City Council Meeting: August 28, 2012

Agenda Item:  4-A

To:               Mayor and City Council

From:           David Martin, Planning and Community Development Director

 

Subject:        Discussion of a proposed Transportation Impact Fee to facilitate developer contributions to transportation network improvements and achieve no net new trips in the afternoon peak hour.

 

Recommended Action

Staff recommends that the City Council review and comment on the Nexus Study and proposed Transportation Impact Fee, and direct staff to proceed with preparation of an ordinance to establish the fee.

 

Executive Summary

During preparation of the Land Use and Circulation Element (LUCE) which was adopted in July 2010, the City Council directed staff to pursue the creation of a transportation impact fee on new development as one of the means to achieve the transportation goals of the LUCE. The fee has been a long anticipated implementation measure of the LUCE, being identified early in the process, including in the Initial Outreach, Assessment, and Emerging Themes document. The fee would help offset the costs of building a robust transportation network, including improvements for those who walk, bicycle, and use transit, along with congestion management.  This network is critical to achieve the vision of no net new automobile trips in the PM peak hour with a Santa Monica origin or destination and, with other funding sources, can be built using fees on new development, complementing project features supporting alternative transportation and any required mitigation measures. Based on a nexus study and draft ordinance prepared by staff, the Planning Commission voted unanimously on March 14, 2012 to recommend Council establish the proposed Transportation Impact Fee. The transportation impact fee would partially fund the costs associated with improvements to the bicycle, walking, transportation demand management, parking, transit, and auto networks necessitated by new development.

 

Background

Transportation improvements are consistently identified as a top priority for Santa Monicans and the adopted LUCE outlined a comprehensive approach for providing greater transportation choice for traveling to and within Santa Monica. It identified specific goals, objectives and actions for walking, cycling, driving, transit, parking and transportation demand management and an integrated approach with land uses throughout the City. The action items included physical changes, modified policies, and new programs; it also included methods to achieve them. Significantly, it included a recommendation to create and implement a transportation impact fee.

 

On September 23, 2008 City Council directed staff to proceed with the development of a transportation modeling tool and a nexus study.  On December 2, 2008 Council authorized an agreement with the consulting team of Fehr & Peers with Nelson/Nygaard to create the citywide Travel Demand Model that is tailored to Santa Monica and to prepare a nexus study using the model that would support a transportation-based development impact fee.  

 

A central tenet of the LUCE is the commitment to no net increase in vehicle trips during the evening peak hour with a Santa Monica origin or destination. The City is working to expand travel choices to encourage a shift of some existing and new trips from single-occupancy vehicles to other, more sustainable modes of travel, including transit, bicycling, walking, and shared rides in order to achieve the no net new trips goal. Coordinated with the LUCE land use strategy to focus activity near high-frequency transit corridors and future Expo stations, strategic transportation investments are key to creating more travel choices for both residents and visitors.

 

With the arrival of the Expo line, Santa Monica is receiving a regional investment in transit with light rail connecting through the Westside to Culver City and Downtown Los Angeles. By providing a fixed alignment, reliable, inexpensive and comfortable alternative to driving alone, transit will become an increasingly appealing and reliable mode of travel, building on the existing ridership of both Big Blue Bus and Metro bus service. This will mean an increase in demand for connections by the Big Blue Bus as well as an increase in pedestrian and bicycle trips as people make the first and last mile connections to and from the three light rail stations in Santa Monica.

 

As a healthy, fun and emissions-free alternative, bicycling has grown in popularity in recent years. The LUCE builds on this momentum to increase the mode share of bicycling. To this end, the Bicycle Action Plan, approved by Council in November 2011, identifies a transformative 5-year implementation strategy and a 20-year vision that prioritize investments in facilities and education. New lanes, paths and bike racks will provide crucial last-mile connections to goods, services, jobs and transit. The facilities include a range of treatments to appeal to all types of cyclists. Education campaigns will empower cyclists and instruct both cyclists and motorists in the rules of the road. Bikeshare will supplement trips made by walking and transit.

