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HomeMy WebLinkAbout2004-04-20; City Council; 17595; CFD 1 appeals panel actionm# 17,595 MTG. 04-20-04 DEPT. FIN CITY OF CARLSBAD - AGENDA BILL TITLE: COMMUNITY FACILITIES DISTRICT NO. I ACTION OF APPEALS PANEL CITY ATTY. CITY MGR- RECOMMENDED ACTION: Adopt Resolution No. 2004-127 sustaining the decision of the Appeals Panel of Community Facilities District No. 1 ITEM EXPLANATION: Bac kn rou nd Property owners of vacant land in Carlsbad and the City worked together to form Community Facilities District (CFD) No. 1. The CFD provides funding for a variety of infrastructure projects which are necessary to meet the requirements of the Growth Management Program. Council formed CFD No. I in 1991 , following an election by property owners for a special tax to be levied upon their property to fund construction or acquisition of capital projects. The Carlsbad philosophy is that CFD financing is not intended to relieve any property owner of the responsibility to provide funding for infrastructure improvements related to a single development. Because our guidelines ensure that the obligation on a residential unit is paid in full when the building permit is issued, a City CFD affects no homeowner in Carlsbad, No homeowner will pay City-imposed Mello-Roos taxes. Appeal of Karl Strauss Breweries When Community Facilities District No. 1 was formed, the drafters of the documents realized that they could not anticipate all possibilities that might arise as the special tax formula in CFD No. 1 was applied. Thus, they included a section in the formation documents that provide certain procedures for appeals and interpretations of the taxing formula. Interpretations can be made when needed to clarify any vagueness or ambiguity in the application of the special tax formula. Appeals are to be referred to an Appeals Panel for review. The Appeals Panel members are the Administrative Services Director, the Community Development Director and the Finance Director. The recommendations of the Appeals Panel are to be taken to the Council after which the special tax would be modified if appropriate. The City received a notice of appeal from Karl Strauss Breweries (Exhibit 2), an owner of developed property. They felt that their restaurant was misclassified when the One- Time Special Tax -Developed Property was applied. There are three types of classifications that may be used in determining the tax rate for a restaurant. These classifications are “fast food”, “sit-down”, and “quality”. The Karl Strauss Breweries was classified as a “sit down”. There is no specific direction in the Rate and Method of Apportionment for CFD No. 1 as to how to determine the type. PAGE 2 OF AGENDA BILL NO. 17,595 The appeal was presented to the Appeals Panel for review. The Appeals Panel found ambiguity in the Rate and Method as to how to apply the One-Time Special Tax - Developed Property to restaurants. The Appeals Panel found that the terms were based on SANDAG’s traffic generation model and were meant to measure the amount of traffic generated by different types of restaurants. The Karl Strauss restaurant appeared to fit better into the classification of “quality” restaurant rather than a “sit down”. The examples found in the SANDAG study showed a McDonald’s as a “fast food”, a Denny’s as a “sit down” and Anthony’s Fish Grotto as a “quality”. After investigating the classifications and discussing the impacts, the Appeals Panel voted to allow the classification of the restaurant to be changed from “sit down” to a “quality” restaurant and to approve a refund to Karl Strauss Breweries and/or Grand Pacific Resorts (as the payers of the property tax bill for a certain number of the years levied) of $20,462.32. FISCAL IMPACT: If Council sustains the decision of the Appeals Panel, Karl Strauss Breweries will receive a refund in the amount of $20,462.32 representing Special Taxes paid for the fiscal years 2000-01 to 2003-04. In addition, the CFD would collect approximately $5,115.58 less annually in special taxes in future years based on the fiscal year 2003/04 tax rates. EXHIBITS: 1. Resolution No. 2004-127 sustaining the decision of the Appeals Panel. 2. Notice of appeal from Karl Strauss Breweries. 