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Staff Report 181-07
City of Palo Alto City Manager’s Report TO: ATTN: FROM: DATE: SUBJECT: HONORABLE CITY COUNCIL FINANCE COMMITTEE CITY MANAGER APRIL 17, 2007 DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT CMR: 181:07 PROPOSED CITYWIDE TRANSPORTATION IMPACT FEE RECOMMENDATION Staff recommends that the Finance Committee recommend that the City Council adopt. the attached ordinance implementing a citywide transportation impact fee (TIF). BACKGROUND In 2002, when developing a work plan for its Top 5 priorities, the City Council directed the Department of Planning and Community Environment to explore creating a transportation impact fee to fund transportation projects to reduce congestion citywide. Staff met with the Planning and Transportation Commission (PTC) on June 11, 2003 and August 27, 2003 to discuss alternatives and, based on those discussions, presented a final recommendation on March 17, 2004. The recommendation included an ordinance and a supporting nexus study showing a relationship between the fee and the traffic impacts it was meant to mitigate. The PTC recommended that the City Council adopt the staff recommendation. Following the PTC recommendation to approve, the Finance Committee reviewed the staff recommendation on April 20, 2004. The Committee was evenly divided on the staff recommendation, and did not make a recommendation to the City Council. The comments of both the t~C and Finance Committee are included in the August 9, 2004 staff report (CMR:384:04), attached. On August 9, 2004, the City Council reviewed the staff proposal. At that meeting, the City Council voted to refer the report to the Finance Committee to reconsider the proposal following a review of all City development impact fees. Staff surveyed CMR:181:07 Page 1 of 8 surrounding cities and produced a comprehensive overview of all City impact fees, which they presented to the Finance Committee and City Council on July 19, 2005 and September 12, 2005, respectively. Of the cities surveyed, Palo Alto impact fees were in the low or middle range for residential development, and in the high range for commercial development. That report, and the minutes from those meetings, are included in Attachments I, J, and K. DISCUSSION This ordinance represents staff’s revised recommendation based on the comprehensive impact fee study, and comments from the City Council, Finance Committee, Planning and Transportation Commission, Chamber of Commerce, and other interested parties. Summary of Staff Recommendation By adopting this ordinance, the City Council would impose a fee on future development to fund transportation system improvement projects. These projects are designed to improve traffic flow throughout the City, and include enhancements to the City’s traffic signal system, the Palo Alto Shuttle, and the bicycle system. The fee would be assessed against both residential and commercial development, but would not apply to existing businesses, tenant changes, or remodeling that does not increase the floor area or number of residential units. The fee would only generate enough revenue to cover 7.9% of the cost of the projects, which is the proportionate share of vehicle trips projected to be generated by new development through 2025. The revenue from the fee would be used to obtain grants to offset the remaining costs. Staff does not recommend reducing other impact fees to offset the impact of the new fees.However, some analysis of this alternative is presented below. Application of the Transportation Impact Fee Because the nexus study was completed in July 2004, staff worked with a transportation consultant to update the nexus study to incorporate updated land use projections from the Association of Bay Area Governments (ABAG) and current project costs. The nexus study update (Attachment C) supports a maximum fee of $2,961 per net new PM peak hour trip generated by a new development subject to the fee. Staff proposes a fee of $2,601 per net new PM peak hour trip, which is the fee proposed in 2004, escalated using the Engineering News Record construction cost index. Because the fee is assessed using net new trips, a project that generates no new traffic impacts, no matter how much new floor area or housing it generates, will not incur a fee. To determine the number of trips, an analysis would be performed based on VTA transportation impact analysis guidelines, and would be paid for by the applicant and reviewed by the City. Similar analyses are already commonly required for development applications. CMR:181:07 Page 2 of 8 Because a traffic impact analysis is required to determine the fee amount, and will be different for each project, it is difficult to convert the above fee into per-square-foot or per-unit rates without a sample project. However, some estimated fee amounts, based on the 7th Edition Institute of Traffic Engineers Trip Generation Manual, are listed in Attachment E, and a selection of those are included in the table below. The actual fee would depend on the particular traffic characteristics of the project. Single-family, detached Apartment General Office Retail Center 1.01 / unit .62 / unit .00149 / sf .00271 / sf $2,627 / unit $1,613 / unit $3.88 / sf $7.05 / sf $2,627 / unit $1,613 / unit $3.88 / sf $3.88 / sf The fee amount is based on the July 2004 Transportation Impact Fee Nexus Study (Attachment B), as updated by the March 2007 Technical Addendum (Attachment C), which updates the numbers in the original nexus study using land use projections that have become available since the original nexus study was completed. Projects to be Funded The nexus study includes a list of projects to be funded by the TIF. The list was developed based on the City’s Transportation Strategic Plan. The projects listed would not be initiated until included in an approved City budget, with all funding sources identified. The list may be changed, so long as the requirements of AB 1600 for reporting are met, which may include revisions to the nexus study. The project list proposed in the nexus study includes the following: Computerized traffic management: This project would extend the traffic-adaptive automated traffic signal system currently installed on Charleston/Arastradero to the rest of Palo Alto. Traffic-adaptive technology has been used successfully to improve traffic flow in other cities throughout the country. This project also includes other uses of electronics to improve transportation flow, including transit information kiosks and dynamic message signs for parking management and special events. Shuttle Service Expansion: The TIF would also provide funding for an expansion of the popular Palo Alto Shuttle service, including service to the Stanford Research Park, service along San Antonio Road, and enhancements to the existing routes. Bicycle and Pedestrian Projects: The remainder of the TIF would fund high priority bicycle and pedestrian projects from the City’s Bicycle Strategic Plan, including: o Bicycle boulevards o Bicycle and pedestrian underc.rossings o Bike lanes on major streets CMR:181:07 Page 3 of 8 o Bike lanes and bike routes on major arterials o Spot bicycle and pedestrian improvements Citywide Transportation Demand Management Program Appendix C of the Nexus Study (Attachment B) includes a detailed list of the projects to be funded by the TIF. Updated project costs are included in Figures C-1 through C-3 of the Nexus Addendum (Attachment C). Exemptions to the Fee The ordinance exempts the following development from the fee: 1.City buildings 2.Public school buildings 3.One-hundred percent affordable housing and below market rate (BMR) housing units in excess of those required by the City 4. Retail services, eating establishments, personal service, and automobile service uses where the total square footage is 1,500 square feet or less 5. Day care centers In addition, the ordinance does not apply to tenant changes or projects that do not increase floor area or involve demolition of the existing building. Application to Projects in Process This fee would only apply to projects that had not submitted a development application prior to the effective date, sixty days from the date of adoption of this ordinance. This fee would apply to the Stanford Medical Center and Stanford Shopping Center expansions unless an application is filed prior to the effective date. Changes to the Original Ordinance City staff is recommending one change to the ordinance proposed August 9, 2004, a cap on the fee for commercial projects. Unlike other impact fees, which are calculated based on the net new building area, and treat all commercial uses equally, this fee is based on net new trips generated. Calculating the fee requires a traffic analysis, and will typically result in higher fees for retail projects, which traditionally generate more traffic. To avoid discouraging retail uses, and to facilitate financial planning for development projects, this ordinance proposes to cap any fee imposed on non-residential development at $3.88 per square foot, the fee that an average general office use would incur. By imposing this cap, the fee would be consistent with the City’s Comprehensive Plan Goal B-3 of "encouraging new businesses that provide needed local services and municipal revenues, contribute to economic vitality, and enhance the city’s physical environment." CMR:181:07 Page 4 of 8 Alternatives: Reducing Other Fees One way to reduce the total fee load on businesses would be to reduce other impact fees. It is staff’s judgment that Palo Alto’s total impact fee load is not unreasonable, even when compared to other cities surveyed (see Attachment J, CMR:323:05, Comparative Data on Impact Fee Levels). An analysis of several alternatives, namely reducing the parks impact fee on commercial uses or reducing the commercial housing in-lieu fee, follows: Parks Impact Fee (Commercial Fee Only) The City currently has two parks fees that apply to new development, the Parks Impact Fee and the Parkland Dedication Fee. The former was adopted in 2002, and applies to both commercial and residential development. The latter was adopted in July 2006 under the State’s Quimby Act, and applies only to residential subdivisions. The Parkland Dedication Fee is higher than the Parks Impact Fee, and will generate significantly more revenue. With this additional revenue stream for parks projects, The City Council could consider reducing or eliminating the commercial Parks Impact Fee to offset the impact of the proposed Citywide Transportation Impact Fee. Projected Revenue from Parks Fees 2010-2025 Residential Commercial Total Before adoption of Parkland Dedication Fee (Park Impact Fee only)27,782,391 14,665,300 42,447,691 Current Fees (Parkland Dedication + Park Impact Fee)91,975,200 14,665,300 106,640,500 Alternative Proposal (eliminate commercial Parks Impact Fee)91,975,200 -91,975,200 The above projections are based on 2010-2025 growth projections by ABAG. See Attachment F for more details. There are two drawbacks to reducing the Parks Impact Fee. First, with the market for commercial space beginning to strengthen, and the market for residential investment slowing, commercial projects will be the most likely source of parks fees in the short term. Second, the Parkland Dedication Fee was adopted because revenue from the Parks Impact Fee was insufficient to fund significant park upgrades and parkland acquisition. It will take some time before the City begins to receive revenues from this new fee. Staff recommends waiting to see whether the new fee generates enough revenue to achieve the City’s parkland goals. CMR: 181:07 Page 5 of 8 Commercial Housing In-Lieu Fee At $16.01 per square foot, the commercial housing in-lieu fee is the most significant contributor to the total development fee load for new commercial projects. However, this fee is a major source of funding for the City’s affordable housing goals set forth in the Comprehensive Plan Housing Element. Reducing this fee would mean that affordable housing would have to compete with other priorities in the City’s budget process each year, or less funding would be available for affordable housing. Other Impact Fees No other impact fees are large enough to have a significant impact on the total development fees for commercial development. Community center and library fees are approximately $0.20 per square foot, and water capacity fees are even less. POLICY IMPLICATIONS The proposed Citywide TIF implements the following Comprehensive Plan Transportation policies and programs: 1998-2010 Palo Alto Program T-4: Consider the use of additional parking fees and tax revenues to fund alternative transportation projects. In addition, projects to be funded by the TIF will implement several Comprehensive Plan Goals, including: Goal T-1 (Less Reliance on Single-Family Vehicles) Goal T-2 (A Convenient, Efficient, Public Transit System that Provides a Viable Alternative to Driving) Goal T-3 (Facilities, Services, and Programs that Encourage and Promote Walking and Bicycling) Goal T-4 (An Efficient Roadway Network for All Users) RESOURCE IMPACT The Citywide Transportation Impact Fee is designed to recover 7.9% of projected project costs, for a total of $10.2 million dollars through 2025. To provide this amount of capital project funding through General Fund contributions, rather than an impact fee, would require an average contribution of nearly $570,000 per year. CMR:181:07 Page 6 of 8 ENVIRONMENTAL REVIEW The creation of a government funding mechanism that does not involve commitment to a specific project is exempt under the California Environmental Quality Act. PREPARED BY: J~’~ENDSCHEIN LIBBY DAME/ Senior Financia~ Analyst DEPARTMENT HEAD REVIEW: EM Director of Planning and Community Environment CITY MANAGER APPROVAL: EMILY ~RI ~ O~N Assistant City Manager ATTACHMENTS Ao B. C. D. Eo F. G. H. I. J. K. U Draft Citywide Transportation Impact Fee Ordinance Draft Transportation Impact Fee Nexus Study (July 2004) Draft Addendum to Nexus Study (April 2007) Comments from Chamber of Commerce Government Action Committee meeting December 7, 2007 Estimate of Transportation Impact Fee for Specific Uses Estimate of Future Park Impact Fee Revenue CMR:384:04, Proposed Citywide Transportation Impact Fee Minutes, City Council, August 9, 2004 CMR:323:05, Comparative Data on Impact Fee Levels Minutes, Finance Committee, July 19, 2005 Minutes, City Council, September 12, 2005 Sample Project Calculation CMR:181:07 Page 7 of 8 COURTESY COPIES Sandra Lohnquist, Palo Alto Chamber of Commerce Jean McCown, Stanford University Beverley Bryant, Home Builder’s Association Lee Wieder CMR:181:07 Page 8 of 8 NOT YET APPROVED ATTACHMENT A’~ ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO ESTABLISHING A CITYWIDE TRANSPORTATION IMPACT FEE AND AMENDING THE PALO ALTO MUNICIPAL CODE, TITLE 16 (BUILDING REGULATIONS) BY ADDING CHAPTER 16.59 - CITYWIDE TRANSPORTATION IMPACT FEE The Council of the City of Palo Alto does ORDAIN as follows: SECTION I. Findings. declares that: The City Council finds and (a) Development projects in the City, including new construction, additions, and rebuilds, place new demands on the City’s transportation infrastructure. (b)Especially during commute hours, the City’s transportation infrastructure operates at or near capacity. Consequently, the introduction of additional vehicles onto the City’s streets has the effect of increasing traffic congestion. Increased congestion has negative effects on commute times, transit system efficiency, air quality~ traffic safety, pedestrian and cyclist comfort, and other quality-of-life issues affecting the community. (c)The City currently imposes site-specific exactions upon new development that place heavy demands on specific intersections and streets,and the City currently imposes area-based traffic impact fees to fund street improvements specifically necessitated by (and in the immediate vicinity of) development in certain areas of the City. However, when traveling to and from new developments, commuters, residents and customers use (and cause congestion on) streets and transportation infrastructure throughout the City. These citywide transportation impacts are not mitigated by existing exactions or fees. (d)It is not feasible to widen streets on a citywide basis in order to relieve congestion. Consequently, the best way to accommodate trips generated by new development is through improvements and services that increase the capacity of the transportation system without requiring additional full-width lanes. 070411 cjs 0130091a NOT YET APPROVED (e)The City has engaged Nelson\Nygaard Consulting Associates to prepare a study, entitled "Transportation Impact Fee Nexus Study," modified by a subsequent addendum, entitled "Addendum to Transportation Impact Fee Nexus Study" (collectively the "Study"), setting forth a program of public improvements and public services designed to increase capacity of the transportation system and mitigate congestion caused by new development (the "Program"). The Study, which is on file in the Office of the City Clerk, is incorporated herein by reference. (f)The Program’s advanced transportation management and information system will mitigate congestion throughout the city by improving drivers’ route and trip selections,by decreasing the amount of time ~ehicles spend idled at intersections and by increasing the efficiency and speed of transit services. (g) The Program’s expanded shuttle transit service will provide additional transportation options to commuters, residents and customers. By shifting trips along existing streets from single passenger automobiles to multi-passenger buses, expanded shuttle service will increase the number of people who can simultaneously use existing streets. (h)The Program’s bicycle and pedestrian improvements will make it safer and easier for individuals to travel within the City without using a motorized vehicle. By shifting trips along existing streets from existing traffic lanes to sidewalks, bike lanes, and bike boulevards, bicycle and pedestrian improvements increase the number of people who travel without using infrastructure for motorized vehicles. (i) Section 66000 et seq. of the California Government Code authorizes the City to levy a fee upon development projects to defray all or a portion of the costs of public improvements and public services related to the development project. (j)The City desires to impose a fee, to be known as the "Citywide Transportation Impact Fee", upon development projects, for the purpose of funding a portion of the costs of the Program (the "Fee"). The Fee, its methodology, and the calculations supporting its methodology, are set forth in this Ordinance and more completely analyzed in the Study. 070411 cjs 0130091a 2 NOT YET APPROVED (k)The Study estimates the costs of each element of the Program and substantiates a methodology for the Fee that will charge each new development project only for the portion of the costs of the Program necessary to mitigate the traffic congestion expected to be caused by that development project. (1)The Study identifies congestion not attributable to new development, and the Fee will not fund mitigation of such congestion. (m)There is a reasonable relationship between the need for the Program and the development projects on which the Fee will be imposed because such development projects cause traffic congestion on a citywide basis that the Program will mitigate. (n)There is a reasonable relationship between the Fee’s use and development projects on which the Fee will be imposed because the Fee will only fund the portion of Project costs allocable to congestion caused by those development projects. (o)The Fee does not exceed the estimated reasonable cost of providing the services and facilities for which the Fee is imposed. The Fee is not levied, collected or imposed for general government purposes. (p)Certain new development projects, though likely to generate at least some traffic congestion, are exempted by this Ordinance from the Fee due to the following considerations: (i) public schools, affordable housing projects, and day care centers are exempted because the provision of the critical social services provided by these types of developments are of higher priority to the City than the mitigation of citywide traffic congestion; (ii) municipal .buildings are exempted because the City already funds a wide range of transportation improvements throughout the city; and (iii) small retail establishments are exempted because such establishments primarily serve workers and residents already in a neighborhood, thereby permitting these customers to substitute walking trips or short vehicular trips for longer trips and thus serve by the very nature to mitigate citywide traffic impacts. (q)The Study identifies the portion of anticipated citywide congestion allocable to exempt uses and does not charge non-exempt development projects for the portion of Project Costs necessary to mitigate such congestion. 070411 cjs 0130091a .NOT YET APPROVED SECTION 2. Title 16 of the Palo Alto Municipal Code is hereby amended by adding Chapter 16.59 to read as follows: "Chapter 16.59 - Citywide Transportation Impact Fee Section 16.59.010 - Short Title This Chapter may be referred to as the Citywide Transportation Impact Fee Ordinance. Section 16.59.020 - Definitions For the purposes of this Chapter, shall apply: the following definitions (a) "Affordable Housing" shall mean housing with a purchase price or rent that is affordable to a "moderate," "low" or "very low" income household, as those terms are defined by the California Department of Housing and Community Development, as applicable to Santa Clara County. (b) "Citywide Transportation Capacity Enhancements" shall mean public facilities and services that relieve citywide traffic congestion caused by new development projects.Citywide Transportation Capacity Enhancements include, but are not limited to, advanced transportation management and information systems, expanded shuttle transit services, and bicycle and pedestrian improvements. Citywide Transportation Capacity Enhancements do not include (i) intersection improvements designed primarily to accommodate increased traffic generated by a specific development or (ii) the addition of through-traffic lanes designed for primary use by private motorized vehicles. (c) "Construction Cost Index" shall mean the Construction Cost Index for the San Francisco Bay Area set forth in the Zngin~ering N~ws Record published by McGraw Hill and Associates. In the event the Engineering News Record ceases to calculate and publish this index, then the City Manager may designate a comparable, alternative index to serve as the Construction Cost Index. (d) "Eligible Citywide Transportation Capacity Enhancements" shall mean (i) the Citywide Transportation Capacity Enhancements identified in the Transportation Impact Fee Nexus Study approved by the City Council, and (ii) other Citywide Transportation Capacity Enhancements that are approved by the City Council that 070411 cjs 0130091a 4 NOT YET APPROVED may be substituted for an identified improvement or service because they will mitigate similar congestion. (e) "Existing Development" shall mean structures present (at the time the amount of the Fee is calculated) on parcels upon which New Development is planned to occur. Where it is necessary to project PM peak hour vehicle trips generated by Existing Development, such projection shall be made based on either (i) the trip generation estimates used to determine the Fee owed with respect to such Existing Development when the Fee was last paid with respect to such Existing Development or (ii) if the Fee has not been paid with respect to such Existing Development (or any portion thereof), the most recent use of the Existing Development. (f)"Fee" shall mean the Citywide Transportation Impact Fee imposed pursuant to this Chapter. (g) Any reference in this chapter to the "Government Code" or to a section of the "Government Code" shall refer to the California Government Code as it exists at the time this ordinance is applied and shall include amendments to that Code made subsequently to the adoption of this Chapter, it being the intent of the City to maintain the Fee in compliance with applicable law. (h) "New Development" shall mean the construction of new ~structures or additions to existing structures in the City and, with respect to residential development, any developmentproject that creates additional residential units. "New Development" shall not mean replacement or expansion of an existing residential unit.With respect to nonresidential development, "New Development"shall also mean any development project that creates additional square footage of useful area. (i) "Transportation Impact Analysis Guidelines" shall mean the most recent edition of the "Transportation Impact Analysis Guidelines" promulgated by the Valley Transportation Authority or such other trip projection methodology adopted by the City for the purpose of traffic impact analysis reports. Section 16.59.030 - Fee Imposed The Fee is hereby imposed as a condition of the issuance of any permit for any New Development, unless expressly exempted by this chapter. 070411 cjs 0130091a NOT YET APPROVED Section 16.59.040 - Exemptions The provisions of this chapter shall not apply to: (a) (b) (c) recordable affordable. City buildings or structures. Public school buildings or structures. Affordable Housing, either for sale or rental, which, by means, is permanently obligated to be 100% (d) Retail service, eating and drinking service, personal service, or automotive service when the total square footage (including New Development) is 1,500 square feet or less. (e) Day care centers used for childcare, nursery school or preschool education. (f)Below market rate housing units above and beyond the minimum number required for projects subject to the city’s Below Market Rate (BMR) Housing Program. The additional units must be offered and constructed consistently with the requirements of the BMR program. (g)A change in tenancy that does not result in a change in use and which does not involve either (i) a demolition of an existing structure or (ii) an expansion o£ square footage of useful area. (h) New Development which is exempt from the Fee by virtue of the Constitutions of the United States and California or by virtue of other applicable state or federal law. Section 16.59.050 - Timing of Payment (a) Except as otherwise required by Government Code Section 66007, the Fee shall accrue when the first discretionary approval is given for a New Development after the effective date of this Section, or if no such discretionary approval is required subsequent to the effective date of this Section, when an application is submitted for a building permit for that New Development. In either case, the Fee shall be payable when an application is submitted for a building permit for the New Development. A Fee shall be calculated at the rate in effect when the Fee accrues. 070411 cjs 0130091a 6 NOT YET APPROVED (b) Payment of the Fee may be deferred, for residential development only, to the date of final building inspection approval of the development, provided the owner of the real property for which the fees are required enters into a recordable agreement with the City prior to issuance of the building permit for the development, which from the date of recordation, shall constitute a lien on the property and shall be enforceable against successors in interest to the property owner. The agreement shall provide that final occupancy approval shall not be given until the fees are paid. The agreement shall also provide that, in any action to collect the fees or any portion thereof, the City shall be entitled to all of its costs of enforcement and collection, including reasonable attorney’s fees. The Director of Planning and Community Environment may execute the agreement on behalf of the City in a form acceptable to the City Attorney. Any deferral granted pursuant to this paragraph (b) shall be consistent with the requirements of Government Code Section 66007. (c) A credit against the Fee may be given for dedications of Eligible Citywide Transportation Capacity Enhancements constructed or provided at private expense and for the value of land dedicated to the City that is necessary or useful to an Eligible Citywide Transportation Capacity Enhancement. Such credit will be granted only if the City Council determines that: (i) the City will experience a substantial cost savings or service quality improvement as a result of private construction or provision of the Capacity Enhancement or the dedication of land, (ii)the Capacity Enhancement can be expected to immediately and significantly relieve citywide traffic congestion,and (iii) the grant of the credit, in lieu of the fee, will not cause the City to delay the implementation of elements of the City’s transportation plan that are of higher priority, in the judgment of the City Council, than the land or Capacity Enhancement that will be dedicated. The credit shall be applied at the time the City accepts the land or Capacity Enhancement. Where the City Council has made the determinations required by this subdivision, payment of a portion of the Fee equal to the amount of an expected Credit against the Fee may be deferred to the date of final building inspection approval of the development, provided the owner of the real property for which the fees are required enters into a recordable agreement with the City prior to issuance of the building permit for the development, which from the date of recordat~ion, shall constitute a lien on the property and shall be enforceable against successors in interest to the property owner. The 070411 cjs 0130091a 7 NOT YET APPROVED agreement shall provide that final occupancy approval shall not be given until the fees are paid or the credit issued. The agreement shall also provide that, in any action to collect the Fees or any portion thereof, the City shall be entitled to all of its costs of enforcement and collection, including reasonable attorney’s fees. The Director of Planning and Community Environment may execute the agreement on behalf of the city in a form acceptable to the city attorney. Any deferral granted pursuant to this paragraph (b) shall be consistent with the requirements of Government Code Section 66007.Where a credit is given for the provision of a service thatis an Eligible Capacity Enhancement, the deferral of the Fee, and the application of the credit, may be according toa schedule set forth in the recorded agreement, which schedule shall be designed to ensure that no credit is applied in advance of the provision of services for which the credit is made. Section 16.59.060 - Calculation of Fee (a) The Fee imposed upon a New Development shall be calculated by multiplying (i) the number of new PM peak hour vehicle trips projected to be generated by a New Development by (ii) the current Fee rate. (b) The number of new PM peak hour vehicle trips projected to be generated by a New Development shall be calculated by subtracting the projected PM peak hour vehicle trips generated by Existing Development on the parcel(s) to contain the New Development from the projected PM peak. hour vehicle trips generated by the New Development (including any existing structures to remain on the parcel after the construction of the New Development). In no event shall a New Development be projected to generate less than zero new PM peak hour vehicle trips as a result of this calculation. (c) For purposes of subsection (b), the number of PM peak hour vehicle trips projected to be generated by a New Development shall be calculated pursuant to the Transportation Impact Analysis Guidelines. (d) To the extent Existing Development on a parcel qualified as New Development after the effective date of this Section, but was exempt from the Fee by virtue of Section 16.59.040 of this Code, the PM peak hour vehicle trips projected to be generated by that Existing Development, shall not be subtracted (as otherwise required by subdivision (b) of this Section) from the 070411 cjs 0130091a 8 NOT YET APPROVED projected PM peak hour vehicle trips generated by the New Development. (e) The rate of the Fee shall be established from time to time by resolution or ordinance of the City Council in the manner required by Government Code Sections 66004 and 66018. (f) Beginning July i, 2005, and on each July 1 thereafter, the rate of the fee shall be automatically adjusted according to the following formula: Council-Approved Rate * Most Recent ENR ENR at Council-Approval Where the "Council-Approved Rate" is the rate most recently set by resolution or ordinance of the City Council, "Most Recent ENR" is the most recently published Construction Cost Index when the calculation is made and "ENR at Council-Approval" is the Construction Cost Index published for the month in which the Council approved the "Council-Approved Rate". (g) The Department of Planning and Community Environment shall be responsible for the calculation of the Fee at the time of plan review or when the Fee is due, whichever is earlier. Applicants shall supply the City with the necessary information to calculate the fee in a format acceptable to the City. Section 16.59.070 - Special Fund (a) There is hereby established a special fund, entitled the "Citywide Transportation Impact Mitigation Fund", into which all Fee proceeds and any interest thereon shall be deposited. The fund shall be maintained as required by Government Code Section 66006. (b) Moneys installation, operation of Enhancements. in the fund shall be expended only on the acquisition, construction, maintenance and Eligible Citywide Transportation Capacity Section 16.59.080 - Accountability Measures (a) At least annually and as required by Government Code Section 66006, the City Manager, or his or her designee, shall review the estimated cost of the public improvements to be funded by the Fee, the continued need for those improvements and 070411 cjs 0130091a NOT YET APPROVED the reasonable relationship between such need and the impacts of pending or anticipated New Developments. The City Manager, or his or her designee shall report his or her findings to the City Council at a noticed public hearing and recommend any adjustment to the Fee or other action as may be needed. (b) The City Council shall review such report in the manner required by Government Code Section 66006(b) (2). (c) To the extent required by Government Code Section 66001(d), the City Council shall make the findings required by that Section. Section 16.59.090 - Penalties (a) All remedies provided for in this chapter shall be cumulative and not exclusive. (b) Violation of any provision of this Chapter, including, but not limited to, converting an exempt use to a use to which this Chapter applies without paying the Fee, is a misdemeanor punishable as provided in this Code. (c) Each person is guilty of a separate offense for each and every day during any portion of which any violation of any provision of this Chapter is committed, continued or permitted by such person. (d) Any person violating any provision of this Chapter, including, but not limited to, converting an exempt use to a use to which this Chapter applies, without paying the Fee, shall be liable civilly to the City in a sum not to exceed five hundred dollars for each day in which such violation occurs. (e) Persons employed in the following designated employee positions are authorized to exercise the authority provided in the California Penal Code Section 836.5 and are authorized to issue citation for violations of this chapter: chief building official, assistant chief building official,and ordinance compliance inspector." SECTION 3. (a) The initial rate of the fee imposed pursuant to Section 16.59~030 of the Municipal Code shall be $2,601 per PM peak hour vehicle trip. This rate may be revised by resolution or ordinance of the City Council and shall be subject to automatic 070411 cjs 0|30091a 10 NOT YET APPROVED annual adjustment Municipal Code. as provided in Section 16.59.060 of the (b) The total fee assessed against a non-residential development shall not exceed $3.88 per square foot. This rate may be revised by resolution or ordinance of the City Council and shall be subject to automatic annual adjustment as provided in Section 16.59.060 of the Municipal Code. SECTION 4. The City Council of the City of Palo Alto hereby determines that: (a) The Citywide Transportation Impact Fee ("Fee") established by this Ordinance is in itself a financing mechanism that is not a project subject to the California Environmental Quality Act ("CEQA"); and (b) That the public improvements to be funded by the Fee are parr of the 2003 Bicycle Transportation Plan ("Plan") analyzed pursuanz to CEQA by the Comprehensive Plan Update Final Environmental Impact Report ("EIR") and Addendum to the EIR which were certified by the City Council as the environmental document for the Plan on November 24, 2003 in Council Resolution No. 8372. SECTION 5. If any provision or clause of this chapter or the application thereof to any person or circumstance is held to be invalid by any court of competent jurisdiction, such invalidity shall not affect any other provision or clause of this Chapter, and to that end, the provisions and clauses of this Chapter are severable. SECTION 6. This ordinance shall be effective on the sixty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: 070411 cjs 0130091a 11 ATTEST : NOT YET APPROVED APPROVED : City Clerk- APPROVED AS TO FORM: Mayor Sr. Assistant City Attorney City Manager Director of Planning & Community Environment Director of Administrative Services 070411 cjs 0130091a 12 ATTACHMENT B CITY OF FALO ALTO Neison\Nygaard Consulting Associates 833 Market Street, Suite 900 San Francisco, CA 94503 2004 No statement in this memoran&~m is meant to expt"ess a legal opinion of any kind Any explicit ot" implicit interpretation of law o~" co~’t precedence in this memol~andum is based solely on o~r e~7~erience as non-legal professional p~aetitioners using development impact fees in California. We advise consulting with an expel"t atto~7~ey in this field pt.io~- to maL’ing any final recommendatioT~s based on the content of this memol’andum. "Transportation lirnl~act Fee ~e~s E~t~y ¯Revised Draft Final Report CiTY OF PALO ALTO Table of Contents PAGE Executive Summary ..........................................................................................................1 Fee Structure .............................’ ....................................................................................3 Chapter 1. introduction ..............~ .....................................................................................S Chapter 2. Planning Conte~-’t ........................:~ ..................................................................6 Existing Impact Fees ............................................................................~ ............: ............6Impact Fees in Ca[il:ornia ........: ......................................................................................7 Chapter 3. Transportation Impacts o~ New Development. ...............................................9 Impacts of New Development .......................................................................................9Mitigation of Identified Impacts ...................................................................................11 Mitigation Measures ....................................................................................................11 Nexus for Proposed Traffic Impact Fee .........................................................................12 Impacts Not Mitigated .................................................................................................13 Chapter 4. Recommended Fee Structure ........................................ ................................14 Vehicle Trip-Based Fee .................................................................................................t4 Expenditure of Fee Revenue ............. ............................................................................16 Exemptions .................................................................................................................21Index Linking ....................................... .......................................................................22 Accounting for Changing Uses .....: ...................." ..........................................................22 Chapter .5. Recommended Fee Leve! ...............................................................................24 Development and Travel Projections ...........................................................................24 Expenditure Plan .........................................................................................................26 Recommended Fee Level ............................................................................................28 Total Impact Fee Level ..................................................... .......... .................................29 March 2004 Page i o Neison\Nygaard Consulting Asso¢iates CITY OF PALO AL, TO Table of Figures Figure Figure Figure ,Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure PAGE 1 Transportation Impact Fees in Select Bay Area Cities ......................................2 2 Proposed Total Impact Fee Level .......................................................:.: ..........2 3 Projects Funded by Proposed Impact Fee .......................................................3 4 Summary of Recommendations .....................................................................4 5 Summary of Existing Palo Alto Impact Fee Levels ...........................................6 6 Summary of Existing Palo Alto Impact Fees ....................................................7 7 Projected Increase in Vehicle Trips ................................................................9 8 Expected Impact of TIF Expenditure Plan .....................................................12 9 VTA Trip Reduction Credits .........................................................................15 10 Bicycle and Pedestrian Improvements Proposed for Impact Fee Funding ......18 11 Transit Improvements Proposed for Impact Fee Funding ...............................19 12 City of Palo Alto Traffic Signals .........¯ ...........................................................20 13--Policy Rationale for TIF Exemptions ...................... .......................................22 14.Palo Alto Travel Demand Model ...................................................................25 15 Palo Alto Population and Employment Projections .......................................-25 16 TIF Project List with Present Value Costs ......., .....~ ........................................27 17 Proposed Fee Level .....................................................................................28 18 Transportation Impact Fee by. Land Use (Illustrative) ..........-. .........................29 19 proposed Total Impact Fee (Illustrative Only) ...............................................30 March 2004 Page ii o Neison\Nygaard Consulting A.ssociates CiTY OF PALO ALTO This report presents a recommended Citywide Transportation Impact Fee (TIF) for Palo Alto. In contrast to the City’s current traffic fees, which are limited to funding intersection improvements in the Stanford Research Park and Bayshore, the proposed TIF would raise money for a broad variety of transportation projects and programs, and be levied on developments in all parts of the City. It would charge new developments for the cost of implementing programs to mitigate the impact of the new vehicle trips that they generate. -~his report recommends a fee level of $2,266 per PM peak hour vehicle trip, which would raise $9 million for transportation over 21 years. This would cover 7.6% of the cost of the proposed expenditure plan, including citywide Transportation Demand Management, expanded shuttle service, bicycle facilities, and computerized traffic management. The 7.6% share of costs is the same as the proportion of vehicle trips in 202,5 that is expected to be generated by new development subject to the fee. Many other cities in the Bay Area and elsewhere in California levy fees to mitigate traffic and transportation impacts of new development. In general, these cover traditional roadway and intersection improvements, but some cities (such as Redwood City) use the revenue to support alternative modes. As shown in Figure 1, the recommended fee for Palo Alto would fall into the mid range of fees levied in other Bay Area cities. Appendix A provides more details of these peer comparisons. The City already levies development impact fees for parks, community centers, libraries and housing. In the Stanford Research Park/El Camino Real and the San Antonio/Bayshore zones, it also levies traffic impact fees to cover the cost of intersection improvements. As shown in Figure 2, a new TIF at $2,266 per PM peak hour vehicle trip would raise the total fee amount by between 12% and 39%, depending on land use and location. Note that the existing traffic impact fees in the Stanford Research Park/El Camino Real and the San Antonio/Bayshore zones would continue to be levied, since these are mitigating a separate set of impacts, namely vehicular level of service at intersections. July 2004 Page 1 ¯ Ne~son\Nygaard Consulting Associates Transpod~t~on ~m~act Fee Nexus Study o Revised Dral~t Final Report CIT~,’ OF PAL0 ALTO Figure I Transportatior~ ~mpact Fees in Se~ec.t IB~y Area Cities $10,000 $8,000 $6,000 $4,000 $2,000 $o __[~ Low End [] High End Notes: For consistency with the proposed Palo Alto fee, the figure expresses impact fees per PM peak hour vehicle trip. Transportation Impact Fees in other cities vary by land use, hence the "low end" and "high end" figures. This is because they are typically levied per square foot or residential unit, no~ per vehicle trip. Figure 2 Proposed Total Impact Fee Leve~ $35,000 _~ $30,000 .,.,$25,000 ~$20,000 =$15,000 o $1o,ooo ~$5,000 $0 []Recommended Transportation Impact Fee []Existing Traffic Fees ~,Parks, C’ty Centers, Libraries, Housing <3,000 sf >3,000 sf >900 sf <900 sf Single Family (unit)Multi Family (unit) No Traffic SA/SRP / ECR Hotel/Motel Fees Bayshore (1000 sO Commercial/Industrial (1000 sf) Hotel July 2004 Page 2 ¯ Ndson\Ny£taard Consuitin£~ Associates Fee Structure Key recommendations regard[ng the structure of the Transportation Impact Fee are as follows. The full set of recommendations, given in full in Chapter 4, is shown in Figure 4. Levy fees on a per .vehicle trip basis, rather than per square foot of development or per residential unit. This ensures that there is the closest possible link between actual transportation impacts and the amount of fee levied. In addition, this approach rewards transit-oriented, mixed-use developments that commit to Transportation Demand Management programs, since these factors will be used to reduce the projected number of trips generated. (Recommendation .1 ) Focus on alternative modes projects. The TIF would exclusively be used to fund bicycle, pedestrian, transit, computeriZed traffic management and Transportation Demand Management projects, reflecting Palo Alto Comprehensive Plan transportation priorities and the most effective mitigation strategies. The expenditure program is shown in Figure 3. The fee would not replace existing obligations for intersection improvements if a project would degrade level of service below the City’s transportation .significance thresholds. These mitigation requirements would. continue to be required on a project-specific basis based on the results of a traffic impact analysis, with the exception of zones such as the Stanford Research Park where these improvements are covered by existing fees. (Recommendation 4) .Levy fees on a citywide basis. Fee revenue would be able to be used. for projects anywhere in the City, in line with citywide priorities and project readiness. However, overall geographic equity would be guaranteed through the composition of the expenditure program. As shown in Figures 10, 11 and 12, projects are spread throughout the City. In addition, 34% of the expenditure program is dedicated to citywide projects, encompassing Transportation Demand Management and computerized traffi.c management. (Recommendation 5) Figure 3 Projects Funded by Proposed Impact Fee Transportation Demand Management Computerized Traffic Management Expanded Shuttle Service Bike Boulevards* Bike/Pedestrian Undercrossings* Bike Lanes on Major Streets* Bike RouteslLanes on Major Arterials* Spot Bike/Pedestrian Improvements* Tetal *High Priority items from Bicyo/e Transportation P/an. $1,225,936 $38,490,703 $27,480,779 $1,308,006 ~38,171,358 $1,222,756 $5,994,176 $2,562,659 $117,456,371 $93,171 $2,925,293 $2,088,539 $99,408 $2,901,023 $92,929 $455,557 $270,762 $8,~26,B84 ~-ota/ Cost inc/udes capita/, replacement and operating costs, expressed i~ present value terms, See Chapter 5 for full details. ~he ful/ project /ist is in Appendix £. July 2004 Page 3 ¯ Neison\Nygaard Consulting Associates Trar~sportati~n ~rr~pact Fee ~exus Study ¯Revised Draft Final Report CITY OF PALO ALTO Figure 4 Summary of Recornmer datioRs 1 Levy fees on a per vehicle trip basis based on PM peak hour trips, for any development that has a completed Traffic Impact Analysis. 2 Require the estimate of trip generation to be consistent with the most recent VTA ~ransportation Impact/~na/~’sis Guide/ines, or any othei" methodology specified by the City for the completion of Traffic Impact Analysis reports. 3 Fees for smaller developments that do not require a full Traffic impact Analysis should be assessed by City staff, using the same methodology as the full TIA. 4 Dedicate fee reveriue exclusively to those projects shown in Figure 3. Do not use TIF revenue to fund traditional roadway and intersection improvements.. 5 Ensure geographic equity through a geographically balanced expenditure plan. Do not institute a zonal System that would require fee revenue to be spent in the same geographic zones where it was collected. 6 Retain the City’s existing transportation impact fees for the Stanford Research Park/El (:amino Real and San AntoniolBayshore zones. 7 Exempt certain development types from the TIF, consistent with the City’s existing impact fees for parks, community centers and libraries. 8 Adjust fee levels annually in line with the Construction Cost Index. 9 ! Levy supplemental TIFs for changing uses, based on net new trips added. July 2004 Page 4 ¯ Nelson\Nygaard Consulting Associates As is true throughout the State, Palo Alto !ncreasingly relies on impact fees to ensure that new development contributes fairly to the City’s fiscal needs. For example, the city’s Commercial Housing In-Lieu fee, in place since 1984, has provided an irreplaceab.le funding source for over 400 new affordable housing units: Along with the housing fee, development impact fees are in place citywide to fund parks, community centers, and libraries. In the Stanford Research Park and El Camino ReaI.CS.Zone, a traffic impact fee on commercial development of $8.51 per square foot funds intersection improvements in the area. Palo Alto is interested in introducing a Citywide Transportation Impact Fee (TIF) to mitigate the impacts of traffic generated by new development. This report outlines a recommended option for the scope and structure of such a TIF in Palo Alto. It first discusses the scope of the City’s existing impact fees, and the legislative and case law requirements for levying such fees in California. In Chapter 3, it then outlines the nexus, or relationship between new development and the projects on which TIF revenue will be spent. Chapter 4 outlines the recommended structure of a citywide TIF in Palo Alto, considering such issues as exemptions, .which projects should be funded, and the methodology for assessing a fee. Chapter 5 presents the recommended fee schedule and expenditure program. Background information on transportation impact fees levied elsewhere in California is provided in Appendix A, "Literature and Peer Review." July 2004 Page 5 ¯ Ne~son\Nygaard Consulting Associates Transportation ~r~pact F~e INex~s Stu~.y o Revised Draft Final Report CITY OF PALO ALTO E×isting !mpact Fees Polo Alto’s existing impact fees are summarized in Figures 5 and 6. The City has hadlong established fees for housing and, in parts of the city, to fund intersection improvements. In 2002, citywide fees were enacted to fund community centers, libraries and parks. Figure 5 Summary of Existing PaSo A~to ~mpactFee Leve~s Parks Citywide Community Centers Citywide Libiaries Citywide Housing Impact Citywide Sdbtota/ for Citywid~ Fe~s Traffic .SRP / El Camino CSZone San AntoniolWTrafficBayshore Total {SRPIE~ Camino) Total (San Antonio/W gayshore) Total (Other Areas) $8,071 $12,050 ~5,283 $2,671 ~3.43 ¢1.55 $2,093 -~3,132 $1,377 ~694 $0.19 80.09 ~730 $1,085 $477 $239 $0.18 $0.08 Exempt Exempt Exempt Exempt $15.24 $15.24 ¢10,#94 ¢1B,287 ¢7,137 ¢3,804 ¢19.04 ¢1&98 Exempt Exempt Exempt Exempt $8.51 Exempt Exempt Exempt Exempt $1.75 ~10,894 $16,267 $7,137 $3,604 ~27.55 ~16.96 ~10,894 $16,267 $7,137 $3,604 $20.79 816.96 $10,894 $16,267 $7,137 $3,604 $19.04 ~16.96 July 2004 Page 6, Nelson\Nygaard Consulting Associates Transportation ~’~#act Fee I~ex~s Stu#y , Revised Draft Final Report CiTY OF PALO ALTO Figure 6 Summary of Existing Polo Alto ~mpact Fees Commercial Enacted in Housing In-Lieu Fee 1984; Updated in 1993 and 2002 Parks, Community Centers and Libraries Transportation Impact Fee (Stanford Research Park/El Camino Real CS Zone only) Enacted in 2002 Enacted in 1986 and 1989 Updated in 2002 Nexus study demonstrates impact of $57.81 per square foot. Actual fee of 815.24 reflects desire to maintain viability of commercial development and availability of other sources Resideniiat rates set at 2/3 of impact supported by nexus study -- partial charge reflects desire to maintain viability of housing development. Commercial rates set at full impact supported by nexus study ¯ Based on cost estimates of intersection improvement projects All residential development, employee use areas (child- care, cafeterias, rec rooms), HazMat storage, churches, colleges/universities, commercial recreation, private clubs, private education, public facilities, childcare facilities, 1,500 s.f. per site for retail/restaurant/ automotive/personal service Public facilities and schools, projects that are 100% permanently affordable housing for very low-, law-, and moderate income households All residential development, employee use areas (child- care, cafeterias, rec rooms}, HazMat storage,, churches, thermal storage, projects under 250 s.f., childcare facilities, 1,500 s.f. per site for retail/restaurant/ automofive/personal service Impact Fees in Catifor.nia Development impact fees are a widely used, well-acceptedpractice for char~ing growth for the needs it creates. They offer an efficient wayto pay for new infrastructure, can help sustain job growth in local economies, ~nd contribute to economic prosperity.~ Cities levy impact fees on new development to fund a variety of public facilities and services including parks, schools, pubiic art, and libraries. Transportation Impact Fees are a type of impact fee. A 1997 study found that 116 of the 206 surveyed California cities (56%) imposed TIFs.~ Such development impact fees are governed by the/~itigation Fee Act) This requires the City Council to make certain findings in order to establish a fee. These findings must: ¯Identify the purpose of the fee ~Identify the use to which the fee is to be put and the facilities (if any) to be financed ¯Determine how there is a reasonable relationship between the fee’s use and the type of development project on which the fee is imposed Determine how there is a reasonable relationship between the need for the public facility and the type of development-project on which the fee is imposed (Cov’t Code §66001 (a)). ~ Nelson, Arthur and Moody, Mitch (2003), Paying for Prosperity." Impact Fees and Job Growth, Brookings Institution Center on Urban and Metropolitan Policy. www.brookings.eduldybdocrootleslurbanlpublicationsl nelsonimpactfees.pdf2 Traffic Impact Fee Survey, Santa Barbara County Association of Governments, May 1997 3 Government Code Section 66000 et seq. Ju~y 2004 Page 7 ¯ Nelson\Nygaard Consulting Associates CITY OF PAL0 ALTO Because the fee would be charged at scheduled rates, based on anticipated trip generation, th’e imposition of the Fee would not be subject to the highly rigorous tests (commonly known as the Nolan/Dolan tests) applicable to ad hoc monetary exactions. (San Remo Hotel v. City and County of San Francisco (2002) 27 Cal.4th 643, 670). However, the Califorhia courts have interpreted the AB1 600 finding requirements to also require that a development fee be shown to "bear a reasonable relationship, in both use and amount, to the deleterious impact of the development." (ld., at 671). This report is intended to describe the proposed fee, and to provide an evidentiary basis and a rationale to support ~hese required findings. July 2004 Page 8, Nelson\Nygaard Consulting Associates This chapter identifies the impacts df new. development on the city’s transportation system, which a TIF could be used to mitigate. ~mpacts of New Development New development in Palo Alto between 2002 and 2025 is expectedto generate 4,411 PM peak hour vehicle trips with origins and/or destinations within the City.4 This rel~resents an 8% increase, on 2002 levels (Figure 7). This figure does not include any "background" growth in trips, since the mode,ling methodology/ (described in detail in Chapter 5) assumes fixed trip generation rates from a land use of a particular size. It should also be noted t[qat the values in Figure 7 account only for trips with an origin an@’or destination within the City of Palo Alto, and thus exclude "pass through" trips of a regional nature. As discussed in the following two chapters, however, certain uses such as public Schools are proposed to be exempt from the Citywide Transportation I.mpact Fee. These are estimated to account for 8.3% of the new 4,411 trips (see Appendix B for the calculation methodology). New development in Palo Alto that will be subject to the proposed TIF is therefore expected to generate 4,045 PM peak hour vehicle trips (Figure 7). Figure 7 Projected increase in Vehicle Trips 2002 Trips 49,142 92% 2025 Trips 53,553 100% Change 2002-2025 4,411 8.2% New Tr.ips Generated by Exempt Uses (82%)366 0.7% New Trips Generated by Development Subject to TIF (91.7%)4,045 7.6% Source." City of Pa/o A/to Travel Demand Mode/ and estimates of exempt uses. This increase in vehicle trips will have impacts on the City’s transportation system as follows: 1. Impacts onTransit. Increased congestion from new vehicle trips will slow transit travel times. As a result, more resources will be required to provide the same capacity, since fewer seats will be available per revenue hour of service. Increased transit expenditure will therefore be needed simply to maintain existing frequencies and capacity. At the same time, the quality of service available to transit riders - one of the key strategic indicators in 4 PM peak hour trips is a generally accepted measure of traffic impacts used in transpor[ation planning practice, and is the typical output from the traffic studies conducted for proposed developments in Palo Alto. July 2004 Page 9 ¯ Neison\Nygaard Consultin~ Associates the City’s draft Transportation Implementation Plans - will be degraded by slower travel times. The scale of all these impa.cts is expected to be roughly proportional to the increase in vehicle trips. 2. Impacts on Pedestrians and Cyclists. New vehicle trips have a detrimental impact on conditions for pedestrians and cyclists in several ways: Comfort and Safety. Research for the Federal Highway Administration, Florida Department of Transportation and other institutions has found that motor vehicle volumes are one of the most important determinants of the level of service for bicyclists and pedestrians, Which are key strategic indicators in the City’s draft Transportation Implementation Plan.° Increases in motor .vehicte volumes are inversely proportional to bicycle and pedestrian level of service. Attractiveness. The degraded conditions for pedestrians and cyclists will diminish the attractiveness and use of these modes, in turn leading to further increases in motor vehicle trips and compounding their impacts. 3. Conge~ion ~mpacts. Traffic impact analyses tend to focus on congestion impacts, such as degrade~ Vehicle Level of Service, at intersections adjacent to the development. However, new trips generated by a development will also have citywide congestion impacts, leading to increases in vehicle travel time. Increases in motor vehicle volumes are inversely proportional to Vehicle Level of Service, which is a key strategic indicator in the City’s draft Transportation Implementation Plan. 4. Other Impacts. Increases in vehicle traffic have a range of other negative impacts on the City of Palo Alto’s environment and transportation system. Some of those listed in the City’s Comprehensive Plan include: Air pollution Water pollution Noise Visual degradation Energy use The costs of enforcing traffic safety laws These impacts are expected to be approximately proportional to the number of new vehicle trips. It should be noted that some California communities, such as Stockton and Turlock, have dedicated fees specifically dedicated to mitigating these impacts, such as air 5 These indicators were reviewed by the Planning and Transportation Commission on June 11, 20’03, and recommended to City Council. They were considered by City Council Finance Committee on October 8, 2003, for recommendation to the full City Council.6 The Bicycle Compatibility Index: A Level of Service Concept. Implementation Manual. FHWA-RD-98-095. Available at: www.hsrc.unc.edu/research/pedbike/98095/index.html. Landis, Bruce eL al. (2001), "Modeling the Roadside Walking Environment: Pedestrian Level of Service," Transportation Research Record No. 1773. July 2004 Page 10 ¯ Ne~son\Nygaard Consulting Associates "[;’ra~sportat~on l~m~act Fee ~;e×~s Stagy ¯Revised Draft Final Report c -Y r-,..,~- PALO ALTO quality. Stockton’s fee, for example, has been in place since 1991, and used for projects such as traffic signal timing, clean-fuel vehicles for City fleets, and city TDM programs. Mitigation of ~dentified ~mpacts Traditionally, measures to mitigate the impacts of vehicle trips havefocused on roadway widenings and intersection enhancements. The City of Palo Alto, however, wishes to mitigate the impacts through an alternative strategy: reducing the number of vehicle trips through provision of effective alternatives. There are several reasons behind this policy decision: Mitigating a[[ impacts. Most other potential mitigation measures address only specific, selected impacts caused by vehicle traffic increases. For example, a clean fuel vehicle program would mitigate air.quality impacts, but not those on bicycle and pedestrian safety and comfort. Mitigating impacts across t[ie City. Some mitigation measures may be able to address a specific impac.t at .a particular location. For example, a transit priority signal may be able to reduce the impacts of new vehicle trips on transit travel time at a particular intersection. However, the impacts of vehicle trips tend to be extremely diffuse and felt across the entire City transportation network. This means that they are best mitigated by addressing the cause - increased vehicle trips - at root. This report therefore identifies and costs the measures necessary to mitigate the impacts of vehicle trips generated by new~ development, through provision of improvements in citywide traffic flow and travel alternatives. This reduction is primarily expected to be achieved through investing in alternative transportation modes, to encourage mode shift away from the private automobile. This appr.oa¢h is in line with the policy framework articulated in the City’S Comprehensive Plan. Reduced reliance on single-occupant vehicles is an explicit goal (Coal T-l), and the "Vision Statement" of the Transportation Element calls for a 10% reduction in vehicle trips by 2010. These policies are supported through_other City policy documents, including the draft Transportation Implementation Plan. Mitigation Measures The exp&nditure plan (identified and costed in full in Chapter 5 and Appendix C) includes .the fol Iowi ng elementg: Citywide Transportation Demand Management o Expanded shuttle service ¯¯ Bicycle facilities Computerized traffic management (or "Advanced Transportation Management and Information System") July 2004 Page 11 ¯ N~lson\Ny~aard Consulting Associates CITY OF PALO ALTO The first three elements of the expenditure plan are explicitly intended to reduce vehicle trips, through making alternative modes more attractive, and providing the information, education and incentives to encourage people to use them. As shown in Figure 8, these .programs will reduce PM peak hour vehicle t.rips by 1,782 vehicles, or mitigate 44% of the vehicle trips generated by new development subject to the TIF. The full methodology’ to support this calculation is shown in Appendix D. Figure 8 Expected Impact of T~F Expenditure Plan Citywide Transportation Demand Management Expanded Shuttle Service Bicycle Facilities* Total Vehicle Trips Reduced by TIF Expenditure Expected New Vehicle Trips from New Development Subiect to TIF oS of New Vehicle.Trips Mitigated by TIF o 58 88 1,636 1, 782 4,045 44~/o *Includes Bike Boulevards, Undercr0ssings, Bike RouteslLanes and Spot improvements Computerized traffic management will contribute towards mitigating the remaining 56% of impacts. For example, this system will be able to: Alleviate congestion through allowing more efficient operation of traffic signals, thus reducing the impact of new vehicle trips on transit travel times. Improve comfort and safety for pedestrians and cyclists, by allowing signal phasings to be adjusted in their favor ¯Reduce air pollution, through promoting smoother and more efficient traffic flow Avoid impacts on pedestrians and cyclists, water pollution and visual amenity by allowing roadway capacity increases to be achieved without roadway widening Nexus for Proposed Traffic Impact Fee . Tl~e recommended transportation impact fee is based on charging new development for 7.6% of the cost of the expenditure plan. This represents the proportion of 2025 vehicle trips that is expected, to be generated by development subject to the TIF. This nexus is based on the fact that the trips generated by new development create new demands on the transportation infrastructure. It is reasonable to assume that these impacts are proportional to the share of total vehicle trips in the City generated by new. development subject to the TIF (7.6%). Similarly, it is reasonable to assume that new development uses Palo AIt0’s transportation facilities in proportion to its share of vehicle trips (7.6%). Moreover, because the transportation facilities being proposed represent only a marginal addition to the City’s existing stock of transportation infrastructure, it is conservative to July 2004 Page ’t2 ¯ Ne!son\Nygsard Consulting Associates "Tra~sport~t~,~ ~r~;act Fee ~]e×~s Study e Revised Draft Final Report CITY OF PALO ALTO require new development to pay for only 7.6% of this marginal addition,, rather than paying to add 7.6% to the City’s entire stock of transportation infrastructure. Note that the expenditure plan accounts for only a small subset of programs to reduce vehicle trips and provide transportation alternatives. Others, which include Caltrain improvements such as the Baby Bullet express service, the University Avenue lntermodal Transportation Center, and neighbo~’hood traffic calming, are set out in the Comprehensive Plan, the draft Transportation Implementation Plan, and other city, county and regional planning documents. Impacts Not Mitigated The mitigation program proposed by l~his report is designed to. mitigate the citywide impacts of increased trips on the major traffic routes within the City of Palo Alto. in addition .to these citywide impacts, development projects often generate an extensive increase in traffic at intersections immediately surrounding the projects, and on the local streets feeding into the projects. These intense, localized impacts are in addition to the impacts mitigated by the proposed program, and will continue to be mitigated through site specific exactions tied to project-based traffic studies and neighborhood-based traffio impacts fees such as the Stanford Research ParWEI Camino Real and San Antonio/Bayshore fees. Ju~y 2004 Page 13 ¯ Ne}son\Nygaard Consulting Associates CiTY OF PALO ALTO The legal requirements for an impact fee provide a great deal of flexibility for a city in crafting an impact fee tailored to its needs. This means that fundamental decisions need to be made on the methodology, exemptions and expenditure of fee revenue. This chapter sets out a recommended structure for the City of Pato Alto’s Transportation Impact Fee. Vehicle Trip-Based Fee Recommendation 1: Levy fees on a per-trip basis based on PM peak hour trips, rather than a per unit or per square foot basis, for any development that has a completed Traffic Impact Analysis. Impact fees are typically quoted on a per unit of development basis such as per housi.ng unit or per square foot. The actual transportation impacts of a development, however, tend to be proportional to the number of peak hour vehicle tripsgenerated. This is related to, but not necessarily proportional to, the size of a development, particularly if only broad land use categories are used. indeed, even if fees are eventually levied per square foot or (as in South Placer County) per "Dwelling Unit Equivalent," the first stage is usually to calculate them on a per trip basis. They are then converted into square footage fees based on trip generation rates for different land uses. Vehicle trips are therefore the recommended assessment basis for the Transportation Impact Fee. The measure of PM peak hour trips is recommended for purposes of administrabiiity, since this is standard practice in the City’s traffic study methodology. Levying fees on a per-trip basis also has the critical advantage of providing incentives for developments that minimize their trip generation, for example through a tocation close to transit, a mix of uses, or Transportation Demand Management programs. Methodology Recommendation 2:. Requirel~he estimate of trip generation to be consistent with the most recent VTA Transportation Impact Analysis Cuidelines, or any other methodology specified by the City for the completion of Traffic impact Analysis reports. For consistency with the environmental review process, it is recommended that trip generation figures from. a development’s Traffic Impact Analysis be used as the basis for fee assessment. The City of Palo Alto uses the methodology developed by the Valley Transportation Authority (VTA), in its Transportation Impact Analysis Cuidelines (1998). July 2004 Page 14 ¯ Nelson\Ny_~aard Consulting Associates Key features of the VTA methodology include: Basic trip generation rates for each land use are taken from the most recent version of the Institute of Transportation Engineers’ (ITE) Trip Generation Manual7. Other sources such as the City of San Jose’s Trip Generation Rates may be used in special circumstances, such as unique land .uses. These baseline estimates may be reduced, based on certain development characteristics such as proximity to transit, as long as clear documentation is provided. Figure 9 summarizes the maximum potential trip reductions generally allowed for by VTA. Note that reductions are maximum amounts as opposed to standard reductions, and VTA emphasizes that they "should be applied carefully using professional judgment" and "may. be smaller" in a given project. It is also possible to use trip reduction values greater than the maximum rates shown in Figure 9, given concurrence by the Congestion Management Program and justification in a TIA report. Figure 9 VTA Trip Reduction Credits With housing and retail components 13% With hotel and retail components 10% With housing and employment With employment and employee-serving retail . Housing near LRT or Caltrain Station Housing near a Major Bus Step~ Employment Near LRT or 0altrain Station Employment near a Major Bus Stop 2% ~~]~~’ ~,~,~ - ~-. -, Financial incentives Shuttle Program~ Projec{-funded dedicated shuttle 3%. Partially-funded multi-site shuttle tFor mixed-use projects, the percentage is off of the smaller trip-generator with the same number of trips reduced for the smaller generator applied to the larger generator. ZMajor bus stop defined as a stop at which six or more buses per hour from the same or different routes stop during the peak period. ~lf the shuttle trip reduction is being combined with the ’Employment near LRT or 0altrain Station’ reduction, the maximum shuttle trip reduction that can be taken is 1.5% 7 Note that a new edition of Trip Generation is expected to be published in Spring 2004. July 2004 Page 15 o Nelson\Ny£taard Consultin~ Associates CITY OF PAL0 ALTO Smaller. Developments Recommendation :]: City staff should assess fees for smaller developments that do .not require a full Traffic Impact Analysis. This assessment should use the same methodology as the full TIA. VTA requires a Traffic Impact Analysis to be completed for any project in the county ¯ expected to generate 100 or more new weekday peak hour trips, including both inbound and outbound trips. In addition, the City of Palo Alto requires a TIA for some projects that fall under this threshold, for example for projects with PC zoning or other zoning that was not included in the Comprehensive Plan Update, or if an Environmental Impact Report is required for other reasons. In some cases, developers have chosen to prepare a TIA even if not required. The trip generation-portion, however, is a very small part of the overall work in producing a TIA. This meansthat trip generation can. be easily calculated by City staff, and used to assess a Transportation Impact Fee. Unless a developer specifically requests and provides documentation to support the trip redUction credits shown in Figure 9, such as proximity to transit, the baseline trip generation rates in the ITE Trip Ceneration Manual should be used. A sample worksheet to calculate the feeis shown in Appendix E. Expenditure of Fee Revenue Recommendation 4: Dedicate TIF revenue exclusively to those projects shown .in Figure 16 and Appendix C. Do not use TIF revenue to fund traditional roadway and intersection improvements. In Palo Alto, the most effective way to mitigate the impacts of increases in vehicle trips, as identified in Chapter 3, is through investment in alternative modes projects and computerized traffic management. This approach is also in line with the City’s Comprehensive Plan policies. We therefore recommend that TIF revenue should be dedicated exclusively to those projects shown in Figure 16 and Appendix C, namely: ¯Citywide Transportation Demand Management ¯Computerized Traffic Management o Expanded Shuttle Service ¯Bicycle facilities, including Bike Boulevards, Undercrossings, Bike Lanes on Major Streets, Bike Routes/[_anes on Major Arterials, and Spot Improvements Roadway and intersection improvements, in contrast, tend to mitigate more localized impacts than those addressed through the TIF, namely vehicle capacity and level of service at specific intersections and on specific roadway segments. We recommend that the City should continue to seek intersection improvements from individual developments to mitigate level of service impacts, based on the impacts identified in a Traffic Impact JuDy 2004 Page 16 ¯ ~e~son\Nygaard Consu~tin~ Assoc~iates C~T’,,’OF PALO ALTO Analysis study. Note that these improvements could consist of either traditional roadway improvements or changes to signal phasing, or investment in alternative modes to reduce the number of vehicles passing through an intersection and thus maintaining a designated Automobile Level of Service standard. Even if the citywide impac.t of vehicle trips were to be fully mitigated, through the expenditure plan for this TIF, there would likely be localized roadway capacity impacts resulting from traffic increases at particular intersections that would still need to be mitigated. Zonal Basis Recommendation 5: Ensur& geographic equity through a geographically balanced expenditure plan. Do not institute a zonal system that would require fee revenue to be spent in the same geographic zones where it was collected. Development is expected to take place throughout the City, rather than being concentrated in a particular area. In addition, the impacts of any development are likely to be experienced citywide. A new employment development in downtown, for example, will generate many trips from existing residences in South Palo Alto, and vice versa. For these reasons, we recommend that the City retain discretion to expend TIF revenue.in any part of Palo Alto/regardless of the location of the development that paid the fee. An alternative approach has been implemented in a number of California municipalities such as the cities of San Diego, Los Angeles, and Sacramento, which have unique expenditure programs for impact fee revenue in different areas of their cities. The benefits of this approach are primarily geographic equity - fee revenue is spent in the neighboi’hoods where development occurs, and that are subject to increased traffic. Because the proposed mitigation program isdesigned to mitigate the non-localized, cityw!de impacts of development on traffic congestion, it is appropriate to spread the costs of the program on a citywide basis. Impacts of a more local nature will continue to be mitigated through site-specific project exactions tied to project-based traffic studies, and neighborhood-based traffic impacts fees such as the Stanford Research Park/El Camino Real and San Antonio/Bayshore fees. To maintain the maximum flexibility and administrative simplicity, we recommend that geographic equity be addressed through the composition of the expenditure plan. As shown in Figures 10 and 11, transit, bicycle and pedestrian projects are geographically balanced and spread throughout the city. In addition, some fee revenue would be devoted to citywide programs that benefit all parts of the Ci~ - computerized traffic management, and Transportation Demand Management. Figure 12 shows the locations of the City’s traffic signals, providing another indication that the benefits from computerized traffic management would accrue to all parts of the .City. July 2004 Page 17. Ne~son\Nygaard Consulting Associates Spot Improvements Undercrossings Bike Lanes Bike Boulevards Palo Alto City Bounda~ Caltrain Stations ~ Caltrain Line ~’. .