Loading...
17 Staff Report - TIF with AttachmentsPREPARED BY: Nicolle Burnham, Parks and Public Works Director Gabrielle Whelan, Town Attorney Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov TOWN OF LOS GATOS COUNCIL AGENDA REPORT MEETING DATE: 04/02/2024 DATE: March 28, 2024 TO: Mayor and Town Council FROM: Laurel Prevetti, Town Manager SUBJECT: Receive a Report on the Transportation Impact Fee and Provide Direction RECOMMENDATION: Receive a report on the Transportation Impact Fee and provide direction. BACKGROUND: On January 16, 2024, Town Council took a series of actions that resulted in the establishment of a Transportation Impact Fee (TIF) to replace the Town’s Traffic Impact Fee. The actions included adoption of a Transportation Impact Nexus Study, modifications to Section 15, Article VII of the Town Code, and resolutions to replace the Traffic Impact Fee with the updated TIF and modify Town Council Policy 1-08: Transportation Impact Policy. During the consideration of this item, questions were asked about the project list, its associated costs, and how those projects relate to new development. During the hearing, staff provided information on how the cost estimates were generated and clarified how the fee was calculated. Specifically, staff indicated that the new fee is based on the historical level of investment the Town has made in its transportation network and that new development would contribute to implementation of the transportation project list at a rate that does not exceed the Town’s historic level of investment. Staff indicated that the legal footing for this was sound because the improvements are needed to meet demands on the transportation infrastructure that will arise from future development. Following the meeting, staff continued to consider and discuss the use of historic level of investment as the method of calculating the new fee. After conferring with the Town’s consultant who prepared the Nexus Study, and third party legal and technical advisers, staff is bringing this item back to Town Council for discussion and direction. ITEM NO: 17 PAGE 2 OF 7 SUBJECT: Receive a Report on Transportation Impact Fees and Provide Direction DATE: March 28, 2024 DISCUSSION: Context of Adopted Nexus Study and Fee The TIF was adopted under the California Mitigation Fee Act (often referred to as AB1600) which is codified in Government Code Sections 66000 and following. Per the Mitigation Fee Act, in adopting the fee the Town must: 1) identify the fee’s purpose and use; 2) determine a reasonable relationship between the fee’s use and the type of land use development project(s) required to pay the fee; 3) determine a reasonable relationship between the need for the public facility(ies) and the type of land use development projects required to pay the fee; and 4) demonstrate a reasonable relationship between the amount of the fee and the costs of the facilities needed to cover developmental impacts. Compliance with these requirements is documented in the Transportation Impact Fee Nexus Study adopted on January 16, 2024. In addition, Government Code Section 66016.5, which is also part of the Mitigation Fee Act, provides that, when applicable, a nexus study shall identify the existing level of service for each public facility, identify the proposed new level of service, and include an explanation of why the new level of service is appropriate. The term “level of service” in this context pertains to the quality or amount of service being provided for a particular type of infrastructure. This should not be confused with “intersection level of service” which measures the volume and rate of vehicles going through an intersection. The Act does not define “level of service,” and jurisdictions have used a variety of methods to calculate impact fees. Calculations can often vary based on the type of impact fee being calculated. For example, traffic impact fees have historically been based on intersection level of service (LOS) for roadways with impacts based on detailed traffic modeling of vehicle delays at each intersection. The intersection LOS methodology works well when a list of capital projects is focused on moving vehicles quickly and efficiently and for developing a traffic impact fee. However, this method does not lend itself to non-vehicular transportation improvements which are a large focus of the Town’s adopted General Plan and Bicycle and Pedestrian Master Plan. For this primary reason, the methodology for the new Transportation Impact Fee (TIF) was not based on intersection LOS. Moving away from an intersection LOS analysis was