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HomeMy WebLinkAboutStaff Report 244-08City of City Manager TO:HONORABLE CITY COUNCIL 8 FROM:CITY MANAGER DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT DATE: SUBJECT: MAY 19, 2008 CMR: 244:08 POLICY AND SERVICES COMMITTEE RECOMMENDATION TO ADOPT AN ORDINANCE AMENDING CHAPTER 21.50 (PARK LAND DEDICATION OR FEES IN-LIEU THEREOF) OF TITLE 21 (SUBDIVISIONS AND OTHER DIVISIONS OF LAND) OF THE PALO ALTO MUNICIPAL CODE TO SET THE PARK LAND DEDICATION REQUIREMENT TO FIVE ACRES PER THOUSAND RESIDENTS RECOMMENDATION Staff and the Policy and Sel-vices Committee recommend that the City Council adopt an ordinance amending Chapter 21.50 (Park Land Dedication or Fees In-Lieu Thereof) of Title 21 (Subdivisions and Other Divisions of Land) of the Palo Alto Municipal Code to increase the park land dedication requirement froln three acres per thousand residents to five acres per thousand residents. BACKGROUND On June 5, 2006, the City Council approved an ordinance requiring that project applicants dedicate park land when subdividing propel~ for residential purposes (Ordinance 4907, also see CMR 246:06). The ordinance required three acres of park land for eve~, thousand residents. Based on experience with two recent projects, however, staff believes that parks generated by the three-acre-per-thousand requirement are inadequate to aneet the Cit-y’s needs which is the minilnum stipulated by State law. The attached proposed ordinance raises the dedication requirelnent to five acres per thousand residents generated by a proposed subdivision. For further background, please refer to the Policy and Services Committee staff report, Attachment B. CMR: 244:08 Page 1 of 6 COM2~IITTEE REVIEW AND RECOM2¥IENDATION On April 8, 2008, the Policy and Services Committee recommended that the City Council adopt an ordinance raising the park land dedication requirement to five acres per thousand residents. The vote was 2-1 with Councilmembers Dre ~k_rneier and Kishimoto voting yes, and Councilmember Barton voting no. Comments and questions were raised at the meeting as follows: Exactly what land is included in the calculation of existing City park land? How is the land value used to calculate the fee determined? How may thefees be used? Why was the park land requirement set at three units per thousand rather than five in 2006? Can somebody choose to dedicate land rather than pay fees if they are building fewer than fifty units? What are the total development fees that apply to new housing? Some additional analysis on whether the City’s park land goals can be achieved with a three acre per thousand requirement would be helpful. As population ~ows, this proposal is one way to maintain city services. The proposed fees could affect the affordability of housing in Palo Alto. Parks are an important part of the quality of life in Palo Alto. DISCUSSION Staff has prepared some additional analysis in response to some of the issues raised at the Policy and Services Committee meeting. Exactly what land is in.cluded in the calculation of existing City park land? In response to questions about the actual amounts of current park land, developed the table below to illustrate Palo Alto’ s various types of park land: staff has Table 1: Palo Alto Park Land Acreage per 1,000 Acreage Residents* Neighborhood Parks 157 acres 2.68 School Athletic Fields 43 acres .73 Foothills Park- Developed area Foothills Park - Open space/hiking areas Baylands Athletic Center Data Source Service Efforts and Accomplishments Report 2006-07 Service Efforts and Accomplishments Report 2006-07 Adamson Report25 acres .43 1,375 acres 23.46 Adamson Report 12 acres .12 1990 Palo Alto Baylands Master Plan Update CMR: 244:08 Page 2 of 6 Baylands - Duck Pond /10 acres Interpretive Center Golf Course 184 acres Baylands - open space 1,264 acres and hiking areas Pearson Arastradero 622 acres Preserve TOTAL 3,692 *Based on 2000 census data, 58,598 residents .17 3.14 21.57 10.61 63.00 1990 Palo Alto Baylands Master Plan Update 1990 Palo Alto Baylands Master Plan Update 1990 Palo Alto Baylands Master Plan Update Adamson Report How is the land value used to calculate the fee determined? The land value in this ordinance is based on a survey of comparables in Palo Alto for 2006. The land value used is the midpoint of the range of commercial sales for that