~ Palo Alto City Boundary ~OSALTOS HILLS ALTOS Extended Downtown Express Shuttle ¯Extended Downtown Express Shuttle Extended Crosstown Shuttle to PAMF Midday Embarcadero Shuttle .... ~jylEW New Stanford Research Park Shuttle New San Antonio Shuttle ~New/Extended Shu~ e Route ......Improved Frequency/Sewice Hours ~Caltrain Stations ~CaltrainUne. *¯PaloAIto City Bounda~ ,ALTOS EAST PALO ALTO CIT.Y OF PALO ALTO ¯ Legend (~ City of Palo Alto Traffic Signals @- City of Menlo Park Traffic Signals 0 Santa Clara County Traffic Signals r~ San Mateo County Traffic Signals ~ Caltrans Traffic Signals Not to Scale City of Palo Alto Transportation Division Traffic Signal Locotions - Transportation Impact Fee Nexus Study ¯Revised Draft Fina/ Report CITY OF PALO ALTO Retain Existing Transportation Impact Fees Recommendation 6: Retain the City’s existing transportation impact fees for the Stanford Research ParWEI Camino Real and San Antonio/Bayshore zones. The City’s existing transportation impact fees are exclusively dedicated to intersection and traditional roadway improvements in specific geographic areas. As such, they fund different types of projects than would the proposed citywide TIF, and they should be retained. However, developments in areas subject to these additional impact fees would not be subject to additional site-specific exactions to fund intersection improvements, as would be the case elsewhere in the City. Exemptions Recommendation 7: Exempt certain development types from the TIF, consistent with the City’s existing impact fees for parks, community centersand libraries For reasons of administrative simplicity and consistency with other impact fees, it is recommended that exemptions from the TIF be the same as those for the Park-s, Commun.ity Centers and Libraries impact fees, enacted in 2002. The exemptions, as listed in Chapter 1 6.58 in the Palo Alto iVlunicipal Code are currently: City buildings or structures; o Public school buildings or structures; Residential housing, either for sate or rental, which, by recordable means, is permanently obligated to be 100% affordable; Retail service; eating and drinking service, personal service, or automotive service when the total additional, square footage is !.,500 square feet or lessl This exemption shall apply, only when the additional square footage of new development does not exceed 1,500 square feet. New development that is larger than 1,500 square feet shall pay a fee for all square footage, including the first 1,500 square feet. Day care centers used for child care, nursery school or preschool education. Below market rate housing units above and beyond the minimum number required for projects subject to the City’s Below Market Rate (BMR) Housing program. The additional units must be offered and constructed in a manner consistent with all requirements of the BMR program. For each exemption, a rational policy basis must be articulated. A brief summary of the basis for the exemptions is provided in Figure 13. The fee methodology (discussed in Chapter 5) has been designed so that development subject to the fee will not pay fees to cover the impacts of these exempt uses. CITY OF PALO ALTO Figure 13 Policy’ Rationale for TIF Exemptions City Buildings Public Schools 100% Affordable housing, and BMR units above minimum Retail service below 1,500 s.f. Day care centers While city facilities can generate vehicle trips, the city is already funding transportation improvements through its operating and capital budgets. The need for modern and expanded school facilities is a higher policy priority than transportation improvements. Schools are fiscally constrained. And public entities .funding schools (counties, states) are funding transportation improvements in Palo Alto. Affordable housing is a high priority to the Polo Alto community. Program H-12 of the Comprehensive plan establishes the basis for the fee exemption: Where appropriate and feasible, allow waivers of development fees as a means of promoting the development of affordable housing to very low. and /ow./ncome households Small retail establishments can capture short trips in low-impact modes, such as walking and cycling. Additionally, it is policy as per Policy B-7 of the Comprehensive Plan: Encourage and support the operation of small, independent businesses, The pressing social need for daycare centers and the general lack of public financing available.to meet daycare need warrants an exemption from public fees Partially adapted from City of Polo Alto, February 20, 2002, CMR: 146:02 ~nde× Linking Recommendation 8;: Adjust fee levels annually in line with the Construction Cost Index Automatic inflation adjustments .avoid the need to adopt a new fee ordinance to reflect inflation. The Construction Cost Index, published by Engineering News Record, provides a better guide than the Consumer Price Index for increases in the cost 6f transportation projects. IL is currently used to adjust the San Antonio and Stanford Research Park traffic impact fees, and is .widely used by other jurisdictions such as Redwood City. Automatic adjustment should not preclude City Council from revisiting the fee level if the Construction Cost Index does not accurately reflect future cost changes in projects-in the TIF expenditure pJan. This is particularly important since several projects, such as shuttle operations, are not construction projects. Accounting for Changing Uses Recommendation 9: Levy the impact fee on new trips generated by a change in use If different levels of fee are charged for different uses, the question arises of how the City should account for changing uses. This is a major issue since different uses vary considerably in the number of trips they generate for the same floor area. The recommended option is to levy impact fees on any new PM peak hour trips generated by the change in use or an increase in square footage. The trigger should be the issuance of a permit for construction or reconstruction, or the approval of a zoning change or conditional use permit. For consistency with other impact fees, a threshold of 1,500 square July 2004 Page 22 o Nelson\Nygaard Consulting Associates T~ansporta~io~ Irapact Fee Nexus Study ¯Revised Draft Final Report cITY OF PALO ALTO feet for non-residential development, or the addition of a new dwelling unit for residential uses, is recommended. A change of use that reduces vehicle trips should not entitle the developer or tenant to a partial refund. There is no legal requirement or precedence for California municipalities to return any fees properly collected. In addition, such refunds would assume that the transportation improvements implemented could be removed and the investment recouped, which would obviously be impracticable. July 2004 Transportation I~npact Fee Ne×us Study , Revised Draft Final Report CITY OF PALO ALTO Chapter 8, Recommended ,Fee Level This chapter presents and describes the methodolo~o~y for determining the recommended fee level. It also presents examples of fee level.s for different land uses, using standard trip generation rates. The basic impact fee formula can be described as the cost of impact mitigation divided by the amount of impact, yielding a cost per unit of impact. The general impact fee formula is shown below: Cost of Mitigations/Projects to Accommodate DevelopmentImpact Fee Rate Aggregate Uni~ Impacts Cenerated by Developmen~ For the Palo Alto Fee, the unit of impact is PM peal<, hour vehicle trips. The cost of impact mitigation is the share of the total cost of the TIF project list. The denominator and numerator of the impact fee equation are discussed successively below. Development. and Trave~ Projections Forecasts of PM peak hour vehicle trips are derived from the new Palo Alto travel demand model, which uses a combination of locally and regionally derived land use forecasts to develop travel forecasts. Using population and employment forecasts developed by the Association of Bay Area Covernments and the countywide model developed by the Santa Clara County Congestion Management Agency (CMA) as the starting point, the model was modified to take better account of local knowledge of existing land use and devel0pme.nt potential and of existing traffic conditions. In addition, the Palo Alto city model includes bicycle and shuttle data that are not available for the county model. Analysis of the traffic assignments results leads to our understanding of level of service, vehicle miles traveled and other transportation system performance measures. Figure 14 shows the model process. Transportation I~npact Fee Nexus Study ¯ Revised Draft Final Report CITY OF PALO ALTO Figure 14 PaSo Alto Trave~ Demand Mode~ IABAC Population and employment forecasts County Street and Highway Network ........indicates process --Indicates results City Street and Highway Network Bicycle Survey The population and employment baseline and forecasts for Palo Alto are shown in Figure 15. The population growth, which is expected to be more stable - and therefore easier to predict, is shown in five-year increments. While the ABAC employment projection to 2025 is expected to be met, employment growth, is expected to be more dynamic than can predicted with much certainty for the intervening years. Employment is predicted for 2005, 2010 and 2025; the 2025 value includes growth from 2011 through 2025. Based on this projected growth in population and employment, the Travel Demand Model shows an increase in PM peak hour trips with origins or destinations in Polo Alto from 49,142 in 2002, to 53,553 in 2025. This represents an increase of 4,411. As discussed in Chapter 3, 91.7% of these new trips are expected to be generated by development that is subject, to the proposed TIF, with 8.3% generated by exempt uses such as public schools (Figure 7). Figure 15 Palo Alto Population and Employment Projections Total Population 63,728 64,237 Total Employment 95,454 96,788 Retail Employment 11,979 12,4% Service Sector Employment 48,717 48,841 Wholesale/Manufacturing Employment 24,615,25,14C 67,576 67,743 99,152: 12,854 49,68~ 25,75C 68,023 69,748 104,964 14,200 51,064 28,392 Note: Excludes Stanford lands Juiy 2.004 CITY OF PALO ALTO Expenditure Plan The proposed expenditure plan is shown in Figure 16. The detailed project list and description is provided in Appendix C. It should be emphasized that the projects in the expenditure plan would not .constitute the sole alternative modes projects in the City of Palo Alto. Rather, .new development would benefit from (and its vehicle trips would be mitigated by) the extremely large investment that the City has already, made in streets, bicycle and pedestrian facilities, traffic control devices, traffic calming, and transit. The costs shown in Figure 16 are ’present-value"costs. The present-value cost represents a conversion of any annual funding needs to a single dollar term. Annual funding streams are discounted to present value assuming a building life of 45 years, and a real interest rate i:o the city of 3 %. The figure shows three distinct groups of costs, which are summed to arrive at the total cost of the projects and programs: ¯¯ C)ne-time costs and capital.costs - these represent the cost to get infrastructure or a program up and running. This amount is not discounted, and is not affected by the use of a different value for building lil:e. Replacement costs - these are a function of the expected useful life of the infrastructure. For example, a shuttle bus with a useful life of s&ven years would need to be replaced six times over the 45-year period. Since these replacement costs are not incurred until later, they are discounted using the real interest rate. Annual costs - the total of these costs over the 45-year planning horizon is discounted using the real interest rate, to obtain a present value figure. In general, these annual costs are for operations and maintenance. The total present value cost of the TIF project list is $117.5 million. If 7.6% of the cost is assigned to new development subject to the TIF, the total amount that would be funded through the TIF is $8.9 million. CITY OF PALO ALTO Recommended Fee Level The total of $8.9 million represents the maximum citywide sum that can be raised from the pr.oposed Transportation Impact Fee, in order to mitigate the impacts of new development subject to the TIF. In addition, administrative costs are estimated at 15% of the time of a traffic engineer, or $15,000 per year. This amounts to $239,054 in present value terms over the period to 2025, assuming the same real interest rate to the City of 3%. This equates to just 2.6% of the total revenue raised through the T!F. This equates to a fee level of $2,266 per PM peak hour vehicle trip. The fee calculation is shown in Figure 17. This fee would allow development to mitigate its impacts by contributing to transportation programs in proportion to its share of total traffic. Figure 17 Proposed Fee Leve~ PM peak hour trips generated by new development subject to TIF (A)4,045 Total TIF Expenditure Plan Costs (mzT/~b~Ts)(B)$117.5 % of Expenditure Plan Funded Through TtF ©7.6% Total Revenue Raised Through TIF (millions) (B * C)~8.9 Administration 90.2 Fee per P~I P~a~ Hour Trip (B*C / A)$2,2~6 As the TIF uses a trip generation rate as the unit of assessment, it is somewhat difficult to compare to the other Palo Alto development impact fees, which are levied per unit or square foot. To facilitate comparison, Figure 18 uses ITE trip generation rates8 to convert the Ptvt peak-hour fee to a unit of development equivalent. Note that these trip generation rates are based on the 6th Edition of the Trip Ceneradon Manual. A new edition is scheduled to be released in 2004, which will supercede the rates used in the calculations in this report. 8 ITE trip generation rates are generally used for Traffic impact Analysis studies that determine fee levels Transportation Jrr=pact Fee Nexus Study ¯ Revised Draft Final Report CITY OF I~ALO ALTO Figure 18 Transportation Impact Fee by Land Use (l~ustrative) Single-Family, Detached Apartment General Office Hotel Room Second Housing Unit Residential Condominium/Townhouse Retirement Community General Light Industrial Warehousing Medical Office Office Park Specialty Retail Center Supermarket Oiscount Club Quality Restaurant 1.01 0.62 0.00149 0.61 0.72 0.54 0.27 0.00098 0.00051 0.00518 0.00150 0.00259 0.01202 0.00350 0.00902 S2,289 dwelling $1,405 dwe!ling ’ $3.38 sq. ft. $1,382 room $1,631 dwelling ~; 1,224 dwelling $612 dwelling $2.22 sq. ft. $1.1.6 $11.74 $3.40 $5.87 $27.24 $7.93 $20.44 Note: Derived by multiplying the applicable PM peat{ hour trip rate X Fee Rate per trip. Illustrative as results of final Traffic Impact Analysis will determine fees far developments. Source: ITE Trip Generation Manual, 6th Edition. sq. ft. sq. ft. sq. ft. sq. ft. sq. ft. sq. ft. sq. ft. Total Impact Fee Leve~ Figure 19 shows the total fee that would be levied on different.development types, following the adoption of a TransPortation Impact Fee. Note that these are illustrative, since the.re are broad variations in trip generation rates between land use types, particularly between different commercia and industrial land uses. While the City’s existing impact fees distinguish between only six land use categories, four of which are residential, the proposed TIF would vary with the literally hundreds of land uses categories detailed in the ITE Trip. Cenerat:ion Manual. For example, per ITE, Supermarkets (code #850) generate 20 t~mes more peak hour tr,Fo than Wa,~h~,uo,,,s (code #I.~,~) - both of which would be considered commercial/industrial under other impact fees. If the recommended Transportation Impact Fee were to be adopted, the total impact fees levied on developers would amount to nearly $13,200 for a small single family home, just over $5,000 for a small apartment; and $22.42 per square foot of commercial or industrial development in most of the City. This represents an increase of between 12% and 39% (Figure 19). As is to be expected, fees for residential uses are increased by the largest percentage because they are exempt from the existing affordable housing in-lieu and traffic impact fees. July 2004 Transportation |~npact Fee Nexus S~udy ¯Revised Draft Final Report CITY OF PALO ALTO It should be stressed that fees will be lower for developments that can take advantage of credits for proximity to transit, mixed-use or TDM programs. A mixed-use residential/retail development close to Caltrain that implements a robust TDM program, for e.xamp!e, could benefit from a reduction of nearly 30% in its impact fee. Figure 19 Proposed Total Impact Fee (!]iust~’ative On~y) Existing Impact Fees Parks $8,071 $12,050 $2,671 $5,283 $3.43 $3.43 $3.43 $1.55 Community Centers $2,093 $3,132 $694 $1,377 $0.19 "$0.19 $0.19 $0.09 Libraries $730 $1,085 $239 $477 $0.18 $0.18 80.18 $0.08 Housing In-Lieu $15.24 $15.24 $15.24 $15.24 Existing Traffic Fee $8.51 Recommended TIF $2,289 $2,289 $1,405 $1,405 S3.38 $3.38 $3.38 $3.95 [Total F~e L~wl $13,t83 $18,556 $5,009 $8,542 $30.93 $24.17 $22.42 $20.91 % increase 21%14%39%20%12~/,16%18%23% Illustrative as results of final Traffic Impact Analysis will determine fees for developments. For this table, the impact fee calculated for. General Office (code#710)is shown. For Hotel/Motel (code #310), assumes 350 square feet of development per hotel room. This needs to be done to match units of assessment between other Palo Alto Impact Fees and the Transportation Impact Fee. Single Family, ITE code #210, Multi " A~P~:NDI× A LITERATURE AND PEER R.EVIEW Transportation impact Fee Nexus S1~udy ~ Appendix A CITY OF PALO ALTO The purpose of this appendix is to provide background for the choices facing Palo Alto in establishing a Transportation Impact Fee (TIF), by reviewing the policies of other jurisdictions that levy TIFs. The focus is on California jurisdictions that have implemented transportation impact fees that fund alternative modes projects/mitigations as wetl as traditional roadway improvements. Relying on previous research as well as a number of phone interviews, we summarize statewide trends in TtF policy, exploring how fees are assessed, what fees fund, fee levels and how nexus is established between fees and mitigations. Following the summary information, this appendix presents brief profiles of innovative TIFs. A few examples of innovative development impact policies and transportation funding sources levied outside of California are presented as welt. A summary of findings categorizes policy options and innovations for ease of reference and consideration regarding the applicability to a TIF in Palo Alto. A Note on Terminology Throughout this appendix, these definitions are used for the following terms: Deve!opment Impact Fee. Any fee levied on new development in recognition of its impacts on municipal services. These fees include transportation, school, housing, arts and open space impact fees. Transportation Impact Fee OqF). A Subset of development impact fees, referring to . fees that cover impacts, on all transportation, modes. Traffi~ [mlpact Fee. In general, traffic impact fees are the same as transportation impact fees, but more narrowly defined to cover only roadway improvements needed to mitigate the impacts of vehicle trip generation. They are also referred to as TIFs; many jurisdictions use the term interchangeably with Transportation Impact Fees. in the..process of establishing its~ transportation impact fee, the Santa Barbara County Association of Governments conducted a statewide survey of what it referred to as Traffic Impact Fees. While conducted in 1997, some of its findings still provide a useful baseline of information as Palo Alto explores its alternatives for a Transportation Impact Fee.~ The study compiles information on 264 jurisdictions, including all 58 counties and 206 (or 44%) of the 469 cities in the state. At the time of the survey 34 of the 58 counties (59%) and 116 of the 206 surveyed cities (56%) imposed TIFs. ~ This section summarizes the findings of Traffic /mpact Fee Survey, Santa Barbara County Association of Governments, lVlay 1997 Transportation Impact Fee Nexus Study ¯Appendix A CITY OF PALO ALTO The study also reviews state statutes and case law, which clearly allow the use of impact fees for alternative transportation modes. Out of four approaches to documenting nexus between new development and alternative mode improvements, the study recommends using a policy-based approach where a capital improvement program (CIP) with traditional street and road projects and alternative mode projects is adopted as part of the ordinance establishi ng the fee. How Are Fees Assessed? Assessment / Calculation Method The TIF survey collected assessment/calculation methods on 95 jurisdictions and found the following distribution of assessment/calculation methodologies: % of Jurisdictions 42% 34% 23% 1% AssessmentlCalculation Method Average daily vehicle trips Size (square footage, number of units, etc.) Peak hour trips Building valuation Setting Fees: Facility Fee Basis Ninety-one percent of jurisdictions use a facility basis methodology for calculating fee levels. The facility basis divides the total dollar, amount needed to construct necessary transportation improvements/facilities .and meet established level of service standards at General Plan buildout by the level of anticipated development (either in the form of number of trips generated, number of square feet, number of housing units, etc.) The result is a unit cost to be assessed against new development. At times, only a percentage of the cost of a CaPital Improvement Plan is assigned to new development on the rationale that the existing community should fund a share of transportation needs as well. The Facility Fee Basis Equation illustrates the methodology. Facility Fee Basis Equation Impact Fee i~ate =Cost ole~iitiFations/Pro[ects to Accommodate Development AggTegate Unit Impacts Generated by Development Fee Amounts While the fee level must be established as part of the particular fee planning process in proportion to local impacts, it is useful to observe the fee levels used in other jurisdictions. Figure A-1 shows a range of fees on a PM Peak. Hour Trip basis, which is the unit of assessment intended for the Pa!o Alto TIF. Most cities state their fees on a unit of development basis, even if the original determination was made with peak hour trip generation rates. The figure ’reconverts’ example fees to a PM Peak Hour basis. It shows a wide range of per trip fees, from under $500 per trip to over $5,000 per trip. Figure A-2 Transportation Impact Fee Nexus Study ¯Appendix CiTY OF PALO ALTO shows the impact fees for single-family residences and office-commercial development, and the percentage of the total impact fee that is accounted for by transportation fees. As can be seen, this percentage varies markedly for both residential and commercial development, from 9% to 100%, depending on the other impact fees levied by the jurisdiction. Figures A-1 and A-2 illustrate the wide range of transportation impact fees in the region. Figures A-3 and A-4 show the impact fee rates of two specific Bay Area cities, illustrating the diversity of land use categories used in impact fees. Many neighboring cities in San Mateo and Santa Clara counties do not levy, a Transportation Impact Fee at all. These include Atherton, Colma, Foster City, San Carlos, Campbell, Cupertino, Mountain View, San Jose, Saratoga and Sunnyvale. Many of these cities, however, levy site-specific exactions on developers. In Campbell, for example, the developer of a recent project including a 210-room hotel, 1 70,000 sf office building and two parking structures paid $150,000 for a new traffic signal, $50,000 for other traffic signal improvements, and $300,000 towards the costs of extending a public street. However, the extent of these site-specific exactions is difficult to quantify on an average basis, since by their nature they vary considerably from project to project, Figu~’e A-1 Specific £ay Area Fees on a Per Peak-Hour Trip Basis Marin County~ Redwood City Gilroy Livermore Walnut Creek San Mateo Vacaville Vallejo Danville2 Morgan Hill San Ramon3 Dublin4 Menlo Park $2,530 81,502 $2,521 $2,903 $914 $1,407 $994 $993 $1,980 $2,418 $4,120 $7,279 $701 $5,316 $1,502 $6,731 $7,717 $31O54 $3,200 $6,808 $3,112 $6,251 $2,418 $9,609 $9,575 $1,074 Unless otherwise noted, the fee level represents conversion of per unit of development fees to PM Peal( Hour equivalent using ITE trip generation rates1 Actual per trip fee, range is for different planning areas ~ Low.amount is city general fee, high amount is fee if in Tassajara planning area3 Both amounts represent all fees for development in city, including sub-regional fees.. High amount includes fee in Tassajara planning area 4 Both amounts represent all fees for development in city, including sub-regional fees. For commercial uses, per trip fee amount has been converted to PM peal{ amount using ITE trip generation rates. E 0 >, 0L Transportation impact Fee Nexus Study ¯Appendix A CITY OF PALO ALTO Figure A-3 Redwood City Transportation Impact Fees by Land Use Single Family Residential [1]Per Dwelling Unit $1,501.59 Multi-Family Residential [2]Per Dwelling Unit $1,021.08 Senior HausinglCongregate Care Per Dwelling Unit $172.31 Affordable Housing Per Dwelling Unit $795.84 Transit-Oriented Housing Per Dwelling Unit $855.90 Retail Per Square Foot $4.97 Fast Food Restaurant Per Square Foot $27.65 High Turnover Restaurant Per Square Foot $8.97 Quality Restaurant Per Square Foot $11.25 Theater Per Seat $210.22 Service Station Per Fueling Position $12,024.71 Service Station with Mini-Mart Per Fueling Position $11,050.18 Convenience Store Per Square Foot $44.37 Hotel/Motel Per Room $915.97 Private School (K-12)Per Student $300.32 Church Per Square Foot $0.99 Office Per Square Foot $3.45 Industrial Per Square Foot $0.90 Self Storage Facility Per Storage Unit $45.05 Commercial Warehouse Per Square Foot $0.77 [1] Single family residential is defined as a residential density of 1-15 units per acre regardless of whether units are attached or detached. [2] Multi-family residential is defined as a residentiat density of 16 + units per acre regardless of whether units are attached or detached. Source: Redwood City, emai[ July 2003 Figure A-4 City of Gih’oy Traffic Development Impact Fee by Land Use Residential- Low Density Residential- High Density Commercial - Low Traffic Commercial - High Traffic Industrial- 6eneral Industrial-- Warehouse Source: City of Gilroy, fax July 2003 Per dwelling unit Per dwelling unit Per 1,000 sq. ft. Per 1,000 sq. ft. . Per 1,000 sq. ft. Per 1,000 sq. ft. $5,560 $4,510 $6,150 $12,430 $2,400 $I,770 Transportation Impact Fee Nexus Study ¯Appendix A CITY OF PALO ALTO What Do Fees Fund? Most of the surveyed jurisdictions that impose TIFs use the revenues solely for traditional street and road improvements. However, more than 10% allocate a portion for alternative transportation mode improvements. Examples of alternative modes projects funded by-TIF revenues included: New or upgraded bicycle and pedestrian facilities qi~n~ programs Transit capital improvements (new buses, shelters, terminals) Bus pull-outs Rideshare/carpool and parking management programs Park-and-ride lots Light rail station improvements Figure A-5 summarizes TIFs in California that include funding for alternative transportation. Traasportation Irapact Fee Nexus Study . Appendix A CITY OF PALO ALTO Figure A-5 California TIFs Using Revenues for Alternative Transportation Improvements Tahoe Regional Planning 100%* Agency San Francisco 100% Santa Cruz County 50% Sacramento County 25-30% City of Long Beach 27% Redwood City 25% City of San Luis Obispo 20% Coachella Valley Association of 10% Governments South Placer Regional 6% *Used for transit or air quality projects other than development mitigation Transit impact fee used for both capital improvements and operating costs Allocated among pod amenities (78%), existing bike facilities (t0%), new Class II bike facilities (6%), bicycle signage (4%), and bus pullouts (2%) Used for buses, P& R lots and LRT station. 7 Districts with fee schedules Allocated to transit (23%) and a Parking Management Program (4%) Used for bicycle paths, shuttle services, TDM coordinator, and other miscellaneous alternative mode improvements Allocated to bicycle facilities-(75%) and transit capital improvements (25%) Used for bus replacement and additional transit service, commuter buses, carpoots/vanpools, and discount senior!disabled fares. Used for rail and bus transit Transportation Authority City of Dublin 6%Allocated among Class I bikeways (19%), transit (57.5%), P&R (23.5%) City of Fillmore (Venture 5%Used for Class I bikeways County) San Joaquin County 5%Projects needed accommodate growth at Comprehensive Plan buildout City of Bakersfield 4%Used for transit capital improvements City of Petaluma 3%9 alternative modes projects include Class 11 bike lanes, Class I trails, pedestrian projects, a P&R lot and a transit center City of Vacaville 2%Used for Class I bike trails along 3 creeks City of Woodland (Yolo County)2%Used for new bicycle facilities Monterey County 1%Used to maintain Class I1 bikelanes along arterials City of San Diego N/A Fees and use vary.based on 49 Community Plans. Used for bike and pedestrian facilities and park and ride lots City of lrvine N/A Uses $3 million of fee revenue for alternative transportation Walnut Creek N/A A variable percentage is apportioned to alternative modes Santa Barbara County N/A Detail unavailable at time of writing Association of Governments Source: Traffic Impact Fee Survey, Santa Barbara County Association of Governments, May 1997, and follow-up interviews How is Nexus Established for Alter£ativ,e ~]odes? Traffic modeling techniques make it relatively simple for local jurisdictions to document the need for roadway system imp.rovements based on the additional trips generated by new development. While state statutes and case law clearly allow the use of impact fees for alternative transportation mode improvements, the issue of documenting the relationship / nexus between new development and alternative mode improvements is more problematic. SBCAC’s report outlined the four methods that have been used in Transportation Impact Fee Nexus Study ¯Appendix A CiTY OF PALO ALTO California to establish this nexus, which are summarized in Figure A-6 below. Local traffic models typically help support the nexus for alternative mode projects by predicting the future level of service given all planned improvements. Figure A-6 Methods for Establishing Nexus Between Fee and Alternative Mode Improvements Direct Relationship Demonstrate mode will be impacted and that improvements will he needed te handle increase in the mede’s use by the new development Alternative mode improvement will increase street capacity through mode shift and reduce traffic impact San Francisco Indirect Relationship City of San Luis Obispo Negotiation with A specific alternative mode improvement is necessary Many examples Developer to serve a particular development Policy-based Formation and adoption of a Capital Improvement City of Petaluma Determination Program with both traditional road and alternative mode projects as part of the ordinance establishing the fee Source: Traffic Impact Fee Survey, Santa Barbara County Association of Governments, May 1997, and follow-up interviews San Francisco Transit Impact Development Fee Unique Features Impact fee nexus is based on the transit demand created by new development Fee revenue is used for both transit capital needs and transit operations Fee will mitigate impacts of development on existing transit service, as well as provide new capacity (proposed) San Francisco.adopted a Transit Impact Develol~ment Fee (TIDF) in 1981. The fee of $5.00 per square foot of development i.s assessed for all office development within the greater downtown area. No specific fees are assessed to pay for traffic or intersection improvements, as the opportunity to expand roadway capacity beyond minor intersection improvements or street widening through parking removal are very limited in San Francisco. The TIDF is intended to recover the costs of carrying additional employees into downtown on public transit. The fee is focused on capturing the "costs incurred by the Municipal Railway in meeting peak-period public transit service demands created by office use in each new development subject to the fee, including the expansion of service capacity through the purchase of new rolling stock, the installation of new lines, the addition of Transportation Impact Fee Nexus Study ¯Appendix A CITY OF PALO ALTO existing lines and the long term operation, maintenance, repair and replacement of those expanded facilities." The very specific definition used in the ordinance, however, has posed several problems for Muni, which were hiF~hlighted in a recent study.= Incremental service is currently assessed against a base year of 1981, which had abnormally high ridership. Subsequently ridership and funding for Muni have declined, making it difficult to show a net increase above in service provision above the base year in the peak hour. The fee only relates to the cost of providing new capacity. Therefore, it cannot cover costs due to the increased congestion caused by new development. Con~;estion slows transit vehicles that are operating in mixed-flow traffic, meaning that fewer passengers are carried per revenue hour of service. The $5.00 per square foot fee falls short of the .cost of providing additional transit service by as much as 60 percent. Therefore, even with the past collection of $144 million since fiscal year 1988/89, service reliability and crowding problems persist on Muni. An update to the TIDF is pending introduction to the San Francisco Board of Supervisors. As well as addressing these issues, the revised TIDF is expected to cover the entire city rather than just the greater downtown area, and charge fees to all non-residential uses rather than only on offices. Sacramento County Roadway and Transit Development Fee Program3 Unique Features: A forecast of transit ridership attributable to development over 10 years was used in developing the transit fee The fee varies among 7 land use zones, which are based on projected development and roadway and transit needs in each zone The alternative mode fee directly funds the transit operator, Sacramento Regional Transit Sacramento County’s TIF was adopted in 1988 and updated in 1993. As in a number of localities, the fee was required in order to enact the local transportation sales tax initiative to ensure that new development would pay a "fair" share of transportation costs. The fee is currently scheduled for a further update. 