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HomeMy WebLinkAbout1986-01-14; City Council; 7099-4; 1986 Public Facilities Fee Review & UpdateCITV-OF CARLSBAD - AGENDABILL B# 7099-r' T'TLE: 1986 PUBLIC FACILITIES FEE (PFF) ITG.1/14/86 REVIEW AND UPDATE EPT. WAG 3ECOMMENDED ACTION: DEPT. HD.-b+ GIN Rrry~ GIN MGR. zf+ - Review the updated 1986 Public Facilities Needs list and consider the proposed additional projects. ITEM EXPLANATION: The Public Facilities Fee (PFF) was established by the City Council in August 1979. In July of 1982 the PFF was reviewed and updated by the City Council. The attached memo to the City Manager contains a history of the development of the PFF, plus a detailed progress report and review and update of the projects contained in the Public Facilities Needs list. Finally, the report identifies the task necessary to recalculate the PFF, based on changes that have occurred since 1982 in order to assure that the fee is adequate .to meet the City's anticipated Public Facilities Needs, The summary of Existing Public Facilities Projects updated in 1986 dollars is: Fire Protection $ 3,001,000 General Government Facilities 3,400,000 Library 11,716,OOO Parks 40,393,750 Traffic Signals 4,260,OOO Arterial Streets 15,215,OOO TOTAL: $ 77,985,750 In addition, staff is proposing the City Council consider adding new projects to the list. ENVIRONMENTAL IMPACT: None required at this time. FISCAL IMPACT: To be determined based on City Council action. EXHIBITS: 1. Memo to Frank Aleshire, City Manager, from James C. Hagaman, Research/Analysis Group Manager, dated January 8, 1986. . a. . ; 'JANUARY 8, 1986 TO: FRANK ALESHIRE, City Manager FROM: James C. Hagaman, Research/Analysis Group PUBLIC FACILITIES FEE (PFF) - HISTORY AND UPDATE I. Introduction: Historically, prior to Proposition 13, public facilities were provided by developers to serve their development, by general obligation bonds, revenue bonds, joint power agreements, or from general revenues. Proposition 13 imposed serious restriction upon the general fund and precluded general obligation bond funding by limiting the City's ability to impose property related taxes. Carlsbad recognized that although Proposition 13 reduced existing and limited future property tax revenues, it did not limit or restrict the public's need for, or expectations of, services provided by local government. The existing infrastructure may support current levels of service to the present population, however, new facilities to support the needs of new residences must be provided to support the growth. The Public Facil- ities Fee was then developed to provide .future facil- ities needed by future residents. The Public Facilities Fee provides a dependable revenue source for facilities necessary to serve new growth. II. Original Approval of the Public Facilities Fee (PFF): A. The Public Facilities Fee was originally established by the City Council in August of 1979 based on a staff Public Facilities Fee Analysis contained in AB 5779 Supplement #6. The PFF was found by the City Council to be the most equitable means to dis- tribute the costs of future capital improvements by assessing the cost to new development. The 1979 PFF report was based on providing capital facilities for an estimated buildout population of 200,000 persons. The following list is a breakdown of the necessary public facilities fees by general category: General Government Facilities Library Parks (neighborhood & community) Traffic Signals Arterial Streets $ 2,780,500 5,936,OOO 14,814,OOO 97,369,600 4,565,OOO :42,205,000 TOTAL: $ 167,670,100 In order to provide the necessary $167,670,100 the staff developed a fee designed to be simple to administer yet to be reflective of the anticipated increase in the costs of public facilities to buildout. The building percent valuation of all construction anticipated to buildout of the City was chosen because it generally reflected increased public facilitity costs of construc- tion, plus consumer price increases. A buildout value of $4,921,600,000 for all new residen- tial, commercial and industrial development was then developed according to the following chart: Aug. .Buildout Build- Exis- Differ- 1979 Value (in out ting ence Value ($) 000,000) Single family 29,000 5,300 23,700 87,600 2,076 Multiple family 48,000 5,300 42,700 99,600 2,118 Commercial 7,122,060 sq.ft. to buildout @ $34/sq.ft. 242.2 Industrial 25,547,940 sq.ft. to buildout @ $lg/sq.ft. 485.4 41921.6 Public Facilities Fee Determination The percentage of the building permit values to be generated by the Public Facilities Fee can be determined using the fol- lowing formula: PFF Funds Required = % of building permit valuation Total Buildout Valuation Substituting the values developed produces the following: $167,670,100 (PFF funds' required) = 3.41% (of building permit $4,921,600,000 (Buildout valuation valuation) -2- 3 The 3.41% represents full funding of the public facilities indicated to be required by new growth. City Council Action August 29, 1979: The City Council adopted the proposed Public Facilities Policy presented to them on 8/29/79, changing the percent- age of the PFF to 2%. III. 1982 PFF Review and Uodate: The Public Facilities Fee was reviewed and updated in June of 1982. This review reaffirmed that the PFF is the most equit- able means to distribute the costs of future capital improve- ments by assessing the cost to new development. Significant changes occurred during this review which needed to be identified. First, the staff was able to more accurately predict buildout population for Carlsbad. The 1982 estimate for the City's population at buildout was 160,000 rather than the previous 200,000 