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Staff Report 4207
City of Palo Alto (ID # 4207) City Council Staff Report Report Type: Action Items Meeting Date: 10/28/2013 City of Palo Alto Page 1 Summary Title: Update on Infrastructure Committee Work Title: Update on the Infrastructure Committee’s Work to Evaluate Finance Measures to Fund Infrastructure Projects and Financing Measures From: City Manager Lead Department: City Manager Recommendation Accept the staff report providing an update on the Infrastructure Committee’s work to evaluate infrastructure projects and their financing. Executive Summary The Infrastructure Committee has held eight meetings since formed in February 2013. A public opinion survey was conducted in the spring of 2013 to measure public attitudes towards 14 potential infrastructure projects. This staff report provides a status of infrastructure project costs, currently available funding sources & other potential funding sources, areas of additional opinion research that could yield additional revenues to fund infrastructure needs, and schedule and next steps. The infrastructure project costs are currently estimated at $200 million including the full cost of the public safety building. Attachment A provides the current summary of project costs, committed funding, potential funding and unfunded costs, as well as the community support as polled for each of the projects. To fully understand the resource needs to fund infrastructure improvements, staff also identified available one-time funding sources that could be allocated to infrastructure projects at Council’s discretion. Attachment B provides a summary of the funds that are available under “Available One-Time Resources.” It is estimated that $57 million could be available from these funding sources should the Council choose to allocate all the revenue to infrastructure. There are also a number of new sources that could provide revenue to fund infrastructure needs (included in Attachment B). These funding sources are less certain and dependent on future policy and land use decisions. It is estimated that these new potential revenue sources collectively could yield up to $104 million to fund infrastructure needs. City of Palo Alto Page 2 The Committee has focused its discussions in several policy areas and considerations and is proceeding with further opinion research in five areas: 1. A 2% to 3% increase in the existing transient occupancy tax (TOT). 2. A special tax fee to finance parking garages (through a citywide or more localized Mello- Roos Community Facilities District). 3. A general obligation bond measure to fund transportation infrastructure. 4. A general obligation bond measure to fund public safety facilities (public safety building & fire stations). 5. A 1/8 cent sales tax increase. In addition, staff recommends evaluating the interaction of a Utility Users Tax modernization measure with other measures on the same ballot. Background The City’s Infrastructure Committee has met eight times since its formation in February 2013. Staff issued an information memorandum with the October 21, 2013 City Council Agenda packet providing the staff reports and minutes from these meetings (with the exception of the October 3 meeting). Attachment D provides the staff report and the action minutes from the October 3 meeting. An initial baseline survey was conducted in late April and early May 2013 to measure public attitudes and overall perceptions of the condition of the City’s infrastructure; test public support for 14 potential infrastructure improvement projects and several potential ballot measure packages that might combine several of the improvement projects; and evaluate types of funding mechanisms and levels of tax threshold the community is willing to support. The results of the survey were presented to the City Council at its study session on June 24, 2013. Over the Committee’s last several meetings and in its review of the survey findings, the Committee focused its discussions on key policy questions and considerations including: 1. Refining the City’s Infrastructure project costs. 2. Reconciling project costs and the Capital Improvement Program. 3. Evaluating current one-time revenue that may be applied to infrastructure at the Council’s discretion. 4. Evaluating the issuance of Certificates of Participation to fund infrastructure needs. 5. Focusing continued efforts around further study on specific projects with wide community support such as public safety and transportation. 6. Evaluating further study on bundled measures that combine multiple projects. 7. Evaluating further study on specific finance mechanisms that received more than simple majority support, as well as, Mello-Roos Community Facility Districts. The Committee is proceeding with opinion research in five areas. This staff report provides a status of infrastructure project costs, available one-time funding sources and other potential funding sources, reviews the five areas of additional research that the Committee is continuing City of Palo Alto Page 3 to explore that may yield new revenue to fund infrastructure needs, and the timeline and schedule forward. Discussion I. Status of Infrastructure Project Costs At the City Council meeting on March 18, 2013, the Council approved a list of 14 projects for public opinion polling. Those projects and several others that were not selected for polling were considered by the Infrastructure Committee in its subsequent meetings as the Committee reviewed public opinion survey results and formulated potential approaches for funding the various projects. Attachment A provides the current summary of project costs, committed funding, potential funding and unfunded costs, as well as community support for each project polled. The estimated project costs total $200 million. Funding committed to the projects through either the Five-Year Capital Improvement Program Plan (CIP Plan) or through grants received by the City totals $19 million, leaving the net unfunded cost of the projects at $180 million. The unfunded cost figure of $180 million does not include potential funding of $48 million for a Public Safety Building if the Jay Paul Company proposal is approved. The list of infrastructure projects, their estimated costs, and the committed funding for the projects have evolved over the course of the Infrastructure Committee’s eight meetings. In initial meetings and as described in the March 18, 2013 City Council staff report, the Cubberley Replace/Expand project was removed because the ultimate decisions about uses and funding mechanisms for the Cubberley site have not been made. Committed funding for the Bike Bridge and Charleston/Arastradero projects was increased by a total of $5 million due to grants received by the City in the Spring of 2013. Following the adoption of the FY 2014 Capital Budget, the Infrastructure Committee reviewed the interaction between the CIP Plan and the project list. A reconciliation of the project costs and the CIP Plan resulted in updates to the unfunded costs of the Parks, Surface and Buildings Catch-up projects and the removal of the Ventura and Streets projects. Additionally, a new emphasis on addressing parking needs for Downtown and California Avenue resulted in the development of a $35 million estimate for the construction of three new parking garages. Although these changes to the project list and costs were made through a series of meetings of the Infrastructure Committee, descriptions of most of the changes can be found in the June 6, 2013 and September 3, 2013 Infrastructure Committee staff reports. The basis for the parking garage cost estimates is described in the October 1, 2013 staff report (Attachment D). I. Currently Available Funding Sources & Other Potential Funding Sources To fully understand the resource needs to fund infrastructure improvements, staff identified available one-time funding sources that could be allocated to infrastructure projects at Council’s discretion. These funding sources include the Stanford Medical Center Development Agreement Funds, the Infrastructure Reserve, fees from the Impact and Parking In-Lieu Funds, City of Palo Alto Page 4 and the FY 2013 surplus. Attachment B provides a summary of one-time funds that are available. It is estimated that $57 million could be available from these funding sources should the Council choose to allocate all the resources to infrastructure. There are also a number of new sources that could provide revenue to fund infrastructure needs also summarized in Attachment B. The use of these potential funding sources for infrastructure projects is at the Council’s discretion and many of the sources are not certain and are dependent on future policy and land use decisions. The potential sources include: new hotel revenue, digital readerboard revenue, sales tax from an auto dealership at Municipal Service Center, lease revenue from renting the current police building (expenses associated with renovating the facility would be deducted from rental income), and lease of the Los Altos Treatment Plant site. Existing, increased or new revenue sources can be used to fund infrastructure on a pay-as-you- go basis or by using debt financing. The primary financing vehicle that does not require voter approval is Certificates of Participation (COPs). Attachment B also shows the estimated amount that could be generated by issuing COPs for infrastructure work. Based on a number of assumptions (e.g. 4.5% to 5.5% interest rate and 30 amortization period), it is estimated that for each $1 million of annual debt service through Certificates of Participation, $13-$15 million of principal can be generated. By leveraging potential new revenues for debt financing by issuing COPs, it is estimated that these new potential revenue sources collectively could yield up to $104 million to fund infrastructure needs. The August 6, 2013 Infrastructure Committee report provides additional detail on current and other potential new funding sources that may be allocated to infrastructure at the Council’s discretion. II. Areas of Additional Research The Committee is proceeding with further study in five areas: A 2% to 3% increase in the existing transient occupancy tax (TOT). A special tax to finance parking garages (through a citywide or more localized Mello- Roos Community Facilities District). A general obligation bond measure to fund transportation infrastructure. A general obligation bond measure to fund public safety facilities (public safety building & fire stations). A 1/8 cent sales tax increase. Attachment B summarizes expected revenue from each of the options and the polling support (if tested). Attachment A of the October 1, 2013 staff report (Attachment D) also provides example project funding scenarios that include options for using a TOT increase or General Obligation bonds, as well as a Mello-Roos Community Facilities District to provide funding for infrastructure projects. City of Palo Alto Page 5 Transient Occupancy Tax The Committee recommends further evaluating community support for a 2 percent or 3 percent increase in the City’s Transient Occupancy Tax (TOT) which is currently 12 percent. A Transient Occupancy Tax, commonly known as the "hotel tax," is charged by the City to guests at hotels located in Palo Alto. The tax is computed by multiplying the rent charged by the hotel operator by the tax rate percentage. Hotel tax revenue currently accounts for 11.5 percent of the City's total general fund revenue. Data from the baseline survey on infrastructure projects and funding mechanisms indicates a potential to pass a TOT increase to fund a variety of general infrastructure needs, especially those needs related to public safety and transportation. Sixty two (62) percent of voters supported a general TOT increase although specific increases such as 2 percent were not tested. Such a measure could be structured as a general tax requiring a simple majority approval from voters. Only a small portion of the initial survey was devoted to a potential TOT measure. To provide a definitive recommendation on the viability of this option, a follow-up survey will test this specific funding mechanism at both a 2 and 3 percent increase. An increase in the TOT rate from 12 to 14 percent on base revenue would yield an additional $1.8 million annually. A three percent rate increase to 15% would raise another $0.9 million to total $2.7 million. New hotels coming on line in the next few years are anticipated to yield $2.4 million at the 12 percent rate. The effect of a 2 percent increase yields another $0.4 million while a 3 percent hike would result in $0.6 million. Thus, the combination of a 2 percent rate increase and new hotel revenues would provide $4.6 million in additional revenue while a 3 percent increase would yield $5.7 million. Table 2 below illustrates these results: Table 2. TOT Increases 2% TOT Increase 3% TOT Increase Increase 2% 14% Increase 3% 15% Current base $1.8M Current Base $2.7M New Hotels $2.8M New Hotel $3.0M $4.6M $5.7M As illustrated in Attachment B, staff estimates at this time that for each $1.0 million in resources, $14.0 million in project funds can be generated by issuing Certificates of Participation (COPs). Hence, a 2 percent increase in the TOT combined with new hotel revenues results in $4.6 million in new revenue that, in turn, translates into $64.4 million in project funds; a 3 percent increase results in $5.7 million that generates $79.8 million in project funds. City of Palo Alto Page 6 Mello-Roos Community Facilities District The Committee is proceeding with additional polling to evaluate community support for a Mello-Roos Community Facilities District (CFD). A CFD is a legal entity in which voters agree to tax themselves to finance new capital improvements and/or new operating costs. The special tax, as envisioned for the type of district described below, would require approval by two-thirds (2/3) of registered voters within the district. The taxes are secured by a continuing lien and are levied annually against property within the district. The October 1, 2013 Committee meeting staff report (Attachment D) and the September 3, 2013 Committee meeting staff report provide additional detail on the formation of a CFD including basic requirements, key considerations, and exploration of two hypothetical districts. The examples provide cost estimates for building garages, a hypothetical tax allocation methodology, and a range of hypothetical financial impacts on parcels within the assumed districts. The basic premise underlying the examples provided is that those parcels generating the most intensive use of garages would bear a greater burden of cost to construct the garages than those having limited use. One of the two examples provided would create a citywide CFD for which three (3) new garages would be built at a cost of $35 million. Two garages would be located downtown and one in the California Avenue area. These garages would provide a total of 575 new or incremental spaces. A professional analysis must be conducted to determine each parcel’s share of the garages’ costs, but a rudimentary estimate by staff indicates a rough range of $9 to $24 per residential parcel and a higher range for commercial properties. Again, all assumptions and financial impacts in the examples provided are for illustration purposes only and will change. If the Council and public indicate a willingness to move forward with a CFD, the next step is to hire a consultant who will develop a rigorous and thorough preliminary rate and tax allocation methodology and to facilitate the CFD election process with the City. Consultant costs are roughly estimated at $20 to $35 thousand. The City’s baseline survey did not test community support for a CFD since staff raised the idea after the poll was conducted. The baseline survey did examine general support for funding parking garages and the idea received low ratings: 44 percent for Downtown and 46 percent for California Avenue. The City’s opinion research consultants have advised, given this low level of general support and no matter how the CFD boundaries are drawn, that a measure to fund parking garages requiring two-thirds support from residents is not likely to be approved. The baseline survey, however, did not specify what tax levels residents could tolerate. The Committee is proceeding with further polling to test support for a citywide or more localized CFD. Given the keen awareness and need for comprehensive traffic and parking solutions, the Committee believes a fresh look at a CFD as one part of the solutions is warranted. City of Palo Alto Page 7 General Obligation Bond Measure to Fund Transportation Infrastructure The City’s baseline survey tested the level of public support for five different potential bond or tax measures that represent combinations of individual projects, with the wording of each potential measure structured as it might appear in an actual ballot measure – minus a funding mechanism and dollar figure. Four measures were found to have support levels greater than two-thirds. A bundled transportation measure (A Traffic Congestion Relief and Safe Streets, Sidewalks and Trails Measure) to fund repairs and improvements to streets, sidewalks, and nine miles of off-road trails elicited support from 74% of voters. The Infrastructure Committee is proceeding with further study on the potential to pass a bond measure to fund a portion of the identified funding needs if the projects included in a measure were bundled to focus on one of the two high priority issues of concern to voters: public safety and transportation. Accordingly, one approach to funding garages to relieve parking, traffic and related transportation concerns, would be to include these projects as part of a larger bundled transportation bond measure, which would require two-thirds approval by voters. While parking garages did not rank among the top priority projects in the voter survey, they could be packaged with other priority projects and presented as part of a comprehensive solution to Palo Alto’s transportation, traffic, and parking needs. As illustrated in Attachment B, a $66.4 million bond could fund the remaining amount for the Bike/Pedestrian Plan, Bike Bridge, Charleston/Arastradero, California Avenue Parking Garage, Downtown Parking Garages, and additional sidewalk spending. A $66.4 million transportation bond is estimated to impact the property taxes for the median assessed value single family home by $116 per year. General Obligation Bond Measure to Fund Public Safety (Fire Stations & Public Safety Building) The baseline survey indicated that a ballot measure to fully fund a public