2 San Francisco Planning Department (2001), Transit Impact Development Fee Analysis. Final Report. 3 Interview with Rich Blackmare, Sacramento County and Traffic Impact Fee Survey, Santa Barbara County Association of Governments, May 1997 CiTY OF PALO ALTO The fee program covers the growing unincorporated areas of the county. Sacramento County has historically had a larger than average share of. unincorporated urbanized and urbanizing areas. However, recent incorporations have diluted the impact of the fee. To better link the fee with the impact of new development, different fees were established among seven land use zones. Fees were based on the amount of anticipated development and required capital improvements. SACOG’s "SACMET" traffic forecasting model was used to assess traffic impacts and identify roadway .capacity deficiencies on county arteriats. A separate forecast of transit ridership attributable to development over the next ten years was used in developing the transit fee. Averaged over the 7 land use zones, the transit fee portion accounts for approximately 20-25 % of the total Roadway and Transit Development Fee revenues. Capital improvements financed by the transit portion of thd impact fee included the purchase of new buses, signal, pre-emption projects at intersections for buses, park and ride lots, and light rail system stations. The revenues are not used for transit operations. Redwood City Transportation Impact Fee4 Unique Features TIF revenues are used to fund a TDM coordinator position and taxi/shuttle operations The city enacted a limited term fee exemption for desired types of development located in its downtown In 2000, Redwood City adopted a Transportation Impact Fee with a project list containing $3.25 million in alternative mode projects out of total projects worth $12.87 million. This represents a quarter of the fee proceeds and is used for bicycle, paths, shuttle services, a full-time TDM coordinator, and 6ther miscellaneous transit, pedestrian, and bicycle improvements. One of the challenges for the city is the need for a steady on-going revenue stream to support activities like shuttle operations compared to a development impact fee, which provides a more irregular flow of funds and also has a foreseeable end date. The nexus between traffic impacts and alternative modes was established by arguing that supporting alternative modes will reduce traffic demands, particularly at locations where traditional mitigations (e.g. road and intersection widenings) are not feasible. A recent ordinance exempts development in downtown Redwood City from the TIF through 2005 for all land uses except for office, medical and professional office. This was done to try and facilitate the development of housing and retail in downtown. Interview with Richard Haygood, Traffic Engineer, City of Redwood City CITY OF PALO ALTO San Luis Obispo City Traffic Mitigation Fee Programs Unique Feature: One fifth of proceeds are used for capital transportation projects that include public transit, bikeways, and pedestrian facilities Fees adjust annually with the Los Angeles/Long Beach CPI Fees are charged for only 50% of the calculated impact of retail and hotel/motel uses in recognition of the other fiscal benefits these uses provide the city San Luis Obispo’s Impact Fees were first implemented in the early 1990s, following a comprehensive study of the City’s transportation needs and capital improvement costs related to new deyelopment. Based on that study, the City Council established Transportation Impact Fees that apply to all new development. The fees are assessed as follows: Single Family Residential Multifamity Residential Retail* Office Service Oommercial Industrial Hospital Motel/Hotel* Service Station Other $1,456 / unit $1,292 / unit $2,298/1000 sq. ft. $2,298 t 1000 sq. ft. $1,584 / 1000 sq. ft $843 / 1000 sq. ft. $2,815 1 1000 sq. ft. $676 / room $1,351 / pump $136 / trip *Fees for retail and hotel-motel are set at 50% of the adjusted study costs in. recognition of the fiscal benefits these developments bring to the Ci_ty. The City allocates 20% of the revenues derived from its traffic mitigation fee to alternative. transportation improvements. The allocation was determined by policy to ensure a 12% mode shift as supported for the modeling documentation. The proceeds are used for capital transportatior~ projects, including streets, public transit, bikeways, and pedestrian facilities. Fees are adjusted annually on July 1 based on changes in the Los Angeles/Long Beach CPI. No empirical Work has been done on changes in transportation behavior or development decisions retated to impact fees. The Transportation Impact Fee is currently being evaluated and may be revised. 5 Email correspondence on 4/18/03 with Jeff Hook, City of San Luis Obispo; and Traffic Impact Fee Survey, Santa Barbara County Association of Governments, May 1997 Page ~-~-I 1 ¯ Neison\Nygaard Consulting ,~ssoc~,at~s CITY OF PALO ALTO West Ho~ly~vood6 Unique Features: Developments that specifically serve lower income residents are F~iven a "credit" during the transportation impact process for higher transit use Developments located close to public transit can use mode split to apply for a reduction in fees levied Fees have been used to improve transit, in particular bus stop amenities Development mitigation has included easements for widened sidewalks near bus stops West Hollywood does not impose fee exactions on all developments. Instead all proposed developments are subject to a ~ransportation impacts review, and assessment fees are applied only if such impacts are deemed "significant." The exaction charged by the City is a flat fee times the number of square feet or residential units. The City uses the SANDAG Traffic Cenerators Manual7 as well as traffic studies to forecast trip generation. A unique aspect of the transportation impact analysis process in West Hollywood is that developments that specifically serve lower income residents or persons living with HIV/AIDS are given a "credit" (i.e. a lower fee) for their higher transit use; with the assumption that these residents will use transit in higher proportions than would typically be found in the region. In the same way, developments located close to public transit can apply for a reduction in their impact fees. Developer assessments can be used for transit and other non-auto modal improvements. Assessment fee funds have been used for enhanced bus stoPS and shelters in order to mitigate for an increase in transit ridership. In addition, easements have been required in order to widen sidewalks near transit stops, increasing their accessibility. Separately, the city also requires all developments with over 10,000 square feet to implement a Transportation Demand Management program. City of Los Angeles Transportation Impact Assessment Fees8 Unique Features: Trip generation studies assume a non-SOV mode split of 20% for-developments in the downtown core. Trip credits (thus lower fees) are given to developers implementing approved and monitored TDM programs. 6 Southern California Association of Governments, Transit Impact Review Program, Final Report, 2002 7 Although in an adjacent region, the SANDAG manual is commonly used for trip generation rates in Southern California. it has data on 70 land uses and includes average rates, ranaes and specific data on each case study8 Southern California Association of Governments, Transit Impact Review Program, Final Report, 2002 CIT.Y OF PAL0 ALTO Trip generation estimates may be reduced after considering pass-by trips, internal capture from mixed land uses, demolition of previous uses, and proximity to regional transit. Transportation Impact Assessment (TIA) fees in a few cases fund measures to reduce travel demand, such as the operation of shuttles and a Transportation Management Association The City of Los Angeles has a sophisticated process of reviewing the impacts of new developments on the transportation system. Trip generation for a proposed project is calculated as part of required traffic studies. Transportation Impact Assessment fees are paid by property owners of proposed projects only in either designated "Transportation Study Districts" (TSD) or an area with a "Transportation Specific Plan" (TSP). tn other cases, development impact mitigation is managed primarily through the city’s Transportation Demand Management ordinance and occasionally required.TDM Plans. The TIA fees are assessed on the basis of PM peak hour trips that are forecast to be generated by a proposed project. TIA fee rates are derived from the cost to impleme.nt projects that will improve (TSD/TSP) area wide traffic conditions divided by the trips expected to be generated in the TSD/TSP by new development projects. For example, the TIA Fee in the Coastal Corridor TSP is $5,285 per PM peak hour vehicle trip while the TIA in the West Los Angeles TSD is $2,059 per PM peak hour vehicle trip. The fee is then converted to a per square foot fee that varies by type of land use. Projects that utilize TDM or transit enhancements to reduce vehicle trips benefit from lower TIA fees since the estimate of fees is based on trips expected to be generated at the site. Local site area mitigations are not included in the TSD/TSP projects to be financed by the TIA fee and thus are required in addition to the fee. TIA fees primarily support traditional roadway improvements, however in some cases, fees have funded measures to reduce travel demand, such as the operation of shuttles and a Transportation Management Association. The TIA fee may also be used as the basis for the penalty that is assessed to property owners who-fail to adhere to a trip cap imposed as a condition of project approval. CITY OF PALO ALTO City of San Diego Transportation Mitigation Fee9 Unique i:eatures Community Plans are used to determine both the fee level and the projects to which the fee level support. A policy decision allocated 1,5% of the cost of desired projects to new development The City of San Diego’s Transportation Mitigation Fee leverages off of the existing General Plan and plans for its 49 communities. Impact fees fund projects, including those for bicycles and pedestrians, based on the needs and priorities established in by each community in Community Plans. Not all of the projects are in the city’s Capital Improvement Plan. Because many projects are desired and are not wholly necessary due to new development, impact fee rates were calculated on the basis of covering 15% of the cost of the desired projects. Fees vary by community depending on the infrastructure/projects and the amount of new development. In other words, each community has its impact fee established via a unique Facility Fee Basis Equation. The city will be updating its impact fee program and is considering modulating impact fees for affordable housing or the presence of transit. This section briefly summarizes additional fees and other development impact policies, both within and outside California, in order to give an idea of the range and type of policies that have been introduced. City of Lor~g Beach Transportation improvement Fee1° ¯/k significant percentage (27%) of fee revenues are used for alternative modes ¯Exemption for affordable housing for lower income households Boulder, CO Citywide (residents and employees) travel surveys are conducted every two years to determine trip generation and define mode split. This informs a multi-modal impact analysis of new development ik developer can suggest that it wil! maintain a higher transit mode split and introduce additional TDM programs as a means to reducing a development’s fees. 9 Interview with Charlene Gabriel Facilities Financing IVlanager, City of San Diego Planning Department and Traffic Impact Fee Survey, Santa Barbara County Association of Governments, May 1997!o City of Long Beach website http://www.ci.long-beach.ca.us and Traffic Impact Fee Survey, Santa Barbara County Association of Governments, May 1997 CiTY OF PALO ALTO Montgomery County, MD11 The county has negotiated developer agreements in which public transportation service is provided by the developer for up to 12 years in lieu of other traffic mitigation Po~t]and, OR A 70% "discount" for trip generation is given to all developments in the downtown area which are located within 500 feet of a transit stop Projects citywide can get between a 30% to 50% trip generation discount if they meet a specific density requirement ~n-Lieu Parking Fees for Parking Requirements - Palo Alto Parking requirements mandate that developers provide resources (land, construction funding) related to access to new development. In this sense, parking requirements should be recognized, if not in name, as essentially a development impact fee. In-lieu parking fees, which allow developers to pay into a fund for the construction of a common parking facility rather than directly provide parking, more closely parallel .the development impact fee because of the monetary payment. Palo Alto’s downtown in-lieu fee of nearly $,51,000 per parking space represents the equivalent of a $200 per square foot impact fee. In some cities, such as Boulder, CO, in-lieu parking fees are used for wider transportation improvements as well as parking, in recognition of their contribution to reducing parking demand. Since Pato Alto is interested in a TIF that will fund a variety of transportation projects, this peer review focuses on TIFs that fund alternativ~ modes as well as traditiohal roadway improvements. Alternative mode. mitigations are more common in TIFs than was generally considered: over 10% Of TIFs surveyed use a portion of revenues for alternative modes. Most of these TIFs view alternative mode projects as a method for facilitating mode shift in trips from new development. Only San Francisco and Sacramento incorporate the cost.of demand for alternative modes generated by new development. In addition to funding alternativen~uu~s, many ~r~ have responded with innovations to the complexities in developing a TIF in an urban, .developed, and multi-modal context. These innovative policies and implementing jurisdictions are summarized in Figure A-7. As Palo Alto embarks on implementing a TIF that is sensitive to multi-modal considerations, it should consider which of these policies are most applicable to the city’s context. Asking Growth to Pay for Public Transportation, Tom Noguchi and Don Samdahl, April 2000 Page A-15 ¯ Neison\Nygaa~d Consulting Associates CITY OF PALO ALTO Figure A-7 Existing .innovative and Unique T~F Policies TIF considers impacts of development on transit A significant percentage of TIF revenues support alternative mode projects TIF revenue supports transit/shuttle operations TIF revenue directly funds a non-levying agency such as a transit operator TIF vary on a Zonal/Community basis incorporating specific development, impacts, and mitigations TIF revenue supports TDM coordinator/staff Ridership forecasts attributed to new development used in establishing TIF Trip Generation/Fees are sensitive to downtowns and presence of transit Trip Generation/Fees consider pass by trips and internal capture for mixed LISBS Trip GenerationlFees recognize lesser impact of lower income households/ affordable housif~g development Trip Generation/Fee discounts provided for higher density development TIF rates consider other fiscal benefits of certain land uses (e.g. retail/hotel) or are modified to encourage certain types of development (e.g. residential in downtown) A development’s TDM program is incorporated into trip generation estimates/fee calculation Payments in kind such as sidewalk easements near bus stops or a long term agreement to support transit operations are allowed as mitigation measure/fee payment A developer can suggest that it will maintain a higher transit mode split and introduce additional TDM programs as a means to reducing a development’s fees Regular resident and employee travel surveys inform multi-modal trip generation estimation ’ Scope of TIF mitigation projects is widened to all desired projects with a percentage responsibility/cost attributed to new development TIF rates adjust with an inflation index SF, Sacramento Numerous SF, Sacramento, Redwood City, Los Angeles SF, Sacramento Sacramento, San Diego, Los Angeles Redwood City, Los Angeles Sacramento Redwood City, West Hollywood, Los Angeles, Portland Los Angeles West Hollywood, Long Beach Portland San Luis Ohispo, Redwood City Los Angeles West Hollywood, Montgomery County Boulder Boulder San Diego San Luis Obispo ESTIMATION OF DEVELOPMENT PROPORTION OF EXEMPT Transportation la~pact Fee Nexus Study . Appendix B CITY OF PALO ALTO This appendix provides details of the methodology used by City of Palo Alto Planning Division staff to estimate the proportion of development that will be exempt from the proposed Transportation Impact Fee. Non R~sid~ntia~ Details were compiled of all development in Palo Alto between 1983 and 2003 with the uses proposed to be exempt from the Transportation Impact Fee. The amount of development with these uses totaled 216,977 square feet. The Association of Bay Area Governments is projecting 10,924 additional employees in Palo Alto through the year 2025. Assuming 4 employees per 1000 square feet of work space, this equates to 2,731,000 square feet of non-residential floor area. Assuming the same rate of exempt development will continue over the next. 21 years, the proportion of exempt non-residential development will be ’7.9% (= 216,977/2,731,000) over the period 2004-2025. Residential Details were compiled of all 100% affordable multifamily housing development (i.e., that proposed to be exempt from the Transportation Impact Fee) in Palo Alto between 1 983 and 2003. This totaled 376 units. The Association of Bay Area Governments is projecting 4,360 additional housing units in Palo Alto through the year 2025. Assuming the same rate of exempt development will continue over the next 21 years, the proportion of exempt, residential development will be 8.6% (= 376 / 4360). 7.9% (= 21 6,977 / 2,731,000) over the period 2004-2025. Tota~ A simple average of figures for residential and non-residential development was taken to estimate the .overalt percentage of development that is expected to be exempt from the proposed Transportation Impact Fee. This equates to 8.3%. APP~=ND]X C DETAILED EXPENDITURE PLAN Transportation ltmpact Fee Nexus Study o Appendix C CITY OF PALO ALTO This appendix provides the detailed project list, supplementing the summary expenditur~ plan outlined in Chapter 5. Transportation Demand Management Plan Reference: Comprehensive Plan Programs T-S, %6, %7, %8, T-9, T-IO, T-11, %12; Pol icy T-3 This line kem would cover operations and marketing costs for a citywide TDM program, equivalent to staff time for 0.5 FTEs. This is estimated at $50,000 per year. Advanced TranSportation Management and ~nformation System Plan Reference: Comprehensive Plan Program %38; Policy T-28 The City of Palo Alto’s Advanced Transportation Management and Information System (ATMIS) will create real-time transportation management system that will manage both th.e traffic system and the transit system. The system will collect real-time traffic:information to better manage the system and will provide information to the users with various technolob:~ means. In addition, the system will be integrated with other transportation service providers and regional systems, including regional traveler information system, Travlnfo®, Caltrans, Silicon Valley ITS Program, Stanford University, and transit agencies, such as V-I-A and Samtrans. The following are the major components of the syste .m: Closed Circuit TV (CCTV) - Install CCTVs at major intersection for. monitoring of traffic conditions -Approximately 30 locations. Communication System Upgrade - Upgrade communication system for the CCTV system, by deploying SONET or Cig Ethernet system over existing fiber o’ptic infrastructure. Dynamic Message Signs (DMS) - Install arterial size DMS signs to provide real-time traffic information, traffic updates and roadway information, especially during event traffic at the Stanford University. -Approximately 10 locations. Video Detection System (V~D) - Install VID system at major intersection to collect real-time i nfor mati on - Approximately 50 intersections. 5. Detection System - Install loop detectors or other types of traffic count system in the downtown area to collect traffic volumes - Approximately 25 intersections. 6. Transit Priority System - Install transit priori.ty system along major collector arterials for major transit routes for V-I-A, Samtrans and Palo Alto Transit. Approximately 60 intersections. CITY OF PALO ALTO Traffic Adapth/e System O’AS) - Implement a traffic adaptive system for major arteria corridors - Approximately 3.5 intersections. Update signal timing for other major intersections - Approximately 65 intersections. o Parking Guidance Systems (PGS) - Implement a parking guidance system to provide real-time information coming to Palo Alto, including event traffic management and integration with the DMS system. Integration with Regional Transportation Systems- Integrate City of Palo Alto’s advanced traffic management system with Travlnfo®, the regional traveler information system, SV-ITS program, which is the south bay traffic management system, Caltrans and Stanford University. 10.Traveler Information System and Web Site - Develop a traveler information system web site for dissemination of traffic and transit information, as well as real-time trip planning. Install kiosk at major transportation attraction points. The proposed system will provide a full spectrum of transportation,, transit and traveler information system efficiencies for the residents of Palo Alto. The program can be integrated with the currently funded Advanced Transportation Management system upgrade and transform the City into one of the most advanced systems in the country. Figure C-1 shows a planning level estimate of probable costs for the proposed program. Figure C-1 Estimate of Costs (P~anning Leve~ Estimate) Closed Circuit TV Communication System Upgrade Dynamic Message Signs Video Detection System Loop Detection for Downtown Translt Priority System Traffic Adaptive System SignalTiming Parking Guidance System Travlnfo® and SV-ITS Integration Traveler Information System Kiosks Sub.T0tal Contingency at 15% Sub.T0tal 30 10 10 50 25 50 35 65 1 1 1 15 ~30,000 $50,000. ~45,000 ~25,000 $10,000 ,~ 15,000 $4,000 $2,500 $500,000 $200,000 $250,000 $10,000 $900,000 $500,000 $45O,000 $1,250,000 $250 000 $750,000 $140,000 $162,500 $500,000 $200,000 $250,000 $150,000 $5,502,500 $825,375 $6,327,875 $2,214,756Planning, Engineering, Construction Management & Administration at 35°/o Tata~ Capita~ Cast $8,542,33t Annual Operatin~ Cast @ 1~]%$854,233 [Page ~-~-2 o Neisor~\Nygaard Corlsuttin~ Associates CITY OF £ALO ALTO Expanded Shuttle Service Plan Reference: Polo Alto Local Shuttle Plan; Comprehensive Plan Policy %4; Program %1 3 Figure C-2 shows the description of shuttle service expansions, and associated costs (current as of February 2004). Note that costs for all-day service are lower than for peak- period or midday only service. Figure C-2 Shuttle Service Expansion Costs Extend Crosstown shuttle to PAMF Stanford Research Park Shuttle (new) San Antonio Shuttle (new) Run Embarcadero shuttle midday from 9-3 !Marguerite noontime express (expanded) Annuai Contract Operatiag Cost Planning & Administration @ I0% Total Annuat Operating Costs Capita] Cast (7 Buses @ $250,008, pius 1~]% administration) 30min 10 ¯ 1 .$47.02 254 $119,431 15 min 11 2 $47.02 254 $262,748 30 min 11 1 $47.02 254 $131,37.4 30 rain 4 1 $47.02 254 $47,772 15 6 2 $54.28 254 $165,445 $72&77g $72,677 $799,447 Bicycle and Pedestrian Projects Plan Reference: Bicycle Transportation Plan; Comprehensive Plan Programs %19, %21, 22, %23,%24; Policies %1 6, %20, %28 Figure C-3 shows the high priority bicycle and pedestrian improvements identified in the Bicycle Transportation Plan, excluding two line items that are expected to be funded separately as part of the Charleston-Arastradero Corridor Plan .(bicycle lanes on Charleston- Arastradero, and intersection improvements at A.rastradero and E! Camino). Unit costs (including identified needs for traffic signals) are taken from the Bicycle and Pedestrian Plan. Since this expresses costs in Year 2001 dollars, they are inflated by 9.4%. (This represents the percentage increase in the Construction Cost Index from February 2002 to February 2004.) C!TY OF PALO ALTO Engineering manuals stress the importance of incorporating annual maintenance and operating costs into the overall budget for bicycle facilities,1 particularly since higher maintenance standards are required for bicycle routes than automobile routes (see, for example, City of Portland Bicycle Master Plan, Appendix A). However, these manuals provide little standard guidance on estimating these costs, and in practice they are often subsumed into overall operations and maintenance budgets. For purposes of this analysis, these costs are estimated at 2% of capital costs annually, including resurfacin~restriping, lighting energy costs and maintenance, graffiti removal and other measures to counter vandalism, signal operations and maintenance, landscaping, sweeping and street cleaning, and drainage and flood control. This is consistent with the 2-5% range estimated by Department of Public Works staff.2 For example, Amedcan Association of State Highway and Transportation Officials (1999), Guide for the d~ evelopment of bicycle facilities.Mike Sartor, Deputy Director, Palo Alto Public Works Department. Transportation ~lmpact Fee. Nexus Study . Appendix C CITY O.F I=ALO ALTO Figure C-3 Bicycle andPedestrian improvements 2 28 31 12 14 16 4 Castilleja/Park/Wilkie Way Matadero/Margarita El Camino Way/Maybell/Donald Everett Ave/Palo Alto Ave (including signal) Homer Avenue (including signal) Chaucer/Boyce/Melville Extension of Bryant bike blvd. $72,209 $21,881 $15,317 $194,744 $193,650 $31,728 $32,822 66 South Palo Alto Caltrain $5,470,344 61 Everett Avenue Caltrain $5,470,344 60 California Avenue Oaltrain . $5,470,344 30 Los Rabies Avenue bike lanes $89,167 6 Middlefield Road bike lanes $228,113 t 8 Embarcadero Road bike lanes $208,420 19 Cal Ave. - business District 3 Alma St. 27 Hanover and Porter bike lanes 1 El Camino Real bike route 33 West Arastradero Rd. 5 Oregon Expwy signals Stanford/El Camino Churchill/El Camino San Antonio/Charleston San Antonio/Middlefield NewelliEmbarcadero El Camino/Embarcadero Tota~ Construction Cast Soft Casts (E.g. design, Aalrainistratian) @ 30% Total CapitaJ Cast Annua~ ~)peratingl~laintenance Cast (2% of construction cost) $268,594 $915,736 $735,214 $560,163 $97,372 $547,034 $164,110 $109,407 $218,814 "$218,814 $54,7O3 $218,814 $2t,~07,86~ $6,482,358 $28,098,218 $432,!57 APPENDIX D /METHODOLOGY FOP~ C~ALCULATING VEHICLE T~IP REDUCTION Transportation Impact Fee Nexus Study o Appendix D CITY OF PALe ALTO This appendix provides the methodology and calculations to ]upport the conclusions in Chapter 3, regarding the contribution of Citywide Transportation Demand Management, Expanded Shuttle Service and Bicycle Facilities towards mitigating the impact of vehicle trips generated by new development. FigureD-1 Expected Impact ofT]F ExpenditureP~an A Cost Per Vehicle Trip Reduced B Total Annual Project Cost C Subtotal Weekday Vehicle Trips Reduced Proposed Daily Revenue Hours Estimated Ridership per Revenue HourE % of Riders Shifting from Drive Alone G Subtotal Weekday Vehicle Trips Reduced Potential Future Bike Mode Split $86.72 $50,000 42 21.0 100% 882 10.7% I Existing Bike Mode Split 5.8% J Potential Increase in Bike Mode Split 4.9% K % of Bicycle Transportation Plan included in TIF 45% Expenditure Plan L Estimated % impact of high priority projects 62% M 2025 Projected PM Peak Hour Vehicle Trips 53,553 N Potential New PM Peak Hour Bike Trips 1,636 0 Subtotal PM Peak Hour Vehicle Trips Reduced 1,636 The Contra Costa Commute Alternative Network’s Program reduced 1,107 daily vehicle trips over the FY 02/03 year, with a budget of $96,000. Source: Transportation Fund for Clean Air report. TIF Expenditure Plan TIF Expenditure Plan.. Figures from existing shuttle service, from: City of Pale Alto, Pale Alto Shuttle Ridership Assessment 2002. Average of Embarcadero (22.65)and Crosstown (19.3)services. Likely maximum assumption, given that many riders will be making new trips, or shifting from paratransit or other modes. =D*E*F Pale Alto Bicycle Transportation Plan, p. B-3. The assumption of 10.7% for work trips is used, rather than the 8.6% for all trips, which provides the likely maximum made share. Pain Alto Bicycle Transportation Plan, p. B-3, based on 1.990 census. 2000 Census figure is 6.0%; using the 5.8% therefore provides the likely maximum value. = H - 1. Assumed to be achievable with full implementation of Bicycle Transportation Plan. However, TIF Expenditure Plan only implements part of this plan (hence rows K and L). Equivalent to % of projects in Bicycle Transportation Plan that are "High" Priority (24 out of 53). Assumes that high priority projects have twice the impact of ethers in the plan. = K* 2/(100% + K) City of Pale Alto Travel Demand Model. =J*L*M Assumes 1:1 reduction. This is the likely maximum assumption, given that many cyclists will be making new trips, or shifting from walking or other modes. Transportation impact Fee Nexus Study = Appendix D CITY OF FALO ALTO The expected impacts in Figure D-1 for Citywide TDM and Shuttle Services refe~ to "weekday vehicle trips," rather than PM peak hour trips, since the data sources utilize this measure. The final step, in Figure D-2, involves conversion from weekday vehicle trips to PM peak hour trips. The diurnal factor in VTA’s. Regional Model is 0.058, meaning that 5.8°/o of weekday trips occur in the PM peak hour. For this calculation, the likely maximum figure of 0.100 is used, given that many of the trip reduction strategies will target peak hour trips. Figure D-2 Conversion from Weekday to P~] Peak Hour Vehicle Trips Citywide Transportation Demand Management .- Expanded Shuttle Service Bicycle Facilities Total 577 881 16,360 17,8111 58 88 1,636 1,782 Note: This table converts trips reduced by £itywide TDM and Shutt/e Service #om weekday into PM Peak Hours. Trips reduced by Bicycle #ac#ities are converted from PM Peek Hour into weekday trips. APPENDIX SAMPLE FEE CALCULATION WORKSHEET 0 o r~>~ o c >o ~~ Z m ATTACHMENT F E > > Attachment C Transportation Consultants DRAFT Addendum to City of Palo Alto Transportation Impact Fee Nexus Study For the City of Palo Alto April 11, 2007 Prepared by: TJKM Transportation Consultants 5960 Inglewood Drive, Suite 100 Pleasanton CA 94588-8535 Tel: 925.463.0611 Fax: 925.463.3690 PLEASANTON ¯SANTA ROSA ¯SACRAMENTO =FRESNO TABLE OF CONTENTS EXECUTIVE SUMMARY ..........................................................................................................................1 EXECUTIVE SUMMARY ...............................................................................................................................1 UPDATED FIGURES (TABLES) ...............................................................................................................3 FIGURE 7 PROJECTED INCREASE 1N VEHICLE TRIPS ....................................................................................3 FIGURE 8 EXPECTED IMPACT OF TIF EXPENDITURE PLAN ..........................................................................3 FIGURE 15 PALO ALTO POPULATION AND EMPLOYMENT PROJECTS ...........................................................3 FIGURE 16 TIF PROJECT LIST WITH PRESENT VALUE COSTS ......................................................................4 FIGURE 17 MAXIMUM FEE LEVEL ..............................................................................................................4 F1GURE 18 MAXIMUM TRANSPORTATION IMPACT FEE BY LAND USE (ILLUSTRATIVE) ..............................5 FIGURE C-1 ADVANCED TRANSPORTATION MANAGEMENT AND INFORMATION SYSTEM: PLANNING LEVEL ESTIMATE OF COSTS ...................................................................................................................... 5 FIGURE C-2 SHUTTLE SERVICE EXPANSION COSTS ....................................................................................6 FIGURE C-3 BICYCLE AND PEDESTRIAN IMPROVEMENTS ...........................................................................7 FIGURE D-1 EXPECTED IMPACT OF TIF EXPENDITURE PLAN .....................................................................8 FIGURE D-2 CONVERSION FROM WEEKDAY TO P.M. PEAK HOUR VEHICLE TRIPS .....................................9 PROJECT PARTICIPANTS .....................................................................................................................10 TJKM TRANSPORTATION CONSULTANTS .................................................................................................10 CITY OF PALO ALTO .......................................; .........................................................................................10 EXECUTIVE SUMMARY Executive Summary in July 2004 Nelson-Nygaard Associates prepared a Transportation Impact Fee Nexus Study Report for the City of Palo Alto based on traffic projections generated by TJKM Transportation Consultants. Because project costs have escalated and new data have become available since the 2004 report was written, TJKM has prepared this update to the 2004 nexus study. No changes have been made to the methodology of the study; only the input data have been updated. The maximum fee level justified by the updated data is $2,961 per net new p.m. peak hour trip. The nexus was based on year 2000 ABAG land use assumptions for growth through the year 2025, which were input into the City’s traffic model. Since then, ABAG has updated their land use projections several times. TJKM has used the 2005 ABAG projections the most recent for which detailed data is available, to update the City’s traffic model, based on allocations of this data by the City staff to traffic analysis zones. The City staff has also revised the initial costs and replacements costs of the projects proposed to be funded by the fee. The updated tables in this report reflect the new land use data and costs. TJKM updated following figures (tables) of the 2004 report based on updated land use data and inputs from the City of Palo Alto. These figures are shown in next section. Figure 7 (Projected Increase in Vehicle Trips) was updated using newly calculated 2005 and 2025 p.m. peak hour trips provided from the model. Figure 8 (Expected Impact of TIF Expenditure Plan) was updated with new numbers from other figures. Trips in Bicycle Facilities were updated with a new number originated in Figure D-2; line five was updated with the result from Figure 7; lines four and six were calculated accordingly. Figure 15 (Palo Alto Population and Employment Projects) was updated with new land use data. Year 2005 and 2025 demographic numbers (rows three and seven) were updated based on newly received data. Since there were no new data for year 2010, 2015 and 2020, the old land use data were not reported here. Figure 16 (TIF Project List with Present Value Costs) was updated in conjunction with the City staff. The first 14 lines were updated by the City staff. Line 15 was updated to the new percentage based on Figure 7 results. Supporting data can be found in Figures C-1 through C-3. Figure 17 (Proposed Fee Level) was updated with new numbers from other figures. Line one (P.M. Peak Hour Trips Generated by New Development subject to TIF (A)) was updated based on results from Figure 7; line two (Total TIF Expenditure Plan Costs (millions) (B)) was updated based on Figure 16; line three (percent of Expenditure Plane Funded Through TIF (C)) was updated from Figure 7; lines four and six were calculated accordingly. City staff updated the administration cost based on 2007 salary and benefit costs. Addendum to City of Palo Alto Transportation Impact Fee Nexus Study TJKM Transportation Consultants Page 1 4/11/2007 Figure 18 (Transportation Impact Fee by Land Use) was updated to reflect changes in the 7th Edition of the ITE Trip Generation Manual. Column one (trip generation rates) was updated to the numbers found in the 7th Edition. Land Use examples were kept the same as the 2004 figure, while the rate for Recreational Homes was used for Second Housing Unit. Column two (Recommended Transportation Impact Fee) was calculated by applying new TIF fee number found in Figure 17. Figures C-1 through C-3 (Advanced Transportation Management and Information System, Shuttle Service Expansion Costs, and Bicycle and Pedestrian Improvements) were updated using the Engineering News Record Construction Cost Index and equipment quotes from vendors. Figure D-1 (Expected Impact of TIF Expenditure Plan) was updated in conjunction with the City staff. City staff provided updates for line A to L. Line M (2025 Projected P.M. Peak Hour Vehicle Trips) was updated with the number from Figure 7; line N (Potential New P.M. Peak Hour Bike Trips) and O (Subtotal p.m. Peak Hour Vehicle Trips Reduced) were calculated accordingly. Figure D-2 (Conversion from Weekday to P.M. Peak Hour Vehicle Trips) was updated based on results found in Figure D-1. Line three (Bicycle Facilities P.M. Peak Hour Trips) was updated to numbers found in Figure D-l, which was determined by the City of Palo Alto; line four (Total) was calculated accordingly. Addendum to City of Palo Alto Transportation Impact Fee Nexus Study TJKM Transportation Consultants Page 2 4/1112007 UPDATED FIGURES (TABLES) Figure 7 Projected Increase in Vehicle Trips Number of P.M.