estimate. Additionally, major changes in service standards and needs occurred in the following public facility groups: 1) 2) 3) Library changed from the concept of one central and four branch libraries, to one which anticipates two large facilities, each serving north or south Carlsbad. Parks changed from a program of numerous mini, neigh- borhood, community and regional parks to a concept of twenty-plus acres community parks strategically placed within the community, along with Special Use and Res- ource areas. Arterials became the responsibility of development when the arterial passed thru new development or adjacent to new development. The program calls for City financing of those arterials adjacent to public property, special areas, i.e. lagoons, agricultural preserves and improve- ments adjacent to existing areas. The changes identified above , plus the new revised estimate of 160,000 persons at buildout, led to the following table that summarizes the projected public facilities needs: Programs Estimated Cost 1982 Fire Protection General Government Facilities Library Parks Traffic Signals Arterial Streets $ 3,400,000 6,500,OOO 6,300,OOO 42,700,OOO 5,800,OOO 17,300,000 -3- TOTAL: $ 82,000,OOO It should be noted that the Public Facilities Fee will fund only those programs listed above. The Public Fac- ilities Management System (PFMS) is designed to monitor the demand for the above facilities as well as monitor the demand for sewer and water service. Both water and sewer facilities have separate funding sources that are related to demand by new development, (i.e. user fees) and, therefore, they are not funded by PFF. In 1982 the PFF was recalculated based on the actual growth since 1979, the new 1982 estimated Program Costs and an estimated population of 160,000 persons. A buildout value of $4,514,917,000 for all new residential, commercial and industrial development was established according to the following chart: 1982 Buildout Build- Exist- Differ- Value Value (in out ing ence ($1 (000,000) Single family 26,500 9,000 17,500 92,350 1,616.125 Multiple family 36,250 6,000 30,250 66,200 2,082.55 Commercial 7,122,060 sq.ft. to buildout x $47/sq.ft. Industrial 25,547,940 sq.ft. to buildout x $22/sq.ft. 334.737 562.055 4,514.917 Using the PFF formula the following percentage of the building permit valuation was determined: $ 82,000,OOO (PFF funds required) = 1.82% (of building permit $4,514,917,000 (Buildout valuation) valuation) In 1982 the PFF applied only to discretionary actions, therefore, it was assumed that 5% of future development would not be discretionary and .09% was added to the 1.82% fee to equal 1.91% PFF. (1) Finally, due to the method- ology in estimating permit valuation, a PFF of 2% of the building permit valuation was considered appropriate and adopted. (1) Subsequently, in 1982, the City Council adolpted ordinance number 6067 creating an additional licence tax on new con- struction for those developments where the public facil- ities fee was not collected. -4- 5 ._.,., IV. January 1986 Public Facilities Fee Financial Statement: In order to understand the impact of the effectiveness of the Public Facilities Fee, the following financial statement is presented to indicate both revenues and expenditures since the inception of the PFF: Revenues Expenditures Fiscal Year 79/80 $ 46,464 $ -O- 80/81 645,930 32,125 81/82 418,160 30,805 82/83 664,118 106,602 83/84 2,305,262 132,254 84/85 3,089,655 274,935 85/Dee. 85 1,869,112 1,573,609 Interest 1,409,316 Total Reven- ue/Interest: 10,447,727 Total Expenditure: 2,150,330 Current appropriation to PFF projects $8,119,860 Estimated unappropriated funds available 6/30/86 $ 177,537 V. PFF Expenditures by Project: The actual expenditures by project within the PFF categories to December 31, 1985 are: Fire Protection $ 312,831 a) I-5 to Poinsettia Fire Station (Batiquitos and Buttercup Rd.) Design fees 15,000 Two new fire trucks 297,831 General Government Facilities 4 Public Safety Center 3,571,107 $3,571,107 Library $ 123,920 a) Children's library addition 123,920 -5- Parks $ 794,748 a) Macario Canyon 46,500 b) Calavera Park 19,694 cl Stagecoach Park 728,554 Traffic Signals $ 52,997 a> Alga/Alicante 48,920 b) Elm/El Camino Real 3,880 cl Kelly/El Camino Real 197 Arterial Streets $ 296,989 4 Tamarack 209,140 b) Faraday 87,849 TOTAL: $ 5,152,592 VI. Existing Public Facilities Fee List of Projects: During December, department heads were requested to review those projects to be funded by Public Facilities Fees and to re-estimate in 1986 dollars today's costs to complete the projects. Below are listed projects to be funded by the PFF .by category: 'Estimated Costs Fire Protection $ 3,001,000 4 b) cl d) Fire Station I-5 & Poinsettia - construction 350,000 Calavera Hills - site development 20,000 - purchase of site 25,000 - construction 360,000 Ranch0 Santa Fe - site development 50,000 - construction 360,000 - equipment ' 160,000 Public Safety Center Phase III - construction & site development 1,550,000 - fire equipment 450,000 General Government Facilities a) Public Safety Center - Phase II - Facilities for parks - Sewers & streets maintenance 3,400,000 -6- $ 3,400,000 7 Librarv $11,716,000 150,000 population will require additional 95,000 sq.ft., plus furniture and equipment - estimated total cost: 11,716,OOO Parks 150,000 population will require: $40,393,750 Special Use Area - an addltional 11.7 acres Community Parks - an additional 200.8 acres Total acres to improve = 212.5 acres x $87,500/ acre = 18,593,750 Macario Canyon 14,000,000 Leo Carrillo 1,200,000 Community Centers - 6 @ $l.l-million 6,600,000 Traffic Signals $ 4,260,OOO The complete listing of traffic signals to be funded by PFF is attached Arterial Streets $15.215.000 1. 