safety building is unlikely to receive two-thirds support; however, according to FM3, the public share of a public- private partnership or the full cost of a public safety building could win approval as part of a broader package. A bundled public safety measure (Fire, Paramedic, Police, Seismic Safety and Emergency Response Measure) to fund fire stations and the public safety building elicited support from 68% of voters. Over the past year, the Jay Paul Company proposal for a Planned Community (PC) zone change at 395 Page Mill and 3045 Park Blvd has been the subject of extensive staff review and multiple public hearings. Jay Paul Company is proposing a Planned Community (PC) zone change at 395 Page Mill and 3045 Park Blvd. that, if approved, would allow construction of office buildings at 395 Page Mill Road, and a three-story approximately 44,500 square foot public safety building (as the primary proposed public benefit). The City’s share of the cost for the Public Safety Building under the proposal is estimated to be $9 million. City of Palo Alto Page 8 The project was formally initiated by the Planning and Transportation Committee at its May 29, 2013 meeting and received a preliminary review by the Architectural Review Board on September 19, 2013. On September 16, 2013 the Council reviewed and commented on a preliminary Public Benefit economic analysis that concluded that the current proposed public benefit is reasonable from a financial perspective and would allow the developer to obtain a return on investment consistent with market standards. The City was also planning to present the preliminary traffic study in September 2013, but staff was concerned about a number of assumptions made in the traffic report, and therefore did not believe it accurately described potential impacts; an updated traffic study is currently scheduled to be reviewed by Council in a Study Session on December 9. Staff anticipates that Council will be able to fully consider the project and its traffic and environmental impacts, and to make a final decision on project approval, in 2014. However, staff believes that sufficient information on the project will be available in spring of 2014 for Council to decide whether or not to include funding for a Public Safety Building in any potential 2014 infrastructure revenue measure. If the development does not proceed and an alternate new location is needed for the public safety building, the City may not be prepared to proceed with a finance measure that addresses funding for a public safety building until 2016 to allow time for the acquisition of the property, and the plan/design/EIR review process. The Infrastructure Committee is proceeding with further study on the potential to pass a bond measure to fund a portion of the public safety needs or the full cost of the fire stations and public safety building. As illustrated in Attachment B, a $71.2 million general obligation bond for public safety (funding the fire stations and public safety building) is estimated to impact property taxes for the median assessed value single family home by $124 per year. A general obligation bond to fund the fire stations and the City share of the public safety building under the Jay Paul proposal is $23.2 million, and is estimated to impact property taxes for the median assessed value single family home by $40 per year. Sales Tax While polling support for a sales tax increase was significantly lower than typically observed at 38%, FM3 highly recommended that the City conduct additional polling on a sales tax measure. The unusually low support may have resulted from the phrasing of the question and not specifying a rate. The Committee is proceeding with further study on community support for a 1/8 cent sales tax increase to fund infrastructure improvements, as well as, testing other increments. As illustrated in Attachment B, the City’s current sales tax is 1%. An increase to 1.125% or 1/8 cent would yield $2.6 million in additional revenue, which could be leveraged to generate $36.4 million using COPs. Utilities Users Tax Modernization Given the City’s ongoing need to seek voter approval for an update to its existing Utility Users Tax (UUT) ordinance, additional surveying may also provide an opportunity to assess the interaction between other finance measures and a UUT measure. This information could help City of Palo Alto Page 9 to determine whether it would be advisable to place these measures on the same ballot and to evaluate the basic viability of a UUT update measure. Staff also recommends evaluating reactions to the infrastructure measures in the context of a UUT modernization measure. Staff has identified two areas where the UUT, which was adopted in 1987, requires modernization. The first area is the telephone user tax. Since 1987, communication technology has expanded and usage patterns have shifted. Many cities have "refreshed" their UUT's to take into account these changes. Staff also recommends that the modernization include a provision for new technologies that may develop in the future. In addition, the overall UUT structure provides a discount for large volume commercial users. This applies to the following utilities: gas, water and electric. This discount can be viewed as contrary to current city goals of energy conservation. Council may want to consider eliminating this discount or even increasing the tax rate for large volume users. Timeline Given the Committee’s direction and subsequent consultation with staff, FM3 and TBWB recommend next steps as follows: A second poll, to be conducted in November, which will test the basic feasibility of all five concepts – testing 75-word ballot language for all five; gauging support for key structural elements of each measure; and testing single comprehensive pro and con arguments on each. Staff will return to the Committee and Council with the results and request further guidance from the Committee and Council. If the City narrows options and proceeds with further study, a third poll will be recommended to explore support for one or two favored options in more detail (with a much more robust test of project elements and pro and con messages, and also in the context of a potential UUT modernization measure). The survey would be conducted in lieu of conducting focus groups to refine communication messages. As previously approved by Council, a final tracking survey would also be conducted in April 2014 before any final decision to place a measure on the November 2014 ballot. The recommended approach and detailed timeline is provided in a memorandum from FM3 included as Attachment C. Resource Impact No changes to the budget are requested. The additional surveying may be completed within the current budget. An additional telephone survey will be completed in lieu of focus groups. Attachments: Attachment A. Infrastructure Project Summary Sheet (PDF) Attachment B. Funding Sources (PDF) Attachment C. Proposed Phase II Opinion Research and Schedule (PDF) City of Palo Alto Page 10 Attachment D. October 1, 2013 Infrastructure Committee Staff Report & Action Minutes (PDF) I n f r a s t r u c t u r e P r o j e c t S u m m a r y S h e e t (a l l c o s t s / r e v e n u e s i n m i l l i o n s o f do l l a r s ) Oc t o b e r 2 8 , 2 0 1 3 Th e p r o j e c t i n f o r m a t i o n a n d c o s t e s t i m a te i n f o r m a t i o n o n t h i s s h e e t r e p r e s en t s t a f f ’ s b e s t i n f o r m a t i o n a t t h i s tim e . S t a f f w i l l c o n t i n u e t o r e f i n e t h e i n f o r m a t i o n a s ne w a n d m o r e p r e c i s e i n f o r m a t i o n b e c o m e s a v a i l a b l e . Pr o j e c t s c o s t s a n d p r o j e c t - s p e c i f i c f u n d i n g Po l l i n g S u p p o r t ( s u m o f s t r o n g l y an d s o m e w h a t s u p p o r t i v e ) P r o j e c t P o l l i n g C o s t CIP T o t a l Fu n d i n g Es t i m a t e d Co s t Co m m i t t e d Fu n d i n g Ne t C o s t w i t h Co m m i t t e d Po t e n t i a l Fu n d i n g Ne t C o s t w i t h Co m m i t t e d an d P o t e n t i a l 72 % Fir e S t a t i o n s 1 4 0 1 4 . 2 0 1 4 . 2 0 1 4 . 2 67 % Sid e w a l k s 6 8 . 5 6 0 6 0 6 67 % Pa r k s C a t c h U p 10 6 . 5 8 . 9 0 8 . 9 0 8 . 9 65 % Bik e / P e d e s t r i a n P l a n 2 5 8 . 7 5 2 5 8 . 7 5 1 6 . 2 5 0 1 6 . 2 5 61 % Bik e B r i d g e 6 9 . 8 6 1 0 8 . 3 5 1 . 6 5 0 1 . 6 5 52 % Pu b l i c S a f e t y B u i l d i n g 5 7 0 5 7 0 5 7 4 8 9 52 % Ch a r l e s t o n / A r a s t r a d e r o 8 0 . 2 5 9 . 7 5 2 . 2 7 7 . 4 8 0 . 3 5 7 . 1 3 47 % An i m a l S e r v i c e s C e n t e r 7 0 6 . 9 0 6 . 9 0 6 . 9 46 % Pla y i n g F i e l d s ( a t G o l f C o u r s e ) 6 0 6 0 6 0 6 46 % Ca l . A v e n u e P a r k i n g G a r a g e 1 2 0 1 6 . 5 0 1 6 . 5 0 1 6 . 5 44 % Do w n t o w n P a r k i n g G a r a g e 2 1 0 1 8 . 4 0 1 8 . 4 0 1 8 . 4 38 % His t o r y M u s e u m a t R o t h B u i l d i n g 3 0 3 0 3 0 3 no t p o l l e d By x b e e P a r k na 0 3 . 6 0 3 . 6 0 3 . 6 no t p o l l e d Su r f a c e C a t c h U p n a 4 . 5 3 . 4 0 3 . 4 0 3 . 4 no t p o l l e d Bu i l d i n g s C a t c h U p n a 0 . 3 4 . 2 0 4 . 2 0 4 . 2 no t p o l l e d Cu b b e r l e y D e f e r r e d M a i n t e n a n c e n a 0 6 . 9 0 6 . 9 0 6 . 9 no t p o l l e d Civ i c C e n t e r n a 0 t b d 0 t b d 0 t b d Su b t o t a l s : 1 9 9 . 8 1 9 . 4 1 8 0 . 4 4 8 . 4 1 3 2 . 0 two-thirds support less than majority support majority support AttachmentB.RevenueSources (allrevenuesinmillionsofdollars)Available One Time Resources StanfordDAforInfrastructure/Housing 22.1 StanfordDAforSustainability 12.3 Parks 1.0 CommunityCenters 1.4 DowntownInLieuParking 1.2 InfrastructureReserve(610million) 8.0 TwoParcelsonMiddlefieldRoad* 2.2 FY2013Surplus 8.5 Subtotal 56.7 *futureCouncilactionwould beneededforsale Expected Ongoing Revenues New Hotels 2.4 Estimatedtogenerate$33.6millioninCOPs Subtotal 2.4 Potential Ongoing Rental Revenues Auto Dealership at MSC Leaserevenue 0.8 Estimatedtogenerate$11.2millioninCOPs Police Building LeaseRevenue 1.4 Estimatedtogenerate$19.6millioninCOPs (Doesnotincluderenovationcosts) Digital Readerboard 0.8 Estimatedtogenerate$11.2millioninCOPs LATP Rental Revenue 1.32 Estimatedtogenerate$18.2to$28.0millioninCOPs Subtotal 4.3 5 Potential Revenue From Finance Measures Polling Support TOT Increase (includes new hotels) From12%to14%(2%increase) 2.2 Estimatedtogenerate$30.8millioninCOPs From12%to15%(3%increase) 3.3 Estimatedtogenerate$46.2millioninCOPs Citywide Mello Roos Community Facilities District to build garages Downtowngarages(2) 18.4 Commercialandresidentialassessmentswouldbe na CaliforniaAvenuegarage(1) 16.5 calculatedaspartofafuturestudy na GO Bonds GOBondsforPublicSafetyat$71.2million (includesfullcostofpublicsafetybuilding) 71.2 68% GOBondsforPublicSafetyat$23.2million (includesCityshareofpublicsafetybuilding underJayPaulproposal) 23.2 68% GOBondsforTransportation@66.4million 66.4 74% Sales Tax Increase From1.0%to1.125%or1/8cent 2.6 Estimatedtogenerate$36.4millioninCOPs 38% Estimatedtoimpactmediansinglefamilyhome assessedvalueby$124peryear Estimatedtoimpactmediansinglefamilyhome assessedvalueby$40peryear Estimatedtoimpactmediansinglefamilyhome assessedvalueby$116peryear 62% AttachmentC.ProposedPhaseIIOpinionResearchandSchedule 2425 Colorado Avenue, Suite 180 Santa Monica, CA 90404 P h o n e : ( 3 1 0 ) 8 2 8 - 1 1 8 3 F a x : ( 3 1 0 ) 4 5 3 - 6 5 6 2 1999 Harrison Street, Suite 1290 O a k l a n d , C A 9 4 6 1 2 P h o n e : ( 5 1 0 ) 4 5 1 - 9 5 2 1 F a x : ( 5 1 0 ) 4 5 1 - 0 3 8 4 TO: City of Palo Alto FROM: David Metz and Shakari Byerly Fairbank, Maslin, Maullin, Metz & Associates RE: Proposed Structure for Phase II Opinion Research for Palo Alto Infrastructure Financing DATE: October 22, 2013 Following the Infrastructure Committee’s meeting earlier this month and subsequent consultation with City staff and TBWB, FM3 is recommending a revised program of opinion research for Phase II of our study of local voter support for various infrastructure finance options. We are not recommending any changes to the number of surveys we had originally suggested (still two to be conducted in the near term, plus a final tracking survey to be conducted before potential Council action next year), nor are we recommending any changes to the project budget. We recommend conducting two surveys in sequence: the first would assess broad relative levels of support for all five measures (testing specific ballot language and structural elements that were not explored in this spring’s survey), and the second survey – based on learnings from the first – would offer a more in-depth exploration of messaging and structural elements for up to two of those measures that the City designates as its preferred options for a 2014 ballot. The balance of this memo presents a proposed structure for each survey, and lays out a timetable for the research and associated communications work. First Survey The first survey will be a 20-minute survey of 600 Palo Alto voters, with a margin of sampling error of +/- 4.0%. Page 2 FM3 will develop the survey instrument in collaboration with the City and TBWB. The research will explore some of the following topics: Gauging levels of support in response to a draft 75-word ballot measure summary for all five potential measures; Testing critical structural elements of each measure, such as the TOT rate; the key project elements for a bond measure; and the scope, structure and cost of a CFD; Assessing shifts in support in reaction to single, comprehensive pro and con messages on each measure; and Comprehensive demographic characteristics. Upon completion of this research, we will make recommendations to the Council and staff about which ballot measure concepts have the greatest potential for success. The results will be presented to the City Council on December 16th (and to the Infrastructure Committee before Thanksgiving) at which point we will receive direction for the content of the second survey. Second Survey Based on direction from the Infrastructure Committee in November upon receipt of the first survey, FM3 will begin to design the second survey. Final Council direction in December will confirm which potential measures (if any) the Council wishes to focus on, and FM3 will finalize the second survey around those concepts. Again, FM3 will develop the second survey instrument in collaboration with the City and TBWB, but we envision that it will explore some of the following topics: Support for refined 75-word ballot labels for each potential measure; Exploration of any structural elements of either measure that still need to be evaluated, based on the findings of the first survey; Assessment of the impact a UUT modernization measure might have on support for the ballot measure concepts under consideration; Detailed assessment of pro and con messages, and their impact on support for each measure; and Comprehensive demographic characteristics. We envision that the poll will take place right after the New Year. Concurrent with this second round of polling, and based on direction from the Council in December, TBWB will commence with developing a program of public outreach around the two final measures being explored in the final survey, with the nature and content of those plans finalized once the survey is out of the field in mid-January. Survey results will be ready for reporting to the Infrastructure Committee and City Council in late January or early February. After that Council meeting, TBWB will have authorization to begin outreach in earnest. Page 3 Timeline The following timeline describes key steps to be taking on research and outreach between now and next year’s elections. October Authorization to proceed with first Phase II survey Evaluate proposed methodology and finalize research plan Preparation of first draft of survey questionnaire Finalization of questionnaire November Obtain client approval of final survey instrument Administer telephone survey Generate topline and cross tabulation of survey results Presentation of first Phase II survey results to Infrastructure Committee Begin to draft second Phase II survey based on Committee direction, pending Council meeting December Presentation of first Phase II survey results to City Council Obtain Council direction on content of second Phase II survey Develop outreach plan based on Council direction Develop list of key community members for proposed outreach Review community materials for outreach January Obtain client approval of second Phase II survey instrument Administer telephone survey Generate topline and cross tabulation of survey results Presentation of second Phase II survey results to Infrastructure Committee Based on Survey results, refine outreach plan Begin outreach February Presentation of second Phase II survey results to City Council Continue outreach to key leaders March Preparation of first draft of tracking survey questionnaire Broaden informational outreach to all voters Page 4 April Authorization to proceed with tracking survey Evaluate proposed methodology and finalize research plan Obtain client approval of final tracking survey instrument Administer telephone survey Generate topline and cross tabulation of tracking survey results Continue outreach to key leaders and all voters Community Meeting re: Proposed Measure (1 of 2) May Develop presentation and reporting materials Schedule presentation of final results to key stakeholders Begin building coalition of leaders who support proposed measure Community Meeting re: Proposed Measure (2 of 2) June Council to make Decision to Place Measure on Ballot Continue outreach as needed July Adopt Resolution of Necessity August City Clerk Files Ordinance Transition to Independent Campaign Committee September - November Independent Campaign Committee works to pass proposed measure Of course, we will be happy to modify this timeline and proposed approach to the research at your request. Please let us know if you have any questions. City of Palo Alto (ID # 4135) Infrastructure Committee Staff Report Report Type: Meeting Date: 10/1/2013 City of Palo Alto Page 1 Summary Title: Infrastructure Finance Measure Title: Continue Discussion from September 3, 2013 Infrastructure Committee Meeting and Make Recommendations to the City Council on Next Steps in Considering a Potential Infrastructure Finance Measure From: City Manager Lead Department: City Manager Recommendation Staff recommends that the Infrastructure Committee continue discussion from the September 3, 2013 Infrastructure Committee meeting and make recommendations to the City Council on next steps in considering a potential infrastructure finance measure. Executive Summary At the September 3, 2013 Infrastructure Committee meeting, the Committee directed staff to return to the Committee with a draft plan, staff recommendation and options for a potential 2014 ballot measure, including using a Mello-Roos District (MR District) to fund parking garages. The Committee also encouraged staff to provide input on next steps, where appropriate, in light of comments received from Committee members. Staff evaluated further the use of a MR District as a solution to building additional parking garages and has provided a plan for proceeding should the Committee and Council elect to continue further study on formation of a MR District. There are a number of factors that the Committee should consider in determining whether to move forward at this time. Based on experience in other cities, the City’s research consultant does not believe that a measure to fund parking garages that requires two-thirds support from a residential taxpayer base is likely to be approved. While that may be the experience in other cities, register voters in Palo Alto may understand the particular parking issues in Palo Alto and provide a different outcome. The Committee also asked staff to evaluate potential public/private partnerships to build parking garages. Staff recommends proceeding with a request for proposals (RFP) to solicit public-private partnerships to build mixed-used parking on downtown, city-owned lots. ! # City of Palo Alto Page 2 Staff recommends that the Committee consider whether to proceed with further opinion research on one or more of the following potential finance measures: 1. MR District to build parking garages. 