The Service Population section identifies whether only residents or both residents and
businesses benefit from the facilities in the associated category. It identifies the
appropriate population figures to use in the analysis, and accounts for anticipated
populations from those developments that have vested rights. For transportation facilities,
the Trip Generation section defines the benefit relationship based on daily vehicle trips
rather than on service population.
The Facility Standards and Fee Schedule section establishes a reasonable relationship
between the need for the fee and type of development paying the fee. This section also
establishes a reasonable relationship between the amount of the fee and the cost of the
facility attributable to development paying the fee. Using a common factor for facility
costs per capita or level of service, the schedule ensures that each development project
pays its fair share of total facility costs. For Transportation facilities, the Proportionate
Share and Fee Schedule sections defines the relationship based on land use types.
The Facility Costs to Accommodate Growth section establishes a reasonable relationship
between the use of the fee revenues and the type of development paying the fee. This
section also estimates the total facility costs associated with new development over the
planning horizon. These costs equal the revenues that would be collected through the
impact fee. Programming of revenues to specific projects would be done through the
City’s annual capital improvement planning and budget process.
Geographic Fee Area
The geographic areas of the City to which the transportation impact fees could be applied are
shown in Figure 1. These areas include the current City of San Luis Obispo General Plan
Boundary, which is further divided into a North Area and a South Area based on the proportional
growth that is anticipated to occur in the expansion or special focus areas identified in the Land
Use Element of the General Plan through the year 2035 and beyond. Those fee areas would
include the following approved and pending projects:
San Luis Ranch Specific Plan
Avila Ranch Specific Plan
Froom Ranch Specific Plan
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Downtown Concept Plan Area
Airport Area Specific Plan
Margarita Area Specific Plan
Orcutt Area Specific Plan
Los Osos Valley Road (LOVR)
It should be noted that the Orcutt Area and LOVR Area specific plans have vesting agreements
with the City for payment of fees. Their contributions must therefore be subtracted from the total
cost of establishing a nexus, leaving the remainder of the cost to be divided between the
remaining General Plan buildout projects.
Figure 1: City of San Luis Obispo, North and South Transportation Fees
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Population Projections
The population estimates for the approved and pending developments were estimated by
applying density factors for the number of people per dwelling unit (DU) to each of the
residential land uses. The number of workers was estimated using density factors based on the
number of building square feet for each worker. The land use, population, and employment
estimates are summarized in Table 1, Attachment A. It assumes that the growth in the impact
fee area will increase the City population by 9,900 people and will generate about 11,100 new
jobs.
Table S-1, Attachments A-E, present a summary of the updated maximum development impact
fees for the City of San Luis Obispo in 2017 U.S. Dollars. Each facility category section
provides a detailed discussion of how these fees were calculated.
Background
The City has several approved development impact fees and in-lieu fee programs that are
currently collecting revenue. The City’s existing development impact fee programs include a
transportation impact fee, a park improvement impact fee (for single family and condominium
developments only), and water and wastewater capacity and connection charges. The City’s
existing in-lieu fee programs include an inclusionary housing in-lieu fee, a public art in-lieu fee,
and a parkland in-lieu fee (Quimby Act only). Unlike the development impact fee programs that
are allowed under the Mitigation Fee Act, with in-lieu fee programs a developer has the option to
provide the asset instead of paying the in-lieu fee.
The Mitigation Fee Act allows the City to establish more development impact fee programs than
are currently in place within the City today. Therefore, this is why the Capital Facilities Fee
Program Nexus Study includes both updates to the existing impact programs (for transportation
and park improvements) and identifies new impact fee programs for general government and
public safety facilities.
It makes sense to evaluate and/or develop new fee programs and update the existing fees
concurrently, because, if appropriately designed and implemented, a comprehensive impact fee
program can contribute to a more holistic and systematic approach to planning for, and funding,
future infrastructure needs. The studies completed will build upon and reference the body of
analysis prepared as part of the City’s fee programs and infrastructure financing needs Citywide
and in the City’s Specific Plan areas.
The City’s Economic Development Strategic Plan includes key policies relative to infrastructure
financing. Policy 1.3 calls on the City to analyze infrastructure plans to ensure that they are
right sized” for the community. Policy 1.4 says that the fair -share fees applied to development
should be appropriate and established a program to work with the City Council to study this
issue. Thus, study sessions were held with the City Council and a set of recommendations was
approved in a summary document reviewed by the Council on August 16, 2016, which can be
reviewed in Attachment-I. One of the recommendations that came out of the study sessions was
to establish fiscal and budget policies to guide decision-making around the various type of
financing mechanisms available for infrastructure. The City Council approved the following new
policies with the 2017-19 Financial Plan:
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1. Public Purpose. There will be a clearly articulated public purpose in forming an
assessment or special tax district in financing public infrastructur e improvements. This
should include a finding by the Council as to why this form of financing is preferred over
other funding options such as impact fees, reimbursement agreements or direct developer
responsibility for the improvements.
New development should generally be expected to “pay its own way,” (i.e., provide
funding through one mechanism or another that funds its “proportional share” of public
improvement and infrastructure costs and ongoing operations and maintenance costs).
1) The City will consider the use of city-based funding sources to fund public
facility and infrastructure improvements that provide for the health, safety and
welfare of existing and future residents and/or provide measurable economic
development and fiscal benefits. In evaluating whether the City will use city-
based funding sources, the following evaluation criteria should be considered:
a) Significant public benefit, demonstrated by compliance with and
furtherance of General Plan goals, policies, and programs
b) Alignment with the Major City Goals and other important objectives
in place at the time of the application
c) Head of Household Job Creation
d) Housing Creation
e) Circulation/Connectivity Improvements
f) Net General Fund fiscal impact
2) The City generally will not fund or offer public financing for
infrastructure improvements that confer only private benefit to individual
property owners or development projects.
3) The City shall seek continuity (or improvements to) existing levels of
municipal service by assuring adequate funding for the City’s operation,
maintenance and infrastructure replacement costs.”
The remainder of this report focuses on the results of the project to update the City’s impact fee
structure. The fees identified are the maximum amounts that can be charged to development
based on the improvements identified or the service level desired, consistent with legal nexus
requirements and fair-share analysis applied on a project by project basis. However, the City
Council must consider the effect of the fee program in total, and in doing so, may provide staff
with direction on the desire to incorporate other funding sources into the City’s infrastructure
financing plans so that development impact fees stay reasonable and appropriate, and don’t
impact the feasibility of new development.
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Capital Facilities Fee Program Update
1. General Government Facilities Impact Fee
This section presents an analysis of the need for public building facilities to accommodate
new development in the City of San Luis Obispo. These public buildings include city hall
and the public works/community development administrative office facilities. A fee is
presented based on the cost of these facilities to ensure that new development provides
adequate funding to expand these facilities to meet its needs.
Service Population
City Hall and Public Works/Community Development administration facilities serve both
homes and businesses citywide. Consequently, a service population that includes both
residents and workers reasonably represents the need for these facilities. As population grows
with new development, so does demand for the administrative services provided by these
facilities.
Table 1, Attachment A, shows the estimated future service population for general
government building facilities for 2035 and beyond. In calculating the service population,
workers are weighted less than residents to reflect lower per capita service demand. Non-
residential buildings are typically occupied less intensively than dwelling units, so it is
reasonable to assume that average per worker demand for services is less than average per-
resident demand. The 0.50-weighting factor for workers is based on resident equivalency
weighting of half an employee to one resident.