2. 3. 4. 5. 6. 7. Tamarack Avenue - Adams to Highland Carlsbad Blvd.median - Tamarack to Elm Carlsbad Blvd. - Tamarack to PAR (in process to Cannon) Palomar Airport Road - west of airport to I-5 Intersection Palomar Airport Rd. and Carlsbad Blvd. Palomar Airport Rd. median west of ECR El Camino Real median 175,000 1,140,000 -O- 3,780,OOO 2,100,000 378,000 1,500,000 -7- . . 8. 9. 10. 11. FOOTNOTE: Cannon Road - I-5 to El Camino Real 5,640,OOO Cannon Road bridge east of El Camino Real 378,000 Jefferson Street - I-5 to Monroe 1,500,000 Miscellaneous 1,000,000 Arterial projects have been revised as to cost based on the original cost estimates from 1976. No det- ailed analysis was done at this time to ascertain the correctness of the original 1976 figures. We will need l%-2 months to recalculate the esti- mates using current staff time and will update the figures as needed. h VII. The Summary Projected Public Facilities Needs List in 1986 Dollars: Fire Protection $ 3,0131,000 General Government Facilities 3,400,000 Library 11,716,OOO Parks 40,393,750 Traffic Signals 4,260,OOO Arterial Streets 15,.215,000 TOTAL: $ 77,985,750 -8- VIII. The City staff is proposing that the City Council give consideration to the following additional projects being included in the Public Facilities Fee: Project Estimated Cost If Any Government Facilities 1. City Hall expansion $ 2,500,OOO Parks 1. Senior Citizen Center 1,676,700 Arterials 1. La Costa Blvd. - I-5 to El Camino Real, including bridge 2. 3. Highway 78 widening Widening I-5 Bridges - Palomar Airport Rd. & Poinsettia 4. Ranch0 de1 Oro - Highway 78 - access on/off ramps 5. Railroad bridge widening - Palomar Airport Rd. & Poinsettia 6. Olivenhain Rd. connection to Leucadia Blvd. 7. Scenic corridor funding 8. Beach area improvements - parking/access Arts 1. 1% of PFF for the arts + 779,858 (') 8,000,OOO 1,000,000 5,000,000 (1) Actual number would depend on approved 1986 Public Facilities Needs list. -9- ’ ” c IX. necessary funds for the projected public facilities to service new growth: Since 1982 the City of Carlsbad has taken action, or is con- sidering action, on the following which effect the determina- tion of the PFF: 1. Annexation of approximately one square mile of land beyond the 1982 General Plan area for which public facilities must be provided per City standards. 2. The lowering of potential density ranges in. the General Plan reducing the number of dwelling units from which a PFF can be collected. 3. Eliminating certain open space areas within the City from density calculation purposes, which also reduces the num- ber of dwelling units from which a PFF can be collected. 4. Approval of the Carlsbad LCP, which also lowers density calculations. In order to predict the PFF to be collected at time of building permit, it is necessary to determine as of January 1, 1986 an accurate count of the existing number of units and commercial and industrial developments and compare this to our new build- out prediction of residential, commercial and industrial. A building valuation of the difference between existing develop- ment and buildout can then be calculated. The formula below can then have proper numbers inserted and a new PFF percentage can be established by the City Council: PFF Funds 'Require'd = % of Building Permit Valuation Total Future Buildout Valuation It is estimated that the staff work will take at-least two months with adequate resources committed to the project. -lO- - TRAFFIC SIGNALS TO BE FUNDED BY PFF: Traffic Signals 1. 2. 3. 4. 5. 6. 7. 8. Cannon & Carlsbad Blvd. 9. Cannon & College 10. Cannon & El Camino Real 11. Cannon & Interstate 5 12. Cannon & Macario 13. Cannon & Paseo de1 Norte 14. Carlsbad Blvd. & State St. 15. Carrillo & El Camino Real 16. Carrillo & El Fuerte 17. Carrillo & Melrose 18. College & Poinsettia 19. College & El Camino Real 20. College & Elm 21. College & Faraday 22. College & Los Monos 23. College & Palomar Airport Rd. 24. El Camino Real & Elm 25. El Camino Real & Faraday 26. El Camino Real & Kelly 27. El Camino Real & La Costa 28. El Camino Real & Mission Estancia 29. El Fuerte & Palomar Airport Rd. 30. Elm & Jefferson St. 31. Elm & Madison 32. Elm & Monroe Adams & Tamarack Alga & El Fuerte Arena1 & El Camino Real Arena1 & Manzanita Avenida Encinas & Cannon Avenida Encinas & Carlsbad Blvd. Camino Vida Roble & Palomar Airport Road Estimated 1986 cost $ 80,000 85,000 85,000 60,000 60,000 65,000 60,000 65,000 90,000 90,000 120,000 65,000 65,000 60,000 85,000 80,000 65,000 65,000 90,000 65,000' 65,000 - 65,000 65,000 85,000 65,000 65,000 85,000 65,000 85,000 80,000 80,000 85,000 100% II II II II 1, -l- 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. Traffic Signals Estimated 1986 cost Elm & Roosevelt $ 80,000 Elm & Tamarack 65,000 Grand & Jefferson St. 80,000 Grand & Roosevelt 80,000 Highland & Tamarack 80,000 I-5 & Tamarack 120,000 I-5 SC Palomar Airport Rd. 120,000 I-5 & Poinsettia 120,000 Jefferson & Tamarack 80,000 Kelly & Palomar Airport Rd. 65,000 Kelly & Poinsettia 65,000 La Costa 6r Melrose 65,000 La Costa & Mission Estancia 65,000 Lagoon & Poinsettia 65,000 Faraday & Melrose 65,000 Macario 6r Palomar Airport Rd. 65,000 Manzanita & Poinsettia 65,000 Melrose & Palomar Airport Rd. 90,000 Melrose St Ranch0 Santa Fe Rd. 65,000 Mission Estancia & Ranch0 Santa Fe Rd. 85,000 , Olivenhain & Ranch0 Santa Fe Rd. 65,000 Paseo de1 Norte & Poinsettia 65,000 Elm Avenue (5 signals) State to Harding 115,000 - - interconnect $ 4,220,000* 100% II II 19 II 50% 50% 50% 100% II II ,1 9, II I, II 11 II II ,l 50% 100% 1, *All projects from 1976 estimated in 1982 have been updated to 1986 using a 25.7% construction cost accelerator based on ENR LA rate of 4550 (l-l-82) versus 5720 (Est. 7-l-86) plus a 20% contingency has been built in. -2- 13 Other Intersections Possibly Requiring Siqnalization: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Camino de Las Ondas & Paseo de1 Norte Camino Vida Roble & Yarrow Carlsbad & Pine - ocean College & Lake Calaveras entrance College & Mesa (Ridge Rd.) College & Kelly Costa de1 Mar & El Camino Real El Camino Real & Ranch0 Carlsbad entrance Elm & Highland Garfield & Tamarack El Camino Real & La Costa Shopping Center (Development Bond) -3- m “.