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Home My WebLink AboutAD 88-01; ALGA RD/ POINSETTIA LN & BATIQUITOS LN; FEASIBILITY STUDY; 1988-09-15FILE CoP( /rt)Ti I ENGINEERS & PLANNERS CITY OF CARLSBAD ASSESSMENT DISTRICT NO. 88-1 ALGA ROAD/POINSETTIA LANE AND BATIQUITOS LANE FEASIBILITY STUDY September 15, 1988 NBS/Lowry Project No. A68-015-016 Prepared by: NBS/LOWRY INCORPORATED Engineers & Planners San Diego, California TABLE OF CONTENTS SECTION PAGE INTRODUCTION ...............1 BACKGROUND ................2 PROPOSED IMPROVEMENTS ...........2 COST ESTIMATE ...............5 METHODOLOGY FOR ASSESSMENT SPREAD .....6 MELLO ROOS TAX FOR SCHOOLS ........13 FINANCIAL FEASIBILITY ...........15 SINGLE vs. MULTIPLE OWNER ASSESSMENT DISTRICT .................16 FIGURE 1 BOUNDARY MAP ................3 1 I. INTRODUCTION The purpose of this feasibility study is to present information to allow the Policy 33 Committee of the City of Carlsbad to make further decisions. Specifically, the scope of work for this feasibility study, includes the following: Submit alternative spread methods. Analyze the impact of spread methodology on residential assessments. Identify potential conflicts between the Mello-Roos Tax for schools and this proposed assessment for roads, should the assessments be allowed to pass through to the new homeowners. Coordinate and discuss this matter with the school district. Review the area of benefits and the viability of a single (that is just Pacific Rim Country Club and Resort property) versus multiple owner assessments. -1- II. BACKGROUND This study utilizes information from the following: Draft, Preliminary Financial Feasibility Study for Proposed Alga Road Assessment District, dated, January 1987, prepared by HPI Development Co. Draft, Master Plan of the Pacific Rim Country Club and Resort, approved as revised by the Planning Commission of the City of Carlsbad, on November 4th, 1987. Local Facilities Management Plan, Zone 19, Revised on October 9, 1987. III. PROPOSED IMPROVEMENTS The proposed improvements to be included in the assessment district are shown on Figure No. 1 and include all preliminary and final planning, design, environmental analysis, construction plans, specifica- tions, cost estimates, surveys, construction and inspec- tion necessary to implement the following facilities: -2- Exhibit A BOUNDARY MAP ASSESSMENT DISTRICT ALGA ROAD and PACIFIC RIM DRIVE ASSESSMENT DISTRICT BOUNDARY (typical) 215-080-:012 215-070-05 otNSETTI4 _\ -.--- I 215-040-02 215-122-23 MODIFIED BY NBS/LOWRY Legend: FUTURE ROAD EXISTING ROAD uhiliiilllllnulunhlulnw PROPOSED PROJECT -3- NOT TO SCALE Figure No. 1 Alga Road - a secondary arterial with a 102 foot right of way from its current terminus near El Camino Real, westerly approximately 10,000 lineal feet to Pointsettia Lane. The project includes full improvement of Alga Road, including dedication, full right of way grading, drainage facilities, paving, curbs, gutters, sidewalks, medians, parkways, landscaping, street lighting, traffic signals, and water and sewer utilities, as needed; and Pointsettia Lane - a major arterial with 102 foot right of way from its current terminus, easterly about 1,900 lineal feet to Alga Road. The project includes full improvements, including dedication, full right of way grading, drainage facilities, paving, curbs, gutters, sidewalks, medians, parkways, landscaping, street lighting, traffic signals, and water and sewer utilities, as needed; and Batiguitos Lane (aka Pacific Rim Drive) - a collector street with 68 foot right of way from its westerly boundary, southeasterly approximately 11,000 lineal feet to Alga Road, and an additional extension easterly of approximately 2985 lineal feet to the Arenal Rd. intersection with El Camino Real. The project includes full improvements of Batiquitos Lane, including dedication, full right of way grading, drainage -4- facilities, paving, gutters, sidewalks, medians, parkways, landscaping, street lighting, traffic signals, and water and sewer utilities, as needed. IV. COST ESTIMATE The cost for the proposed improvements, except for the extension of Batiquitos Lane easterly to Arenal Rd. are included in the "Draft, Preliminary Financial Feasibility Study" and