year. Staff used the commercial land value because it represents larger parcels more likely to be subdivided into residential uses, and thus subject to the park land dedication ordinance. Some cities do a study of comparables for each new development, rather than setting a fair market value for all new developments. This requires more administrative work, but can potentially yield higher in-lieu fees. The drawback to this method is the lack of predictability for both the City and the developer for forecasting future fee revenue and development costs, respectively. How may the fees be used? Fee revenue may be used only for projects that increase the capacity of the City’s parks. One way to do this is by acquiring new land, but there are other ways. Some improvements to existing parks increase capacity without additional land. For example, replacing a grass field with turf expands the number of days of the year the field can be used, because the turf is more resilient and requires less maintenance. Capacity improvements are an important method for expanding park capacity because dedication is sporadic in a built-out community. Few parcels are large enough to support a development over 50 units which would trigger the land dedication requirement under the park land dedication ordinance. l/Vhy was the requirement set at three units per thousand rather than five in 2006? A question was raised at the Policy and Services Committee meeting about the rationale for adopting a three-unit-per-thousand requirement. When proposed in 2006, staff recommended the lower requirement until the City gained some experience with administering the ordinance, and could determine whether the City’s park land goals CMR: 244:08 Page 3 of 6 could be achieved with such a requirement. A five-unit-per-thousand ratio was presented as an alternative, but not adopted at that time. Can a developer choose to dedicate land rather than pay fees if they are building fewer than fifty units ? A developer may always offer to dedicate land rather than pay fees, but that offer is subject to the City’s acceptance. The City may require in-lieu fees if the land proposed does not meet the City’s park needs. For developments of fifty units or fewer, the City may not require land, though the developer may still offer it. It is unlikely a park offered as part of such a development would be large enough to meet the City’s needs, though in some cases it might be if it expanded an existing park. Some additional analysis on whether the City’s park land goals can be achieved with a three acre per thousand requirement would be helpful. The demand for parks demonstrates itself both qualitatively and quantitatively. There is an existing demand for field sports. A survey done in 2002 of some of the major sports leagues in Palo Alto found that 3% of people who want to join are turned away. There is also competing demand for space from underserved activities such as skateboarding, dog recreation, gym recreation, and water sports. The existing facilities for these activities, built a long time ago, are not up to modern standards. When considered alongside the continuing need for passive recreation areas such as picnic space, or the need for play~ounds, including those suitable for special needs children, the demand for additional park space is clear. Staff has done a rough analysis of the cost of acquiring parcels to expand park land to meet this demand. Staff chose sample parcels spread throughout the City that could be suitable for new parks, and analyzed the cost. The parcels were chosen with an eye to their effectiveness at expanding parks in a way that created a more efficient shape or layout. To acquire six acres of suitable land spread throughout the City would require approximately $28 million. Even if this land were acquired over the next twelve to fifteen years, it would still provide only 2.4 acres of park land for each 1,000 new residents projected to move to Palo Alto during the same time. A park land dedication fee based on a ratio of five acres per thousand residents may generate enough revenue to acquire and improve this park land, while a fee based on the current ratio most likely would not (see "Resource Impacts", CMR 196:08, Attachment B). This analysis suggests that the current park land dedication requirement is not sufficient to maintain our existing level of recreation