HomeMy WebLinkAbout1997-12-01 City Council (15)City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE
SERVICES
DATE:DECEMBER 1, 1997 CMR:482:97
SUBJECT:ANNUAL STATUS REPORT ON DEVELOPERS’ FEES AND
ADOPTION OF FINDINGS REGARDING UNEXPENDED FEES
REOMMENDATION
Staffrecommends that the City Council accept the Annual Report on Development Fees for
the period ~ndingJune 30, 1997 (Exhibit A). In addition, staff recommends that the City
Council make the findings in Exhibit B with respect to the continued need for certain funds
in the San Antonio/West Bayshore Fund, which are planned to be used for the San Antonio
On-Ramp Project, and the continued need for funds in the Stanford Research Park/El Camino
Real Service Commercial (CS) Zone Fund, which are being used for Major Intersection
Improvements and are scheduled for completion in 2010.
POLICY IMPLICATIONS
The approval of findings in Exhibit B, which allows the City to retain unspent development
fees, does not represent any change to existing City policies.
BACKGROUND
State law (Government Code Section 66006) requires each local agency which imposes
development impact fees, to prepare an annual report providing specific information about
those fees. This requirement is part of the law commonly referred to as AB 1600. It codifies
the legal requirement that fees on new development have the proper nexus to any project on
which they are imposed.
CMR:482:97 Page 1 of 5
In addition, AB 1600 imposed certain accounting and reporting requirements with respect
to the fees collected. The fees, for accounting purposes, must be segregated from the general
funds of the City and from other funds or accounts containing fees collected for other
improvements. Interest on each development fee fund or account must be credited to that
fund or account and used only for the purposes for which the fees were collected.
The law was amended, effective January 1, 1997. The new provisions require that, Within
180 days after the close of the fiscal year, the agency which collected the fees must make
available to the public the following information regarding each fund or account:
o A brief description of the type of fee in the fund.
o The amount of the fee.
o
o
The beginning and ending balance for the fiscal year.
The amount of fees collected and interest earned.
O
O
An identification of each public improvement on which fees were expended
and the amount of the expenditure on each improvement, including the total
percentage of the cost of the public improvement that was funded with fees.
An identification of an approximate date by which the construction of a public
improvement will commence, if the local agency determines that sufficient
funds have been collected to complete financing on an incomplete public
improvement.
O A description of each interfund transfer or loan made from the account or fund,
including the public improvement on which the loaned funds willbe expended,
and in the case of an interfund loan, the date on which the loan will be repaid,
and the rate of interest that the account or fund will receive on the loan.
o The amount of any refunds made due to inability to expend fees within the
required time frame.
This report must be presented to the legislative body. Exhibit A, attached, fulfills this
requirement.
CMR:482:97 Page 2 of 5
The law alsc~ provides that, for the fifth fiscal year following the first deposit into the fund,
and every five years thereafter, the local agency shall make findings with respect to any
portion of the fee remaining unexpended, whether committed or uncommitted. The finding
must: identify the purpose to which the fee is to be put; demonstrate a nexus between the fee
and the purpose for which it was originally charged; identify all sources and amounts of
funding anticipated to complete financing of incomplete improvements; and designate the
approximate dates on which the funding referred to above is expected to be deposited into
the fund.
If the f’mdings are not made as required by the law, or the agency determines it has collected
sufficient funds to complete the improvements for which a fee has been imposed and
collected, and the approximate date for commencement of construction is not identified
within 180 days, the agency shall refund, on a prorated basis to owners of the properties
upon which the fees for the improvement were imposed, the monies collected for that project
and any interest earned on those funds.
DISCUSSION
The City of Palo Alto development fees covered by AB 1600, and documented in the
attached Exhibit A, include the following:
O Stanford Research Park Traffic Impact Fees (PAMC Ch. 16.45)
Fee for new nonresidential development in the Stanford Research Park/El
Camino Real Service Commercial zone, to fund capacity improvements at
eight intersections.
O
o
San Antonio/West Bayshore Area Traffic Impact Fees ( PAMC Ch. 16.46)
Fee for new nonresidential development in the San Antonio/West Bayshore
Area to fund capacity improvements at four intersections.
Housing Impact Fees imposed on Commercial Developments (PAMC Ch.
16.47)
Fee on large commercial and industrial development to contribute to programs
that increase the City’s low-income and moderate-income housing stock.
CMR:482:97 Page 3 of 5
O Parking In-Lieu Fees for University Avenue Parking District (PAMC Ch.
16.57).
Fee on new nonresidential development in the University Avenue Parking
Assessment District in lieu of providing required parking spaces.
Residential housing in-lieu fees are also paid to the City, at the developer’s election, by
residential developers in fulfillment of obligations under the City’s inclusionary zoning
(Below-Market Rate Housing) program. While these fees do not necessarily fit within the
definition of development fees subject to AB 1600 reporting requirements, staff has included
them in this report for informational purposes.