summarized as shown below. The cost estimate for Batiquitos Lane extension to Arenal Rd. is based on a preliminary alignment study prepared by VTN as well as a cost estimate prepared by P & D Technologies as shown below. Cost I Public Works of Construction Alga Road Poinsettia Lane I Batiquitos Lane Extension to Arenal Right-of-Way (off-site) Poinsettia Lane I Batiquitos Lane Extension to Arenal Quantity 10,000 LF 1,900 LF 11,000 LF 2,985 LF 4.5 AC 1.9 AC 4.7 AC Unit Total $720 7,200,000 720 1,368,000 625 6,875,000 515 1,538,500 60,000 270,000 60,000 114,000 60,000 282,000 17,647,500 7,059,000 24,706 ,500 SUBTOTAL Incidentals & Financing Costs 40% Total Estimated Project MM V. METHODOLOGY FOR ASSESSMENT SPREAD The law requires and the statutes provide that assessments, as levied pursuant to the provisions of the "Municipal Improvement Act of 1913,". must be based on the benefit that the properties receive from the works of improvement. The statute does not specify the method or formula that should be used in any special assessment district proceedings. The responsibility rests with the Assessment Engineer, who is retained for the purpose of making an analysis of the facts and determining the correct apportionment of the assessment obligation. The Assessment Engineer then makes his recommendation at the public hearing on the Assessment District, and the final authority and decision rests with the City after hearing all testimony and evidence presented at that public hearing. Upon the conclusion of the public hearing, the City must make the final decision in determining whether or not the assessment spread has been made in direct proportion to the benefits received. I Three different approaches were investigated as a part I of this feasibility study. The first approach was a I distribution of cost based on net developable acreage for each land use. The second and third approach of I M. determining benefit was to distribute the project cost based on traffic generation. The difference between the second and third approach involved whether or not there would be a discount for commercial trip generation. The first approach of distributing the cost based on net developable acreage was also included in the draft preliminary feasibility study dated January 1987. However, included herein is a more precise breakdown of the net developable acreage by land use within the Pacific Rim Country Club and Resort Development. This net developable acreage was determined from the various land uses shown on the tentative map and master plan. Single Family Multi Family Hotel Commercial Golf Course Net Area(l) (AC) 258 .2 101.0 25.0 24.1 171.5 579.8 Total Assessment 11,002,683 4,303,749 1,065,284 1,026,934 7,307,850 24,706,500 Notes: (1) Excludes the following: School 12.4 Park 24.3 Open Space 734.5 Streets 23.9 Utility Corridors 27.2 Total 822.3 -7- The second methodology for spreading the project cost is based on traffic generation. Each type of development or land use will create a specified number of "trip generations" in a given 24-hour day. The trip generation rate for each land use was taken from the Modified Engineer's Report ,for the Bridge and Thoroughfare Benefit District No. 1, dated August 12, 1986, prepared by Neste, Brudin & Stone Incorporated. The total trips generated by the projected land use as identified in the master plan are as follows: Land Use Single Family Multi Family Hotel Commercial: - Restaurant (quality) - Neighborhood Shopping Ctr - Sports Complex! Health Club SUBTOTAL COMMERCIAL Golf Course Trip Generation Total Units Rate/Unit Trips 787 DU 10 7,870 2049 DU 8 16,392 560 ROOMS 10 5,600 17,380 SQ.FT.1 0.1 1,738 120,000 SQ.FT.1 0.12 14,400 8.2 AC 300 2,460 18,598 171.5 AC 8 1,372 49,832 NOTES: Refers to square feet of building area There is a difference between the draft preliminary feasibility study dated January 1987 and the above table in the trip generation rate for commerial land uses. The study dated January 1987 utilized 500 trips per acre, whereas the generation rates used in the above table are from the bridge and thoroughfare district report. The above table results in a cost per trip of I approximately $496 and assessments for each land use as follows: I Total I Land Use