 

Santa Monica has long been devoted to investing in pedestrian infrastructure, including sidewalks and enhanced crosswalks. Examples of this investment can be seen on Wilshire Boulevard, with its many marked crosswalks and landscaped medians. The LUCE identified sidewalk improvements along the boulevards to complement the mixed use housing and land use strategy and accommodate demand generated by past and future investments. This is also true near the future Expo Light Rail where creating walkability to serve walkers and to address the need for direct pathways in former industrial areas underscore this support.  Walking should continue as both a functional and recreational activity for Santa Monicans, providing opportunities for health and wellness, access to community resources for youth and seniors and convenient provision of goods and services. Additionally, the recently initiated Pedestrian Action Plan is anticipated to identify strategic investments and prioritize future actions.

 

Transportation Demand Management (TDM) is also a key piece of the transportation strategy to reduce single occupancy vehicle trips and improve air quality. Development Agreements are being negotiated that include strong TDM measures to incentivize reduced automobile dependence, including providing free or low-cost transit passes, unbundled parking, and carpooling. The City’s current trip reduction ordinance is being revised in parallel with the Zoning Ordinance update.

 

A viable future network for auto drivers, pedestrians, cyclists and transit users would rely on investment by the private sector and the public sector. As proposed, the Transportation Impact Fee would offset part of the costs associated with the identified transportation improvements, but not cover the full cost of these improvements. City funds and County transportation funds, such as those from Proposition A, Proposition C and Measure R would need to be applied for and awarded. Not all transportation changes will need to occur in the public right-of-way through capital improvement projects; new buildings will need to provide the infrastructure to support walking, cycling and riding transit on their own property through changes in the zoning ordinance and as negotiated through development agreements. These continued investments in the future of Santa Monica will help ensure the community’s on-going economic health and vitality.

 

Impact fees, contributions and taxes are something that the City Council has adopted into the Municipal Code over time to ensure that community values are reflected in new development. Adopted fees include affordable housing, parks, arts, and childcare. The Council has recently requested the evaluation of an update to the open space fees, and affordable housing fees for non-residential development. The proposed Transportation Impact Fee reflects Council’s direction from 2008, incorporates the policy and project priorities from the adopted LUCE, and pursues community priorities for access, mobility and pro-active congestion management in Santa Monica.

 

Discussion

The City of Santa Monica is continually investing in the transportation network to meet changing demands, maintenance and safety standards. Past investments have yielded improvements, from optimizing the auto flow by upgrading traffic signal technology to creating the Santa Monica Bike Center, from creating an internationally recognized transit system with the Big Blue Bus to making it easier for pedestrians to cross the street by building median refuge islands and curb extensions. Continued investment is needed for autos, transit, walking and cycling to achieve community goals for livability, access, and no net new trips. The City alone does not have the resources to build this improved network, and new land uses and development needs to participate in the completion of transportation systems necessary to serve future demand.

 

Cities throughout California increasingly rely on impact fees justified by nexus studies to ensure that the costs of infrastructure and services necessary to support new development are not born disproportionately by existing residents, businesses and/or property owners. Santa Monica currently has fees and requirements to make sure that new development projects offset their demand for new services in the community. The existing project mitigation fee for parks and housing predates the Mitigation Fee Act; the current Child Care Linkage Program was adopted in compliance with its terms. The City collects fees in the form of a Private Developer Cultural Arts contribution. 

 

The City has prepared a Transportation Impact Fee nexus study (Attachment A) that outlines the purpose, rationale, and structure of a proposed transportation impact fee for new development including a detailed description of the projects and programs to be funded by the potential fee revenues. The study:

·       Establishes the need for the fee by forecasting future traffic conditions that would result from future development without the transportation improvements and trip reduction strategies contained in the LUCE; resulting in failure to achieve the no net new trips goal.   

·       Identifies a capital projects list based on LUCE transportation action items and programs and the LUCE FEIR (e.g. sidewalks, car-sharing, bike facilities, bus stops and mobility centers) that does not duplicate costs associated with developer or employer TDM programs or improvements required for project mitigations.

·       Estimates the total cost of construction for the capital project list, including project administration, design and contingency at approximately $134 million based on conceptual project costs.

·       Assesses multi-modal transportation impact by development type (multi-family residential, retail, etc.) as measured by PM peak hour vehicle trip generation and accounting for differences based on location and mix of land uses. 

·       Identifies a maximum potential fee by development type (using square footage or residential unit count) proportional to the multi-modal transportation impact of that use, with the goal of accounting for 74 percent of the new trips (26 percent of new trips are attributed to regional pass-through and cannot be assessed to new development). 

