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05/06/1997, 2 - TRANSFER OF DEVELOPMENT CREDIT (TDC) CODE AMENDMENTS
counck 5 -6- � acenaa PepoRt CITY OF SAN L U I S O B I S P O FROM: Arnold B. Jonas, Community Development Directorr0 Prepared By: Glen Matteson, Associate Planner Cbz9 z SUBJECT: Transfer of Development Credit (TDC) Code Amendments CAO RECOMMENDATION Introduce an ordinance to approve a negative declaration of environmental impact, to add enabling provisions for TDC to the City's Zoning Regulations and Subdivision Regulations, and to authorize printing the ordinance in summary form for public notice. PLANNING COMMISSION RECOMMENDATION: The Planning Commission has recommended adoption of code additions to allow TDC. The Commission's recommendation.is reflected by the attached draft code provisions, except that the Commission recommended a larger potential sending area. (The difference follows from Council direction at the last meeting when TDC was considered.) DISCUSSION This is a summary report. The report for the August 20, 1996, hearing provides additional background. The General Plan calls for a TDC program, as one of several tools to help protect open space. With TDC, recorded easements permanently reduce or eliminate development potential on sending sites, while receiving sites absorb the development potential by allowing credits to be used for more development than otherwise would be possible. The transfers are accomplished through the sale and purchase of development credits among willing sellers and buyers. The City's TDC program is being developed in conjunction with the County, because much of the open space which could include sending sites is outside the city limits, and it is not feasible for the City to annex all of it. Most of the land with potential for additional development, which could serve as receiving sites, is within the City or the areas which the City plans to annex. The County has adopted a package of amendments to the County's general plan and development regulations to enable TDC. A few projects in the County -outside the San Luis Obispo planning area- are waiting to use TDC. While a suit has been filed against the County concerning establishment of TDC, the County is proceeding on the assumption that it will prevail. City staff' has prepared a package of additions to San Luis Obispo's zoning and subdivision regulations to implement the City's part of the program. The additions cover the mechanics of allowing higher density with receipt of transferred development credits in locations identified by 2 Council Agenda Report- TDC Code Additions Page 2 the General Plan: the downtown core and identified residential expansion areas. The City's General Plan can accommodate about 500 additional dwellings with TDC, in the urban area (about two percent of the build-out capacity). The Council is being asked to determine if the recommended additions to the City's code are a clear and effective way to enable receiving sites in the city. On August 20, 1996, Council considered recommended code additions in the context of the whole proposed TDC program, including the sending-site aspects that the County will be primarily responsible for. Council expressed general support for the City's participation, and directed staff to re-evaluate the following two issues. 1. The extent of the potential sending area. Staff and the Planning Commission had recommended the San Luis Obispo planning area and the neighboring San Luis Bay planning area, which is the eligible sending area of the County's program. The San Luis Obispo planning area extends from the eastern fringe of Los Osos and Morro Bay to the Lopez Creek watershed, and from the Cuesta Grade area into the Irish Hills and Davenport Hills. The San Luis Bay planning area covers Avila Beach and vicinity, and the Five Cities area. Council expressed concern that the combined area was too large in relation to the potential receiving area, and that if city residents were to experience the effects of additional development enabled by TDC, the associated open space benefits should be clearly visible to them. In response, staff is recommending that the potential sending area include the greenbelt identified in the adopted Open Space Element, plus largely undeveloped land at three locations next to the greenbelt (highlighted on the attached map): A. along Highway 101, from San Luis Bay Drive to the southern edge of the greenbelt; B. along Highway 1, from the northwest greenbelt edge to El Chorro Regional Park, covering the hillsides north of CMC; C. along Highway 101, between the northeast edge of the greenbelt and Cuesta Ridge. These areas cover key"viewsheds" from the city and its main entry roads. Some land in these additional areas is owned by the State and Federal governments. Use of TDC on lands now in public ownership is not likely. However, there are some private inholdings, and there is no assurance that undeveloped State land will always be in state ownership. There is no harm in drawing the potentia! TDC sending area broadly. It would be cumbersome, both initially and with the passage of years, to exclude each parcel owned by a government agency or covered by an open space easement, or occupied by some development. 2. A "sunset clause" or review period. At the last meeting, a citizen advocated a sunset clause, which would require a deliberate action to extend the code provisions beyond a certain date, such as five or ten years from adoption. Staff recommends a section directing that the Council consider an annual report on use of TDC, which could be the basis for review and revising the provisions. (This report would logically be part of the Annual Report on the General Plan.) While a sunset clause would not Council Agenda Report - TDC Code Additions Page 3 affect transfers of development credit that had occurred, it would raise questions for long- term projects which had started using credits, but not completely used the sending or receiving potential. Also, the existence of a sunset clause could give the impression that the open space protection on a sending site or the additional development allowed on a receiving site could be taken away. Potential buyers of credits may have a concern that there would not be a receiver site to use the credits. Also, potential sellers might fear that the market for their credits would be unreliable, and so choose not to participate in the program. This apparent uncertainty would create one more aspect to explain, in a program that people tend treat skeptically because it is new and different. If the market for TDC's appears to be unstable, the program might never be used sufficiently to realize its potential. The following three major concerns were addressed previously. • Effective protection for s ending sites Will the protection be permanent? Will it be complete? The details depend on conservation easements that owners of sending sites will grant to the County or other eligible parties. Staff of the County and staff of the Land Conservancy, which was a consultant to the County in drafting the TDC program, have said that standard easement forms for use with transfers to the City can reflect the City's desires, as described in a previous letter from the City to the County. Since the program in entirely voluntary, the owners of sending sites will still be able to decide if they want to restrict their property to the extent desired by the City. (The County's draft model easement generally removed residential development potential only, while leaving the potential for some commercial and institutional uses; the City's open space policies favor removing all development potential except for limited agricultural and low-impact recreational uses.) • Additional build-out capacity Will TDC increase the amount of development that can occur in the San Luis Obispo area? The method for determining the number of credits available from a sending site implies a large but not precisely predictable increase. The limiting factor will be availability of receiving sites. The City's residential build-out would increase by about two percent with TDC. The County could designate additional receiving sites in unincorporated areas, which is a secondary concern. The County can designate receiving sites in unincorporated territory regardless of what the City does. By providing receiver sites in its designated urban area, the City is relieving some of the pressure for the County to designate its own sites. Having receiving sites in the designated urban area is more consistent with the City's open space policies than having receiving sites in unincorporated areas. • Receiving site impacts What will be the impacts on and near receiving sites? Impacts, addressed in the Environmental Impact Report for the 1994 Land Use Element update, are expected to be acceptable. Projects receiving TDC credits would be subject to the City's development standards and review procedures. Action Deadline State law does not set a deadline for this legislative act. Council Agenda Report-TDC Code Additions Page 4 Environmental Determination An initial study has been prepared (distributed previously) and a negative declaration has been published. No public objections have been received. The Planning Commission and the City Council have not asked for changes or additional information during previous consideration. FISCAL EMPACT The recommended action has no significant fiscal impacts. TDC would reduce the cost of open space protection compared with purchase, though it is expected to be used in cases where purchase is a less likely option. The additional residential development allowed as a result of TDC may generate more general fund costs than revenues. However, the long range relationship of costs and revenues is hard to predict, and the relative maximum quantity of TDC development is a relatively small part of build-out. CONCURRENCES The Natural Resources Manager concurs with the recommendation. ALTERNATIVES 1. Council may introduce the ordinance with different provisions from those recommended. Substantial changes to the proposed regulations may need additional staff work or environmental review, so continuation with direction would be appropriate. 