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Facility Standards and Fee
Per capita facility standards are used in calculating the impact fee to ensure a reasonable
relationship exists between new development and the need for expansion of city hall and
public works/community development facilities. The costs associated with the future
expansion of City Hall and Public Works/Community Development facilities were divided
by the service population that included both residents and workers (equivalent residents) to
obtain a per capita cost. The resulting cost per resident of $274.64. The cost per worker is
137.32 (0.50 x 274.64).
The cost per capita was then multiplied by the density assumptions to determine a fee for
each land use, as shown in Table 3, Attachment-A.
2. Public Safety Fee Program
This section presents an analysis of the need for public safety facilities to accommodate new
development in the City of San Luis Obispo. A maximum fee schedule is presented based on
the cost of these facilities to ensure that new development provides adequate funding to meet
its needs.
Service Population
Public safety facilities serve both homes and businesses citywide. Consequently, a service
population that includes both residents and workers reasonably represents the need for these
facilities.
Table 3, Attachment-B, shows the estimated service population for public safety facilities
for 2035 and beyond. In calculating the service population, workers are weighted less than
residents to reflect lower per capita service demand. The 0.50-weighting factor for workers is
based on the estimated number of service calls per employee compared to a resident.
Facility Standards and Fee
Per capita facility standards are used in calculating the impact fee to ensure a reasonable
relationship exists between new development and the need for new public safety facilities.
a. Fire Facilities
Table 1, Attachment-B, list a variety of fire safety related capital improvement projects that
range from existing fire station repairs to construction of Fire Station 5. Table 2,
Attachment-B, list a variety of fire vehicles and apparatus that will require replacement. The
total funded cost for these fire facilities is presented in Table 4, Attachment-B.
The cost associated with the future Fire public safety facilities were divided by the service
population that included both residents and workers (equivalent resident) to obtain a per
resident cost of $223.40. A weight factor of 0.50 was applied to residential per capita costs to
obtain the non-residential per capita costs. The cost per worker is $111.70 (0.50 x 223.40).
The cost per capita was then multiplied by the density assumptions to determine a fee for
each residential land use, as shown in Table 4, Attachment-B.
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b. Police Facilities
Table 1, Attachment-C, list one project, the construction of a new police headquarters.
Table 3, Attachment-C, list the police vehicle cost to serve new development. The total
funded cost for these police facilities is presented in Table 4, Attachment-C.
The cost associated with the future police headquarters was divided by the service population
that included both residents and workers (equivalent resident) to obtain a per capita cost of
265.84. A weight factor of 0.50 was applied to residential per capita costs to obtain the non-
residential per capita costs. The cost per worker is $132.92 (0.50 x 265.84). The cost per
capita was then multiplied by the density assumptions to determine a fee for each residential
land use, as shown in Table 4, Attachment-C.
Facility Costs to Accommodate Growth
As shown below in Table S-1, Attachment-B and -C, provides an estimate of the maximum
impact fee that could be applied for public safety facilities at build-out in 2035 and beyond.
The City would maintain a reasonable relationship between new development and the use of
fee revenues by funding a variety of projects to expand public safety facilities during this
period.
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3. Parkland Fee Program
This section presents an analysis of the need for parks and park facilities to accommodate
new development in the City of San Luis Obispo. A maximum fee schedule is presented
based on the cost to require that new development provides funding to meet its needs.
Policies and Existing Conditions
The City’s 2001 Parks and Recreation Element identifies the policies listed below related to
the development of parks and recreational facilities. Unfortunately, this is a document that
was drafted in the 1990s and was based upon then identified needs. It is outdated and does
not reflect many of the more recent planning initiatives that were adopted as part of the
City’s General Plan when the Land Use and Circulation Elements were updated in 2014.
With the adoption of the 2017-19 Financial Plan, the City Council allocated funding for an
update of the Parks and Recreation Element and creation of a Master Plan for future parks
and facilities in support of recreation activities in the City. Staff will be bringing a project
plan and request for proposals to Council in November 2017. Upon completion of that work
effort, the approved Master Plan will provide Council with a prioritized list of future parks
and recreational facility needs. As such, it is anticipated that the fees for parks and park
facilities will in the future need adjustment with the update of the list of projects. The
policies in the updated element of course will continue to be consistent with the Quimby Act
and are anticipated to aligned with existing policy as well.
Policy 3.13.1 The Park System: The City shall develop and maintain a park system
at the rate of 10 acres per 1,000 residents. Five acres shall be dedicated as
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neighborhood park. The remaining five acres required under the 10 acres per 1,000
residents in the residential annexation policy may be located anywhere within the
City’s park system as deemed appropriate.
Policy 3.15.1 Neighborhood Parks: San Luis Obispo residents shall have access to a
neighborhood park within 0.5 to 1.0-mile walking distance of their residence.
Policy 3.15.1 Neighborhood Parks: All residential annexations areas shall provide
developed neighborhood parks at the rate of 5 acres per 1,000 residents.
Policy 5.0.1 Facilities: The City shall continue to acquire parkland through the
development review and annexation process.
Policy 5.0.2 Facilities: For Annexation areas, at least 10 acres of developed parkland
for each 1,000 new residents shall be provided by the developer.
Policy 5.0.4. Facilities: The City Council shall review the park in-lieu fees
periodically to ensure that they stay consistent with land acquisition and development
costs.
Policy 5.0.5. Facilities: Park on-lieu fees shall be committed to a project within two
years from collection and shall have direct benefit to area for which they were
intended.
Existing Inventory of Improved Parkland
The city has a total improved park acreage of 195.4 acres. This total includes 183.2 acres of
community parks, neighborhood parks, and mini-parks; and 12.2 acres of recreational
facilities (i.e., the Ludwick Center, SLO Swim Center, and so on). Based on the 2017 City
population of 46,724, this represents 4.18 acres per 1,000 residents.
Quimby Act
In addition to the Mitigation Fee Act, development impact fees for park land acquisition can
be applied under the Quimby Act (Government Code Section 66477), which requires
developers set aside land, donate conservation easements, or pay fees and/or cash- in-lieu of
land for park improvements. Revenues generated through the Quimby Act cannot be used for
the operation and maintenance of park facilities. The Quimby Act provides specific
acreage/population standards and formulas for determining the exaction, and requires that the
exactions must be closely tied (nexus) to a project’s impacts as identified through
environmental review required by CEQA. The Quimby Act is only applicable as a condition
of subdivision map approval.
Service Population
The City’s parks, recreational facilities, and recreational programs are widely used by a
diverse population and serve both residents, non-residents, and employees of local
businesses. Many employees of local businesses use the City’s parks (such as eating lunch in
a park, walking on the paths at Meadow Park, taking an aqua aerobics class at the SLO Swim
Center, playing Adult Soccer and Softball and more) daily. Consequently, a service
population that includes both residents and workers reasonably represents the true need for
these facilities. As population grows with new development, so does demand for recreation
services provided by these facilities. Table 6, Attachment D, shows the service population
assumptions that were used to calculate the maximum fee.
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Facility Standards and Fee
Per capita facility standards are used in calculating the impact fee to ensure a reasonable
relationship exists between new development and the need for new parks and park facilities.
A per capita cost was calculated based on the estimated cost of new park facility, as shown in
Tables 4 & 5, Attachment-D. This cost was then multiplied by the density assumptions to
determine a maximum fee, as shown in Table 7, Attachment-D.
This method of calculating assures that fairness exists between new and existing
development and that new development only funds expanded facilities to maintain the
current level of service standards.
Facility Costs to Accommodate Growth
As shown below in Table S-1, Attachment-D, provides an estimate of the maximum impact
fee that could be applied for parks and recreation facilities at build-out in 2035 and beyond.