·       Presents a reduced fee that would recover approximately one-half of the allowable capital project costs based on a review of comparable transportation impact fees from other Southern California communities.


The study
meets the requirements of state law by demonstrating the reasonable relationship between the proposed fee and the projected transportation needs of development that the fee-funded transportation projects and programs are intended to address. In doing so, it explains the mechanism to ensure that new development would pay towards the costs of providing transportation infrastructure necessary to implement No Net New Trips and the sustainable transportation policies and goals of the LUCE.

 

This report presents the nexus study as well as key components of the proposed Transportation Impact Fee which was reviewed by Planning Commission on March 12, 2012 and recommended for approval.  Since the hearing, comments and concerns have been raised by the Chamber of Commerce and business groups.  In considering the enclosed information, the City Council may want to consider some of the following questions and concerns raised:

·       Rates: Has the rate for the transportation impact fee been set appropriately?

The report explains the methodology for how rates were developed, based on the estimated trip generation impacts of net new development for a variety of land use types in Santa Monica. This report contains information regarding how rates compare with other cities.  The proposed rates are on the high end of the range of fees charged by other California cities. It should be noted that the City of Los Angeles is in the process of updating the West LA Transportation Improvement and Mitigation fee program and it is expected that these fees will be increased. The Chamber has raised concerns that the combined effect of City fees could push development away to other cities and/or disincentivize desirable uses. Staff has agreed to evaluate this issue through an economic impact study before returning to City Council.  

 

·       Affordable Housing Exemption: The Planning Commission recommended exemption for affordable housing units that include public funding (exemptions for recreation, religious and government uses are currently included). Additionally, all affordable housing for very-low and low income households could be exempted.

In response to these suggestions, staff recommends that all publicly-funded and all very-low and low income affordable housing units be exempt.

 

·       Other Exemptions: Should additional exemptions be included such as outdoor dining?

Staff agrees that outdoor dining in the public right-of-way should be exempt.

 

·       Credit for Existing Structures: Should the TIF fee provide a credit for existing land uses? 

The proposed TIF includes a credit for existing land uses that are removed. The fee is based on net changes so that prior uses in place for 12 continuous months of the past five years receive full credit for those trips, and those uses in place for 6 continuous months receive partial credit for those previous trips.  

 

·       Intensifications of Use: Should the transportation impact fee be applied to additions, or changes of use that intensify use?

Additions as well as conversions to an intensified use generate more trips. The fee should apply to the net change for additions or conversions that generate more trips. Changes of use within the same category or between categories that do not create a net increase in trips would not pay a TIF fee.

 

·       Extended Vacancies: Should the transportation impact fee be applied to spaces that have been vacant for an extended period (years)?

The initial recommendation was that spaces that have been vacant for a continuous 12 month period would trigger the TIF fee when re-occupied.  The recommendation has been modified to extend the potential vacancy period.  No TIF fee would be triggered if the space was in continuous use for any 12 month period over the prior 5 years.

 

·       Capital Projects List: Does the capital projects list reflect the LUCE actions and programs adequately?

The development of the list of capital projects is explained in this report, and was generated from the LUCE and the LUCE Final Environmental Impact Report. The package of capital projects is defined explicitly to address projected growth and to help achieve the goal of no net increase in PM peak hour vehicle trips through 2030. In compliance with nexus study requirements, no operating or maintenance costs were included.  Projects that would not contribute to a reduction in peak hour vehicle trips were not included.  

 

·       Retail Category: Should the TIF categories be more fine-grained for special uses? Two examples provided by the Chamber include auto sales and neighborhood-serving uses.

This suggestion presents administrative challenges in tracking different types of retail for a given space. Broad land use categories are considered the best practice for this type of fee as similar land uses are included in a single type, allowing for flexibility and simplicity for landowners, tenants and City administrators. For example, the broad categories allow the space to change from retail to restaurant and then back to retail over time without payment of additional fees or administrative barriers. In addition neighborhood-serving uses will depend upon the multimodal network improvements funded by the fee program and implemented by the City for neighborhood access. A specific trip generation rate for auto sales was not initially included in the travel demand model but has been successfully calibrated with the retail rate, at 2.10-3.01 trips per 1,000SF, which is within the lower range of the ITE trip generation manual for auto sales (0.94 to 5.81 trips per 1,000SF).

 

·       Auto Storage: Should the fee exclude vehicle storage for Auto Dealers?