- . . ASSOCIATE0 wtmw ~r+ousm~ ENGINEERING AN0 GENERALCONTRACTORS ASSOCIATION OF GENERALCONTRACTORS OF AMERICA SAN OlEGO COUNTY ASSOCIATION CONSTIWCTION INDUSTRY FEDEBATION 6336 GREENWICH DRIVE. SUITE F. SAN DIEGO, CALIFORNIA 92122 (619) 587-0292 Summarv Aaalvsis of the Adequacy and Use of the Carlsbad Public Facility Fee Proaram -. 1979 19%2 AGTUAL mL. Fire I .60X 4.15% 6% General Government 3.54% 7.93% 69% Library 8.84% 7.68% 2% Parks 58.07% 52.07% 15% Traffic Lights 2B7&+9?% 707 +lAU% I%& Streets 25.17% 21.10% 6% na 45x* na na na na *Ehsed on the lollowing information: To date $4,73 I ,657 has been expenhd, encumbered or budgeted for general government facilities, primarily the Public Safety Center,es follows $48,961 1983-84 Expenditure 1984 Encumbrance 1984-85 Carry-Over 1985-86 Budget LEASE-REVENUE INCOME FROtl SALE OF PUBLIC SAFETY CENTER f3ond: Length: Return Annual Costs 6 mllllon dollars 20 years 9.5% $680,860 PROJECTED IMPACT EXACTION REVENUES PER YEAR Public Facility Fee Business License Tax Park Fees TOTAL $2.5 million S .5 million $ .5 million $3.5 million Conclusion; If properly managed, the public facility fund program, in conjunction wlth the business license tax and the park fee ordinance, provides an adequate mechanism to fund publtc factlttles needed to accommodate future growth. Recommendation; Direct the City Manager to work with the building industry and other interested groups to further examine the adequacy and management of the public facility fee program, particularly with respect to; [al The feaslbllfty of leveraging fees through revenue bonds. [bl The feasfbllty of capltalizlng the Public Service Center. [Cl Priority use of public facility fee revenues. PUBLIC AFFAIRS CONSULTANTS 7185 Navajo Road. Suite G San Dicgo, California 92119-1682 (619) 464-8471 JOHN J. McTlGHE Principal KATHY G. NADLER Senior Associate January 13, 1986 Mr. Kim John Kilkenny Legislative Director Construction Industry Federation 6336 Greenwich Drive, Suite F San Diego, California 92122 Dear Kim: Per the agreement between Public Affairs Consultants, Inc. and the Construction Industry Federation, we have completed an analysis of the City of Carlsbad's Public Facilities Fee Fund and Park In-Lieu Fee Fund. The enclosed report presents the answers to the questions posed in the agreement. The following represents our observations and conclusions based on the information gathered in our research and presented in the report. 1. The City of Carlsbad has not acted responsibly in its administration of the public facilities fee program to assure that in fact public facilities are provided when needed from the revenues derived for such purposes. We have reached this conclusion based on our review of the public facilities fund expenditures, encumberances and planned expenditures. A disproportionate share of the public facilities fund fees expended and planned for expenditure have been committed to the financing of the City's Operations Center. While the construction of the Operations Center was in fact an expenditure planned for in the original adoption of the public facilities fee, the early expenditure of funds on this facility deprives those monies from being expended on the more visible needs created by the growth from new development such as arterial streets, traffic signals and parks. Consequently, while the funds are being expended on a project that can legitimately be 'considered part of the basis for the fee, their expenditure in this manner is not perceived by existing residents as meeting the needs of the City occassioned by the new growth. Mr. Kim John Kilkenney January 13, 1986 Page Two 2. The City of Carlsbad does not appear to be able to manage its capital improvement funds in such a way as to assure that the monies available and appropriated for capital projects are spent in the year planned. We offer as evidence of this conclusion, the experience of the City in fiscal year 1984-85. In addition to the public facilities fee fund and the park in-lieu fee fund, the City has several other funds identified for capital improvements. The three major non-enterprise funds are the Capital Construction Fund, the Gas Tax Fund and the Revenue Sharing Fund. Of the total $13.89 million appropriated in 1984-85 for these five funds, the City only expended $3.44 million or 25%, while encumbering another $3.39 million, or 24%. With respect to the public facilities fee fund alone, that portion that has been collected under the agreement process through the end of 1984-85 together with interest earned on the balance amounted to $8.32 million. As of the end of 1984-85, only $576,721 of this total, or 6.94%, has been spent. 