The City would maintain a reasonable relationship between new development and the use of
fee revenues by funding a variety of projects to expand parks and recreation facilities during
this period.
Table S-2, of Attachment D, provides a comparison between the current fees and the
maximum fees that can be levied. The current fee program does not include fees for multi -
family apartments, or any non-residential uses (office, retail, hotel, etc.).
4. Transportation Fee Program
This section presents an analysis of the need for transportation facilities to accommodate new
development in the City of San Luis Obispo. These include multimodal projects such as
intersection & corridor improvements, protected bikeways, buses and transit facilities. A
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maximum fee schedule is presented based on the cost of these facilities to ensure that new
development provides adequate funding to meet its needs.
Trip Generation
Transportation facilities serve both homes and businesses citywide. Consequently, trip
generation rates based on both residential and non -residential land uses reasonably represents
the need for these facilities.
Different development projects impact the transportation network at different rates based on
the number of trips they generate. The amount of daily and peak hour trips generated by the
approved and pending projects in the Traffic Impact Fee program were obtained from the
City’s Transportation Model, the Draft Environmental Impact Report for the LUCE Update.
Table 3, Attachment-E, presents the average daily trips generated by the projects in the
Transportation Impact Fee program. The projects are estimated to generate approximately
257,865 average daily trips. These daily trip estimates are used in calculating fees for
interchanges, roadways, intersections, pedestrian/bicycle and transit facilities improvements.
Transportation Project Inventory
Table A-3, Attachment-E, contains the list of interchanges, roadways, intersections,
pedestrian/bicycle and transit facilities improvements projects in the CIP program. The list
also indicates which projects will or are expected to receive funding from other sources
including Regional government, grants, and developers.
Table 2, Attachment-E, summarizes the total transportation facilities improvement costs
that will be funded by the Transportation Impact Fee program, after accounting for financing
costs, regional funding sources, support existing development and/or address existing
deficiencies, but does not include adjustments for existing fee balances.
Transportation Development Impact Fee Calculations
To calculate the fee for transportation projects, the balance of the costs (approximately $79
million for interchanges, $47 million for intersections, $38 million, $82.5 million for
roadways, $58 million for pedestrian/bicycle improvements, $6.5 million for transit, and $3
million for median and corridor improvements) were adjusted by subtracting the estimated
costs to be recovered by regional funding sources and the portion of improvement cost that
support existing development and/or address existing deficiencies. regional funding. Those
costs were then divided by the total number of trips allocated to the North and South Areas to
get an average cost per trip (ADT). These costs were then multiplied by the trip rates to
determine the fee for each land use category, as shown in Table 4, Attachment-E.
This method of calculation assures that fairness exists between new and existing
development and that new development only funds expanded facilities to maintain the
current level of service standards.
Transportation Fee Summary
Table S-1, Attachment-E, provides a summary of the maximum impact fees for
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interchange, roadways, intersections, pedestrian/bicycle and transit projects that could be
generated at build-out in 2035 and beyond.
Water and Wastewater Capacity and Connection Fee Program
The Water and Wastewater Capacity and Connection Fee Program ensures that existing
ratepayers and new development equitably apportion costs related to existing and future capital
expenditures. On February 7, 2017, the City Council provided staff input on the update to what
was formerly identified as the City’s water and wastewater development impact fees. At that
session, Council supported the name change to “capacity and connection” fees to more clearly
communicate what the fees were paying for. The complete 2017 Water and Wastewater Capacity
and Connection Fee Study (2017 Study), prepared by HDR Engineering, Inc., is provided in
Attachment F. Recommended fees are provided in Table 2.
The methodology used in the 2017 Study the divides the value of existing and future water and
wastewater capital improvement costs by the estimated number of future growth units. In the
2017 Study, a “growth unit” is represented by a quantity of water demand and wastewater
generation by one residential unit. The City updated the projections for future residential and
non-residential development in “equivalent dwelling units,” or EDUs, based on a reduction in
average water use and wastewater generation, finding that 5,821 future EDUs can be
accommodated in the City.
In the 2017 Study, the residential fee category was modified to add new categories to correspond
to residential units between 451 and 800 square feet and 801 square feet or more as water
demand correlates more closely to unit size than a single- or multi-family residential land use
designation. Fees for non-residential EDUs in the 2017 Study are based on water meter safe
operating capacity ratios from the American Water Works Association (AWWA) specifications.
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Table 2: Water and Wastewater Capacity and Connection Fees
Equivalent
Dwelling Unit
EDU)
Water
Capacity and
Connection Fee
Wastewater
Capacity and
Connection Fee
Residential
by Unit Size)
Residential Unit
801 square feet or more) 1.0 $15,780 $12,602
Residential Unit
451 to 800 square feet) 0.7 $11,046 $8,821
Mobile Home 0.6 $9,468 $7,561
Studio Unit
450 square feet or less) 0.3 $4,734 $3,781
Non-Residential
by Meter Size)
1.0 $15,780 $12,602
1” 1.7 $26,826 $21,423
1.5” 3.4 $53,652 $42,847
2” 5.4 $85,212 $68,051
3” 10.7 $168,846 $134,841
4” 16.7 $263,526 $210,453
6” 33.4 $527,052 $420,907
Alternative Fee Considerations
As part of item PH2 of this agenda, the City Council is presented with a recommendation to
adopt a fee program for water and wastewater capacity and connection fees. The current staff
recommendation for this fee is to use Water Option 2 and Wastewater Option 4, with represents
the maximum charge for “cost-based capacity and connection fees” based on development’s fair
share of existing infrastructure and future capital improvements needed to serve future
development. Using the maximum charge for these options puts the lowest upward pressure on
rates. If the Council is interested in reducing these development impact fees, it should provide
direction to staff to evaluate the potential impact on rates if the maximum fees are not charged.
Implementation Considerations
The facility and infrastructure impact fees for general government, public safety, parks and
recreation, transportation, and water and wastewater capacity and connection would be collected
at the time of building permit issuance. To implement any of those fees the City will need to:
Annually update a capital improvement plan to indicate the specific uses of fee revenues
for facilities to accommodate growth;
Comply with the annual and five-year reporting requirements of Government Code 66000
et seq.; and
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Identify appropriate inflation indexes in the fee ordinance and allow an inflation
adjustment to the fee annually.
For the inflation indexes, 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 (ENR).
Timeframe: The identification of infrastructure and capital facilities improvements must be
consistent with the timeframe under consideration in the nexus studies. The choice of timeframe
is also based in part on an assessment of the accuracy and availability of land use and cost data.
In this case, the projects evaluated in the fee program are those needed to implement the 2014
General Plan update, or through 2035.
Infill Development: Capturing the demand from infill development will be important to the
success of the fee programs, at least from an equity perspective.
Consolidation of related fees: The City already has a Citywide transportation fee in addition to
four Specific Plan areas fees. In some circumstances, a single combined fee may improve the
City’s flexibility in terms of how fee revenue can be spent and may ease the
administration/accounting requirements. In other circumstances, where the nexus logic does not
support fee consolidation, a system of fee zones and/or layering that vary be geography ma y be
appropriate. The issue of whether to have one Citywide fee or multiple fees that vary by location
or a combination of the two) will have both technical and policy implications
Total Fee Burden: As the City considers updates to its impact fee structure, it is important to
keep the total fee burden experienced by a given development project in context. As part of the
infrastructure financing strategies identified in the City’s Economic Development Strategic Plan,
a series of study sessions have been presented to the City Council that outline the various options
available for financing important infrastructure. For example, for a single-family residential
development, under current market conditions, the general rule of thumbs that the fee burden
should not exceed 15 percent of the cost of the unit. This is illustrated in the following graphic.
