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HomeMy WebLinkAbout1980-01-15; City Council; 5951-1; Public Facilities Feesr’ ’ .’ 2-e. CITY OF CARLSBAD , ..- , i$ENDA4?I~L NO. zy()jL/ a I - DAiE: January 15, 1980 DEPARTMENT: Utilities 4 Maintenance Subject: ACCEPTING THE REPORT OF THE CITIZENS COMMITTEE FOR PUBLIC FACILITIES FEE -7 , .-._.. Statement of the Matter The Council appointed a Citizens Committee to develop a Public Facilities Fee by Resolution No. 5880 at their regular meeting of September 18, 1979. Their report is forwarded to Council. EXHIBIT: A. Report of Citizens Committee for. Public Facilities Fee. B. Memo to City Manager dated January 9, 1980. C. Memo to Mayor and Council dated January 10, .1980. RECOMMENDATION: Accept the report, as submitted. Council Action: q l-15-80 Council accepted the report of the Citizens Committee and I directed that it be scheduled for a workshop session at the earliest possible date. January 4, 1980 :IEMORANDUM TO: Carlsbad City Council FROM: Public Facilities Fee Citizens Committee SUBJECT: Committee Report The Citizens Committee, appointed by Council Resolutions 5880 and 5958, convened on October 1, 1979 and met weekly thereafter to meet the requirements of the Council's charge. Mr. H. B. "Jerry" Bank served as Chairman and Mr. Glenn McComas as Vice Chairman of the committee. Council requested the committee provide specific recommendations for four key issues, as discussed below: 1. The committee finds the staff approach, using the ultimate population projec- tions most reasonable, in that funds generated will be correlated with the rate of growth, and thus provides the best opportunity to provide public facilities concurrent with need. The committee is aware that Council is developing a Growth Management Plan and believes this plan will correlate with the public facilities fee ordinances and policies adopted by Council. 2. The committee is of the consensus that the fee should include parks and arterial streets. It is recommended that the standard for land dedication requirements of the Parks Element of the General Plan (5 acres/1000 population) and of the Parks Dedication Ordinance (2% acres/1000 population) be brought into consistency and the standard established be supported by the public facilities fee, in proportion to the other elements comprising the fee. Arterial streets should also be included as an element of the fee; however, alternate funding sources should be aggressively pursued. 3. It is the consensus of the committee that the current rate of 2% of building permit value be set as the maximum limit. It is further recommended that a flat fee of $300.00 per mobile home site be established. The latter fee should be adjusted annually in consonance with changes in the Consumer Price Index. It is recognized that the 2%/$300 fee will not "fully fund" all elements of the staff recommendations; however, these elements should be funded from other revenue sources, or standards for these facilities should be adjusted downward and these reduced standards funded from revenues available from the public facilities fee. 4. It is the consensus of the committee that the public facilities fee should not be set for an election as the Council, in exercising its responsibilities, is well within its authority to set the fee for all new construction (with minor exceptions as outlined in the attached report). The committee strongly recommends that Council formalize procedures to appoint a Citizens Committee to review the Public Facilities Fee Program not less than every three years and, in particular, to confirm or recommend changes to the amount of the fee (2% and $300) and to measure the success of utilizing the funds generated for their intended purpose. Additionally, the committee recommends that fees be placed in a restrictive fund to be utilized solely for the acquisition and construction of public facilities. Carlsbad City Council -2- January 4, 1980 The committee report is attached and will provide a more detailed rationale for these recommendations. It has been a pleasure participating in these serve the Council well Sincerely, JiT(p$ Chairman HBB:RWG:pab for all members of the committee to serve our community by important deliberations. We trust our recommendations may in developing policies for the years ahead. Encl: (1) Report of Citizens Committee for Developing a Public Facilities Fee REPORT OF THE CITIZENS COMMITTEE FOR DEVELOPING A PUBLIC FACILITIES FEE I BACKGROUND The City Council appointed the following citizens of the City to a committee to review a staff analysis of public facility fees and submit recommendations to the Council concerning the subject, for their consideration: H. B. "Jerry" Bank Alice V. Beach Richard J. Chick Ronald Cipriano Robert Dias Glenn McComas Barbara Otwell Marty Rombotis Edwin S. Schick, Jr. Robert L. Snyder Rosemary Stafford Raul Tarrango David Thompson The City Manager provided the following staff to the committee: Roger W. Greer, Director of Utilities & Maintenance Michael Zander, Associate Planner Pamela Batho, Secretary II COMMITTEE PROCEDURE The first meeting was held on October 1, 1979 for the purpose of deciding meeting dates, to discuss a work schedule and to establish administrative procedures. The committee met each Thursday evening thereafter (except November 22 - Thanksgiving , and