2. Transient Occupancy Tax (TOT) increase to fund infrastructure needs. 3. Bundled general bond transportation measure that combines multiple projects. 4. Bundled public safety bond measure that combines the fire stations and public safety building. Concurrent to polling on any priority measures, the City’s communications consultant, recommends that the City reach out to key stakeholders for input and to help build consensus around a ballot measure proposal. For example, if the Council is considering increasing the TOT, the City should consult with Palo Alto hotel owners and managers. If the Council is considering a bundled transportation or public safety measure, the City should consult with key transportation-related or public safety-related stakeholders. Background On June 6, 2013, the City’s Infrastructure Committee reviewed the preliminary findings of a baseline survey assessing the community’s opinions about a potential finance measure to fund infrastructure needs. On August 6, 2013 and September 3, 2013, the Committee continued its discussions and assessment of a potential finance measure to fund infrastructure needs and recommendations that the Committee may make to the full Council about: 1) areas of further study for opinion research, 2) uses of current or potential new revenue sources to fund infrastructure projects, or 3) other next steps. At the September 3, 2013 Infrastructure Committee meeting, the Committee directed staff to return to the Committee with a draft plan, staff recommendation and options for a potential 2014 ballot measure, including using a MR District to fund parking garages. The Committee also encouraged staff to provide input on next steps, where appropriate, in light of comments received from Committee members. The minutes for the September 3 Infrastructure Committee meeting are included as Attachment E. Discussion Based on the baseline survey results, consultant recommendations, and Committee discussion and input over the last several meetings, staff recommends that the Committee consider whether to proceed with further opinion research on one or more of the following potential finance measures: 1. MR District to build parking garages. 2. Transient Occupancy Tax (TOT) increase to fund infrastructure needs. 3. Bundled general bond transportation measure that combines multiple projects. 4. Bundled public safety bond measure that combines the fire stations and public safety building. City of Palo Alto Page 3 An overview of each measure is described below along with an outline of next steps. At the September 3, 2013 Infrastructure Committee meeting, staff reviewed with the Committee a sample project funding scenario that included options for using a TOT increase or General Obligation bonds, as well as MR Districts or assessment districts, to provide funding for infrastructure projects. Based on feedback from the Committee and consultant recommendations, staff updated the project funding scenario information to provide four distinct funding scenarios (Scenarios #1 through #4), that are provided in Attachment A. Each of the four scenarios utilizes one infrastructure revenue measure – TOT increase, MR District, bundled transportation GO bond, or bundled public safety GO bond – to fund certain projects, with funding for other high priority projects provided by existing or projected revenue sources. All four of the scenarios would use an identical approach for the remaining projects (Surface Catch-up, Buildings Catch-up, Animal Services Center, Playing Fields, History Museum, and Cubberley Deferred Maintenance), as outlined in Attachment A. The following changes to project costs and available revenue sources are also incorporated in the funding scenarios: 1. The estimated and unaudited general fund surplus for FY 2013 is $8.5 million, and based on the Council approved reserve policy the funds are expected to be transferred to the Infrastructure Reserve. These funds are designated in the scenarios as “FY 2013 surplus.” 2. The Downtown Parking Garage estimate of $21 million has been reduced to $18.4 million. This change is due to the development of a new estimate of 303 additional spaces that could be built in garages on existing surface lots D (Hamilton Avenue & Waverly Street and P (High Street between University Avenue and Hamilton Avenue), as further described below. Other downtown lots can be considered for garage construction as well, but further funding would need to be identified. 3. The California Avenue Parking Garage estimate of $12 million has been increased to $16.5 million. This change is due to the development of a new estimate for a 391 space parking garage on Lot 8 located on Sherman Avenue between El Camino Real and Ash Street; this lot would provide an increase of 272 parking spaces over the existing 119 space surface lot as further described below. The City’s opinion research and communications consultants’ (Fairbank, Maslin, Maullin, and Metz and TBWB) recommendations on next steps are summarized below and included in Attachment B. 1. Set aside further study on a MR District. 2. Proceed with a finance measure survey with a primary focus on the TOT, and sales tax as a secondary concern. The interaction of a UUT update on the same ballot may also be measured. City of Palo Alto Page 4 3. Proceed with a bundled transportation bond measure survey. 4. Sequence further study as needed on a bundled public safety bond measure in 2014 as related funding issues are more certain. Formation of a Mello-Roos District to Build Parking Garages At the September 3, 2013 Infrastructure Committee meeting, staff outlined the basic requirements of a MR District and how it could be used to fund new parking garages. The Committee requested additional information on potential district boundaries, the number of new garages, and the potential financial impact on property owners. Before providing a preliminary and conceptual outline of a district, some of the key requirements of a MR District bear repeating: 1. If there are fewer than 12 registered voters within the district then election involves a landowner vote; if there are 12 or more registered voters in district, then election involves a registered voter election. Approval requirement is two-thirds (2/3) of voters 2. A MR District requires a “reasonable” basis for its special tax. State code defines “reasonable” as “based on a benefit received by parcels of real property, the cost of making facilities or authorized services available to each parcel, or some other reasonable basis as determined by the legislative body." 3. The special tax is levied pursuant to a rate and method of apportionment (called the "RMA" or "tax formula"), which can assign tax rates on a variety of criteria or one or more of the following factors: Land use: the RMA could assign different tax rates to single family residential, multifamily residential, commercial, retail, etc. Intensity of land use: the RMA could assign different tax rates based on square footage. Proximity to a facility: the RMA could establish tax zones whereby those properties closest to the facility would pay more. Expected burden on a garage: the RMA could assign a tax rate based on the number of car trips expected at different properties or even sales transactions. Requirements 2 and 3 above have not been fully explored and vetted. If the Committee and Council decide to move forward with a MR District, staff would hire a consultant and outside legal counsel to further evaluate the MR requirements and advise the Council on potential measures that meet these conditions. To assist the Committee, staff has delineated two potential districts, estimated costs for new garages, and developed a strictly hypothetical method of apportionment. These are provided for illustration purposes only. All assumptions and financial impacts illustrated below will change if a MR District proposal moves forward and information is refined. Again, neither a “reasonable” basis nor a final “method of apportionment” is determined in this report. City of Palo Alto Page 5 The following illustration is for building two garages in the downtown business district at Lot D (Hamilton Avenue & Waverly Street) and Lot P (High Street between University Avenue and Hamilton Avenue). Each of these sites is currently being studied along with Lots E & G (Gilman Street) and each represent potential garage sites either located in the high-demand parking areas of the downtown (Lot P) or centrally located in the Downtown (Lot D or E/G). Garages that could be built on surface lots D and P would yield 303 incremental or new spaces. The cost of both garages is estimated at $18.4 million. The rough boundaries of a potential district are El Camino to slightly east of Middlefield and from San Francisquito Creek to Melville/Embarcadero Road. Attachment C shows the hypothetical boundaries. Within this area there are 2,798 parcels which include 900 estimated commercial properties and 1,898 residential parcels. Based on a 30 year amortization period and an interest cost of 5.7 percent (tax exempt), the annual debt service for these garages is around $1.3 million. The table below shows a hypothetical method of apportionment that may or may not meet the standard outlined in requirement three above. Three scenarios are assumed whereby commercial properties bear increasingly higher costs based upon an assumed intensity of use of the garages. While residential properties would benefit from new downtown garages in that cars would be removed from surrounding neighborhoods, the assumption here is that businesses generating rising trips by employees and visitors are increasingly responsible for the use and cost for new garages. Columns A through C show rising “intensity of use” (from 5 times to 15 times higher use) and a consequent rising share of debt service allocated to commercial properties compared to residential properties. Commercial and Residential Property Share of Annual Debt Service Per Parcel for Downtown Garages Column A Column B Column C Number of Parcels 5X Scenario 10X Scenario 15X Scenario Residential 1,898 $116 per parcel $63 per parcel $43 per parcel Commercial 900 $1,221 per parcel $1,311 per parcel $1,374 per parcel This example shows that if commercial properties were found to have 15 times the responsibility for garage construction costs compared to residential landowners, they would pay $1,374 annually and residential parcels would pay $43. At 10 times the “intensity of use” residents would pay $63 annually versus $1,311 for commercial properties. Let’s suppose the City wishes to propose a citywide MR District that would support the building of two garages downtown and one in the California Avenue Business District. Assuming that City of Palo Alto Page 6 272 spaces could be added incrementally in the Cal Ave area (Lot 8 located on Sherman Avenue between El Camino Real and Ash Street), the cost to construct a garage is estimated at $16.5 million. Amortized over 30 years at an interest cost of 5.7 percent, the annual debt service for this garage is around $1.2 million. The boundaries assumed are current City boundaries excluding the Stanford Shopping Center and open space parcels. The number of parcels used in this analysis is 17,384 residential and 1,811 commercial. This excludes planned community and public facility parcels. Commercial and Residential Property Share of Annual Debt Service Per Parcel for Downtown and California Avenue Garages Column A Column B Column C Number of Parcels 5X Scenario 10X Scenario 15X Scenario Residential 17,384 $24 per parcel $13 per parcel $9 per parcel Commercial 1,811 $1,152 per parcel $1,256 per parcel $1,296 per parcel Using the same “intensity of use” assumption, this citywide example shows that if commercial properties were found to have 15 times the responsibility for garage construction costs compared to residential landowners, they would pay $1,296 annually and residential parcels would pay $9. At 10 times the “intensity of use” residents would pay $13 annually versus $1,256 for commercial properties. Each of the examples above is to provide the Committee with cost estimates for building garages, an understanding of the MR District tax allocation, and a range of financial impacts on parcels within the hypothetical districts. The information provided is meant to provide a sense of the magnitude of potential impacts on property owners given certain boundaries and assumptions. Further refinement of costs, parcel information, district boundaries, and an allocation methodology is necessary. As we move toward a citywide boundary with parcels distant from the locales of garages, policy and allocation questions will arise. Finally, there are variables e.g., interest rates and construction costs that will affect impacts cited in this report. Although staff raised the idea of investigating a MR District, the City’s research and communications consultants (FM3 and TBWB) have advised no matter how the MR District boundaries are drawn that a measure to fund parking garages that requires two-thirds support from a residential taxpayer base is not likely to be approved. There are a number of other factors for the Council to consider that suggest not moving forward with a MR District at this time. The factors are: City of Palo Alto Page 7 1. Parking garages received low ratings in the recent infrastructure survey: 44 percent for Downtown and 46 percent for California Avenue. 2. In light of an emerging and potentially widespread Residential Parking Program, will residential voters support even a nominal tax in the examples above ranging from $9 to $116 per year? 3. The assessed cost is high relative to the number of additional parking spaces created to relieve parking congestion. 4. As with current assessment districts, there is no guarantee to commercial property owners that they will have exclusive use of a space and this may generate significant opposition. The Infrastructure Committee directed staff to research a number of additional issues. These include: 1. How would a MR District be structured in a ballot measure? 2. What are the election requirements? 3. How long would it take to bring a vote to the public? 4. Are there any conflicts with current assessment districts; are there exemptions; conflicts with existing codes? 5. Are there potential public/private partnerships to build garages or are there possibilities of long-term leasing arrangements? 