The analysis of City’s Capital Facilities Fee Program and Water and Wastewater Capacity and
Connection Fee Program considers the overall fee burden on various types of development
projects (prototypes) to maintain overall financial feasibility. These efforts are being coordinated
to ensure consistency and compatibility across the fee program from the standpoint of fee
administration and financial feasibility.
Please see Attachment-G for examples of the anticipated total fee burden for the Single Family,
Multi-family Apartments, Office/Business Park (standalone building), Office/Service
standalone building), and Retail prototypes. The industry feasibility threshold s for fee burden is
shown in green (10% of market value), yellow (15% of market value), and red (20% of market
value.
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Potential Economic Impacts of New Impact Fees
The results of the impact fee nexus analysis identify the maximum legal impact fees that could
be charged on new development in San Luis Obispo. Legally, the City Council can adopt impact
fees at or below the maximum legal amounts identified. The findings of the economic feasibility
analysis show that the levels of impact fees that could be absorbed by new development in the
near future, are substantially below the maximum legal impact fees identified. Similar results
occur in most communities. Typically, impact fee programs seek to balance the need for impact
fee revenues with the ability of development to pay the impact fees without affecting the pace
and amount of development.
The finding that new impact fees are at their maximum levels from an economic feasibility
perspective indicates that there could be some projects where new impact fees could delay
development until other changes in revenue or costs occur. These could include multi -family,
retail and office buildings types that can be difficult to finance and require high rents and process
to achieve feasibility before the additional costs of new impact fees. Imposing new impact fees
also could affect development in locations with lower rents and prices and limited or no market-
rate development, where feasibility is particularly sensitive to costs including the cost of new
impact fees.
There are benefits associated with impact fee programs for development. Two types of benefits
can be important.
Greater certainty up front as to the impact fee amount and any other requirements can be
of a substantial benefit to a developer in saving time and costs as opposed to the situation
with little clarity and ad hoc negotiations.
A mechanism for paying a development’s fair share of costs can be of benefit to a
developer compared to the situation where the largest project or the first project in an
area must pay the full cost of improvements serving the larger surrounding area while
subsequent projects pay less. An example is transportation impact fees to fund
improvements required to mitigate cumulative traffic impacts.
Impact Fee Comparisons Among Benchmark Cities
The analysis includes a comparative review of impacts in the cities that San Luis Obispo
currently uses as benchmarks. The focus was on impact fees assessed on the development
prototypes that were evaluated for the feasibility analysis. While impact fees in other cities are
not necessarily indicative of the level of impact fees feasible and appropriate in San Luis Obispo,
the evaluation offers insight into relevant market and feasibility considerations. The complete
analysis of the development impact fee comparisons for the Single Family, Multifamily
Apartment, Office and Retail prototypes is provided in Attachment-H.
CONCURRENCES
The proposed update to the City’s development impact fee programs combined sound technical
analysis with a collaborative, iterative, and informed decision-making process. The technical
analysis was grounded in legally defensible nexus arguments, with ongoing policy direction from
various stakeholders, including City staff, advisory bodies, the local public, and the development
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community. To help achieve politically and economically acceptable fees, the ultimate objective
was the establishment of a revised set of development impact fees that strike a mutually
enforcing balance between infrastructure and parks and new residential and economic
development in the City.
ENVIRONMENTAL REVIEW
This is a study session, so staff is not recommending Council take any action on the Capital
Facilities Fee Program Nexus Study or the Water and Wastewater Capacity and Connection Fee
Study now. Modification of rates and charges by public agencies is statutorily exempt from the
California Environmental Quality Act (CEQA) under Section 15273 of the Public Resources
Code because changes in fees is not intended to fund expansion of capital projects not otherwise
evaluated under CEQA.
FISCAL IMPACT
This is a study session, therefore there is no direct fiscal impact associated with it. However,
there will be fiscal impacts associated with any action the City Council takes when it considers
the Final Water and Wastewater Capacity and Connection Fee Study on October 17th and the
Final Capital Facilities Fee Program Nexus Study on November 7th. The following is a summary
of the alternative funding sources that could be used to fund the infrastructure and facilities that
will be impacted because of new development:
Existing or new General Fund revenues
Existing or new general purpose taxes
New special purpose taxes (any new special purpose tax would require two -thirds voter
approval)
Existing or new assessments (any new assessments or property-related charge would
require majority property owner approval)
Grants where the use of the funds are restricted for eligible capital facilities improvement
projects
However, the City has specific policies in place that discourage earmarking general-purpose
revenues, whether in the General Fund or Enterprise Funds. It is also the City’s policy that new
development should pay its fair share of the cost of constructing the community facilities needed
to serve it. For this reason, the City has established development impact fees for water,
wastewater, and transportation improvements. The City has also adopted in-lieu fees for
parking, parkland dedication (consistent with the Quimby Act), and “inclusionary moderate and
low-income housing” requirements. This allows developers to pay in-lieu fees instead of
providing the required asset.
NEXT STEPS
The following objectives are the most important factors in establishing new development impact
fees for transportation, water and wastewater capacity and connection, park land acquisition and
improvement, general government administration, and public safety:
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1. The fees must be legally defensible. The fee should be developed and implemented in a
fashion that unambiguously complies with applicable State law. The fees should be based
on explicit growth and cost assumptions and sound nexus arguments that ensure the types
of improvements and facilities and the costs of the improvements and facilities are
directly attributable to benefiting land uses.
2. The fees must be financially effective. The fees developed should provide sufficient
means for successfully funding the new improvements and required capital facilities
targeted by the program. Given that fee revenues are likely to represent only one, albeit
important, funding source for transportation, capital facilities and parks improvements,
the development impact fee program must be effectively integrated with other programs
and resources to ensure stakeholders (and developers who pay the fees) that the facilities
will ultimately be built.
3. The fees must be politically and economically viable. The fees developed in this
process should reflect input from key stakeholders in the community to ensure that they
receive broad support. Although the technical steps provide the basis for completing the
impact fee study, it is recognized that ultimate approval will require compromise and
policy choices. To this end, it will be important to work closely with stakeholders. In
addition, it will be important to understand and monitor the economic implications of the
fee program to ensure that financial burdens on development are reasonable and do not
hinder growth.
The consideration of the Final Capacity and Connection Fee Study is on the Council Agenda for
October 17,2017, and the Final Capital Facilities Fee Program Study is on the Council Agenda
for November 7, 2017. Implementation of the new fee programs is planned for January 1, 2018.
FOCUSED QUESTIONS FOR CITY COUNCIL DIRECTION
Staff has provided the following focused questions to facilitate City Council Direction to help
guide the City Council in their deliberations:
General Government Impact Fee Program
1. Is there support to implement a new General Government fee program?
2. Should the fee be set at the maximum, or is this an area that the staff should consider
making some policy-based reductions?
Public Safety – Fire Impact Fee Program
3. Is there support to implement a new public safety fee program to support costs for Fire
Department facilities and equipment?
4. Should the fee be set at the maximum, or is this an area that the staff should consider
making some policy-based reductions?
Public Safety – Police Impact Fee Program
5. Is there support to implement a new public safety fee program to supports costs for Police
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Department facilities and equipment?
6. Should the fee be set at the maximum, or is this an area that the staff should consider
making some policy-based reductions?