Staff examined the accounts to determine if any development fees remain unexpended five
years or more after receipt. Development impact fees collected on or before June 30, 1992
which remain unexpended are contained in the San Antonio/West Bayshore Fund and in the
Stanford Research Park/El Camino Real CS Zone Fund. Staff is recommending that the City
Council make the findings contained in Exhibit B with respect to the continued need for the
San Antonio/West Bayshore funds for the San Antonio On-Ramp Project and with respect
to the continued need for the Stanford Research Park/E1 Camino funds for the Major
Intersection Improvements at Foothill Expressway and Page Mill Road, which are scheduled
for completion in 2010.
FISCAL IMPACT
If the Council does not make the findings contained in Exhibit B, the development fees
described therein will be required to be refunded. This would have a fiscal impact of
$644,501.
ENVIRONMENTAL ASSESSMENT
Presentation of this annual report is not a project under the California Environmental Quality
Act; accordingly, no environmental assessment is required.
ATTACHMENTS
Exhibit A Annual Report on Development Fees for Period Ending June 30, 1997
Exhibit B Findings With Respect to Unspent Impact Fees in San Antonio/West Bayshore
Traffic Fund and in the Stanford Research Park/El Camino Fund
CMR:482:97 Page 4 of 5
PREPARED BY:Linda Craig, Senior Financial Analyst
DEPARTMENT HEAD’ APPROVAL: )q~ ~ (~t~
Melis~a O. Cavallo
Acting Director,
Administrative Services
CITY MANAGER APPROVAL:
Assistant City Manager
CC: Home Builders Association
CMR:482:97 Page 5 of 5
Fund
Purpose and Authority
for Collection
Amount of the Fee
Exhibit A
City of Palo Alto
Annual Report on Development Fees
for Period Ending June 30, 1997
Stanford Research Park/
El Camino Fund
Traffic impact fees imposed
on new nonresidential develop-
ment in the Stanford Research
Park/El Camino Real CS zone
to fund improvements at eight
identified intersections
PAMC Ch. 16.45
$2.73 per square foot
San AntonioNVest
Bayshore Fund
Traffic impact fees imposed
on new nonresidential develop-
ment in the San AntonioNVest
Bayshore Areas to fund capacity
improvements at four identified
intersections.
PAMC Ch. 16.46
$1.46 per square foot
Balance July 1, 1996 $380,597 $329,265
Active96-97
Revenues
Fees Collected
Interest Earnings
339,884 13,467
36,332 20,067
376,216 33,534
Expenditures
M~orlnte~ectionlmprovement
Reimbursement of prior yearexpenditure for Embarcadero BikeBridge that should have not havebeen paid from these fees.
Ending Balance June 30,1997
Funds Unexpended since June 30,1992, plus accruedinterest
Other Commitments/Appropriations
Budget 1997-98
Budget1999-2000
(75,000)
32,750
(42,250)0
714,563 362,799
299,536 344,965
(15o,ooo)(5oo,ooo)
USE OF FUNDS:
In 1996-97 funds were used forthe Foothill Expressway/PageMill intersection improvements.The total project cost is$1,300,000, of which $200,000in impact fees are budgeted tobe used. This represents 15.4%of the project total cost.
USE OF FUNDS:
No expenditures have beenmade from this fund. Fees areplanned to be used for specifictraffic improvements in theCharleston/San Antonio Roadarea, but have been delayed bya related project beingconstructed by the StateDepartment of Transportation.
Exhibit A
City of Palo Alto
Annual Report on Development Fees
for Period Ending ,June 30, 1997
Fund Commercial Housing
In-Lieu Fund
University Avenue
Parking Assessment District
In-Lieu Fund
(INFORMATION ONLY)
Residential Housing
In-Lieu Fund
Purpose and Authority
for Collection
Amount of the Fee
Fees imposed on large com-
mercial and industrial develop-
ment to contribute to programs
that increase the City’.s low
income and moderate-income
housing stock.
PAMC Ch.16.47
Fees collected from non-residential
development within the University
Ave. Parking Assesment District
in lieu of providing the required
number of parking spaces.
PAMC Ch 16.57
Fees colected from residential
developments of three or more
units in lieu of providing the re-
quired below-market rate unit(s)
to low and moderate income
households.