Total Trips Assessment Single Family 7,870 3,901,914 Multi Family 16,392 8,127,085 I Hotel 5,600 2,776,457 Commercial: - Restaurant (Quality) 1,738 861,693 Neighborhood Shopping I - Center 14,400 7,139,461 - Sports Complex! Health Club 2,460 1,219,658 SUBTOTAL COMMERCIAL 18,598 I 9,220,812 Golf Course 1,372 680,232 49,832 I 24,706,500 The third approach, as utilized in the preliminary I financial feasibility study dated January 1987, distri- buted the project costs based on traffic generation, but discounted the commercial trips to 40% of the residen- tial rate. The discount is used to recognize common trips and avoid double counting of the commercial trip generation. The double counting applies to regional areas and may not be fully applicable to this project. I The 40% discount was also utilized in the Bridge and I Thoroughfare Benefit District No. 1 and the City's "Traffic Impact Fee". Utilizing this approach, the costs would be approximately $639 per trip for residen- tial, hotel and golf course use and approximately $256 I. per trip for commercial use as shown in the table below. cm Total Land Use Total Trips Assessment Single Family 7,870 5,027,775 Multi Family 16,392 10,472,082 Hotel 5,600 3,577,578 Commercial: - Restaurant (Quality) 1,738 444,131 - Neighborhood Shopping Center 14,400 3,679,795 - Sports Complex/Health Club 2,460 628,632 SUBTOTAL COMMERCIAL 18,598 4,752,558 Golf Course 1,372 876,507 49,832 24,706,500 MAt 40% of residential cost per trip The above alternatives have accepted Batiquitos Lane (Pacific Rim Drive) and' the Arenal Road extension as complying with the provisions of Policy 33. However, these are collector streets and are not included in the provisions of Policy 33. Alternate No. 4 spreads the cost of Alga Road, Poinsettia Lane, Right-of-Way for Poinsettia Lane and Incidental and financing costs on a trip generation basis without discounting for double counting of commercial trips. The assessed cost is $12,373,200. -10- This approach incurs a cost of approximately $248 per trip for all land uses and assessments for each land use as follows: Total Land Use Total Trips Assessment Single Family 7,870 1,954,108 Multi Family 16,392 4,070,106 Hotel 5,600 1,390,470 Commercial: - Restaurant (Quality) 1,738 431,542 - Neighborhood Shopping Center 14,400 3,575,495 - Sports Complex/Health Club 2,460 610,814 SUBTOTAL COMMERCIAL 18,598 4,617,851 Golf Course 1,372 340,665 49,832 12,373,200 A summary of these alternative approaches is shown in the following table. -11- Alternative No. 1 Alternative No. 2 Alternative No. 3 Alternative No. 4 By Net Area By Trip By Modified Trip (40%) By Trip Assessment Assessment Assessment Assessment Assessment Per Unit Assessment Per Unit Assessment Per Unit Assessment Per Unit $11,002,683 $13,981/DU $ 3,901,914 $4,958/DU $ 5,027,775 $6,389/DU $1,954,108 2,483/DU 4,303,749 2,100/DU 8,127,085 3,966/DU 10,472,082 5,111/DU 4,070,106 1,986/DU 1,065,284 1,902/RM 2,776,457 4,958/RM 3,577,578 6,389/RM 1,390,470 2,483/RM 861,693 49.58/SQFT 444,131 25.55/SQFT 431,542 24.83/SQFT(1) 7,139,461 59.50/SQFT1 3,679,795 30.66/SQFT 3,575,495 29.80/SQFT(1) 1,219,658 148,739/AC 628,632 76,662/AC 610,814 74,490/AC $ 1,026,934 42,611/AC $ 9,220,812 $ 4,752,558 4,617,851 7,307,850 42,611/AC 680,232 3,966/AC 876,507 5,111 /AC 340,665 1 ,986/AC 24,706,500 24,706,500 24,706,500 l2 373200 Land Use Single Family Multi Family Hotel Commercial: - Restaurant (Quality) - Neighborhood Shopping Ctr - Sports Complex/ Health Club SUBTOTAL COMMERCIAL Golf Course NOTES: (1) Refers to square feet of building area. -12- I With respect to Alternative No. 4, at the time of forma- tion of the Assessment District when final costs and work are known, some consideration may be required to I account for double counting of commerical trips. The reduction, however, would be far less than what was I utilized in the Bridge and Thorofare District. VI. MELLO ROOS TAX FOR SCHOOLS The Carlsbad Unified School District would prefer to I have a $9 million Mello Roos bond issue for the Pacific I Rim Country Club & Resort development. The developer preferred limiting this bond to $1.50 per square foot of I residential buildings. However, this may amount to a total bond issue of somewhat less than $9 million. I U I The developer would also prefer to limit the total tax rate to less than 2% of the assessed valuation. I Assuming the present tax rate is approximately 1.2%, the remainder for Mello Roos purposes would equal 0.8%. Allowing for a safety factor for future Mello Roos bonds, a current tax rate of 0.65% could be considered, I which would result in a total bond issue of I approximately $34 million at residential buildout. This far exceeds the required $9 million requested by the I. -13- I School District, but is approximately the same as the I combined cost of the proposed Assessment District ($24.7 million) plus the proposed Mello Roos Bonds ($9 I million) . Utilizing the developer's preference of limiting the bond issue to $1.50 per square foot, would I result in a debt of approximately $3,000 per dwelling I unit for single family use and approximately $2,000 per dwelling unit for multi family uses. A $9.0 million bond issue for schools would result in a debt of approximately $4,200 for single family dwelling unit and I $2,800 for a multi family dwelling unit. The maximum and minimum debt from the assessments and school fees within alternates 3 and 4 for residential land use is as follows: I Single Multi I Maximum Debt Family Family Alternate 3 AD I $ 6,389 $5,111 School 4,200 2,800 TOTAL: $10,589 $7,911 I Minimum Debt Alternate 4 I AD $2,483 $1,986 School 3,000 2,000 I TOTAL: $5,483 $3,986 Projected Tax Rate I Maximum Debt Ave Price $300,000 0.35% Ave Price I $170,000 0.46% I -14- Minimum Debt Ave Price $300,000 0.18% Ave Price $170,000 0.23% VII. FINANCIAL FEASIBILITY I The value to lien ratio is the relationship between the ' value of the property with the proposed improvements in place and the amount of the assessment. The City's I policy requires the value to lien ratio to be 4:1 or a minimum of 3:1 with approval from bond counsel and the underwriter. The property, consisting of the total development, was ' recently sold by Hunt Brothers to Hillman Properties West, Inc., for approximately $72.2 million as reported I by the newspaper. When the improvements are construc- ted, the value should be increased by the cost of the I improvements or $24.7 million for a total of $96.9 mil- lion for alternates 1 through 3 and $84.6 million for Alternate No. 4. When final maps are recorded, the I value of the property should be further increased which should put the overall ratio above 4:1. However, for I specific properties to be assessed, the ratio could very I well be lower than 4:1. For example, the proposed Assessment in Alternate No. 2 for the restaurant (quality) plus the neighborhood shopping center is -15- I approximately $500,000 per acre and this may be very difficult to achieve a 4:1 value to debt ratio. I Value to lien ratios in Alternate No. 4 should be well within the 4:1 requirements. The commercial property I may still require some form of credit enhancement. I Appraisals made at time of bond sale will determine if credit enhancements are required. In these cases, a I letter of credit could be obtained from the developer to enhance the ratio for the required number of years until I the 4:1 ratio is achieved. When the dwelling units and I commercial buildings are constructed, the ratio will increase and the letter of credit should no longer be I .required. As discussed in the previous section, the annual cost (including the proposed Mello Roos bonds) at U time of build out would be less than 0.65% of the present day value of the dwelling units which is an I acceptable percentage. I VIII. SINGLE vs. MULTIPLE OWNER ASSESSMENT DISTRICT I This study considers only assessing the properties I within Pacific Rim Country Club & Resort development as a single owner assessment district. A single owner I assessment district is justified since the primary benefit of constructing the road is to make possible the I -16- I development of the Pacific Rim Country Club & Resort. I Benefits to properties outside of this development can be paid by the property owners and refunded to the Assessment District as credits to assessments. A secondary spread of the project cost to all of these I properties would determine the amount of that payment at the time of their development. I -17-