Parks and Recreation Impact Fee Program
7. Should changes to the Parks and Recreation Impact Fee program be implemented now, or
should they be delayed until the adoption of the Parks and Recreation Element and
Master Plan Update?
8. Does Council agree that multifamily and apartment residential developments have
impacts on existing parks and recreational facilities and create the need for more parks
and recreational facilities?
9. Is there support to use the Mitigation Fee Act to charge multifamily and apartment
residential development impact fees for parks and recreational facilities?
10. Does Council agree that non-residential developments, with employees and/or hotel
guest, have impacts on existing parks and recreational facilities and create the need for
more parks and recreational facilities?
11. Is there support to use the Mitigation Fee Act to charge for non-residential development
impact fees for parks and recreational facilities?
12. Should the fee be set at the maximum, or is this an area that the staff should consider
making some policy-based reductions?
Transportation Impact Fee Program
13. Is there support for the proposed consolidation of existing subarea fees, based on Specific
Plan boundaries, into a Citywide fee area that is then allocated based on geography
North and South area)?
14. Is there support to leave the existing LOVR and OASP out of the proposed update to the
fee program?
15. Should the fee be set at the maximum, or is this an area that the staff should consider
making some policy-based reductions? Currently, a 50% reduction is applied to the
Transportation Impact Fee for retail land uses.
Water and Wastewater Capacity and Connection Fee Program
16. Is the Council comfortable with charging the maximum fee applicable to new
development, or should increasing rates be considered as an available alternative to
address the costs identified in the fee program?
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Attachments:
a - General Government Review Tables
b - Public Safety: Fire Review Tables
c - Public Safety: Police Review Tables
d - Parks Review Tables
e - Transportation Review Tables
f - Council Reading File: Water and Wastewater Capacity and Connection Fee -Final
Study
g - Fee Comparisons with Benchmark Communities
h - Total Fee Burden Feasibility Analysis
i - Council Reading File: Public Financing Framework and Draft Policies
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General Government
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Fire
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Police
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Parks
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Table 1
Existing Parks and Recreation Land
San Luis Obispo Capital Facilities Fee Nexus Analysis; EPS #161187
Existing Park and Recreation Land * Acreage
Existing Parklands
Damon Garcia Sports Field, Broad @Tank Farm 22.0
Chinese Garden, Santa Rosa @ Marsh 0.3
DeVaul Park , west end of Madonna 0.9
Emerson Park, Nipomo @ Pacific 3.3
French Park, Poinsettia @ Fuller 10.0
Laguna Hills Park, San Andriano Ct.3.2
Demonstration Garden, South @ Broad 0.1
Vista lago Park, Vista del lago 0.2
Stoneridge Park, 535 Bluerock Dr 1.0
Buena Vista Park, Buena Vista Ave.0.5
Sinsheimer Park/ Sports Complex, 900 Southwood 21.7
Mitchell Park, Osos @ Bucheon 3.0
Anholm Park, Mission St 0.1
Throop Park, Cuesta @ Cerro Romauldo 3.0
Santa Rosa Park, Santa Rosa @Oak 11.0
Johnson Park, Augusta 5.0
Meadow Park, South @ Meadow 16.0
Ellsford Park, San Luis Drive near California 1.0
Osos Triangle Park, Osos @ Church 0.2
Las Praderas Park, Las Praderas and Mariposa 0.4
Priolo-Martin Park, Vista del Collados & Vista del Arroyo 0.5
Laguna Lake Park, 500 Madonna Rd 40.0
Jack House Gardens, Marsh @ Beach 0.8
Laguna Lake Golf Course, 11175 LOVR 27.0
Railroad Bike Path, Orcutt to Jennifer 10.0
Poinsettia Creek Walk, Poinsettia @ Rosemary 2.0
Total Existing Parklands 183.2
Existing Recreational Facilities
Rodriguez Adobe, Purple Sage Lane 1.4
Islay Hills Park, Tank Farm @ Orcutt 6.0
Canet Adobe, 464 Dana St.0.5
Mission Plaza, Broad @ Monterey 3.0
Ludwick Center, Santa Rosa @ Mill 1.0
Jack House, 536 Marsh St 0.1
Senior Center, 1445 Santa Rosa St 0.1
Meadow Park Center, 2333 Meadow St 0.1
Total Existing Recreational Facilities 12.2
Total Existing Parklands and Recreational Facilities 195.4
This does not include the substantial inventory of City open space.
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Transportation
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Fee Comparisons
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Feasibility
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Prototypes and Assumptions
Single Family (Detached Unit)
Geography South Area, SF Subdivision
Lot Size (Sq.Ft.)4,000
Unit Size (Sq.Ft.)1,675
DU/Acre 11
Applicable Zoning Category R-2
Number of Stories 2.0
Average Price (per Unit)$650,000
Example(s)Avila Ranch (Proposed Development) and Serra Meadows
Multifamily Apartment
Geography South Area
Lot Size (Acres)4.95
DU/Acre 24
Building Size (Sq.Ft.)103,944
Number of Stories 2-3
Total Number of Units 120
Average Unit Size (Sq.Ft.)930
Applicable Zoning Category R-4
Capitalized Value $375,000
Example(s)De Tolosa Ranch
Retail (Standalone Building of Larger Development)
Geography South Area
Lot Size (Acres)0.77
Floor Area Ratio (FAR)30%
Building Size (Sq.Ft.)10,000
Number of Stories 1.0
Capitalized Value/Sq.Ft.$300
Example(s)No Recent Examples
Office/Business Park (Standalone Building of Larger Development)
Geography South Area
Lot Size (Acres)0.77
Floor Area Ratio (FAR)30%
Building Size (Sq.Ft.)10,000
Number of Stories 1.0
Capitalized Value/Sq.Ft.$425
Example(s)Airport Business Center (Proposed Development)
Office/Service (Standalone Building of Larger Development)
Geography South Area
Lot Size (Acres)0.77
Floor Area Ratio (FAR)30%
Building Size (Sq.Ft.)10,000
Number of Stories 1.0
Capitalized Value/Sq.Ft.$300
Economic & Planning Systems, Inc. 9/25/2017
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Oakland Sacramento Denver Los Angeles
October 17, 2017
San Luis Obispo Capital
Facilities Fee Update
presented to
San Luis Obispo City Council
presented by
Economic & Planning Systems, Inc.
1SanLuisObispoCapitalFacilitiesFeeUpdate
1. Introduction/Background
2. Study Scope and Objectives
3. Fee Programs
4. Fee Comparison
5. Feasibility Considerations
6. Discussion and Questions
2SanLuisObispoCapitalFacilitiesFeeUpdate
Costs of Growth -LUE Policy 1.13.9
The City shall require the costs of public facilities and
services needed for new development be borne by the
new development, unless the community chooses to
help pay the costs for a certain development to obtain
community-wide benefits. The City shall consider a
range of options for financing measures so that new
development pays its fair share of costs of new service
and facilities which are required to serve the project and
which are reasonably related to the new growth
attributable to the development.
General Plan Implementation
3SanLuisObispoCapitalFacilitiesFeeUpdate
EDSP 1.4
Ensure that the fair-share structure includes appropriate
percentages for each party bearing a portion of the
infrastructure costs.
Utilize a consultant to lead a series of study sessions
with the City Council on the City’s impact fee
structure guided by existing policies and options for
the City to consider related to how impact fees are
determined, calculated, and applied.
Economic Development Strategic Plan
4SanLuisObispoCapitalFacilitiesFeeUpdate
1.Incremental evolution of the fee program has created an
overly complex system that warrants reconsideration.