3. The City of Carlsbad does not have a multi-year capital improvement program. Therefore, it is impossible to verify that projects that are known or anticipated to be needed to support the development within the City will be undertaken when required to avoid problems of congestion, overcrowding, etc. We would like to note that the cooperation from Mr. Jim Elliot, the City's Finance Director, in gathering the information concerning the history and status of each of the funds has been invaluable. Without Jim's assistance we would not have been able to provide the kind of detailed information included in this report. We have observed that in spite of the City's apparent lack of proper planning for capital improvement expenditures, its accounting and record keeping system is in good shape and in the capable hands of the Finance Director. Please let us know what additional information you would like in preparation for the City Council meeting of January 14th. ..,. ,,, .I. ,’ Mr. Kim John Kilkenney January 13, 1986 Page Three Thank you for the opportunity to be of service to the Construction Industry Federation. We hope the enclosed material will be of assistance in your efforts to bring some reason to bear on the present situation in Carlsbad. L&closure - ‘* ‘. I CITY OF CARLSBAD PUBLIC FACILITIES FEE STATUS REPORT The following report has been prepared by Public Affairs Consultants, Inc. on behalf of the Construction Industry Federation in order to answer the following questions: 1. Has the public facilities fee been consistently applied over the seven-year period from its inception in August 1979? If not, what changes have there been in its application? Why were the changes made? 2. What has been the total revenue derived from the public facilities fee by year and the park in-lieu fee by year since 1979-801 3. What has the public facilities fee been spent on since 1979-80? 4. What has the park in-lieu fee been spent on since 1979-803 5. What are the current cash balances of the public facilities fee and park in-lieu fee? 6. What are the current committments for the public facilities fee and the park fee revenues? 7. What are the planned future year expenditures for the public facilities fee and the park in-lieu fee revenues? The following presents the answers to the above questions. 1. Has the public facilities fee been consistently applied over the seven year period from its inception in August 19791 If not, what changes have there been in its application? Why were the changes made? The public facilities fee has not been consistently applied over the seven year period. When first adopted in August 1979, the fee was applied in accordance with City Council Policy #17 through agreement.at the rate of two percent (2%) of building permit valuation on all new construction that was subject to to the City's discretionary approval. On December 7, 1982 the City Council introduced Ordinance No. 6067 which levied the public facilities fee as an "Additional License Tax on New Construction" at the rate of two percent (2X) on the valuation of the building or structure. The City has continued to apply the public facilities fee on \ 1 f discretionary projects through agreement, with an I exemption built into the license tax ordinance for any person who has entered into an agreement pursuant to Council Policy #17. The funds received by agreement under Council Policy #17 are deposited into a special fund of the City entitled the Public Facilities Fund. On the other hand, funds received from the fee imposed under the license tax ordinance are credited to the City's General Fund. This latter arrangement was devised in order to comply with the decision of the California Supreme Court in the case of City of San Francisco v. Farrell in which the court held that if the proceeds from a tax are placed in the general fund and are available for general municipal purposes, then the tax is not a special tax under the definition of Article XIIIA of the California Constitution (Proposition 13). The addition of the license tax procedure was therefore made by the City Council upon the advice of the City Attorney in order to avoid the possibility of violating the interpreted meaning of special tax under Proposition 13. The application of the tax in this fashion has the potential for including those projects which were not subject to discretionary approval by the City in the base for collection of the tax. The following brief history of the origin and evolution of the public facilities fee may help in putting the current status of the fee program into perspective. The public facilities fee was an outgrowth of the City of Carlsbad's concern for its ability to finance public facilities in wake of the property tax cutting of Proposition 13 in June 1978. In March 1979 the City Council decided to impose a "business license tax" on all new construction in the amount of three percent (3%) of improvement value as a method of raising revenue to provide for public facilities required to support new development. The issue was placed before the Carlsbad City voters in June 1979. While a majority voted in favor of the ordinance, it did not receive a two-thirds majority and under the requirements of Proposition 13 was not considered to have been adopted as a "special tax." The City Council then directed staff to explore alternative ways in which the revenue needed to support infrastructure expansion associated with the City's growth could be financed. City staff embarked upon a c 'I 2 study of the public facilities that would be needed in the City between 1979 and the City's General Plan buildout when the City was expected (at that time) to reach a population level of 200,000 persons. In the staff report of August 1979 which formed the basis for the eventual enactment of the public facili- ties fee, it was stated that the philosophy on which the public facilties fee was based was "to require future facility costs required to support new residents to be provided by these new residents." Furthermore, the report stated that the public facilities fee was "not to generate revenues for any other purpose." The facilities that