The Chamber of commerce has requested that vehicle storage for auto dealers be excluded from the area used to calculate the TIF fee.  Auto Dealer facilities combine a range of auto service, sales and storage uses that include some high trip generating uses such as auto service and test-driving and some lower trip generating uses such as storage.  Like other combined facilities, a blended rate was identified to address trip making characteristics. Staff will evaluate this issue prior to returning to Council. 

 

·       Additional Project TDM measures: Should the TIF fee be reduced for projects including additional TDM measures?

LUCE establishes that all projects provide a significant TDM program as a base requirement. A more aggressive TDM program above the base can be considered a Community Benefit.  The TIF is also a base requirement. However, as noted below, these elements are negotiable through the development agreement process.

 

·       Development Agreement projects: Should the City take into account other factors including the magnitude of community benefits or should the TIF be treated as a given?

As noted in this staff report, Development Agreements will use the TIF as a guideline, and development agreements are always negotiable.

 

·       Timing of Payment: Should the fee be collected with other exaction fees during Building Permit issuance or be due at Certificate of Occupancy?

Staff recommends that the fee be collected at issuance of the building permit so that the improvements can be underway or completed and provide improvements to the transportation network by the time the project is completed. This is consistent with the timing of payment in City of Los Angeles districts.

·       Refund of Payment: Should the City refund the TIF fees that have been collected in the event a project is not constructed?

Because it is anticipated that some improvements may be initiated once the payment is made, staff recommends a 50% refund.

 

Nexus Study

The nexus study and proposed multimodal transportation impact fees both start with the data from the City’s travel demand forecast model and therefore are carefully calibrated to account for PM peak hour vehicle trip generation typical for Santa Monica.  The model accounts for differences based on location (especially proximity to transit), mix of land uses, and type of uses and uses a horizon year of 2030, consistent with the LUCE and the LUCE FEIR. The model enables the City to more accurately predict trip-making characteristics including trip length, mode and generation factors, and to account for conditions such as proximity to transit and locally serving retail, both of which have been demonstrated through empirical research to be inversely correlated with vehicle trip generation. For these studies, both vehicle trip generation rates for comparable land uses as well as the fee per dwelling unit and square foot are tailored for two different areas in the City of Santa Monica:

·       Area 1 includes Downtown Santa Monica, the Special Office District, and Bergamot Transit Village. Vehicle trip generation rates in these districts account for their accessibility by transit and the presence of a diversity of complementary land uses and activities, both of which tend to reduce vehicle travel demand.

·       Area 2 includes all remaining areas of the City of Santa Monica.

 


Figure 1: Santa Monica: Transportation Impact Fee Areas 1 & 2, and Half-Mile Walk Shed to Expo Light Rail Stations

The package of capital projects in the nexus study is designed explicitly to address projected land use changes and to help achieve the goal of no net increase in PM peak hour vehicle trips through 2030. The determination of capital projects which may be funded by the transportation impact fee is based on the policies and actions identified in the Land Use and Circulation Element, which were used in the trip generation modeling conducted as part of the LUCE EIR. Improvements identified include projects such as creating a path for bicycles from the Expo Light Rail Station at 17th Street to Santa Monica College, enhancing crosswalks along major boulevards, and real time information for travelers. Part of the development of the model was identifying the expanded improvements for walking, cycling and transit.

The improvement cost estimate for capital projects is approximately $93 million based on a conceptual definition of each project scope. This estimate was based on cost estimates for similar projects recently completed or in the planning stages in Santa Monica. Figure 2 summarizes total project costs by project category; an itemized list can be found in Figure 4-2 of the nexus study. Legal constraints limit project costs to primarily capital costs, excluding most City operating costs from the project list.

Figure 2: Summary of Project Costs Over 20 Year Period

Project Category

Estimated Capital Costs

Bicycle Actions

$33,708,781

Pedestrian Actions

$25,024,000

TDM Actions

$6,127,075

Transit Actions

$10,177,750

Auto Network Actions

$11,594,000

Project Management[1]

$3,000,000

Fee Administration[2]

$3,000,000

Subtotal

$92,631,606

Engineering/Design[3]

$9,263,161

Contingency[4]

$32,421,062

Total

$134,315,829

 

Also included are the cost for a project management position to oversee these capitals projects and a fee administration position to oversee this separate set of responsibilities. Lastly, a 10 percent design and engineering fee is added onto the subtotal of physical improvements, and a 35 percent contingency cost per industry standard.[5]  With these additional costs, the total capital projects list totals approximately $134.3 million.