2.Geographic overlaps cause significant differences in fee
levels in various parts of the City.
3.Some specific fees appear high by industry standards.
4.Inconsistency between land use categories used to
compute fees in different programs.
5.Fees do not contain cost component for administration and
updates.
6.Engineering News Record Construction Cost Index is a
better index than CPI.
7.The City does not charge for all municipal infrastructure
categories, though this may be appropriate in the context
of other concerns about the fee program.
Study Session Key Findings
5SanLuisObispoCapitalFacilitiesFeeUpdate
Council directed staff to proceed with the update of the
City’s development impact fees, to integrate fees into and
prioritize projects in the City’s Capital Improvement
Program, and also to explore new infrastructure funding
strategies to support the objectives of the EDSP.
Some funding strategies discussed included:
Community Investment Bond
Economic Development Direct Investment
250,000 current balance
Land Secured Bonds for Area-Specific Infrastructure
First CFD initiated for Avila Ranch
Study Session #3 Direction
6SanLuisObispoCapitalFacilitiesFeeUpdate
1.The City will consider the use of city-based funding sources
to fund public facility and infrastructure improvements that
provide for the health, safety and welfare of existing and
future residents and/or provide measurable economic
development and fiscal benefits. In evaluating whether the
City will use city-based funding sources, the following
evaluation criteria should be considered:
a)Significant public benefit, demonstrated by compliance with and
furtherance of General Plan goals, policies, and programs
b)Alignment with the Major City Goals and other important
objectives in place at the time of the application
c)Head of Household Job Creation
d)Housing Creation
e)Circulation/Connectivity Improvements
f)Net General Fund fiscal impact
Budget Policies Updated
7SanLuisObispoCapitalFacilitiesFeeUpdate
A.Reduce fees by reducing infrastructure investments
B.Reduce fees and identify alternative funding sources
C.Change transportation cost allocations (and fees)
D.Fee timing/implementation options
OPTIONS TO REDUCE FEE LEVELS
8SanLuisObispoCapitalFacilitiesFeeUpdate
INTRODUCTION/
BACKGROUND
9SanLuisObispoCapitalFacilitiesFeeUpdate
ECONOMIC & PLANNING SYSTEMS (EPS)Economic & Planning Systems, Inc. (EPS) is a land economics consulting
firm with over 30 years of experience in the full spectrum of services related to
real estate development, the financing of public infrastructure and government
services, land use and conservation planning, and government organization.
Open Space and Resource
Conservation
Reuse, Revitalization, and
Redevelopment
Government Organization
Housing Development Feasibility and
Policy
Transportation Planning and Analysis
Real Estate Market and Feasibility
Analysis
Regional Economics and Industry Analysis
Public Finance
Land Use Planning and Growth
Management
Fiscal and Economic Impact Analysis
Areas of Expertise
Located in Oakland, Los Angeles, and Sacramento, California; and Denver, Colorado
www.epsys.com
10SanLuisObispoCapitalFacilitiesFeeUpdate
Impact fees are “one-time” charges to new development
that can fund capital improvements required to serve new
development
What can they fund?
Funds only infrastructure, capital facilities, and other
capital items (e.g., police vehicles)
Funds only proportionate share of costs associated
with new development (“nexus”)
Non-fee funded portion must be funded through other
sources
Cannot fund ongoing services or operating costs
Part of City’s overall infrastructure financing program
DEVELOPMENT IMPACT FEES
11SanLuisObispoCapitalFacilitiesFeeUpdate
Impact fees must be adopted consistent with the Mitigation
Fee Act (Government Code Section 66000)
New development impact fees are adopted pursuant to a
technical nexus study that must address:
Purpose of the fee
Use of the fee revenue
Relationship between new development and new capital
facilities
Need for new capital facilities
Proportionality between costs of facilities required to
serve new development and fee levels
MITIGATION FEE ACT
12SanLuisObispoCapitalFacilitiesFeeUpdate
STUDY SCOPE AND
OBJECTIVES
13SanLuisObispoCapitalFacilitiesFeeUpdate
STUDY SCOPE
Update
Transportation
Parks
New
General
Government
Police
Fire
14SanLuisObispoCapitalFacilitiesFeeUpdate
Consistent with General Plan Policy 1.13.9, ensure that new
development pays its proportionate share of infrastructure
costs
Generate revenue to pay for infrastructure needed to
mitigate the effects of new development
Simplify existing fee programs where possible (e.g., reconcile
land use categories, reduce geographic fee level variations)
Track and coordinate pending development applications,
existing commitments, reimbursement obligations
Manage development feasibility implications
Ensure process is transparent
Reflect stakeholder outreach
Consider ease of administration
STUDY GOALS AND PRINCIPLES
15SanLuisObispoCapitalFacilitiesFeeUpdate
Fees are investments in necessary infrastructure and
contribute to the City’s quality of life
Impact fees provide certainty to developers in terms of City
infrastructure/ capital requirements
Impact fees add to the cost of new construction and can affect
development feasibility
Aggregate fee burdens are sometimes moderated to provide
funding for necessary capital facilities while balancing
development feasibility
ECONOMIC CONSIDERATIONS OF FEES
16SanLuisObispoCapitalFacilitiesFeeUpdate
FEE PROGRAMS
17SanLuisObispoCapitalFacilitiesFeeUpdate
New Fee to help fund future civic facility space
needs, including construction of a new City Hall and
Public Works/ Community Development office
space.
GENERAL GOVERNMENT: Objective
18SanLuisObispoCapitalFacilitiesFeeUpdate
Fee Summary
GENERAL GOVERNMENT: Results
Generates total
revenue of
4.26 Million
Land Use
Residential
Single Family $689.77 per Unit
Multifamily $496.70 per Unit
Non-Residential
Office $0.46 per Sq.Ft.
Retail $0.25 per Sq.Ft.
Industrial $0.18 per Sq.Ft.
Institutional $0.25 per Sq.Ft.
Service $0.25 per Sq.Ft.
Lodging $137.32 per Room
Maximum
General Government
Development Impact Fee
19SanLuisObispoCapitalFacilitiesFeeUpdate
New Fee to help fund costs related to future capital
improvements identified in the Fire Master Plan,
including vehicles.
FIRE: Objective
20SanLuisObispoCapitalFacilitiesFeeUpdate
Fee Summary
FIRE: Results
City,
16,256,612
Fee
Program,
3,466,184
Generates total
revenue of
3.47 Million
Land Use
Residential
Single Family $561.08 per Unit
Multifamily $404.03 per Unit
Non-Residential
Office $0.37 per Sq.Ft.
Retail $0.20 per Sq.Ft.
Industrial $0.15 per Sq.Ft.
Institutional $0.20 per Sq.Ft.
Service $0.20 per Sq.Ft.
Lodging $111.70 per Room
Maximum Fire
Development Impact Fee
21SanLuisObispoCapitalFacilitiesFeeUpdate
New Fee to help fund costs related to future capital
improvements, such as the Police Headquarters
facility and vehicles.
POLICE: Objective
22SanLuisObispoCapitalFacilitiesFeeUpdate
Fee Summary
POLICE: Results
City,
16,485,099
Fee
Program,
4,124,701
Generates total
revenue of
4.12 Million
Land Use
Residential
Single Family $667.67 per Unit
Multifamily $480.79 per Unit
Non-Residential
Office $0.44 per Sq.Ft.
Retail $0.24 per Sq.Ft.
Industrial $0.18 per Sq.Ft.
Institutional $0.24 per Sq.Ft.
Service $0.24 per Sq.Ft.
