City Council Meeting: June 14, 2011

Agenda Item: 3-U

To:               Mayor and City Council 

From:           Andy Agle, Director of Housing and Economic Development

Subject:        Agreement for Downtown Parking In-Lieu Fee Study


Recommended Action

Staff recommends that the City Council:

1.     Authorize the City Manager to negotiate and execute a professional services agreement with the consulting team of Nelson\Nygaard to analyze and make recommendations regarding the City’s Downtown Parking In-Lieu Fee Program in an amount not to exceed $75,000.

2.     Appropriate the budget increase as outlined in the Financial Impacts and Budget Actions section of this report.


Executive Summary

The Downtown Parking In-Lieu Fee Program, established in 1986 in connection with the Bayside District/Third Street Promenade public improvements, creates a fund to finance additional parking improvements in the area.  It also encourages new development within the Bayside District to become part of the “park once” City policy by contributing to the fund rather than providing private parking on-site.  The Walker Parking Study reviewed the Downtown Parking In-Lieu Fee Program and recommended further review and possible adjustment of the formula and the areas where the fee is applied. Nelson\Nygaard, in partnership with AECOM, Inc. is being recommended to undertake this assignment for an amount not to exceed $75,000. 



The Downtown Parking In-Lieu Fee (Program) was established by Resolution 7255 in July 1986, as an incentive to encourage property owners to rely upon public parking and support the City’s policy of “park once.”  Under the Program, developers within the Bayside District (the area bounded by Second Court to the west, Fourth Court to the east, Broadway Avenue to the south, and Wilshire Boulevard to the north) may choose to pay a fee in lieu of providing required parking on-site.  The annual fee, which expires June 30, 2016, is $1.50 per square foot of building area added after 1986 for which parking is not provided.  The City collects approximately $600,000 annually from 44 parcels.  Currently, there is approximately $7.0 million in the fund. 


The Walker Parking Study, approved by Council on September 8, 2009,  evaluated current parking operations in Downtown and made a number of recommendations to help the City better manage its parking resources.  One of Walker’s recommendations was that the Program be re-evaluated because the fee of $1.50 per square foot only provides about $5,000 to $6,000 in bond financing for the construction of each parking space, far less than the estimated cost of $50,000 to construct a new public parking space.



The formula, fee amount, and applicable area of the Parking Developer Fee have remained unchanged since 1986.  The Walker Parking Study recommended that the City revisit its in-lieu program because its current formula at $1.50 per square foot per year is far below the cost of providing structured parking.  In January 2011, staff prepared a request for proposals (RFP) for a consultant to evaluate the City’s existing in-lieu fee program and recommend a methodology for establishing an in-lieu fee structure and assessment formula for new developments that provide less than the required parking on-site.  The recommended in-lieu fee program would create a fund that would accumulate sufficient revenue to construct additional public parking, reduce reliance on private parking, and evaluate and possibly fund transportation demand management (TDM) programs.


Consultant Selection

The RFP was distributed to four firms and staff received proposals from two firms, Nelson\Nygaard and AECOM.  Each company responded separately to the RFP.  An interdepartmental team consisting of staff from Economic Development, Planning, Transportation Management, Finance and the City Attorney’s Office reviewed the proposals and staff interviewed both companies.  Each firm had different strengths that they brought to the assignment.  Upon request by staff, Nelson\Nygaard and AECOM submitted a revised joint proposal that is being recommended to Council.  The consultants, who are partnering on this assignment, will evaluate the existing fee, recommend alternative formulas, consider amendments to the geographic area within the Downtown where the fee might apply, and relate the proposed fee to the amount of anticipated new development and to the amount of parking that could be financed. In addition, the consultants are being asked to recommend uses of the fee for Transportation Demand Management (TDM) programs that also support efficient use of parking resources.


Nelson\Nygaard Consulting Associates is a national transportation planning firm that specializes in developing parking management programs.  The firm’s experience includes work on the City of Glendale’s Mobility Study, in which the primary focus was to develop a new comprehensive parking management system and adoption of a parking in-lieu fee.  Nelson\Nygaard’s work with the City of Santa Monica includes preparing the update of the Land Use and Circulation Element (LUCE), completing the Santa Monica Civic Center Parking Area Assessment Study, preparing the Transportation Impact Fee Nexus Study, and assisting with the Downtown Specific Plan and the 5th & Arizona Visioning Process. In the proposed agreement, Nelson\Nygaard would be responsible for work related to information about best practices by other cities regarding in-lieu fees and information about other uses of in-lieu fees such as TDM strategies. 


AECOM is a global professional services firm whose core practice includes economic and fiscal impact assessments.  AECOM’s experience includes developing the Santa Barbara Parking Assessment District, and providing long-range economic guidance for a variety of retail districts and neighborhoods in Central Portland.  AECOM’s work with the City of Santa Monica includes the preparation of three Feasibility Studies – the Freeway Capping Project, a study which explores the independent station options for the Expo Light Rail terminus, and a study that examines the connections and linkages between public and private projects within the City’s Downtown.  In the proposed agreement, AECOM would be responsible for conducting the sensitivity analysis for in-lieu fees using developer pro-formas that link payment of in-lieu fees to additional parking and to specific TDM strategies. 


The firms will collaborate on estimating future growth, recommending how the in-lieu fee would be structured for different uses, making recommendations about the geographic boundaries, and estimating how many parking spaces may be needed and/or built given the proposed fee structure. 


Financial Impacts & Budget Actions

The contract that will be awarded to Nelson\Nygaard will not exceed $75,000 and includes a contingency of $5,000.  As was the case with other recommendations from the Walker Parking Study, this study was expected to be funded from the net increase in funds generated since the adoption of higher parking fees at the May 11, 2010 Council meeting.  The higher parking fees were implemented on July 1, 2010 and are expected to generate $2.1 million in increased parking revenue during Fiscal Year 2010/11. The contract award requires an appropriation of $75,000 to Account 01225.555060 (Professional Services) for these services from the incremental parking revenue.


Prepared by:  Erika Cavicante, Senior Development Analyst





Forwarded to Council:







Andy Agle, Director

Housing and Economic Development


Rod Gould

City Manager