% of 2025Peak Hour Vehicle Trips Trips 2005 Trips 40,617 90.0% 2025 Trips 45,011 100.0% Change 2005-2025 4,394 9.8% New Trips Generated by Exempt Uses (8.3%)365 0.8% New Trips Generated by Development Subject to TIF (91.7%)4,029 9.0% Source: City of Palo Alto Travel Demand Model and estimates of exempt uses. Figure 8 Expected Impact of TIF Expenditure Plan Expenditure Plan Item Citywide Transportation Demand Management Expanded Shuttle Service Bicycle Facilities* Total Vehicle Trips Reduced by TIF Expenditure Expected New Vehicle Trips from New Development Subject to TIF % of New Vehicle Trips Mitigated by TIF P.M. Peak Hour Trips Reduced 58 88 1,257 1,403 4,029 35% Note: Include Bike Boulevards, Undercrossings, Bike Routes/Lanes and Spot Improvements Figure 15 Palo Alto Population and Em floyment Projects 2002 2005 2025 Total Population 63,728 66,451 77,258 Total Employment 95,454 92,560 106,119 Retail Employment 11,979 7,272 8,196 Service Employment 48,717 58,307 66,480 Wholesale/Manufacturing Employment/Other 24,615 26,981 31,443 Vote: Excludes Stanford lands Addendum to City of Palo Alto Transportation Impact Fee Nexus Study TJKM Transportation Consultants Page 3 4/11/2007 Figure 16 T1F Project List with Present Value Costs Initial Costs Project Replacement Costs Annual/Operating Costs Total Costs Transportatio Computerized Expanded Biken Demand Traffic Shuttle BoulevardsManagementManagementService CapitaV1-Time/Start-Up Costs $0 $9,809,958 $2,194,500 $816,645 Useful Life (Yrs)N/.~15 7 30 Number of Replacements N/,~2 6 1 Replacement 1 $6,296,639 $1,784,329 $336,447 Replacement 2 $4,041,573 $1,450,823 Replacement 3 $1,179,652 Replacement 4 $959,165 Replacement 5 $779,889 Replacement 6 $634,121 Total Replacement Payments I N/,~$10,338,212 $6,787,979 $336,447 Annual/Operating Costs $60,127 $980,996 $855,517 $12,564 Ann. Op Costs as % of Cap NIA 10%N/A 2% Present Value of Annual Costs $1,474,237 $24,052,759 $20,976,175 $308,047 Combined Present Value $1,474,237 $44,200,928 $29,958,654 $1,461,139 % Funded by TIF 9.00%9.00%I 9.00%9.00% Amount Funded by TIF $132,681 $3,978,084 $2,696,279 $131,503 Bike/Ped Under. crossiBgs $24,499,361 30 1 $10,093,412 $10,093,412 $376,913 2~ $9,241,428 $43,834,201 9,00% $3,945,078 Bike Lanes on Major Streets $784,796 30 1 $323,326 $323,326 $12,074 2% $296,034 $1,404,155 9.00% $126,374 BikeRoutes/ Lanes on Major A~erials $2,749,645 3O 1 $1,132,817 $1,132,817 $42,302 2% $1,037,196 $4,919,659 9.00% $442,769 SpotBike/Ped Improvements $1,224,969 30 1 $504,671 $504,671 $18,846 2% $462,072 $2,191,712 9.00% $197,254 Total $42,079,874 $29,516,864 $57,847,948 $129,444,685 $11,650,022 Figure 17 Maximum Fee Level P.M. Peak Hour Trips Generated by New Development subject to TIF (A) Total TIF Expenditure Plan Costs (millions) (B) % of Expenditure Plane Funded Through TIF (C) Total Revenue Raised Through TIF (millions) (B * C) Administration (millions) (D) Fee Per P.M. Peak Hour Trips (B * C+D / A) 4,029 $129.4 9.0% $11.65 $0.28 $2,961 Addendum to City of Palo Alto Transportation Impact Fee Nexus Study TJKM Transportation Consultants Page 4 4/11/2007 Figure 18 Maximum Transportation Impact Fee by Land Use (Illustrative Example Land Use Single:Family, Detached Apartment General Office Hotel Room Second Housing Unit Residential CondominiumiTownhouse Retirement Community General Light Industrial Warehousing Medical Office Office Park Specialty Retail Center Supermarket Discount Club Quality Restaurant P.M. Peak Hour Trips Generated 1.01 0.62 0.00149 0.59 0.26 0.52 0.29 0.00098 0.00047 0.00372 0.00150 0.00271 0.01045 0.00424 0.00749 Recommended Transportation Impact Fee $2,990 $1,836 $4.41 $1,747 $770 $1,540 $859 $2.90 $1.39 $11.01 $4.44 $8 .o2 $30.94 $12.55 $22.18 Note: Source: Unit of Development dwelling dwelling sq. ft. room dwelling dwelling dwelling sq. ft. sq. ft. sq. ft. sq. ft. sq. ft. sq. ft. sq. ft. sq. ft. Derived by multiplying the applicable p.m. peak hour trip rate by Fee Rate per trip Illustrative as results of final Transportation Impact Analysis will determine fees for developments. ITE Trip Generation Manual, 7th Edition. Figure C-1 Advanced Transportation Management and Information System: Planning Level Estimate of Costs Item Quantity Unit Price Total Closed Circuit TV 30 $34,451 $1,033,518 Communication System Upgrade 10 $57,418 $574,177 Dynamic Message Signs 10 $51,676 $516,759 Video Detection System 50 $28,709 $1,435,442 Loop Detection for Downtown 25 $11,484 $287,088 Transit Priority System 50 $17,225 $861,265 Traffic Adaptive System 35 $4,593 $160,769 Signal Timing 65 $2,871 $186,607 Parking Guidance System 1 $574,177 $574,177 Travlnfo and SV-ITS Integration 1 $229,671 $229,671 Traveler Information system 1 $287,088 $287;088 Kiosks 15 $11,484 $172,253 Sub-Total $6,318,814 Contingency at 15%$947,822 Sub-Total $7,266,636 Planning, Engineering, Construction Management & Administration at 35%$2,543,323 Total Capital Cost $9,809,958 Annual Operating Cost @ 10%$980,996 Notes: Projects and costs are taken from Figure C-1 of the July 2004 Transportation Impact Fee Nexus Study. Since those costs were expressed in year 2004 dollars, the costs have been inflated by 14.8%, the percentage increase in the Construction Cost Index from February 2004 to February 2007. Addendum to City of Paid Alto Transportation Impact Fee Nexus Study TJKM Transportation Consultants Page 5 4/11/2007 Figure C-2 Shuttle Service Expansion Costs Shuttle Route Extend Crosstown shuttle to PAMF Stanford Research Park Shuttle (new) San Antonio Shuttle (new) Run Embarcadero shuttle midday from 9-3 Marguerite noontime express (expanded) Annual Contract Operating Cost Planning & Administration @ 10% Total Annual Operating Costs Capital Cost (7 Buses @ $285,000, plus 10% administration) Notes: Frequency Service No. of Cost per Hours Buses Hour 30 min 10 15 min 11 30 min 11 30 min 4 15 min 6 1 2 1 1 2 $50.10 $50.1o $50.10 $50.1o $58.94 Service Days 254 254 254 254 254 Annual Operating Cost $127,254 $279,959 $139,979 $50,902 $179,649 $777,743 $77,774 $855,5t7 $2,194,500 Projects and costs are taken from Figure C-2 of the July 2004 Transportation Impact Fee Nexus Study. Associated costs are current as of February 2007 Addendum to City of Palo Alto Transportation Impact Fee Nexus Study TJKM Transportation Consultants Page 6 4/11/2007 Figure C-3 Bicycle and Pedestrian Improvements ConstructionBike Plan Ref.Description Cost Bicycle Boulevards 2 Castilleja/Park/Wilkie Way $82,921 28 Matedero/Margarita $25,127 12 Everett Ave/Palo Alto Ave (including signal)$223,635 14 Homer Avenue (including signal)$222,379 16 Chaucer/Boyce/Melville $36,435 4 Extension of Bryant bike blvd.$37,691 Bicycle/Pedestrian Undercrossings 66 South Palo alto Caltrain $6,281,687 61 Everett Avenue Caltrain $6,281,887 60 California Avenue Caltrain $6,281,887 Bike Lanes on Major Streets 30 Los Robles Avenue bike lanes $102,395 6 Middlefield Road bike lanes $261,954 18 Embarcadero Road bike lanes $239,340 Bike Lanes / Routes on Major Arterials 19 Cal Ave. - Business District $308,441 3 Alma St.$1,051,588 1 El Camino Real bike route $643,265 33 West Arastradero Rd.$111,817 Spot Bicycle/Pedestrian Improvements Churchill/El Camino $125,638 San Antonio/Charleston $251,276 San Antonio/Middlefield $251,276 Newell/Embarcadero $62,818 El Camino/Embarcadero $251,276 Total Construction Cost $23,134,935 Soft Costs (e.g. design, Administration) @ 30%$6,940,480 Total Capital Cost $30,075,415 Annual Operating/Maintenance Cost (2% of construction cost)$462,699 Notes: Projects are from the Bicycle Transportation Plan, excluding those projects already completed before the publication of this addendum. Construction costs are taken from Figure C-3 of the July 2004 Transportation Impact Fee Nexus Study. Since those costs were expressed in year2004 dollars, the costs have been inflated by 14.8%, the percentage increase in the Construction Cost Index from February 2004 to February 2007. Addendum to City of Palo Alto Transportation Impact Fee Nexus Study TJKM Transportation Consultants Page 7 4/12/2007 Figure D-1 Expected Impact of TIF Expenditure Plan Raw [Project 1. Citywide Transportation Demand Management A Cost Per Vehicle Trip Reduced B Total Annual Project Cost C Subtotal Weekday Vehicle Trips Reduced 2. Expanded Shuttle Service D Proposed Daily Revenue Hours E Estimated Ridership per Revenue Hour F % of Riders Shifting from Drive Alone G Subtotal Weekday Vehicle Trips Reduced 3. Bicycle Facilities H Potential Future Bike Mode Split Source/Calculation L M N 0 Existing Bike Mode Split Potential Increase in Bike Mode Split % of Bicycle Transportation Plan included in TIF Expenditure Plan Estimate % impact of high priority projects 2025 Projected P.M. Peak Hour Vehicle Trips Potential New P.M. Peak Hour Bike Trips Subtotal P.M. Peak Hour Vehicle Trips Reduced $86.72 $50,000 577 42 21.0 100% 882 10.7% 5.8% 4.9% 40% 57% 45,011 1,257 1,257 The Contra Costa Commute Alternative Network’s Program reduced 1,107 daily vehicle trips over the FY 02/03 year, with a budget of $96,000. Source: Transportation Fund for Clean Air report TIF Expenditure Plan =B/A TIF Expenditure Plan Figures from existing shuttle service, from: City of Palo Alto, Palo Alto Shuttle Ridership assessment 2002. Average of Embarcadero (22.65) and Crosstown (19.3) services Likely maximum assumption, given that many riders will be making new trips, or shifting from paratransit or other modes. =D*E*F Palo Alto Bicycle Transportation Plan, p. B-3. The assumption of 10.7% for work trips is used, rather than the 8.6% for all trips, which provides the likely maximum mode share. Palo Alto Bicycle Transportation Plan, p. B-3, based on 1990 census. 2000 Census figure is 6.0%; using the 5.8% therefore provides the likely maximum value. = H - I. Assumed to be achievable with implementation of Bicycle Transportation Plan. However, TIF Expenditure Plan only implements part of this plan (hence rows K and L). Equivalent to % of projects in Bicycle Transportation Plan that are a "High" Priority, and are included in the revised TIF expenditure plan (21 out of 53). Assumes that high priority projects have twice the impact of others in the plan. = K * 2 / (100% + K) City of Palo Alto Travel Demand Model :J*L*M Assumes 1:1 reduction. This is the likely maximum assumption, given that many cyclists will be making new trips, or shifting from walking or other modes. Addendum to City of Palo Alto Transportation Impact Fee Nexus Study TJKM Transportation Consultants Page 8 4/11/2007 Figure D-2 Conversion from Weekday to P.M. Peak Hour Vehicle Trips Project Weekday Vehicle P.M. Peak Hour Vehicle Trips Reduced Trips Reduced Citywide Transportation Demand Management 577 58 Expanded Shuttle Service 882 88 Bicycle Facilities 12,570 1,257 Total 14,029 1,403 Note:This table converts trips reduced by Citywide TDM and Shuttle Service from weekday into p.m. Peak Hours. Trips reduced by Bicycle Facilities are converted from p.m. Peak Hour into weekday trips. Addendum to City of Palo Alto Transportation Impact Fee Nexus Study TJKM Transportation Consultants Page 9 4/11/2007 PROJECT PARTICIPANTS TJKM Transportation Consultants Jia Hao Wu, Ph.D. Kai Han, Assistant Engineer Allen Nie, Ph.D., P.E. Stephen Au, P.E. City of Palo Alto Jon Abendschein Gayle Likens Libby Dame Project Manager and the City Travel Demand Modeling Document and Excel Operations Census Data Process and Investigation Project Engineer, Quality control Administrator Transportation Manager Senior Financial Analyst j:~jurisdictionlp~palo alto~042-029 traffic impact feeldocumentlreportl3_rO4102OO7_fee_study-4-11.doc Addendum to City of Palo Alto Transportation Impact Fee Nexus Study TJKM Transportation Consultants Page 10 411112007 ATTTACHMENT D Comments and questions from the 12/7 Government Action Committee discussion of a proposed citywide transportation impact fee: What are the costs vs. the benefits for small business? o How does this fee affect the cost of expanding a business? o In what ways will these projects benefit the business community? o How do the City’s fees compare to other cities’ fees? o Quantify the benefit to business (e.g., shuttles to business districts, $ paid for specific improvements) Exemptions: o What would be an appropriate square footage exemption for a small retail expansion? o Would it be appropriate to exempt retail entirely? Will these fees affect the Stanford Research Park? Are there ways this fee, and the projects funded by it, could be aligned with the goals of the Green Ribbon Task Force? o Increased shuttle service to schools o Exemption for "attainable" housing Attachment E Estimate of Transportation Impact Fee for Specific Uses Example Land Use Single-Family, Detached Apartment General Office Hotel Room Second Housing Unit Residential Condominium Retirement Community General Light Industrial Warehousing Medical Office Office Park Specialty Retail Center Supermarket Discount Club Quality Restaurant PM Peak Hour Trips Generated 1.01 0.62 0.00149 0.59 0.26 0.52 0.29 0.00098 0.00047 0.00372 0.0015i 0.00271 0.01045 0.00424 0.00749 Hecommenoe(l Transportation Impact Fee (without cap) $2,627 $1,613 $3.88 $1,535 $676 $1,353 $754 $2.55 $9.68 $3.90 $7.O5 $27.18 $11.03 $19.48 Hecommenaea Transportation Impact Fee (with cap) $2,627 $1,613 $3.88 $1,535 $676 $1,353 $754 $2.55 $1.22 $3.88 $3.88 $3.88 $3.88 $3.88 $3.88 Note: Derived by multiplying the applicable PM peak hour trip rate by Proposed Fee Rate per trip. results of final Transportation Impact Analysis will determine fees for developments. Source: ITE Trip Generation Manual, 7th Edition. Unit of Development dwelling dwelling sq. ft. room dwelling dwelling dwelling sq. ft. sq. ft. sq. ft. sq. ft. sq. ft. sq. ft. sq. ft. sq. ft. Illustrative as Attachment F Estimate of Future Park Impact Fee Revenue Based on ABAG Growth Projections 2010-2025 Projected Job Growth Jobs per 1,000 square feet Projected square feet Park impact fee (2007) Estimated future fees (2007 dollars) 15,560 jobs 4 jobs / 1000 sf 3,890,000 sf $3.77 / sf $14,665,300 2010,2025 Projected Household Growth Parkland Dedication fee (2007) Estimated future fees (2007 dollars) Conservative fee estimate (assume on!y 70% of ABAG projected housing actually built by 2025) 6,830 households $19,620/unit $131,136,000 $91,795,200 2010-2025 Projected Household Growth Park Impact fee (2007) Estimated future fees (2007 dollars) Conservative fee estimate (assume only 70% of ABAG projected housing actually built by 2025) 6,830 households $5,811/unit $39,689,130 $27,782,391 Net increase in future revenue resulting from adoption of Parkland Dedication Fee $64,012,809 ATTACHMENT G TO:HONORABLE CITY COUNCIL FROM: DATE: SUBJECT: CITY MANAGER AUGUST 9, 2004 DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT CMR:384:04 PROPOSED CITYWIDE TRANSPORTATION IMPACT FEE RECOMMENDATION The Finance Committee recommends referral of the Citywide Transportation Impact Fee to Council without recommendation. Staff recommends the following Council actions: 1)Conduct a public hearing regarding the proposed Citywide Transportation Impact Fee (TIF) and 2)Adopt an Ordinance making certain findings regarding the TIF and adding Chapter 16.59 to the Palo Alto Municipal Code to impose and implement the TIF. BACKGROUND The City Council directed staff to develop a Citywide Transportation Impact Fee as part of two "Top 5" Council Priorities: Long-Range Financial Planning and Alternative Transportation/Traffic Calming. The proposed citywide TIF would fund a portion of the TIF Expenditure Plan. The TIF Expenditure Plan comprises life-cycle costs (capital, operations, and maintenance) for the life of a project or program through the year 2025. The Expenditure Plan includes a suite of eight projects and program areas as listed below. These projects are derived from either (or both) the proposed Transportation Strategic Plan or the Council-adopted Bicycle Transportation Plan. "Transportation Demand Management Program (expansion of the City’s Way2Go commute alternatives program) "Computer traffic management (including traffic-adaptive automated traffic signal operation citywide and other applications of advanced electronics for traveler information, parldng management, and transit operations management) "Expanded Palo Alto Shuttle service (an additional 42 bus service hours each weekday)°Bicycle boulevards (seven new bicycle boulevards, forming a citywide network) CMR:384:04 Page 1 ofl0 Bicycle/pedestrian undercrossings (two new and one replacement bicycle/pedestrian undercrossing) Bicycle lanes on major streets (new bicycle lanes on three major residential streets) Bicycle routes/lanes on major arterials (new bicycle lanes on five other major streets) Spot bicycle/pedestrian improvements (for improved bicycle and pedestrian travel at seven signalized intersections citywide that are choke-points contributing to citywide congestion). The life cycle cost approach takes account of expected total future costs in current dollars (using a real interest, or present value, discount rate of 3 percent) to build, operate, and maintain transportation infrastructure or to operate transportation programs. Use of proposal projected life-cycle costs is based on best practices in engineering economic analysis. Hence, the TIF Expenditure Plan projects include the cost not only of building, but also operating and maintaining, a project through its useful life. City Council has final authority with respect to project approval and budget for each TIF Expenditure Plan project or program. The TIF would be assessed on net new PM peak-hour trips (typically, those weekday vehicle trips taldng place between 5 p.m. and 6 p.m.) generated by land development and re- development. The 7.6 percent share represents the proportion of all PM peak-hour vehicle trips originating and/or terminating in Palo Alto as forecast in the citywide computer travel demand forecast model as attributable to new development and re-development. A ~nal report has been prepared to document the findings and determinations required pursuant to the Mitigation Fee Act (A.B. 1600) with respect to the TIF (Attachment B). Figure 16 (page 27) of Attachment B displays the TIF Expenditure Plan life-cycle costs in detail. The table below presents a summary by category: Transportation Demand Management Computerized traffic management Expanded shuttle service Bicycle boulevards Bicycle/pedestrian undercrossings Bicycle lanes on major streets Bicycle routes/lanes on major arterials Spot bicycle/pedestrian improvements $1,225,936 $38,490,703 $27,480,779 $1,308,006 $38,171,358 $1,222,756 $5,994,176 $3,562,659 $93,171 $2,925,293 $2,088,539 $99,408 $2,901,023 $92,929 $455,557 $27O,762 1.0% 32.8% 23.4% 1.1% 32.5% 1.0% 5.1% 3.0% CMR:384:04 Page 2 ofl0 DISCUSSION The key provision of the TIF Ordinance is: Funds a citywide Transportation Impact Fee Expenditure Plan. Addresses citywide future transportation needs with an emphasis on alternatives to the single-occupant vehicle and to both more efficient traffic flow and better travel information. Assessed on a net PM peak hour vehicle trip basis, calculated according to the VTA standard methodology which takes into account proximity to public transit, inclusion of mixed-use development as part of a project, and existence of on-site transportation demand management programs. ~ Provision to account for future inflation in these costs through annual adjustment of the TIF based on changes in the Construction Cost Index published by The Engineering News Record, the industry standard for infrastructure cost information. Includes exemption for public facilities, day care centers, and 100 percent affordable housing developments (including those in the Below Market Rate program), consistent with the methodology for other development impact fees levied by the City. TIF not assessed if a development is projected to generate the same or less traffic than the prior use of the property to be developed. Does not disturb existing impact fees and improvement programs in the Stanford Research Park and the San Antonio/East Bayshore areas, which are geared toward mitigating local impacts of development rather than impacts on the citywide transportation system. Also does not disturb existing ad hoc development conditions requiring local transportation improvements in the immediate vicinity of new development. COMMISSION/COMMITEE REVIEW AND RECOMMENDATIONS Planning and Transportation Commission Review The PTC reviewed the staff findings and recommendations regarding the TIF on March 17 (see Attachment C for the March 17 staff report to PTC and Attachment D for PTC meeting minutes). The PTC voted 5-0-0-1 (Commissioner Bialson absent) to recommend the staff recommendation of the proposed Citywide Transportation Impact Fee and associated ordinance with the following additions, each of which have been included in the current version of the TIF Ordinance: 1)A provision permitting the City to accept certain developer-funded improvements in- lieu of payment of the TIF. CMR:384:04 Page 3 of 10 2)Clarification that the "change of use" trigger for the TIF would be activated only by an activity that requires a discretionary approval from the City, or the pulling of a building permit, and not minor changes to the operations of a business. In addition, the Commissioners requested that staff explore the feasibility of exempting from the TIF, or providing credits against the TIF, land uses that generate sales ~ax and/or transient occupancy tax revenues for the City, while keeping the TIF fund whole. Staff was not able to implement this recommendation because legally the TIF methodology must be based upon impacts of development upon the City’s infrastructure, not net effect upon City revenue. A consequence of this requirement is that the fee charged to non-exempt projects cannot be increased to cover lost revenue that results from the creation of exemptions for sales and occupancy tax generators. Because it is not possible to earmark increased sales tax or transient occupancy tax revenues for a specific purpose without voter approval, it is therefore not possible to grant exemptions in a manner that will not have an effect on the amount of TIF proceeds. Additionally, the creation of exemptions for numerous projects that create substantial traffic impacts and are not traditionally exempted from such fees could negatively impact the legal defensibility of the TIF. The Commissioners also commented that there is a need for expedient delivery of TIF expenditure plan projects, and to strike the right balance between project readiness, project delivery, and citywide geography equity in implementation of the TIF expenditure plan. Finance Committee Review The Finance Committee reviewed staff and PTC recommendations on April 20, 2004. Since the Committee was evenly divided on the staff and PTC recommendations, it did not transmit to full Council either a favorable or unfavorable recommendation regarding the proposed citywide TIF. Comments, concerns and suggestions of individual Finance Committee members included the following (see Attachment E for Finance Committee Minutes). These comments and suggestions represent views expressed by individual Finance Committee members and not the Committee as a whole. Why should developments that reduce traffic have to pay the TIF, even at a discounted rate? Staff Response: Development and redevelopment that reduces PM peak hour traffic compared to the prior use of the land subject to development or redevelopment will not pay a fee because the fee is based on net new trips. Also, the methodology used to calculate trips takes into account the proximity of projects to public transit, inclusion of mixed uses, and implementation of transportation demand management programs. CMR:384:04 Page 4 ofl 0 Developments that occurred prior to the TIF would not have to pay for the transportation problems they caused. Staff response: Legally, transportation impact fees can only be assessed to meet future needs due to proposed development and redevelopment and cannot be assessed to make up for existing deficiencies in transportation facilities or services. The TIF would not charge new development for impacts of existing development, but would only charge new development for its own impacts. The City is active in obtaining regional, state, and federal grants and expending the City’s own resources, however, to ~assigt in both improving current conditions and anticipating future needs. Clarify when the TIF is payable. Staff response: The revised draft TIF ordinance stipulates that although the obligation to pay the TIF accrues at the time the first discretionary permit is issued; the TIF is actually payable upon issuance of a building permit. ¯Why are City buildings exempt? Staff response: The TIF continues the exemptions provided in all existing City development impact fees, including parks, libraries, and community centers. The City provides substantial funding for transportation improvements, including the Street Improvement Fund and from securing a variety of external grants for transportation purposes. ¯The TIF expenditure plan improvements funded by a development should be located near the development providing the funding. Staff response: In contrast with the City’s existing development fees, the TIF is designed to mitigate the impacts that a development in one part of the City may have on the transportation system throughout the City. These impacts occur because vehicles commuting to or from points within the City typically must traverse many parts of the citywide transportation network before leaving the City. In practice, proximity of the development project to the location at which the TIF funds obtained would be spent will be an important consideration ha allocating funds. Since Council will have authority to approve each TIF project prior to its implementation, Council can evaluate the geographic equity in use of TIF funds on a case-by-case basis. Other factors to be considered include project readiness (some projects will be nearer to "launch" than others) and the relative benefit of different types of improvements from a citywide perspective. The citywide benefit perspective is important since the TIF expenditure plan addresses future citywide transportation impacts and needs. CMR:384:04 Page 5 of 10 How will the TIF affect single-family residences? Staff response: New single-family residences would be assessed a TIF of $2,289 since single-family homes generate approximately one vehicle trip in the PM peak hour. No TIF would be assessed in the case of an addition to or re-model of an existing single-family home since the PM peak hour trip rate would remain the same. How will the TIF affect secondary (residential) units? Staff response: Secondary units are subject to the TIF and will be assessed at a lower rate than a single-family house, since their projected vehicle trips generation rates will also be lower. How does the TIF assessment on the PM peak-hour, basis compare to a fee assessment on a square foot basis? Staff response: The TIF assessment is based on a conversion of PM peak hour trip generation rates given in the Institute of Transportation Engineer’s (ITE) Trip Generation Handboolc, 7th Edition and typically expressed in terms of trips per 1,000 square feet. Expressing trip generation directly in terms of trips per PM peal( hour, rather than trips generated during the PM peak hour per 1,000 square feet, provides a more direct link between the land use cause and the transportation effect. Why is the PM Peak Hour Metric the TIF assessment unit? Staff response: Citywide, the PM peak hour represents the peal( demand or stress on the transportation system. Since the TIF expenditure plan addresses transportation needs citywide, the PM peak demand hour is the most meaningful measure of these needs. How does the proposed Citywide TIF relate to the existing traffic impact fees imposed in the Stanford Research Park and the San Antonio/East Bayshore area? Staff response: The two existing TIF ordinances only cover traffic engineering improvements (e.g. new lanes and/or traffic signalization improvements) for motor vehicle movements at specific inte.rsections, based on impacts of new development in a circumscribed geographic area. The proposed citywide TIF addresses future citywide, multi- modal (bicycle, pedestrian, shuttle, vehicular traffic signal system) transportation improvement needs and development impacts. In addition, these two existing fees only apply to commercial, not residential, development. CMR:384:04 Page 6 of I 0 How do Palo Alto’s existing and proposed traffic and transportation impact fees compare to other California jurisdictions? Could Palo Alto set a higher TIF level than that proposed? Staff response: Palo Alto’s traffic and transportation impact fee will be in or somewhat below the mid-range among jurisdictions imposing such fees. The proposed TIF fee level is the most that can be justified through the legally required "nexus" or AB 1600 study, which is presented in Attachment A. Will the TIF be imposed on a development or redevelopment that reduces traffic compared to the use it replaces? Staff response: The proposed TIF will not be assessed on development or re-development projects that generate less PM peal( hour traffic than the use being replaced. Will developments on previously vacant or unoccupied properties have to pay the proposed citywide TIF? Staff response: There is no "vacancy" time limit in the revised citywide TIF ordinance, so the basis for assessing the citywide TIF will be the difference between the projected PM peak-hour trip generation rate of the proposed development and the trip generation rate of the previous use. Developments generating fewer PM peak-hour trips than the use being replaced will not have to pay the citywide TIF. Will larger single-family homes pay a larger citywide TIF than smaller ones? Staff response: All new single-family homes would be assessed the same TIF amount since the average PM peak-hour trip generation rate for single-family home is the same regardless of home size. ¯Could non-profits be exempt from the citywide TIF? Staff response: The TIF must be based on the transportation impacts caused by a development. As non-profit developments cause similar transportation impacts to for-profit developments of a similar land use, it is not appropriate to make a differentiation on this basis. The current fee methodology exempts certain uses from the fee, such as childcare service providers. However, it does so based on (1) the different transportation impacts they cause, and (2) the importance of such uses to achieving other important City goals, rather than their for-profit or not-for-profit status. Creating a blanket exemption for non-profits is also problematic from an administrative standpoint because (1) non-profits are often project tenants, rather than developers and, therefore, their existence cannot be known at the time building permits are pulled, and (2) a blanket exemption would cause the TIF to be subject to a different set of exemptions than other impact fees administered by the City. CMR:384:04 Page 7 ofl0 Will the proposed TIF "chill" housing development? Staff response: The TIF for an individual housing unit in Palo Alto with a sales price of $750,000 would amount to approximately three-tenths of one percent of the purchase price. In the case of a sales price of $1,000,000, the TIF would amount to about two-tenths of one percent of the purchase price and a new home priced at $2,000,000 would be assessed a TIF of about one-tenth of one percent of sales price. Moreover, the TIF will fund improvements that enhance residential quality of life, such as bicycle lanes and bicycle boulevards, improved Palo Alto shuttle service, and more efficient traffic management. Will the TIF discourage transit-oriented development? Staff response: The trip methodology used to calculate vehicle trip generation takes into account a number of "transit-oriented" features of development. Consequently, transit- oriented development and will besubject to a lower fee. This provides an incentive for transit-oriented features. The cumulative impact of all development fees is a concern. Staff response: One developer consulted by City staff described the financial impact of proposed citywide TIF as being "equivalent to one month’s rent for one of the tenants in an office building we own." An important consideration is "value for money." Do the benefits in terms of enhancing community quality of life, as well as improving transportation safety, choice, and convenience (thus the economic value of developing in Palo Alto) of the projects funded by the TIF outweigh the cost of the fee? Staff believes that they do. RESOURCE IMPACT The TIF is expected to raise a projected $8.9 million dollars over the next 20 years and fund 7.6 percent of the TIF to the year 2025, with other funding provided by federal, state, and regional grants, and the City’s Street Improvement Fund. Annual revenues from the TIF are projected to be approximately $450,000. The proposed TIF is $2,266 per PM peak hour trip. The Citywide TIF assessment for a single-family house would be $2,289, or the proposed Citywide TIF ($2,266 per peal( hour trip) times the single-family trip generation rate of 1.01,compared to a Parks impact fee of from $8,071 to $12,050, depending on home size, and Community Center impact fee of from $2,093 to $3,132, again depending on home size). Figures 18 and 19 on pp. 29-30 of Attachment B provide additional detail on these and other illustrations. Administrative costs included in the TIF Program are 15 percent of a staff year of one transportation engineer. Expected staffing burdens in connection with the TIF include verifying PM peal( hour trip generation projections and calculating the resultant TIF assessment, administering the TIF expenditure plan, annual reporting and updating of the CMR:384:04 Page 8 of 10 TIF based on the Construction Cost Index, and verifying the conformity of any proposed in- lieu contributions by developers to the TIF expenditure plan. POLICY IMPLICATIONS The proposed citywide TIF carries out two of the Council’s Top 5 priorities: City Finances and Alternative Transportation/Traffic Calming, and helps implement both the Bicycle Transportation Plan and draft Transportation Strategic Plan. The TIF expenditure plan implements the following 1998-2010 Palo Alto Comprehensiv,e Plan Transportation Goals: T-l: T-2: T-3: T-4: T-5: T-6: Less Reliance on Single-Occupant Vehicles A Convenient, Efficient, Public Transit System that Provides a Viable Alternative to Driving Facilities, Services, and Programs that Encourage and Promote Walldng and Bicycling An Efficient Roadway Network for All Users A Transportation System with Minimal Impacts on Residential Neighborhoods A High Level of Safety for Motorists, Pedestrians, and Bicyclists on Palo Alto Streets ENVIRONMENTAL REVIEW The TIF expenditure plan comprises a set of lxojects from the Palo Alto Comprehensive Plan and Bicycle Transportation Plan. The proposed Transportation Strategic Plan is in turn comprised of projects from both the Comprehensive Plan and Bicycle Transportation Plan. The Comprehensive Plan was the subject of the Comprehensive Plan Update Final Environmental Impact Report approved by Council on July 30, 1998 (Resolution No. 7780). The Bicycle Transportation Plan was the subject of an addendum to the Comprehensive Plan EIR approved by Council on November 24, 2003 (Resolution No. 8372). Each project in the TIF expenditure plan would be subject to a project-level environmental analysis prior to implementation. The TIF itself is a funding mechanism, not a project subject to environmental review. ATTACHMENTS A. Draft Citywide Transportation Impact Fee Ordinance B. Transportation Impact Fee Nexus Study Revised Draft Final Report C. March 17, 2004 Planning and Transportation Commission Staff Report D. March 17, 2004 Planning and Transportation Commission Meeting Minutes E. April 20, 2004 Finance Committee Minutes F. Development Fees in Selected Bay Area Cities CMR:384:04 Page 9 ofl0 PREPARED BY: JOSEPH KOTT Chief Transportation Official DEPARTMENT HEAD: STEVE EMSLIE Director of Planning and Community Environment CITY MANAGER APPROVAL: EMILY HARRISON Assistant City Manager Palo Alto Chamber of Commerce Palo Alto Bicycle Advisory Committee Lee Weider Jim Baer Bill Phillips, Stanford Management Company Sandy Sloan CMR:384:04 Page 10 of 10 Attachment H Regular Meeting August 9, 2004 Resolution 8448 entitled "Resolution of the Council of the City of Palo Alto Expressing Appreciation to Officer William "Bill" Dale Baldwin for Outstanding Service to the Community" ............................................101 ORAL COMMUNICATIONS ........................................................................101 APPROVAL OF MINUTES .........................................................................101 Authorization for the Filing of a Grant Application for Federal Surface Transportation Program (STP) Funding for Street Resurfacing Rehabilitation Projects for University Avenue and Page Mill Road .........102 The Policy and Services Committee Recommends Adoption of an Ordinance Amending Exhibit A-17 and Map to Exhibit A-17 to Section 22.08.210 of Chapter 22.08 of Title 2 of the Palo Alto Municipal Code Correcting the Boundaries of Rinconada Park and Adjoining City Property Adjacent to the Junior ~Museum and Zoo and Girl Scout Building ............................................................................... .. ......... 102 Resolutions Amending the Merit System Rules and Regulations to Adopt a I~lemorandum of Agreement with International Association of Fire Fighters (IAFF, Local 1319) and Adopting a New Compensation Plan for Fire Department Personnel ................... ~ ............................. 