3. Community Facilities District No. 1, 2003-04 maximum tax rates. DEPARTMENT CONTACT: Lisa Hildabrand, (760) 602-2430, Ihild@ci.carlsbad.ca.us 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 2004-127 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, SUSTAINING THE INTERPRETATIONS MADE BY THE APPEALS PANEL FOR COMMUNITY FACILITIES DISTRICT NO. 1 WHEREAS, in 1982, the State Legislature approved the Mello-Roos Community Facilities Act of 1982 which allows voters to approve a special tax to be levied upon their property to fund the construction or acquisition of facilities or services, and; WHEREAS, the City Council of the City of Carlsbad approved the formation of Community Facilities District No. 1 (CFD No. 1) in June 1991 to provide funding for a variety of infra-structure projects needed to meet growth management requirements; and WHEREAS, CFD No. I generally provides for the establishment of two types of special taxes: an annual tax on undeveloped property and a one-time tax on developed property, and WHEREAS, the formation documents for CFD No. 1 created an Appeals Panel of three members to clarify any vagueness or ambiguity in the application of the special tax formula. The Appeals Panel members are the Administrative Services Director, the Community Development Director and the Finance Director; and WHEREAS, on January 14,2002, the Appeals Panel met and recommended approval of the appeal to reclassify the Karl Strauss Brewery to a “quality” restaurant for the purpose of applying the Annual Special Tax - Developed Property. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the recommendation of the Appeals panel to reclassify the Karl Strauss Brewery to a “quality” restaurant for the purpose of applying the Annual Special Tax - Developed Property is sustained. 3. That a refund of $20,462.32 representing the overpayment of Special Taxes as determined by the Special Tax Administrator is authorized. 111 111 111 Ill 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a regular meeting of the Carlsbad City Council held On the 20th day Of ADril , 2004 by the following vote, to wit: AYES: Council Members Lewis, Finnila, Kulchin, Hall and Packard NOES: None ABSENT: None ATTEST: Q-nA!LS&-U ORRAINE M. WOOD, City Clerk (SEAL) Pg 2 of Resolution 2004-127 Exhibit 2 ASSOCIATED MICROBREWERIES, LTD. a California limited partnership d.b.a. Karl Strauss Breweries 5985 Santa Fe Street San Diego, CA 92109-1623 Phone: (858) 273-2739 Fax: (858) 581-5691 May 16,2003 City of Carlsbad 1635 Farady Ave Carlsbad, CA 92008 Attn: Lisa Hildabrand, Finance Director RE: Parcel 2 11-022-30-00; Community Facility District #I Dear h4s. Hildabrand In accordance with paragraph E 3 of the City of Carlsbad Commdty Facilities District Report, and pursuant to Section 53321.5. of the Government Code dated January 22,1991, NBSLowry Project No. A68-015.025, I submit this letter to appeal the amount of the special tax on +e above referenced property. Associated Microbreweries, Ltd., a California limited partnership (“AMY) is the lessee on the property located at 5801 Armada Drive. The owners, Carlsbad Ranch Restaurant Co. LLC, pass through the property taxes on this parcel to us. After gathering the general information supporting the tax assessment plan and having analyzed the amount of the tax levied on our restaurant parcel, it is apparent that, for tax calculation pwposes, our establishment is being categorized as a “sit-down restaurant” rather than a “quality restaurant”. As a result, we believe the taxes on this parcel are considerably higher than they should be. Enclosed please find a copy of my letter dated October 18,1999 to Mike Peterson at the City of Carlsbad which apprised the City of Carlsbad of our restaurant’s qualifications to be classified as a “quality restaurant”. As the immediate past-president of the San Diego Chapter of the California Restaurant Association, I can also provide you with references from many of the top restaurateurs in the county who will attest to Karl Strauss Breweries’ rightful classification as a “quality restaurant”. Simply put, the dining experience in our nationally renowned, award-winning microbrewery restaurant extends far beyond the sort of brief visit to a “sit-down restaurant” that might create negative traffic impacts in the area. Further, our location in the Grand Pacific Palisades Resort means many of our guests are also guests of the hotel and timeshare, for whom there is no traffic impact whatsoever as they merely walk to our restaurant fkom their rooms. Therefore, I respecthlly wish to appeal our tax classification as a “sit-down restaurant” to et of-a “quality restayant’ and request a - , . downward adjusthent of the special tax levy. Thank you for your attention to this matter. I would be more than happy to meet with you to discuss this issue in person, or provide you with any further information you may require. Sincerely, ASSOCIATED MICROBREWERIES, LTD., a California limited partnership BY: ASSOCIATED MICROBREWERIES, INC. a California corporation, General Partner By: Christoph6r W. Cramer, President cc. Matt Rattner, Timothy J. Stripe, Barbara Hale-Carter 5 Exhibit 3 NOT IDENTIFIED ABOVE CITY OF CARLSBAD COMMUNITY FACILITIES DISTRICT NO. 1 SPECIAL DEVELOPMENT TAX- ONE-TIME IMPROVEMENT AREA I $1.6343 I VALID JULY 1,2003 TO JUNE 30,2004 11 RATE IF ANNEXED 1 FORMATION OR ANNEXATION DATE: 11 FY2003-04 NOTE 1: THIS CATEGORY OF LAND USE CONTAINS PM AND CM ZONED PROPERTY. NOTE 2: THIS CATEGORY OF LAND USE CONTAINS M AND PU ZONED PROPERTY. Page I of 2 CITY OF CARLSBAD COMMUNITY FACILITIES DISTRICT NO. 1 ANNUAL SPECIAL rAx UNDEVELOPED PROPERN MAXIMUM B FORMATION OR ANNEXATION DATE: I FY2oo3-04 NON ;TRIAL PROPERTY Page 2 of 2