specifically supported by the following reasons: • Intersection LOS is a valid metric for assessing the operation of intersections by measuring vehicular delay. However, LOS is not helpful in evaluating the demand for non-vehicular transportation improvements. The only project on the Town’s project list that would lend itself to an intersection LOS analysis is the State Route 17 Corridor Congestion Relief Project. PAGE 3 OF 7 SUBJECT: Receive a Report on Transportation Impact Fees and Provide Direction DATE: March 28, 2024 DISCUSSION (continued): • Intersection Level of Service traffic analysis does not account for the full range of transportation-related infrastructure, including the transit, bicycle, and pedestrian projects that have been identified in the Town’s adopted Plans. Given the shortcomings of the intersection LOS method, a historic level of investment or “asset based” approach was used to calculate the TIF. The Nexus Study (https://mccmeetingspublic.blob.core.usgovcloudapi.net/losgatos-meet- 6f19635f84ad4713a27b577cff420113/ITEM-Attachment-001- f9100b2185eb4fd8bd34a179bea1253f.pdf) defined Level of Service to mean historic level of investment in transportation-related infrastructure. This is a method that is widely used for park impact fees and more recently is being used by other jurisdictions for transportation impact fees (Attachment 1). Its use for transportation impact fees allows for a broad range of projects to be efficiently funded, rather than just those that can be assessed by intersection LOS. Alternatives Analysis In conducting its recent analyses, staff has identified potential alternatives for modifying the Nexus Study and the TIF. Staff is not recommending a specific option at this time. Attachment 2 provides a summary of the alternatives and their advantages and disadvantages. Each alternative is described in more detail below. Option 1. Keep Adopted Analysis and Associated Fee (Asset Based Approach) The analysis presented to Town Council for TIF adoption started with a calculation of the historic level of investment of all transportation improvements. The ensuing analysis is underpinned by the foundation that the proposed TIF charged to new land use development projects cannot exceed the historic level of investment that the Town has made in its transportation network. In other words, new development would fund a reasonable portion of the future improvements that cannot be funded in other ways (i.e., grants, etc.) because the Town has already funded at a historic, calculated level. The historic level of investment was calculated to be $57,907 per dwelling unit. The proposed fee was calculated to be $16,051 for an average sized single-family residence (or per Dwelling Unit Equivalent). This method was selected because it provided a mechanism to fund the full range of transportation-related projects identified in the Town’s adopted Plans. This approach is believed to fairly apportion project costs to new development in that the new development is not being asked to pay more than the Town’s historic investment in its transportation infrastructure assets. While widely used for certain categories of impact fees (e.g., parks) and PAGE 4 OF 7 SUBJECT: Receive a Report on Transportation Impact Fees and Provide Direction DATE: March 28, 2024 DISCUSSION (continued): used by other jurisdictions for transportation impact fees, this method is legally untested in its use for calculating transportation impact fees. Option 2. Refine the Adopted Analysis (Modified Asset Based Approach) This alternative retains the method, clarifies the assumptions, and revises certain calculations used for the Nexus Study. With this option, staff would evaluate the following assumptions and revise the analysis accordingly: • Evaluate and review calculations around the historic level of investment. This would involve comparing costs to current bid pricing for similar work, adjusting if necessary, and then depreciating the value of the Town’s transportation assets. The result would be a maximum justifiable fee of less than the $57,907 historic level of investment per dwelling unit. • Refine costs of transportation investments on the project list by adjusting to 2024 dollars and providing further analysis of funding expected from other sources. Staff is confident that project costs presented in the project list (Appendix Section 1 of the Nexus Report) represent the best available information. Specifically: - The $111M cost of the Highway 17 Highway 9 item is from VTA; - The $25M for the Highway 17 Overcrossing is from the design consultant working on