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HomeMy WebLinkAbout03-03-1999spSPECIAL CITY COUNCIL MEETING REGARDING IMPACT FEES March 3, 1999 Minutes Mayor Booth called the special meeting to order at 4:36 PM in the Council Work Area located in the Mayor's office at 25 West Main Street, Auburn. Mayor Booth and the following Councilmembers were present: Jeanne Barber, Fred Poe, Gene Cerino, Pete Lewis, Sue Singer, Trish Borden, and Rich Wagner. Staff members present included: Fire Chief Bob Johnson, Parks and Recreation Director Dick Deal, Planning and Community Development Director Paul Krauss, Public Works Director Christine Engler, Traffic Engineer Steve Mullen, Finance Director Diane L. Supler, Assistant City Attorney Judith Ausman, City Attorney Michael J. Reynolds, and Deputy City Clerk Cathy Richardson. Guests present included: Randy Young, Henderson, Young, and Company, Executive Director of Finance Fred High, Kent School District, Deputy Superintendent Bob Poldervart and Superintendent Linda Cowan, Auburn School District, Attorney Steve Sheehy, and Aimee Green, Tacoma News Tribune. I. Introduction and Backqround Mayor Booth stated that the purpose of the meeting is to review philosophies and specific factors for consideration regarding impact fees, Mayor Booth welcomed guests from the Kent and Auburn School Districts. Planning and Community Development Director Paul Krauss reviewed the items on this evening's agenda. Mr. Krauss referred to a display board reflecting impact fees collected by other jurisdictions. Auburn policy makers have historically encouraged growth and economic development within the community while endeavoring to keep development costs Iow to attract developers to the area. Community location and assets have also drawn developers to Auburn. In some cases Iow development costs have brought in some undesirable development to the city. Mr. Krauss explained that the City of Auburn has some of the last developable land left in King County, has excellent highway access, and is between the downtown areas of the cities of Tacoma and Seattle. All of these things contribute to the growing market for retail development. Efforts have been made to keep development and governmental costs and resulting taxes Iow. To reach this goal, new development must pay a fair share of the cost of providing the public infrastructure. The traffic mitigation program under the State Environmental Policy Act (SEPA) has been used for a number of years to implement cost sharing. The application process is expensive and it is cumbersome for staff and developers to implement, but it is effective. Larger single-family developments are required to dedicate land for parks. There is also a half-street ordinance and a system development charge for storm, sewer, and water systems under SEPA. Last year the first school impact fee for the Dieringer School District was adopted for land the City annexed in Pierce County. Mr. Krauss reported that an ongoing investigation on the potential for using impact fees to improve the system has been in process for the last two years. The present means of assessing and mitigating impacts is complex, expensive, and time consuming. Substituting impact fees for SEPA mitigation fees should significantly reduce or eliminate these problems. Special City Council Meeting Minutes March 3, lggg Page 2 Mr. Krauss explained that the current means of addressing park impacts requires no mitigation for multi-family housing or single-family tracts under fifty units in size. When mitigation is required by the City, it often results in park land that is too small or inappropriately located to help in the development of the park system. Dedication is typically in land, and finances may not be available for development or for matching grant funds. Mr. Krauss stated that the transportation mitigation program is very time consuming and expensive for both the City and the developer to complete. The landowner is unable to forecast what the expenses may be. Mr. Krauss indicated that the state legislature has informed governments that impact fees are the tool of choice in collecting at least a portion of the costs of development. Action by staff on impact fees has been delayed until the Capital Facilities Plan (CFP) was completed. Staff was then directed to make the CFP work without impact fees at which time funding for some projects was unavailable. Mr. Krauss stated that a grant from the state and funds appropriated by the City Council for a study on impact fees have been expended. Mr. Krauss referred to the table displayed and noted that information on Auburn's rate of growth has been distributed to Councilmembers. Mr. Krauss stated that under Auburn's particular cimumstances, additions to provide for fire service to accommodate growth tend to be more incremental over the years than new capital construction. The collection of fire impact fees will only pay for a small increment of growth-required expansion. For example, the relocation of some of the existing stations does not represent a capital expansion so impact fees are not appropriate. Mr. Krauss stated that fire impact fees are not recommended. Mr. Krauss summarized the information distributed to Councilmembers and encouraged a decision regarding the implementation of impact fees and introduced Mr. Randy Young with Henderson, Young & Company for a presentation. I1. What Are Impact Fees? Mr. Young noted that his attendance tonight is in the capacity of a technical advisor. Mr. Young explained that impact fees ara one-time charges paid by new development for capital costs and ara based on the Capital Facilities Plan. Impact fees could be used with the CFP to offset funds being used from other sources for the portion of costs relating to development. The opportunity is also available to pay for more projects than those listed on the CFP. Mr. Young stated that the City of Auburn adopted a standard for parks in the CFP. The list of projects chosen for