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HomeMy WebLinkAbout2004-01-05 City Council (3)TO:HONORABLE CITY COUNCIL City of Palo Alto Nlanager’s Report 10 FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES DATE:JANUARY 5, 2004 CMR: 113:04 SUBJECT:ACCEPTANCE OF ANNUAL STATUS REPORT ON DEVELOPERS’ FEES AND APPROVAL OF FINDINGS RECOMMENDATION Staff recommends that the City Council accept the Annual Report on Developers’ Fees for the period ending June 30, 2003 (Exhibit A). In addition, staff recomrnends that the City Council make the findings attached to this report with respect to certain sums held in the Stanford Research Park/El Camino Real CS Zone Fund and the San Antonio/West Bayshore Fund. BACKGROUND State law (Government Code Section 66006) requires each local agency that imposes development impact fees to prepare an annual report providing specific information about those fees. This requirement is part of the law commonly referred to as AB 1600. It codifies the legal requirement that fees on new development have the proper nexus to any project on which they are imposed. In addition, AB 1600 imposes certain accounting and reporting requirements with respect to the fees collected. The fees, for accounting purposes, must be segegated from the general funds of the City and from other funds or accounts containing fees collected for other improvements. Interest on each development fee fund or account must be credited to that fund or account and used only for the purposes for which the fees were collected. The law was amended effective January 1, 1997. The provisions now require that, within 180 days after the close of the fiscal year, the agency that collected the fees must make available to the public the following information regarding each fund or account: 0 o 0 0 A brief description of the type of fee in the fund. The amount of the fee. The beginning and ending balance for the fiscal year. The amount of fees collected and interest earned. CMR:100:04 Page 1 of 4 o O o An identification of each public improvement on which fees were expended and the amount of the expenditure on each improvement, including the total percentage of the cost of the public improvement that was funded with fees. An identification of an approximate date by which the construction of a public improvement will commence, if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement. A description of each interfund transfer or loan made from the account or fund, including the public improvement on which the loaned funds will be expended, and in the case of an interfund loan, the date on which the loan will be repaid and the rate of interest that the account or fund will receive on the loan. The amount of any refunds made due to inability to expend fees within the required time frame. This report must also be reviewed by the City Council at a regularly scheduled public meeting not less than 15 days after the information is made available to the public. In addition, notice of the time.and place of the meeting shall be mailed at least 15 days prior to the meeting to any interested party who files a written request with the local agency for such a mailed notice. The law also provides that, for the fifth fiscal year following the first deposit into the fund and every five years thereafter, the local agency shall make findings with respect to any portion of the fee remaining unexpended, whether committed or uncommitted. The finding must: identify the purpose to which the fee is to be put; demonstrate a nexus between the fee and the purpose for which it was originally charged; and identify all sources and amounts of funding anticipated to complete financing of incomplete improvements along with the approximate dates on which the anticipated funding is expected to be deposited into the fund. If the agency no longer needs the funds for the purposes collected, or if the agency fails to make required findings, or perform certain administrative tasks prescribed by AB 1600, the agency may be required to refund, on a prorated basis to owners of the properties upon which the fees for the improvement were imposed, the monies collected for that project and any interest earned on those funds. DISCUSSION The City of Palo Alto development fees covered by AB 1600, and documented in Exhibit A, include the following: CMR: 100:04 Page 2 of 4 o Stanford Research Park/E1 Camino Real traffic impact fees (PAMC Ch. 16.45). Fee for new nonresidential development in the Stanford Research Park/El Camino Real Service Commercial zone, to fund capacity improvements at eight intersections. o San Antonio/West Bayshore Area traffic impact fees (PAMC Ch. 16.46). Fee for new nonresidential development in the San Antonio/West Bayshore area to fund capacity improvements at four intersections. o Housing impact fees imposed on commercial developments (PAMC Ch. 16.47). Fee on large commercial and industrial development to contribute to programs that increase the City’s low-income and moderate-income housing stock. o Parking in-lieu fees for University Avenue Parking District (PAMC Ch. 16.57). Fee on new nonresidential development in the University Avenue Parking Assessment District in lieu of providing required parking spaces. o Development impact