the project; - The Shannon Road Widening and Safety Improvements cost is from the design consultant based on their 95% complete plans (although soft costs for this project are currently increasing); - The traffic signal program costs are from the Town’s Traffic Engineering Team and assumes $1M per signal for design and construction. The Town owns 31 signals, and replacement of eight signals seemed reasonable given past activity; - Projects labeled as Carryover were in the 2014 project list and were adjusted to 2022 dollars; and - Costs for the remaining projects were estimated by the consultant or taken from Town documents such as the Bicycle and Pedestrian Master Plan and adjusted to 2022 dollars. As such, staff would not propose to revisit the base costs of the projects other than escalating them to 2024 dollars and would analyze in more detail the “Estimated Funding from Other Sources” which may include grants or other programs, resulting in a potentially different “Unfunded Cost Allocated to TIF Calculation.” As with Option 1, the Town’s consultant and their subconsultants believe this approach fairly apportions project costs to new development in that the new development is not being asked to pay more than current the Town’s historic investment in its transportation infrastructure PAGE 5 OF 7 SUBJECT: Receive a Report on Transportation Impact Fees and Provide Direction DATE: March 28, 2024 DISCUSSION (continued): assets. It is important to note that staff has not completed analysis of this option and so cannot say if the resulting fee would be higher, lower, or the same. Option 2A: Option 2 with Intersection Level of Service Analysis of Highway 17 Project In this scenario, staff would make the revisions to historic level of investment and project cost calculations noted under Option 2 and would remove the Highway 17 project from the project list and analyze that project using the intersection Level of Service analysis. In this scenario, there would be two separate fee calculations: one for bicycle and pedestrian projects and one for the Highway 17 project. The total fee would be the sum of these two resulting fees. Using intersection Level of Service for the Highway 17 project would mean the cost of the improvements for this project would be apportioned to new development based on the volume of traffic generated by those land use developments. As noted previously, this is the method used to historically calculated traffic impact fees. This option provides a mechanism to generate funding for bicycle and pedestrian projects while analyzing the traffic-related project (Highway 17) in a more traditional way. It also allows for fees to be generated to support implementation of the full breadth of the Town’s adopted Plans governing transportation. Option 3: Convert to a Basic Fair Share Approach Under this alternative, the use of historic level of investment as the nexus would be eliminated. If this option is selected, staff does recommend adjusting the project list as recommended in Option 2 to refine the project costs and adjust them the2024 dollars. Further analysis would then be completed to consider which transportation projects would primarily benefit new land use development over existing residents. Following refinement of the project list, the costs of each project would then be apportioned to new development based on this resulting analysis. In its simplest form, this could mean dividing the total cost of the project list by the percentage increase of dwelling unit equivalents projected. The increase in dwelling units is calculated at 10% (see Table 3 of the Nexus Study). The portion of the project list would then be apportioned to new development would be allocated across the 2,598 Dwelling Unit Equivalents (DUEs) calculated in the Nexus Study. A more complicated analysis would require evaluating each transportation project location and its proximity to new development and then apportioning specific projects to new versus existing development. That is not recommended due to the complexity of the required analysis. PAGE 6 OF 7 SUBJECT: Receive a Report on Transportation Impact Fees and Provide Direction DATE: March 28, 2024 DISCUSSION (continued): The “Fair Share” method has the advantage of identifying how much new development would contribute to the transportation improvements. It is important to note that staff has not completed analysis of this option and so cannot say how significantly it would impact the fee calculation. Initial considerations suggest that the resulting fee could be lower than the previous fee of $1,104 per vehicle