CITY COUNCIL STAFF REPORT
MEETING DATE: June 17, 2015
PREPARED BY: Chris Ghione, Community Services Director
Scott Creer, Senior Engineer/Public Works
APPROVED BY: City Manager
Title
REESTABLISHMENT OF RECREATION CENTER AND ADJUSTMENT TO TRAFFIC IMPACT FEES
END
RECOMMENDATION(S)
RECOMMENDATION
1. Open and close public hearing; and
2. Adopt a Resolution adjusting the City's Traffic Impact Fee and initiating the City's Recreation Center Impact Fee.
BODY
COUNCIL PRIORITIES, GOALS & STRATEGIES:
Ongoing Priorities
Enhancing public safety
Supporting youth
2015 Focus Areas
Infrastructure Funding and Advocacy
REPORT NARRATIVE:
The General Plan requires the City to update periodically the schedule of development impact fees authorized by State law (AB 1600) to address the impacts of growth on City infrastructure. At this time, City staff is recommending adjustment to the Traffic Impact Fee and the reestablishment of the Recreation Center Impact Fee. The City engaged an independent financial consultant, Willdan Financial Services, to examine these specific development impact fees.
Impact fees provide the financial means for the City to build future infrastructure that would be required to service future growth. Developers are the sole payers of impact fees as it would be inherently unfair to ask current residents and businesses to pay for infrastructure needed to service future residents and businesses. Willdan's study provides the necessary analysis to match the impact fees paid to the fair share of infrastructure to be built.
For purposes of the Traffic Impact Fee program, only the financing of arterial roadways is considered. All other smaller roadways, such as collectors and residential streets, are built by the developers as a condition of their development and would not be included in the Traffic Impact Fee program. Therefore, only arterial roadways are paid for by the program. The Traffic Impact fees proposed by Willdan and recommended by staff are formulated by calculating the cost of the future arterial roadway system and dividing that cost by the number of vehicle trips the future growth will generate. The future vehicle trips generated are established using commonly accepted traffic industry formulas that are applied to the different types of development.
The City has long had a Traffic Impact Fee program that has allowed for the planned build-out of the arterial roadway system. In January 2007, the Redevelopment Agency ("RDA") committed to pay for $38M worth of specific traffic improvements. One roadway segment included in that list of RDA funded projects was the Santa Teresa/Hale Avenue extension. Unfortunately, the RDA expired before that roadway segment could be constructed. The action to take projects out of the Traffic Impact Fee program in 2007 reduced the total capital outlay upon which traffic impact fees are calculated and resulted in the fee dropping from $3,181 per "peak hour trip" (pht) to $1,383/pht for all residential, commercial and industrial development in the City (the fee has since increased to $1,791/pht due to annual construction cost (CCI) adjustments over the last 8 years). The funding commitment from the RDA was lost with the elimination of the RDA in February 2012. In February 2010, the 2001 Circulation Element was updated and much of the arterial roadway system identified within the Element was reduced in size (i.e. from four lanes to two lanes). With the loss of the RDA funding and the updated Circulation Element, staff was asked to evaluate the Traffic Impact Fee to see if an adjustment to the fee was necessary. In addition, it is important that the Santa Teresa/Hale Avenue extension project be reinstated in the proposed Traffic Impact Fee program. Based on the Willdan study, the new fee would be $1,816/pht which is just slightly higher than the current fee of $1,791/pht.
In June 2013, the City Council requested that staff look at the possibility of reestablishing the Recreation Center Impact Fee. This impact fee was eliminated in April 2010 during a comprehensive review of City impact fees. At that time, the City still had redevelopment as a tool for constructing and expanding recreation facilities. No longer having this tool, the City has no funding source to expand and construct new recreation centers to support a growing population. Following the Council's direction, City staff conducted an analysis of future recreation center needs, utilizing community outreach and data from use of the existing recreation facilities. This analysis resulted in development of a list of future potential recreation center facility needs. This report was presented to Council on May 7, 2014 and is attached this report.