were identified for funding, either completely or on a prorata basis (current population vs. new population), from the public facilities fee were: Fire Paramedics Police Library Administration Maintenance Parks (neighborhood and community) Traffic Signals Arterial Streets The staff report concluded that a fee equivalent to 3.41X of all new construction cost was necessary to provide the level of funding necessary to acquire and/or construct the improvements needed to support the increase in the City's population by buildout of the General Plan. This was arrived at by calculating the estimated cost (in 1979 dollars) of the needed facilities based on the standards applied by the City staff and dividing this amount by the presumed building permit valuation of all future residential, commercial and industrial constuction in the City to buildout of the General Plan. The total amount of facilities costs for categories of facilities included for funding from the public facilities fee and the amount recommended by staff for funding from the public facilities fee in August 1979 by type of facility were estimated by City staff to be as follows: 3 f Total PFF PFF % \ Facility cost Allocation of Total Fire $ 2,680,500 $ 2&3;,;;; 100.0% Paramedics 100,000 100.0% Library 17,428,OOO 14,814;OOO 80.0% Government* 7,420,OOO 5,936,000 85.0% Parks 102,862,OOO 97,369,OOO 94.7% Traffic Signals 4,565,ooo 4,565,000 100.0% Arterial Streets 42,205,OOO 42,205,OOO 100.0% ---s-m----- ----------- Total $177,260,650 $167,670,100 94.6% * includes administration, police and maintenance facilities. The standards/needs on which the above costs were calculated were as follows: Fire: Four additional fire stations, one combined headquarters and training facility, four pumpers and one aerial ladder truck. Paramedics: Two new paramedic units. Government: This category of facility was based on the assumed need for a total addition of 85,760 square feet of office space, 46,080 square feet of storage space and 304,960 square feet of parking space. These space needs were broken down to:$ general government office space of 30,080 square feet and parking of 62,800 square feet; community development office space of 18,240 square feet and parking of 38,160 square feet; City Yard facility consisting of 16,640 square feet of office, 46,080 square feet of storage and 131,440 square feet of parking; and additional law enforcement office space of 20,800 square feet and parking of 72,560 square feet. Library: The library needs were based on a concept of one central library and four branch libraries. The central library size was based on .8 square feet per capita and the branch libraries were based on .6 square feet per capita at buildout. Consequently, it was calculated that a total of 280,000 square feet of library space and 448,000 square feet of of parking space would be needed to serve the General Plan buildout population of 200,000. In addition, the costs for libraries included the purchase of an additional 156,000 volumes of books. A factor of eighty-five percent (85%) was then used to arrive at the cost of future library facilities to be financed by added growth. \ / 4 - Parks: The park acquisition and development amounts were based on the projected need for a total of 500 acres of neighborhood parks and 592 acres of community parks at General Plan buildout. This equates to a ratic of 5.46 acres of parkland per 1,000 population. Subtracting the acreage the City had in 1979, the amoun' of need was calculated to be 460.3 acres of neighborhooc and 468 acres of community park. The cost estimates were based on $50,000 per acre acquisition and development costs of $50,000 per acre of neigborhood an $59,700 per acre of community park in 1979 dollars. Hence, of the total $97,369 600 in park needs shown in the original staff report, $ 46,030,OOO was for neighborhood and $51,339,600 was for community parks. Traffic Signals: The amount of the traffic signal needs was based on a staff analysis of the City's Circulation Element requirements for traffic signals. The assumption was made that all future traffic signals were necessitated by new growth and therefore should be included within the public facilities fee. Arterial Streets: The Circulation Element formed the basis for the calculation of the arterial streets tc be included in funding from the public facilities fee. The amounts included both new and widened prime arterials, major arterial8 and secondary arterials. Of the new arterials, there were 3.3 miles of prime, 14 miles of major and 26.9 miles of secondary. Of the widening, there was five million square feet of prime, one million square feet of major and 500,000 square fee. of secondary arterial included in the calculation of the costs. It should be noted that the new construction excluded the portion of the arterials that was assumed to be the responsibility of subdividers (half width improvements). In June 1982, City staff provided a review and update o: the public facilities fee. That report was intended to indicate what changes had been made since the inception of the fee program. The most significant change dealt with a decrease in the projected buildout population from 200,000 to 160,000. In addition there were changes in service standards for the library, parks, ant arterial streets. The 1982 estimates of the cost of these facilities to be provided by the public facilitiel fee are as follows: . / 5 Facility -------- Estimated Cost (in 1982 $1 -------------- Fire General Government Library Parks Traffic Signals Arterial8 Total $ -ygw& 6;300:000 42,700,OOO 5,800,OOO 17,300,000 ------------ $ 82,000,OOO When the above dollar totals are adjusted for inflation between 1979-1982, the total of $82.0 million, is equivalent to approximately $64.57 million in 1979 dollars. Therefore, the revised projects to be constructed by use of the public facilities fee equal approximately 38.5% of the original amount included in the City staff's 1979 report. The following indicates the changes between the 1979 needs identified and the 1982 amounts. Fire: No change was made in the fire facilities to be financed by the public facilities fee. Paramedics: Apparently the paramedic unit acquisition has been deleted from the fee. Government Facilities: The government facilities requirements were changed to reflect that the primary funding for expansion of administrative.facilities would be from revenue bonds with no use of the public facilities fee. The City's new civic facility located near Palomar Airport Road was included with a 1982 dollar estimate of $6.5 million. This was the only government facility included in the revised fee financing. Parks: The funding for parks has been significantly changed, in that the original public facilities fee program anticipated that there would be a credit for park in-lieu fees if a development participated in the public facilities fee. Because of the reduction from the original 3.14% to 2% of the public facilities fee, the credit has not been included and new residential development is therefore required to pay both the 2% public facilities fee and the park in-lieu fee which varies by district within the City. The City revised , 6 / . its estimate of cost to buildout of the park program to $71.0 million in 1982 dollars. Park in-lieu fees were presumed to generate approximately $28.0 million. Therefore, the difference of approximately $43.0 millior is what has been included in for the public facilities fee. Library: The City has changed its concept for library expansion from one central library and four branch libraries to having two major libraries. The City has applied a standard of -6 square feet per capit& for the required library space at buildout. The estimated cost of the additional library facilities in 1982 dollars is $6.3 million. This represents a sizeable reduction from the original 1979 estimate of $14.8 million. Traffic Signals: There has been no change in the traffic signals identified for funding from the public facilities fee. The updated 1982 cost of $5.8 million is roughly equivalent to the $4.57 million included in the 1979 report. Arterial Streets: In December 1980, the City changed its policy with respect to the funding of arterial streets. The revised policy assigns responsibility for the construction of arterial to land development, with only the portion that cannot be reasonably assigned to development projects being born by the public facilities fee. As a result the amount of arterial streets construction required to be funded by the public facilities fee has been reduced down to a 1982 cost estimate of $17.25 million. 2. What has been the total revenue derived from the public facilities fee by year and the park in-lieu fee by year since 1979-80? The total public facilities fee revenue collected by the City since the fee was first adopted is $7,169,599, 1980-81 through 1984-85. An additional $1,145,527 in interest has been earned off this revenue over these years and accrued to the Public Facilities Fee Fund. Fund income totals $8,315,126. The following schedule shows the total income to the Fund (fee revenue and interest) by year: 7 3 f 1979-80 $ 48,175 Y 1980-81 1981-82 f ;2;:2 1982-83 $ 766:535 1983-84 $2,556,832 1984-85 $3,734,814 ---------- $8,315,126 An additional $2,297,021 in "license tax" revenue has also been collected by the city, in 1983-84 and 1984-85. This tax is identical to the public facili- ties fee paid at time of building permit. The total park in-lieu fee revenue collected by the City since 1979-80 is $1,583,793. Interest earned on that revenue in the Park Construction Fund is $376,473 for a total Fund income of $1,960,266 through 1984-85. 1979-80 $ 138,811 1980-81 1981-82 s :4% 1982-83 $ 221:265 1983-84 $ 371,063 1984-85 $ 730,022 ---------- $1,960,266 See Appendix 2 for a detailed recapitulation of this data. 3. What has the public facilities fee been spent on since 1979-807 Public facility fee revenue has been spent on the City's operations building, streets, libraries, fire stations and sites and parks, as shown below. Eleven percent of the expenditures are to purposes not identified in available documents. c ‘1 8 ,- PUBLIC FACILITIES FEE EXPENDITURES FACILITY Percent 1980-81 1981-82 1982-83 1983-84 1984-85 Total of Total --------------- ------- ------- _______ ------- ------- ---w-s- Fire $23,886 $3,632 $27,518 4.77% Government $48,961 $48,961 8.49% Libraries $88,157 $28,227 $445 $116,829 20.26% Parks $16,547 $16,547 2.87% Traffic Signale $50,662 $50,662 8.78% arterial8 $18,425 $31,178 $203,645 $253,248 43.91% Unidentified $32,125 $30,805 $20 $62,950 10.92% ------- ------- ------- _______ ------- ---w--- --____ rota1 $32,125 $30,805 $106,602 $132,252 $274,931 $576,715 100.00x The table below compares the percentages of the public facilities fee monies planned for expenditure by category (per the 1982 staff report) with the percentage actual expended by category from 1979 through the end of the last fiscal year. Facility -------- Fire Government Libraries Parks Traffic Signals Arteriala Unidentified Planned Percent of PFF --m---e 4.15% ;-Ez 52:07% 7.07% 21.10% 0.00% Total 100.00% Actual Percent of PFF 1979-85 ----------v 4.77% 8.49% * 20.26% 2.87% 8.78% %-;E . ------- 100.00% * There was an encumfrance made in 1984-85 of $1,209,113 for the City Operations Center. 