103 Resolutions Amending the Merit System Rules and Regulations to Adopt a Memorandum of Agreement with Service Employees’ International Union (SEIU), Local 715 and Adopting a New Compensation Plan for SEIU Classified Personnel ...............................103 Resolutions Adopting Compensation Plan for Management and Professional Personnel, Amending the Salaries and Benefits of Certain Council Appointed Officers, and Amending the Merit System Rules and Regulations ..................................................................................103 08/09/04 98-98 10. 11. 12. 13. 14,¸ 15. Contract Between the City of Palo Alto and TMAD Engineers, Inc. in the Amount of $100,000 for Design Services for Cubberley Mechanical and Electrical Upgrades - Capital Improvement Program Project PF-04010 .. 104 Contract Between the City of Palo Alto and CPS Human Resource Services in the Amount of $10,000 per Year for Facilitation Services Related to Evaluation of Council Appointed Officers ............................104 Contracts to Provide Regulatory and Technical Assistance to the City of Palo Alto Utilities ...........................................................................104 Response to Grand Jury’s Inquiry into Financial and Performance Audits for the County and Cities in the County ..................................104 Confirmation of Response to Santa Clara County Grand Jury Report on Property and Evidence Rooms in Santa Clara County .........................104 Contract for Unpaid Sabbatical Leave for Ruben Grijalva for One Year (August 2004 To August 2005) .......................................................104 Public Hearing: The Palo Alto City Council will Consider Adopting a Resolution Confirming the Report of Delinquent Administrative Penalty Bills and Directing that a Lien be Recorded with the Santa Clara County Recorder’s Office Against Properties Located at 1042 Metro Circle, Palo Alto, APN: 127-04-041 and 3376 Ross Road, Palo Alto, APN: 127-48-033 ..........................................................................105 Public Hearing: The Palo Alto City Council will Consider a Zoning Ordinance Update - Adoption of a New Automobile Dealership (AD) Combining District, Which Would Create an Overlay Zone Providing for Flexible Development Standards for Auto Dealerships, Including Auto Display Areas, Fleet Storage, Landscaping and Screening and Full Service Operation. Adoption of an Ordinance Approving the Auto Dealership Overlay ~Zone Where Existing Auto Dealerships Selling New and Pre-Owned Autos Currently Exist in the City, Located at: 4180 El Camino Real (Peninsula Ford), 4190 El Camino Real (Carlsen Volvo), 3290 Park Blvd. (Park Avenue Motors), 762 San Antonio Road (Hengehold Motors), and 3045 Park Blvd. (Stanford European). Adoption of Ordinances Amending the Three Planned Community Sites to Allow the Auto Dealership Flexible Development Standards for Existing Automobile Dealerships Selling New Automobiles Located at 1730 Embarcadero Road (Carlsen Motor Cars, PC 2554), 1766 Embarcadero Road (Anderson Honda, PC 3350), and 690 San Antonio Road (Magnussen’s Dodge And Toyota, PC 2592) ..............................105 Public Hearing: The Palo Alto City Council will Consider the Imposition of a Transportation Impact Fee on New Development to Finance the 08/09/04 98-99 Costs of Transportation Improvements Identified in the Report Entitled Proposed Citywide Transportation Impact Fee ...................................107 REPORTS OF OFFICIALS .............................................................. ...........111 16.Direction to Study a Charleston/Arastradero Corridor Streetscape Development Impact Fee ...............................................................111 COUNCIL COMMENTS, QUESTIONS, AND ANNOUNCEMENTS .......................113 17. Conference with City Attorney -- Existing Litigation ............................115 18.Conference with Labor Negotiators ..................................................115 FINAL ADJOURNMENT: The meeting adjourned at 9:25 p.m ........................115 08/09/04 98-100 The City Council of the City of Palo Alto met on this date in the Council Chambers at 7:00 p.m. PRESENT: Beecham., Butch, Cordell, Kleinberg, Kishimoto, Morton, Mossar ABSENT: Freeman, Ojakian SPECIAL ORDERS OF THE DAY Resolution 8448 entitled "Resolution of the Council of the City of Palo . Alto Expressing Appreciation to Officer William "Bill" Dale Baldwin for Outstanding Service to the Community" MOTION: Council Member Morton moved, seconded by Kleinberg, to adopt the Resolution. MOTION PASSED 7-0, Freeman, Ojakian absent. Police Chief Lynne Johnson said Officer Baldwin had been involved in many aspects of the Police Department, and the loss left a void that would not soon be filled. Police Sergeant Carole Baldwin expressed her thanks to the Council for the Resolution honoring her husband for his service to the community. She also thanked Ms. Johnson, the command staff, and the Palo Alto Fire Department for their support to her and her family during the sudden loss of her husband. Mayor Beecham said the hearts and best wishes of the Council were with the Baldwin family. ORAL COMMUNICATIONS Roccie Hill, 1786 Technology Drive, San Jose, spoke regarding thanks from the Housing Trust. Ken Horowitz, 525 Homer Avenue, #1, spoke regarding water fluoridation award. Matt Hilliard spoke regarding amending Ordinance No. 4422. APPROVAL OF MINUTES MOTION: Council Member Mossar moved, seconded by Burch, to approve the minutes of July 12, 2004, as submitted. 08/09/04 98-101 MOTION PASSED 6-0-1, Freeman, Ojakian absent, Kishimoto abstaining. CONSENT CALENDAR Herb Borock, P.O. Box 632, Palo Alto, spoke regarding Item No. 3. He said the agenda for the Policy and Services (P&S) Committee meeting of December 9, 2003, failed to state with adequate specificity that the Committee would discuss the portion of the boundary line at Rinconada Park adjacent to the Junior Museum and Girl Scout Building. In addition, the bearings and distances in the proposed ordinance were based upon a Record of Survey filed by the Palo Alto Unified School District (PAUSD) in 1998, which was the same year they placed buildings illegally on Rinconada Park. He believed it was a mistake to base the boundary descriptions on the PAUSD’s Record of Survey at that time. Director of Human Services Kathy EspinozaTHoward, representing the City of Palo AIto’s Management and Professionals Association, spoke regarding Item No. 6. She expressed her support of the Management Compensation Committee’s efforts in crafting the Management and Professional compensation package. Council Member Morton registered a no vote on Item No. 8. MOTION; Council Member Mossar moved, seconded by Morton, to approve Consent Calendar Item Nos. 2-12. LEGISLATIVE Authorization for the Filing of a Grant Application for Federal Surface .Transportation Program (STP) Funding for Street Resurfacing Rehabilitation Projects for University Avenue and Page Mill Road Resolution 8449 entitled "Resolution of the Council of the City of Palo Alto Authorizing the Filing of an Application for Federal Surface Transportation Program Funding for a Street Rehabilitation Project for University Avenue and Page Mill Road" The Policy and Services Committee Recommends Adoption of an Ordinance Amending Exhibit A-17 and Map to Exhibit A-17 to Section 22.08.210 of Chapter 22.08 of Title 2 of the Palo Alto Municipal Code Correcting the Boundaries of Rinconada Park and Adjoining City Property Adjacent to the Junior Museum and Zoo and Girl Scout Building Ordinance Ist Reading entitled "Ordinance of the Council of the City of Palo Alto Amending Exhibit A-17 and Map to Exhibit A-17 to Section 22.08.210 of Chapter 22.08 of Title 2 of the Palo Alto Municipal Code 08/09/04 98-102 Correcting the Boundaries of Rinconada Park and Adjoining City Property Adjacent to the Junior Museum and Zoo and Girl Scout Building" Resolutions Amending the Merit System Rules and Regulations to Adopt a Memorandum of Agreement with International Association of Fire Fighters (IAFF, Local 1319) and Adopting a New Compensation Plan for Fire Department Personnel Resolution 8450 entitled "Resolution of the Council of the City of Palo Alto Amending Section 1501 of the Merit System Rules and Regulations Regarding the Memorandum of Agreement Between the City of Palo Alto and Local 1319, International Association of Fire Fighters" Resolution 8451 entitled "Resolution of the Council of the City of Palo Alto Adopting a Compensation Plan for Fire Department Personnel (IAFF) And Rescinding Resolution No. 8362" Resolutions Amending the Merit System Rules and Regulations to Adopt a Memorandum of Agreement with Service Employees’ International Union (SEIU), Local 715 and Adopting a New Compensation Plan for SEIU Classified Personnel Resolution 8452 entitled "Resolution of the Council of the City Of Palo Alto Adopting a Compensation Plan for Classified Personnel (SEIU) and Rescinding Resolution Nos. 8056, 8059, 8141, 8180, 8242, 8251, 8310 and 8313" Resolution 8453 entitled "Resolution of the Council of the City of Palo Alto Amending Section 1401 of the Merit System Rules and Regulations Regarding the Memorandum of Agreement Between the City of Palo Alto and Local 715A, SEIU, AFL-CIO, CLC" Resolutions Adopting Compensation Plan for Management and Professional Personnel, Amending the Salaries and Benefits of Certain Council Appointed Officers, and Amending the Merit System Rules and Regulations Resolution 8454 entitled "Resolution of the Council of the City of Palo Alto Amending Section 1.701 of the Merit System Rules and Regulations" Resolution 8455 entitled "Resolution of the Council of the City of Palo Alto Adopting a Compensation Plan for Management and Professional 08/09/04 98-103 Personnel and Council Appointees and Rescinding Resolution Nos. 8353 and 8378" ADMINISTRATIVE Contract Between the City of Palo Alto and TMAD Engineers, Inc. in the Amount of $100,000 for Design Services for Cubberley Mechanical and Electrical Upgrades - Capital Improvement Program. Project PF-04010 Contract Between the City of Palo Alto and CPS Human Resource Services in the Amount of $10,000 per Year for Facilitation Services Related to Evaluation of Council Appointed Officers Contracts to Provide Regulatory and Technical Assistance to the City of Palo Alto Utilities: Consulting Contracts Between the City of Palo Alto and Navigant Consulting for Gas Regulatory and Technical Consulting for a Total Amount of $436,000 for the Fiscal Years FY2004-05, FY2005-06 and FY2006-07 Consulting Contracts Between the City of Palo Alto and Navigant Consulting for Electric Regulatory and Technical Consulting for a Total Amount of $150,000 for the Fiscal Years FY2004-05, FY2005-06 and FY2006-07 Consulting Contracts Between the City of Palo Alto and Flynn Resource Consulting Inc. for Electric Regulatory and Technical Consulting for a Total Amount of $228,000 for the Fiscal Years FY2004-05, FY2005-06 and FY2006-07 10.Response to Grand Jury’s Inquiry into Financial and Performance Audits for the County and Cities in the County 11.Confirmation of Response to Santa Clara County Grand Jury Report on Property and Evidence Rooms in Santa Clara County 12.Contract for Unpaid Sabbatical Leave for Ruben Grijalva for One Year (August 2004 To August 2005). MOTION PASSED 7-0 for Item Nos. 2-7 and 9-12, Freeman, Ojakian absent. MOTION PASSED 6-1 for Item No. 8, Morton no, Freeman, Ojakian absent. Council Member Morton said he was opposed to his colleagues transferring 08/09/04 98-104 the responsibility of evaluating the Council Appointed Officers (CAOs) to a facilitator. In addition, the contract, as written, allowed for automatic renewal subject to the Council’s approval. PUBLIC HEARINGS 13.Public Hearinq: The Palo Alto City Council will Consider Adopting a Resolution Confirming the Report of Delinquent Administrative Penalty Bills and Directing that a Lien be Recorded with the Santa Clara County Recorder’s Office Against Properties Located at 1042 Metro Circle, Palo Alto, APN: 127-04-041 and 3376 Ross ~Road, Palo Alto, APN: 127-48-033 (Ztem continued from 5/17/04; Staff requested item to be continued to 9/20/04) MOTION-" Council Member Mossar moved, seconded by Butch, to continue the item to the September 20, 2004, regular City Council meeting. MOTION PASSED 7-0, Freeman, Ojakian absent. 14.Public Hearing: The Palo Alto City Council will Consider a Zoning Ordinance Update Adoption of a New Automobile Dealership (AD) Combining District, Which Would Create an Overlay Zone Providing for Flexible Development Standards for Auto Dealerships, Including Auto Display Areas, Fleet Storage, Landscaping and Screening and Full Service Operation. Adoption of an Ordinance Approving the Auto Dealership Overlay Zone Where Existing Auto Dealerships Selling New and Pre-Owned Autos Currently Exist in the City, Located at: 4180 El Camino Real (Peninsula Ford), 4190 El Camino Real (Carlsen Volvo), 3290 Park Blvd. (Park Avenue Motors), 762 San Antonio Road (Hengehold Motors), and 3045 Park Blvd. (Stanford European). Adoption of Ordinances Amending the Three Planned Community Sites to Allow the Auto Dealership Flexible Development Standards for Existing Automobile Dealerships Selling New Automobiles Located at 1730 Embarcadero Road (Carlsen Motor Cars, PC 2554), 1766 Embarcadero Road (Anderson Honda, PC 3350), and 690 San Antonio Road (Magnussen’s Dodge And Toyota, PC 2592). 08/09/04 98-105 Mayor Beecham said additional noticing to property owners in the vicinity was required to make the public hearing legal. However, members of the public who wished to speak to the item could do so that evening, without prejudice. Mayor Beecham declared the Public Hearing open at 7:27 p.m. John Barton, 360 W. Charleston Road, Chair of the Palo Alto Chamber of Commerce (Chamber), said the Chamber endorsed changes to the Zoning Code, which benefited auto dealerships. Auto dealerships brought in approximately 12.2 percent of the sales tax in Palo Alto. He said anything the City could do in difficult economic times to.support the auto dealerships without undo burden on the rest of the citizenry was important to continue doing. He encouraged the Council to adopt staff’s recommendations rather than those of the Planning and Transportation (P&TC) Commission in regard to the .6 Floor Area Ratio (FAR). Bob Moss, 4010 Orme Street, expressed his concern about the proposed ordinance. There was an issue of compatibility between commercial and residential developments. There were two auto dealerships on El Camino Real near Arastradero Road that backed up to single-family homes, and were across the street from multi-family homes. Both of those dealerships would have an adverse impact on the community ~if they were allowed to do whatever their corporate offices said they should in order to attract attention. He cautioned the Council on how much to bend the rules for the auto dealerships. MOTION: Council Member Kleinberg moved, seconded by Kishimoto, to continue the item to the September 20, 2004, regular City Council meeting. 08/09/04 98-106 MOTION PASSED 7-0, Freeman, Ojakian absent. Public Hearing: The Palo Alto City Council will Consider the Imposition of a Transportation Impact Fee on New Development to Finance the Costs of Transportation Improvements Identified in the Report Entitled Proposed Citywide Transportation Impact Fee. Director of Planning and Community Environment Steve Emslie said fees in the State of California addressing development related issues fell under AB1600. The State law, which had been in effect for the past 15 years, mandated when cities charged fees related to development impacts there must be a direct connection to the impact being corrected by the fee and the fee itself. There needed to be proportionality, as well as a legal justifiable nexus. The Transportation Impact Fee (TIF) Nexus Study, attached to CMR:384:04, outlined a remedy to the increased number of car trips in the community through transportation improvements, not just vehicular ones. The projects included in the TIF fulfilled the purpose of the general Comprehensive (Comp) Plan. A related item was a request for direction to staff to proceed with an additional Nexus Study that pertained to the Charleston/Arastradero corridor, and the increased number of peak hour trips based on safety impacts for bicyclists and pedestrians. Chief Transportation Official Joe Kott said the staff report (CMR:384:04) contained the TIF Nexus Study, and minutes from the Planning and Transportation Commission (P&TC) and Finance Committee meetings. The intent of the TIF was to address future travel demand, which was expected to occur as a result of new development and redevelopment in Palo Alto. The TIF did not address travel that took place as a result of existing land uses or developments within the region, but outside of Palo Alto, which would generate more traffic. The TIF was based on the following: 1) the goals of the Comp Plan; 2) the intent to assign an appropriate share of new travel in Palo Alto and their related impacts; 3) an assessment of net PM peak hour vehicle trips; 4) funding of a citywide Transportation Impact Fee Expenditure Plan; 5) Computer traffic management (including traffic-adaptive automated signal operation citywide and other applications of advanced electronics for traveler information, parking management, and transit operations management); 6) expanded Palo Alto Shuttle service (an additional 42 bus service hours each weekday); and 7) bicycle boulevards (seven new bicycle boulevards, forming a citywide network), bicycle/pedestrian undercrossings, bicycle lanes on major streets, bicycle routes/lanes on major arterials, and spot bicycle/pedestrian improvements for bicycle and pedestrian travel at seven signalized intersections. The proposed TIF was flexible with respect to being citywide and was created ~to provide a timely response to needs, as they were anticipated. It would provide an incentive for trip reduction/Traffic Demand Management (TDM) activities, because the lower the trip generation 08/09/04 98-107 rate of a new development or redevelopment, the lower the amount of the assessed fee. Programs such as carpool matching, and the provision of bus and train passes would help reduce the fee liability as well as provide employees additional travel options at that site. Planning and Transportation Commissioner Patrick Burt said the P&TC unanimously supported the proposed TIF based upon a carefully evaluated staff work plan, and a clear and persuasive Nexus Study. The P&TC was impressed by the Chamber’s support of the project and the belief the investment led to an overall better business environment and added to the community’s desirability. The P&TC believed the fee proposal was in the moderate range for existing communities in the Bay Area, and did not stifle development in those communities with such a fee. Staff was asked to explore whether there was any way in which the TIF could be used as an incentive to help facilitate other sources of businesses the P&TC would like to see expanded in the community, such as those having business-to-business sales tax generation, and Transient Occupancy Tax (TOT). Mayor Beecham declared the Public Hearing open at 7:45 p.m. Penny EIIson, 513 El Capitan Place, Civic Affairs Committee Co-Chair for Greenmeadow Community Association, said it was critical to find a way to improve Palo AIto’s transportation infrastructure in order to pursue the vision for growth as outlined in the Comp Plan. She encouraged the Council to approve the citywide TIF. I~lOTIOl~i: Council Member Mossar moved, seconded by Kleinberg, to continue discussion until staff has had time to agendize a full Council discussion of all existing and proposed development impact fees to consider cumulative economic impacts and allow Council to prioritize needs and develop an impact fee program that both sufficiently funds highest priority needs and meets the future economic goals of the community, including business. Council Member Mossar expressed her appreciation to the community for their support and interest to address the City’s future transportation needs, and the attention and energy of the staff, the Council and the community to better understand and support the relationship between a vital business community and. the City’s future community vision. However, she did not believe the Council had adequately addressed the economic consequences of a decision to implement a TIF in Combination with other Impact Fees either adopted or proposed. She would, however, support moving forward with the Charleston/Arastradero Corridor Streetscape study. Council Member Kleinberg said the Finance Committee minutes of April 20, 2004, had a number of registered concerns about how the TIF should be 08/09/04 98-108 formulated, as well as how it would fit into the context of all the other impacts, both for profit and non-profit businesses. She believed it would be wise to have a greater analysis of how the impact fees would discourage the types of critical services and needs for the City, which was of a high priority while using a standard exemption that might .not be relevant or timely. Council Member Morton said if one of the motivations for such an impact fee was that it provided incentives for trip reductions through carpooling and train passes, he did not see homeowners of million dollar properties located at the Hyatt Rickey’s and the Elks Lodge carpooling or utilizing the train. He wondered if the TIF was being proposed to justify its use elsewhere in larger communities, where it worked. He expressed concern about the vagueness of how much would be raised from proposed projects, such as Campus for Jewish Life and Albertson’s. He concurred with the comments of Council Member Mossar. Council Member Kishimoto said the City’s top two perennial issues were housing and traffic, and the previously adopted impact fees had its largest proportion on housing at $15 per square foot, which was one-third of what could be imposed. SUBSTITUTE MOTION: Council Member Kishimoto moved, seconded by Cordell, to approve the staff recommendation to adopt an Ordinance making certain findings regarding the Transportation Impact Fee (TIF) and adding Chapter 16.59 to the Palo Alto Municipal Code (PAMC) to impose and implement the TIF. Council Member Kishimoto said the division statement for the Comp Plan adopted in 1998 included the hope that individuals would reduce their automobile trips by 10 percent by 2010, as alternative transportation methods were implemented. The City would seek out innovative funding sources and approaches to construct and maintain needed transportation systems. She said the TIF was one key funding source critical to providing locally generated funds to use as seed money for the necessary grants. She disagreed with the comment by Council Member Kleinberg about the discouragement of development for the City. A mechanism such as the TIF would help to enable development and redevelopment in Palo Alto, and she believed some individuals would oppose future new development if it meant continued deterioration in the quality of life, safety and environment for the City. 08/09/04 98-109 Council Member Cordell concurred with the comments of Council Member Kishimoto. She said while the end result might not be the production of substantial amounts of monies, new development over the course of 10-20 years would increase traffic by at least 8 percent. She believed the item had been studied enough and it was time to move forward on the issue. Vice Mayor Butch asked whether the fee for the developer was based on their estimate of traffic generation and the TDM. Mr. Emslie said yes. Vice Mayor Burch asked whether there would be code enforcement for the commitment made by the developer. Mr. Kott said staff would apply professional reasonableness of the developer’s TDM program, implementation over a number of years. judgment as to the as well as monitor its Vice Mayor Butch said it appeared there would not be five votes either for the motion nor the substitute motion. Mayor Beecham declared the Public Hearing opened. Bob Moss, 4010 Orme Street, said the State of California had an abysmal system for levying taxes and paying for public services, which left cities with limited ways of raising funds to pay for those services. The TIF was a way of providing public funding to alleviate some of those problems. He believed it was appropriate to move forward with the item. Mayor Beecham declared the Public Hearing closed. Council Member Kleinberg clarified the substitute motion would be voted on first. If that failed then the main motion, in which Council Member Mossar requested the item be continued to another date, would go to a vote. Mayor Beecham said that was correct. The substitute motion would need five votes to carry. He would like to go through the steps and then have a discussion of where the Council would go next. Council Member Kleinberg said she believed it was important when voting to know what the next option would be. She expressed her support for the TIF; however, she questioned the application of its formulation. Council Member Morton said the Council may anticipate redeveloping the entire community over the next 20 years; however, he believed there were 08/09/04 98-110 approximately four projects that would come forward, and he wanted to know what kind of dollars it involved, and use that as a reality base. Council Member Kishimoto clarified the original motion would continue the item for staff to bring back more research. Council Member Mossar said the main motion would look at the City’s package of adopted and proposed impact fees, and prioritize the needs to ensure adequate funding to accomplish real goals. Mayor Beecham expressed his support for the original motion. He had a philosophical opposition to impact fees. SUBSTITUTE MOTION FAILED 3-4, Butch, Cordell, Kishimoto yes, Freeman, Ojakian absent. MOTION PASSED 6-1, Cordell no, Freeman, Ojakian absent. REPORTS OF OFFICIALS 16.Direction to Study a Charleston/Arastradero Corridor Streetscape Development Impact Fee Council Member Cordell stated she would not participate in the item due to a conflict of interest because she owned property within 500 feet of the Charleston Corridor. Director of Planning and Community Environment Steve Emslie said the Charleston/Arastradero Corridor was closely related to the Transportation Impact Fee, and staff anticipated bringing it back when the TIF returned. Myllicent Hamilton, urged the Council to direct staff to take the initial steps, including a Nexus Study to establish a Charleston/Arastradero Corridor Streetscape Development Impact Fee (DIF) to fund bicycle, pedestrian, and landscape improvements. Without the impact fees, the Charleston/Arastradero plan would never become a reality, because grant funds could not be spent for temporary installations. Penny Ellson, 513 El Capitan Place, spoke on behalf of the Greenmeadow Community Association, and urged the Council to take the initial steps on the Charleston/Arastradero Corridor Streetscape DIF including the required Nexus Study. The plan created a street environment that made the community safer for new residents, and proposed projects more attractive to renters and buyers. 08/09/04 98-111 Deborah ]u, 371 Whitclem Drive, expressed her support for the Charleston/Arastradero DIF. The corridor was proven unsafe for children walking and bicycling to school, demonstrated the area had grown at a much greater level than anticipated by the Comp Plan, and could function safely only if the streetscape plan was implemented. She urged the Council to approve the Nexus Study, and specify a prompt date for a follow-up hearing to review and implement the DIF. MOTION: Council Member Morton moved, seconded by Burch, to approve the staff recommendation to direct staff to take the initial steps, including preparation of a Nexus Study, to establish a Charleston/Arastradero Corridor Streetscape Development Fee to fund bicycle, pedestrian, and landscape improvements called for in the Council-adopted Charleston/Arastradero Corridor Plan, and report back to the Council regarding the feasibility of the proposed fee. Council Member Morton asked whether projects would continue to be Charleston/Arastradero configuration. the City’s other traffic calming funded regardless of the Mr. Emslie said the computerized, or ITS, system for each of the City’s corridors was something that would continue to move forward. Mr. Kott said in order to solve Palo Alto’s future traffic problems staff would need to automate much of the traffic management, including signal, parking and electronic travel information. Council Member Morton expressed concern about .the assumption there would be no funding because some of the parts would be temporary. He hoped one of the things that came out of the Nexus Study was how the City handled the school corridors with the recently installed bullet trains. Council Member Kleinberg said the proposed DIF was keyed to a carefully thought out program of improvements and mitigations. She expressed her support for proposed plan. Vice Mayor Burch expressed his support for the proposed plan and would like to see it move forward as quickly as possible. Council Member Kishimoto asked whether staff anticipated looking at both the average daily trips and the peak hour travel, Mr. Kott said with respect to the corridor, staff would not consider a vehicle trip based fee, but rather a fee based on the number of people coming to the 08/09/04 98-112 corridor due to new development and pedestrian/bicycle and streetscape needs. redevelopment,and the Council Member Kishimoto expressed her support for the proposed plan. Council Member Mossar concurred with the comments of Council Member Kleinberg. She said it was a good model, and is one that she would like to see in future discussions where impact fees were keyed to specific areas and bundles of projects. The Nexus Study was about how much to. charge new developments based upon their contribution to the problem. It was foolish to believe the TIF would provide enough money to fund all of its projects. Council Member Morton asked if the costs of desired future improvements. were defined and an impact fee for that area determined, could an impact fee be imposed on the greater community that would contribute to some of those improvements, or was the expectation that the residents of the new development would contribute solely to the impact fee. Mr. Emslie said the impact fees would be separate and not mutually exclusive. The TIF was based on the increased number of trips. What was known about the corridor was that larger proposed projects did not generate more trips, but different types of trips, which had a different type of impact. Mayor Beecham expressed his support for the proposed plan. He was sensitive to the difference between overall impacts, which the TIF was in his opinion, versus more specific localized impacts. I~lOTION I~.$$EI) 6-0, Cordell not participating, Freeman, Ojakian absent. COUNCIL COMMENTS, QUESTIONS, AND ANNOUNCEMENTS Vice Mayor Burch noted he spent time with Richard James, Dan Williams, and Rob DeGeus of the Community Services Department visiting the various recreation camps, and it was great to visit the young people. He noted he represented the Council at the funeral services for Officer "Billy" Baldwin, which was a beautiful service. Council Member Kleinberg spoke regarding the sales tax increase proposed by the County of Santa Clara and thanked Mayor Beecham for the letter he sent to the Board of Supervisors. She noted the Board of Supervisors did not approve the proposal. Council Member Kishimoto commented regarding three labor contracts on the Consent Calendar. She voted to support the contracts, which represented goodwill and difficult negotiations on both sides. 08/09/04 98-113 Council Member Mossar clarified the motion for Consent Calendar Item No. 8 did not eliminate one point of contact between the CAO’s and Council. She also gave a report on the recent San Francisquito Creek Joint Powers Authority (JPA) meeting, where the Army Corps of Engineers spoke regarding their concerns about property values. The JPA Board approved a strategy for the next year. Council Member Morton read into record: Morton & Associates Inc., Certified Public Accountants, of which I am the principal, performs accounting, auditing and tax services for corporations, non-profits and individuals in the mid-peninsula. My staff and I have performed auditing and accounting services within the last year for a number of non-profit organizations that receive funds from or through the City of Palo Alto. I have given each of my clients the option of retaining us as their auditor/accountant or having us resign so that I may participate in any matter that comes before the City Council affecting them. For those organizations that have elected to retain us, I have indicated that I will disclose my role as auditor or accountant and absent myself from any matter that relates to them directly. Among the non-profit organizations that currently receive City funding or other benefits such as reduced rent and for which Morton & Associates, Inc. has within the last year provided, or continues to provide services are the following: Adolescent Counseling Services Community Skating, Inc. Friends of the Palo Alto Children’s Theatre Museum of American Heritage Palo Alto Community Child Care Palo Alto Players Palo Alto Recreation Foundation Project Sentinel Inc. The Children’s Preschool Center Zohar Dance Company Council Member Morton stated "I will not participate in the approval of the funding or the provision of benefits to these or other clients that may come before the City and request direct funding or other forms of City assistance. t will ask my colleagues to vote on matters affecting any of my current or former clients before approval of the main item and on those items I will disqualify myself and will not participate in the discussion or decision- making." Council Member Kleinberg thanked Council Member Mossar for her commitment to the San Francisquito Creek JPA. CLOSED SESSION 08/09/04 98-114 The meeting adjourned at 8:48 p.m. to a Closed Session. 17.Conference with City Attorney -- Existing Litigation Subject: In re Enron Corp., Debtor, U.S. Bankruptcy Court, Southern District of New York; Case No. : 01-16034(AJG) Authority: Government Code section 54956.9(a) 18.Conference with Labor Negotiators Agency designated representatives: City Manager and his designees pursuant to the Merit SystemRules and Regulations (Frank Benest, Leslie Loomis) Employee Organization: Fire Chiefs Association Management Personnel, IAFF Local 1319 Authority: Government Code section 54957.6(a) The City Council met in Closed Session to discuss matters existing litigation and labor negotiations, as described in Agenda Item No.. 17 and 18. Mayor Beecham announced there was no reportable action taken. FINAL ADJOURNMENT: The meeting adjourned at 9:25 p.m. ATTEST:APPROVED: City Clerk Mayor NOTE: Sense minutes (synopsis) are prepared in accordance with Palo Alto Municipal Code Sections 2.04.180(a) and (b). The City Council and Standing Committee meeting tapes are made solely for the purpose of facilitating the preparation of the minutes of the meetings. City Council and Standing Committee meeting tapes are recycled 90 days from the date of the meeting. The tapes are available for members of the public to listen to during regular office hours. 