the CFP will not meet the six-year plan. if park impact fees were collected for new development, they would generate enough funds to pay for those projects on the approved list and an additional set of projects to meet the six-year plan standard. If impact fees are not collected it will be necessary to supplement the project list with other revenue sources or to revise the level of service standard. In response to questions from Councilmember Singer, Mr. Young stated that the list of park projects in the CFP ara short of the six-year level of service standard in regards to acreage. The CFP can be revised twice per year at which time projects that are funded from any source can be added. III. Council Discussion Councilmember Lewis expressed concern with the costs involved to the single home builder with the addition of impact fees. Special City Council Meeting Minutes Mar'ch 3, lggg Page 3 Mr. Krauss pointed out that the City of Federal Way uses Traffic Impact Analysis (TIA) for mitigation. Funds are paid but the dollar amount could not be determined for the chart displayed and should not be averaged at zero. It is unclear whether they collect fees for each development. The City of Auburn does not. In response to questions from Councilmember Lewis, Traffic Engineer Steve Mullen stated that only projects that trigger the level of service on a transportation system are required to pay mitigation fees. Councilmember Wagner stated that Federal Way has a different Level of Service (LOS) methodology than Auburn. One of the complicating factors in comparisons to other cities is that they may use the SEPA in a different way. The City of Auburn uses the corridor approach while the City of Federal Way uses an averaging approach. Discussion followed regarding the effect of impact fees on single home builders and developers, property available for new development, high-density units, and downtown development. In response to questions from Councilmember Cerino, Mr. Young stated that impact fees are based on the potential uses, not on the actual use of a particular facility. Normally all housing is liable for paying school or park impact fees, including senior housing, as there is no guarantee that during the life of the structure it will not be used by families with school-aged children. There are exemptions allowed under the law for Iow-income housing which are not age specific, and broad public purposes which have not been defined or litigated. The City must pay any exemption allowed for an impact fee into the impact fee account. In response to questions from Councilmember Poe, Mr. Krauss stated that traffic impact fees would be computed on the loading for each development. Senior housing loading trip count would be very Iow which would generate Iow impact fees. Councilmember Borden requested clarification on the mechanisms used for a reduction of impact fees or park land in lieu of fees in a Planned Unit Development (PUD). Mr. Young explained that, generally, ordinances for impact fees have a provision that allows the applicant to accept the rates imposed or submit alternate data with professional documentation showing that they would not have the same impact as other developments. If the documentation is accepted, a lower impact fee could be imposed. Councilmember Poe requested specific data on the fees paid or any exemptions received by Lakeland Company on the Lakeland Hills project in King and Pierce Counties. Mr. Krauss offered to gather that information and recollected that in King County, Lakeland Company developed facilities such as parks, storm basin, and sewer and water facilities to off-set some of the mitigation. Lakeland had obligations to Pieme County as the approving agency. The settlement agreement with the City of Auburn contained additional obligations to bring facilities up to city standards and included additional fees for transportation, fire, and parks improvements. Discussion followed regarding land available for development within the City, the levels imposed on impact fees, system development fees, the effect impact fees may have on future levies, and the increase in the cost of homes. Councilmember Cerino proposed that impact fees should be a ballot issue for the public to decide. Special City Council Meeting Minutes March 3, lggg Page 4 In response to questions from Councilmember Poe, Mr. Young stated that impact fees are generally collected at the time that building permits are issued. Finance Director Supler stated that the current fees were identified under the Lakeland agreement. If impact fees were imposed, the Finance and Public Works Departments would work together to identify the parcels by the geographical area to determine where impact fees would be applicable. The system would identify the parcels of land that fall under the agreement and those that would pay impact fees. Mr. Steve Sheehy spoke regarding the Lakeland Hills development and the fees assessed per the agreement with the City of Auburn and the fees assessed on the annexed portion in Pierce County. In response to questions from Councilmember Singer, Mr. Krauss stated that under the current system there may be single family development that is approved that pays nothing in transportation fees. They are building half streets that are internal or adjacent to their development and they have added traffic to the street, but may not contribute towards a traffic light. Councilmember Borden expressed an interest in having a system that is predictable for those that are developing, with fixed fees that are equitable across the board so the funds for schools, parks, and transportation systems are not imposed only on large developments. Councilmember Borden expressed concern with the amount of time expended by staff and also the matter of apartment developers that do not pay into the parks system. Councilmember Wagner stated that he feels the City needs impact fees and expressed the desire to see a reasonable amount proposed. The