service to current and future Palo Alto residents. CMR: 244:08 Page 4 of 6 What are the total development fees that apply to new housing ? Below are tables showing the total development impact fees, assessed both by the City and the School District. Table 2:Impact and In-Lieu Fees for Single Family Subdivisions (5+ units)* School fees Community Facility Fees Library Fees Citywide TI F Park Land Dedication Housing In-Lieu Fees** TOTAL Current Fees (Per Unit) $8,680 2,350 820 3,582 28,620 116,625 $ 160,677 Proposed Fees (Per Unit) $8,680 2,350 820 3,582 47,700 116,625 $ 179,757 % increase 67% 12% *Note: None of these fees apply to tearing down and rebuilding a home. For second units, only the school, community facility, library, and traffic fees apply (at the multi-family rate). ** Housing in-fieu fees are only required if the developer does not build affordable housing units. Table 3:Impact and In-Lieu Fees for Multi-family and Condominium Projects School fees Community Facility Fees Library Fees Citywide TIF Park Land Dedication Housing In-Lieu Fees* TOTAL Current Fees (Per Unit) $4,200 1,546 536 1,771 19,620 57,000 $ 84,673 Proposed Fees (Per Unit) $4,200 1,546 536 1,771 32,670 57,000 $ 97,723, % increase 67% 15% * Housing in-lieu fees are only required if the developer does not build affordable housing units. RESOURCE IMPACT With a three-acre-per-thousand-resident park standard, projected fees over the next twelve years are $15-25 million, or an average of $1.5-2 million per year. Increasing the standard would mean $25-40 million collected over the next fifteen years, or an average of $2-3 million per year. Revenues would be highly variable from year to year, depending on whether new subdivisions were proposed for development in Palo Alto. The ordinance could also generate an indetelaninate amount of park land, depending on fluctuating land values, the availability of suitable property for acquisition, whether large parcels in the City are redeveloped, and whether those parcels are in an acceptable location for park land. The cost of maintenance must be considered when purchasing or accepting park land for dedication; current costs are $15,000 per acre annually, per the 2006-07 Service Efforts and Accomplishments Report. CMR: 244:08 Page 5 of 6 Per the attached ordinance, the fair market value would be increased annually by the Engineering News Record Construction Cost Index. ENVIRONMENTAL REVIEW Adoption of an ordinance setting a requirement for land dedication is not a project under the California Environmental Quality Act (CEQA). ATTACHS~ENTS Ordinance amending Section 21.50 of the PAMC April 8, 2008 Policy and Services Committee staff report (CMR 196:08) PREPARED BY: <FO-~ AB E’ND S CHEIN ’Administrator DEPARTMENT HEAD REVIEW: CURTIS WILLIAMS Director of Planning and Community Environment CITY MANAGER APPROVAL: STEVE EMSL~ / KELLY MORARIU Interim Deputy City Managers COURTESY COPIES Home Builder’s Association Silicon Valley Association of Realtors Palo Alto Chamber of Commerce CMR: 244:08 Page 6 of 6 NOT YET APPROVED Attachment A ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENrDING CHAPTER 21.50 (PARK LAND DEDICATION OR FEES IN LIEU THEREOF) OF TITLE 21 (SUBDIVISIONS ANTD OTHER DIVISIONS OF LAND) OF THE PALO ALTO MUNICIPAL CODE TO SET THE PARK LAND DEDICATION REQUIREMENT TO FIVE ACRES PER THOUSAND RESIDENTS The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Section 21.50.040 (Land Requirement) of Chapter 21.50 (Park Land Dedication) is hereby amended to read as follows: .1.~0.040 Land requirement. In accordance with the Palo Alto Comprehensive Plan, it is hereby found and determined that the City of Palo Alto cunently provides neighborhood_, eag-district park_, a-a4 recreational facilities, and c,,De.