trip, or approximately $10,000 per single family residence. Option 4: Use Only an Intersection Level of Service Analysis As noted previously, intersection level of service (LOS) has been the historic method of traffic impact fee calculation in many communities. Under the intersection Level of Service method, traffic modeling is completed and fees are charged based on the additional traffic generated by new land use developments. This method is not applicable to funding for bicycle and pedestrian improvements. The only vehicle-related project on the Town’s project list would be the Highway 17 project. If this method were used, all other projects would be removed from the project list and would not be eligible for funding through the Town’s impact fee program. Option 5: Combine Options 3 and 4 For this option, staff would recommend adjusting the project list as recommended in Option 2 and Option 3 to refine the project costs and adjust them to 2024 dollars. The Highway 17 project would be removed from the project list and analyzed separately using the LOS method discussed in Option 4. The fee associated with Bicycle and Pedestrian Projects would be calculated as discussed in Option 3. The two resulting fees would then be added together to yield the final Transportation Impact Fee. This option has the advantage of identifying how much new development would contribute to the transportation improvements while using the traditional LOS analysis for the Highway 17 project. It is important to note that staff has not completed analysis of this option and cannot say how significantly it would impact the fee calculation. Initial considerations suggest that the resulting fee could be lower than the previous fee of $1,104 per vehicle trip, or approximately $10,000 per single family residence. CONCLUSION: Staff looks forward to Town Council’s feedback on these options and its direction regarding next steps. PAGE 7 OF 7 SUBJECT: Receive a Report on Transportation Impact Fees and Provide Direction DATE: March 28, 2024 COORDINATION: This agenda item was coordinated with the Town Manager, the Town Attorney, Finance Director, outside legal counsel, and DKS Associates. FISCAL IMPACT: There is no fiscal impact associated with this report. Depending on the direction provided by Town Council, modifications to the Transportation Impact Fee Program directly affect the availability of future funding for transportation-related capital improvements. ENVIRONMENTAL ASSESSMENT: This is not a project defined under CEQA, and no further action is required. Attachments: 1. Asset Based Transportation Impact Fees in California (Partial List) 2. Summary of Alternatives This Page Intentionally Left Blank 1135 CLARENDON CRESCENT BOBINOAKLAND@GMAIL.COM OAKLAND, CALIFORNIA 94610 (510) 816-9458 Asset-based Transportation Impact Fees in California (partial list)1 City/County Project Use of Funds Adopted Pleasant Hill Traffic Mitigation Fee Update w Upgrade or expand street, transit, bicycle or pedestrian facilities w Capital projects not specified but anticipated to include streetwidenings & extensions, intersection improvements, completinggaps in transit, bicycle & pedestrian network, and replacementof substandard facilities2 2003 San Francisco Transportation Sustainability Fee Nexus Study w Any complete streets improvement (bicycle and pedestrian facilities only) w Capital projects not specified but shown in various master plans 2015 Contra Costa County Alamo Area of Benefit District w Fund capital projects list of bicycle, pedestrian, and intersectionprojects, including safety improvements 2016 Oakland Transportation Impact Fee Nexus Analysis w Upgrade or expand “citywide transportation infrastructure”3 w Capital projects not specified but shown in various master plans w May fund street and intersection mitigation measures forcumulative impacts identified in existing EIRs 2016 Santa Rosa Impact Fee Program Update w Upgrade or expand “citywide transportation infrastructure” 3 w Revenue allocated roadways/intersections (85%) vs.transit/bike/pedestrian (15%) w Capital projects not specified but shown in various master plans 2018 El Cerrito Transportation Impact Fee Study w Upgrade or expand “citywide transportation infrastructure” 3 w Funding gap for capital project list focused on bicycle andpedestrian improvements 2019 Long Beach Traffic Impact Fee Study w Upgrade or expand “citywide transportation infrastructure” 3 w Funding gap for capital project list (all modes) Deferred Rolling Hills Estates Public Facilities Fee Program Update w Upgrade or expand any transportation infrastructure