08/09/04 98-115 Attachment I TO:HONORABLE CITY COUNCIL ATTN:FINANCE COMMITTEE FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES/PLANNING DATE: JULY 19, 2005 CMR: 323:05 SUBJECT:COMPARATIVE DATA ON DEVELOPMENT IMPACT FEE LEVELS This is an informational report and no Council action is required. BACKGROUND On August 9, 2004, the City Council considered a potential transportation impact fee on new development citywide (CMR 384:04), as well as a potential study of the Charleston!Arastradero Streetscape Plan (CMR 385:04) to determine if a legal nexus exists for an area-specific development fee. Council was aware that several new impact fees had been implemented over the past few years, and that there had been discussions of other potential new developrmnt- related fees. In order to consider the cumulative economic impact of all existing fees along with potential new fees, Council moved to continue discussion of new transportation impact fees until staff could prepare information on all existing and potential development-related fees for Council consideration and prioritization. This report summarizes current impact fees; presents potential citywide and Charleston!Arastradero area fees; and provides comparative data from other cities. The data reveals that while cumulative impact fees for residential development are similar to other cities, non-residential fees are high compared to other jurisdictions. These comparisons warrant further analysis of existing fee levels and policies. Staffwill be examining the legal and financial issues associated with adjusting existing impact fees prior to making a recommendation on a citywide transportation impact fee. DISCUSSION Under California law (AB 1600), cities have the ability to charge new development for its relative share of the cost of public facilities and services. The City of Palo Alto first adopted a development impact fee in 1984. Development impact fees are not an ongoing fee or tax, but rather are one-time .fees, paid at the time of construction. The City’s current impact fees are comprised of three categories: Housing, Traffic, and Community Facilities (parks, libraries and community centers). Current fee levels are summarized in Attachment A. CMR:323:05 Page 1 of 12 The City has several new development-related fees under consideration. Potential one-time development impact fees include: Citywide transportation (TIF) e Charleston/Arastradero corridor fee e Water/wastewater capacity (adopted, effective 7/1/2005) In addition to impact fees, developers are required to pay other fees on their projects, which add to the cumulative economic effect of doing business in Palo Alto. Some of these are one-time application expenses such as permit fees, which are included in charts in this report comparing Palo Alto to other cities. Other fees are not development-related. These are ongoing, paid by residents and businesses annually or monthly, not just with new construction. Current ongoing fees include utilities fees, the Downtown Business Improvement District fees, and the University and California Avenue Parking Assessment Districts. A storm drain fee increase was approved by voters on April 26, 2005. Other potential ongoing fees include a business license tax and emergency response or 911 fee. Ongoing fees are not included in the data presented in thls report. Current & Potential Fees Chart 1 depicts each of Palo Alto’s current and potential impact fees for two types of residential projects: a new single-family home; and per multi-family dwelling. If enacted, potential impact fees will add 20% to 22% to the current impact fees charged to new residential development. CMR:323:05 Page 2 of 12 Chart 1: Current vs. Potential Impact Fees - Residential Fees Single Family per housing unit $21,000 20%$19,669 Multi-Family $18,000 $16,452 $15,000 $12,000 $9,000 $6,000 $3,000 $- $12,708 $10,375 ~ ~ Current Potential Current Potential Total $16,452 $19,669 $10,375 $12,708 I~ Citywide TIF 2,289 1,405 [] Charleston/Arastradero 928 928 [] Water Capacity 4,750 4,750 2,708 2,708 [] Parks/Library/Comm Ctr 11,702 11,702 7,667 7,667 Impact fees do not apply to residential replacement homes, remodels or expansions, only to new residential units. CMR:323:05 Page 3 of 12 Chart 2 depicts each of Palo Alto’s current and potential impact fees for three types of commercial projects. Data is per square foot of development. If enacted, potential impact fees will add 12% to 30% to the current impact fees charged to new commercial development. Impact fees apply to net new development in each land use category. A change in tenants or tenant improvements within existing space will not trigger impact fees. Chart 2: Current vs. Potential Impact fees - Commercial $4O $35 $30 $25 $20 $15 $10 $5 Total [] Citywide TIF I:1 Charleston/Arastradero []Water Capacity []Traffic -SRP []Other . []Parks/Library/Comm Ctr []Housinq Office R&D Retail +18%+12%÷30% $20.50 Current $2o.5o 0.60 0.23 4.09 15,58 $24.17 Potential $24,17 3.40 0.27 0.60 0.23 4.09 15.58 $29.18 $32.58 Current $29,18 0.60 .8.68 0,23 4,09 15.58 Potential $32.58 3,1;40 0.60 8.68 0.23 4,09 15,58 $20.33 Current $20.33 0,60 0.06 4.09 15.58 $26.47 Potential $26.47 5.87 0,27 0.60 0,06 4.09 15,58 * Charleston/Arastradero fee will apply to few lots in the Stanford Research Park, thus it ts excluded from R&D figures. See Attachment C. Area-Specific Fees and Fee Overlap Not all impact fees apply citywide. Pal0 Alto’s current traffic impact fees apply only to parcels developed in a specific area, like San Antonio/West Bayshore or the Stanford Research Park. The potential CharlestordArastradero fee would only apply to parcels within a half-mile of the corridor, not citywide. Attachment C indicates parcels subject to current and potential area- specific fees. It is noteworthy that in some areas of town, area-specific and citywide fees overlap. For instance, a parcel subject to an area-specific fee, like the traffic impact fee in Stanford Research CMR:323:05 Page 4 of 12 Park, would also be subject to a citywide transportation fee if enacted. In portions of the half- mile CharlestordArastradero corridor a few parcels (pending development) could be subject to the Charleston/Arastradero fee, potential citywide TIF, and San Antonio/West Bayshore fees. Fee overlap areas are indicated on Attachment C, though "citywide" is not included in the legend (since all parcels would be affected by a citywide fee). Impact Fee Exemptions It is important to note that development impact fees include a number of exemptions, which vary widely across fee ordinances adopted by each city. The City of Palo Alto’s impact fee exemptions are not uniform, and are summarized in Attachment B. Each exemption reflects a policy decision addressed at the time the impact fee was enacted or amended by City Council. New development may be exempt from all or some impact fees, depending upon the intended use as summarized in Attachment B. For instance, 100% affordable housing projects (not a mix of market rate and below market rate) are exempt from current impact fees. Palo Alto Compared to Other Cities Council has expressed an interest in comparing Palo Alto’s fee levels with those of surrounding communities. Palo Alto recently participated in two development fees surveys: one conducted by Redwood City (April 2005) and another conducted by the City of San Jose on behalf of the Home Builder’s Association (May 2004 and June 2005). These multi-city surveys calculated development-related fees and taxes, including permit, construction, and development impact fees for various project types. They did not include ongoing, non-development-related fees. Comparison data presented in this report is derived from the data in the surveys plus online research on fees in each jurisdiction. Other jurisdictions have addressed fees in a variety of ways. The most common development fees are implemented to support parks and water/sewer systems or mitigate traffic. Other jurisdictions have fees designed to support public facilities like libraries and public safety buildings. Less common fees include those that fund housing and street trees, or are applied as a general construction tax. Table 1 depicts the array of development impact fees and taxes in a few jurisdictions in the Bay Area. Table 1: Impact Fee Types In Various Jurisdictions Menlo Redwood Fee type Los Gatos Milpitas San Jose Fremont Park City Palo Alto Park X X X X X Housing X X rraffic X X X X X X Water/Sewer X X X X X X X Street Trees X X Other Facilities X X Construction Tax X X CMR:323:05 Page 5 of 12 In addition to different types of fees, each jurisdiction applies fees to different types of development in different ways. Impact fees for residential projects are usually assessed by housing unit, whereas fees for commercial projects can be calculated by square foot, car trip, valuation and many other ways. For comparison purposes the data is presented per dwelling unit for residential fees (total fees divided by housing units in each survey), and on a square foot basis for non-residential projects (total fees divided by square footage of each sample project). The following charts allow Council to compare cities based on total fee levels (permit plus impact fees) and then on impact fees by fee category. Residential Fees It is helpful to look at the total cost of fees added to the cost of development across jurisdictions. Charts 3 and 4 compare estimated permit and impact fees for single-family and multi-family residential projects in Palo Alto to 12 other cities. Palo Alto’s current combined impact and permit fees are around the mid-range compared to other cities for residential projects. Chart 3: Permit & Impact Fees, New Single-Family Home $60,000 $50,000 $40,000 $30,000 $20,000 $!0,000 CMR:323:05 Page 6 of 12 Chart 4: $40,000 $35,000 $3O,0OO $25,000 $20,000 $15,000 $10,000 $5,0OO Permit & Impact Fees, Multi-Family (per dwelling unit) rl Impact Fees ~ Permit Fees CMR:323:05 Page 7 of 12 Chart 5 examines only impact fees, stratifying the fees charged on a new single family home by fee type, for Palo Alto and other cities. Fees in other cities range from $7,844 (Redwood City) to $43,717 (Gilroy). Palo Alto’s current fees total $16,452. Adding the potential CharlestordArastradero fee of $928 would bring Palo Alto’s impact fees to $17,380. Adding the potential TIF of $2,289 would result in a total fee of $19,669, keeping single-family fees for Palo Alto within the mid-range compared to other cities. Chart 5: Impact Fees by Type - New Single Family Home $45,000 $40,000 $35,0OO $30,000 $25,000 $20,000 $15,000 $10,000 $5,000- $0 Water Capacity I Parks/Lib/CC rl Housing n Traffic [] Other [] PotentialC/A [] Potential TIF Total CMR:323:05 Page 8 of 12 Chart 6 stratifies impact fees charged per multi-family unit, by fee type, for Palo Alto and other cities. Fees in other cities range from $3,016 (Redwood City) to $31,654 (Gilroy). Palo Alto’s current fees total $10,375. Adding both the CharlestordArastradero and TIF fees would bring Palo Alto’s impact fees to $12,708 ($10,375 + $928 + $1,405), near the mid-range compared to other cities. Chart 6: Impact Fees by Type, Multi-Family (per dwelling unit) $35,000 $30,000 $25,000 $2O,OOO $15,000 $10,000 $5,ooo $o Sewer/Water I’lTraffic [] Housin~ ~ Water Capacity [] Parks/Lib/CC [] Other [] PotentialC/A [] Potential TIF Total CMR:323:05 Page 9 of 12 Commercial Fees Charts 7 and 8 stratify impact fees by type for Palo Alto and other cities for commercial development. Current impact fees in Palo Alto are high compared to other cities, primarily due to Palo Alto’s housing fee ($15.58 per square foot) and area-specific traffic fee ($8.68 per square foot in the Stanford Research Park/E1 Camino Real CS zone). Chart 7: Impact Fees by Type- Office/R&D (per square foot) $40 $35 $3O $25 $20 $15 $1o $5 $- 1~ Sewer~ater ~ Housing i Parks/Lib/CC ~ Water Capacity l Traffic ~ Other ~ PotentialC/A i Potential TIF Total/s.f. 1 Office/R&D impact fees in other cities cluster in three groups: $2 to $8 per square foot; $13 to $15; then jump to nearly $28 per square foot in San Francisco. Palo Alto’s current impact fees for office total $20.50 per square foot. Adding potential Charleston/Arastradero and TIF fees ¯ would bring Palo Alto’s office impact fees to $24.17, well above fee levels in other cities, except San Francisco. Impact fees in the Stanford Research Park would increase from $29.18 per square foot to $32.58 if the potential TIF fee is enacted. This fee level is well above other cities, including San Francisco. CMR:323:05 Page 10 of 12 Chart 8: Impact Fees by Type - Retail (per square foot) sao $25 $20 $15 $I0 $5 $0 IQ SewerA, Vater Q Water Capacity [] Heusin9 ~ Parks/Lib/CC 0 Traffic [] Other [] PotentiaIC/A [] Potential TIFTotal] Retail impact fees at other cities cluster from $5 to $12 per square foot, then jump to the $21 to $25 per square foot range. Palo Alto’s current impact fees total $20.33 per square foot. The key to impact fees for retail development is exemptions. Palo Alto’s current impact fees for retail are higher than other cities. However, Palo Alto’s 1,500 square foot exemption allows existing retail locations to expand moderately without paying impact fees. Also, fees only apply to new development, so an existing location that changes retail tenants will not be subject to impact fees unless space beyond 1,500 square feet is added. Adding fees could stifle new retail growth on vacant lots on E1 Camino Real or other parts of the city. In light of the disparity between cumulative impact fees in Palo Alto and other cities, staff plans further study of Palo Alto’s current fee structure and exemptions. The purpose of this analysis will be to examine the legal and financial issues associated with adjusting fees prior to making a recommendation on a citywide transportation impact fee. RESOURCE IMPACT Development impact fees provide funding for capital improvements to mitigate the impacts of new development on a specific public facility. The revenues received each year vary based on the amount of development occurring in Palo Alto during that timeframe. Fees collected for various existing fee types for fiscal year 2003-04 (CMR: 109:05) were: Housing:$345,615 Parks:$369,149 CMR:323:05 Page 11 of 12 Libraries:$ 32,455 Community Centers:$ 91,219 Traffic SRP:$ 38,035 Revenues for new fees are estimated at: Water capacity: CharlestordArastradero: $1,000,000 to $3,000,000 per year $819,000 (by the year 2015) 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 nexus studies. 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 consider all existing and potential fees together to evaluate the cumulative impact on development in Palo Alto. Information provided in a future analysis will examine existing fee levels and policies, including the legal and financial issues associated with adjusting existing impact fees in order to facilitate a policy discussion related to fee levels for both new and existing fees. PREPARED BY:Libby Dame, Senior Financial Analyst, Administrative Services Heather Shupe, Administrator, Planning and Community Environment DEPARTMENT HEAD APPROVAL: CARL YEATS Director, Administrative Services DEPARTMENT HEAD APPROVAL: STEVE EMSLIE Director, Planning & Community Environment CITY MANAGER APPROVAL: EMILY HARRISON Assistant City Manager ATTACHMENTS Attachment A: Current Development Impact Fees Attachment B: Palo Alto Development Impact Fee Exemptions Attachment C: Areas subject to Traffic Impact Fees Attachment D: Additional Information on Impact Fees in Palo Alto and Other Jurisdictions CMR:323:05 Page 12 of 12 Attachment J FINANCE COMMITTEE "’ MiNUTES Regular Meeting July 19, 2005 ,0ral Communications..,, ....":2 Results of Direction to Staff to Explore Alternate Proposals to the Recommendation to Declare as Surplus Property A Parcel on High Street near OregOn Expressway ."..’ " . ’2 . Comparative Data on Deve o m nt [mpact Fee Levels ........................ 3 Proposed .Charleston-Arastradero Corridor Pedestrian and Bicyclist. ¯ . ; -.,- . -: ..,~,.~ ¯ .Safety Impact Eee ......., ............, ............., ........................, ................6 Auditor’s O, ff.ice Quarterly Report .....................................................11 Discussion for Future. Meeting-Sdhedules and Agendas.....-,...,..,...........: " -’.11 ADJOURNMENT: The meeting:adjourned at 9’05. p.m...... 07/19/05 FIN:I ...... Chairperson Ojakian called the meeting to Order at 7:09 Council Conference Room, 250 Hamilton Avenue, Palo Alto, califOrnia. Present: Morton, Mossar, Ojakian, Kishimoto ....’ ": .’:;::’L " ":’:’ Absent: None 1. " oral Communications None. 2.Results.of. Direction to Staff to Explore...Alternate Proposals to the Recommendation to Declare as Surplus Property A Parcel on High .,.. .Street. near.Oregon Expressway ... .. .. ~ ~ .Manager Real Property William Fellman s, aid . the . two. housing coi’porations were contacted and neither were interested in developing or expanding the property. ~ " ~ ¯ " ". .... MOTION: Council Member Mo~sar: rfioved, SeConded~ by Morton, that the Finance Committee recommends to the Clty Councilth~t it: ..... 1) DeClare a portion of a .city-oWned ’ ": "parcel located :dn High"Street near Oregon .Expressway to .be surPlus propeldl:y; ,.,,.: .,. 2).Direct staff to process an application to change the zoning from .Public Facility (PF) to Two Unit Multiple Family District (RMD); and, 3)Return to Council for approval of the Request for Bid Proposal (RFBP) to dispose of the property using an open bid procedure in accordance with the City policy for sale of surplus property. Funds from the sale of the High Street property will be used to fund the proposed redevelopment of the Alma Substation property for affordable housing. Council Member Morton questioned staff as to what it felt the fair market value would be. Mr. Fellman said the property was appraised, and the minimum value was estimated at $450,000 MOTION PASSED 4-0. Chairperson Ojakian said the item could come back on the Consent Calendar. 07/1.9/05 FIN :2 MOTION: Council Member Mossar moved, seconded Item No. 4. forward head of Item No. 3. ; .. MOTION PASSED 4-0, by Morton, to move 4. Comparative-Data on Development Impact Fee Levels Director of Planning and Community EnvirOnment Steve Emslie said the item on the agenda was in response to Council dtrection in fall 2004 when impact fees were on the Council agenda. At that time, staff was directed to prepare c0mparative.data on the cumulative effects of.the full :impact fees that were added over the years. Staff found that Palo Alto was on the high end for some of the land uses, particularly in nonresidential office and retail. The report was. submitted:for information. purposes..Staff continued to look: at ¯ how the ¯relative. fee levels of all.-the,-fees..could be adjusted..- A recommendation for modification of the fees-would goback to-the. Council. Administrator of Planning and Community Development Heather Shupe-said the City currently had fees for housing, traffic, facilities, and water and ¯ wastewater capacity. Fees. :under consideration ..included a citywide transportation impact fee and the Charleston/Arastradero Corridor. Impact fees did not apply to replacement homes, expansions, or remodels of existing homes in Paio Alto, nor did they apply on. commercial properties if there were a change in tenants. Impact fees did not apply to tenant improvements’ if .those improvements took place within an existing,space and did not apply to .a number, of exempt:,categories. The impact fees currently in place applied to a new house built on a vacant lot and to .property with increased,i~ residential", density.. Nonresidential. expansion commercial space beyond the. 1,500:square-foot one-time, exemption was subject to impact fees, and BMR units were subject to impact fees. Palo Alto was compared to 12 cities. Current and potential fees were in the mid-range compared to. other jurisdictions for .new residential development, somewhat higher for new nonresidential development. Council Member Morton. said it appeared .that Palo Alto. was. not much higher than the cities of Menlo Park,. Mountain View,. Gilroy, Mitpitas,’ Fremont, and San lose. Mr. Emslie said Palo Alto was in the high end with nonresidential fees. CouncilMemberMorton asked whether staff knew if Gilroy or Morgan Hill charged fees for rebuilt homes, Ms. Shupe said she did not know the answer. 07/19/05 FIN ~3 Mr. Emslie said Gilroy, Morgan Hill, and Milpitas werecities that Were.still growing and adding infrastructure and had fees to help with the funding of the infrastructure. ~. Ms. Shupe said staff.intended to further look into options relatedto adjusting existing impact fees to find out what could be done legally and what the financial impact might be..Information, would be brought back. at a later date. . ,. ; -.~. ¯ ’ Council Member Morton asked for Staff’s opinion of what legal, options might entail ’ ...." i: Mr..Emslie said providing exemptions Were difficult, legally,.lf not impossible. Setting ..fees at less than 100 percent cost recovery .was ,legal. To .the extent that. fees .could be adjusted .so. that the fees Were less than cost-recovery was an option for the full range of fees. Staff would look at the facility, .library, and housing fees and return to the Council with a recommendation. Council .Member Morton .clarified the ..concern. was the. total impact of.the Mr. Emslie said that-was correct. ’ Council. Member MOssar .said Palo Alto. did. not build .many..new .homes on vacant .lots and asked whether the’ fee.. was big for only a few opportunities. Ms: Shupe said~the key, was the increase in,density where there might be a :series ¯of .single-family residences ’ .replaced. With townhomes or .Council Member Mossar asked whether staff looked at.the impact of the fees on the price.of housing. ..: . .~ .. Ms.-Shupe .said costs for fees were ~appr.oximately $16,000. for new homes ,that were 9alued at between.S800,000 and $1.2 million, Ms. Shupe said units under 900 square feet and additional accessory buildings paid alower fee; ,Council Member¯ Mossar clarified .the. fees. applied to Below Market Rate (BMR) units, 07/19/05 FIN :4 Mr. Emslie said the idea Of applying:the .fees to BMR units was since the fees were a fixed requirement, the devetopermust provide, under, the City’s ComprehensivePlan (Camp Plan)., thatthere would.be no reason..to provide BMR units with a break in the fee. Ms. Shupe said that BMR units, in excess of the minimum required by law, were exempt from.fees. , Council Member Mossar asked whether staff looked at the impact of the fees on the-ability of small~ local retail businesses to come into the community. Mr. Emslie said there was: an exemption for the small addition or small retail less than l~500-square feet. Council Member Mossar said the selection of cities that Palo.AIto ~was compared to was an odd mix in that Palo Alto was very different from most Of the cities. Staffmight want to look at a broader area with cities more like PaioAlto in terms of. build-out and .not aggressively expanding. ~ Council Member Morton said staff should took at the applicability of fees to rebuilds " Mr. Emslie said staff looked at the possibility of having a .different fee based on the size of the house.. Staff researched the possibility, did comparative ¯ census.:t~ack analysis," and foUnd no appreciable difference. In. order to .:charge~for .rebuilds, the City had to show there was a not’increase in some sort of impact.. ’ " . .... .’ "Council Member Kishimoto urged staff to Iook at, the mix of the fees because the fees needed tO reflect the. needs of .the community. Impact fees should be Seen in ,the Context of the value that they add. to .businesses" or residents. Chairperson Ojakian said his recollection.when fees were set was.that they were not set at the high end. The City’s approach had not been to maximize fees at the top but to find a number below.-- Mr. Emslie said that was correct. Council Member Mossar said she was uncomfortable with the notion that square footage translated into people and jobs. The impact fees were not seen as a.mechanism for regulating the jobs/housing imbalance. : Director of Administrative Services Carl Yeats said the Finance Committee would see the item again when he and Mr. Emslie brought the impact fee 07/19/05 FIN:5 if(~rward..At that ti.mei they anticipated, they would, need .to look. at most:of the impact fees and o.ther fees in specific.,business d!stricts in the community ;in order to.get an entire picture of the cost to do,business in Palo Alto. No Action Required 3.Proposed Charleston-Arastradero Corridor Pedestrian and Bicyclist Safety Impact Fee DirectoF, of Planning and Community. Environment Steve Ems!ie said staff was directed to investigate funding mechanisms to implement the trial of the Charleston-Arastradero Corridor,approved. in..January 2003. The Council also authorized the preparation of a nexus study that. determined there was:an impact of certain projects within a certain radius of the Corridor. When converting from commercial use to reside.~tial use, there were an increased .,number of bicycle and pedestrian trips.,. Those trips requir.ed a higher degree of safety than the .commercial trips, The Charleston.--Arastradero Corridor Plan implemented a. variety.of safe~y measures with extended bike lanes and pedestrian refuges and safer crosswalks. Chief Transportation Official Joe Kott said staff recommended, that the Finance Committee ask Council to conduct a public hearing regarding the proposed. Charleston-Arastradero~Corr.idor Pedestrian and., Bicyclist. Safety Impact: Fee and .to adopt .an ordinance .making. certain.findings regarding-the Pedestrian and Bicyclist. Safety., Impact -Fee....The Councit..;approved .the Corridor.- Plan in January .2004 .and dir.ected, staff to .obtain funding to implement the Plan. Staff was confident with the nexus study, ..and findings. The purpose of the Pedestrian and Bicyclist Safety Impact Fee was to ,..:,provide -.funding..for improvements called .for. in. the Charleston-Arastr, adero Corridor Plan, The feeamount .was..predicat, ed on. the basis, ofa fair.share, 12.2 percent share, of .the.. Charleston-Arastradero. Corridor improvement plan, that would be funded by new development. The remainder would be funded- by other sources, including-grant.sources. Council Member Mossar clarified, the.. fee was based.upon .the increase, in bicycle and pedestrian trips and had nothing to do with car trips. Mr. Kott said that was correct. The fee was based on the likelihood of "x" number, of new. cyclists andpedestrians. ~ Ellen Fletcher~ 777 San Antonio Road, urged the Finance Committee approve finding a mechanism to fund the Charleston-Arastradero project. to 07/19/05 FIN:6 Fi~ili&nt i:lamliton~ Green Meadows Homeown~rs"ASSociation, 4014 Ben Lomond Drive, read a statement from the Green Meadow Homeowners elected board. The Finance Committee was asked to approve the Charleston- Arastradero ~Blcyclist and Pedestrian Safety Impact Fee andto, place .the matter on the Council agenda for final approval at the earliest possible, date. Penny Ellson;-513 El Capitan’Place, said the Green Meadows Homeowners Association requested that the Finance Committee ask staff to include a timeline for the project when the Issue went to the Council.. Betsy Altyn, Willmar Drive, .asked the Finance Committee :to support staff’s effort and added that her concern was the completion of the total Corridor. Lee Wieder questionedthe amount of time it would take to get the funds to ¯ ~"omplete the project, where-"the funds came’.:.fFom, .and. what. were the implications if the improvements were not completed until .after 2015. Irvin Dawid, 753 Alma Street, #126, was.supportive of .all bicycle.and pedestrian improvements in the community and asked for assurance that ¯ residents would see conditions improved for. pedestrian and bicyclists¯ as ¯ opposed to-.conditions improvement for motorists. Council Member Kishimoto asked whether staff was prepared to give a timellne and whether staff would also. provide information on the cash flow issues..~ Mr. Kott said he did not have detail .on cash flow. The most aggressive timeline was to implement the trial with paint and selected raised center medians with curbing at. three crosswalk~locations by fall of 2006.The trial would be.the: beginning of the final design. Adjustments Would.be made to turn¯ lanes and length and width of medians. The project would be expected to be completed in the fall of 2008; The project was defined.as somewhat under $7 million. MOTION:¯ Council Member Kishimoto moved, seconded by Morton, that the Finance Committee recommends to the City Council the following actions:¯ ¯ .," 1) Conduct a pUblic~ hearing regarding the, proposed, Charleston- . Arastradero. Corridor. Pedestrian andBicydlist Safety;,Impact Fee and 2) Adopt anOrdinance making certain fundings regarding-the proposed Charleston-Arastradero Corridor ,Pedestrian ,,and Bicyclist Safety .Impact Fee and adding Chapter 16.59 to the Palo Alto Municipal Code 07/19/05 FIN:7 ". tO" impose and implement the Charleston-Arastradero Corridor ¯, Pedestrian and Bicyclist Safety ImpacLFee.~ Further~ to direct staff to include a draft tlmellne and to bring back a funding plan for the design. CounciI.Member,..Kishimoto said the nexus study.showed .that by 2015, the City wouldsee a 1.3.8 percent.growth in. population in households, along the Corridor. The significance of the project v~as the City had .the opportunity to turn the potential divider of a community into something that was positive for:the quality of life-and .safety:of the. community,. Council Member Morton said he had trouble with the structure. His understanding was the Charleston-Arastradero Corridor was at capacity with .bicycles and.pedestrians and that the: City. .:wanted tO come up .with a fee to discourage bikes’and people.. The fee was.based .purely the change, from commercial space to something other than redevelopment. The intent was .understood. :The .goal was to make the Corridor better, and safer. Mr. Emslie said state law. said whenthere was an impact.of any. type., the impact could, be offset proportionately with the fee. The..premise of: the fee was that increased numbers of bikes and pedestrians constituted an impact. ¯.Mr. Ko.tt said putting more pedestrians across the street and more-bicycllsts on the streets sharing the street space with cars increased the probability of conflicts. There was no intent to mitigate by reduclng bike and pedestrian ¯ trips..., .. . Council,Member Morton.. clarified the half-mile Corridor intended to..give, a development¯ population-a broad enough scope to fund the. impacts Mr..Kott said .that :was correct..A typical walk trip .was onequarter mile, and a typical bicycle trip was between one and two miles. Council Member Morton said he would.like to have seen a ’~Homer tunnel,.at Charleston or.East Meadow... ..- ~ .. Council Member...,Mossar said she was consistent in voting against development ,impact fees;, which she did because she, believed her,, colleagues took every opportunity when there was a public outcry about something to ¯ .adopt a fee. There was an.implicit attempt,to use development impact fees ~tO discourage development. The Council had an overwhelming, willingness to charge developers to pay for needs In the communityand,had not done so in a matter that was necessary, The Council needed to make priority choices, 07119105’FIN :8 The development impact fee-currently before the Finance Committee was ’the type of thing that development impact fees should be used for.. The ~ Council made poor choices in the past. for the types of development impact ; fees that were adopted. Staff was asked; about the transportation impact.fee (TiF),- ." Mr~ Emslie said the TIF would come:back with staff’s recommendation after the ahalysis on the overall impact was completed. Council Member Mossar asked.why the "FIF did not come forward before the charleston-Arastradero Corridor Impact Fee.. , Mr. Emslie said the findings of the report made it clear that for certain land uses, the City needed to reduce the overall fee impact. Staff discovered that the. assumptions ¯that were .made when the TIF was considered werebearing true, especially-in the nonresidential and commercial categories. ¯Once staff ¯ had the data, it needed to come up with a methodologyto adjust the’fees. Council Member Mossar asked why staff chose the bicycle and pedestrian trip as the rationale for implementation of the fee as opposed to car trips. ¯ Mr. Emslie said state law allowed the City to charge only net increases. The overriding principle f0¢ the development ofthe Corridor..Pian had always been promotion of bicycle and pedestrian safety. When commercial use was ¯ Converted tO a residential use, less peak hour trafficwas.generated, Council Member Mossar said She"would .only support the .. motion if her colleagues put a moratorium on all or someof the other development impact fe~s that’had already been imposed. Improvements for pedestrian and bicycle safety.in the community were¯ ~supported;. Chairperson Ojakian said staff looked at limited funding sources and asked whether the fact the City generated money from the impact fee helped leverage against other monies.the City might get." ’ ,Mr’. ¯Kott’said that was correct; The City had money ,ready for matching purposes. ., . Chairperson Ojakian’ said he supported the motion. Certain parts of town that were commercial were hit harder than other areas, The Downtown had .,several other-¯assessment type districts, and California Avenue had an assessment on the garages~, The overall fee that might be Charged. to. somebody was not a concern because.he understood the offset was the City tried to get money to create aproject. The traffic, calming program was 07/19/05 FIN :9 ..focused on working on the Charleston-Arastradero ¯Corridor. In terms of a .,placeholder, the City knew it ,would get. u.r!expected money: ~ back from the State. The. City knew that was a one-time amoun,t ,of money and .the .trial was a one-time use¯ of money. Where the City got unexpected money and where there was a project the City wanted to do should be brought together. ¯ .Council. Member ..Morton said be had sympathy for looking at the range of impact fees again, but he did not..want the Finance: Committee ~to give the impression to staff that there was a dyer need, The City had needs that new development was asked to pay for.-His concern, .was that many rebuilds do not contribute to the same extent as a. brand- new house on a vacant lot, MOTION PASSED 3-1, Mossar no. .Council Member Mossar .said Council Member Morton alluded to other types :of development: that might be viewed to be fairly included in the collection of impact fees... That obser.vation got to her concern about the process.,,Theissue was fairness and equity. Finding ways to balance the old and new over time-was important... Chairperson Ojakian suggested the Finance Committee make a motion to direct staff to look at reviewing whether some of .the .money the City got back from the State would qualify to ~und the. $100,000 trial. Mr, Yeats .said staff would look at the option and added’ that he wanted to bring back a funding plan that looked at every grant Joe Kott could get, If the.City received grant funding~ .that was. where the funding .came from, If .not, by mid-year, staff would, let th.e Finance.Committee. know..how:!t would fund the proj.ect,-,If Mr., Kott..planned to have the full trial-done by fall,.of 2006, that meant an additional .Capi,tal, Improvement Pr0ject.(CIP) needed to be created so that Mr, Kott could begin the process’of doing the Request for Chairperson Ojakian asked whether it was fair to.say that becausestaff’..was looking at the overall funding plan and what to do, that before finding out .whether his colleagues were interested in allocating some of the money from the state, staff would come back with a plan, ,... .¯Council Member Morton asked when staff would come back to.the Council, Mr.. :Yeats: said the item would be-on the Council’s agenda when the Council returned from vacation, in. order to go through the formal steps to adopt the impact....fee, At that time, staff would .have a funding plan.for the design ..;phase and by mid-year would have a funding plan for the trial, .. 07/19/05-,FIN: 10 City Auditor Sharon Erickson said the Auditor’s Office Quarterly Report was an update, on the activitiesas of June 30, 2005. Since the last~stat.us report in April’, the Auditor’s"Office issued an.informational reporton Palo Alto sales tax, Ceview of SAP controls over accountspayable; and results of Police property and evidence rooms inventory. ¯ . Council Member Morton clarified the Auditor’s Office recommendation was in response to concern about removing terminated staff from the SAP system.¯. ~.’¯~, .,.,’ ,~"~. .:.", ,. :’, Ms.Erickson-said that was correct. AlsO, the Auditor’s Office..continued to find money~ The City ’received $232;895during the fiscal ¯.year as aresult of in~house .a nd contracted audits. The Association of.Government .Accountants (AGA) awarded: the Certificate :of Achievement ’in:.Service Efforts: and :Accbrnplishments :Reporting to :,the.. City’s¯. Service Effortsand Accomplishments Report 2003-04. The following projects,were in process: Audit of cable franchise fees and customer service provisions, audlt of parks maintenance, audit of street maintenance, Police Department survey, Review of Police Building proposal, and audits of sale.s, property, documentary transfer tax, and utility users tax revenues. MOTION: Council Member Morton moved, seconded by Kishimoto, that the Finance Committee recommend to the City Council to accept the Auditor’s Office Quarterly Report. MOTION PASSED 4-0. 6. Discussion for Future Meeting Schedules and Agendas Director of Administrative Services Carl Yeats said a meeting was scheduled for August 2, 2005, which included update on the GASB-43 and 45 and the 2004-05 Reappropriation Request. The conflict was that August 2 was "National Night Out." Council Member Morton asked whether the meeting could be rescheduled to September. Mr. Yeats said continuing the Reappropriation Request caused delays in getting money back to staff. Chairperson Ojakian said he would be out of the state on August 2, 2005. 07/Z9/05 FIN:11~ Council Member Morton said there was a.Chance he might .notib:e available on August 2, 2005. ..Mr; Yeats.,sai~l staff.would Io0k at reschedullng...the.item. The next Finance ..~Committee meeting .was on Septem.~er 20, .20.05,..at which time staff.would bring the Business License Registry proposal to the~.Finance Committee. AD,10URNMENT: The meeting adjourned at 9:05 p.m. NOTE: Sense minutes (synopsis) are prepared in accordance With~ alo Alto Municipal Code:Sections 2.04..180(a).and (b). The City.Council and Standing Committee meeting tapes are.. made. s01ely for.the p¯urpose of fac!litating the preparation . of:: the ..minutes of.. the meetings., City ¯Council and Standing Committ;ee meeting .tapes.. are recycled..90 .days from. the..date of the meeting,..The tapes are available, for.membeFs ,o1~. the pub!!c. :t.o !isten to 07/19/05 FIN: 3:2 Attachment K Regular Meeting September 12, 2005 Proclamation Honoring Jim Johnson on His Retirement from the San Francisquito Creek Watershed Council .......................................... 329 Selection of Candidates to be Interviewed for the Utilities Advisory Commission ............................................................................. 329 Selection of Candidates to be Interviewed for the Architectural Review Board ...................................................................................... 329 ORAL COMMUNICATIONS ...................................................................329 APPROVAL OF MINUTES .....................................................................330 Ordinance 4878 entitled "Ordinance of the Council of the City of Palo Alto Revising the Threshold for Compliance with Storm Water Pollution Prevention Regulations for Land Development Projects" ................. 331 Approval of Agreement and Declaration of Covenant with Kenson Group to Provide Parking at 130 Lytton Avenue ...................................... 331 Rejection of Bids and Authorization to Re-Solicit Bids for Parking Lot R Supplemental Lighting Project - Capital Improvement Program Project PE-95030 ................................................................................. 