The Council has various options for implementing the Recreation Impact Fee. The recommended option is to utilize the "Existing Facility Standard". This standard is derived from the City's existing level of facilities and existing demand for services. This approach is believed to be more appropriate, as many needs have been identified through the staff's outreach and planning effort, but the formal update of the Parks and Recreation Master Plan will not be completed for another 14 to 16 months. Using this standard would enable the City to continue to provide the same level of recreation center facilities that available now to an estimated community of 60,000 people in 2035. The methodology used to determine the existing facilities standard takes the per capita value of the recreation facilities that are available today in Morgan Hill and derives a per capita value. Then that per capita value is charged to developers based on the average occupancy for the type of residential unit that is being constructed. This ensures that new development is only responsible for the cost of new facilities at a level equal to costs paid for the facilities serving out existing population.
The recreation facilities identified for expansion or construction over the next 20 years include: CRC Fitness Expansion, a gymnasium, expanded parking facilities, expansion of the Friendly Inn, expansion of the El Toro Youth Center, expansion of Aquatics Center Facilities, and an additional lap swim pool. These expansions account for approximately $13.3 million of the projected impact fee revenue. Using the "Existing Facilities Standard" an additional $8.7 million in fees would be designated for facilities to be identified in the future through the City's capital improvement plan and update of the City's Parks and Recreation Master Plan.
COMMUNITY ENGAGEMENT: Inform
In the development in the planning of future engagement needs the community was involved in the process to identify and develop future needs. Several public meetings and an online survey were part of this process and good participation was received.
A public meeting was held on June 4, 2015 for the proposed Traffic Impact and Recreation Center Impact Fees to be discussed with the development community. Only a limited number of developers attended this meeting, however, a number of other developers have discussed the fees with City staff via email and phone.
ALTERNATIVE ACTIONS:
In relation to the Recreation Center Impact Fee, the Council could elect to utilize the "Planned Facilities Standard" utilizing this impact fee would establish a fee that collects approximately $13.3 million in funds to develop the planned facilities outlined in the City's 2014 outreach and planning. This alternative would result in a lower fee and less funding available for future recreation center construction and expansion. A resolution and fee study is available for both the recommended "Existing Facilities Standard" and the alternative "Planned Facilities Standard".
An additional alternative for the Council could be to direct staff to make adjustments to the planned facility standard either increasing or decreasing the planned facilities and associated fees. If this alternative action is utilized, City staff would need to return at a later date with a revised study and resolution.
Finally, Council could decide to not approve one or both of the recommended impact fees.
PRIOR CITY COUNCIL AND COMMISSION ACTIONS:
The City completed a comprehensive impact fee update in August of 2002. The Council last approved changes to the Traffic Impact Fee in May of 2007. The Recreation Center Impact Fee was eliminated in April of 2010, at the same time several impact fees were updated.
FISCAL AND RESOURCE IMPACT:
The revised Traffic Impact fee will generate approximately $29.3 Million over the next 20 years. The traffic impact fee revenue will come from fees charged to both residential and nonresidential development. The new fees are outlined in the attachment and in the case of the traffic impact fee will not be changing considerably. Since the Recreation Center Impact Fee is no longer being subsidized by the RDA, it will reflect a much larger increase. Using the recommended "Existing Facilities Standard" will generate approximately $22 million over the next 20 years. The Recreation Impact Fee would only be charged against residential development and would charge developers $3,570 for a single family residential unit. The alternative Planned Facilities Standard would generate approximately $13.3 million over 20 years and developers would be charged $2,150 for each single family residential unit.
CEQA (California Environmental Quality Act):
Project, Description of CEQA requirements
These actions are exempt from CEQA under Section 15273 of Guidelines for CEQA, because they establish, modify and approve rates and charges for the purposes of obtaining funds for capital projects.
LINKS/ATTACHMENTS:
Resolution for Recommended Action - Traffic Fee and Rec Ctr Fee Existing Facility Standard
Resolution for Alternative Action - Traffic Fee and Rec Fee Planned Facility Standard
Resolution for Alternative Action - Traffic Fee Only
Traffic Impact Fee Study
Recreation Center Impact Fee Study - Existing Facilities Standard
Recreation Center Impact Fee Study - Planned Facilities Standard