December 6). Early meetings were devoted to "backgrounding" the committee on the many issues relating to the need for public facilities fees. Briefings were provided by the City Finance Director, Jim Elliott; planning considerations by Mike Zander; the staff analysis; Mr. Fred Morey of La Costa Land Company; Mr. Robert Cozens and Mr. John McTighe of the Construction Industry Federation. Various documents, sample ordinances from other jurisdictions and correspond- ence were also provided to the members for their review. A speakers list and bibliography are attached. Several members of the committee also attended the City Council workshop session of November 26, 1979 on Growth Management. III DISCUSSION Each of the major issues addressed to the committee contain or lead to many sub-issues. General discussion of all of the elements required to be supported by the fee and discussions of revenue sources and their applications, although time consuming, aided the committee in recognizing the complexity of the issue of public facility fees and was part of the process needed for the individual members to clarify the major issues and arrive at their individiual decisions. These discussions are not detailed below, rather the report focuses -only on those specific issues the Council requested. Additionally, developing committee consensus did not occur in the same sequence as they were identified in the appointing resolution; however, they are outlined in that order for consistency. A. The Period Over Which the Public Facility Needs Should be Projected? The committee investigated various alternatives for establishing a time frame; i.e., setting a specific period such as five, ten or twenty years. It was recognized that in establishing such a specific time frame it would be necessary to assume a growth rate to determine a population and in addition it would be necessary to project the location of this development in order to establish the public facility needs. This process involved many unpredictable factors which would require making assumptions and there was concern that these assumptions would in time be considered as "goals" and thus have an undesired side effect. The committee agreed with the staff approach of developing facility needs on the basis of the General Plan buildout population, since it appears that revenues generated would provide funding for facilities somewhat con- sistent with need. The Growth Management Plan, being developed, will correlate with this public facilities fee by providing guidelines for location of facilities and the Capital Improvement Program will set the priorities for construc- tion. The committee does have concern that the funds generated by the public facilities fee will not be sufficient to provide these facilities concurrent with need and urges the Council develop funding programs to meet the initial capital requirements. Concern was also expressed regarding resale of homes protected under Proposition 13. These homes, faced with revaluation, will contribute additional property tax funds. Additionally, new construction will add to the current property tax base. Therefore, the public facilities fee should be reviewed periodically by a citizens committee to reaffirm requirements and methods for collection of monies to satisfy the program. The committee was of the opinion that the City has not demonstrated its ability to plan and construct public facilities in a reasonable time, consistent with need. This committee, therefore, suggests that Council take those measures necessary to improve this process. It is further suggested that those developers, who wish to construct public facilities in anticipation of actual need, be encouraged to do so. A procedure for allowing credits to the developer's fee liability, or a process by which the developers may recover funds by way of a reimbursement agreement, should be incorporated into the public facilities fee system. B. Should the Basis for the Fee Include Considerations for Parks and Arterial Streets? This issue required a large part of the committee's deliberations: Parks: The committee is aware of the inconsistency between the standard of 5 acres/1000 population for local park purposes of the Parks & Recreation Element of the General Plan and the standard of 2% acres/1000 - 2 - C. in the present Park Dedication Ordinance. It is our understanding that these standards are being reconsidered during the process of updating the Parks & Recreation Element by the Parks & Recreation Commission and by reviews being conducted by the Parks & Recreation staff. The committee recommends that Parks be included in the consideration of a public facili- ties fee, but only to the degree of a consistent standard. Arterials: This element comprises almost 25% of the total revenue require- ment and appears to have a greater probability of being funded from other revenue sources such as gas tax or grants, which is considered to be more equitable. Nevertheless, the committee considers arterial streets as a need which should be funded, at least in part, from the public facilities fee. This element also lends itself to funding by developers and should be encouraged by any discretionary decisions made by Council when approv- ing such developments. The reduction in the proportion of the fee required for construction of arterial streets should reduce