2. Council may continue action for other reasons. 3. Council rejection of any code changes to implement TDC would result in the need to delete from the General Plan those policies and programs which call for TDC. Such amendments would have to be considered at a future hearing. Attachments Draft ordinance amending zoning and subdivision regulations Legislative draft of code changes Draft ordinance synopsis Maps (showing planning area, greenbelt, and potential TDC sending area) Distributed Previously and Available in Council Reading File Agenda Report for August 20, 1996, including: Initial Environmental Study General Plan policies related to TDC Staff letter to County concerning easements TW agenda report s� �2 ORDINANCE NO. (1997 Series) AN ORDINANCE OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO AMENDING THE ZONING REGULATIONS TEXT AND THE SUBDIVISION REGULATIONS TEXT TO ENABLE TRANSFER OF DEVELOPMENT CREDIT (TA 85-96) WHEREAS, the City Council conducted a public hearing on May 6, 1997, and has considered testimony of interested parties, the records of the Planning Commission hearing and action, and the evaluation and recommendation of staff; and WHEREAS, the City Council has considered the draft Negative Declaration of environmental impact as prepared by staff and reviewed by the Planning Commission (ER 85- 96). BE IT ORDAINED by the Council of the City of San Luis Obispo as follows: SECTION 1. Environmental Determination. The City Council finds and determines that the project's Negative Declaration adequately addresses the potential significant environmental impacts of the proposed text amendment, and reflects the independent judgment of the City Council. The Council determines that the amendment of the Zoning Regulations text and the Subdivision Regulations text will not result in any significant impacts, and that no mitigation measures are necessary. The Council hereby adopts said Negative Declaration. SECTION 2. Findings. That this Council, after consideration of the proposed amendments to the Zoning Regulations and Subdivision Regulations to enable transfer of development credit (TDC), and the Planning Commission's recommendations, staff recommendations, public testimony, and reports thereof, makes the following finding: A. The TDC code amendments are consistent with the General Plan. SECTION 3. Annual R_port. Each year following adoption of these provisions, the Community Development Department shall prepare, and the City Council shall consider, a report on the use of transfer of development credit within the City's planning area. This report may be combined with another report or reports concerning implementation of the City's General Plan. After considering this report, or at any other time deemed appropriate by the City Council, the City Council may consider amending or repealing the code provisions concerning transfer of development credit. SECTION 4. Section 17.04.440, a definition, is added to the Zoning Regulations, to read as follows: 17.04.440 Transferred development credit. "Transferred development credit" means a certain number of dwellings which may be built on a site in addition to those otherwise allowed, where the credit is equivalent to a certain development potential that is permanently relinquished on another site, all subject to verification by an administrator appointed by the County of San Luis Obispo for that purpose. SECTION 5. Part E is added to Zoning Regulations Section 17.16.010, Density, to read as follows: E. Transfer of Development Credit. Transfer of development credit is a way to reduce or eliminate development potential on land designated for agricultural, rural, or open space uses, by moving development potential to land designated for additional development. Development sites within the City may receive transferred credit from sending sites which are inside or outside the city limits. Sites within the City may receive credit from the greenbelt as shown in the Open Space Element of the City's General Plan, and from lands adjacent to the greenbelt which are generally visible from roads leading into the city. The Community Development Department shall maintain for public reference a map showing potential sending areas. The number of dwellings determined pursuant to part A of this section shall be the base density for sites which receive transferred development credit. In zones which permit receipt of transferred development credit, additional dwellings above the base density may be allowed upon verification of the development credit transfer, by the administrator appointed by the County of San Luis Obispo for that purpose. Each transferred credit shall be equivalent to one dwelling at the receiving site, unless the City Council, in approving a development plan or specific plan for the receiving site, specifies a higher ratio of credits to dwellings. SECTION 6. Zoning Regulations Part 17.42.020.A, Central Commercial (C-C) Zone, Property Development Standards, Density, is amended to read as follows: A. Maximum density: 36 units per acre (see also Section 17.16.010). With receipt of transferred development credit, up to 54 units per acre are allowed. (Other property development standards are not changed by receipt of transferred development credit.) SECTION 7. Zoning Regulations Part 17.50.030.A, Planned Development (P-D) Zone, Property Development Standards, is amended to read as follows: A. Residential densities. 1. Residential densities not involving transfer of development credit. Where a project in the PD Zone does not involve transfer of development credit, residential densities may exceed those allowed in the underlying zone by not more than 25 percent. To approve a Ordinance No. Page 3 development which exceeds the density otherwise allowed, but which does not receive transferred development credit, the Planning Commission and the City Council must make certain findings as required by Section 17.62.040.B. 2. Residential densities using transfer of development credit. Where the PD Zone is applied to a residential expansion area designated by the General Plan Land Use Element, and the site will receive transferred development credit, residential densities may exceed those allowed in the underlying zone by not more than 25 percent. In these cases the Planning Commission and the City Council must find that the project is consistent with the General Plan (including any upper limit on the number of dwellings for the expansion area) and compatible with neighboring land uses, but they need not make the findings of Section 17.62.040.B. SECTION 6. Zoning Regulations Part 17.52.030.A, Specific Plan (SP) Zone, Property Development Standards, is amended to read as follows: A. Residential density shall be as provided in the specific plan. A specific plan may provide for the receipt of transferred development credits, including the number of additional dwellings permitted, their location within the specific plan area, and their form. Where a specific plan provides for receipt of transferred development credits, it shall prescribe what additional densities or development locations, if any, are allowed by right upon receipt of the transferred credit, and which densities and locations, if any, are permitted only by separate City approval. SECTION 7. Section 16.08.400, a definition, is added to the Subdivision Regulations, to read as follows: 16.08.400 Transferred development credit. "Transferred development credit" means a certain number of dwellings which may be built on a site in addition to those otherwise allowed, where the credit is equivalent to a certain development potential that is permanently relinquished on another site, all subject to verification by an administrator appointed by the County of San Luis Obispo for that purpose. SECTION 8. Part W is added to Subdivision Regulations Section 16.24.020, Final Map Form and Contents, to read as follows: W. Where a final or parcel map incorporates lots or dwellings resulting from a transfer of development credit, it shall include, on a separate sheet, a clear and legible note that approval of the land division included the use of transferred development credit, the number of credits used and their registration number(s), and a description of the location of the sending site or sites. o2- 7 Ordinance No. Page 4 SECTION 9. A summary of this ordinance, together with the names of Council members voting for and against, shall be published at least five (5) days prior to its final passage, in the Telegram-Tribune, a newspaper published and circulated in this City. This ordinance shall go into effect at the expiration of thirty (30) days after its final passage. INTRODUCED AND PASSED TO PRINT by the Council of the City of San Luis Obispo at its meeting held on the day of , 1997, on a motion of seconded by , and on the following roll call vote: AYES: NOES: ABSENT: Mayor Allen K. Settle ATTEST: City Clerk Bonnie Gawf APPROVED AS TO FORM: ty to y C ordinance City of San Luis Obispo PROPOSED TDC CODE CHANGES Legislative Draft Additions are shown by sladirtg; Lletions are shown by ice-tkeug�a. Zoning Regulations Add Section 17.04.440, a definition: .04.440 ><«; ;<;><z<<:; :::< >:::<::>:>;:;::::>: »:;;;< :; T�ansfsrrec ,deve �ent;cred 17 " "rarrsfe►red dev optrreut Cie pt"mems a rae tarn number pf dvyell1.gs which may be b'uilt,; txzt,a site uEr ddMon.. those,txiherwise allowed,where the eredrC u equivalent to a certain;; deuelppment potents thatpermanently relurgrusled on anom .jct..to eatirsn':by an adurnstratr appointed by the County of San )rugs Qb�spo for,that' Add to Section 17.16.010, Density, a new part E: E.: ranser raf;Ievlapmentredrt Transfer of deYeloptnent t redlt is a way io reduce or: emiate deaelziptnent potentrai ou land dasrgnatd >r agricultural, rural, or mi open space; u3e5 :by ntpvsngievettpment .potettlal,to;land.desrgnater firr add►tlQnal development Weveptrtextt sites withztr the City may receive;transferred cred7t from sending;sitesmul#'. are,rnse;ar:.pzttsyde»the...ci #s Sites withu4 the:arty may receive credit frim fhe: ..:.:...v .. .. ...:...:.:....:::......: .. .. gre�tes; avn the Open Space l~tement ofthe4t *s +general ;tan, andfram lads; adlaoer t to the gr eni tt�rhic are generally< Sble from raazl s leadtag into the r�ty . 