PA Comprehensive Plan and
PAMC Chapter 18
"$3.63 per square foot $17,848 per space Varies
Fund Balance July 1, 1996
Activity in 1996-97
Revenues
Fees Collected
Webster Wood In-Lieu Payment
Sale of Property
Interest Earnings
Interfund Loan -
Total Revenues
Expenditures
Housing Prog~’am Expense
Principal Retired
Housing Construction
Transfer to Residential Fund
Total Expenditures
Ending Balance June 30, 1997
Funds Unexpended since
June 30, 1992
Other Commitments/Appropriations
Notes Receivable:
$3,800,584 $233,098 $2,008,632
304,237 517,590 3,999
8,300
82,256
115,452 28,467 0
100,000
419,689 546,057 194,555
(30,998)
(300,000)
(90,601)
(100,000)
(430,998)0 (90,601)
3,789,275 779,155 2,112,586
(3,300,400)(1,969,474)
Net Funds Available 488,875 779,155 143,112
Fund
Exhibit A
City of Palo Alto
Annual Report on Development Fees
for Period Ending June 30, 1997
Commercial Rousing
In-Lieu Fund
University Avenue
Parking Assessment District
In-Lieu Fund
(INFORMATION ONLY)
Residential Housing
In-Lieu Fund
USE OF FEES:
During 1996-97, $30,998 in fees
were used for contract expenses
with the Palo Alto HousingCorporation for administration of
the Below-Market-Rate housing
program. $300,000 was
expensed for the construction of24 units of housing at 2700 Ash
Street, a housing complex for
developmentally disabledpersons. City fees represent
8.1% of the total cost.
USE OF FEES:
No fees have been spent as of
6/30/97. Fees are planned to be
used for Downtown ParkingStructures project which is
estimated to cost $21.6 million inthe year 2000. Funds on hand
represent 4% of the total cost. The
project is currently in the designphase, and is contingent on voter
approval of an assessment district,
which will provide the bulk of theproject funding.
USE OF FEES:
During 1996-97, fees were used
to write-off the annual principal
payment due on a note
receivable from Oak Manorapartments.
The interfund loan of $100,000 isplanned for acquisition of
Bautista Court in the amount of$130,000. The loan is payable
to the Housing- Commercial
Fund as funds are available, andthere is no interest charge. In
the meantime, all interest earned
on the combined residential andcommercial housing funds is
accrued to the Housing-
Commercial Fund.
Notes Receivableinclude
725-753 Alma St. $2,695,000,
Barker Hotel $400,000 and2700Ash $205,000.
The interfund loan of $100,000 isplanned for acquisition of a
below-market-rate unit at 922
Bautista Court in the amount of$130,000. The loan is payable
to the Housing-Commercial Fund
as funds are available, and thereis no interest charge. In the
meantime, all interest earned on
the combined residential andcommercial housing funds is
accrued to the Housing-
Commercial Fund.
Notes Receivable include
$375,000 for 3053 Emerson, and$1,594,474 for Oak Manor
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EXHIBIT B
FINDINGS WITH RESPECT TO
UNSPENT IMPACT FEES
STANFORD RESEARCH PARK/EL CAMINO REAL CS ZONE FUND
SAN ANTONIO/WEST BAYSHORE FUND
WHEREAS, Government Code section 6600 l(d) requires the City to make
certain findings with respect to development fees collected which remain unexpended or
uncommitted five or more years after deposit of such fees; and
WHEREAS, the City has collected development fees as authorized under
Chapters 16.45 and 16.46 of the Palo Alto Municipal Code for the purpose of funding
transportation capacity and operational improvements as set forth in those Chapters, and has
segregated those fees into two separate funds, known respectively as the Stanford Research
Park/El Camino Real CS Zone Fund and the San Antonio/West Bayshore Fund; and
WHEREAS, the sum of $299,536, representing fees collected pursuant to
Chapter 16.45 since January 1, 1989, together with accrued interest thereon, remains
unexpended five or more years after deposit of the fees ("the Stanford Research Park fees");
and
WHEREAS, the sum of $344,965, representing fees collected pursuant to
Chapter 16.46 since January 1, 1989, together with accrued interest thereon, remains
unexpended five or more years after deposit of the fees ("the San Antonio fees"); and
WHEREAS, the City Council desires to make the findings required by law
with respect to such fees;
NOW, THEREFORE, THE CITY COUNCIL does find as follows:
Stanford Research Park Fees
1. The Stanford Research Park fees were collected pursuant to Chapter 16.45 of the Palo
Alto Municipal Code, to be used solely for the purpose of funding transportation capacity
improvements at designated intersections which are adversely impacted from new non-
residential development in the Stanford Research Park/El Camino Real CS Zone Area
("Area").
2. The need for the improvements for which the Stanford Research Park fees were
collected was identified in an Environmental Impact Report ("EIR") certified by the City
Council on March 6, 1989.