decision for a school impact fee should be made by the school board. Councilmember Cerino communicated his concern with litigation that might arise in connection with Lakeland Hills and the imposition of a school impact fee. Mr. Krauss suggested that the impact fee ordinance that was implemented for the Dieringer School District should be used as a model. The ordinance includes a Hold Harmless Agreement that alleviates the City from any litigation matter. City Attorney Michael Reynolds stated that this issue has been worked out with the Auburn School District and the language is such that, in the event of a challenge, it would be up to the School Board to defend it. Councilmember Poe commented that it would be helpful to receive press exposure relating to the proposed expenditure of revenue received from school impact fees to assist in public education. Councilmember Singer stated that the collection of impact fees is one of the few avenues allowed by the state to raise funds. Councilmember Singer questioned the community support and the amount requested for school impact fees. Auburn School District Superintendent Linda Cowan responded that this is the first time the school district has applied for impact fees and is the amount charged in King County. In response to questions from Councilmember Poe, Kent School District Executive Director of Finance Fred High stated that a bond issue has been passed in the City of Kent since the implementation of impact fees. Special City Council Meeting Minutes March 3, 1999 Page 5 Mayor Booth recessed the meeting at 5:50 PM for a dinner break. IV. Park Fees Mayor Booth reconvened the meeting at 6:10 PM. Parks and Recreation Director Dick Deal distributed an outline on park impact fees and began with a slide presentation, Mr. Deal stated that current park dedication requirements include 7.25 acres of property per 1,000 residents in developments larger than fifty single-family or multi-family units. Mr. Deal pointed out that the current system has provided the opportunity for the City to acquire new sites. Lakeland Hills is unique in that it has community, neighborhood, and linear parks all in one location. The other areas have been on a smaller scale. Mr. Deal commented that one of the disadvantages of the existing system is that it is designed for property dedication only. It involves negotiations with the developer to give up property and sometimes results in such a small area that not many park facilities can be accommodated. There are no requirements for multi-family units or less than fifty single-family units. Mr. Deal stated that park impact fees would provide the benefit to the developers of knowing the costs in advance and of not giving land from their existing inventory. All new developments would be required to participate. The funds could be used for property acquisition, development, or as grant matching funds. This would provide the ability to forecast and plan. The current level of service for developed sites is 6.03 acres per 1,000 acres. Mr. Deal explained that many existing facilities are not considered fully developed sites and impact fees would provide the opportunity for additional development. The current cost to acquire and develop a neighborhood park is $113,300 per acre, $166,000 per acre for community parks, and $47,400 per acre for linear parks. Mr. Deal reviewed the improvements to existing facilities identified under the CFP. The total cost for improvements to Brannan Park Skatepark, Game Farm Wilderness Park, Isaac Evans Park, and Les Gove Park is $366,300. Mr. Deal stated that, based on projects currently under the CFP, the estimated park impact fee revenue would be $587.94 per unit for single-family dwellings and $503.95 per unit for a multi- family dwellings. In response to questions from Councilmember Singer, Mr. Deal explained that there is undeveloped property in the City inventory such as the Fenster and Olson Canyon properties and the Pautzke property should be coming on line soon. Impact fees would allow the City to accumulate funds that could be used for possible grant matches or to fully develop existing facilities. Negotiation for funds in lieu of property is possible if a reasonable amount can be determined for the value of the land. The developers generally like to have a park within the development in most cases. Mr. Krauss pointed out that the ordinance on subdivisions specifically states that the City will take land. Negotiations have occurred on occasion for the developer to make additional improvements to a park. Special City Council Meeting Minutes March 3, 1999 Page 6 In response to questions from Councilmember Borden, Mr. Deal stated that a five-acre neighborhood park would not be intended for scheduled recreational activities and would not include amenities such as a parking areas or restrooms. They are intended more for local use so as not to impact the neighborhood. The cost to develop a fifteen-acre community park would be dependent on other funding sources as well as impact fees. Councilmember Wagner suggested using a PUD for large developments and an ~mpact fee for those developments of less than fifty units. Mr. Young stated that could be accomplished by structuring an ordinance with a uniform requirement of impact fees, but that would allow for negotiations to occur for the City to accept an offer of something other than cash as long as it is equal to or exceeds the required fees. Difficulties can occur in a two-tiered system to assure that all parties are treated equitably. Mr. Reynolds pointed out that collecting impacting fees and then pumhasing property from the developer would be one way to insure that all parties are treated equally. Mr. Deal stated that the City can maintain its level of service with the current system, but as development continues on existing facilities, it will be necessary to find other funding soumes or lower the level of service. The opportunity does often arise to obtain grant funds