the total amount of fee required for the development up to the full liability, based on the Council‘s decision concerning conditions for development. Should the Revenue Required to Construct Public Facilities Concurrent With Need be Fully Funded by the Fee Collected at the Time of Building Permit Issuance or Funded in Part by Revenues From Other Sources? The public facilities fee should be set at no more than 2% of building permit valuation or $300 for each mobile home site. The mobile home fee should be adjusted annually based on the local Consumer Price Index. The committee felt strongly that the staff's determination of 3.41% and $1750 per mobile home, although fully funding the facility needs, failed to recognize that new growth generates additional revenue and some propor- tion of these newly generated revenues should be apportioned to fund public facilities. Additionally, the committee believes that alternative funding mechanisms will be developed in the future by the state or federal governments, which will help provide for new facilities. The committee also rejected the staff assumption that new facilities only benefit new residents and believes that some proportion of new facilities should be funded by current population. The committee, therefore, recommends that no more than 2% of building permit valuation be levied to fund public facilities. The committee also believes that the staff recommendation of $1750 per mobile home site failed to recognize the realities of developing revenue to support the construction of public facilities for the same reasons annotated above. Additionally, it is believed that mobile home communities, as they presently exist, place a lesser burden on the public facilities infrastructure than does other development. It is, therefore, recommended that the fee for a mobile home site be set at $300 and adjusted annually in consonance with changes occurring in the Consumer Price Index. Should the present characteristic use of mobile homes change, reconsideration of this fee would be necessary. D. Should the Public Facilities Fee be Placed Before the Voters Again? The committee is of the opinion that the Council is fully empowered to act judiciously in setting the fee without reference to the electorate. The committee is strongly convinced that the fee should apply to all new -3- development (not just development requiring discretionary actions as out- lined in Policy No. 17). Exceptions to the fee as outlined in the proposed ordinance, developed prior to the previous ballot question, are reconfirmed and, in addition, remodeling which does not increase the number of dwelling units, should also be exempted. The Council should be aware that this last recommendation- was the most difficult of all the recommendations to develop and was reached by a 6 to 5 vote at the final meeting. Pursuasive arguments can be made for both positions on this question; however, it was generally believed that Council can and should act alone on this issue. Should there be a legal requirement that this matter be set to an election, the committee urges that it be set to occur with a major election in order that it may be acted upon by the largest number of voters. Council should also set this election with sufficient lead time in order that all voters may have maximum exposure to all arguments to the question. IV RECOMMENDATIONS A. The public facility needs should be established on the basis of General Plan buildout population: 1. The CIP process establish priorities. 2. The planning and contracting process for construction of public facilities be improved in order that facilities may be built con- current with need. Additionally, Council should develop methods to ensure that capitalization of the facility may be achieved. It does not appear that all facilities can be constructed when needed by use of the funds generated from the public facilities fee. 3. Developers wishing to construct public facilities should receive a commensurate reduction in their fee liability or granted reimburse- ment through appropriate agreements. B. The public facilities fee should include consideration of parks and arterial streets: 1. Parks standards should be reviewed and consistency achieved between the Parks & Recreation Element of the General Plan and the Park Dedication Ordinance. The fee should include considerations for funding under the revised standard. 2. Arterial streets should be included; however, alternate funding sources should be encouraged. C. The fee should be set at no more than 2% of building permit valuation and at $300 per mobile home site. 1. The $300 fee for the mobile home site should be adjusted each year in consonance with changes in the Consumer Price Index. D. The committee recommends that the public facilities fee be established by Council action and that a referendum is not desired. -4- A master file containing all minutes of the meetings and documentation reviewed is maintained in the office of the Director of Utilities & Maintenance for the City cif Carlsbad and is available for review by interested parties. Chairman HBB:RWG:pab attach. -5- SPEAKERS AND GUESTS Mr. Jim Elliott Finance Director, City of Carlsbad Mr. Fred Morey La Costa Land Company Mr. James Goff La Costa Land Company Mr. Robert Cozens Construction Industry Federation Mr. John McTighe Construction Industry