~, s~ace to its residents at a ratio of {gr-ee-five acres per thousand residents. The public interest, convenience, health, welfare and safety require that ~five acres of property for each one thousand persons residing within the City of Palo Alto be devoted to public park and recreational facilities." SECTION 2. Section 21.50.050 (Density Formula) of Chapter 21.50 (Park Land Dedication) is hereby amended to read as follows: 21.50.050 Density formula. In calculating dedication and in-lieu fee requirements under this chapter, the following table, derived from the density assumptions of the Comprehensive Plan, shall apply: Table 2 DENSITY FORMULA Dwelling Density Single Family Multi Family Density of Persons Per Dwelling Unit 2.44 1.68 Acreage Requirement Per Dwelling Unit within Subdivision 080507 syn 0120283 NOT YET APPROVED SECTION 3. Section 21.50.070 (Calculation of Fair Market Value) of Chapter 21.50 (Park Land Dedication or Fees in Lieu Thereof) of Title 21 (Subdivisions and Other Divisions of Land) of the Palo Alto Municipal Code is hereby amended to read as follows: "21.50.070 Calculation of fair market value. (a) At the time of submission a final subdivision map for approval, the city shall, in those cases where a fee in lieu of dedication is required either in whole or in part, determine the fair market value of the land in the proposed residential development, and this determination shall be used in calculating the fee to be paid. If the developer objects to the fair market value, the city, at developer’s expense, shall obtain an appraisal of the property by a qualified independent real estate appraiser, agreed to by the city and the developer, and the value established by said appraiser using standard recognized appraisal techniques to establish fair market value will be accepted as the fair market value of the land in the proposed development. Alternatively, the city and the developer may a~ee as to the fair market value. calcL,,~on in Section 2i.50.080 is ~a g m~iion .oer acre. (ci Be~.nn!n£ Jul\’ i. -~00c~.. ane o~.. ~v.ur~ Juiv i ,h~,.~,~,~:~. the a~,~’~;~ .... "" ....-’-~1 increase without furtheY action by the City accord~n£ Most Recent ENR // // // // // // // 080507 syn 0120283 SECTION 4. of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: AB S TENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Assistant City Attorney NOT YET APPROVED This ordinance shall be effective on the thirty-first day after the date Mayor APPROVED: City Manager Director of Planning and Community Environment 080507 syn 0120283 ATTACHMENT B TO: ATTN: FROM: DATE: SL~BJECT: HONORABLE CITY COUNCIL POLICY AND SERVICES COMSIITTEE CITY MANAGER DEPARTS~ENT: PLANNING AND COMMLrNITY ENVIRONM]~NT APRIL 8, 2008 CMR: 196:08 RECOMS~ENI)ATION TO TI-H~ CITY COUNCIL TO ADOPT AN ORDINANCE AMENDING CHAPTER 21.50 (PARK LAND DEDICATION OR FEES IN-LIEU THEREOF)OF TITLE 21 (SUBDIVISIONS AND OTHER DIVISIONS OFLANI)) OF THE PALO ALTO 5~UNICIPAL CODE TO SET THE PARK LANq) DEDICATION REQUIREMENT TO FIVE ACRES PER THOUSAN~ RESIDENTS RECOMMENDATION Staff recommends that the Policy and Services Committee recommend that the City Council adopt an ordinance amending Chapter 21.50 (Park Land Dedication or Fees In- Lieu Thereof) of Title 21 (Subdivisions and Other Divisions of Land) of the Palo Alto Municipal Code to increase the park land dedication requirement from three acres per thousand residents to five acres per thousand residents. BACKGROUND On June 5, 2006, the City Council approved an ordinance requiring that project applicants dedicate park land when building condominiums or other types of residential subdivisions (Ordinance 4907, also see CMR 246:06). The ordinance required three acres of park land for every thousand residents, and allowed fees to be paid in-lieu for projects with fifty or fewer units, and for larger projects with City Council approval. The in-lieu fees are based on the value of the land that would otherwise be required, and are intended to help the City purchase park land off-site to serve those new residents. To make administration simpler, the City uses a strategy similar to other cities in the area, determining the fair market value of land for the purposes of in-lieu fee calculation using a general appraisal of land value throughout the city. The current land value used for in- lieu fee calculation is $3.9 million per acre, which yields fees of $28,620 per single- CMR:196:08 Page 1 of 5 family unit and $19,620 per multi-family unit. The ordinance only applies to residential subdivisions and condominiums. It does not apply to commercial subdivisions or condominiums, home remodeling, construction of second units (except with a condominium map), or demolition and replacement of existing homes. DISCUSSION The State Quimby Act permits cities to require more than three acres of park land per thousand residents only if the ratio of existing park land to residents is higher, in which case the city may require up to five