HomeMy WebLinkAboutStaff Report 4063
City of Palo Alto (ID # 4063)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 11/5/2013
City of Palo Alto Page 1
Summary Title: Development Impact Fees: List of Public Facilities Capital
Needs
Title: Development Impact Fees: Approval of List of Public Facilities Capital
Needs
From: City Manager
Lead Department: Administrative Services
RECOMMENDATION
Staff requests that the Finance Committee review and approve the attached Development
Impact Fee Capital Needs List, and recommend approval by the full Council. Council approval is
a recommended step prior to having the City’s consultant suggest updates to the City’s
Development Impact Fees. Though approving the Needs List is not required by law, it will
ensure maximum transparency and public involvement, which will enhance the
comprehensiveness of the City’s Development Impact Fee program.
Staff requests that Council approval occur as soon as feasible, so that any approved fee changes
may be incorporated into the FY 2015 Budget.
BACKGROUND
Under California law, cities and other local agencies may exact Development Impact Fees on
proposed development which must be paid as a condition of development approval.
Development Impact Fees (“DIFs”) were enacted under Assembly Bill 1600 by the California
Legislature in 1987 and codified under California Government Code §66000 et. seq., also
referred to as the Mitigation Fee Act (the “Act” or “AB 1600”).
Development Impact Fees are not ongoing fees or taxes; they are one-time fees, paid at the
time of construction. Impact fees are not special assessments, nor are they permitted to cover
ongoing operations and maintenance costs. By definition, “a fee is voluntary and must be
reasonably related to the cost of the service provided by the local agency.” The fees are
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collected by local governmental agencies to pay for infrastructure or capital f acilities needed to
serve new development. Because impact fees are collected during the development approval
process, the fees are typically paid by developers, builders, or other property owners who are
seeking to develop property, as a way of paying their “fair share” of needed capital facilities.
Public facilities that can be funded with impact fees are defined by the Act as “public
improvements, public services, and community amenities.” In other words, the use of impact
fees is effectively restricted to public capital improvements.
The City of Palo’s current DIFs are listed in Attachment A. Cities typically identify a number of
exemptions to DIFs, which reflect policy decisions addressed at the time each impact fee was
enacted or amended by City Council. Developments may be exempt from all or some impact
fees, depending upon the intended use. For instance, 100% affordable housing projects (not a
mix of market rate and below market rate) are exempt from current impact fees, as are home
remodels or expansions, and certain categories of nonprofits.
A brief summary of Palo Alto’s current DIFs (detailed in Attachment A) follows, with enactment
dates in parentheses:
1. Housing Impact Fees for commercial and industrial projects (1984 and updated 2004)
2. Traffic Impact fees in the Stanford Research Park and San Antonio/East Bayshore areas
(1989)
3. In-lieu parking fee for downtown development (1995)
4. Parks (2002)
5. Community Centers (2002)
6. Libraries (2002)
7. Transportation (2007)
Last year, the City contracted with David Taussig & Associates, Inc (“DTA”) to (a) review the
City’s impact fees and evaluate the existing program’s general compliance with current legal
requirements, (b) compare the City’s fee categories and levels with those in comparable cities,
(c) work with City staff to identify existing and projected facilities and major equipment needs,
and (d) recommend options and methods to annually adjust impact fees.
In May 2012, DTA submitted to staff the results of a Comparative Development Impact Fee
Survey which evaluated the City’s existing DIF programs in relation to those maintained by the
following eight (8) cities – Cupertino, Fremont, Menlo Park, Mountain View, Redwood City, San
Mateo, Santa Clara, and Sunnyvale. The survey data revealed that the City’s cumulative impact
fees for residential development are relatively similar to other cities, and that its non -
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residential fees are high compared to other jurisdictions. In particular, the City’s DIFs for
transportation are on the low side, and there is no DIF for public safety.
DTA recommended that the City review and update its transportation, general government
facilities impact fees, and examine the possibility of a new public safety DIF. Note that the
evaluation of the City’s housing impact fees is not included in DTA’s current contract scope, but
is included as a program under the recently adopted Updated Housing Element.
DISCUSSION
The next step in this process is to identify the City’s projected facilities and major equipment
needs in the three categories identified above: transportation, general city government
facilities, and public safety. The attached Public Facility Capital Needs List (Attachment B) is
the product of discussions between Public Works, Police, Fire, Community Services, and
Administrative Services Departments; and a thorough review of the FY 2014 Adopted Capital
Budget, the Infrastructure Blue Ribbon Task Force (“IBRC”) recommendations, and the work to
date of the Council Infrastructure Committee. The Finance Committee may note that the list of
projects in Attachment B is longer than the list of projects developed by the Infrastructure
Committee and presented to Council on October 28, 2013 (CMR #4207). The primary reason for
this is that whereas the Infrastructure Committee has focused on projects that would require
some form of debt financing, the Needs List includes projects that the City tends to fund year to
year via the CIP Budget (“pay-as-you-go”).