3iu#tutrity` leveloprner�t IIegartnrent sha11 r�aatY. ntat�a dor pubCrc Feference.. rnap showutg' pOtetal sendurg area3 . li .nulnber.:of dwellings dete�rutredl,pursuaist to part ..#his: secttran sh E be the base dens►c r for sties uvh;t h receive;traits erred evelnpmer► credtt< m 2t+ne wlW.hAgerrnitXeceapt n#'.ir nsferred development credit,;ad t�acial dwellrr s above: the efenstty may ni?e aawed upon srerrftcauon of the developmen€ credat:transfer,:;by: the,adrnuu$frator aprnted ?3' the County rf San Lu►s (7bispo for that purpose Each tratrftred credit shall be equvalen aae tivelling at the reGeav�ng sirex unless the City C n �n.apprflYurg a development:.plan or.specif ,planfor-the receiving site,;specifies a ier�ratsc►stl.: ry is 3e t. We1lutgs .2- 9 Add to part 17.42.020.A, Central Commercial (C-C) Zone, Property Development Standards, Density: A. Maximum density: 36 units per acre (see also Section 17.16.010). 1ftje9eipt!>:of< transferred aevetopment credit up tfl, S$.vmts per acro,are.aliowed. (thher prapety ev.....P E,siandardS,are nat.,changed byre eipt oaf transfened.deveIapment It) Add to art 17.50.030.A, Planned Development (P-D) Zone, Property Development Standards: �1 �Vie§denial � s �s : .. :..........: r: 1. Resrdentiat densrt O not tnypl-M tji;jransfer pf de.,yelnpment credjt' >Where a project;in its . D Zan@.does, snt.[nwolpe transfer of development cr.e if residential densities may exceed those allowed in the underlying zone by not more than 25 percent. (In erdeF ,o approve a development which exceeds the density otherwise allowed but' lucFdoes nc t: rety Transferred.development Credit the Planning Commission and the City Council must make certain findings as required by Section 17.62.040.B.) :1Zden steris�ties; smg #ransferr a#;cTeyelopment credit; Where the PI? Zone;as: ; e�ppiied;ta`Fesrderttral expansion area:des�gnateti by the Genera(15[an I andT Stemerrt, ande sit elf receive transferred development credit, residentiab densities may exceed; :.tt. ;::::.. : those allowed in the nndr[ymg zone:by not inure than 2S .percent Tit ft►ese cases.the ]Planningrrrunrssrannd The,Crtyuncil must find that the project rs consistent with the Geizeis�t 119g.ark upper tarot nn the number.nf dwett�ijgs far the expansion.area) atitlte vnt[t,nerghtarutg land uses, bvt they need oat.make the findings;Qf Section TINiia g And to part 17.52.030.A, Specific Plan (SP) Zone, Property Development Standards: A. Residential density shall be as provided in the specific plan. F >sgecfcl!an< a > p ©}ride°.fir the» eeeSt1` # ansfered deuelopment credits including the number of � . a{ldit ana a ings,peir fted,:3he►r Iocat�gn within the#specific plan ut«a, and.ffi: .form_;,. re.:a speciti plrr�iv�ies for receipt raf transfeed development st creditt §halt' preaaibe'w[rat addrtiartal stensi#ies or development locations iF ariy are ailatcted by right; iupan:.:reee�pt of tie.#ransfeFred. credit, and.which �eistties and locatlnns, if any,. ;ala;; permtteel,nnlr by separatety.apgravat �2 -/0 Subdivision Regulations Add Section 16.08.400, a definition: " iansf ed develop en#.gredi#"means s certain numM of d Nellingswfuch mai bo:: ul V m,... AMA.r di#ronto e•c5iherwise allowed,where the.cretht.ts equcvalecrt;ta a certain: eveltaps nt.pc3te► t that.k s.permanec tly,relThed tin another;site, all: s %ec: uerifi . cat s;by. au dnunistra t�r..aApoin#e by ths.. ounty of $an.Luis. b�sp4 0 that:: Add to Section 16.24.020, Final Map Form and Contents: W l ere a mal Cr. arcel,map�neorpnrates'lots ur dtve[l ngS:. suiting from a transfer of. eipr ►t xedit,. shall_include,. tin.a. separate,sheet,.a clear ani.legibly not6.4 ap app o al land.dtva oa mniud d,the use of,transferred rlevelapmenf crecLt,•,the..... aumar of Cr.. 9, used and tFiear registrat<on.nurnl�ersj, and a description'`of the location; E�ftvsendutgs�teclrst#es ~^A TDC legis draft [DRAFT SYNOPSIS] ORDINANCE NO. (1997 SERIES) TRANSFER OF DEVELOPMENT CREDIT On May 6, 1997, the San Luis Obispo City Council voted [ vote ] to introduce Ordinance No. which would add provisions to the City's Zoning Regulations and Subdivision Regulations, to enable transfer of development credit (sometimes referred to as "TDC"). Transfer of development credit is a way to permanently reduce or eliminate development potential on land in one location, which is referred to as a "sending site." This is done by recognizing development credits that can be sold separately from the land, and used to build more than otherwise would be possible at a "receiving site." The initial buyer of the credits compensates the owner of the sending site for its lowered development potential. Easements would restrict future use of sending sites. The City's adopted General Plan says there should be a program for transfer of development credit, primarily to prevent development on land around the city that is to be kept open. The City's program would work in conjunction with a program proposed by the County of San Luis Obispo. According to the City's General Plan, certain locations, mainly in areas to be annexed, could be receiving sites. Use of transferred development credits would be voluntary, between willing sellers and buyers. Following is a summary of the major features of the ordinance: • Sites in the city limits could receive transferred development credits from unincorporated land in the County, mainly from the "greenbelt" mapped in the City's Open Space Element. (Transfer from sites within the city limits is not proposed at this time.) • Development credits would take the form of dwellings which could be built in addition to the number of dwellings otherwise allowed on a site according to the maximum density in each zone. In the Central Commercial Zone, an increase from 36 to 54 units per acre would be allowed. In the Planned Development overlay zone, a 25 percent increase above the base density would be allowed. In specific plan areas, additional dwellings could be permitted as described by the specific plans which the City would adopt. It would not be necessary to acquire development credits to develop the number of dwellings typically allowed by a property's zoning. The Council must vote again to approve this ordinance before it can take effect. That action is tentatively scheduled for May 20, 1997, at a Regular City Council meeting to begin at 7:00 p.m. in the Council Chambers of City Hall, 990 Palm Street. Copies of the complete ordinance are available in the City Clerk's Office, Room No. I of City Hall. For more information, contact the Community Development Department at 781-7172. .Bonnie Gawf, City Clerk TDC ord sum A NOTE ON THE TDC MAPS Several mapshave been prepared to show the potential TDC sending area. The first follows this page. It is based on a small map in the Open Space Element. The second following map provides a less abstract illustration of the potential sending area in relation to some major physical features. The third map, a transparent overlay of U.S.G.S. topographic quadrangles covering the San Luis Obispo area, is available for viewing in the Community Development Department in the lower level of City Hall, 990 Palm Street. 2-�3 PLANNING AREA, GREENBELT, AND POTENTIAL TDC SENDING AREA The white area in the middle of the drawing, labeled "SLO," is the City's existing and planned urban area. The shaded area covers potential TDC sending sites. The light shading is a general depiction of the greenbelt as shown in the Open Space Element, while the dark shading is additional sending area proposed as part of the TDC ordinance. The dashed line is the boundary of the San Luis Obispo planning area. L SAWA MAAGARMA PARK � �:,f f.• ' r.•:;: t� sio L / .� � BEACH N �2 -�� 0 ; I • Y 5i �.j • .� � I 1 "�...1 "t5.�ir1�5�M �{5 S} � V}".�. 1�1C3 }�����'"..S Yt � I ;,. �,�� sss JA.y.":: 5•. 5".�}I9X� }S�,r,�F'g`,"c'•£.•.",� "ix"},." w 'i. bias 3i ,y . 5�5. .