6. Describe an outreach plan and schedule Staff was asked to evaluate the feasibility of potential public/private partnerships to build garages or other possibilities of long-term leasing arrangements. Staff believes that there is a high likelihood of interest and recommends proceeding with a request for proposals (RFP) to solicit public-private partnerships to build mixed-used parking projects on downtown city owned lots. The Planning and Community Environment Department is currently studying the comparative advantages of building parking structures over certain downtown surface parking lots. Staff recommends proceeding directly to Council at the conclusion of the study along with the scope of work for the RFP. In the interest of brevity, the staff responses to the remaining questions are included in Attachment D. In summary, pursuing a MR district may be feasible, but will likely lead to opposition. This financial tool must be viewed in the context of bringing forward other taxes, such as a TOT increase, or a bundled transportation or public safety bond measure for voter approval, as well as a more comprehensive look at area and citywide traffic issues. The City is currently exploring the development of Residential Permit Parking (RPP) Districts around the City including Downtown. The implementation of a Downtown RPP Program may prioritize the need to build additional parking supply for Downtown customers, visitors and employees. Within the California Avenue Business District limited permit supply for employees has resulted in delays to parking permit distribution, so an additional garage in that district should also be considered if initiatives to help fund parking garage construction move forward. City of Palo Alto Page 8 Building additional parking supply, however, may increase citywide traffic concerns as it promotes the use of single-occupant vehicle trips instead of alternative transportation modes such as public/private transit, car sharing/ride sharing, or bicycling. Any parking garage construction should include considerations for a citywide Transportation Management Authority (TMA) to help reduce single-occupant vehicle trip use and encourage private sector participation in reducing vehicle trips while supporting the well-being of employees and the community. Transient Occupancy Tax Data from the baseline survey on infrastructure projects and funding mechanisms indicates a potential to pass a TOT to fund a variety of general infrastructure needs, especially those needs related to public safety and transportation. Such a measure could be structured as a general tax requiring simple majority approval from voters or as a special tax with funds earmarked for specific purposes and would require two-thirds voter approval. Only a small portion of the initial survey was devoted to a potential TOT measure. To provide a definitive recommendation as to the viability of this option, FM3 recommends a follow-up survey to test this specific funding mechanism and how to best package a measure for success. Attachment B provides additional information on the scope and schedule of the recommended survey. The survey would sample 600 likely voters, with a margin of sampling error of +/-4.0 percent. FM3 and TBWB also recommend that the survey further investigate the sales tax as an alternative funding mechanism that would generate significant revenue. Given the City’s ongoing need to seek voter approval for an update to its existing UUT ordinance, this survey may also provide an opportunity to assess the interaction between a TOT and UUT measure, determine whether it would be advisable to place these measures on the same ballot and evaluate the basic viability of a UUT update measure. If further study on a potential TOT increase is pursued, concurrent to polling on the measure, TBWB recommends commencing targeted outreach to Palo Alto hotel owners and managers to explain the City's planning for a potential TOT increase. This will allow the City to identify questions or concerns and collect feedback from impacted businesses. Similar outreach to other business leaders who might be impacted indirectly by this measure should be conducted during the same timeframe. Bundled Transportation Measure The City’s baseline survey tested the level of public support for five different potential bond or tax measures that represent combinations of individual projects, with the wording of each potential measure structured as it might appear in an actual ballot measure – minus a funding mechanism and dollar figure. Four measures were found to have support levels greater than two-thirds. City of Palo Alto Page 9 As was recommended to the Infrastructure Committee as part of the presentation of the baseline infrastructure survey results, FM3 and TBWB believe that the City has the potential to pass a bond measure to fund a portion of the identified funding needs if the projects included in a measure were bundled to focus on one of the two high priority issues of concern to voters: public safety and transportation. Accordingly, one approach to funding garages to relieve parking, traffic and related transportation concerns, would be to include these projects as part of a larger bundled transportation bond measure, which would require two-thirds approval by voters. While parking garages did not rank among the top priority projects in the voter survey, they could be packaged with other priority projects and presented as part of a comprehensive solution to Palo Alto’s transportation, traffic, and parking needs. To further evaluate the feasibility of a transportation bond measure, FM3 recommends a follow up survey devoted entirely to this measure. In this survey FM3 would test potential ballot language and project descriptions reflecting the array of Palo Alto’s transportation-related needs, sensitivity to specific bond amounts and tax rates, and the impact of supporting and opposing statements and assess the optimal timing of a transportation bond measure. As a starting point for structuring this survey, FM3 would rely on key findings from the prior survey such as voters’ expressed willingness to pay (which seems to peak at $125 per year for a measure requiring two-thirds support) and the bundled proposal that elicited support from 74% of voters (A Traffic Congestion Relief and Safe Streets, Sidewalks and Trails Measure to fund repair and improvements to streets, sidewalks, and nine miles off-road trails. This measure would provide safe routes to school for children, improve accessibility for people with disabilities, provide a network of safe bike paths and pedestrian walkways, increase the availability of parking, and upgrade traffic signals and intersections to reduce congestion and improve safety). Similar to what was described previously for evaluating a potential TOT measure, FM3 would recommend conducting a ballot measure feasibility survey among 600 likely voters, which is associated with a margin of sampling error of +/-4.0 percent. The findings of the survey will be used to inform a recommendation to the City regarding the viability of a transportation focused bond measure, recommended election dates, total bond amount and tax rates. If the City continues to be interested in pursuing a transportation bond measure, TBWB recommends building a coalition of key transportation-related constituencies and stakeholders to participate in outreach and help build consensus around a ballot measure proposal. TBWB will help identify these interested parties, organize a process to enable their participation and provide messaging and materials to allow stakeholders to communicate within their respective networks of influence. Bundled Public Safety Measure As noted previously, the baseline infrastructure survey indicates that a bundled bond measure focused on public safety needs, while polling lower than a bundled transportation measure at 68% support, also appears to be potentially viable. Accordingly, if the Infrastructure Committee and City Council wish to proceed with further study on funding public safety infrastructure City of Palo Alto Page 10 needs, the survey and outreach approaches outlined here could be applied to refine a bundled public safety measure for the ballot. This may require looking at a 2016 election or beyond for voter approved funding to allow the City to acquire land and conduct the necessary environmental review for a new public safety building. Timeline Given the current schedule, in order to provide the City with definitive recommendations as to the viability of a funding measure in 2014, it is timely for the Committee and Council to prioritize any areas for study and to initiate ballot measure polling in the immediate near term. The schedule for conducting additional surveys is included as Attachment B. Attachments: Attachment A. Funding Scenarios (PDF) Attachment B. FM3 and TBWB Recommendations (PDF) Attachment C. Mello-Roos Hypothetical Boundaries (PDF) Attachment D. Mello-Roos Response to Committee Questions (PDF) Attachment E. September 3, 2013 Infrastructure Committee Minutes (PDF) Note: Funding from Mello Roos district, GO bonds, and COPs is for construction only and does not include financing costs Potential Infrastructure Project Funding Scenario #1 (2% or 3% TOT increase) Polling Support Project Cost Funding Source Funding Amount 52% Public Safety Building and land 57 City Hall Police area lease - COPs 19.6 52% Charleston/Arastradero 7.5 TOT increase 3% - COPs 46.2 61% Bike Bridge 1.7 New hotels - COPs 33.6 na Byxbee Park 3.6 Stanford Funds 33.4 72% Fire Stations (2) 14.2 Infrastructure Reserve 8 67% Sidewalks additional spending 6 FY 2013 surplus 8.5 65% Bike/Pedestrian Plan 16.25 Sum: 149.3 67% Parks Catch-up 8.9 46% Cal Avenue Garage 16.5 44% Downtown Parking Garages (2) 18.4 Sum: 150.05 OR Funding Source Funding Amount City Hall Police area lease - COPs 19.6 TOT increase 2% - COPs 30.8 New hotels - COPs 33.6 Stanford Funds 33.4 Infrastructure Reserve 8 FY 2013 surplus 8.5 5 years annual surplus ($1M per year)5 Digital Readerboard - COPs 11.2 Sum: 150.1 Potential Infrastructure Project Funding Scenario #2 Mello Roos Parking Garage Measure Polling Support Bundled Projects Cost Funding Source Funding Amount 46% Cal. Avenue Parking Garage 16.5 44% Downtown Parking Garages (2) 18.4 Sum: 34.9 Polling Support Project Cost Funding Source Funding Amount 52% Public Safety Building and land 57 City Hall Police area lease - COPs 19.6 72% Fire Stations (2) 14.2 New hotels - COPs 33.6 67% Sidewalks additional spending 6 Stanford Funds 33.4 na Byxbee Park 3.6 Infrastructure Reserve 8 67% Parks Catch-up 8.9 FY 2013 surplus 8.5 65% Bike/Pedestrian Plan 16.25 Digital Readerboard - COPs 11.2 61% Bike Bridge 1.7 Sum: 114.3 52% Charleston/Arastradero 7.5 Sum: 115.15 Mello Roos districts (citywide or localized) 34.9 Attachment A. Potential Funding Scenarios Note: Funding from Mello Roos district, GO bonds, and COPs is for construction only and does not include financing costs Potential Infrastructure Project Funding Scenario #3 Bundled Transportation GO Bond Measure Polling Support Bundled Projects Cost Funding Source Funding Amount Streets additional spending 8 GO Bonds 74.35 Sidewalks additional spending 6 Bike/Pedestrian Plan 16.25 Bike Bridge 1.7 Charleston/Arastradero 7.5 Cal. Avenue Parking Garage 16.5 Downtown Parking Garages (2) 18.4 Sum: 74.35 Polling Support Project Cost Funding Source Funding Amount 72% Fire Stations (2) 14.2 City Hall Police area lease - COPs 19.6 52% Public Safety Building and land 57 Stanford Funds 33.4 na Byxbee Park 3.6 Infrastructure Reserve 8 67% Parks Catch-up 8.9 FY 2013 surplus 8.5 5 years new hotels ($2.4M per year)12 Sum: 83.7 Sum: 81.5 Potential Infrastructure Project Funding Scenario #4 Bundled Public Safety GO Bond Measure Polling Support Bundled Projects Cost Funding Source Funding Amount Public Safety Building and land 57 GO Bonds 71.2 Fire Stations (2) 14.2 Sum: 71.2 Polling Support Project Cost Funding Source Funding Amount 67% Sidewalks additional spending 6 City Hall Police area lease - COPs 19.6 na Byxbee Park 3.6 Stanford Funds 33.4 67% Parks Catch-up 8.9 Infrastructure Reserve 8 65% Bike/Pedestrian Plan 16.25 FY 2013 surplus 8.5 61% Bike Bridge 1.7 4 years new hotels 9.6 52% Charleston/Arastradero 7.5 Sum: 79.1 46% Cal. Avenue Parking Garage 16.5 44% Downtown Parking Garages (2) 18.4 Sum: 78.85 74% 68% Attachment A. Potential Funding Scenarios Funding Approach For Remaining Projects Polling Support Project Cost Funding Source Funding Amount na Surface Catch-up 3.4 na Buildings Catch-up 4.2 Sum: 7.6 Polling Support Project Cost Funding Source Funding Amount 47% Animal Services Center 6.9 46% Playing Fields at Golf (3) 6 38% History Museum 3 na Cubberley Deferred Maintenance 6.9 Sum: 22.8 Fund gradually through CIP planning process utilizing CIP funds, ongoing surpluses, and development impact fees Defer planning for potential funding or remove from project list Attachment A. Potential Funding Scenarios TO: City of Palo Alto FROM: Charles Heath and Joy Tatarka, TBWB Strategies Dave Metz and Shakari Byerly, Fairbank, Maslin, Maullin, Metz and Associates RE: Recommendations Regarding Potential Infrastructure Funding Measures DATE: September 24, 2013 ___________________________________________________________________________________ TBWBStrategiesandFM3Researchhavereviewedpollingconductedtodateandinformation providedbycitystaffrelatedtothedevelopmentofaTransientOccupancyTax(TOT)tofundgeneral infrastructureneedsandapotentialMelloRoosDistrict(MRD)orgeneralobligationbondtofund parkinggaragesintheDowntownandCaliforniaAvenueareasandrelatedtransportationneeds. Followingisourcollectiveassessmentofthepotentialfeasibilityofthesemeasures,alternativesfor youtoconsiderandrecommendednextsteps. Transient Occupancy Tax Datafromthebaselinesurveyoninfrastructureprojectsandfundingmechanismsindicatesa potentialtopassaTOTtofundavarietyofgeneralinfrastructureneeds,especiallythoseneeds relatedtopublicsafetyandtransportation.Suchameasurecouldbestructuredasageneraltax requiringsimplemajorityapprovalfromvotersorasaspecialtaxwithfundsearmarkedforspecific purposesandwouldrequiretwothirdsvoterapproval. OnlyasmallportionoftheinitialsurveywasdevotedtothisapotentialTOTmeasure.Toprovidea definitiverecommendationastotheviabilityofthisoption,FM3recommendsafollowupsurveyto testthisspecificfundingmechanismandhowtobestpackageameasureforsuccess.WhileFM3 continuestobelievethatfocusgroupswouldbehelpfulinunderstandinghowtodevelopmessaging forameasurethatincludesfundingforapublicsafetybuildingandrequirestwothirdsvotersupport, webelievetheTOTmeasureshouldfirstberefinedbyastandardballotmeasurefeasibilitysurvey. Similartotheinitialbaselinesurvey,FM3envisionsconductingaballotmeasurefeasibilitysurvey among600likelyvoters,whichisassociatedwithamarginofsamplingerrorof+/4.0percent.The centralobjectiveoftheresearchwillbetogaugevoterattitudestowardaTOTincreaseofbetween2 and3percenttofunddeferredmaintenanceneedsrelatedtoinfrastructurepriorities,andassessthe optimaltimingofanelection. FM3woulddevelopthesurveyinstrumentincollaborationwiththeCityandTBWB.Theresearchwill exploresomeofthefollowingtopics: Attachment B 2 Gauginglevelsofsupportinresponsetoadraft75wordballotmeasuresummaryofa potentialmeasure; Assessingpublicattitudestowardfundingprioritiesthatmightbefinancedthroughthe measure; Determiningifthemeasureshouldbestructuredasageneraltaxorspecialtax; Identifyingprojectprioritiesandoptimalprojectdescriptions; AssessingpublicsensitivitytotheTOTtaxrate; Measuringsensitivityofsupportinthefaceoflikelyargumentsfromsupportersand opponents,includinganargumentregardingthefactthatanincreaseinthelocalTOTwould bringtheratetoamongthehighestinthestate/region;and Determiningthedemographicprofileoftherespondentstoprovidethenecessarycategories forcrosstabulationofthedata,andtoensurethattherespondentsarerepresentativeofthe pooloflikelyvotersinPaloAlto; ProvidearecommendationtotheCityregardingtheviabilityoftheTOTasafinancing mechanismandthespecificcomponentsofameasurethatwillmaximizethelikelihoodof voterapproval. GiventheCity’songoingneedtoseekvoterapprovalforanupdatetoitsexistingUUTordinance,this surveywouldprovideanopportunitytoassesstheinteractionbetweenaTOTandUUTmeasure, whetheritwouldbeadvisabletoplacethesemeasuresonthesameballotandevaluatethebasic viabilityofaUUTupdatemeasure. AshasbeennotedaspartofpastrecommendationstotheInfrastructureCommittee,FM3andTBWB weresurprisedbytherelativelylowlevelsofsupportmeasuredinthebaselinesurveyforasalestax measure.Wesuspectthatthelowlevelsofsupportmaybehaveresultedfromthespecificlanguage testedorothercontextualsurveyissues.Ifdeemedapriority,thissurveywouldprovidean opportunitytofurtherinvestigatethesalestaxasanalternativefundingmechanismthatwould generatesignificantrevenue. FM3ispreparedtobegintheproposedresearchimmediately,attheCity’srequest.Aproposed timelineforconductingtheresearchappearsbelow: WeekofOctober28,2013 Authorizationtoproceed Evaluateproposedmethodologyandfinalizeresearchplan Preparationoffirstdraftofsurveyquestionnaire WeekofNovember4,2013 SubmitdraftquestionnairetoCityforreview WeeksofNovember11November18 Finalizesurveyquestionnaire Obtainclientapprovaloffinalsurveyinstrument Drawsample Attachment B 3 November1822,2013 Administertelephonesurvey Generatetoplineandcrosstabulationofsurveyresults November23December5,2013 Developpresentationandreportingmaterials Schedulepresentationoffinalresultstokeystakeholders ConcurrenttopollingonthispotentialTOTmeasure,TBWBrecommendscommencingtargeted outreachtoPaloAltohotelownersandmanagerstoexplaintheCity'splanningforapotentialTOT. ThiswillallowtheCitytoidentifyquestionsorconcernsandcollectfeedbackfromimpacted businesses.Similaroutreachtootherbusinessleaderswhomightbeimpactedindirectlybythis measureshouldbeconductedduringthesametimeframe.Thisoutreachwouldbeconductedduring theNovemberandearlyDecembertimeframeinordertoprovideasummaryoffeedbackalongwith thesurveyresults.TBWBwillworkwiththeCitytodevelopanoutreachtargetlist,informational materialstofacilitatethesemeetingsandscheduleforconductingthemeetingsandsynthesizing feedback. ItshouldbenotedbytheCommitteethatifthismeasureisdesignedasageneraltaxrequiringonly simplemajorityvoterapproval,itmustgototheballotatthesametimeascouncilmemberelections. TheexceptionwouldbeiftheCitydeclaredafiscalemergencywithaunanimousvoteoftheCouncil. Thus,iftheTOTwouldbedesignedasageneraltax,TBWBwilldevelopadetailedtimelineidentifying specificplanningstepstopreparefortheNovember2014municipalelectiondate.Giventhelimited electiondateflexibilityforthistypeofmeasure,theCitymightevaluateotherelectiondateoptions (e.g.June2014,June2016,November2016orspecialelectiondates)fortheotherpotentialfunding measuresunderconsideration. Funding for Parking Garages and Related Transportation Needs AreviewofthedatafromFM3’srecentsurveyoninfrastructureneedsandfundingoptionsindicates votersupportforameasuretofundparkinggaragesintheDowntownandCaliforniaAvenueareas wouldfallsubstantiallyshortofthetwothirdssupportthatwouldberequiredforapproval.When theanalysisislimitedtovoterswithinthegeographicareasinorneartheDowntownandCalifornia Avenueareas,supportstillfallswellshortof66.7%.Iftheboundariesweredrawnbroadlytospread thecostandminimizetherequiredtaxrate,wedonotbelievethattheprojectranksashighenough apriorityforvoterstogeneratetwothirdssupport.IftheCommitteeisinterestedinabroadbased measurewithapalatabletaxratetofundtheseneeds,webelievethatacitywidebondmeasurethat packagesparkinggaragesalongwithmorepopulartransportationprojects(e.g.roadandsidewalk improvements,saferoutestoschool,bikeandpedestrianimprovements,trafficrelief)wouldbea moreviableapproach. Inshort,nomatterhowtheMRDboundariesaredrawn,wedonotbelievethatameasuretofund parkinggaragesthatrequirestwothirdssupportfromaresidentialtaxpayerbaseislikelytobe approved.Accordingly,weofferthefollowingalternativesandrecommendednextstepsforsecuring additionalfundingforparkinggarages: Attachment B 4 1. MRD Focused on Non Residential Properties AnalternativeapproachwouldbetodrawMRDboundariestightlyringingtheDowntownand CaliforniaAvenuecommercialcorridorstoexcludeallbutfewerthan12registeredvoters residingwithintheboundaries.Underthisscenario,theMRDmeasureelectionwouldbe decidedbyavoteofpropertyownerswithintheboundaries.TheCitywouldneedtodevelop aconvincingbusinesscasetopresenttotheimpactedpropertyownersandconductextensive individualoutreachamongthisgrouptogaugesupport.Theproposedareasaretoosmallfor traditionalpublicopinionresearchtechniquesandthereforewouldnotprovidereliable results. IftheCitywouldliketoevaluatethepotentialfeasibilityofapropertyownerelection,TBWB willusevotermappingapplicationstodeveloppossibleboundaryoptionsthatincludefewer than12registeredvotersandcomparetheseboundariesagainstpropertyownershipdatato developanoutreachtargetlist.Afterananalysisofhowmucheachofthesepropertyowners wouldhavetopayinordertofundtheprojects,wewoulddevelopinformationalmaterials andanoutreachplantomeasuretheinterestandsupportamongthepropertyowners. 