w Funding gap for capital project list focused on intersection,bicycle, and pedestrian improvements 2019 South San Francisco Development Impact Fee Study w Upgrade or expand “citywide transportation infrastructure” 3 w Funding gap for capital project list (all modes) 2020 1 List only includes studies prepared by or with substantial input from Urban Economics. Other consultants have used this approach as well for transportation impact fees. 2 Level of investment based on depreciated value of assets to enable use of funds for replacement of depreciated facilities. All other programs listed in this table are based on replacement value and prohibit use of funds for replacement of existing facilities. 3 “Citywide transportation infrastructure” defined as system of arterials, collectors, and related transit, pedestrian, and bicycle facilities that provide connectivity between neighborhoods and activity centers within the jurisdiction, as well as to neighboring communities. Excludes local streets used primarily for access to one specific neighborhood or development site. ATTACHMENT 1 This Page Intentionally Left Blank Page 1 ATTACHMENT 2 Atachment 2. Summary of Alterna�ves Alterna�ve Name Advantages Disadvantages Op�on 1: Keep the Adopted Analysis and Associated Fee (Asset-Based Approach) • Analysis is complete and fee is adopted. • Fee was based on the otherwise unfunded project costs, and accounts for an�cipated grant and other funding sources. • Approach has been adopted by other jurisdic�ons, yet has not been legally tested for a TIF. • Adopted fee is higher than nearby jurisdic�ons. Op�on 2: Refine the Adopted Analysis (Modified Asset Based Approach) • Clarifies the assump�ons. • Provides a more conserva�ve calcula�on of the maximum jus�fiable fee. • Refines the transporta�on project list to provide 2024 cost es�mates and clarify other funding sources. • Retains an approach that has been used by other jurisdic�ons but has not been legally tested for a TIF. • Staff is unclear at this �me how this approach might change the resul�ng fee. Op�on 2A: Op�on 2 with Intersec�on Level of Service Analysis for Hwy 17 Project • Uses intersec�on Level of Service for the only tradi�onal transporta�on project (Hwy 17) on the project list. • Clarifies the assump�ons. • Provides a more conserva�ve calcula�on of the maximum jus�fiable fee. • Refines the transporta�on project list to provide 2024 cost es�mates and clarify other funding sources. • Retains an approach that has been used by other jurisdic�ons but has not been legally tested for a TIF. • Staff is unclear at this �me how this approach might change the resul�ng fee Page 2 ATTACHMENT 2 Atachment 2. Summary of Alterna�ves Alterna�ve Name Advantages Disadvantages Op�on 3: Calculate Fee Using “Fair Share” Es�mate of Project Costs • Method has survived legal challenge. • Refines the transporta�on project list to provide 2024 cost es�mates and clarify other funding sources. • May reduce the proposed fee to below the previous level of $1,104 per trip. • Unfunded costs for most projects would be allocated to the fee based on the new development’s share of total future land use in Los Gatos. • Requires the Town to clearly document how funding gaps will be filled for all transporta�on projects on the project list. Op�on 4: Use only an Intersec�on Level of Service Calcula�on. • Tradi�onal method of calcula�on that has survived legal challenge. • SR 17 Conges�on Management is the only project that lends itself to this approach. Bicycle and pedestrian projects would not be funded. Op�on 5: Combine Op�ons 3 and 4 • Relies on “Fair Share” approach for bicycle and pedestrian costs and “Level of Service” for Highway 17. • Combines two op�ons that have survived legal challenge. • May reduce the proposed fee to below the previous level of $1,104 per trip. • Unfunded costs for most projects would be allocated to the fee based on the new development’s share of total future land use in Los Gatos. • Requires the Town to clearly document how funding gaps will be filled for all transporta�on projects on the project list. ATTACHMENT 3 From: Phil Koen Sent: Saturday, March 30, 2024 10:13 AM To: Mary Badame <MBadame@losgatosca.gov>; Matthew Hudes <MHudes@losgatosca.gov>; Rob Rennie <RRennie@losgatosca.gov>; Rob Moore <RMoore@losgatosca.gov>; Maria Ristow <MRistow@losgatosca.gov> Cc: Laurel Prevetti <LPrevetti@losgatosca.gov>; Gabrielle Whelan <GWhelan@losgatosca.gov>; Wendy Wood <WWood@losgatosca.gov> Subject: Agenda Item # 17 - public comment [EXTERNAL SENDER] Dear Honorable Mayor and Members of the Town Council, I recommend the