The Needs List identifies the City’s capital needs (through the Target Year of 2035) within the
selected categories.
Staff presents this to the Finance Committee for discussion, comment, and approval. Staff asks
that the Committee keep in mind that this list is meant to be more inclusive than exclusive. It is
also a snapshot in time, i.e., there is no possible way the City and DTA can properly catalogue all
of the City’s needs over the next 21 years. DTA has indicated that the standard of review is that
the City should utilize the “best information that it has available at the time.” The specific
projects the Needs List includes, as well as funding requirements it indicates, are likely to
change over time. It is suggested that the City revisit the Needs List and its AB 1600 program at
least every five (5) years to ensure the appropriate legal nexus and ultimately the health and
defensibility of the AB 1600 program. This “snapshot” list serves as the denominator of “Total
Needs” which can then be utilized to calculate the “fair share” of facilities costs attributable to
new development through 2035.
Once both Finance Committee and full Council members’ comments are considered and
incorporated into the Needs List, DTA will proceed to its next phase – developing and
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documenting methodologies for calculating new fee amounts in a manner that complies with
all nexus requirements of AB 1600. DTA has prepared over 300 AB 1600 Nexus Studies; their
clients have included nearly every major City, County, and urban center in the State of
California. Staff will then present their recommendations to Council for approval.
It is hoped that full Council approval of the Needs List may occur by December 31, 2013, so that
DTA can prepare its nexus study to present to Council by March 1 , 2014, which will allow any
revisions to be processed and the final updated fees incorporated by May into the FY 2015
Proposed Budget.
RESOURCE IMPACT
Development Impact Fees provide funding for capital improvements to mitigate the impacts of
new development on the community and a specific public facility. The revenues received each
year vary based on the amount of development (both residential and non -residential) occurring
in Palo Alto during that timeframe. Recommended changes to the fees will be presented to
Council in future meetings.
POLICY IMPLICATIONS
Council has the authority to charge new development for its relative share of the cost of
specific public facilities and services, as calculated based on a Nexus Study. Council also has the
authority, for policy reasons, to restructure fees based on articulated City policies. The
information provided in this report allows Council to take the next step towards re -evaluating
and adjusting the City’s Development Impact Fees.
Attachments:
Attachment A: Current Development Impact Fees (PDF)
Attachment B: Public Facilities Capital Needs List (PDF)
City of Palo Alto Development Impact Fees
As per FY 2014 Adopted Municipal Fee Schedule page 17-3
Type of Project Parks Community Centers Libraries Housing
Total Fees (NIC
Transp.)Transportation
Residential - New Homes Only*
Single family < 3,000 sq. feet $10,638/residence $2,758/residence $963/residence EXEMPT $14,359/res.
$3,197 per net new
PM peak hr trip
Single family >3,000 sq. feet $15,885/residence $4,129/residence $1,434/residence EXEMPT $21,448/res.
$3,197 per net new
PM peak hr trip
Multi-family </= 900 sq. feet $3,521/unit $916/unit $316/unit EXEMPT $4,753/unit
$3,197 per net new
PM peak hr trip
Multi-family >900 sq. feet $6,963/unit $1,815/unit $565/unit EXEMPT $9,343/unit
$3,197 per net new
PM peak hr trip
Non-residential
Commercial/Industrial
$4,517 per 1,000 sq ft
or fraction thereof
$255 per 1,000 sq ft or
fraction thereof
$243 per 1,000 sq ft or
fraction thereof
$18.89 per sq
ft
$23.89 per net
new sq ft
$3,197 per net new
PM peak hr trip
Hotel/Motel
$2,043 per 1,000 sq ft
or fraction thereof
$115 per 1,000 sq ft or
fraction thereof
$102 per 1,000 sq ft or
fraction thereof
$18.89 per sq
ft
$21.15 per net
new sq ft
$3,197 per net new
PM peak hr trip
Residential Subdivisions of over 50 parcels
Single-family
Multi-family
Special Zones Traffic Impact Fee
Stanford Research Park/El Camino Real CS
Zone
$11.08 per net new sq
ft
San Antonio/West Bayshore Area $2.28 per sq ft
Charleston/Arastradero Commercial $0.34 per sq ft
Charleston/Arastradero Residential $1,168 per unit
Parking in-lieu fee for Downtown
Assessment District
$60,750 per parking
space
Note: "Single-family" is defined as a single dwelling unit that does not share a common wall with another dwelling unit
Fee Category
Parkland Dedication Fee
*Square footage refers to living area, not lot size.