2. Transportation Bond Measure AswasrecommendedtotheInfrastructureCommitteeaspartofthepresentationofthe baselineinfrastructuresurveyresults,webelievethattheCityhasthepotentialtopassa bondmeasuretofundaportionoftheidentifiedfundingneedsiftheprojectsincludedina measurewerebundledtofocusononeofthetwohighpriorityissuesofconcerntovoters: publicsafetyandtransportation.Accordingly,oneapproachtofundinggaragestorelieve parking,trafficandrelatedtransportationconcerns,wouldbetoincludetheseprojectsaspart ofalargerbundledtransportationbondmeasure,whichwouldrequiretwothirdsapprovalby voters.Whileparkinggaragesdidnotrankamongthetoppriorityprojectsinthevoter survey,webelievethattheycouldbepackagedwithotherpriorityprojectsandpresentedasa comprehensivesolutiontoPaloAlto’stransportation,trafficandparkingneeds. Theinitialsurveytouchedonawidearrayofissuesandwasdesignedtonarrowthescopeof optionsunderconsideration.Itwasnotdesignedtodefinitivelydeterminethefeasibilityofa singleballotmeasure.Tofurtherevaluatethefeasibilityofatransportationbondmeasure, werecommendafollowupsurveydevotedentirelytothismeasure.InthissurveyFM3would testpotentialballotlanguage,projectdescriptionsreflectingthearrayofPaloAlto’s transportationrelatedneeds,sensitivitytospecificbondamountsandtaxrates,theimpactof supportingandopposingstatementsandassesstheoptimaltimingofatransportationbond measure.Asastartingpointforstructuringthissurvey,wewouldrelyonkeyfindingsfrom thepriorsurveysuchasvoters’expressedwillingnesstopay(whichseemstopeakat$125per yearforameasurerequiringtwothirdssupport)andthebundledproposalthatelicited supportfrom70%ofvoters(ATrafficCongestionReliefandSafeStreets,SidewalksandTrails Measuretofundrepairandimprovementstostreets,sidewalks,andninemilesoffroadtrails. Thismeasurewouldprovidesaferoutestoschoolforchildren,improveaccessibilityforpeople withdisabilities,provideanetworkofsafebikepathsandpedestrianwalkways,increasethe availabilityofparking,andupgradetrafficsignalsandintersectionstoreducecongestionand improvesafety). Attachment B 5 SimilartowhatwasdescribedpreviouslyforevaluatingapotentialTOTmeasure,FM3would recommendconductingaballotmeasurefeasibilitysurveyamong600likelyvoters,whichis associatedwithamarginofsamplingerrorof+/4.0percent.Thissurveycouldbeconducted inlieuoftheTOTsurveydescribedpreviouslyandonthesametimeline.Orthissurveycould beconductedsubsequently.Thefindingsofthesurveywillbeusedtoinforma recommendationtotheCityregardingtheviabilityofatransportationfocusedbondmeasure, recommendedelectiondates,totalbondamountandtaxrates.InordertoprovidetheCity withdefinitiverecommendationsastotheviabilityofafundingmeasurein2014,we recommendtestingtheTOTorabundledtransportationmeasure,butnotbothatthesame time.Testingbothmeasuresinasinglepollwilllimitthedepthintowhichsupportforeither measurecanbeinvestigated. IftheCitycontinuestobeinterestedinpursuingatransportationbondmeasure,TBWB recommendsbuildingacoalitionofkeytransportationrelatedconstituenciesand stakeholderstoparticipateinoutreachandhelpbuildconsensusaroundaballotmeasure proposal.TBWBwillhelpidentifytheseinterestedparties,organizeaprocesstoenabletheir participationandprovidemessagingandmaterialstoallowstakeholderstocommunicate withintheirrespectivenetworksofinfluence.TBWBandFM3wouldappreciateguidance fromtheCommitteeastowhichofthetwomeasuresisahigherpriorityinordertorefinea researchstrategyandtimeline. Asnotedpreviously,thebaselineinfrastructuresurveyindicatesthatabundledbondmeasure focusonpublicsafetyneedsappearsjustaspotentiallyviableasabundledtransportation measure.Thesurveyandoutreachapproachesoutlinedhereforabundledtransportation measurecouldbeappliedtorefineabundledpublicsafetymeasurefortheballot.However, theuncertaintysurroundingtheproposedpublicprivatepartnershiptofundapublicsafety facilitymakesthisadifficultoptiontoresearchatthistime.Accordingly,iftheInfrastructure Committeeand/orCityCouncildeterminethatfundingpublicsafetyinfrastructureneedsisa higherpolicyprioritythantransportation,werecommendconductingasurveyonthistopic oncetheoutcomeofthepublicprivatepartnershipandrelatedfundingissuesaremore certain.Weacknowledgethatthismayrequirelookingata2016electionorbeyondforvoter approvedfundingforpublicsafetyinfrastructure. Wedonotfeelthatthebaselinesurveydataindicatessufficientvotersupporttojustify furtherresearchonageneralinfrastructurebondmeasureoranyothermeasurerequiring twothirdssupportunlessitisfocusedontransportationorpublicsafetyneeds. Attachment B ElCaminoPark ElCaminoPark KelloggPark ScottPark TimothyHopkinsPark LotA Lot D Lot G Lot H LotF LotO LotP LotQ LotT LotC LotK LotWC CogswellPlaza LotB LotK LotE JohnsonPark AlmaParkette Welcome TimothyHopkinsPark LyttonPlaza StanfordShoppingCenter Parkette El Palo A l t o P a r k CivicCenterPlaza ChanningHouse DwtnChildCareCtr Bryant / L y t t o n Parkin g G a r a g e Parking Tract No. 5447 PKG PKG SunsetMagazine AddisonElementary PaloAlto HighSchool CastillejaSchool WholeFoods Parking WholeFoods Market Oak C o u r t Apartm e n t s HeritagePark El Palo Alto ParkTimothyHopkinsPark WilliamsPark PAMFCLARKBUILDING PAMFPARKINGSTRUCTURE CVS Ph a r m a c y Union B a n k Miyake E-Tra d e Stanf o r d B o o k s GATE1 GATE15GATE14 GATE2 GATE3 GATE4 GATE5 GATE6 GATE7 GATE8GATE9 GATE10 GATE11 GATE12 ELCAMINOGROVE 09-575 GATE13 MALONEYFIELD MASTERSGROVE BOYFA ARTIFICIALTURF FIELD SUNKENDIAMOND PAC-10 PLAZA STEUBERFAMILY RUGBYFIELD WOMENSSOFTABLLD ARBORETUMGROVE EUCALYPTUSGROVE LASUENGROVE TOYONGROVE Lot S Lot CC Lot N Lot R QuarryRoad Arboretum RoadQuarryRoad HomerAvenue Lane8 West MedicalFoundation Way Lane7 West Lane7East EmbarcaderoRoad EncinaAvenue ElCaminoReal UrbanLane WellsAvenue ForestAvenue HighStreet EmersonStreet Channing Avenue Alm aStreet AlmaStreet PaloAltoA ElCaminoReal venue MitchellLane HawthorneAvenue EverettAvenue LyttonAvenue Lane15 E HighStreet Alm a S t r e e t BryantStreet Lane6 E Lane11 W Lane21 HighStreet GilmanStreet HamiltonAvenue UniversityAvenue BryantCourt Lane30 FlorenceStreet KiplingStreet TassoStreet CowperStreet RuthvenAvenue HawthorneAvenue Lane33 PaloAltoAvenue EverettAvenue PoeStreet WaverleyStreet TassoStreet CowperStreet PaloAltoAvenue WebsterStreet EverettCourt LyttonAvenue ByronStreet FultonStreet MiddlefieldRoad MelvilleAvenue KelloggAvenue KingsleyAvenue LaneA West LaneB West LaneB East LaneD West Lane59 East WhitmanCourt KelloggAvenue EmbarcaderoRoad KingsleyAvenue LincolnAvenue AddisonAvenue LincolnAvenue ForestAvenue DowningLane HomerAvenue LaneD East Lane39 Lane56 HamiltonAvenue WebsterStreet WaverleyStreet Kip l i n g S t r e e t BryantStreet RamonaStreet AddisonAvenue Sc o t t S t r e e t ByronStreet LyttonAvenue GuindaStreet PaloAltoAvenue FultonStreet MiddlefieldRoad ForestAvenue WebsterStreet KelloggAvenue MiddlefieldRoad By WebsterStreet CowperStreet TassoStreet CowperStreet AddisonAvenue LincolnAvenue BoyceAvenu HomerAvenueGuindaStreet MiddlefieldRoad ChanningAvenue Ad GuindaStreet LincolnAvenue FultonStreet MelvilleAvenue ByronStreet KingsleyAvenue MelvilleAvenue CoMi We b s WilsonStree Ra m o n a S t r e e t AddisonAvenue ChanningAvenue Wa v e r l e y S t r e e t PaulsenLn Lan e 1 5 E Em e r s o n S t r e e t Lane 20 WLane20E UniversityAvenue Ca l T r a i n R O W Em e r s o n S t r e e t Wa v e r l e y S t r e e t Kip l i n g S t r e e t OrchardLane SandHillRoad SandHillRoad Bry a n t S t r e e t Ra m o n a S t r e e t PaloRoad Shopp ingCenterWay ShoppingCenterWay ShoppingCenterWay LondonPlaneWay PlumLane SweetOliveWay PearLane Lane12W Lan e 5 E LasuenStreet PistachePlace EverettAvenue HomerAvenue PaloAltoAvenue CommunityLane HarkerAvenue Parkinson Avenue ByronStreet EmersonStreet ChurchillMall AboretumRoad AboretumRoad GalvezStreet MastersMall NelsonMall NelsonRoad PalmDrive AlmaStreet Alma Street HawthorneAvenue LyttonAvenue SamMcDonaldRoad Mall Th i s m a p i s a p r o d u c t o f t h e Ci t y o f P a l o A l t o G I S Th i s d o c u m e n t i s a g r a p h i c r e p r e s e n t a t i o n o n l y o f b e s t a v a i l a b l e s o u r c e s . Le g e n d Pa r c e l s C o u n t e d w i t h i n P r o p o s e d B o u n d a r y # 0 3 ( 2 , 7 9 8 P a r c e l s ) Pr o p o s e d B o u n d a r y # 0 3 ( 2 , 7 9 8 P a r c e l s ) Co m m e r c i a l D o w n t o w n ( C D ) Z o n i n g D i s t r i c t s Pa r k i n g A s s e s s m e n t D i s t r i c t P a r c e l s Ci t y J u r i s d i c t i o n a l L i m i t s 0' 9 6 1 ' Mello-Roos District Potential Boundary # 03 Exercise University Avenue Area Map CITYOF PALO ALTO INCOR PO RATED CALIFORNIA P a l o A l t o T h e C i t y o f APRIL 16 1894 Th e C i t y o f P a l o A l t o a s s u m e s n o r e s p o n s i b i l i t y f o r a n y e r r o r s . © 1 9 8 9 t o 2 0 1 3 C i t y o f P a l o A l t o rriv e r a , 2 0 1 3 - 0 9 - 1 0 1 2 : 0 6 : 3 9 Me l l o R o o s U n i v e r s i t y A v e 0 3 ( \ \ c c - m a p s \ g i s $ \ g i s \ a d m i n \ P e r s o n a l \ r r i v e r a . m d b ) At t a c h m e n t C . H y p o t h e t i c a l M e l l o - R o o s B o u n d a r i e s ATTACHMENTD StaffResponsetoInfrastructureCommittee’sQuestions onformingaMelloRoosDistrict 1 9/26/2013 TheInfrastructureCommitteedirectedstafftoresearchanumberofissues. 1) Howlongwouldittaketobringavotetothepublic? Response:Itwouldtakeapproximately89monthstoformacommunityfacilities districtundertheMelloRoosAct,fromthefirstmeetingtodiscussthetaxformula throughadoptionofthefinalordinance,assumingaregisteredvoterelectionandamail ballotelectionthatisnotconsolidatedwithanotherelection. Iftheelectionisconsolidatedwithanotherelection,thenthetimingmaybeimpacted, althoughitshouldbesimilar. SeeTable1onpage3foratypicalschedule. 2) HowwouldaMelloRoos(MR)Districtbestructuredinaballotmeasure? Response:Theballotmeasurewouldapprovethreeitems:(i)thelevyofthespecialtax accordingtotheRateandMethodofApportionmentofSpecialTaxforthepurposes specifiedintheResolutionofFormation(e.g.,acquisitionandconstructionofapublic parkinggarageatthecornerofXandY,(ii)theissuanceofbondsinamaximum amount,and(iii)anappropriationslimitfortheCFD.TheMelloRoosActallowsthe threeitemstobeconsolidatedinasingleballotmeasure Otherwise,thegeneralprovisionsofCaliforniaelectionslawwouldgoverntheballot measure,andtheadviceofanelectionconsultantwillbeuseful. 3) Arethereanyconflictswithcurrentassessmentdistricts? Response:Thespecialtaxwouldbeinadditionto,andwouldnothaveanyimpacton, existingspecialbenefitassessments,the1%advaloremtaxoranyvoterapprovedtax overrides.Itwouldbefairtoconsiderthespecialtaxtobeanadditionalsourceof revenuetobuildmoreparkinggaragesintheCity,assumingitwouldbedescribedas suchintheformationproceedings. Thespecialtaxshallbecollectedinthesamemannerasordinaryadvaloremproperty taxesarecollectedandshallbesubjecttothesamepenaltiesandthesameprocedure, sale,andlienpriorityincaseofdelinquencyasisprovidedforadvaloremtaxes ATTACHMENTD 2 9/26/2013 4) Arethereexemptionsfromthetax? Response:Ingeneral,propertiesownedbypublicagenciesareexemptfromspecial taxesundertheMelloRoosAct.Therearesomeexceptions,forexamplewherethe publicagencyleasesitspropertytoataxableentity. TheMRtaxformulawouldapportiontaxesamongvariouslandusesonareasonable basisandcouldidentifyadditionalexemptions,e.g.,lowincomehousing,nursing homes,et.al. 5) DescribeanoutreachplanandtheexpertisenecessarytoformaMRdistrict? Response: InformationfromCity’sOutreachFirm,TBWB Oneofthefirststepsistoidentifythefinancedfacilities,identifytheboundariesofthe CFD(whowillpaythetax)anddefinethespecialtaxformula.Becausethespecialtax doesnotneedtobeapportionedonthebasisofspecialbenefit,thereisnoneedto employanengineerforthispurpose;theCitywould,instead,retainaspecialtax consultant,whocouldbeanengineer,withexpertiseinpreparingspecialtaxformulas and,ifpossible,withpublicparkinggaragesindevelopedCFDs.SeeattachmentBfor moredetailedplanforoutreach. 6) Aretherepotentialpublic/privatepartnershipstobuildgaragesoraretheirpossibilities oflongtermleasingarrangements? Staffbelievesthereispotentialforpartnershipstobuildgaragesorforlongtermleasing arrangements,andrecommendsproceedingwitharequestforproposals. ATTACHMENTD 3 9/26/2013 TABLE 1. TEMPLATE MELLO ROOS ELECTION SCHEDULE Date Responsible Party Event BeforeDay1 Citystaff,special taxconsultant, financialadvisor, bondcounsel (i)IdentifyCFDboundaries (ii)Identifyfinancedfacilitiesandservices (iii)DefineRateandMethodofApportionmentof SpecialTaxes Day1 CityCouncil Adopt:(1)ResolutionApprovingLocalGoalsand PoliciesforCommunityFacilitiesDistrict;(2) ResolutionofIntentiontoEstablishCommunity FacilitiesDistrict;(3)ResolutionofIntentionto issueBonds ByDay16 CityClerk RecordBoundaryMap(within15daysofadoption ofResolutionofIntention)(Streets&Highways Code§3111) By[7dayspriorto publichearing] CityClerk PublishNoticeofPublicHearing(Gov.Code §§53322;6061) NoearlierthanDay 31 CityCouncil (1)ConductaPublicHearing;(2)adoptResolution ofFormation;(3)adoptResolutionDeclaring NecessitytoIncurBondedIndebtedness;(4)adopt ResolutionCallingElection(“ROE”) Approx.Day35 CityClerk PublishNoticeofArgumentDeadlines NolaterthanDay 44(w/in14daysof ROE) CityClerk Deadlineforsubmissionofdirectarguments (ElectionsCode§9286) Approx.Day44 CityAttorney Submissionofimpartialanalysis Approx.Day54 (Argumentdeadline +10days) CityClerk Deadlineforsubmissionofrebuttalarguments (ElectionsCode§9285) Approx.Days55– 64 CityClerk 10daypublicinspectionperiod (ElectionsCode§9295) INFRASTRUCTURE COMMITTEE FINAL MINUTES Page 1 of 13 Special Meeting September 3, 2013 The Infrastructure Committee met on this date in the Council Conference Room at 4:00 P.M. Present: Berman, Klein (Chair), Scharff, Shepherd Absent: ORAL COMMUNICATIONS None ACTION ITEMS 1. Continue Discussion from August 6, 2013 Infrastructure Committee Meeting on Baseline Survey Results and Recommendations to the City Council on Next Steps in Considering an Infrastructure Finance Measure. Herb Borock suggested the Utility Users Tax (UUT) be increased to 5 percent for everyone. This increase would generate approximately the same amount of funds as other taxes without the need to designate a tax for a specific purpose, which would require approval by two-thirds of voters. Sheila Tucker, Assistant to the City Manager, noted the Infrastructure Committee (Committee) requested Staff return with additional information related to the Capital Improvement Program (CIP), costs and scope of projects, and revenue options. Brad Eggleston, Assistant Director Public Works, presented a draft schedule for preparing the CIP Budget and the Five Year CIP Plan. Staff reviewed and updated costs of projects and determined if projects were included in both the CIP Budget and project costs. Staff recommended removing projects from the list or reducing costs for projects because of new funding, discretionary funding, or the need for further study. Jim Keene, City Manager, was unsure whether project costs were actually reduced. For example, the Bicycle and Pedestrian Transportation Plan Attachment E FINAL MINUTES Page 2 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 decreased from $23.5 million to $16.25 due to funding in the Five Year CIP Plan. However, only the first year was funded through the Capital Budget. There could be issues with respect to future annual funding of $1.2 million for the Bicycle and Pedestrian Transportation Plan. The Committee should remember the tradeoff between priority and funding of projects. Mr. Eggleston believed the information was incorrectly titled. A more suitable title would be "Changes to Unfunded Project Costs." Staff was not indicating that implementation of the Bicycle and Pedestrian Transportation Plan no longer cost $25 million, but that more funding was available through the Five Year CIP Plan. The remaining portion of the cost for the Bicycle and Pedestrian Transportation Plan, for which funding was needed, had decreased. Chair Klein indicated actual costs for some projects could be reduced. He inquired about the increase in funding for the Ventura Community Center. Mr. Eggleston stated that was a typographical error. A portion of funding for the Ventura Community Center was included in the Five Year CIP Plan and another portion was included in the buildings catch-up category. The project was counted twice. Vice Mayor Shepherd noted the worksheet showed the cost as $0. Chair Klein inquired whether the Ventura Community Center was included in the $41 million amount shown on the slide. Ms. Tucker answered yes. That amount should also be reduced. Mr. Keene noted the net amount was $32.75 million. Mr. Eggleston reported the project summary sheet provided the actual cost and amount of funding for projects. With the proposed changes, the amount reduced was approximately $40 million. Because the Committee discussed integration of the CIP Budget with the project list, Staff indicated the Five Year CIP funding for projects with CIP funding and the project cost as stated in polling. Joe Saccio, Assistant Director of Administrative Services, noted a 2 percent increase in the Transient Occupancy Tax (TOT) would generate $1.8 million and could be utilized to finance $25.2 million in Certificates of Participation (COP). Staff utilized the formula of $1 million in revenue to raise $14 million in project funds to calculate the amount of funds resulting from COPs. Applying a 2 percent TOT increase to new hotel revenue generated $2.2 million. A 3 percent TOT increase would generate $3.3 million including new hotels. The original assumption for the Los Altos Treatment Plant (LATP) Attachment E FINAL MINUTES Page 3 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 revenue included building out the site. Staff revised the assumption to renting the site under current zoning without building it out and determined approximately $1.3 million annually could be generated. If the zoning changed to commercial, the upper limit for potential revenue was $2 million. Two former well sites on Middlefield Road could be made available for residential use. Staff estimated sale of the two sites could generate $2.2 million. Given the recent increase in revenues, Staff believed an additional $1 million in surplus funds could be provided for infrastructure improvements. Staff removed parcel tax and UUT from further consideration in accordance with the Committee's direction. The Mello-Roos District was mentioned with regard to financing Downtown and California Avenue parking garages. The consultant was present to discuss that if the Committee wished. Mr. Keene inquired whether the Committee discussed possible changes with respect to COPs. Mr. Saccio noted potential changes were discussed in the Staff Report. Standard and Poor's and Moody's apparently were considering downgrading COPs generally. Due to municipal bankruptcies, the market was wary of municipal debt. There was general talk of degrading COPs from a credit perspective. Ms. Tucker requested the Committee provide direction regarding other areas for additional opinion research and recommendations to the Council regarding current or new revenue sources for funding infrastructure projects. Mr. Keene expressed concern about the competition of projects and scheduling issues. He wished to provide alternate methods for the Committee to consider projects and funding sources. The projects that received positive polling totaled $88.3 million. New hotel revenue and a 3 percent TOT increase along with Infrastructure Reserve funds would total approximately $88.3 million without the need to issue bonds. The Bicycle and Pedestrian Transportation Plan and the Bike Bridge could receive funding from Stanford University Medical Center (SUMC) Development Agreement funds. Parking garages did not poll well; however, the community was concerned about parking issues. Perhaps a Mello-Roos District or an assessment district strategy was viable. Staff identified projects that could be handled better through the CIP Budget or ongoing surpluses. Staff could return with more definition of the proposals. He noted the Committee's concern with the Jay Paul Company project. Staff could not guarantee the progress of that project in relation to the Committee's planning. Without utilizing a finance measure, approximately $90 million could be available for infrastructure projects. The City had more than one option to consider for funding a Public Safety Building. Attachment E FINAL MINUTES Page 4 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Chair Klein felt the problem was the many options. Council Member Berman inquired whether voters would have to approve a 3 percent TOT increase. Mr. Keene answered yes. Council Member Berman asked if interest rates and debt service costs for General Obligation (GO) bonds remained 15-20 percent higher than costs for COPs. Bob Gamble, Public Financial Management, expected the marginal difference to be substantially less than 15-20 percent, more in the range of 5 percent. The difference varied based on relative credit perceptions. Council Member Berman inquired whether the 12 percent TOT for new hotels had been factored into future budgets. Mr. Saccio felt it was new revenue. Staff budgeted approximately $400,000 in the Fiscal Year (FY) 2013-2014 Budget for Casa Olga. The $2.4 million amount was over and above the Casa Olga projected revenue. Council Member Berman asked when plans could proceed in relation to the LATP site. Mr. Eggleston reported a contract for the design consultant was in place. He estimated the earliest time was fall 2015 if Staff received regulatory clearances. Council Member Berman felt a conservative estimate for use of the LATP site was 2016 or 2017. Lalo Perez, Director of Administrative Services, noted the site was jointly owned by the Refuse Fund. Allocation of net revenue would have to be considered. Council Member Berman inquired about the purposes for issuing past COPs. Mr. Saccio reported COPs were issued in 1983 for civic center improvements; in 1992 for additional improvements to the civic center and for refinancing; in 1998 for improvements to the Golf Course; and in 2002 for the building next to the Bryant Street Garage and for refinancing. Council Member Berman asked which revenue sources paid for the COPs. Attachment E FINAL MINUTES Page 5 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Mr. Saccio indicated the revenue streams from the Golf Course paid for that COP. Rent on the Bryant Street Garage was used to pay for that COP. The civic center COP was paid through General Fund revenue. Mayor Scharff inquired whether a two-thirds vote of the entire city was needed to approve a Mello-Roos District. Mr. Saccio replied yes. Mayor Scharff noted the Council could determine how many parking garages it needed before requesting community approval; and asked if the properties within the District would be required to pay the tax. Mr. Saccio responded yes. Mayor Scharff felt a Mello-Roos District was similar to an assessment district. The main difference was that all citizens voted on a Mello-Roos District. Mr. Saccio understood the City had to strictly ascribe the benefit from a property to the tax. Mayor Scharff asked if one vote could be held to create two Mello-Roos Districts. Molly Stump, City Attorney, answered yes. Mayor Scharff indicated assessments could vary depending on the number of garages built in Downtown and in California Avenue. He asked if an election was required to be held in an even year. He suggested the Council determine the number of garages needed, and then place a measure on the 2014 ballot. He inquired about the actions needed to begin the process. Mr. Keene requested the Committee direct Staff to return with more detailed information regarding a Mello-Roos District. Staff could present information expeditiously. Mr. Saccio agreed. Mayor Scharff asked when the Jay Paul Company project might be presented to the Council for a vote. The Committee needed some idea of that timeframe to determine whether there was sufficient time to place a GO bond for a Public Safety Building on the ballot. Aaron Aknin, Interim Planning Director, was doubtful the Council would vote on the project in April or May 2014, because of the time required for Attachment E FINAL MINUTES Page 6 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 environmental review, the Planning and Transportation Commission process and the Council process. Mayor Scharff believed Staff would need at least two years to compile a Public Safety Building project if the Council did not approve the Jay Paul Company project. Therefore, it was not logical to consider funding for a Public Safety Building in the 2014 election cycle. If the Council did not approve the Jay Paul Company project, then it could consider a Public Safety Building in 2016. Chair Klein noted the same conversation was held previously. Mr. Keene stated the Council did not have to specify the use of an increase in the TOT. It would be difficult to gain approval of a bond without specifying its use. 2016 was the appropriate timeframe for a GO bond and still practically better for the TOT issue. The Council could have a successful measure in 2014. Mayor Scharff was unsure why a TOT increase would not be perfect for 2014. The Council would not want a GO bond and a TOT increase on the same ballot in 2016. Mr. Keene believed the Council could pursue a TOT increase in 2014 even if it was considering use of the TOT increase for a Public Safety Building. Vice Mayor Shepherd inquired whether the Committee was responsible for forwarding the UUT ballot item to the Council. Ms. Stump reported the Committee had discretion to forward that item to the Council. She understood the Committee verbally directed her to present it to the Council as an administrative measure. Vice Mayor Shepherd wanted to ensure the item was placed on the ballot. She inquired whether GOs were threatened with the loss of tax-exempt status. Mr. Gamble explained that consideration would apply to any tax-exempt bond including GOs, Mello-Roos Districts and COPs. Vice Mayor Shepherd inquired whether the City would have more expense in issuing those types of bonds. Mr. Gamble replied yes, depending on terms in the legislation. Vice Mayor Shepherd noted the Council considered a land swap regarding the Municipal Services Center (MSC), and inquired whether the Committee Attachment E FINAL MINUTES Page 7 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 should discuss swapping the MSC site for a site to build the Public Safety Building. Mr. Eggleston reported Staff was finalizing the scope of a Request for Proposal (RFP) to study MSC uses. Swapping the MSC site for another site suitable for a Public Safety Building could be considered. Vice Mayor Shepherd wanted to find a way to initiate that conversation. The Staff Report provided a method for the Committee to match taxes, revenues and project costs. Chair Klein recalled the Committee discussed a possible surplus of funds as an available source of revenue, and inquired about the amount of the surplus. Mr. Perez indicated the surplus would be significantly more than $8 million, because sales tax and TOT were trending higher than expected. Staff would have a specific amount shortly. Mr. Keene asked when Staff projected having the exact amount. Mr. Perez believed within the next two weeks Staff would know the amount. Chair Klein assumed the surplus would be closer to $12 million than $8 million. Mr. Keene stated Staff would not have to perform due diligence if the amount were not significantly higher. Chair Klein understood a report on the Jay Paul Company project was coming up in September. Mr. Keene reported Staff was attempting to report to the Council in September 2013 regarding traffic and public benefits. Chair Klein felt the Council could disapprove the project if the traffic report indicated the traffic impact would be great. Mr. Keene commented that Staff had issues with the performance of the initial traffic study. Therefore, the traffic study would need to be reviewed closely. Mr. Aknin indicated the information was a preliminary traffic report, a first draft. The report provided an idea of potential traffic impacts. Staff would want to review it closely and study impacts to additional intersections. Attachment E FINAL MINUTES Page 8 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Chair Klein inquired whether the preliminary nature of the report would provide the Council with sufficient information to understand potential impacts. Mr. Aknin felt the report would provide a picture of potential impacts; however, Staff would want additional detail and additional intersections studied. Chair Klein noted that Staff proposed using approximately half the SUMC Development Agreement funds, and requested Mr. Keene comment. Mr. Keene reported Staff was not comfortable proposing uses for the SUMC Development Agreement funds. Because the Bicycle and Pedestrian Transportation Plan appeared to meet the criteria the Council discussed for projects, Staff proposed utilization of funds for that project. A follow-up session with the Council on SUMC Development Agreement funds was scheduled within the month. Chair Klein indicated the Policy and Services Committee recommendation regarding SUMC Development Agreement funds would be presented to the Council in September 2013. He asked if there were any issues with the Committee proposing use of remaining funds for a Public Safety Building, for example. Mr. Keene stated Staff had not precluded that possibility. Council Member Berman referenced the $1 million increased funding amount included in the FY 2014 Capital Budget and Five Year Plan for sidewalks, and asked if that increased amount would accomplish the goal of completing the sidewalk 30-year cycle in 30 years. Mr. Eggleston believed the increased amount would accomplish the goal. The $6 million amount was utilized in polling and would be additional funding to complete the original sidewalk cycle. The $6 million represented the amount needed to replace approximately 7 percent of the total amount of sidewalks in the City. Council Member Berman inquired whether Staff felt there was a need for that amount of sidewalk repair. Mr. Eggleston reported in some districts, where work was performed many years ago, a great deal of work was needed. Staff did not have a good assessment of the actual amount of work needed; therefore, Staff suggested funding a study of sidewalks in the FY 2015 Budget. The study could consider options for the cost of implementing a 10-year, 15-year or 20-year cycle and other ways to organize the program. Attachment E FINAL MINUTES Page 9 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Council Member Berman concurred with considering a Mello-Roos District. He suggested COPs based upon the revenue stream from renting the current Public Safety Building be issued to fund a new Public Safety Building. The digital reader board was another potential source of revenue. Because an increase in the TOT required a 50 percent approval vote, he felt that revenue stream should fund the least popular infrastructure items, namely a new Public Safety Building. Fire stations, the Bicycle and Pedestrian Transportation Plan, parks catch-up and sidewalks all polled very well and were better suited for a GO bond election. He preferred to increase the TOT rate first, and then utilize revenue from the new hotels for future projects and needs. The civic center and Cubberley Community Center would need major improvements at some point. He did not want to use COPs on the TOT as a first option. The Council needed to impress on the public that all these projects were catch-up items, not ongoing maintenance. Mayor Scharff felt Staff needed to provide details regarding a Mello-Roos District including the boundaries of districts, the number of garages and spaces needed, and impacts on businesses. MOTION: Mayor Scharff moved, seconded by Vice Mayor Shepherd to direct Staff to come back with a plan for a 2014 ballot measure using a Mello-Roos District. Mayor Scharff noted the Committee's concerns that an assessment district was no longer a viable funding mechanism. A Mello-Roos District would provide a solution to the parking problem, and the people who created the problem would pay for the solution. Vice Mayor Shepherd indicated the Committee needed to have sufficient information to determine whether a Mello-Roos District was viable. The public needed to know a Mello-Roos District was a possibility and provide comment on the topic. Chair Klein understood Vice Mayor Shepherd wanted information while Mayor Scharff wanted to include a Mello-Roos District on the 2014 ballot. Mayor Scharff clarified that Staff should present a detailed plan, including options and recommendations, for possibly placing a Mello-Roos District on the 2014 ballot. Chair Klein reiterated that Vice Mayor Shepherd was interested in general information, while Mayor Scharff was interested in details of actual garages and spaces. Attachment E FINAL MINUTES Page 10 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Mayor Scharff inquired whether Vice Mayor Shepherd would agree with Staff providing information about actual Mello-Roos Districts in Downtown and California Avenue. Vice Mayor Shepherd believed detailed information was necessary for the Committee to make a decision. The discussion of Mello-Roos Districts could be iterative as the Committee requested specific details. She assumed the public would comment once they learned the Committee was considering a Mello-Roos District. She inquired whether Mayor Scharff wanted the discussion to be iterative or Staff to provide clearly-defined plans. Mayor Scharff indicated the process could be iterative; however, he wanted a timeline to place a Mello-Roos District on the 2014 ballot. The Committee could make a decision more quickly if the initial presentation was detailed. The Committee and Downtown property owners needed to know the broad impacts of a Mello-Roos District. Chair Klein would support the Motion if it was clear that the Committee was not committed to placing a Mello-Roos District on the ballot in 2014. Vice Mayor Shepherd added that the discussion would be held with the consideration that it could be placed on a 2014 ballot. Chair Klein also wanted Staff to reach out to affected neighborhoods and property owners early to provide sufficient time for public comment. Mr. Keene understood the discussion would be iterative. The question was the level of detail the Committee wanted in the initial presentation. Staff could provide a gross analysis and share information with the public. The public would also be interested in the scale of parking provided by a Mello- Roos District. In six weeks, Staff could provide a schedule for providing a first iteration. He believed the Committee would have sufficient time to discuss the information and inform the public. Vice Mayor Shepherd requested Staff indicate whether any Ordinances conflicted with a Mello-Roos District or whether a Downtown Parking District would be exempt. Mr. Keene indicated the initial presentation would not capture all information. The process would need to be iterative in order to consider many different impacts. The important point was for Staff to return as quickly as possible with as much meaningful information as possible. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to have Staff investigate a public/private Attachment E FINAL MINUTES Page 11 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 partnership with the possibility of selling to or having a long-term lease with a developer for one of the surface parking lots. Vice Mayor Shepherd also requested information regarding possible overlap with the Transportation Demand Management (TDM) Program. Mr. Keene stated the Vice Mayor was acknowledging the fact that parking and traffic issues would not be addressed solely by building additional parking. The Council requested Staff review an intensive expansion of the TDM Program and standards. Mr. Saccio reported a consultant could be needed to determine how best to develop a tax. Chair Klein believed the Motion was simply requesting information. Work needed to begin soon. MOTION PASSED:4-0 Mayor Scharff inquired whether Staff needed a Motion on the UUT. Ms. Stump did not believe a Motion was necessary. She would provide the needed information. Mayor Scharff felt the Committee needed to provide more details regarding a TOT increase and GO bonds. The Committee should not provide the Council with an open-ended discussion. The Committee needed more information before recommending a TOT increase or a GO bond. He wanted Staff to provide a Staff Report considering the relationship between funding sources and the Jay Paul Company project. The Committee could discuss revenue sources again in October 2013 after reviewing the preliminary traffic analysis for the Jay Paul Company project. He requested Staff comment on his suggestions. Mr. Keene agreed that the Committee should provide the Council with recommendations and clarity regarding a funding source approach soon. If the Committee chose a COP strategy, the real discussion was the use of those funds and the relationship to a back-up option. The Committee needed to tell Staff if it needed specific follow-up information regarding funding sources. If additional information was not needed, then Staff could work on the schedule and interface between funding options and the Jay Paul Company project. He advocated for the Committee choosing a lead funding source sooner rather than later, because other concerns would then fall in line for the Committee and the Council. Attachment E FINAL MINUTES Page 12 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Mayor Scharff suggested the Committee place a TOT increase on the ballot for 2014 with the opportunity to place GO bonds on a 2016 ballot. He was unsure whether the Committee should decide which projects the revenue would fund in terms of which items were popular in the poll. Because there were many projects to fund, the Committee should maintain flexibility. MOTION: Mayor Scharff moved, seconded by Council Member XXX to direct Staff to return to the Committee with possible scenarios for a Transient Occupancy Tax Measure for the 2014 election, being sensitive to the flexible use of the funds. MOTION FAILED DUE TO LACK OF SECOND Chair Klein felt the Committee had enough information regarding a TOT increase. He wanted the TOT to total 14 percent, rather than 15 percent. He also wanted to utilize more SUMC Development Agreement funds. The Council reached consensus that those funds should be used for items with a large impact. Projects on the infrastructure list did provide large impacts. The Bicycle and Pedestrian Transportation Plan, a Public Safety Building, parks catch-up and Byxbee Park met the requirements for use of SUMC Development Agreement funds. The Committee should recommend a plan or plans for Council consideration. Vice Mayor Shepherd asked if there was a reason for Staff not linking funds in the infrastructure/housing category with funds in the sustainability category. Mr. Keene explained that listing the funds in that manner was easier. The Committee could obviously break it up. MOTION: Chair Klein moved, seconded by Mayor Scharff to continue the discussion and encourage Staff to provide input in line with the discussion in order to allow the Committee to do their homework. Mayor Scharff inquired whether the Committee needed to include a study of sidewalks in the Motion. Mr. Eggleston reported Staff discussed proposing a study as part of the CIP Budget for the following fiscal year. Mayor Scharff asked if Staff needed authority to perform that study. Mr. Eggleston replied no. Staff would propose a study as part of the upcoming CIP process. Attachment E FINAL MINUTES Page 13 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Chair Klein inquired whether the preliminary traffic analysis for the Jay Paul Company project would be presented to the Council in September 2013. Mr. Aknin reported Staff could include it on the September 16, 2013 Agenda. Chair Klein wanted to ensure the Committee had that information prior to the next meeting. Vice Mayor Shepherd inquired whether the Motion could include uses for the MSC site. Mr. Eggleston indicated that information would take time to compile. Vice Mayor Shepherd asked about uses for the LATP site. Mr. Eggleston knew the land uses for which the site was zoned, but the zoning could be changed. Staff did not know the number of acres of usable land the site would provide. Vice Mayor Shepherd asked when that information could be provided. Mr. Eggleston hoped to have the information in spring of 2014. MOTION PASSED:4-0 Chair Klein inquired about possible meeting dates in October 2013. Ms. Tucker indicated October 1, 2013. Mayor Scharff noted a conflict with 4:00 P.M. on October 1. He suggested the meeting begin at 2:00 or 3:00 P.M. Chair Klein announced the next meeting would be held on October 1, 2013 at 3:00 P.M. ADJOURNMENT: The meeting was adjourned at 5:28 P.M. Attachment E INFRASTRUCTURE COMMITTEE DRAFT MINUTES Page 1 of 18 Special Meeting October 1, 2013 The Infrastructure Committee met on this date in the Council Conference Room at 3:03 P.M. Present: Berman, Klein (Chair), Scharff, Shepherd Absent: ACTION ITEMS 1. Continue Discussion From September 3, 2013 Infrastructure Committee Meeting and Make Recommendations to the City Council on Next Steps in Considering a Potential Infrastructure Finance Measure. Sheila Tucker, Assistant to the City Manager, reported the Infrastructure Committee (Committee) needed to decide the priorities for infrastructure projects. From those priorities, the Committee could determine the means to fund projects, whether to invest in additional study of a finance measure or a combination of both. Staff provided four recommendations regarding: 1) a Mello-Roos District; 2) an increased transient occupancy tax (TAT); 3) a bundled General Obligation (GO) bond transportation measure; and 4) a bundled GO bond public safety measure. Attachment A outlined a funding scenario for each recommendation. Staff increased the Infrastructure Reserve Fund amount to $8.5 million and adjusted the cost of parking garages. Chair Klein suggested the Committee begin the discussion with the Mello- Roos District. Ms. Tucker indicated the Committee directed Staff to present a plan and analysis for implementing a Mello-Roos District to fund parking garages. Constructing parking garages was a small component of the larger City-wide strategy to address parking and traffic issues. No matter how boundaries were drawn, Staff did not believe a Mello-Roos District was a viable option. Public-private partnerships were one option for constructing parking garages. Chair Klein was unsure whether the Committee would agree that a Mello- Roos District was not viable. DRAFT MINUTES Page 2 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Ms. Tucker encouraged the Council to review that option more closely. Mayor Scharff asked which option Ms. Tucker suggested the Committee review. Ms. Tucker clarified proceeding with a Request for Proposal (RFP) to consider private interests in building garages in the California Avenue area. James Keene, City Manager, asked if the Committee had sufficient background information regarding the Mello-Roos analysis and options. Chair Klein understood Staff indicated a Mello-Roos District was not viable, and requested more information regarding jurisdictions where a Mello-Roos District did not succeed and the circumstances. Mr. Keene inquired whether the Staff Report contained practical issues related to a Mello-Roos District. Joe Saccio, Assistant Director Administrative Services, believed the Staff Report outlined information about Mello-Roos Districts. It contained a few examples of potential districts utilizing hypothetical numbers with respect to the amount a parcel would be taxed under two different scenarios. He asked if the Committee felt the report included sufficient information. Mayor Scharff replied no. The Report did not consider a district where residents paid an assessment of $1 or $2 and commercial entities paid more. There was no explanation as to how the boundaries were drawn. The drawing of the boundaries would determine whether or not a district was politically feasible. Mr. Saccio noted two methods for drawing a Mello-Roos District in terms of voting. The first consideration was whether the District contained 12 or fewer residents or more than 12 residents voting. Through a study, Staff would determine a tax formula for allocating the tax to different properties. Bond counsel opined that there were various factors the City could use for the allocation of the tax; proximity to the garage, car trips generated, square footage, etc. The amount of impact on the resident could be reduced; however, he did not wish to present the information as a rational study. As more of the assessment obligation was allocated to commercial properties, less was allocated to residential properties. Mayor Scharff expressed concern that Staff assigned too high of an assessment to residential properties. He believed voters would support a minimal assessment, and wanted to poll on that. DRAFT MINUTES Page 3 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Chair Klein explained that the Council would have to provide a rational basis for the assessment. Mayor Scharff inquired whether Staff considered on a rational basis the lowest assessment that could be placed on a residential parcel. He wished to have a study on that and then poll about it. That would provide the information as to whether a Mello-Roos District was feasible. Mr. Saccio agreed that a rational formula was necessary. The City would need to hire a consultant to establish a rational process, because the process could not be arbitrary. The two examples in the Staff Report were meant to demonstrate that with more residential properties in a district, theoretically the lower the cost to a resident would be. The Council needed a rationale for allocating more of the tax to the entities that would generate the traffic and car trips. Mayor Scharff inquired whether a rational basis standard was applicable. Molly Stump, City Attorney, understood bond counsel to advise that the legal standard was a reasonable basis, which was probably a slightly higher standard than the rational basis test. Staff would need to work through the process with an engineer and with bond counsel. Mayor Scharff asked why Staff opposed a Mello-Roos District. Mr. Saccio reported the concern was the need for a two-thirds majority approval. The consultant felt that was a high hurdle, given other factors that could oppose a Mello-Roos District. Mr. Keene noted an additional concern was providing detailed methodologies and different alternatives in a limited amount of time. The Committee also needed to consider the extent that any single measure could provide a solution to parking and traffic issues. Chair Klein inquired about Staff's use of $3 million in the report. Mr. Saccio explained that the total debt service associated with construction of three garages in the second scenario was approximately $3 million a year. The table on page 6 indicated tentative scenarios, according to intensity of use, for the amount of the allocation per parcel per resident. Mayor Scharff felt the Committee did not have sufficient information. He assumed a study was needed to determine the amount of parking needed. The parking problem seemed to be created by the people owning the office DRAFT MINUTES Page 4 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 buildings and retail. The Staff Report did not contain a rational basis with respect to the numbers. Chair Klein believed the City needed an impartial consultant to perform a study. All traffic studies showed a significant part of the parking problem was residents. If the numbers in the report were realistic, they would not be a huge hurdle to obtaining a two-thirds vote. Council Member Berman noted in the Downtown District hypothetical, Staff would have to identify a rational basis that the Downtown businesses created 693 times more traffic than residents. He expressed concern regarding confusing voters by proposing a Mello-Roos District, a TOT increase and a Residential Parking Permit (RPP) Program in the same measure. Vice Mayor Shepherd inquired about areas where Mello-Roos Districts were successful and unsuccessful. Shakari Byerly, Fairbanks, Maslin, Maullin, Mertz and Associates, reported no one particular ZIP code or region received 50 plus 1 support. Chair Klein stated a Mello-Roos District was not contained in the poll. Ms. Byerly clarified that parking garages did not receive that level of support. The polling questions were not associated with a particular tax level. Both of the proposals received approximately 52-53 percent overall. By geographic area, one district received 52 percent support. If there was not significant public support in concept for a project with an assessment of $25-$30, the it would be a challenge to receive two-thirds approval. Polling a specific geographic area would be the best method to determine support in specific neighborhoods. She recommended public outreach work, because obtaining a significant number of interviews in such a small area would be difficult. Joy Tartarka, TBWB Strategies, agreed obtaining support in any one region would be difficult. The City could perform extensive outreach and consider different dollar amounts. She could test to determine whether those issues changed some of the variables. Recommendations from the report included shrinking the size of a district to less than 12 voters and creating a business district alone. Again, the City would need to perform extensive outreach to the affected business owners. Mr. Keene added that the City would need to obtain two-thirds support of business owners. DRAFT MINUTES Page 5 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Council Member Berman questioned how to create a Downtown district. Vice Mayor Shepherd was interested in exploring all the types of business cooperatives. In 2009, support for the business license tax reached the 51 percent level for a revenue stream; however, she was unsure how that would match to a revenue stream for parking garages. If businesses did not support a Mello-Roos District, it might not reach a two-thirds majority. The Council should reach out to the business community to determine what they might support. She was unsure if the Committee should direct Staff to provide additional information, unless there was an example of a successful Mello-Roos District. Mayor Scharff noted the consultant was concerned that parking garages polled between 48 and 52 percent depending on the district. He inquired whether support was 48 percent City-wide. Ms. Byerly reported support was 52 percent for California Avenue and 53 percent for Downtown. Mayor Scharff indicated the concern was how to obtain a two-thirds majority. The TOT increase polled well because residents would not be paying the increase. He asked if the structure of a measure would affect the level of support. Ms. Byerly commented that another consideration was the time horizon. Six months to a year was needed to build public consensus around a structure. Her concern was reaching two-thirds approval and educating the voter. Chair Klein felt the community was more concerned about parking since the poll was conducted. He was willing to poll again to determine the current level of support. He requested examples of Mello-Roos Districts in other communities and information regarding their success or failure. Ms. Tartarka could look into it. She could only speak anecdotally with respect to polling falling short of the goal. Chair Klein stated apparently the consultants did not have recent experiences from other cities. Ms. Byerly could look into that. She was not prepared for that question and did not bring specific examples. DRAFT MINUTES Page 6 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Vice Mayor Shepherd stated the topical point was the two-thirds vote. She proposed Staff provide experiences from other cities to facilitate an explanation to the full Council. MOTION: Vice Mayor Shepherd moved, seconded by Council Member XXXX to put in the parking lot to direct Staff to obtain from the consultant past Mello-Roos District election information and experiences from other cities. MOTION FAILED DUE TO LACK OF A SECOND Mayor Scharff wanted additional information on the connection between polling. Parking was a high profile issue. He believed residents would support a measure if the amount they paid was nominal. He suggested the Committee test some sort of nominal amount that was rationally justifiable. If support did not reach two-thirds, then the Committee should abandon the concept of a Mello-Roos District. If support reached two-thirds, then a Mello-Roos District was probably a more viable option to build parking garages than some of the other options. MOTION: Mayor Scharff moved, seconded by Council Member Klein to put in the parking lot to direct Staff to: 1) work with the consultant to poll the public on a nominal cost of a parcel tax that is rationally justifiable by the numbers for parking garages, with numbers provided by Staff, 2) some offset of payments that people would be paying for other parking garages. Council Member Berman believed the Committee should focus on other possible options; however, it was difficult to make a decision without discussing the other options. Including Mello-Roos questions in a poll could complicate matters. He did not understand why the Committee would want to perform one poll on a Mello-Roos District to raise $34 million as the Committee had identified other options to raise money to build parking garages. Chair Klein agreed that the Committee's later decisions could impact the first one. He agreed with moving the Motion to a parking lot. Vice Mayor Shepherd wanted to understand the positive and negative aspects of the previous campaign for a business license tax. She would not want to be taxed under a Mello-Roos scenario and pay for an RPP. Perhaps the Committee could consider a universal RPP for parking anywhere in Palo Alto. Chair Klein indicated that topic was beyond the Committee's jurisdiction. DRAFT MINUTES Page 7 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Vice Mayor Shepherd was attempting to integrate that type of question. Chair Klein stated the full Council might have that responsibility at some point. Vice Mayor Shepherd inquired whether the Committee could only direct Staff to poll regarding the specifics of parking garages. A broader question was needed. Mr. Keene suggested effective polling would need a number of different aspects to be worthwhile, including possible opposition. Staff assumed RPP Programs would be implemented in conjunction with building parking garages, and the community would be asked to pay for both. It would be important to test that. He did not believe the Committee was holding a real discussion about establishing a City-wide RPP Program. Mr. Saccio reported a Mello-Roos District was flexible in that operating expenses and capital expenses could be included in it. An RPP Program could be folded into a Mello-Roos District. It would add a layer of complexity, but it was a possibility. Mayor Scharff agreed with Vice Mayor Shepherd. An RPP Program was an important component of a potential Mello-Roos District. He requested Staff consider different variations, poll on it and include it in the process. Chair Klein inquired whether the Committee on its own could authorize a second poll. Ms. Tucker believed the previous Council authority assumed a poll in the fall. Vice Mayor Shepherd inquired about the Committee's check-ins with the Council. Chair Klein felt the Committee should report to the Council very soon. Mr. Keene inquired whether a report to Council would impact the schedule for the Committee's work. A check-in could trigger issues other than just infrastructure, such as parking issues and RPP policies. The Council might want to authorize the shaping of those issues. Chair Klein preferred not to include Vice Mayor Shepherd's suggestion regarding an RPP Program. Vice Mayor Shepherd asked if he preferred to check-in with the Council first. DRAFT MINUTES Page 8 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Chair Klein believed that would add a month's delay to the process. Vice Mayor Shepherd noted the Committee held several meetings without updating the Council. She asked that the Motion be restated. Chair Klein reported the Motion contained several items; to poll on parking garages; to provide a rationally justifiable