} �:��`"' " ...,}� •• sz r;..s��:; •c" ��ajtt i ��� �^HF 's?. ?E }s�•1�3 �as"5�'„z�`D'1,�� 1 LM Sw pro IIP •v���a��lY� 11 �� _e. 3Y too —x g 5 >M : f Ya4 i ` SII PFETINGAGENDA 6 ����7 May 6, 1997 ._. *EITEM Ci GfF(�C/� To: City of San Luis Obispo, City Council From: Diane Hull ^_( � �`tTTY b, 1G[.ER K P� SDnlAS This document was endorsed by the Edna Area Group in September 1996 and presented to the Board of Supervisors. The purpose of this memorandum is to discuss the advantages of including a sunset clause in the proposed TDC Ordinance. Additionally, a draft of the sunset clause is attached to help the Board of Supervisors (City Council) visualize how it could be worded. General Discussion Congress frequently enacts sunset clauses in proposed tax law changes to evaluate whether or not the law is producing the desired effect and to analyze unforeseen effects. Additionally, a tax law, such as the Investment Tax Credit, is established with a sunset clause because Congress wants to stimulate certain types of investing for a temporary period of time. Even some permanent types of tax laws, such as lower rates for capital gains, will change from time to time, as-the political and economic climate changes. As a result, transactions are either accelerated or deferred. Investors are accustomed to uncertainties such as these, and make decisions according to these changing rules. The fiscal and economic uncertainties of the TDC program would be similar. The TDC program creates, on paper, a new economic unit by separating the residential development potential from eligible property. The rules appear complex and cumbersome. The ordinance states that the program is voluntary, but the ultimate decision rests with the Board of Supervisors (City Council). When the Board-required TDCs for 2 development projects in North County as part of their general plan update, 0 the TDC program became de-facto mandatory for them. Additionally, in the future, the 'j Board may allow Arroyo Grande to use TDCs to increase commercial development in JI, z`exchange for TDCs. This would be a significant change to current zoning laws and o represents a departure from the underlying purpose of TDCs: To retire residential _ 0 development from agriculture properties and natural resource areas. 2X Z5 This TDC program is such a monumental change to the way San Luis Obispo county (city) currently operates, we believe that a sunset clause is the only prudent way to evaluate the potential ramifications. The Board should develop success parameters now as part of the TDC ordinance. If the program is successful, the Board of Supervisors (City Council) can pat themselves on the back and extend it. If the TDC program is unsuccessful, the Board of Supervisors (City Council) merely allows the sunset clause to become effective. There is an expectation that a certain number of properties will participate in the TDC program, and a sunset clause will not have a negative effect on these transactions. In fact, the county residents may be the beneficiary if TDC participants move quickly to participate in the program, thus ensuring its continuation. TDC Ordinance Sunset Clause This ordinance will be in effect for 4(or 10?) years from the date of enactment, unless extended by a majority vote of the Board of Supervisors (City Council). An extension shall constitute an additional 4(or 10?) years. If this ordinance is not extended, then the following rules shall apply in order to facilitate a fair and expeditious transition out of the TDC program. The purpose of the transition rules is to guarantee that receiving sites who have not purchased their TDCs by the sunset date will be allowed to complete that process and complete the development of their project. Sending Sites If a property owner has applied to participate in the TDC program as a sending site, they will be considered as participating and will not be precluded from completing the application process if the sunset clause goes into effect. A qualified sending site is a property that has been approved pursuant to the terms of the ordinance. A qualified sending sites with unsold TDCs will be allowed to sell TDCs to qualified receiving sites that exist after the sunset clause goes into effect. If a property owner has signed up to be a sending site and has sold all of their available TDCs, then this program will no longer apply to them, since the property owner has received full compensation for the permanent easement. If a property owner which is a qualified sending site, and has unsold TDCs, then a partial easement reflecting the percentage of sold TDCs will remain attached to the property. If a property owner has signed up to be a sending site, and there have been no sales of TDCs, then the property will retain its previous unfettered title. Receiving Sites If a property owner has applied to participate in the TDC program as a receiver site, they will be considered as participating and will not be precluded from completing the application process if the sunset clause goes into effect. A qualified receiving site is a property that has been approved pursuant to the terms of the ordinance. A qualified receiving site will be allowed to purchase TDCs from qualified sending sites that exist after the sunset clause goes into effect. 2 unit V Use I nd e ,(}.� t' s hundred: n m ,tv�tp tally aha The st m 1 x'10,16 SG' ^ aY b us Z Gam,. ewhit R_ employee 10 ingTransferable Development Rights' Concept Rips Off Landowners both Georg(th air cellular p. con. By Ronald A.Zumbrun The court further concluded that Suitum;without ras'but W Md. attempting to transfer the rights she currently possesses . .. 'meat AIi his The U.S.Supreme Court next month will consid cannot know the"nature and extent of permitted develop h a a ied er a petition about a lando>vncr's right to seek mens...and thus cannot know the regulations'M eco. and other nd, just compensation for public use of her proper- nomicimpact." without r: 1't'1 m ind ty.Suilum a Tahoe Regional Planping Agency,96-243, . 'tore reco Z sus revolves around a concept known as a transferable: L�r "' c : ,;ciogged,c P transferable.., , ,,,n ro;.;k South. rofinn,�Cggc(al P'unca-," 5„U�o� r y1 v in. development right T fbo3(1992),.the 11.5.Supreme Court held Exone s am The constitutionality of TDRs has yet to be deter- 1 test for governmental regulation of property violating Dom} ler, mined. Governmental agencies invoke this dubious the takings clause is when the'regulation denies all eco may have p ust "right”when prohibiting individuals from using their nomially beneficial or productive use of land."The court cal power )ng property.The idea is to allow one owner of restricted noted that this per se rule"typically"applies to regula• he threw es a land to transfer and sell the development rights he has tions"requiring land to be left in its nahual state."In mak- charges i been denied to another whose property has been ing its ruling,the court determined that'the erection of Asses restricted to a lesser degree. any habitable or productive improvements'on ones land The ssembly m ma A TDR is intended to give the totally restricted is"the essential use of land. Lucas provides a clear-cut Baugh wil landowner a mechanism for receiving some compensa- basis for determining that the Tahoe Regional Planning election w tion—albeit from another property owner,not from Agency's placement of Suitum s property in an SEZ vio- the slendt the government.Although the TDR remains only an lates the takings clause and entities Suitum'to just com- control wi abstract eonccpt.unrealized as a legitimately mar- pensation. a slap at( ketable product,governments nonetheless wield it as a The 9th Circuit's decision also cAntiiCts with Supreme -�Mich n s means to avoid claims against permit denials. Court decisions involving the ripeness doctrine.In ed a11egat so In 1989,Bernadine Suit- KriAiamson County Regional pct attot ;to um submitted to the Tahoe Planning Commission'u. adversely but Regional Planning Agency Hamilton Bank,473 U.S. evident,a •nd plans to develop her,par- 172(1985),the court ruled general in ug cel.The agency evaluated truth IS that that before an owner can 0Sacra the land and determinedchallenge the application of Judge Jan fDRs are a scheme to allow ing that it was located in a � governmental regulations she most , ids stream environment zone. gOvemment to avoid Its duty on his property,he needs to';� the state 1 A policy of the Tahoe have"obtained a final'dee3- .putes are die agency prohibits any new to compensate landowners cion regarding how it will be: hands,'c: land coverage or other allowed.to develop its.prop': hoAmatu for overregulation. c . u d .: permanent land distur• ; city"The court concluded �'�baUot&" tch bance"in an SEZ.The rul- I that tbq•amount of develop ci: Recent. ing capriciously ignored /}�R4�LYJRNL P7 �B- meet allowed on a piece.of. , +' thatyotc that the parcel was sur- / `i' h property is the essential fan• Propositi rounded by existing development.Under the agency for in challenges based on a regulation's economic affirmati policy,there is absolutely no use to which Suitum can impact though th put her land. In MacDonald,Sommer&Fates u County of Yolo,477 in the me: dS.340(1986),the court-held that'our cases uniformly Ford's r n November 1990,the Tahoe Regional Planning reflect an insistence on knowing the nature and extent of General D Agency denied Suitum's appeal.She then filed suit in permitted development before adjudicating the coostitu• barker wl the U.S.District Court for the District of Nevada, tionality,of the regulations that purport to limit it.' language. alleging that the agency's application of its regulations and 'There is no uncertainty about the amount of develop- when an ordinances to her property violated her civil rights under ment that the TRPA will allow on Suituai s property.No ruling an, a the Fifth and 14th Amendments and constituted a taking variances or other procedures are available.to allow her to guage.Th Cf'COUNCILof her property without just compensation.The agency develop her land.Under Williamson.County,and MaiiDon•. rial impar f7 CDD U! moved for summary judgment old,Suitum's case should have been ripe for review. :, which bar d�cxO ❑ FIN DIR The court examined the agency's TDR policy,which The 9th Circuit stated that the TDR program;was erencesin [j—ACAO , allows transfers of development rights on the condition designed to provide relief to owners of property in.an • approved 1 O FIRE CHI that the seller's SEZ parcel be retired permanently.For SEZ In practice,however,the program offers no assts• O—ATfORNEY ❑ PW DIR Suitum,this means that she could attempt to sell to anotht tance to owners prohibited from developing their proper- 