Federation Mr. Don Brown Carlsbad Chamber of Commerce Mr. Bud Porter Legislative Advocate, San Diego County Board of Realtors r A Public Facilities Fee for the City of Carlsbad - An Analysis by City Staff An Analysis of the Special Tax Limitation of Article XIII-A by Vincent F. Biondo, Jr., City Attorney and Daniel S. Hentschke, Assistant City Attorney ' Council Policy Statement No. 17 Provision and Financing of the Urban Infrastructure in San Diego County - Construction Industry Federation General Plan Summary for the City of Carlsbad Article in Los Angeles Times of July 29, 1979 "Reliance on Infrastructure Fee Indidates Resurgent Interest in Growth Control" by Donald G. Hagman Final Budget City of Carlsbad FY79-80 , Cal Tax Research Bulletin, August 1979, "When It's Time To Build" Excerpts of City Council "Goals & Objectives" of June 1, 1979 Correspondence "Comments Regarding The Public Facility Fee' from Fred J. Morey, La Costa Land Company Correspondence 'Proposed City of Carlsbad Growth Management Policy' Carlsbad Chamber of Commerce Resolution of the City of Thousand Oaks - "Road Pavement Fee Policy for all Ndw Land Development" and supporting documentation Resolution of the City of Thousand Oaks - "A Traffic Signal Fee Policy for all Land Developments' and supporting documentation Ordinance of the City of Corona - ‘Imposing a Dwelling Development Tax on New Residential Construction" Ordinance of the City of Milpitas - "Imposing a Charge Up on the Construction of New Dwellings" Ordinance of the City of San Juan Capistrano - "Establishing a Systems Development Charge" Ordinance of the City of Irvine - "Establishing a Systems Development Charge" Letter from David R. Thompson - 'Recommendations for Discussion in My Absence" DATE: TO: FROM: SUBJECT: JANUARY 9, 1980 CITY MANAGER Assistant to City Manager CITIZENS' COMMITTEE REPORT ON PUBLIC FACILITIES FEE The Committee Report dated January 4, 1980 contains recom- mendations on two issues that deserve further comment, Recommendation Number 2 discusses an inconsistency regarding standards for park dedication between the General Plan and the Park Dedication Ordinance (Chapter 20.44 CMC). City staff has been aware of this apparent inconsistency and the Parks and Recreation Commission will soon be considering the issue and will be making recommendations to the City Council on ways to resolve the apparent inconsistency. Committee Recommendation Number 4 deals with placing the fee before the voters. The committee recommends that the Council set the fee directly and submit the issue to the electorate. The City Attorney in a separate memo will further discuss the need for an election on this issue. If the Council is inclined to again place the fee question before the electorate, it is recommended that the issue be placed on the June 1980 primary election ballot or the November 1980 general election ballot. This would allow a greater opportunity for community discussion and debate on the issue. In addition, voter turnout at primary and general elections is typically higher than at municipal elections. FRAN N. MANNEN Assistant to City Manager FNM:gb MEMORANDUM DATE: January 10, 1980 TO: Mayor and City Council FROM: City Attorney SUBJECT: PUBLIC FACILITIES FEE CITIZEN COMMITTEE REPORT Our office commends the efforts of the Public Facilities Citizen Committee for the time and effort that they put into the preparation of their committee report. It is clear from reading the report that the Committee has done an excellent job in reviewing an extremely difficult problem: however, we must take issue with the recommendation that the fee should be applied to all new construction by Council ordinance, without placement of the issue before the voters. Such action would be of questionable validity. Although the Committee is correct in their conclusion that the Council is within its authority to set a fee for all new construction under the City's general taxing powerrand pursuant to Government Code Section 37101, constitutional restraints limit the use of the City's power. Section 4 of Article XIIIA, commonly known as Propostion 13, apparently requires that before a city may impose special taxes, a two-thirds vote of the people is required. While the question of what a special tax really is, is still unsettled in the state, the apparent trend of authority as revealed by judicial decisions, legislative action and Attorney General's opinions, indicates that the fee on all new construction in the city would be considered as a special tax requiring a vote. While we recognize that placement of a public facilities fee only on discretionary approvals creates certain inequitable situations, the legal basis for imposition of that fee is sound. Because the City has an existing fee structure, resting on what we believe is a sound basis, we recommend against changing that structure and placing a fee on all new construction without complying with the constitutional provisions. This position is consistent with the position we took back in March, 1979 when we initially recommended the placement of the issue on the ballot. While we recognize the Citizen Committee's concern, our opinion is that the most prudent course of action if the Council desires to impose the fee on all new construction, would be to again place the matter before the voters.,~--.*‘-"--) , DSH/mla V B