 

Using the methodology described above in which transportation fees are allocated proportionally based on trip generation rates (trip generation rates by land use category are listed in Figure 5-3 of the Nexus Study), the maximum legally justifiable Transportation Impact Fee based on the project costs and trips attributable to new development would be as follows in Figure 3. While these are the maximum justifiable fees, a lower level is proposed to be more consistent with other jurisdictions.

 

Figure 3: Maximum Potential and Proposed Impact Fee by Land Use

Land Use Category

Maximum Impact Fee

(per sq. ft. or dwelling unit)

Area 1

Proposed Impact Fee

(per sq. ft. or dwelling unit)

Area 1

Maximum Impact Fee

(per sq. ft. or dwelling unit)

Area 2

Proposed Impact Fee

(per sq. ft. or dwelling unit)

Area 2

Residential (d.u.)

 

 

 

 

Single Family

$12,540

$7,600

$12,870

$7,800

Multi-Family

$4,290

$2,600

$5,445

$3,300

Non-Residential (sq. ft.)

 

 

 

 

Retail

$34.65

$21.00

$49.67

$30.10

Office

$16.01

$9.70

$17.82

$10.80

Medical Office

$46.37

$28.10

$49.17

$29.80

Hospital

NA

NA

$24.26

$14.70

Lodging

$5.94

$3.60

$5.94

$3.60

Industrial

$1.98

$1.20

$2.15

$1.30

 

Given that the cost estimate for capital projects is almost $134.3 million, the revenue generated by the transportation impact fee would not be sufficient to fully cover the cost of all capital projects. The remaining 55 percent of the total project cost is expected to be covered by regional, state and federal grants, City General Fund, and other sources, for which the Fee may provide a local match. Historically transportation improvements have been financed entirely by outside and City General Fund sources, and the fee would be a new revenue source for funding these much desired transportation improvements. Establishing a Transportation Impact Fee would not obligate the City to complete the projects listed in Figure 2 if other revenue sources are insufficient to fill the gap in funding between fee revenues and total project costs. Individual projects will be brought to Council for appropriation of available funds prior to the construction of each project.

 

The proposed transportation impact fee is intended to capture projects that result in changes from one type of land use category to a land use category with a greater trip generation rate, such as from office to medical office or office to retail. Development agreements would not be subject to the ordinance; staff intends to use the fees that the project would be subject to as a guideline for the transportation contribution amount acceptable under the terms of negotiated agreements for future development agreements and development agreements currently being negotiated. Recent development agreements approved by the City Council include contributions similar to those recommended in the Transportation Impact Fee.

 

Development Impact Fee Comparison

A summary of transportation impact fees for new development projects in selected California cities follows. Most communities in California that collect transportation fees use general descriptions of land uses to define fee categories. Several land use categories are recommended to be exempted from the fee as they are provided by the City, including recreation, government and religious uses. The residential categories include both market rate and deed restricted low income residential uses, the Planning Commission also recommends that deed restricted affordable housing be exempt.

 

Figure 4 presents a comparison of the proposed fee to other jurisdictions throughout California.  Figure 5 provides a comparison with jurisdictions in Southern California. While the nexus study calculated the maximum justifiable fee, such a fee would be higher than other California and Los Angeles jurisdictions. Staff is recommending a lower fee more comparable to other jurisdictions.

 

Figure 4: Transportation Impact Fees in Selected California Jurisdictions[6]

 

Single Family Detached House

(per unit)

Multi-

Family

(per unit)

General

Office

(per square foot)

Industrial

(per square foot)

Retail

(per square foot)

Irvine

$7,175

$20.28

$5.85

$20.28

Pasadena

$2,556.88

$3.84

$3.20

$8.89

San Luis Obispo

$3,220

$2,858

$6.48

$1.87

$6.78

Santa Barbara County

$1,945 per development per peak hour trip (within urban planning areas), $523 per development per peak hour trip (other locations in Santa Barbara County)