1-_L11!RK0%G ❑ pOUCE C H, v Property owner the rights to additional land coverage, ties.The TDR orouam has never produced any sales acid': W O MGiiQT residential development rights and a residential construe- there is no market for the Tahoe.Regional Planning.:! ' TEAM O REC DIR tion allocation.For the purchaser,this means a highly AgengJs devclopmcnt rights The wort disregarded the the'state': O C LE ❑ UTIL DIR questionable requirement to pay for aTDR in order to use affidavit of Paul Kaleta,a former agency staff member, Chief Just �i his own property.Presumably,payment for this extortion- who was qualified to testify as to whether development often get i ❑ PEAS DIR ale device also means that the purchasing owner is free to lights have ever been sold.Suitum argued that the exciu ished,the ignore the environmental concerns initially justifying the sion of that testimony was an abuse of discretion. intervene. use restrictions on his property. A fcder; In March 1994,the district court granted.the agency's motion for summary judgment on ripeness grounds, ince 1987,the Supreme Court;has been viadiacartxrs al politicians because the agency had not ruled on another party's eligi- without hesitation the rights of property owners. R,.Ak�vii bRity m to receive the TDR from SuituSuilurn appealed to Lucas rejected the notion,advanced by planners, in a laws' the 9th U.S.Circuit Court of Appeals In its affirmation, that even if a regulation destroyed the complete value of a in sed t the 9th Circuit ignored the actual conditions and prohibi- property,no compensation need be paid by the govern- imposed r tions attached to Suitum's property and curiously conciud- menl if the regulation was designed to promote some tors ed that'transfer of development rights is a'use'of SEZ Hrc.utet"public purpose or avoid a perceived harm or leg-. And if sh Because that"use'had not been exercised,the islatively defined nuisance which sot property."Because on was not ripe for review. The bare truth of TDRs is that they constitute nothing. pletely al' more than a scheme to allow government.to avoid its duty. 1998.It w L. �) to compensate landowners for overregulation of their Pete Was V Ronald A. Zumbrun,managing atwmeyof Zurnbrun property.Suitum clearly has been'denied the'essential &Rndley;a Saordrtlentobased firm spWallzing In pub - use"of her land as defined by the Lucas court.The wishes AY He issues,•filed a amicus curia brief before'the U.S. Supreme Court should take the opportunity now before it Supreme Court supportingthe appellant.. to reinforce the rights of property owners by raffirming Dan We Lucas and reversing the 91h Circuit's prejudicial decision. �Sacramt CITY CLERK 3S,N LUZ 08t5'�.' r Q off `� '' `` ,'a PLF NEEDS YOUR SUPPORi.'TO Y Tmoth_ � R,-Hall Joins PLF Board ,•,,_, REGAIN AND STRENGTHEN.OUR r,..... FREEDOMS s: Pacific Legal Foundation welcomes Mr.Hall participated in the local Oro PLF way-establis1W in 1973 to regain and Timothy R.Hall as.a new member of „oma School Board while he lived in the the basic freedoms guaranteed tmdq.h%y�yc�v t� its Board of Trustees;mt Hall is the San Joaquin Valley,and more recently Comtitution'and to reverse.the omimus q; ; " I has been a member of the Santa Catalina; t control ppg owner of T,Ji:HaJI Laid and Cattle toward.greatei goveumren n, Company,and he..is General.Partner and School Board in Monterey.He is currently " Americans.PLF defends the.right to over of T1te Ball Com an —two President of the Larkin House Advisory', reasonably use vote property free of ::. ` :l y_..Bel P y rY`' Pri P w::sr•.::. cvltutal en based in the San Committee,which oversees the preserva- govanmmtregulatiomthatelevatt ,. above,*'dof ahans.PLF ako ' r. ��V�Y tion and display of one of Monterey's ., .. M ,Mt Hall has a longtime advocate historic adobes. taxassesmrmtpohaes d�m8es> 8, ? m8 quotas,and suppocb eduction toR,'art� :.And exemplar od the responsible use of Mr.Hall received his B.S.in Business reforms.As a deader of the flee enRrprisS ; ' -,ot>rshared resotmces.ML Hall has lobbied administration from California State pLF t no govenm mt gr5nt9aid,b,,F..• .., ''miteasively for water legislation in University at Fresno in 1971.He lives with wdybyprivatermtn3utmm Cashdamata% his wife,Laurie,in Carmel,California. pnipaty,and bequests in wigs and.trusts are_ t�Saaaritento.and,Washngton,D.C.,on dumbleuirderIRC§501.(cH34L.. rbehalf of western water.users.He has i Kelso been a board member for the ,OFFICERS' .lr '±: anoche Water 1?istiict:: Chairman Jerry W3.Sdia z:.•-; ;<:; Vice Chairmen RobertE M'. e '. ..:. ", ...,• :. ... �:... ' .' ..:Ben J.Gantt,'JL%• • ; :c;, •i' �:• Secretary-Treasurer AprilJ.Morris;-. t RUF.Again In The U.S.Supreme Court PresideniandCEO. Roberti Bim: Asst Seca-Treasurer .'Anthori T.Casa h (&turned from page 1) " _BOARD OF TRUSTEES Robbing"Peter"To.Pay"Paul" i ithe size of a bedroom)to an,as yet, Mrs.Bernadine Suitum applied fora unidentified owner of a"receiving parcel Robin P.Arkley rf. . . . with acceptable use and density eli '-..`'Rancher/Businessman ,$. . .; permit m 1989 to build one modest house ep h' f' t}" , ;'on a lot in Incline Village,Nevada,that In other words,Mrs.Suitum is not James J Busby,President and Oxmri.. entitled to a da m court to challenge the J Y' c' she and her late husband bought in 1972 y g Security Owners Corporation_ The Planning Agency outright taking of her ;rejected her application property until she first Janus L Cloud,Senior Vee President PLF has brought finds another individual— National Bank of'Alaska =Auld de hied her the right to r parcel to any whoever he might be— p, P y before the Supreme whose right to use his Greg K Evans,President do productive or beneficial Manager .::.;,:.. ;;rise even though chive Court an outstanding own lot has been restricted Evans Management Servi ;neighboring houses abut so drastically that he will S� +. 'three sides of her loL The opportunity to pay Mrs.Suitum some Ben J.Gantt,Jz" agency denied her permit scrutinize a dubious unknown amount for the Graham&Dunn without compensation on "privilege"of making P legal device called some reasonable use of Timothy R.Hall,Owner :the grounds that her small g his parcel.Stated a Tit I3au Land and Cattle Compan u� lot,totally surrounded by transferable >= . Paved streets and ' different way,the Planning Thomas A.May buildings,is really a development rights... Agency is"robbing Peter Luee,Forward,Hamilton&Saipps;'Y "Stream Environment to pay Paul."The agency that is nothing more wants"Peter"to pay Robert E.McCarthy `'Zone"in which"new land McCarthy&Rubright ;' Mrs.Suitum to get back 1 erage or other: than a bureaucratic development rights th ' " ent land disLu Pthey April J.Morris,Principal is absolutely ruse...to prevent stole from him in the first -Gibbons and' ` place.Even if Mrs.Suitum = 7` f ' 2irbited Mrs Suittmt owners... WP.SehauffletiPtrsident;_ a lawsuit property could find this person and Jerry . ��8 " WS L Builders,Inc. Planning Agency from making somehow sell 183•sduaze , , _. ._.. :. feet of her"land coverage her dvrl'rights by John L Schwa6ef "her far beneficial use of their she would still be pmhib 'S&vrabe,Williamson 8 PmP�Y lic benefit out properties. of lot.What the ne Ronald E Van Biukirk to g her compensation Madison&Su • :4, *r required by the Planning Agency is doing +Pillsbury i w to Mrs.Suitum is an outright scam ii 15.Constitution Brooks walker,Jr,General p ' `The federal Drstnct Court and Ninth PLF will be arguing before the .,'Walker Investors justices in earl 1997 that government a,°. w; 4r •. .. r>�r: Y��.'. t Court of Appeals ruled for the J Y domrvarrr; W. g Agency which claims that agencies cannot rely upon legal fictions comm ottkf,vsr m like"transferable devel meet rights"so ::. ''u95sopulaaaesadkfl coma r®m 1+•'_'' ' ' ySuittrm has no right to challenge the °P �' !'suae 3A tr0em WA 9W Real tasottot' p to avoid their responsibility under the yetatttdenialbecause she didn'tattem t P t} tt�itw�uoair�sniet�up fo transfer.her"development rights"to Constitution to pay compensation to uawtn96813(K52+o51o;P0 ; :someone else Under thea en s landowners whose properties have been ;.. g regulated out of existence. ^.:.:.' . . Editor', ";elaborate procedures,Mrs.Suitum could Sigfredo A.Cabrera ;,e-Y sell 183-square-feet of"land coverage" Winter 1996 • GUIDEPOST 7.. MEETING AGENDA MEMORANDUM DATE s�� 9� ITEM # TO: Honorable Mayor and City Council VIA: John Dunn, City Administrative Officer FROM: Arnold Jonas, Community Development Director ° DATE: May 6, 1997 SUBJECT: Transfer of Development Credit Ordinance Item#2 on tonight's Council hearing agenda concerns the possible introduction of an ordinance which, in conjunction with a complementary County ordinance, would allow the transfer of private development rights between the two jurisdictions. The County ordinance, previously adopted by the Board of Supervisors, is now the subject of litigation which could result in program or detail changes during the current calendar year. Given the need for close coordination between the City and County in establishing and administering the program, this potential for change by the County introduces an element of uncertainty regarding appropriate structure and detail in the City ordinance.. It thus appears that the City's process would be best served by delaying consideration and introduction of our ordinance until the situation at the County is resolved. There is no specific time goal or deadline for adoption of our ordinance. Consequently, we recommend that Council continue the matter without hearing to a date uncertain. It can then be rescheduled at an appropriate future date. ❑gA6NNCIL " �o 4���.: 0-CAO ❑ FIN DIR 49-ACAO ❑ FIRE CHIEF ❑ ATTORNEY ❑ PW DIR ❑-CMRK/ORIG ❑ POUCE CHF ❑ MGMT TEAM ❑ REC DIR ❑ r e-REQ FILE ❑ UTIL DIR P '7 ❑ PERS O;R cm'c ERV Rot&..a s document for 10we Council meeting CITY CLERK MEMORANDUM April 18, 1997 TO: Mayor and City Council FROM: Bonnie Gawo�ty Clerk SUBJECT: Vista Hospital Information Packets Two large binders of information about Vista Hospital Systems, Inc. were sent over late yesterday by Scott Gross of Primas Management. The binders were accompanied by a letter answering specific questions asked by Council Member Smith and Mayor Settle at a recent meeting. The letter has been copied to each of you, and the binders are available for your review in the Council Office. As you will recall, a business item regarding consideration of a request for conduit financing by Vista is scheduled for the May 6'Council agenda. cc: John Dunn, CAO Jeff Jorgensen, City Attorney Bill Statler,Finance Director PRIMUS ENT, INC. April 17, 1997 Council Member Kathy Smith City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Dear Council Member Smith: Thank you for taking such an active interest in Vista Hospital Systems and especially for so diligently advocating good healthcare in San Luis Obispo. I'm certain that your experience in the healthcare field will be a tremendous benefit as you and your colleagues explore how to provide the very best possible healthcare for the community. Here are our responses to the questions you submitted to us. We've also included answers to several additional questions that we have been asked to address. I hope you find them helpful. We would very much appreciate any thoughts or advice you can share on how Vista may best go about introducing ourselves and answering questions about our philosophy and plans to enhance French Hospital's already outstanding reputation. It is our sincere hope to become an integral part of the community and operate French in a manner in which everyone can be proud. If you have any further questions or need clarification on any of the questions you submitted to us,please do not hesitate to call me at 415- 627-0755. Sincerely, (f5 � tt F. Scott Gross One Eleven Sutter Street, Suite 2150 • San Francisco, CA 94104 415.627.0755 • FAX 415.627.0766 PRIMUS NIA ENT,INC. April 17, 1997 The Honorable Mayor Allen Settle City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Dear Mayor Settle: Thank you for taking time to meet with us last week and especially for so candidly expressing your concerns. Here is a copy of our responses to the questions submitted to us by Council Member Smith. We've also included answers to several additional questions that we have been asked to address. I hope you find them helpful. It is.our sincere hope to become an integral part of the community and operate French in a manner in which everyone can be proud. If you have any further questions or need clarification on any of the questions you submitted to us,please do not hesitate to call me at 415-627-0755. Sincerely, F. Scott Gross One Eleven Sutter Street, Suite 2150 • San Francisco, CA 94104 415.627.0 755 • FAX 415.627.0766 VISTA HOSPITAL SYSTEMS, INC. Response To Questions April 17, 1997 The following are our responses to questions submitted to us by San Luis Obispo City Council Member Kathy Smith on behalf of the community. We have done our best to thoroughly answer each question. We have also included additional questions that have been asked of us since Council Member Smith initially submitted the questions. If you have additional questions or need more information on any of our responses, please call us at 4151627-0755. Thank you. INTRODUCTION Vista Hospital Systems,Inc. is one of two corporations operated by Permian Healthcare, a not for profit healthcare corporation, with Vista being the California subsidiary. Edgewater Hospital Systems is our Illinois subsidiary and operates Northside Hospital in Chicago. Edgewater Medical Center, a 335-bed tertiary care hospital provides many specialized services including a full-service heart proincluding cardiac catheterization, cardiac Sn =,neurosurgery, and hyperbaric medicine. Edgewater Medical Center is also a teaching hospital for interns and residents training under the auspices of the University of Chicago School of Medicine. Since Vista Hospital Systems will operate French Hospital once the purchase is approved by the Federal Trade Commission(FTC), the following responses focus on Vista rather than Edgewater operations. If you would like further information on our Edgewater operations,please call us. VISTA MISSION Vista seeks to bring previously for-profit hospitals into our system when they are sold by for-profit hospital chains. When discarded by the large chains,these hospitals are cut-off from sources of capital and sophisticated management expertise and are therefore vulnerable standing alone. We seek to make these hospitals viable entities that serve the needs of their respective communities. It is our belief that the conversion of French Hospital to a community nonprofit hospital with a charitable purpose will benefit San Luis Obispo in many ways. Here are just few examples: • Services provided to patients regardless of their ability to pay; no "wallet biopsies" before care is rendered. • Full range of services for women and families involving human reproduction needs ranging from assisting in the successful birth and care of healthy children and the after-care needed in problem pregnancies. • Community outreach in the form of health education to aid the prevention of disease and injury to maintain good health. • Free or low cost health screenings where early detection is essential, such as diagnostic screening for cancer and heart disease, childhood immunizations, flu shots, pap smears, and blood pressure testing, etc. • CPR, first aid, poison detection and injury prevention training for public employees and private citizens. • Specialized support services for senior citizens such as 'Breathers Groups" for those with respiratory problems, continuum of care such as home health services, and diabetes and cataract screening. • Education regarding family planning,birth control, and child development as well as sexually transmitted disease prevention for individuals and their families who wish to have such services. • Disaster planning and other public safety assistance to public safety departments, emergency medical services and other public agencies. 1 z ' •goEa 3o sliElap aioui io3 g ligigxg aas asuald •ssouJ lloos •3 of uodai s.io;ralsmTaipd pue sOgD IId (OMD) aumpluD •xW of suodai pue raluoD IEoipay�l lt,uoiSa2l EuoioD jo iolEgsiuiurpd lelidsoH uoilElT rga21 aql si nlsnnoluesp ouaPO (DMD)ialua0 paW Sail EuoioD;o iaog30 aniln0axg,iaigD Sl auoiaplED ugop (H3Od) It,lidsoH fliununuoD aput,ID oAouy to iao> O aniln0axg3aigD si mArlsloom pm oi2l Z• • •o; s;iodag Zle;idsoH e;Slgala do SuipEag lunpinipm;o al;iL •c, luauraSEucru dol jo aoiruas3o glSual uo sliElap ion g ligigxg aas aseald •S.Max 01 =DouE io3 snurud glim loEiluoo aql pomauaz Alluaoai isnf anEq spnog aql PuB 0661 aouis uETulrad puE Elsie ioj iaSt,ut,ui It,lidsoq aql uaaq seq snunucl 'could sli ui Xusduioo luouia2EUEui lt,lidsog luumssa3oid pozrawai Alluuoiluu ngloue Aoldura of paambaa asE uururrad puu t,isiA `sa.IgjDUj asagl so;J02EMui pal3E.4u00 agl iaSuol ou seen EKCJ uoseai atuos zo;3l •sappua aseo gllEag iaglo put, slt,lidsoq s,ut,iuuad pue s,ulsiA aSEuuta o;pauiulai AllEogioods aq IWcl lEgl annbai sluaumoop Su!aueurg puoq luaooi `sluailo sli so3 sprepuels ooueuuoliad 1wouuug pue slt,oS f4!lt,nb Suinaigoe ui ssa30ns sli put,Elsie glinn pi0001 3I3t,.l sli of an(I •Suiourug goua io3 sloE.quoo puE ldu3sue.4 puoq aql ul poluoumoop si luouiannbai sial, •suoilt,rado sli agt,uem of Aueduroo luaruagmum leuoissajoad poziuSo0ai Allt,uoilt,u E jo saoinaas agl urelai of paimbai si `Suim-eug puoq sli jo u0111pu00 faolt,put,ur u SE `elsiA ZslulidsoH e;siA Sui;sixa ui;uamaNsu m do; to; pa;in mi asogl;o saaLuas jo q;Sua l zm.rg apis;no et, Suisn io; uos8al lunopt,zinESip •17 •g ligigxg aas asuald Lsuogisod lsn;as amEn asuald Zmig Bq papinoidpe;s;uamagunum;o slava l Z• • •Bq paumo tuq Zm.0;o Sn;e;s xv jL Zj;e;S;uamaSsunm apinoid o; pau2isap mlUjo aluum •£ •d ligigxg aas osuaid LSMLl -Aq°slagmnu auogd lsassaippt, l;nataSoldma lsao;oa.iiQ;o p.iuog e;siA;o;si l •Z •ut,iuuad jo aluuipiogns E SE `6861 `SZ zagolop uo `uoilEzodioo.liloid io3 jour `•ou1 `areo gllEaH ue maad of popualxa uorlduraxa dnoiS E ui uoisnloui iiagl;o anuin Aq `apoD agl 30 (E)(o) i0S uoiloaS ui poquosap se uoilEziuuS.io uE su `9861 JO apoD anuana2I lt,u.alu1 agl,lo (E)IOS uopooS.zapun xul amomi It,iopaj uioq iduiaxa si ElsiA ,'sM!dsoq agl„ se luarun0op sigl ur of paira;ai�tlaniloalloo aye It,uoiSa21 Euo.ro0 put, apueD ofio.ud -t,iu 0j7. D `t,uoioz)m palEool si `(IElidsoH uoilElTligE4921) sPaq LL ion pasua0il It,lidsoq uoilt,liliqugoj put (lt,lidsoH uit,N) IElidsog ialuao luailt,dlno anisuagaiduioo E glinn spaq 8V .10,1 pasuaoil IElidsoq ano alnoE uE jo$uilsisuoo `ialuao IEOtpay�l lEuoiSa�l Euoio� ETmomro `apunD oxoud ui palEool si `spaq 6L io3 pasuaoil IElidsoq oxco alnot, uE `lulidsoH,tliunIT OD app ofoud •Iulidsog uoiluliligEgai ouo put, srelidsog amo cine om4 solluodo puE sumo ElsiA -0661 `9 Ainr uo polEiodioom `uoilElodioo lgauoq oilgrnd`lgoiduou poltmodo Enuo3ilED E si •ou1 `suralsXS lEltdsoH Elsie Lsn;e;S;go.rd-uoN 1palundioauI sma;sAs le;idsoH VISTA Senn uagM •I SN3MSNaN`d S O 6. Process of decision making on health care products for any given hospital? To meet the needs of each community and to encourage local representation in the activities of each facility, Vista has appointed a Governing Board for each facility comprised of business executives, civic leaders and local physicians who are responsible for reviewing the operations of the facilities and reporting to the Vista Board. Most hospital.business is transacted through the respective hospital's Governing Board. Therefore, the development.of specific health care "products" is developed at the local level to best meet local needs. 