to develop smaller projects. Mr. Krauss stated that most grant opportunities require matching funds. The City general fund does not allow the latitude to do that at this time. V. Transportation Traffic Engineer Steve Mullen stated that the development of the mitigation fee system had to meet five major criteria. That criteria includes being legally defensible, helping to meet the revenue needs for funding transportation improvements that are an expansion of the existing facility, resulting in reasonable rates, being simple to administer, and resulting in no unmitigated adverse transportation impacts. Mr. Muilen explained that a study identified the growth related transportation cost necessary to expand the existing transportation system and the local growth new trips that are generated within Auburn. The transportation model was run to identify those project impacts associated with the new development and local traffic growth was predicted in terms of new trips. The cost per new trip on the system was calculated and the new trip was associated with the land use category. The twenty-year CFP was used as the basis to determine the City's growth related project costs. Only a portion of the project costs are passed along to new development. Mr. Mullen distributed a draft fee schedule and referred to a slide presentation for examples of the fee results. The fees are based on PM peak hour trips, as the level of service standard and transportation model are based on PM peak hour. Mr. Mullen referred to the slide presentation for comparison figures with surrounding jurisdictions and pointed out that the City of Auburn enjoys a high degree of mobility and has a high level of service standard. In addition, there is a lot of room for new development, redevelopment, or intensification of development within Auburn that is not shared by areas like Renton or Bellevue. Mr. Mullen explained that, from the City's perspective, some of the advantages of collecting impact fees are that they provide a more stable source of funding that can be predicted for grant opportunities, they simplify the process of identifying impacts and mitigation for the City and the Special City Council Meeting Minutes March 3, 1999 Page 7 developer, and they are an equitable way to recover costs because all developments would participate. It would also reduce the risk of litigation. Mr. Mullen stated that the proposed rates are comparable to other jurisdictions when the level of mobility and service are taken into consideration. The current system requires a developer to investigate the possible mitigations with very little predictability. Mr. Mullen reported that one of the disadvantages of the impact fee system is the initial reaction from the developers. In response to questions from Councilmember Singer, Mr. Mullen stated that the impact fee system would not pay for local access streets but would pay for arterial improvement. Under the half street ordinance, developers have an obligation to build half the street in front of their development and, for local access streets, this requirement would not change. For developments on an arterial street, there would be some obligation to build the local access portion of that roadway. The additional capacity may be funded partially by City participation from the impact fees. In response to questions from Councilmember Borden, Mr. Mullen stated that the developer would still be required to provide a very abbreviated traffic analysis that would determine how their site interfaces with the arterial system in the immediate area, but not citywide. In response to questions from Councilmember Lewis, Ms. Engler stated that only the first three years of the Six Year Transportation Improvement Program (TIP) are financially constrained. The Six Year TIP should not be used to manage concurrency or visa versa. If impact fees were imposed, the City would uncouple the current mitigation fee system from concurrency management. Concurrency management would go to a corridor'level of service. The City would become the manager of that system and would plan long range around corridors instead of intersection by intersection. This would allow for more flexibility in meeting the impacts of development. Mr. Mullen stated that another disadvantage is that they recover fees from all new development. There are many small developments now that pay no impact fee. Mr. Mullen presented an example of how the impact fee system would change for the project of Auburn 18 Distribution Center located on C Street Southwest. Under the impact fee system they would pay approximately $185,000. The reason it would be lower is that they are building a system improvement of a traffic signal. They would receive credit for that system improvement against their mitigation fee. Under the existing system they paid for the whole signal, they have obligation to participate in other future intersections, and the estimated cost for transportation impact mitigation for that development is approximately $420,000. This figure does not include the time it has taken to get the system in and approved. Impact fees would speed the process up by approximately one and one half years. Discussion followed regarding the current methodology used in the existing system for mitigation. MS. Engler stated that the current system is cumbersome to maintain and involves a profusion of agreements between the City and a suite of developers. There is very limited flexibility. Collecting the money and putting it into the arterial street fund gives the City the opportunity to spend it as needed rather than developing and maintaining the agreements. Special City Council Meeting Minutes March 3, 1999 ' Page 8 VI. Schools Executive Director of Finance Fred Hiqh, Kent School District. Mr. High distributed a handout on Kent School District's impact fees. Mr. High stated that Kent and Auburn School Districts share territory, students, and taxpayers. Kent anticipates approximately 2,400-2,500 