acres per thousand residents. Palo Alto’s ratio of neighborhood park land to residents is just under three acres per thousand, but the City also maintains a substantial amount of open space for the enjoyment of its residents. With open space included, the ratio is well above five acres per thousand, which allows Palo Alto to require dedication of up to five acres of park land per thousand residents generated by a proposed subdivision. Park land Dedication Under Current and Proposed Standards Since the adoption of the park land dedication ordinance, no new large residential subdivision projects have been submitted, so the efficacy of the ordinance in enlarging Palo Alto’s park land has not yet been tested. However, based on experience with two recent projects for whidh park land was voluntarily dedicated, staff believes that the three-acre-per-thousand requirement will be insufficient for the City’s needs. The developers of these projects voluntarily dedicated parks to the City, one at 4249 E1 Camino Real (Summerhill Homes project at the Elk’s Lodge site) and one at 3445 Alma Street (Alma Plaza). Each park was approximately a quarter-acre, which is what would have been required by the park land dedication ordinance for developments that size. While quarter-acre parks fill a need for the City, they are more expensive to maintain per acre, and less accommodating of changing recreation, relaxation and sport needs. In the case of these two projects, the size of the parks also made them less accessible to the general public outside the bounds of the project. Flexibility is a critical consideration for City park land. Parks in Palo Alto can fulfill a variety of purposes, depending on size and configuration. Residents and visitors use Palo Alto parks for active recreation, passive relaxation, and play. Parks also have an aesthetic value to the city. The largest parks and open space areas are often used for active recreation, such as field sports, hiking, or other outdoor activities. There is a high demand for these active recreational spaces. Other parks, such as Heritage Park, are primarily used for passive relaxation, a place to sit outdoors. Heritage Park also has a play~’ound, and therefore doubles as a play area. The smallest parks fulfill a single purpose, such as Kellogg Park along Embarcadero Road, which is primarily an aesthetic geen space that breaks up the built environment. The larger parks and open space areas, by contrast, can serve multiple purposes, offering active recreational areas, passive recreation, scenic and aesthetic areas, and can even serve as educational resources. CMR: 196:08 Page 2 of 5 The more functions a park can serve, the more valuable it is to the City and its users. The smallest parks, which typically serve only a single purpose, are difficult to adapt to the changing needs of the surrounding residents. Noise is more often a factor because there is a smaller buffer zone between the active areas of the park and the surrounding homes, and this further limits potential uses for the park. Maintenance is also more costly on a per-acre basis. When maintaining a larger park, for example, there are economies of scale in scheduling work crews, which lowers the maintenance costs per acre. While small parks can be beneficial, experience has shown that a half-acre park is the smallest that justifies the maintenance costs. The smallest development that would generate a half-acre park under the current three- acre-per-thousand park land standard is 100 units. A 51-unit development, the smallest development for which land dedication is required under the current ordinance, would only generate a quarter-acre park. Under a five-acre-per-thousand-resident standard, the smallest park required would be .42 acres, and a 60-unit development would generate a half-acre park. The attached ordinance amendment, therefore, will ensure that developers propose only sizable parks that are cost-effective to maintain and flexible enough for changing resident needs. In-Lieu Fees Raising the park land dedication requirement would also increase the in-lieu fees for projects that are not required to dedicate park land, projects of 50 or fewer units. The City currently uses a land value of $3.9 million per acre, based on a survey of comparables within Palo Alto generated by an appraiser for the Department of Planning and Community