7. Name/address/phone of organizations negotiating contracts with third-party payers. Tax status? Owned by? Third party payer contracts are negotiated by contracting experts employed by Primus Management, Inc. Primus is a for-profit organization located at One Eleven Sutter Street, Suite 2150, San Francisco, California 94104,telephone 415) 627-0755. Primus also uses various independent,unrelated consultants where necessary. 8. Contracts currently in place? Percents of costs (or charges) on each? Please see Exhibit C for a list of contracts currently in place. Vista is unable to provide percent of costs or charges for each contract due to antitrust issues. However,Vista's percentages are comparable to industry averages. 9. Percent of current business in hospital system with each third party. Below is a list of approximate percentages by class of payer: Hoapital Medicare Medical Managed Care Other CRMC 34% 11% 50% 5% AGCH 43% 12% 37% 8% Rehabilitation 54% 27% 19% 0% 10. Managed Care philosophy/strategy? Vista's philosophy in managed care is to gradually develop a full-service and community-based not for profit integrated delivery system for each of our communities. This system is designed to provide a continuum of care for people in the community—complete choice and access to physicians,hospitals, and other providers covered by managed care payers. In San Luis Obispo the system will provide a not for profit alternative to the large, for-profit Tenet Healthcare. 11. Please provide the following for each individual hospital owned by Vista: a. When purchased? Vista acquired Circle City Medical Center in Corona, California and Arroyo Grande in January, 1991. In October, 1992, Vista acquired Circle City's competitor, Corona Community Hospital, also located in Corona, California. Both facilities provided essentially the same services and were located one and a half miles apart. Immediately following the acquisition,Vista consolidated all services at the Main Hospital campus and closed the Rehabilitation Hospital campus for renovation. To accommodate the increased patient volume at the Main Hospital, Vista expanded the Intensive Care unit to ten licensed beds, opened a new Progressive Care Unit, completed a new 17,000-square foot surgery department, a state of the art obstetrical deparhnent, and refurbished a number of patient rooms. In addition, Vista centralized most outpatient activities, including preoperative services, in a new Outpatient Pavilion. 3 v 313 `ssugaaurjjels `uoile;uauo `uognaooai onuos m `Moiq`s1roui ioj ourg opnroui goigm smog OAgonposd -uou ase popnroxg •IEp;uaged sad smoq angoupoid luosaidal sasnsg osogl LsSt'p;na.;Ed pa;snfpt' rad Su33E}S 'a XaluaD re3ipaN rEuoisaZl euosoD uo uogEuuo}iri Xoj g ligigxg aas oseard •louuosiod ire XoI lsoddns Sur .Vui-uoisimp 3AI snnurpe apinoid put' papaau uagm drag of xaam sad sAvp uanas `,Cep sad smoq-tZ argerieAE osre si XosinXadnS osnog NZl ud •,C}moE luagt'd.Kq pounmolop ase rauuosiad jo nqumu pue xim oU •soLmlonaS 1?ufl puE sluElsissd suismN`s,NA-I `s,NZr;o ureal rt'uoissopid e Aq pa33els ase 1?ufl uogEAXasgp angiugaQ puE Ease rE3i2mS-rEoipaW aqZ •argEriunE sAwAre si ogen CEN Aouassauto ug glim suorE `jpls nagl se sumoppol rEoipaW A3uassaurg We s,NZI sEq ZIg mp JJE;s NZr ire ue sEq uufl aXED anisua;ul paq-8 mp 'spaau;uailed of suipsoo39 palsn[pE uagl si.r3,nS -Atp a souiil aamp p0;t'nrEAa-as si put' uralsAs f4jnoE m uo pamq si sluagud Xoi aXe3 of argErit'AE jt';s suismu jo saqumu aU •Asosaln NZr aql ut an 33els suismu oql jo%0L `ArluasmD •saiTF=j siagl put, sluagt'd mo of papinosd si legl QM aq;Jo asXEg3 ui si NZr aqZ •saue10s32S liufl put' `slut';sissd suismN`s,NA'I `s,NZI apnroui;Egl ss03rioen 0X93 q;re3g3o ureal E suisn pasanirap si oseo suisXnN sansas f1?IioE3 mo uogt'rndod oql Xo3;uaumoXinua pasa;ua3-Ati=3 pue `opmoiss9duroo `argisuodsoi `rEuoissajosd E u[asm suislflu aAisuagasduioo s32mm r rE;idsog c4pmururoZ) opuesg oAou V lE;uauivecloQ SuismN oql E; OPuwD OXOuV Luoi;Eziue2jo/aat'a smsanu;o alf4S 3 •AX0201E3 MR ui E;Ep rt'urs03 40931 lou saop MIA Ls;so33o s[uia; m;uagsd-;no o;;uaued-ui;o oquH •a %££ %L9 %6Z %IL reuoisaZlEuosoo %L£ %£9 %Z£ %89 oputJD oAossy 9661 5661 Zanumal3o suual m;uagt'd-;no o;;uaged-m jo ops-d T 10 100q3S OBBOND0 jopUff SmuimXl sluopisas put' suia;ui X33 rE;i sog 911Tg3ea E osrE si Xa;uaD rEoipoyi iolzmaspa •0uioipour out'gsadtCq put' `Am msom0u` a s . 190 MopugoloqI20 outPIRO BUTTPOM urE X a - E suipnloui sooinsas pazirei3ads Xu-eur sapinosd rE;idsog aXE3 AXegsal Paq-S££E `oSEoigo ui Xa;ua� rEoipOW miumaspg`AllruoilipPv •Q ligigxg aas oseaid ZmiA.ras luapud pazReiaadS •a Q ligigxg aas 2st'0id Lsaawas;uagt'd augnog -q uogE;irigrgw a;noegns put' `uoi;t'litigt'gas a1naE `[.gr goXsd oW!jos ui sureaoid uoi;E;irigEgaX luailedui S,reuoisaZi Euoso�suisnog `£66I `saquraoaQ ui relidsoH uogE;gigEq2-d oq; se pouadow sm sndureo.Cli0 ar3Xio aqr Arroyo Grande ppd=23.0 and Corona Regional ppd=19.8 h. Size/type of Medical staff--#in each specialty noted. Arroyo Grande As of April 1997, the Arroyo Grande Medical Staff consisted of 174 members. Excluding Courtesy Staff members,there are 96 members of the Medical Staff; 43 of whom, on average, annually admit more than ten patients to Arroyo Grande. Of the 43 physicians, 97% are Board certified in their respective specialties. The Active, Courtesy and Consulting Medical Staff members' average age is approximately 46 years. The top five admitting physicians,whose average is 43 years, account for approximately 30%of all admissions. Corona Regional As of April 1997, the Corona Regional Medical Staff consisted of 302 members. Excluding Courtesy Staff members,there are 221 members of the Medical Staff, 108 of whom, on average, annually admit more than ten patients to Corona Regional. Of the 108 physicians, 68% are Board certified in their respective specialties. The Active, Courtesy, and Consulting Medical Staff members' average age is approximately 52 years. The top five admitting physicians, whose average age is 56 years, account for approximately 21% of all admissions. Please see Exhibit F for more details. L Contractual status re: Radiology,Anesthesia,Emergency Department? Arroyo Grande Community Hospital Radiology As of January 1, 1996, the Radiology Directorshhip and Professional Services Agreement is currently with Coast Radiology Medical Associates in Arroyo Grande. The term of the agreement is for one year and maybe renewed for one years terms thereafter by mutual written agreement of the parties,unless otherwise terminated per provisions within the agreement. Anesthesia As of January 1, 1996, Dr. Russ Levitan and Dr. Andrew Sun are providing anesthesia services under their respective agreements. Emergency Services Emergency services have been provided by Coastal Physician Services of the West,Inc. A contract is currently under negotiation. Corona Regional Medical Center adiol Radiology has been provided by Fullerton Radiology. Contract status is current. Anesthesia Anesthesia has been provided by Crown Anesthesiology Medical Group. Contract.status is current. Emergent, Service Emergency services has been provided by Coastal Emergency Medical Group. Contract status is current. j. Satellite Services offered by each? Arroyo Grande Community Hospital currently offers one satellite clinic in Nipomo. Corona Regional Medical Center has a full service outpatient center on 5 9 xoAauaZ Isago21 :uossad louluoD 6Z65-£96/908 :auogd 101£6 VO `esugssg clutS oasud Ig it,1004S alg1S 808 •out `suoilgoiununuoD sainuQ •glsin jo jjBgaq uo maga ssaippE pus fliunmmoo aql}o smaouoo pug spaou aql alunlsna dlaq o;usugseg slues Jo oul`saogw mim aoD soinuQ;o scop uos agl paumlas seg glstn •saluo am f4jununuoo mau,Cug soj uoilsonpa apinoid pus ssauassmg oilgnd ui lsisse of sluuoissa3osd suoqulas oilgnd sasiq fgaugnoi ulstn •u3tedmt,a gd gaunel of paiiq miUjo ssaippe/amug •£I *W llgrgxg aas osuald •le;tdsoq It,nptntpm gaea put, uot;eiod zoo a;stA;o l rt,ga Ieuot;eztut,�l0 'ZI •Z llgigxg aas aseald •suivi2oad goual;no 14tunmmoa alt,l;snllI 'd salnluls put, smul uoiluuimisosip-ilus Igsapa3 pug aluls alslou Acm suosuudmoo Bons asnnoq ui2uo 3o AAunoo jo suual ui jjuls umop sxeaiq goigm uoRsuuojm ogioods opinosd of lou lasunoo Ictal Aq posinpg uaaq seq ulsiA •sial;oaUai s,I3sls lulidsoq luauno mo --,ClFmwwoo magi jo Alissanip Pip loallas sgins ls;idsoq mo alum of anuls pus AClissanip algsgolao pus oowqum aM •umBilai pus `ui.suo 3o k4unoo `sapua2l `ooss uoilusaptsum olui all lou scop smalsAs IulidsoH skin •?I ligigxg aas asuald •saguluaajad It,ngulllq alnma; o; alt,m/f)JU :;o sm.aal m f4tslantp (1t,;tdsoq pun lealpaw)•gelS •o •selimis Alanilslai ase sauo2olgo Aq sa2gluaosad lnq amil ui palidmoo aq lou pinoo luum2w uuosoo so3;sil sglimis d •papinosd sl L661-1661 pouad so3 opussD oAouV so3 lsil olaldmoo I ligigxg aas asuald Lsast,ga.ind ;uamdtnba ant;e;uasaidaa adstu 3o saldmexa q;tm not;ana;suoa pun ;uamdmba uaaes;aq ftmgsinim;stp gat,a at s;uaw;sanm lultdua •u 'L661 `AInf jpun palaldmoo oq lou II?m lipnu luosU 9661 :alou aseald •I ligigxg aas assaid Laic;)f4pega wogs/sivalf aalq;;sed aql io;laodai letauemj It,nuuV •m •H liglqxg aas assald L(sest,l-AN MvIS it,atPaW pun p mog;o alog •1 coo aseAld Lauogd/ssaippn/;uauxXolduia 2utpnlaut1stl pinog •11 •sndun;o lulidsoq urem aql mog saiim Z,Cialgmncosddg si lelidsog uoilu;il?qugo-d oql pug sndmuo lulidsoq urem sli The following are questions not originally included in the list submitted to Vista by Council Member Smith. These questions have been asked frequently and we believe you may also find them informative. 