fees (PAMC Ch. 16.58). Fee on new residential and non-residential developments to provide community facility funds for parks, community centers and libraries. Additional fees include residential housing in-lieu fees paid to the City, at the developer’s election, by residential developers in fulfillment of obligations under the City’s inclusionary zoning (Below-Market Rate Housing) program. While these fees do not necessarily fit within the definition of development fees subject to AB 1600 reporting requirements, staff has included them in this report for informational purposes. Staff examined the accounts to determine if any development fees remain unexpended five years or more after receipt and are subject to refund. The San Antonio/West Bayshore Fund and Stanford Research Park/El Camino Real Fund contain development impact fees collected on or before June 30, 1998 that remain unexpended. Staff is recommending that the City Council make the findings contained in Exhibit B with respect to the continued need of the San Antonio/West Bayshore Fund for the San Antonio On-Ramp Project and with respect to the continued need for the Stanford Research Park/El Camino Fund-for the Major Intersection Improvements at Foothill Expressway and Page Mill Road project, which are scheduled for completion in 2010. CMR:100:04 Page 3 of 4 In the case of the housing impact fees from commercial development, the parking in-lieu fees for the University Avenue Parking District, and the development impact fees, the funds on hand as of June 30, 2003 have all been received within the past two years. Therefore, no findings are required for these fees. RESOURCE IMPACT If the Council does not make the findings contained in Exhibit B, the development fees described therein will be required to be refunded. This would have a fiscal impact of $610,062. POLICY IMPLICATIONS This report does not represent any change to existing City policies. ENVIRONMENTAL ASSESSMENT Presentation of this annual report is not a project under the California Environmental Quality Act; accordingly, no environmental assessment is required. ATTACHMENT Exhibit A: Annual Report on Development Fees for Period Ending June 30, 2003 Exhibit B:Findin~Unspent Impact Fees ,]’,. SHARON BOZMAN ...... Ser~ior Accountant DEPARTMENT HEAD APPROVAL: ~CA Y ArS / Director, Adm~istrative Services CITY MANAGER APPROVAL: Assistant City Manager cc: Home Builders Association CMR: 100:04 Page 4 of 4 Exhibit A City of Palo Alto Annual Repo~ on Developers’ Fees for Period Ending June 30, 2003 Purpose and Authority for Collection Traffic impact fees imposed on new nonresidential development in the Stanford Research Park!E! Camino Real CS zone to fund improvements at eight identified intersections. PAMC Ch. 16.45 Traffic impact fees imposed on new nonresidential development in the San AntonioANest Bayshore Areas to fund capacity improvements at four identified intersections. PAMC Ch. 16.46 Amount of the Fee Fund Balance July 1, 2002 Activity in 2002-03 Revenues Fees Collected Interest Earnings Unrealized Gain/Loss Investments Total Revenues Expenditures Operating Transfer to General Fund Total Expenditures Ending Balance June 30, 2003 Net Funds Available $8.20 per square foot $!,702,725 0 83,725 28,150 $111,875 0 0 0 $1,814,600 $I,8!4,600 USE OF FEES:- No expenditures have been made from this fund during FY 2002-03. Budgeted transfers in the amount of $340,000 in FY1998-99,$609,000 in FY1999-00 and $50,000 in FY 2001-02 were made from this fund to be used for major intersection improvements. The total project cost is $!,624,000, of which $999,000 in impact fees are budgeted to be used. This represents 61.5% of the project total cost. $1.64 per square foot $516,910 25,396 7,142 $32,538 0 $549,448 $549,448 USE OF FEES: No expenditures have been made from this fund. Fees are planned to be used for specific traffic improvements in the Charleston/San Antonio Road area, bLt have been delayed by a related project to constructed by the State Department of Transportation. Page ! of 4 Exhibit A City of Palo Alto Annual Report on Developers’ Fees for Period Ending June 30, 2003 Purpose and Authority for Collection Amount of the F~ 4/30~01-5/29/02 as of 5/30/02 Fund Balance July 1, 2002 Activity in 2002-03 Revenues Fees Collected Interest Earnings Unrealized GainlLoss Investments Total Revenues Expenditures Transfer to Capital Improvement Project Principal Retired Total Expenditures Fees imposed on large commercial and industrial development to contribute to programs that increase the City’s low income and moderate- income housing stock. PAMC Ch.16.47 $4.21 per square foot $15.00 per square foot $5,214,778 342,238 134,012 78,434 $554,684 0 0 Fees collected from non-residential development within the University Ave. Parking Assesment District in lieu of providing the required number of parking spaces. PAMC Ch 16.57 $32,898 per space $73,299 2,728 (1,887) $841 Ending Balance June 30, 2003 Other Commitments/Appropriations Reserve for Notes Receivable: Net Funds Available $5,769,462 (4,581,976) $!,!87,486 $74,140 $74:140 USE OF FEES: No expenditure of funds have been made from this Fund in FY2002-03 USE OF FEES: Budgeted transfers in the amounts of $798,000 for FY1997-98, S766,295 for FY 