Lodging $132.92 per Room
Maximum Police
Development Impact Fee
23SanLuisObispoCapitalFacilitiesFeeUpdate
Expanded Fee Program to help fund parkland
acquisition and park improvement costs.
New Fee for multifamily rental and commercial
development to help fund parkland acquisition and
park improvement costs.
PARKS AND RECREATION: Objective
24SanLuisObispoCapitalFacilitiesFeeUpdate
PARKS AND RECREATION: Results
Land Use
Residential
Single Family $6,030.38 per Unit
Multifamily (Condominiums)$4,342.44 per Unit
Multifamily (Apartments)$3,530.35 per Unit
Non-Residential
Office $3.25 per Sq.Ft.
Retail/ Service/ Institutional $1.77 per Sq.Ft.
Industrial $1.30 per Sq.Ft.
Hotel (per Room)$976.01 per Room
Maximum
New Fee
Fee Summary
New Fees
Generates total
revenue of
33.8 Million
h
15.0 Million
from new fees
25SanLuisObispoCapitalFacilitiesFeeUpdate
Updated Fee to help fund future multimodal
transportation improvements.
TRANSPORTATION: Objective
26SanLuisObispoCapitalFacilitiesFeeUpdate
TRANSPORTATION: Existing Geography
27SanLuisObispoCapitalFacilitiesFeeUpdate
TRANSPORTATION: Proposed Geography
28SanLuisObispoCapitalFacilitiesFeeUpdate
TRANSPORTATION: Growth Allocation
Citywide Buildout
100%
Existing Development
77%
Future Development
23%
North Area
22%
29SanLuisObispoCapitalFacilitiesFeeUpdate
TRANSPORTATION: Costs by Category
Improvement Category Cost Percentage
Interchange $78,822,720 28.6%
Intersection $46,920,000 17.0%
Street Widening $38,231,278 13.9%
Street Extension $44,283,500 16.1%
Pedestrian/ Bicycle $58,000,000 21.0%
Transit $6,500,000 2.4%
Other $2,900,000 1.1%
Total $275,657,498 100.0%
Includes financing costs for Highway 101/ Prado Road Interchange, Highway 101/LOVR Interchange, and Prado Road Bridge W. of Higuera
30SanLuisObispoCapitalFacilitiesFeeUpdate
TRANSPORTATION: Cost Allocation
Total Project
Costs $275.7
MillionRegional Funding:
33.1 Million
Existing Development:
66.9
Million New Development:
175.7 Less
Fees Collected:
169.4 Million
North Area:
24.1 Million
South Area:
145.3 Million
Fee
Program:169.4
M City:
66.9 M
Regional Funding:
33.1 M
31SanLuisObispoCapitalFacilitiesFeeUpdate
Fee Summary
TRANSPORTATION: Results
Land Use
Residential
Single Family $6,858.67 per Unit $12,383.75 per Unit
Multifamily $5,389.06 per Unit $9,730.28 per Unit
Non-Residential
Office/Service $8.35 per Sq.Ft.$15.07 per Sq.Ft.
Retail $29.45 per Sq.Ft.$53.18 per Sq.Ft.
Industrial $10.89 per Sq.Ft.$19.66 per Sq.Ft.
Institutional $8.35 per Sq.Ft.$15.07 per Sq.Ft.
Hotel $3,056.15 per Room $5,518.07 per Room
North Area South Area
Generates total
revenue of
169.4 Million
32SanLuisObispoCapitalFacilitiesFeeUpdate
TRANSPORTATION: Current vs. Maximum
3,700
6,900 $13,100
12,400
Single Family Unit in the North Area Single Family Unit in the MASP
33SanLuisObispoCapitalFacilitiesFeeUpdate
FEE COMPARISON
34SanLuisObispoCapitalFacilitiesFeeUpdate
HOW DOES SLO COMPARE?
Davis Napa Palm
Springs
Paso
Robles
Santa
Cruz
SantaMariaBenchmarkCities:
General
Government •Consistent
Public Safety •Consistent
Parks •Residential: lower end
Non-Residential: highest
Transportation •North Area: upper end
South Area: highest
35SanLuisObispoCapitalFacilitiesFeeUpdate
FEASIBILITY
CONSIDERATIONS
36SanLuisObispoCapitalFacilitiesFeeUpdate
Single Family (per Unit)
reflects Staff recommendation
10 % of Market Value
15 % of Market Value
20 % of Market Value
37SanLuisObispoCapitalFacilitiesFeeUpdate
Multifamily (per Unit)
reflects Staff recommendation
38SanLuisObispoCapitalFacilitiesFeeUpdate
Office/ Business Park (per Sq.Ft)
reflects Staff recommendation
39SanLuisObispoCapitalFacilitiesFeeUpdate
Office/ Service (per Sq.Ft)
reflects Staff recommendation
40SanLuisObispoCapitalFacilitiesFeeUpdate
Retail (per Sq.Ft)
reflects Staff recommendation
41SanLuisObispoCapitalFacilitiesFeeUpdate
NEXT STEPS
42SanLuisObispoCapitalFacilitiesFeeUpdate
Preliminary fee calculations
Feasibility testing and fee comparisons (iterative!)
Policy-based adjustments (e.g., retail and hotel discounts)
Final fee recommendations
Implementation/Administration: oversizing –fee credits and
reimbursements
PROCESS AND STATUS
43SanLuisObispoCapitalFacilitiesFeeUpdate
OPTIONS TO REDUCE
FEES
44SanLuisObispoCapitalFacilitiesFeeUpdate
A.Reduce fees by reducing infrastructure investments
B.Reduce fees and identify alternative funding sources
C.Change transportation cost allocations (and fees)
D.Fee timing/implementation options
OPTIONS TO REDUCE FEE LEVELS
45SanLuisObispoCapitalFacilitiesFeeUpdate
A. REDUCE FEES BY REDUCING
INFRASTRUCTURE INVESTMENTS
Fee Program:
169.4 M
City:
66.9 M
Fees Collected:
6.3 M
Regional Funding:
33.1 M
Total Project Costs: $275.7 Million Total Project Costs: $200.0 Million
27.5% reduction in overall investment
24.7% reduction in fees
City:
48.5 M
Fee Program:
127.5 M
Regional Funding:
24.0MFeesCollected:
6.3 M
46SanLuisObispoCapitalFacilitiesFeeUpdate
B. REDUCE FEES AND IDENTIFY ALTERNATIVE
FUNDING SOURCES
Fee Program:
169.4 M
City:
66.9 M
Fees Collected:
6.3 M
Regional Funding:
33.1 M
Total Project Costs: $275.7 Million Total Project Costs: $275.7 Million
Shifts $42 M to “City”
City:
108.8 M
Fee Program:
127.5 M
Regional Funding:
33.1MFeesCollected:
6.3 M
47SanLuisObispoCapitalFacilitiesFeeUpdate
C. CHANGE COST ALLOCATIONS (AND FEES)
Fee Program:
169.4 M
City:
66.9 M
City:
136.3 M
Fee Program:
100.0 M
South
Area
North
Area
Example:
Single Citywide Fee
Example:
Reduced Fee for
Smaller Homes
Example:
Reduce Retail Trip Rate
Retail
Fee
All
Other
Fees
Smaller
Homes
Larger
Homes
48SanLuisObispoCapitalFacilitiesFeeUpdate
D. FEE TIMING IMPLEMENTATION CHOICES
Fee Program:
169.4 M
City:
66.9 M
City:
136.3 M
Fee Program:
100.0 M
Example:Example:
Phase-in
Fees
Reduced
Revenue
Need to Identify
Alternative Funding
Fee Deferral
Same
Revenue -
Comes Later
49SanLuisObispoCapitalFacilitiesFeeUpdate
DISCUSSION AND
QUESTIONS
50SanLuisObispoCapitalFacilitiesFeeUpdate
Feasibility and Fee Levels
Is there direction to explore options for lower fee levels?