14. Who is Primus Management, Inc. and what is its relationship to Vista? How is the management fee structured? Primus Management,Inc. (PMI) is a for-profit management company. PMI has been retained under a management agreement to provide certain corporate functions, as well as to manage the operations of all Vista's hospitals. PMI reports directly to the Board of Directors of Vista. Vista does not own PMI nor does any Board member or officer of Vista have any direct or indirect financial interest in Primus. No one from PMI serves on the Board of Vista or in any other official capacity other than Vista's management contract. This is required by law. The management fee is structured according to IRS regulation 97-13 which strictly defines the structure,method of compensation and other terns of such management agreements. These regulations are enforced by the Intermediate Sanctions regulations of the IRS. (See Exhibit N for a copy of all the above mentioned regulations). The management fee is commercially reasonable and falls within the range of the market rates for the size of hospitals PMI manages in the State of California and the nature of the services provided under the terms of the contract. Furthermore, the appropriateness of the fees are verified for the Vista Board by a Big Six Public Accounting firm, in this case Coopers and Lybrand. During a bond financing, the fees are again verified by Coopers &Lybrand and must be acceptable to independent tax counsel and bond counsel so that the bonds can be legally issued. 15. Identify why Vista Hospital Systems was selected as the proposed buyer? Vista can only speculate as to why it was selected as the buyer of French Hospital. However, it can be assumed that Vista meets the criteria established by the Federal Trade Commission(FTC) for this transaction. Those criteria are that the buyer must have the financial strength, management experience, managed care expertise, and overall track record to continue to support French Hospital as the premier specialty hospital in San Luis Obispo. Although Tenet must select the proposed buyer, the FTC will make the final decision as to whether or not Vista meets these criteria. 16. How is the tax-exempt bond financing structured and what impact does the debt have on French Hospital? The tax-exempt bond financing will be accomplished by utilizing the City of San Luis Obispo as a conduit, a technical sten, to create the tax exemption. eTli CitX will have no financial risk or obligation for the bonds. no liability or general revenue pledge.nor will it cost the city anything since all costs for this technical sto will be reimbursed by Vista. If the bonds are ever in default, there are special reserve funds set aside to pay for the bonds for approximately 1 1/2 years until they can be restructured. Any losses on the bonds will be experienced only by the bondholders. These bonds are sold to large mutual funds and are not sold to private citizens. Seven(7) of the 12 largest bond mutual funds in the country purchase Vista's bonds. French Hospital will pay the interest and principle on the bonds over the next 30 years. The bonds may be refinanced from time to time if there is an opportunity to lower interest costs. The bonds will not be issued or sold unless it can be clearly demonstrated that French Hospital can pay the bond payments without in any compromising quality of care for its patients. 7 8 •onssr Aur uo op a Vaiq o;alon Aluo II?m 011S •Psuog RIs?A aql jo uossadsitgo aql osle si pssog luior agl jo uosiodneuo aqZ •psuog opuwD oAouy aql pus pssog gouwj aq1 uio.0 smquiamjo mqumu Isnbo ue jo do aputu sr psuog 9TLU •pstog ulsrA oT of Supiodas pssog Suil=dp luso f E oq Ilim omq L •uralsAs 3g13o sleoS aql luaamoldusi of Sur m Id oiSalEsls pus 2uila3lssul Iuiof`uonmTj000 1uauTa2euem ,Io ooi2op ggrq 10 aq Ilim asagl `lanamoH sooAoIdum pus `sjns IeoipouT `spstog SuiusanoD al10sEdas glim f4gu3 olesedas E se olusado II?m IBI?dsoq gong Lslt;idsoq ore.;aq;;e pam4m.4s aq aaueuaanoS Qib MOH 'Oz -f4unoD odsigp sin-I uuS m soseaiour lu0uglosao also po&uo T se m000 Ilim glmoi2 Isuoilippd •podolanap si rualsXs mo aouo uado om000q II?m goigm Inq anisnl3xa moa asu lEgl sl3EAuo3 oI Ss003e surElgo li su luouilloma PI?nq IIYn Pas IOIOE4u0O anissoMv uE oq oI Els?A olgeuo Ilim uralsAs oqs •uralsAS AsanilaP lgoid-io3-jou possq A41mururoo E pue lgord-.ro3 s uaannlaq a310143 SE Ilam se `s.rapcnoid iaglo `sauioisAgd`slElidsoq;o oo?ogo IIn3 a of ssoom, or.gdesSoaS odsrgp sm7 utS jo suazgto otp opinoid Il?m pue lauaZ o;anileusallu okmladmoo lsoo a 21eas3 Il?m It ooms ssaAEd ano paStueui of aniloulple fjan oq IIlm uoiluuiquroo snU •odsigp sm7 MS ui MOIS CS TIEaH lauaZ 011101 QA1.4 sane anilgadasoo s apinosd IIyA`uralsXs Asanilap u10i3isAgd luapuodopui 0ntl3a;3a ue jo lu0uidolan3p aql glim Suols `oputso oXouy pat gouzig jo uoiTomquioo oTLL LiE;idsoH 14iunuruioa apue if) o,Cos rd pus lE;idsog 11300 zg uaanuaq uo.Izgl 3e ue 3o s;gauaq aq;an,;eqM '6I p ligigxg 0os ural? Aq puE mo C Aq ls?I ololdmoo E io3 •pouad sell 5mmuoilliar Oi$AlalturixolddE palsanur stg slsiA `uoilt?m I'Z$ Su?MOl L66I u?XuAuOPun PUB papurg sluaaranosdrur IElidE3 agl ql?M 'uoTll?m 8$rano uaaq seq 9661 ggnoull 166I raozl IElidsoH[liunmmOD apussD oAouy lE laaurlsanui IslidEo IElos Ldigsaaumo g;siA aouis lgidsoH ,CliunuimoD apusif) oAo.ud;e paxinno antq s;uaruanordun It;idea;EgM '81 ErusolgED asaglnoS lnogSnosgl saralsAs)Sranilap pa;EaSalut SaiSsaura 111?m slaalmuT ur Surladmo3 put Su[dolanaP ui oouauodxo anrsu0lxa anEq ureal luoma9mmm oql jo ssaquraui Isom sE Il0m sic `pseog 2193o ssaquraur `Alluuoilippd -rose aornias ImliEuigns sll ui molsAs lmurdiop aip Surmooaq spmAol Aum alp Suole Ilam si umIsAs paltsSalu?us jo luaurdolanap `jo:imui oStoigo sl?uI mals is s Bons jo uoiltaso OT 01e3am?Ioe3 Ii ^�I?anaimuooHiiCC ` •lulidsoq ag13o amltu pus ozis aql of onp M31SAS Asanilop poltsSalu? ue dolanap of STI?qe slr ui pal3islsas uaaq seq ItlydsOH A47anumuoZ)opunD oAoud `altp o jL •suEio?sXigd put Ielidsoq qloq soj anegs iminuz omo paSmour%8L pue astgs lmIsem IEl?dsoq%05 sano seg elsiA tuosoo uI •odsigp SPI-I auS ui augl susalsAs Asanilap 1e3ip3ur PUB slelidsoq saSsel q3?m 03eldlailSui anililaduroo�Ssan s ut PUP `poluslauad asuo paSumm AlgSig `ears 11lnnos2 a si Euosoo (rClunoo aptssani-d)urm ilEZ) tuosoo ui uralsAs fUOAIIaP PalEsSalui ut dolanap saglmj of Suinurluo3 si put llmq seq slsiA •saoLuas put ssapinosd jo Avi n poluBolui us of ss000s ansq of sluailud molls of olesad000 sooLuos ostoglltaq saglo pue `ssoloop;o sdnoa `slElidsoq--Allunurmoo aq1 ui oldood soj aseo 3o mnnu?Iuoo E 3110313 01 p2pu3lui s? saials,Cs Al2ATIOP PalElSOIUT JO Suiplmq oILL Lswa;sAS Alangap palvAla;ui Suiplinq ui a3uauadxa s,t;siA si;EqM 'LI This joint board will meet quarterly at first and then twice a year once the . operations between the two hospitals become more routine. However,the Board will meet whenever necessary should issues arise which cannot wait until the next regular meeting. 21. What will be the process to determine consolidation of services at both hospitals? Will there be employee layoffs? Immediately after the completion of the sale, there will be a joint identification and analysis of service consolidation opportunities at both hospitals. This effort will involve the Board's medical staffs and various levels of management of both hospitals. Every effort will be made to avoid layoffs by determining if salary savings can be accomplished through attrition.reassignment ofnemonnel when possible. and retraining. If layoffs become necessary in this situation, severance pay and benefits will be structured to be at least as generous as the current policies at both hospitals. Laid- off employees will be given an opportunity to apply for any newly vacant position at the hospitals if they are qualified for the position. 22. French Hospital has established high standards of quality through its case management and quality improvement program. How will Vista continue to support these efforts? Due to the proven excellence of the French Hospital case management and quality improvement programs, Vista will assign the responsibility for these programs at both hospitals to the French Hospital team. 23. How does Vista plan to capitalize current projects such as the OB unit? Prior to the closing of the transaction, Vista's management team will collaborate with physicians, nurses, and other departments to develop a long range plan for the OB unit. Additionally, this effort will include an assessment of the needs for the planned Women's Health Center. A major portion of the funds for the early stages of these programs will be provided in the initial bond financing. Further capital will come either from reinvestment of hospital cash flow or future bond financing if necessary. 24. Will employee benefits be similar? It is rarely possible to exactly replicate employee benefits. Vista will provide employee benefits with essentially the same value as those now in place. They will very likely be similar in most respects. This has not been an issue in previous hospital purchases. Vista has no current plans for layoffs unless volume fluctuations require them in the normal course of business. Seniority for the purposes of benefit, service awards, and vesting will continue uninterrupted by Vista. The process for determining merit pay for union employees is according to contract. 25. Describe Vista's compensation structure and merit pay opportunities for employees. Merit pay plans are available for all employees upon recommendation of their supervisors. Merit increases are given based on employee performance and are not automatic. There are no other restrictions on merit pay. Vista endeavors to have a maximum number of its employees receive merit increases. The process for determining merit pay for union employees is according to contract. -END- 9