2000-0I and $226,000 for FY 200i-02 were made from this fund to the Capital Improvement Project fund, to be used for CIP 19530, Downtown Parking Stucuture ’^~-’~’""’ project. ~’~’ to cost $42 million. Funds on hand represent 4% of the total cost. The bulk of the project funding will come from a voter approved assessment district. Page 2 of 4 Exhibit A City of Palo Alto Annual Report on Developers’ Fees for Period Ending June 30, 2003 Purpose and Authority for Collection Fees imposed on new residential and non- residential development approved after Jan 28,2002. PAMC Ch. 16.58 Fees imposed on new residential and non- residential development approved after Jan 28,2002. PAMC Ch. 16.58 Amount of the Fee Varies Varies $13,170 $3,150Fund Balance July 1, 2002 Activity in 2002-03 Revenues Fees Collected 132,323 12,258 Interest Earnings 3,424 490 Unrealized GainlLoss 3,684 0 Total Revenues $139,431 $12,748 Expenditures 0 0 Total Expenditures 0 0 Ending Balance June 30, 2003 Other Commitments/Appropriations Reserve for Notes Receivable: Net Funds Available $152,60t $15,898 $152,601 $15,898 USE OF FEES:USE OF FEES: No expenditure of funds have been made No expenditure of funds have been made from this Fund in FY 2002-03 from this Fund in FY 2002-03 Page 3 of 4 Exhibit A City of Paio Alto Annual Report on Developers’ Fees for Period Ending June 30, 2003 (INFORI~IATION ONLY) Purpose and Authority for Collection Fees imposed on new residential and non- residential development approved after Jan 28,2002. PAMC Ch. 16.58 Amount of the Fee Varies Fees collected from residential developments of three or more units in lieu of providing the required below-market rate unit(s) to low and moderate income households. PA Comprehensive Plan and Varies Fund Balance July 1, 2002 Activity in 2002-03 Revenues Fees Collected Webster Wood In-Lieu Payment Interest Earnings Unrealized GainlLoss Investments Sale of Property Other Revenue Total Revenues Expenditures Housing Program Expense Principal Retired Total Expenditures $1,190 8,024 244 $8,024 0 $9,2i4 $4,332,385 294,210 8,750 86,995 24,376 108,067 1,000 $523,398 (231,888) (231,888) $4,623,895Ending Balance June 30, 2003 Other CommitmentslAppropriations Reserve for Notes Receivable: Net Funds Available (2,677,333) $I ,946,562 USE OF FEES: No expenditure of funds have been made from this Fund in FY 2002-03 USE OF FEES: Reserve for Notes Receivable include $375,000 for 3053 Emerson, $I,204,094 for Oak Manor, $756,819 for Sheridan Apts. and $341,450 for Paio Alto Gardens. Page 4 of 4 EXHIBIT B FYAVDINGS %rITH RESPECT TO. UNSPENT IMPACT FEES STANFORD RESEARCH PARK!EL CAMINO REAL CS ZONE, FUND SAN ANTONIO/~VEST BAYSHORE FUND WHEREAS, Oovemmem Code section 66001(d) requires the City to make certain findings with respect to development fees collected which remain unexpended or uncommitted five of more years after deposit of such fees; and WHEREAS, the City has collected development fees as authorized under Chapters 16.45 and 16.46 of the Palo Alto Municipal Code for the purpose of funding transportation capacity and operational improvements as set forth in those Chapters, and has se~egated those fees into two separate funds, known respectively as the Stanford Research Park/El Camino Real CS Zone Fund and the San Antonio/West Bayshore Fund; and WHEREAS, the sum of $ 222,039.75, representing fees collected pursuant to Chapter 16.45 since January 1, 1989, together with accrued interest thereon, remains unexpended five or more years after deposit of the fees ("the Stanford Research Park fees"); and ~rf-IEREAS, the sum of $ 388,022.22, representing fees collected pursuant to Chapter 16.46 since January 1, 1989, together with accrued interest thereon, remains unexpended five or more years after deposit of the fees ("the San Aaatonio fees"); and E,TIEREAS, the City Council desires to make the findings required by law" with respect to such fees; NOW THEREFORE, THE CITY COUNCIL does fred as follows: Stanford Research Park Fees 1. The Stanford Research Park fees were collected pursuant to Chapter 16.45 of the Palo Alto Municipal Code, to be used solely for the purpose of funding transportation capacity improvements at designated intersections, which are adversely impacted from new non-residential development in the Stanford Research Park/El Camino Real CS Zone Area ("Area"). 2. The need for the improvemems for which the Stanford Research Park fees were collected was identified in an Environmental Impact Report ("EIR") certified by the City Council on March 6, 1989. 