POLICY CONSIDERATIONS FOR DISCUSSION
51SanLuisObispoCapitalFacilitiesFeeUpdate
Is there support to adopt and implement the following new fee
programs:
General Government?
Fire and Police?
o Presumes other funding is/will be available for remainder
of costs.
Parks
Is there support to use the Mitigation Fee Act to charge
parkland and park improvement fees on multifamily
residential and commercial development?
POLICY CONSIDERATIONS: CONTINUED
52SanLuisObispoCapitalFacilitiesFeeUpdate
Transportation
Should the transportation project list be scaled back to
reduce transportation fees?
Is there support to simplify the geographic zones?
o Should North Area and South Area be created to reflect
higher growth or one consolidated citywide?
o Should LOVR IC be spread into the South Area fee
program or stay as is?
Should adjacent properties pick up more project cost to
reflect project specific needs? (e.g., Prado Road Extension)
POLICY CONSIDERATIONS: CONTINUED
53SanLuisObispoCapitalFacilitiesFeeUpdate
TECHNICAL SLIDES FOR
REFERENCE (ONLY IF
NEEDED)
54SanLuisObispoCapitalFacilitiesFeeUpdate
NEXT STEPS
Task/Description
Phase I - Study Implementation Plan
Task 1:Project Initiation and Project Management M
Task 2:Stakeholder Outreach Strategy S S
Task 3:Develop Critical Fee Study Parameters and
Assumptions M D
Task 4: Consider Policy and Implementation Issues M D
Phase II - Technical Analysis
Task 1:Develop Transportation Component of the CFF
Program M D M D
Task 2:Develop the Parks/Recreation Fee Program M D
Task 3:Develop General Government and Public Safety Fee
Programs M D
Task 4: Nexus Analyses and Preliminary Fee Calculations D
Phase III - Fee Implementation
Task 1:Economic Analysis M D
Task 2:Draft Nexus Studies and Ordinance/Resolution
Support D
Task 3:Council Review and Approval Process H H
Task 4:Final Nexus Studies D +H
D indicates project deliverables.
May June
201720172017
July August
2017
NovemberSeptemberOctober
S indicates Stakeholder Outreach meeting.
H indicates a public hearing (Planning Commission or City Council).
2017 2017 2017
M shows meetings with City staff.
55SanLuisObispoCapitalFacilitiesFeeUpdate
Time Horizon
General Plan Buildout (2035) and Development Capacity
KEY ASSUMPTIONS
Land Use Categories
Single Family
Multifamily
Office
Service
Retail
Industrial
Institutional
Hotel
56SanLuisObispoCapitalFacilitiesFeeUpdate
GENERAL GOVERNMENT: Approach
Current General
Government
Facility Space
City Hall:
22,971 Sq.Ft.
Public
Works/Community
Development:
17,000 Sq.Ft.
Total
39,971 Sq.Ft.
Current Service
Population
46,724 Residents
a
52,092 Employees
b
72,770 Service
Population
c = a + b (0.5)
Current Level of
Service
549 Sq.Ft. per 1,000
Service Population
Development
Cost per Sq.Ft.$
500 per Sq.Ft.
Cost per New
Service
Population
275 per New Service
Population
Translated to land use
categories based on
resident and employee
densities
57SanLuisObispoCapitalFacilitiesFeeUpdate
FIRE: Approach
Capital
Improvement
Needs
Facility Needs
14.4 Million
Vehicle Needs
5.4 Million
Current Service
Population
46,724
Residents
a
52,092
Employees
b
72,770 Service
Population
c = a + b (0.5)
82.4%
Future Service
Population
56,686
Residents
a
63,199
Employees
b
88,286 Service
Population
c = a + b (0.5)
17.6%
Costs Allocated
to New Growth $
3.5 Million
Cost per New
Service
Population
223 per New
Service
Population
Translated to land
use categories based
on resident and
employee densities
58SanLuisObispoCapitalFacilitiesFeeUpdate
POLICE: Approach
Capital
Improvement
Needs
Facility Needs
20 Million
Current
Service
Population
46,724
Residents
a
52,092
Employees
b
72,770 Service
Population
c = a + b (0.5)
82.4%
Future Service
Population
56,686
Residents
a
63,199
Employees
b
88,286 Service
Population
c = a + b (0.5)
17.6%
Vehicle Needs
Current
Service
Standard
610,000 –all
to new growth
Costs
Allocated to
New Growth
4.1 Million
Cost per New
Service
Population
265 per New
Service
Population
Translated to land use
categories based on
resident and employee
densities
59SanLuisObispoCapitalFacilitiesFeeUpdate
PARKS AND RECREATION: Approach
Current Park
Acreage 195 Acres
Current Service
Population
46,724
Residents
a
52,092
Employees
b
72,770 Service
Population
c = a + b (0.5)
Current Level of
Service
Quimby: 4.18
Acres per 1,000
Residents
MFA: 2.69 Acres
per 1,000 Service
Population
Cost per Acre $300,000 per
Acre for Land
427,000 per
Acre for
Improvements
Cost per Service
Population
Land
Quimby: $1,255
MFA: $806
Improvements
Quimby/MFA:
1,147
Translated to land use
categories based on
resident and employee
densities
60SanLuisObispoCapitalFacilitiesFeeUpdate
PARKS AND RECREATION: Program Structure
Land Use
Residential
Single Family/ Condominiums Quimby Act Mitigation Fee Act
Multi-Family Apartments Mitigation Fee Act Mitigation Fee Act
Non-Residential
All Types Mitigation Fee Act Mitigation Fee Act
Land Improvements
61SanLuisObispoCapitalFacilitiesFeeUpdate
FEE COMPARISON
62SanLuisObispoCapitalFacilitiesFeeUpdate
Comparable City Fee Comparisons: Parks
Comparable Cities w/o Parks Fees
Napa
Palm Springs
Santa Cruz
Napa
Palm Springs
Santa Cruz
Napa
Palm Springs
Santa Cruz
Paso Robles
Napa
Palm Springs
Santa Cruz
Paso Robles
Napa
Palm Springs
Santa Cruz
Paso Robles
Napa
Davis
Palm Springs
Santa Cruz
Paso Robles%
Above
63SanLuisObispoCapitalFacilitiesFeeUpdate
Comparable City Fee Comparisons: General Government
Comparable Cities w/o General Government Fees
Napa
Palm Springs
Santa Cruz
Napa
Palm Springs
Santa Cruz
Napa
Palm Springs
Santa Cruz
Napa
Palm Springs
Santa Cruz
Napa
Palm Springs
Santa Cruz
Napa
Davis
Palm Springs
Santa Cruz%
Above
64SanLuisObispoCapitalFacilitiesFeeUpdate
KEY
Comparable City Fee Comparisons: Public Safety
Comparable Cities w/o Public Safety Fees
Palm Springs
Santa Cruz
Palm Springs
Santa Cruz
Palm Springs
Santa Cruz
Palm Springs
Santa Cruz
Palm Springs
Santa Cruz
Napa
Davis
Palm Springs
Santa Cruz%
65SanLuisObispoCapitalFacilitiesFeeUpdate
Comparable City Fee Comparisons: Transportation
Comparable Cities w/o Transportation Fees
Davis%
Above