Town Council repeal the ac�ons taken on January 16, 2024, and redo the Nexus Study by adop�ng Op�on #3. The Nexus Study is fatally flawed in that it does not provide any reasonable alloca�on of future infrastructure investment to new development based on a nexus finding that establishes a reasonable rela�onship according to need, benefit, and propor�onality. A traffic impact fee can only be used to mi�gate the impacts of new development on facili�es or infrastructure and can only be spent on capital projects that improve or expand facili�es to accommodate growth in service demand from new development. Fee revenues cannot be used for rehabilita�on unless related to a major capital project upgrade nor can they be used for maintenance or opera�ng costs. The Nexus study must allocate the fair share of facility costs to new development. The study prepared for the Town fails to do this. The major failing of the study is that it is purposely designed to “tax” new development to fund all the cost of certain transporta�on projects the Town Council wishes to develop ATTACHMENT 3 over the next 20 years, regardless of whether they are truly required to accommodate growth. For example, State Route 17 Corridor Conges�on Relief Project accounts for $10.5m or 25% of the total new infrastructure investment listed in the Nexus study. The reason for this project was outlined in an October 4, 2023, Staff Report to the Town Council. The report stated, “the project was requested by the Town in an effort to improve traffic flow on Highway 17, discourage cut through traffic in Los Gatos, and improve pedestrian and bicycle safety along Highway 9 near the on and off ramps to Highway 17”. These are largely exis�ng condi�ons with minimal rela�onship to incremental impacts from future development. And yet 100% of the cost of this project was included in the TIF project cost summary. Worse, when asked by the Town Council if this project could be removed from the list, Staff replied if the project is removed there would be no known funding source for the 10% Town match requirement for the Measure B Conges�on Management Funds. If removed, the impact fee in every land use category would be materially reduced. For example, the impact fee for mul�-family dwelling units would be reduced by 30% or $4,274 per dwelling unit. Based on this, the true intent of the Nexus Study was not to allocate the fair share of this project cost to new development but rather to allocate all the project cost to new development regardless of the true propor�onality. Simply put, the goal was to extract maximum fee revenue from new development regardless of true propor�onality. ATTACHMENT 3 I would also request that the Town release to the public all documents received from the third party legal and technical advisers who reviewed the Nexus Study. I previously requested these documents and was informed by the Town Atorney that “atorney-client privileged informa�on on this topic has been provided to the Town Council. Staff an�cipates sharing public informa�on at a future Town Council mee�ng”. There is no reason to withhold these documents from the public given the importance of this analysis and the public good that would come from sharing this informa�on. One last comment I would respec�ully request the Council to consider. When the Nexus Study was discussed at the January 16, 2024 Town Council mee�ng, one member of the Town Council though�ully suggested the Nexus Study be reviewed by the Finance Commission. This sugges�on was not accepted by a majority of the Council members for reasons that are s�ll not en�rely clear. In retrospect, this was unfortunate because of where we now find ourselves. I am poin�ng this out because the role of the Finance Commission is to independently advise the Council on important financial issues. The Commission is capable and willing to act as an independent advisor to the Town Council, if requested. A nexus study is a technical document and needs to be a well-organized and factually correct report that can be relied upon when making the required findings in accordance with the relevant sec�ons of the Government Code. This report has severe shortcomings which could have been pointed out to ATTACHMENT 3 the Town Council if the Finance Commission had been engaged. I would encourage the Town Council to honor the people’s wishes when they approved the Finance Commission and ask for the commission’s input before making cri�cal financial Transportation Impact Fee Program Receive Report and Provide Direction Town Council Meeting April 2, 2024 1 ATTTACHMENT 4 BACKGROUND 2 •Spring 