West Hollywood

$447.92

$1.85

-

$1.85

Palo Alto

$2,861/peak hour trip

$4.26

Emeryville

$943.24/p.m. peak hour trip

San Joaquin County

$3,001.29

$1,801.08

$1.51

$0.90

$1.20

Redwood City

$1,501.59

$1,021.08

$3.45

$0.90

$4.97

San Francisco

Not subject to fee

$11.34

Santa Monica Staff Recommended Fees

Santa Monica – Proposed Area 1

$7,600

$2,600

$9.70

$1.20

$21.00

Santa Monica – Proposed Area 2

$7,800

$3,300

$10.80

$1.30

$30.10

 

 

 


Figure 5: Transportation Impact Fee for Select Los Angeles Area Peers

 

 

Los Angeles

Culver City

El Segundo

Average

Santa Monica

Warner Center*

West LA**

Coastal Corridor*

Central City West*

Zone 1

Zone 2

Zone 3

Proposed Zone 1

Proposed Zone 2

Retail (per 1,000 sq. ft.)

$23,882

$7,087

$46,683

$12,706

$1,000

$9,615

$391

$431

$12,298

$21,000

$30,1000

Office (per 1,000 sq. ft.)

$10,632

$6,450

$22,194

$11,547

$1,000

$3,820

$155

$171

$6,645

$9,700

$10,800

Industrial (per 1,000 sq. ft.)

$3,109

$2,740

$6,888

$5,754

$1,000

$2,513

$102

$113

$2,824

$1,200

$1,300

Single-family (per unit)

Exempt

Exempt

Exempt

Exempt

n/a

n/a

$105

$116

$926

$7,600

$7,800

Multi-family (per unit)

$2,673

Exempt

Exempt

Exempt

n/a

n/a

$63

$69

$1,340

$2,600

$3,300




 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proposed Transportation Impact Fee

The nexus study recommends the following impact fees by land use. A complete list of sub-categories of the land uses is included as Figure 5-1 of the study. Broad land use categories are considered the best practice for this type of fee as similar land uses are included in a single type, allowing for flexibility and simplicity for both landowners and City administration. For example, a new building usually does not know which exact type of use will be included in the first floor of a mixed use building, and the payment of one fee allows the space to be either as retail or a restaurant. The payment of the initial fee also allows the space to change from retail to restaurant and then back to retail over time.

 

Based on the proposed fee structure, the total potential revenue estimated to be generated by the proposed Multimodal Transportation Impact Fee by 2030 is approximately $60 million.  The Fee is based on net changes so that prior uses in place for 12 continuous months of the past five years receive full credit for those trips, and those uses in place for 6 continuous months receive partial credit for those previous trips. Because the City of Santa Monica is largely urbanized with limited vacant land areas, and the LUCE preserved the prevailing patterns of residential neighborhoods and commercial boulevards, the LUCE FEIR projected land use changes are primarily along the future Expo light rail stations and along the transit-rich commercial boulevards.  New housing units as part of mixed-use projects represent the greatest proportion, with associated service and retail uses at the ground floor.  Some creative arts and office uses are projected near the future Expo light rail stations and a modest net increase in citywide hotel use.  Industrial land uses were projected to decrease during the 20-year projection period.

 

Proposed Ordinance

Other potential elements of a transportation impact fee ordinance include:

·     Fee Amount: Establishes the Transportation Impact Fee on a per square foot basis as described previously.  For mixed use projects, separate fees are determined per use and the total fee shall be the sum for all uses in the building.

·     Timing of fee amount and payment: The fee amount is calculated and must be paid prior to issuance of a building permit.

·     Fee adjustment or waivers: An applicant may request a credit for existing square footage at the time the developer files an application if the existing use was in continuous use for any 12 month period over the prior 5 years and a 50% credit if the use was in continuous use for any 6 month period over the prior 5 years. This differs from the recommendation to the Planning Commission, but is consistent with how the fee is administered in the City of Los Angeles’ Coastal Transportation Corridor Specific Plan.

·     Accounting: The ordinance establishes a separate Transportation Impact Fee Reserve Account to be used solely for the purposes of collecting and disbursing the Transportation Impact Fee on projects identified in the nexus study.

·     Use of Funds: The ordinance establishes the parameters for the disbursement of funds so that they are spent on the uses identified in the Nexus Study. The fees should be spent typically within five years of receipt.

·     Automatic Annual Fee Adjustment: The fee annually adjusts on July 1, beginning in 2013, by a percentage equal to the appropriate Engineering Construction Cost Index.

·     Annual report: A required annual report will be submitted for review by the Council.  