331 Approval of Letter of Mutual Understandings for Coordination and Development of an Integrated Regional Water Management Plan for the San Francisco Bay Area ............................................................. 331 Cancel October 3, October 10, and November 7, 2005 City Council Meetings and the October 4, 2005 Finance Committee Meeting ....... 331 10.Approval of Contract Amendment in an Amount Not to Exceed $20,000 with Mike Miller for Consulting Services for Utilities Policies and Procedures and Organizational Review ......................................... 331 09/12/05 99-326 11.Approval of Contract in the Amount of $800,000 with Standard Insurance Company for the City of Palo AIto’s Group Life, Accidental Death and Dismemberment (AD&D), and Long Term Disability Insurance (LTD) Plans .............................................................................. 331 12. 13. Approval of an Ordinance Amending the Budget for the Fiscal Year 2005-06 to Provide an Additional Appropriation of $1,110,305 for the Acquisition of 13-Acre Open Space Bressler Property from the Peninsula Open Space Trust (POST) and the Approval of a Purchase Agreement with POST for the Acquisition of the Property in the amount of $3,560,000" ............................................................................. 332 Finance Committee Review of Comparative Data on Cumulative Impact of Development Fees ................................................................. 333 13a.Colleagues Memo from Mayor Burch and Council Members Kishimoto and Ojakian Regarding Proposal for Matching Funding for Capital Improvements in the California Avenue Business District ................ 334 13B.(Old Item No. 5) Approval of Resolutions Adopting Compensation Plan for Management and Professional Personnel and Amending the Salaries and Benefits of Certain Council Appointed Officers, and Amending the Merit System Rules and Regulations ............................................ 338 COUNCIL COMMENTS, QUESTIONS, AND ANNOUNCEMENTS ...................342 14. CONFERENCE WITH CITY ATTORNEY -- EXISTING LITIGATION ........343 ADJOURNMENT .................................................................................343 09/12/05 99-327 The City Council of the City of Palo Alto met on this date in the Council Chambers at 7:05 p.m. PRESENT:Beecham, Butch, Cordell, Freeman, Kishimoto, Kleinberg, Morton, Mossar, Ojakian Mayor Butch spoke regarding Hurricane Katrina and proposed that City staff encourage other California cities to connect directly with affected cities. Staff was exploring the possibility of working as a liaison with statewide nonprofits in Louisiana and Mississippi to connect California cities to local government in need in that region. Trish Bubenik, Red Cross Executive Director, said during the preceding two weeks the American Red Cross had sheltered approximately 207,000 people in 709 shelters in 24 states. More than $609 million had been donated for the Hurricane Katrina relief effort nationwide, with the Palo Alto Chapter of the Red Cross processing just over $500,000. She expressed thanks for the support. Council Member Mossar said as a member of the Steering Committee for the National League of Cities (NLC), she contacted staff in Washington, D.C. on behalf of the City Council and Executive Staff, stating Palo Alto’s interest in doing whatever it could to help cities that had been affected by Hurricane Katrina. The NLC accepted the City’s offer and appreciated it greatly. Mayor Burch said the City of Kenner, Louisiana, was identified as a city similar in size to Palo Alto, which was damaged by Hurricane Katrina. Kenner was located approximately 10 miles west of downtown New Orleans with a population of 71,000. Like New Orleans, Kenner~ was adjacent to Lake Pontchartrain and below sea level; therefore, subject to flooding. An estimated 85 to 90 percent of the homes were damaged either from flooding or high winds. The city remained evacuated and businesses closed. Phil Capitano, Mayor of Kenner, expressed his gratitude and indicated his city’s immediate need was cash assistance. Mayor Burch proposed that Palo Alto adopt the City of Kenner and provide assistance as needed over the next 18 to 24 months. I~IOTION: Mayor Butch moved, seconded by Mossar, to direct staff to prepare a resolution to authorize the use of City resources and staff to provide assistance to Kenner, Louisiana, during the next 18 to 24 months, and to authorize staff to serve as a liaison to help California cities connect with cities in need in the Gulf Coast region. Vice Mayor Kleinberg expressed thanks for her colleagues’ leadership. HOTION PASSED 9-0. 09/12/05 99-328 Mayor Butch urged Palo Altans to prepare themselves for imminent disasters and suggested residences put together emergency kits for their home and car to sustain them for 48 to 72 hours. Senior Auditor Renata Falk said she was born in Baton Rouge, Louisiana, and lived there for 25 years. She knew a number of people who were affected by Hurricane Katrina. SPECIAL ORDERS OF THE DAY Proclamation Honoring Jim Johnson on His, Retirement from the San Francisquito Creek Watershed Council Jim Johnson encouraged Palo AItans to continue community efforts to restore the natural resources of San Francisquito Creek. Council Member Mossar expressed her personal thanks to Mr. Johnson for the many stories that were shared about the Creek and its history. No action required. 2.Selection of Candidates to be Interviewed for the Utilities Advisory Commission MOTION: Council Member Morton moved, seconded by Mossar, to interview all candidates for the UAC. MOTION PASSED 9-0. 3.Selection of Candidates to be Interviewed for the Architectural Review Board MOTION: Council Member Morton moved, seconded by Cordell, to interview all candidates for the ARB. MOTION PASSED 9-0. ORAL COMMUNICATIONS Richard Herndon, 2350 Amherst Street, spoke regarding streets and utility repairs. Danielle Martell spoke regarding public concerns. Dennis "Galen" Mitrvzk, Maclane Street, spoke regarding abuse of power. 09/12/05 99-329 Anthony Merlo, 2430 Bryant Street, spoke regarding an electric utilities matter. Don Letcher, 788 N. Rengstorff, Mountain View, spoke regarding Human Relations Commission autonomy. Jeff Levinsky, 1682 Hamilton Avenue, spoke regarding libraries. Nancy Alexander, 435 Santa Rita, spoke regarding floor area ratio and ca rpo rts. Betsy Allyn, 4186 Willmar Drive, spoke regarding Palo Alto libraries. Ellen Wyman, 546 Washington Avenue, spoke regarding the library. Janice Sedriks, 325 Waverley Street, spoke regarding the Downtown library. Robert Moss, 4010 Orme Street, thanked the Council regarding the relief for Hurricane Katrina and spoke regarding library facilities. City Manager Frank Benest spoke regarding a point of information on Council Candidates. APPROVAL OF MINUTES City Clerk Donna Rogers recommended the minutes of July 11, 2005, August 1, 2005 and August 8, 2005 be removed from the agenda and brought back after review by staff. MOTION: Council Member Ojakian moved, seconded by Morton, to adopt the minutes of July 18 and July 25, 2005. MOTION PASSED 9-0. CONSENT CALENDAR Assistant City Manager Emily Harrison stated staff has requested to have Item No. 6 removed from the Consent Calendar. Cubberley and-Human Services Division Manager Kathy Espinosa-Howard spoke regarding Item No. 5 and expressed appreciation for the salary increase and no unpaid furlough. She said the Management and Professional group wants a voice and equal treatment with other groups within the City. Herb Borock, P.O. Box 632, spoke regarding Item No. 5 and noted there have been changes in Utilities’ management structure, which are not reflected in the item before Council this evening. 09/12/05 99-330 Council Member Freeman referred to Item No. 10 and asked whether it was common practice to use former City employees for internal investigations. Ms. Harrison said it was not common practice to use former City employees for internal investigation, but Mr. Miller did not perform any internal investigations. He handled the paperwork for the disciplinary action that followed the work of the professional investigator. I~lOTION: Council Member Freeman moved, seconded by Kishimoto, to remove Agenda No. 5 from the Consent Calendar to become Item No. 13B. I~lOTION." Council Member Morton moved, seconded by Ojakian, to approve Item Nos. 4 and 7-11 on the Consent Calendar. LEGISLATIVE Ordinance 4878 entitled "Ordinance of the Council of the City of Palo Alto Revising the Threshold for Compliance with Storm Water Pollution Prevention Regulations for Land Development Projects" (1st Reading on o8/o8/o5) ADMINISTRATIVE. .Rejection of Bids and Authorization to Re-Solicit Bids for Parking Lot R Supplemental Lighting Project - Capital Improvement Program Project PE-95030 Approval of Letter of Mutual Understandings for Coordination and Development of an Integrated Regional Water Management Plan for the San Francisco Bay Area Cancel October 3, October 10, and November 7, 2005 City Council Meetings and the October 4, 2005 Finance Committee Meeting 10.Approval of Contract Amendment in an Amount Not to Exceed $20,000 with Mike Miller for Consulting Services for Utilities Policies and Procedures and Organizational Review 11.Approval of Contract in the Amount of $800,000 with Standard Insurance Company for the City of Palo AIto’s Group Life, Accidental Death and Dismemberment (AD&D), and Long Term Disability Insurance (LTD) Plans I~IOTION PASSED 9-0 for Item Nos. 4 and 7-11. 09/12/05 99-331 ORDINANCES AND RESOLUTIONS 12.Approval of an Ordinance Amending the Budget for the Fiscal Year 2005-06 to Provide an Additional Appropriation of $1,110,305 for the Acquisition of 13-Acre Open Space Bressler Property from the Peninsula Open Space Trust (POST) and the Approval of a Purchase Agreement with POST for the Acquisition of the Property in the amount of $3,560,000" Council Member Mossar said Palo Alto had tried for the past 25 years to acquire the Bressler property in order to complete the Enid Pearson Arastradero Preserve. Through the farsighted, generous, and just-in-time action of the Peninsula Open Space Trust (POST), they purchased the property in a bankruptcy sale. City staff had worked diligently and succeeded in acquiring more than $2.5 million in grant funding. POST agreed to offer the City an interest free loan towards the purchase price of the property to be repaid in Fall 2005. Audrey Rust, Peninsula Open Space Trust, 3000 Sand Hill Road, 1-122, Menlo Park, CA, urged the Council to accept staff’s recommendation on the proposal. Roger Smith, 270 Tennyson Avenue, concurred with the comments of Audrey Rust. Herb Borock, P.O. Box 632, said he believed the Certificate of Compliance for the Peninsula Open Space Trust (POST) was in violation of the law, and the property was worth much less than what the City was being asked to pay for it. ~’~ I~lOTIOl~l: Council Member Mossar moved, seconded by Kleinberg, to adopt staff recommendations as follows: a. Ordinance 4879 entitled "Ordinance of the Council of the City of Palo Alto in the amount of $1,110,305 from the Budget Stabilization Reserve for the purpose of the acquisition of the Peninsula Open Space Trust" b. Approve and authorize the Mayor to execute the purchase agreement with the POST in the amount of $3,560,000 for the acquisition of the Arastradero Gateway property. Vice Mayor Kleinberg expressed her thanks to Audrey Rust, her staff and POST for partnering with Palo Alto, helping the community finish the Arastradero Preserve and create a valuable asset. She concurred with the comments of Council Member Mossar. Council Member Ojakian asked whether staff had any comments regarding Mr. Borock’s statement. 09/12/05 99-332 Senior Assistant City Attorney Grant Kolling said he did not believe Mr. Borock’s statement was legally relevant,to the purchase. The issue was the approval of a purchase and settlement agreement. Council Member Ojakian expressed his support for the motion. He believed it was the right move to make. Council Member Kishimoto expressed her support for the motion. It was a worthy use of the City’s Budget Stabilization Reserve (BSR). Council Member Morton said with the help of POST, the Council had put together a parcel that would become a part of the City’s heritage. Mayor Burch expressed his appreciation to POST for preserving open space. MOTION PASSED 9-0. City Manager Frank Benest congratulated Greg Betts andGrant Kolling for all their hard work. REPORTS OF OFFICIALS Finance Committee Review of Comparative Data on Cumulative Impact of Development Fees Council Member Ojakian said this was an informational report (CMR:372:05) that calibrated when certain impact fees or taxes were charged for residential and commercial properties. Administrative Services Senior Financial Analyst Libby Dame said the Council previously posed a question to staff regarding what the cumulative impact of new and existing fees would have on developers. The staff report (CMR:372:05) summarized current impact fees, presented potential citywide and Charleston/Arastradero area fees, and provided comparative data from other cities. Impact fees did not apply to replacement homes, remodels or expansions of existing homes, commercial properties when there was a change in tenant or tenant improvements made in existing space, and exempt categories such as 100 percent affordable housing. Arthur Keller, 3881 Corina Way, said he would like to see the housing fees adjusted by the percentage of the sales value. He suggested developers should provide parkland if the sizeof their development was sufficiently large. No action required. COUNCIL MATTERS 09/12/05 99-333 13a.Colleagues Memo from Mayor Butch and Council Members Kishimoto and Ojakian Regarding Proposal for Matching Funding for Capital Improvements in the California Avenue Business District Council Member Morton stated he would not participate in the item due to a conflict of interest since his office was located within the boundaries of the California Avenue Business District. Mayor Butch indicated Council Member Kishimoto was Liaison to the California Avenue Area Development Association (CAADA). MOTION: Council Member Kishimoto moved, seconded by Ojakian, to direct staff to make a mid-year adjustment to the Capital Improvement Budget of $50,000 from the City Council’s contingency fund for improvements in the California Avenue Business District. This funding would be contingent on the following: ¯Development of a prioritized streetscape master plan for the area by CAADA with the understanding that CAADA plans to secure the assistance of a licensed architect on a pro bono basis to develop the plan. ¯Financial participation by CAADA to ensure maximum leverage of City funds Council Member Kishimoto said California Avenue was one of Palo AIto’s gems. She acknowledged the work CAADA had done in taking the initiative to maintain the area. The goal of both CAADA and the City of Palo Alto was to re-invigorate the California Avenue Area Business District and it became clear there needed to be an additional investment in the shopping district. Council Member Ojakian said he saw an opportunity to work with CAADA and have them get involved in improving the streetscape, thereby enhancing the district for business owners as well as for the enjoyment of the public. Sanford Forte, 280 College Avenue, said studies have shown that canopy improvements in commercial districts increased the amount of time individuals spent on a street by as much as 20 percent, and the amount of money spent in that district by as much as 17 percent. He expressed concern however, that if retailers were asked to pay for the improvements there would be resistance. He urged City staff and the Council to work with developers and landlords to try and find a way to make it happen. Heather Trossman, 769 Garland Drive, offered her architectural services to put together a design, which would jumpstart the development. 09/12/05 99-334 Council Member Mossar asked if the Council were to vote in favor of the motion what would be the remaining balance in the Council’s Contingency Fund. Council Member Ojakian said he believed the balance was approximately $150,000. Council Member Kishimoto said from her conversation with Director of Administrative Services Carl Yeats the balance was closer to $160,000. Council Member Mossar said while she agreed California Avenue was an important and special shopping district in the community it was not the Council’s standard practice to do a Budget Amendment Ordinance (BAO) without a budget and defined project. Council Member Kishimoto said she understood CAADA would develop a prioritized streetscape master plan for the area and present it to the Finance Committee and Council at mid-year. Council Member Mossar asked why the BAO was being authorized at the present time as opposed to when CAADA returned with a plan. Council Member Ojakian said his colleagues were attempting to provide CAADA with an incentive to take some action, and it included the retailers putting up some money. Council Member Mossar asked whether the Council could vote to make a policy commitment to CAADA instead of putting the money in the budget. Council Member Ojakian said yes they could, but it was a way of showing CAADA that if they followed through on their end, the Council would come back at mid-year to create the Capital Improvement Project (CIP) with $5o,ooo. Council Member Mossar clarified the Colleagues Memo directed staff to come back only when and if CAADA came forward with the two conditions indicated in the motion. She asked whether the motion could state that explicitly. Council Member Kishimoto said the intent was that Council would make the $50,000 commitment, but only if the two conditions were met. Council Member Freeman asked whether canopy and news racks were the two items being developed with the $50,000. Council Member Ojakian said it would involve a prioritized streetscape master plan. 09/12/05 99-335 Assistant City Manager Emily Harrison said, in addition to canopy and news racks, there was also discussion about fountain repair for the California Avenue fountain, as well as bulb outs and traffic calming. City staff needed CAADA to prioritize a list of possible improvements. Council Member Freeman said there was a question of the timeframe and allocating money at a time when the streetscape master plan had arrived. She hoped to hear how that would be added into the motion. Vice Mayor Kleinberg said the contingencies in the contract were vague. She asked whether anything more specific was discussed and could it be included in the motion. Mayor Butch said CAADA had felt California Avenue was second-class to University Avenue. In order to alleviate that feeling, his colleagues offered to commit $50,000 after CAADA provided a master plan for the project. Vice Mayor Kleinberg asked what was being asked of CAADA in terms of financial participation. Council Member Kishimoto anticipated approximately ~50 percent of the $5o,ooo. Vice Mayor Kleinberg said if there was nothing to trigger the Council’s responsibility then it was an empty responsibility, and how would staff know when to return to Council since there was no written agreement. Council Member Kishimoto said her colleagues just needed to see that CAADA was serious enough to put in some broad participation. Vice Mayor Kleinberg asked whether CAADA knew what putting in funds meant. Council Member Kishimoto said CAADA was an association that collects annual fees. Vice Mayor Kleinberg said she was referring to restricted monies. She asked to whom should the prioritized streetscape master plan go since she did not believe the Finance Committee needed to review it. Council Member Ojakian said he believed the master plan would go to the Finance Committee. He reminded his colleagues it was their streets and sidewalks. He asked whether financial participation was asked of the downtown businesses when the downtown urban design charette was developed. 09/12/05 99-336 Ms. Harrison said much of the original plan for that project was done on a pro bono basis. Additional staff work would be required when it became incorporated into the CIP. The same dialogue was had with CAADA as to the success of University Avenue. Council Member Ojakian said he and his colleagues chose a different route for this case because they wanted a "buy in" from CAADA. There was a benefit to having them involved in what would happen. Vice Mayor Kleinberg asked whether the neighboring residents would be included in the process. Council Member Kishimoto said yes. Vice Mayor Kleinberg said she understood the development on California Avenue should be a model for other districts. She asked the authors of the Colleagues Memo what they had in mind in terms of a precedent. Council Member Kishimoto said one issue involved news rack regulations and budget issues. Vice Mayor Kleinberg expressed concern about how the Colleagues Memo was formatted, and that the contingencies were vague and without direction. It was premature to restrict $50,000 when there was so much yet to be done. She requested the motion be approved in concept and to direct staff to return with more specific language about the contingencies. MOTION RESTATED: Council Member Kishimoto moved, seconded by Ojakian, to direct staff to prepare a mid-year adjustment to the Capital Improvement Budget of $50,000 from the City Council’s contingency fund for improvements in the California Avenue Business District. This approval of the adjustment would be contingent on the following: ¯Development of a prioritized streetscape master plan for the area by CAADA with the understanding that CAADA plans to secure the assistance of a licensed architect on a pro bono basis to develop the plan. °Financial participation by CAADA to ensure maximum leverage of City funds Vice Mayor Kleinberg said, unfortunately, the Council was left with a master plan that had not been vetted by the City, and financial participation, which was not defined. Mayor Burch said his colleagues gave CAADA a dollar amount of how much the Council could commit. It was a placeholder until things were more developed. 09/12/05 99-337 SUBSTITUTE MOTION: Vice Mayor Kleinberg moved, seconded by Mossar, to approve in concept the direction to staff to prepare a mid-year adjustment to the Capital Improvement Budget of $50,000 from the City Council’s contingency fund for improvements in the California Avenue Business District. This approval of the adjustment would be dontingent on the following: ¯Development of a prioritized streetscape master plan for the area by CAADA with the understanding that CAADA plans to secure the assistance of a licensed architect on a pro bono basis to develop the plan. ¯Financial participation by CAADA to ensure maximum leverage of City funds Furthermore, staff would be directed to return with specific language for the two contingencies. Vice Mayor Kleinberg said the Council wanted to be forthcoming and committed to the arrangement. If it was a precedent and model, it should be as specific and clear as possible. Council Member Mossar said the original motion made reference to a specific timeframe, budget action and dollar amount with no plan or clear contingencies. She approved of the concept, but Council needed to ask staff for due diligence to flush out the proposal in order to make a clear and sound budget recommendation. SUBSTITUTE MOTION PASSED 5-3, Beecham, Kishimoto, Ojakian no, Morton not participating. 13B.(Old Item No. 5) Approval of Resolutions Adopting Compensation Plan for Management and Professional Personnel and Amending the Salaries and Benefits of Certain Council Appointed Officers, and Amending the Merit System Rules and Regulations City Manager Frank Benest said the Management and Professional (M&P) employee group was an unrepresented unit. One goal was to keep the M&P group on par with the City’s unionized general employees represented by the Service Employees International Union (SEIU). The few substantive changes in the agreement included a salary increase and technical changes related to the tax law. In respect to the professional development medical benefits and other benefits, staff recognized the Council’s continued direction to contain or reduce those benefit costs. The best way to do that was when staff comprehensively dealt with all the unions and groups in the early months of 2006. Council Member Freeman asked whether all members of the M&P employee group were in their appropriate classifications, or whether some movement was going to happen. 09/12/05 99-338 Mr. Benest said the positions listed in the staff report (CMR:373:05) were the ones affected by the Compensation Plan (Comp Plan). For a number of years, there was concern about misclassification. Consequently, staff had looked at developing a class study to ensure appropriate classification. The issue of compaction would also be studied. Council Member Freeman asked for the best and worst case impact on the overall budget. Mr. Benest said there was no way to determine that although there had been longstanding concerns by the M&P employee group. Council Member Freeman asked whether non-exempt employees in the M&P group received overtime. Assistant City Manager Emily Harrison said they did in some cases. Those classifications were originally placed in non-exempt status because they directly supervised employees who, with overtime, would make considerably more than they did for doing work side-by-side. Staff did recognize that the management compensation study would need to address and correct those issues. Council Member Freeman said the benefit of 80 hours of Management Leave equated to approximately 9 days per year along with having the opportunity for overtime pay. She asked whether she was reading that correctly. Ms. Harrison said on a comparable basis the same issue arose with firefighters and fire chiefs, as well as management and SEIU. All those issues would be looked at comprehensively when the respective contracts expired in 2006. Council Member Freeman said a comprehensive look was what the City needed. She asked for an explanation of the winter closure and furlough. Mr. Benest said for the past two years the M&P employee unit had a mandatory furlough in which they had to take the time off. It equated to a one percent decrease in salary. In addition, there was a three-day closure of City Hall during the holiday. If an employee chose, they could take their three-day furlough during the winter closure. However, those two events were separate. Although the furlough would not be in effect in 2005-06, the winter closure would. During that time, the employee would have to take vacation. Council Member Freeman asked how did that work for employees who worked a schedule where their regular day off fell on a holiday. Ms. Harrison said that related to the 9/80 alternate Friday off schedule in which if a holiday fell on the 9/80 Friday, the person would not lose their 9/80 Friday, but would be able to adjust their timecard in order to be paid for the holiday or take the time in the next pay period. 09/12/05 99-339 Council Member Freeman asked when was the time to make suggestions if the Council felt the Professional Development reimbursement of $1,500 per year, which in part could purchase job related computer software, hardware, internet access, telecom equipment and home office furniture, was excessive. Mr. Benest said providing an incentive for employees to purchase computers and be able to work at home or elsewhere was, in his opinion, a good incentive; however, if the Council believed it was not good use of money, the time to make suggestions was during the employee groups’ yearly contracts. He proposed scheduling a strategy session with the Council prior to entering any discussions with the bargaining units and non-represented groups as to where the Council priorities were. MOTION: Council Member Freeman moved, seconded by Cordell, to ensure that staff would set a Council meeting to provide time for Council input for salary and benefits for all classifications before labor negotiations begin. City Attorney Gary Baum asked the meeting requested be within the parameters of the Brown Act for closed sessions. Specifically, one could only meet to discuss negotiation parameters with the negotiators. Mayor Burch clarified it would have to be a closed session. Council Member Freeman said in order for the Council to talk about the details of the Comp Plan publicly they had to have a closed session. Mr. Benest said prior to entering negotiations with all the employee groups next year, staff had committed to sit down with the Council to get direction on a broader more comprehensive basis. Council Member Ojakian asked staff when they anticipated the item returning to Council. Ms. Harrison said per the City Attorney, staff could not include any new Council Members in a closed session. Therefore, the item would return after the new Council Members had been sworn in. Council Member Ojakian said he found it difficult for a Council that had five seats up for election to vote on the motion presented. Council Member Morton said the Council had a commitment from the City Manager and a change was forthcoming in the majority of the Council. He felt it was in bad taste to force the City Manager to do something he had already committed to. 09/12/05 99-340 Council Member Kishimoto expressed support for the motion. She found the matrix prepared by staff useful and it would be great to extend it to comparable cities. MOTION PASSED 5-4, Beecham, Burch, Morton, Ojakian no. MOTION: Council Member Ojakian moved, seconded by Morton, for the approval of the resolutions adopting a Compensation Plan for Management and Professional Personnel effective for the pay periods including July 1, 2005 through June 30, 2006. Also recommended is approval of the resolution amending the salary and benefits of certain Council Appointed Officers and the Merit System Rules and Regulations to incorporate the amended compensation plan for Management and Professional personnel. Resolution 8554 entitled "Resolution of the Council of the City of Palo Alto Adopting Compensation Plan for Management and Professional Personnel and Council Appointees and Rescinding Resolution Nos. 8455, 8475, and 8539" Resolution 8555 entitled "Resolution of the Council of the City of Palo Alto Amending Section 1701 of the Merit System Rules and Regulations" Council Member Ojakian said he was satisfied with staff having followed his suggestions and favored the motion. Council Member Kishimoto said although the parameters were discussed in closed session, the various issues were not. The question she raised was to make sure the M&P employee group contract did not set a precedent, which increased the City’s budget. The intent of the PERS Choice reimbursement was that it was a temporary measure and subject to review. She disagreed with using the Professional Development reimbursement for gym/health club memberships. She noted a stark contrast with the City of Sunnyvale’s $248 maximum per month PERS Care medical benefit to Palo Alto’s $1,600 per month maximum. Vice Mayor Kleinberg expressed support for the motion and believed it was the fair thing to do for the M&P employee group, who helped run the organization. She was concerned, however, about where Palo Alto stood comparable to other cities, where it was headed, and the increased liability for pension and health benefits. She believed the Council had the responsibility to look at the entire compensation and benefit package for all the employee groups. Council Member Morton said the Council had the opportunity to look at what had been done for other City employee groups and is fair to the M&P employees. He expressed support for the motion. 09/12/05 99-341 Council Member Freeman said she felt accountable and had a fiscal responsibility to understand the details. AIth’ough she would not be able to support the motion, she appreciated the fairness and contributions of the M&P employee group. Council Member Cordell believed the discussion on the issue was productive and necessary for the Council Members who sat as trustees of the City. She hoped the members of the M&P employee group understood the discussion was not meant to disparage them or the work they did. She was aware of how diligent staff worked and was supportive of what they did for the City. She believed a comprehensive look of the entire compensation and benefit package for City employees was crucial. She wondered whether or not it was appropriate to base salary increases upon what one group received. She expressed support for the motion. MOTION PASSED 8-1, Freeman no, COUNCIL COMMENTS, QUESTIONS, AND ANNOUNCEMENTS Council Member Freeman said the City and County of San Francisco Planning Department issued the Notice of Preparation (NOP) and Notice of Public Scoping Meetings for the San Francisco Public Utilities Commission (SFPUC), Water System Improvement Program, in preparation of an Environmental Impact Report. A Scoping Meeting to provide oral or written comments would be held on Tuesday, October 18, 2005, 7-9 p.m. at the Palo Alto Art Center, 1313 Newell Road, Palo Alto. Council Member Mossar stated her concern regarding Council’s ability to participate in, and comment on, the Water System Improvement Program process. She felt it was appropriate for the Council to understand the process and its role in participating in the larger process. Assistant City Manager Emily Harrison stated Palo AIto’s response to the SFPUC was due in December, and the Utilities Advisory Commission (UAC) hearing would precede the Council’s discussion, which would count as the public hearing requirement. Staff was looking at a Study Session regarding water issues in November. It was a key planning issue and there would be in an opportunity for Council input. Council Member. Kishimoto spoke regarding the Valley Transportation Agency’s (VTA) discussions about a potential one-quarter cent sales tax for transportation for the coming year. Mayor Butch noted Senator Simitian would be holding a Town Hall meeting Saturday, September 24, 2005, from 10 a.m. to 12 noon in Council Chambers. 09/12/05 99-342 Council Member Freeman complimented staff on the 2005-06 Budget in Brief pamphlet distributed in the Council packet, which would help the public to better understand the budget process. Vice Mayor Kleinberg requested the meeting be adjourned in memory of the following: 1) Andrea Liederman, a leader in health and education in the community, who passed away the previous night; 2) Lou Platt, who passed away on Friday, was a titan of technology and an important philanthropist in racial diversity and understanding education, and also involved in preservation and environmental issues; and 3) the heroes and victims of 9/11. Mayor Burch requested the meeting be adjourned in memory of the victims of Hurricane Katrina and the three states where many lives were lost; and Robert Brown, who had passed away recently and was very involved in environmental open space and land trust issues in the community. CLOSED SESSION The meeting adjourned to a Closed Session at 10:00 p.m. 14.CONFERENCE WITH CITY A-I-I-ORNEY -- EXISTING LITIGATION Subject: Israela Banin v. City of Palo Alto, et al.; SCC #1-04-CV- 030273 Authority: Government Code section 54956.9(a) The City Council met in Closed Session to discuss matters regarding existing litigation as described in Agenda Item 14. Mayor Burch announced there was no reportable action taken. ADJOURNMENT: The meeting adjourned at 10:05 .p.m. in memory of: 1) Andrea Liederman, who headed Government Affairs for Kaiser Permanente, was an elected member of the Foothill DeAnza College Board of Trustees, and a leader in health and education in the community; 2) Lou Platt, who was a technology titan and headed Hewlett Packard, an important philanthropist in racial diversity and understanding education, and also involved in community preservation and environmental issues; 3) The tragedy of 9/11, and the victims and heroes who should never be forgotten; 4) The victims of Hurricane Katrina and the three states where many lost their lives; and 5) Condolences to.the Brown family for the passing of Robert Brown, son of Vance Brown of Vance Brown and Sons, a major contributor in community construction. Robert was also very involved in environmental open space and land trust issues. 09/12/05 99-343 A1-FEST:APPROVED: City Clerk Mayor NOTE: Sense minutes (synopsis) are prepared in accordance with Palo Alto Municipal Code Sections 2.04.180(a) and (b). The City Council and Standing Committee meeting tapes are made solely for the purpose of facilitating the preparation of the minutes of the meetings. City Council and Standing Committee meeting tapes are recycled 90 days from the date of the meeting. The tapes are available for members of the public to listen to during regular office hours. 09/12/05 99-344 Attachment L . Impact Fee Calculation for a Sample Commercial Project This sample project is modeled off an office expansion done at 3401 Hillview, in the Stanford Research Project. This expansion was done under the Mayfield Development Agreement, and so was exempt from City impact fees, but the calculations below show the fees that would be required for a similar expansion. Citywide Impact Fees (fees paid by all projects in Palo Alto) Net new commercial .square feet 100,188 Parks Impact Fee Community Centers Impact Fee Library Impact Fee Commercial In-Lieu Housing Fee $3.77O / sf $0.213 / sf $0.203 / sf $16.01 / sf 377,709 21,340 20,338 1,604,010 Net new PM peak hour trips 173 TOTAL Site-Specific Impact Fees (only required for projects in specific areas) Stanford Research Park Transportation Impact Fee San Antonio / W. Bayshore Transportation Impact Fee Charleston /Arastradero Transportation Impact Fee $9.25 / sf $1.91 / sf $0.27 / sf 2,473,370 926,739 191,359 27,051