Environment. Based on that land value, the park land dedication in-lieu fees for multi-family projects will be $32,600 per unit, while the fees for single-family subdivisions will be $47,600 per unit. Combined with other development fees, the total fees per unit for multi-family projects will be $35,000 to $37,000, while single-family subdivisions would incur $51,000 to $54,000 per unit in fees. For comparison, the park land dedication requirements and in-lieu fees of several other surrounding cities are shown in Table 1, below. Most are lower than Palo Alto, either because they use a lower fair market value, have a lower park land standard, or allow credits for private open space. Alternatives When determining in-lieu fees, the City sets the fair market value that will be used to calculate the fee (subject to challenge by the developer). If the City wished to raise the land dedication requirements while maintaining the same fees, it could accept a lower fair market value. A fair market value of $2.35 million would keep fees at the current level, $19,600 per multi-family unit, and $28,600 per single-family unit. CMR: 196:08 Page 3 of 5 TABLE 1: Comparison of Park land Dedication Requirements Palo Alto (existing) Palo Alto (proposed) Redwood City Menlo Park Mountain View San Mateo sunnyvale Park land Dedication Requirement 3 acres / 1,000 residents 5 acres / 1,000 residents 3 acres / 1,000 residents 5 acres / 1,000 residents 3 acres / 1,000 residents 2 acres ] i ,000 residents 1.25 acres / 1,000 residents Typical Credit for Private Open Space 25%* 60% In-Lieu Fees Per Unit (after credit) Sl 9,600- $28,600 $32,600-$47,600 $8,100-S12,300 $6,900- 8,600 $9,400 : $14,1 O0 Land Value Used to Calculate Fees (per acre) $3.9 million $3.9 million $1.9 million Different for each project, typically $3.5 to 4 million Different for each project, typically $3 to 4 million Differeni f~r each project, typically $4 to 5 million $4.2 million / acre "Redwood City’s ordinance was adopted December 2007. The estimate of typical credit granted is based on very few projects. POLICY IMPLICATIONS This ordinance is consistent with Comprehensive Plan policy C-28, which prescribes use of the National Recreation and Park Association Standards as guidelines for locating and developing new parks. These guidelines state that neighborhood parks should be at least two acres in size, supplemented when necessary by parks as small as one-half acre. It also fulfills pro~am C-23, "Stud?, and recommend methods of private and public financing for improved park maintenance, rehabilitation, and construction." RESOURCE IMPACT With a three-acre-per-thousand-resident park standard, projected fees over the next twelve years are $15-25 million, or an average of $1.5-2 million per year. Increasing the standard would mean $25-40 million collected over the next fifteen years, or an average of $2-3 million per year. If the alternative proposal were adopted setting a lower fair market value for calculation of the in-lieu fees, there would be no increase in fees collected even if the parks standard were increased. In either case, revenues would be highly variable from year to year, depending on whether new subdivisions were proposed for development in Palo Alto. CMR:196:08 Page 4 of 5 The ordinance could also generate an indeterminate amount of park land, depending on fluctuating land values, the availability of suitable property for acquisition, whether large parcels in the City are redeveloped, and whether those parcels are in an acceptable location for park land. The cost of maintenance must be considered when purchasing or accepting park land for dedication; current costs are $15,000 per acre annually, per the 2006-07 Service Efforts and Accomplishments Report. Per the attached ordinance, the fair market value would be increased annually by the Engineering News Record Construction Cost Index. EN¥IRON~IENTAL REVIEW Adoption of an ordinance setting a requirement for land dedication is not a project under the California Environmental Quality Act (CEQA). PREPARED BY: JONXBElqIDSCHEIN Administrator DEPARTMENT HEAD REVIEW: /~TEVE E~SLIE Director of Planning and Community Environment CITY MANAGER APPROVAL:{ / 5 EMILY ~RIS ON Assistant City Manager COURTESY COPIES Home Builder’s Association Silicon Valley Association of Realtors Palo Alto Chamber of Commerce CMR:196:08 Page 5 of 5