·     Fee Revision: The Council may periodically revise the amount of the linkage fee or the automatic adjustment by resolution.

·     Implementation Schedule: The fee applies to all development applications meeting the criteria for applicability that are submitted or determined complete after the effective date of this Ordinance.

 

Legal Considerations

The California Legislature passed Assembly Bill (AB) 1600 in 1987, the California Mitigation Fee Act. As defined in AB 1600, a development impact fee is not a tax or special assessment, but rather a fee that must be reasonably related to the cost of the service provided by the local agency for the purpose of defraying all or a portion of the cost of public facilities related to the development project (Gov. Code § 66000(b).)

 

The nexus study and proposed fee is consistent with the Mitigation Fee Act, including the amendment added by AB 3005 in 2008. AB 3005 applies to new housing that meets the specific requirements relating to distance to transit, convenience retail and provision of parking. The proximity of transit would encompass certain residential areas in Area 2.  Therefore, the residential fees established for Area 1 would be used to charge reduced fees for qualifying housing in Area 2 as specified in AB 3005. A more complete analysis is included in the Nexus Study.

 

Commission Action

The Planning Commission considered the nexus study and the proposed Transportation Impact Fee at their March 12, 2012 meeting. After comments from the public and discussion, the Planning Commission unanimously voted to recommend that the Council adopt the Transportation Impact Fee as proposed with one amendment. The Commission recommended that deed restricted low- and very low-income rental housing units built by a non-profit developer which receives some funding from the City be exempt the fee. 

 

The proposed staff recommendation includes this low-income housing exemption in the ordinance before the Council. City funding for this type of project typically fills the gap between funding available from other sources and the cost to complete the project. The fee would increase the total cost of the project and the City would essentially be paying itself the fee. Combined with the policy goals of the City to encourage low- and very low-income housing opportunities, staff recommends the projects be exempt from the Transportation Impact Fee.

 

In order to recommend the proposed text amendment to the City Council, the Planning Commission found that the amendment is consistent with the City’s General Plan and that it promotes public health, safety and general welfare. The proposed amendment is consistent in principle with several of the goals, objectives and policies of the General Plan, and is explicitly called for in one policy, including:

·       LUCE Goal T19 states that the City should create an integrated transportation and land use program that seeks to limit total peak period vehicle trips with a Santa Monica origin or destination to 2009 levels.

·       LUCE Policy T19.7 calls for the City to perform a nexus study and implement transportation an impact fee to mitigate negative transportation impacts of new development.

 

Public Outreach

The Transportation Impact Fee has been discussed in concept for many years. Some discussion of it has been included in community outreach as part of the community benefits discussion occurring as part of the zoning ordinance update. In general, members of the community have been supportive of the adoption of such a fee. Additionally Planning and Community Development staff presented the concept and details of the Transportation Impact Fee to the Santa Monica Chamber of Commerce’s Land Use Committee at their April 5, 2012 meeting; participants expressed support for such a fee but expressed concern about the perceived high price relative to surrounding jurisdictions and the timing of the adoption of the fee.

 

Financial Impacts and Budget Actions

There is no immediate fiscal impact or budget action necessary as a result of the recommended action. If Council proceeds with a fee as proposed, the Transportation Impact Fee is estimated to collect a total of $60 million in revenue over the next 18 years. Projects to be built using Transportation Impact Fee revenue would be brought to Council for review and expenditure allocations on an individual basis prior to their construction.

 

Prepared by:           Beth Rolandson, AICP, Principal Transportation Planner

Approved:

 

Forwarded to Council:

 

 

 

 

 

 

David Martin, Director

Planning and Community Development

 

Rod Gould

City Manager

 

 

Attachments:          A. Transportation Impact Fee Nexus Study



[1] Project Management covers the annual salary cost of one staff person to oversee capital projects for a 20 year period.

[2] Fee Administration covers the annual salary cost of one staff person to oversee the administration of the fee for a 20 year period.

[3] A 10% engineering and design fee is added on to the subtotal of physical improvements only.

[4] A 35% contingency fee is added on to the subtotal of physical improvements only.

[5] Caltrans Project Development Procedures Manual specifies including a contingency of between 30% and 50% as part of the project cost estimation phase. Caltrans Project Development Procedures Manual, Chapter 20 pg. 11.

[6] Data collected in 2009 and 2010