555 sq ft of parkland/unit or $58,366/unit in-lieu fee
382 sq ft of parkland/unit or $40,187/unit in-lieu fee
{1}{2}{3}
Facility Name Total Cost for
Facility
Off-setting
Revenues Net Cost to City
A. TRANSPORTATION
1 Bike/Pedestrian Plan $22,250,000 ($6,000,000)$16,250,000
2 Citywide Traffic System Upgrade $453,000 $0 $453,000
3 California Avenue Parking Garage $16,500,000 $0 $16,500,000
4 Charleston/Arastradero Corridor $9,750,000 ($2,270,000)$7,480,000
5 Citywide Traffic Signal ITS Upgrade $5,345,000 ($650,000)$4,695,000
6 Downtown Parking Garage (new)$18,400,000 $0 $18,400,000
7 El Camino Medican Landscape Improvements $1,086,000 ($30,000)$1,056,000
8 Highway 101 Bike/Ped. Bridge $10,000,000 ($8,350,000)$1,650,000
9 Newell Road/San Francisquito Creek Bridge Upgrade $2,500,000 ($2,500,000)$0
10 Safe Routes to School $2,200,000 ($528,000)$1,672,000
11
Traffice Management & Parking Improvements in non-Safe
Routes to School Neighborhoods $4,950,000 ($225,000)$4,725,000
12 Sign Reflectivity Upgrade $1,100,000 ($50,000)$1,050,000
13 Street Lights, Streets and Sidewalk Improvements $13,130,000 ($140,000)$12,990,000
14 Thermoplastic Marking & Striping $1,650,000 ($75,000)$1,575,000
15 Benches, Signage, Fencing, Walkways, Perim. Landscaping $3,300,000 ($150,000)$3,150,000
16 Transportation Revenues not yet Committed ($489,245)($489,245)
TOTAL - TRANSPORTATION 112,614,000$ (21,457,245)$ 91,156,755$
B. PUBLIC SAFETY FACILITIES
1. Police Facilities
1 Public Safety Building ("PSB") - Replace (44,850 square feet)$57,000,000 $0 $57,000,000
Subtotal $57,000,000 $0 $57,000,000
2. Fire Facilities
2 Fire Station 3 (Rinconada Park - built 1948) - Replace $6,700,000 $0 $6,700,000
3 Fire Station 4 (Meadow/Middlefield - built 1953) - Replace $7,500,000 $0 $7,500,000
4 Rescue Vehicle $750,000 $0 $750,000
5 BC Van (x 2)$200,000 $0 $200,000
6 Fire Trucks (x 2)$2,000,000 $0 $2,000,000
7 Type III Engine (x 2)$800,000 $0 $800,000
8 Training Tower & Related Land Acquisition $8,000,000 $0 $8,000,000
9 Type I Engine (x 8) - 2024 $4,200,000 $0 $4,200,000
10 Ambulances (x 4) - 2022-2025 $1,300,000 $0 $1,300,000
11 Vehicles (Van, Trucks, Engines, Ambulances)$9,250,000 $0 $9,250,000
Subtotal $31,450,000 $0 $31,450,000
12 Pubic Safety Revenues not yet Committed $0 $0
TOTAL PUBLIC SAFETY FACILITIES $88,450,000 $0 $88,450,000
ATTACHMENT B
CITY OF PALO ALTO DEVELOPMENT IMPACT FEE PROGRAM
PUBLIC FACILITIES NEEDS LIST THROUGH 2035
1
{1}{2}{3}
Facility Name Total Cost for
Facility
Off-setting
Revenues Net Cost to City
ATTACHMENT B
CITY OF PALO ALTO DEVELOPMENT IMPACT FEE PROGRAM
PUBLIC FACILITIES NEEDS LIST THROUGH 2035
1 Acquisition of Post Office*TBD $0 -
2 Acquisition of New Computers $750,000 ($75,000)$675,000
3 Buildings Systems Improvements $6,300,000 ($100,000)$6,200,000
4 Civic Center Plaza Deck $16,000,000 $0 $16,000,000
5 Municipal Services Center Improvements (through 2020) $ 1,991,000 $0 $1,991,000
6 Municipal Services Center - Replace (after 2020)$93,000,000 ($32,550,000)$60,450,000
7 Ventura Buildings Improvements $690,000 $0 $690,000
8 General Government Revenues not yet Committed $0 $0
TOTAL GENERAL GOVERNMENT FACILITIES 118,731,000$ (32,725,000)$ 86,006,000$
GRAND TOTAL $319,795,000 ($54,182,245)$265,612,755
Note:
*Funds required for acquisition of Post Office not included.
C. GENERAL GOVERNMENT FACILITIES (COMMUNITY CENTER, INFORMATION TECHONOLOGY,
PUBLIC ART, ETC.)
2