cost per residential parcel with an explanation that businesses would pay more than residents; and to determine the community's position regarding some offset for payments for other parking programs Council Member Berman inquired whether the poll would address only parking garages or other issues as well. Ms. Byerly would need information regarding the scenario the Committee would propose. Whether the Committee placed three measures before voters would determine how she structured the questionnaire. To provide robust data, voters needed to understand the context in which they would be asked to pay for each of the mechanisms. Ms. Tartarka recommended polling along with outreach to the particular community, in this case the affected business communities. That feedback could be incorporated into survey data. Chair Klein supported outreach as long as it could be accomplished in a timely manner for a November 2014 ballot. Mr. Keene stated the Committee did not have an explicit definition of the topic for a poll. He inquired whether the Committee expected to review poll questions prior to polling or grant Staff the authority to proceed. Chair Klein understood that neither the Committee nor the Council would review the questions. Vice Mayor Shepherd requested background information concerning a Mello- Roos District as part of a larger strategy for addressing City-wide parking issues. She inquired about the broad uses of a Mello-Roos District. Mr. Keene noted Berkeley implemented a Mello-Roos Street Light Assessment District. Vice Mayor Shepherd wondered whether the proposed toll in San Francisco would have been a Mello-Roos District. DRAFT MINUTES Page 9 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Mr. Saccio indicated a prior Staff Report provided three examples of successful Mello-Roos Districts in San Francisco. Vice Mayor Shepherd asked if the question could be broadened. Chair Klein reported that a Motion was on the floor directing three areas for polling. Vice Mayor Shepherd's suggestion should be addressed in future discussion. A substantial portion of Staff's and the consultant's recommendation against a Mello-Roos District concerned the fact that parking garages did not poll well at all. The results of polling would determine whether the Committee considered the details Vice Mayor Shepherd requested. Vice Mayor Shepherd felt the poll response would be different if questions included other costs associated with residential parking issues. Mayor Scharff understood one of those questions would be included in the poll. Vice Mayor Shepherd asked if a question could be included without resolving the RPP problem. Chair Klein requested clarification of the question to include as there was a variety of RPP forms. Mayor Scharff indicated the question address residents receiving an offset. Vice Mayor Shepherd requested clarification of an offset. Chair Klein explained residents would receive an offset if they paid for any other form of parking. Vice Mayor Shepherd did not realize the Motion included that point. MOTION PASSED: 3-1 Berman no Ms. Tucker reported that the baseline survey indicated a number of other approaches would be more successful for financing parking garages. The TOT increased polled well at 62 percent. Staff recommended a survey addressing a TOT increase specifically. A second recommendation was to consider a sales tax increase in association with the TOT increase. This would also be a good opportunity to test the interaction of upgrading the Utility Users Tax (UUT). In addition a poll could test reaction to a 2 percent DRAFT MINUTES Page 10 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 and a-3 percent increase. Staff suggested beginning outreach simultaneously with a survey. Council Member Berman suggested Staff include in the survey current revenue sources as noted in the spreadsheet. Mr. Keene asked the consultant to comment on the need to define the use of a TOT increase. That could have some impact on perception of the tax. Ms. Byerly noted the recommendation for additional polling was based on a general purpose measure. Many cities often suggested the types of general purposes for which the tax could be used. She recommended that infrastructure projects be prominently featured in outreach. A high level of risk was associated with a two-thirds measure given an initial vote at 62 percent. Mayor Scharff did not believe the Committee would move to a two-thirds. Ms. Byerly clarified that she was responding to the question regarding specifying uses of tax funds. Mayor Scharff assumed Mr. Keene meant there would be a companion measure. Vice Mayor Shepherd inquired if Staff wanted to test for a 2 percent and 3 percent increase in the TOT. Ms. Tucker recommended that based on Committee input. Vice Mayor Shepherd asked if the prior poll tested for a percentage. Ms. Byerly answered no. The prior poll tested a general concept. Vice Mayor Shepherd agreed with polling for a 2 percent and 3 percent increase. Because the UUT increase would be included on the ballot; therefore, she preferred to determine how it should be placed on the ballot. Ms. Byerly clarified that her recommendation was not that the UUT would not be used to fund infrastructure projects. If the City was interested in a TOT increase, it would be important to know the effect of another revenue neutral measure on the TOT measure. Vice Mayor Shepherd reiterated that the idea was to determine if the two would poll well together. DRAFT MINUTES Page 11 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Chair Klein noted that the UUT measure was not a renewal. If the UUT measure failed, the tax would remain in effect. Ms. Byerly reported that the goal in developing the research instrument was to model the climate in which voters made decisions. If there was a measure related to the UUT, she wanted to incorporate information concerning the UUT into polling on the TOT measure. Vice Mayor Shepherd did not support polling on sales tax. Mayor Scharff inquired about polling results for sales tax. Mr. Keene suggested the support level was approximately 36 percent. Ms. Byerly explained that a good read on a sales tax measure required context for the tax be provided to voters. When sales tax was explored in depth, often the support level increased. Mayor Scharff believed the issue was whether a sales tax should be explored in more depth as part of the TOT. Chair Klein stated the sales should be considered not as part of the TOT but in addition to the TOT. Mayor Scharff asked if sales tax was included in the bundle. Chair Klein noted sales tax was simply one of the suggestions. MOTION: Vice Mayor Shepherd moved, seconded by Mayor Scharff to put in the parking lot to direct Staff and the consultant to conduct another poll for a 2 percent and 3 percent Transient Occupancy Tax to include the Utilities User Tax (UUT) to clean up the UUT measure and include a 1/8 cent sales tax. Vice Mayor Shepherd wished to understand how the sales tax would be incorporated. Mayor Scharff explained the consultant would poll on a sales tax increase to provide information. Vice Mayor Shepherd questioned the number items that should be included in a poll. DRAFT MINUTES Page 12 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Ms. Byerly recommended two separate polls. One survey would explore a bond measure. Mr. Keene noted that the participants would be different for each survey. Vice Mayor Shepherd inquired whether the Mello-Roos District questions would be part of the survey concerning a TOT increase. Ms. Byerly responded yes. Vice Mayor Shepherd asked about the appropriate number of questions in a survey. Ms. Byerly explained the number of questions would be based on the length of the survey. It was possible to test two robust measures and potentially a third measure in less detail. MOTION PASSED: 4-0 Ms. Tucker reported that the GO bond bundle would package highly supported projects with lower supported projects. The baseline survey reviewed five measures that bundled different products. The traffic congestion relief, streets, sidewalks and trails bundle polled the highest at 74 percent. If the Committee was interested in funding parking garages, a bundle of projects could be successful. It would require a two-thirds vote. Staff recommended a survey devoted to a bundled measure. Council Member Berman recalled that the Committee determined previously that polling on streets was not necessary, even though streets were popular. Approximately two-thirds of the funding needed was comprised of parking garages and the Charleston-Arastradero project, neither of which polled well. He inquired about possible survey results when two-thirds of the projects in the bundle were unpopular. Ms. Byerly felt it should be tested. The survey would include messaging to make the case to voters in order to determine their reaction. Mayor Scharff agreed streets should not be included in a poll if it was not necessary, because the Committee did not plan on funding streets from a bond measure. Chair Klein did not support performing a poll, because it would be a separate poll and the Jay Paul Company Project was uncertain. DRAFT MINUTES Page 13 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Mayor Scharff suggested discussing the topics together. Chair Klein did not believe it was logical to perform a poll until the Council had more certainty regarding the Jay Paul Company Project. Ms. Byerly recalled the Committee discussed in a prior meeting a GO bond in 2016. The Committee should discuss the combination and sequence of measures it would put forward. Mayor Scharff wanted the TOT increase and possibly the Mello-Roos District on a ballot in 2014 with bond measures on a ballot in 2016. If the Jay Paul Company Project did not materialize, then he would support the second bond measure. If the Jay Paul Company Project was successful, then he might consider the bundled transportation measure in 2016. He did not support a bundled GO bond measure if a funding was needed for a Public Safety Building (PSB). Chair Klein indicated funding for a PSB would not be needed if the Jay Paul Company Project was approved. If the Jay Paul Company Project was unsuccessful, then a bond measure would be needed to finance a PSB. That would take precedence over other aspects included in the transportation measure. Council Member Berman believed the discussion was different at the prior meeting, because the Committee separated funding into three clean categories. The PSB was an aspect of the TOT increase. A successful TOT measure would eliminate the need for a bond measure in 2016, because it provided the funding needed. Chair Klein disagreed. On the funding source side, there were a number of variables. Council Member Berman considered the categories of projects identified under the different scenarios. Chair Klein indicated a TOT increase would not necessarily fund all projects. Council Member Berman agreed. Chair Klein reiterated that the focus was on subjects for polling. Council Member Berman felt it was logical to poll for a potential transportation GO bond measure. The Committee needed as much information as possible to compare the options. He inquired about the cost DRAFT MINUTES Page 14 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 of an additional poll. The cost should not be extraordinary, and now was the right time to obtain information from the public. Ms. Byerly reported that timing was a concern. If there was a scenario under which the Committee would proceed with a GO bond in 2014, she recommended polling now. Otherwise, she recommended polling be delayed on the transportation measure and the focus moving to the measure of most of interest for November 2014. Council Member Berman had difficulty reaching a decision without results from the polling on the TOT. Vice Mayor Shepherd believed support might have changed because of publicity around the Jay Paul Company Project and densification. The Council needed direction from the community on how the PSB would be financed. She supported a poll. Mr. Keene asked if Vice Mayor Shepherd supported a poll under a GO bond scenario in addition to polling on the transportation bond. Vice Mayor Shepherd responded no. Mayor Scharff noted the Committee's reluctance to poll on both measures with a strong desire to poll on a public safety measure. He inquired about the cost to perform a second poll. Ms. Byerly felt a poll on both would be valuable if the Committee was considering a separate bond measure survey. MOTION: Mayor Scharff moved, seconded by Council Member Klein to put in the parking lot to direct Staff to poll for bundled General Obligation Bond measure and Transportation measure. MOTION PASSED: 4-0 Chair Klein inquired about the timing of the polls and when results could be provided to the Committee. Ms. Byerly anticipated finalizing questions in mid-November and reporting in late November or early December. She hoped to complete the initial research phrase prior to the end of 2013. Ms. Tucker noted a check-in with the Council was tentatively scheduled for late October, possibly the October 28, 2013 Council meeting. DRAFT MINUTES Page 15 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Mr. Keene inquired whether the Committee removed streets from the transportation polling item. Mayor Scharff agreed streets were removed unless Staff provided a rationale for needing financing for streets. Mr. Keene inquired whether the name should be transportation measure or transportation/parking measure. The public could question the lack of streets in a transportation measure. Mayor Scharff explained that the Committee was providing Staff with discretion. Chair Klein reiterated that streets was removed, because funding was not needed for streets. He requested the consultant's recommendation with regard to the name. Mr. Byerly would work with Staff on all issues. Ms. Tucker inquired whether the Committee wished to discuss an RFP on a public-private partnership with respect to parking garages. Chair Klein answered yes. Jaime Rodriguez, Chief Transportation Officer, reported that Staff reviewed the needs for constructing parking garages on existing lots. Staff discussed the best long-term use for parking sites. Developers approached Staff with proposals for partnerships. The Council would need to set parameters regarding projects on the sites. Staff believed the development community was interested in partnerships with the City. Public-private partnerships would allow garages to be built quickly and outside existing assessment districts. Staff could provide a proposed RFP for the next Committee meeting. Mr. Keene noted that the discussion of public-private partnerships was part of the larger parking issue, which the Council should consider. Chair Klein agreed that the topic should be presented to the Council. Council Member Berman felt the Council should determine which parking lots were candidates for garages before issuing an RFP. Mayor Scharff inquired with assessment district permits should be provided to all who paid for them. DRAFT MINUTES Page 16 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Mr. Rodriguez indicated Staff requested a meeting with bond counsel to address that question. Mr. Keene stated Staff would provide that information to the Council. Mayor Scharff recommended Staff demonstrate the advantages of the various types of partnerships in its information to the Council. Mr. Keene believed a public-private partnership to build a garage was a narrow focus. Development visions for Downtown could include different mixed-use issues, which were broader than the public-private partnership strategy. The discussion should encompass planning and land use rather than solely building a parking garage. Mayor Scharff understood Mr. Keenan built more parking on his project site and paid the in-lieu fee after the Council denied the project. That may have been more beneficial for the City than building the garage in partnership with Mr. Keenan. That type of information should be included in the Staff Report. Chair Klein asked if there was a definitive date for the Committee's check-in with the Council. Ms. Tucker reported it was tentatively scheduled for October 28, 2013. Chair Klein inquired whether the Committee should have another meeting prior to October 28. Ms. Tucker suggested Staff return quickly to the Committee to outline research objectives. Mayor Scharff asked if Staff recommended a Committee meeting on that topic. Ms. Tucker replied yes. Staff would outline the survey topics and ensure the Committee's feedback was correctly represented in the surveys. Mr. Keene asked if that meeting would occur after October 28. Ms. Tucker indicated Staff could return to the Committee in early November with the plan. Chair Klein requested clarification regarding the Committee's review of survey questions. DRAFT MINUTES Page 17 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Ms. Tucker reported Staff provided the Committee with a high-level overview of the objectives and the topics to be tested in the baseline survey. Staff did not provide the questionnaire or the specific questions to the Committee for review. Mr. Keene did not believe Staff should return to the Committee prior to the Council meeting on October 28, 2013. Polling would not be completed prior to October 28. He inquired about a possible date for polling to be completed. Ms. Byerly believed results would be available in early December 2013. Chair Klein understood Ms. Byerly to indicate earlier that polling would be completed in November. Ms. Byerly explained polling would likely be conducted in mid-November. An analysis of the results could be presented in the first week of December. Chair Klein asked if there was a need for the Committee to meet prior to receiving the results from polling. Ms. Tucker replied no. Ms. Byerly would begin work immediately. Chair Klein announced the Committee would not prior to the October 28, 2013 check-in with the Council. He and Ms. Tucker would confer with respect to a presentation to the Council. Council Member Berman inquired whether a TOT increase, a Mello-Roos District and a UUT could be contained in one poll. Ms. Byerly responded yes. Ms. Tucker added that sales tax would be included. Ms. Byerly felt the UUT issue was not a separate measure. MOTION: Mayor Scharff moved, seconded by Council Member Berman to direct Staff to work with the consultant to conduct a poll for the Transient Occupancy Tax, a Mello-Roos Tax, sales tax, and the contrast of the UUT Tax in one poll. MOTION PASSED: 4-0 DRAFT MINUTES Page 18 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 ADJOURNMENT: The meeting was adjourned at 4:42 P.M.