3. Section 16.45.060 of Chapter 16.45 identifies the specific improvements to be
constructed with the Stanford Research Park fees. Of the eight intersection improvement
projects collectively being implemented under CIP 19073 (Major Intersection
Improvements), one has been completed (Alma Street/Charleston Road), and a second is
nearing completion (Foothill Expressway/Page Mill Expressway). The latter is expected to
be completed in December 1998 at an estimated construction cost of $1,300,000. Full
funding has been made available, as follows:
Impact fees: $200,000 (15%)
Federal (ISTEA): $800,000 (62%)
General Funds in CIP 19073:$300,000 (23%)
Other major intersection improvements will follow as funds become available, and as traffic
conditions dictate. An implementation program for these improvements will be adopted by
the City Council as part of approval of the new Comprehensive Plan. This program
establishes a procedure to insure that improvements are constructed as traffic conditions
warrant. The first step in implementing the remaining improvements is the completion of
design plans to the 10-20 percent level, sufficient to establish "plan lines" that will give the
City the ability to obtain right-of-way where required.
The current cost estimate for the remaining major intersection improvements, based on the
modified set of locations included in the new Comprehensive Plan (which includes fewer
projects than in the current list), is $6.5 million. This estimate is higher than the original
estimate upon which the impact fee was based. If the impact fee is not increased, it will pay
for approximately $2.3 million of this amount, once the area on which it is levied is
reasonably built out in approximately 2010. The remaining $4.2 million will be obtained
from other sources including: ISTEA (federal),. state, county, and City (street improvement
funds). All major intersection improvements are expected to be completed by 2010. The
remaining improvements have not yet. been implemented due to lack of funding, lack of
right-of-way, secondary impacts of intersection widening, and a temporary respite from
deteriorating traffic conditions due to an economic recession.
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4. A reasonable relationship exists between the Stanford Research Park fees and the
purpose for which they were collected, in that the fees were imposed upon new non-
residential developments in the Area. Those projects, according to the’ EIR, cumulatively
generate traffic which adversely impact the intersections designated in the EIR.
5.The Stanford Research Park fees will be used solely for purpose of constructing the
traffic improvements identified in Chapter 16.45, as required under the Code.
6. The Stanford Research Park fees continue to be required in order to fund the
improvements specified in Chapter 16.45, in that the improvements have not yet been
constructed for the reasons described above, and the cost of the necessary improvements is
to be spread proportionately among the new non-residential users which contribute the traffic
generating the need for the improvements.
7. Based on the foregoing, a continuing need for the Stanford Research Park fees has
been demonstrated.
San Antonio Fees
1. The San Antonio fees were collected pursuant to Chapter 16.46 of the Palo Alto
Municipal Code, to be used solely for the purpose of funding transportation capacity
improvements at designated intersections which are adversely impacted from new non-
residential development in the San Antonio/West Bayshore Area ("Area").
2. The need for the improvements for which the San Antonio fees were collected was
identified in an Environmental Impact Report ("EIR") certified by the City Council on
January 13, 1986.
3. Chapter 16.46 identifies the specific improvements to be constructed with the fees
collected thereunder, which include a right-turn lane on westbound Charleston at San
Antonio, a signalized intersection at the site of the Ford Aerospace driveway, and
interconnections of traffic signals in the Area, or alternative improvements in the Area as
determined by the Chief Transportation Official, subject to the approval of the City Council.
4. The State Department of Transportation (Caltrans) has plans for a new on-ramp and
ramp metering improvements at the San Antonio Road junction with Highway 101. This
project has been planned for over eleven years, but has not yet been constructed because the
State is currently engaging in further review and study of the project. The San Antonio/West
Bayshore improvements described in Chapter 16.46 (with the exception of the
Middlefield/San Antonio feasibility study, which is not being actively pursued at this time)
are to be constructed together with or after the Caltrans on-ramp improvements, because of
the need to coordinate construction projects and assess the impacts of the new on-ramp prior
to commencement of the City improvements. Accordingly, the City has been unable to
undertake the improvements as of this time, and the San Antonio fees remain unspent.
5. The latest cost estimate for the three projects other than the feasibility study, based
on the increase in the San Francisco Bay Area Construction Cost Index since the original
estimate was made, is $625,000. If the impact fee is not increased, it will pay for
approximately $126,000 of this amount, once the area on which it is levied is reasonably
built out in approximately 2010. The remaining $499,000 will be funded by Caltrans as part
of the on-ramp and ramp metering projects.
6. A reasonable relationship exists between the San Antonio fees and the purpose for
which they were collected, in that the fees were imposed upon new non-residential
developments in the Area. Those projects, according to the EIR, cumulatively generate
traffic which adversely impact the intersections designated in the EIR.
7. The San Antonio fees will be used solely for purpose of constructing the traffic
improvements identified in Chapter 16.46, as required under the Code.
8. The San Antonio fees continue to be required in order to fund the improvements
specified in Chapter 16.46, in that the improvements have not yet been constructed for the
reasons described above, and the cost of the necessary improvements is to be spread
proportionately among the new non-residential users which contribute the traffic generating
the need for the improvements.
9. Based on the foregoing, a continuing need for the San Antonio fees has been
demonstrated.
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