9 What has the park in-lieu fee been spent on since 1979-801 All identified expenditures of park in-lieu fee revenue have been on park facilities, as identified in the following chart. PARK IN-LIEU FEE EXPENDITURES BY PARK Percent PARK 1980-81 1981-82 1982-83 1983-84 1984-85 Total of Total c-_-___-------- -----em e-----m ------- ------- -----mm ----w-- --B-B-- La Costa $36,541 $36,541 15.59% Calavera $3,807 $3,807 1.62% Fuerte $629 $629 0.27% Holiday $12,613 412,613 5.38% Chase/Pine 461,179 461,179 26.10% Unidentified $19,799 411,817 488,050 4119,666 51.04% -----em ------- ------- ----___ s--w--- ----a-- ----_ Total $19,799 $11,817 $124,591 $0 $78,228 $234,435 100.00% 5. What are the current cash balances of the public facili- ties fee and the park in-lieu fee? The current cash balances of the two fee Funds as of July 1, 1985 were $7,738,405 (Public Facilities Fee Fund) and $1,904,700 (Park Construction Fund). However, $1,514,001 of the Public Facility Fee Fund balance is encumbered and an additional $2,355,606 is "earmarked" but unencumbered for unidentified capital projects. The available Fund balance is $177,537 if earmarked monies are not considered. If revenue from the first 6 months of 1985-86 is added to the cash balance of $177,537, the total available cash would be $2,310,138, including interest earned during the first 6 months. It appears that at a maximum, counting all unencumbered monies in the Public Facilities Fee Fund, $4,665,744 could be considered "cash". lo In the case of the Park Construction Fund balance, F $76,461 is encumbered and $1,685,810 is earmarked. The first 6 months of the current fiscal year shows an additional $473,900 in park in-lieu fee revenue. Including interest earned, Fund cash could be as much as $575,903. 5. What are the current commitments for the public facilities fee and park in-lieu fee revenues? The City's budget for current fiscal year 1985-86 indicates appropriations of $5,905,000 from the Public Facilities Fee Fund. This total includes $528,000 loaned to the redevelopment agency. Total 1985-86 appropriations of $1,626,280 are scheduled from the Park Construction Fund. The capital budget indicates the appropriations will be made to these types of projects: Public Facility Fee Fund Traffic signals $ 210,000 (X of Appro;;iation) Streets 50,000 1% Fire Stations 620,000 12% Pub. Safety Ctr. Parks (Stagecoach) 2,550,000 1,948,OOO ;z; ---------- --w-w Total $5,378,000 100% Park Construction Fund Holiday Park Calvera Hills Community Center park design ballfields Total $ 35,000 432,280 1,097,000 50,000 12,000 ---------- $1,626,280 7. What are the planned future year expenditures for the public facilities fee and the park in-lieu fee revenues? Since the City does not have a multi-year capital improvement program, it is not possible to state with any certainty what the planned future year expeditures might be for these two funds. However, the Finance Director has indicated that there are carryover 11 / appropriations in the current year for projects to be 1 funded by the public facilities fund totalling some $2.36 million. This is in addition to the encumbered amount of $1.51 million carried over from the 1984-85 fiscal year. The projects included in this total for funding are as follows: 1. Public Safety Center $ 923,583 2. Fire Station #4 28,568 3. Fire Station #3 79,700 4. Calavera Hills Park 535,741 5. Stage Coach Park 100 6. Faraday Road 506,551 7. Tamarack Avenue (Birch Reconstruction) -1,764 8. Tamarack Avenue 129,078 (Adams to Highland) 9. Alga and Alicante 22,756 Traffic Signal 10. Elm and El Camino Real 131,563 Traffic Signal -B---e--- Total $ 2,355,606 ..‘. ,. :.,. .. .* . .’ a - 2 ZQ In 8 8 8 B s 8 8 zf mo”s9) b 2 El&. * 4 4 .a 2aL-r 8SYZ d 0.0 m (009 3 d 8 8 8 0 8 010 %a .,-I 9 ” n 0 zi 0 812 n” I d B RI% b-In t N- I c ii fl2 I * k w m 8 18 s 8 s 2 -14 % ml- F - 9 r\ F-3 all-- z - . - . .,-m d N I N S1E ’ B 0 r; : r\” ? I b-l . t:l: I* k -a P B m i z ;1 !i I- 2 2 ?: F !2 $ $ & ;; ii IL 9 E L !? 5 E a ’ JP “8, 14 i IE % I3 3 I --. January 14, 1986 TO: CITY COUNCIL - - FROM: CITY MANAGER #P 2 _ PUBLIC FACILITIES MANAGEMENT SYSTEM The PFMS is a system to . . . . - predict the public facility needs of the City at buildout. - and to levy a fee against development to cover the cost. The initial PFMS was approved by Council in 1979 and updated in 1982. A number of assumptions must be made to arrive at 'the fee. number of dwelling units ta be 'built number of people per dwelling unit valuation of future construction The following chart shows the changes in assumption which occurred between 1979 and 1982. 4. 1979 1982 '# dwelling units at buildout 77,000 62,750 Persons per dwelling unit 2.6 2.5 Population 200,000 160,000 Building Valuation (to be built) $4.9 bl. $4.5 bl. Public Facility Cost $167 ml. $82 ml. . - . Public Facilities Management System Page Two To update the report in i986 we need to review the assum If we start with a DU count of 62,750 in 1982 and assume a 20% reduction (due to lower density ranges, more open space and other restrictions) we arrive at a buildout figure of 40,200 dwelling units. Assuming 2.3 persons per dwelling unit we arrive at a population of 92,460 in the year 2030. Other assumptions would produde different results. DU FACTOR POPULATION 62,750 2.5 156,875 62,750 2.4 150,600 62,750 2.3 144,325 (-10%) 56,475 2.4 135,540 (-2p) 40,200 2.4 96,480 As part of the updating process we need to know the fina effect of current land use changes on the buildout population. We do not have that data as yet. It will . be developed by staff when Council completes its land use actions. What Council can do now is to review the needs list and decide which projects are to be included in the Public Facility Program. FA:dc :ions. .