3. Section 16.45.060 of Chapter 16.45 identified the specific improvements to be constructed with the Stafford Research Park fees. Of the eight intersection improvement projects collectively being implemented under CIP 19073 (Major Intersection laaaprovements), two have been completed (Alma Street!Charleston Road), and (Foothill Expressway/Page Mill Expressway). The next project will be the (Page Mill!Hanover intersection). Other major intersection improvements will follow as funds become available, and as traffic conditions dictate. An implementation pro~am for these improvements has been adopted by the City Council as part of approval of the Comprehensive Plan. This program established a procedure to insure that improvements are constructed as traffic conditions warrant. The first step in implementing the remaining improvements is the completion of design plans to the 10-20 percent level, sufficient to establish "plan lines" that will give the City the ability to obtain right-of-way where required. The current cost estimate for the remaining major intersection improvements, based on the modified set of locations included in the Comprehensive Plan (which includes fewer projects than in the current list), is $15.3 million. This estimate is higher than the ori~nal estimate upon which the impact fee was based. If the impact fee is not increased beyond the 2003 amount, it will pay for approxinaately $3.4 million of this amount, once the area on which it is levied is reasonably built out in approx~ately 2010. The remaining $11.9 million will have to be obtained from other sources including: ISTEA (federal), state, county and City (street improvement funds). All major intersection improvements are expected to be completed by 2010. The remaining improvements have not yet been implemented due to lack of funding, lack of right-of way, secondary impacts of intersection widening, and a temporary respite from deteriorating traffic conditions due to an economic recession. 4. A reasonable relationship exists between the Stafford Research Park fees and the purpose for which they were collected, in that the fees were imposed upon new non- residential developments in the Area. Those projects, according to the EIR, cumulatively generate traffic, which adversely impact the intersections desig-nated in the EIR. 5. The Stanford Research Park fees will be used solely for purpose of constructing the traffic improvements identified in Chapter ! 6.45, as required under the Code. 6. The Stanford Research Park fees continue to be required in order to fund the improvements specified in Chapter 16.45, in that the improvements have not yet been constructed for the reasons described above, and the cost of the necessary hnprovements is to be spread proportionately among the new non-residential users, which contribute the traffic generating the need for the improvements. 7. Based on the foregoing, a continuing need for the Stanford Research Park fees has been demonstrated. San .~mtonio Fees 1. The San Antonio fees were collected pursuant to Chapter 16.46 of the Palo Alto Municipal Code, to be used solely for the purpose of funding transportation capacity improvements at designated intersections, which are adversely impacted from new non- residential development in the San Antonio/West Bayshore Area ("Area"). 2. The need for the improvements for which the San Antonio fees were collected was identified in an Environmental Impact Report ("EIR") certified by the Cit3~ Council on January 13, 1986. 3. Chapter 16.46 identifies the specific improvements to be constructed with the fees collected thereunder, which include a fight-turn lane on westbound Charleston at San Antonio, a siN~alized intersection at the former Sun Microsystems driveway and interconnections of traffic signals in the _area, or alternative improvements in the Area as determined by the Chief Transportation Official, subject to the approval of the City Council. 4. The State Depaltment of Transportation (Caltrans) has plans for a new on-ramp and ramp metering improvements at the San Antonio Road junction with Highway 101. This project has been planned for over fifteen years, but has not yet been constructed because the State is currently engaging in further review and study of the project. The San Antonio/West Bayshore improvements described in Chapter 16.46 (with the exception of the Middlefield/San Antonio feasibility study, which is not being actively pursued at this time) are to be constructed together with or after the Caltrans on-ramp improvements, because of the need to coordinate construction projects and assess the impacts of the new on-ramp prior to commencement of the City improvements. Accordingly, the City has been unable to undertake the improvements as of this time, and the San Antonio fees remain unspent. 5. The latest cost estinaate for the three projects other than the feasibilil3~ study, based on the increase in the San Francisco Bay Area Construction Cost Index since the original estimate was made is $712,000. If the impact fee is not increased, it will pay for approximately $473,000 of this amount, once the area on which it is levied is reasonably built out in approximately 2010. 6. A reasonable relationship exists between the San Antonio fees and the purpose for which they were collected, in that the fees were imposed upon new non-residential developments in the Area. Those projects, according to the EIR, cumulatively generate traffic, which adversely impaci the intersections designated in the EiR. 8. The San Antonio fees continue to be required in order to fund the improvements specified in Chapter 16.46, in that the improvements have not yet been constructed for the reasons described above, and the cost of the necessary improvements is to be spread proportionately among the new non-residential users, which contribute the traffic generating the need for the improvements. 9. Based on the foregoing, a continuing need for the San Antonio fees has been demonstrated.