residences to be constructed in the shared territory over the next few years. Possible land dedication would reduce the impact fees collected. The combination of single and multi-family dwellings could generate approximately 1,500 students. Mr. High commented that Kent School District's philosophy on impact fees is that they reduce the local property tax burden on the existing tax base. Kent School District has built nineteen schools over the last 19 years and has an outstanding debt of $235,500,000. Due to high growth and Iow assessed valuation per student, Kent has one of the highest school property tax rates in King County. Mr. High stated that Kent School Board, and a majority of the community, believe that new development should cover a share of the impact that it creates. The Board feels that contributions should come from local existing tax payers, the state, and development. A typical single family residence in Kent generates a .84 student and approximately $15,000 per household in new school costs. Mr. High pointed out that the current impact fees for Kent School District are $3,744 for single- family and $1,888 for multi-family. There are many issues that could lower the cost of impact fees in the future such as better use of current facilities, Powering the cost of future facilities, elimination of sales tax to government agencies, design improvement, common codes regarding life safety issues, and the payment of the prevailing wage. Mr. High stressed that, by their nature, impact fees are designed to be phased out. As the community matures, the amount of children generated per household should be declining and the City should start approaching build-out. Superintendent Linda Cowan, Auburn School District Ms. Cowan thanked the Council for the time allowed to the school districts for presentation of their views. Ms. Cowan referred to the chart displayed and pointed out that those districts with impact fees are those that are growing. The Auburn School District is experiencing rapid growth. Ms. Cowan explained that the State of Washington chose impact fees as the mechanism for school districts to handle impacts of growth. The issue of full use of excise tax allocations at the city and school district level is being discussed in the legislature. In the last ten years the State of Washington has gone from matching up to 60% for school construction to approximately 33% Ms. Cowan stated that the Auburn School District will be constructing a new comprehensive high school at a cost of $45,000,000 which should be open by 2003. There are currently 1,800 students and 8 portable classrooms at Riverside High School and 2,050 students and 12 portable classrooms at Auburn High School and the district continues to grow. After an in-depth study the School Board decided to incorporate the Lakeland South portion into the Auburn School District. Ms. Cowan explained that study committees of 65-85 Auburn citizens have been very involved in planning the direction of the future for the school district since mid 1960. A study committee has been in operation since last year regarding the annexation of the southern portion of Lakeland. Special City Council Meeting Minutes March 3, '1999 Page 9 This portion was formerly in the Dieringer School District. The boundary was changed and with the addition from Dieringer, the Auburn School District became eligible for impact fees under the King County formula. There are approximately 2,000 students coming into the district from the annexed portion of Lakeland alone in the next five to six years. A new high school, two elementary schools, and a middle school will be needed to accommodate those students. The School Board, with citizen recommendation, decided to apply for impact fees. Ms. Cowan reported that the citizens of Issaquah failed their school bond issue twice as they felt their impact fees were not high enough. At that time impact fees were at $3,000 and the citizens stated that until they reached $6,000 they would fail any bond issue. They felt that the new development was causing the growth and should pay for the impact upon the schools. Ms. Cowan stated that, under the School Board's calculations, a bond issue would still need to be passed in addition to the collection of impact fees. The impact fees would pay for approximately 6% of what has been projected for future construction. Ms. Cowan pointed out that the school district needs to purchase property in the Lakeland area to construct the new schools needed and the cost continues to rise as improvements are made to the infrastructure. Impact fees would assist in the purchase of property. In response to questions from Councilmember Poe, Ms. Cowan stated that the School Board has the ability to negotiate for land in lieu of impact fees. In response to questions from Councilmember Wagner, Deputy Superintendent Bob Poldervart stated that there are no multi-family dwellings inside the territory transfer area. There is only one area with multi-family units along the "A" Street corridor and that remained in the Dieringer School District. VII. Comparisons To Other Cities Comparisons with other cities were discussed above. VIII. Discussion And Conclusions Mr. Krauss concluded with reference to the model ordinance and interlocal agreement for school impact fees included in the agenda packet. Mr. Krauss stated that, if staff is directed to go forward with impact fees, a final ordinance could be submitted for Council review within forty-five days. Park impact fees are more complex and could be submitted within approximately sixty days. The transportation impact fees require further work on the model and could be submitted within three to four months. Special City Council Meeting Minutes March 3, 1999 Page 10 IX. Adiournment There being no further discussion, the meeting adjourned at 7:38 PM. Approved on the J,.,,A' '''~t day of ~'J,~ ,1998. Charles A. Booth, Mayor Cathy Ric~rdson, Deputy City Clerk f:\clerk\cou n ci1~99m03-03