2022 –Town hires DKS to update the Town’s Traffic Impact Fee Program •May 2023 – Staff provides report on technical work completed and preliminary fee calculations. •October 2023 – Town Council holds a study session to address questions raised in the May 2023 meeting and provides feedback to staff. •November 2023 – Town Council received the draft Nexus Study, including the Capital Project List in Appendix 1, and set a hearing date for January 16, 2024. •January 2024 – Council adopted a Transportation Impact Nexus Study, approved modifications to Section 15, Article VII of the Town Code and adopted resolutions to replace the Traffic Impact Fee with Transportation Impact Fee and modify Town Council Policy 1-08 REGULATORY FRAMEWORK OF IMPACT FEES 3 Per the California Mitigation Fee Act the Town must: •1) identify the fee’s purpose and use; •2) determine a reasonable relationship between the fee’s use and the type of land use development project(s) required to pay the fee; •3) determine a reasonable relationship between the need for the public facility(ies) and the type of land use development projects required to pay the fee; and •4) demonstrate a reasonable relationship between the amount of the fee and the costs of the facilities needed to cover developmental impacts. Also, when applicable, a nexus study shall identify the existing level of service for each public facility, identify the proposed new level of service, and include an explanation of why the new level of service is appropriate. CALCULATION OF TRANSPORTATION IMPACT FEES 4 •Historically Traffic Impact Fees focused on optimizing vehicle improvements and used intersection Level of Service to apportion traffic fees. •Intersection Level of Service does not consider bicycle and pedestrian infrastructure. •There are three basic approaches to impact fee calculations: •Level of Service (for traffic only); •Asset Based (adopted by Los Gatos in January); and •Fair Share Approach FEE CALCULATION OPTIONS 5 Alternative Name Advantages Disadvantages Option 1: Keep the Adopted Analysis and Associated Fee (Asset-Based Approach) •Analysis is complete and fee is adopted. •Fee was based on the otherwise unfunded project costs, and accounts for anticipated grant and other funding sources. •Approach has been adopted by other jurisdictions yet has not been legally tested for a TIF. •Adopted fee is higher than nearby jurisdictions. FEE CALCULATION OPTIONS (cont’d) 6 Alternative Name Advantages Disadvantages Option 2: Refine the Adopted Analysis (Modified Asset Based Approach) •Clarifies the assumptions. •Provides a more conservative calculation of the maximum justifiable fee. •Refines the transportation project list to provide 2024 cost estimates and clarify other funding sources. •Retains an approach that has been used by other jurisdictions but has not been legally tested for a TIF. •Staff is unclear at this time how this approach might change the resulting fee. Option 2A: Option 2 with Intersection Level of Service Analysis for Hwy 17 Project •Uses intersection Level of Service for the only traditional transportation project (Hwy 17) on the project list. •Clarifies the assumptions. •Provides a more conservative calculation of the maximum justifiable fee. •Refines the transportation project list to provide 2024 cost estimates and clarify other funding sources. •Retains an approach that has been used by other jurisdictions but has not been legally tested for a TIF. •Staff is unclear at this time how this approach might change the resulting fee FEE CALCULATION OPTIONS (cont’d) 7 Alternative Advantages Disadvantages Option 3: Calculate Fee Using “Fair Share” Estimate of Project Costs •Method has survived legal challenge. •Refines the transportation project list to provide 2024 cost estimates and clarify other funding sources. •May reduce the proposed fee to below the previous level of $1,104 per trip. •Unfunded costs for most projects would be allocated to the fee based on the new development’s share of total future land use in Los Gatos. •Requires the Town to clearly document how funding gaps will be filled for all transportation projects on the project list. Option 4: Use only an Intersection Level of Service Calculation •Traditional method of calculation that has survived legal challenge. •SR 17 Congestion Management is the only project that lends itself to this approach. Bicycle and pedestrian projects would not be funded. FEE CALCULATION OPTIONS (cont’d) 8 Alternatives Advantages Disadvantages Option 5: Combine Options 3 and 4 •Relies on “Fair Share” approach for bicycle and pedestrian costs and “Level of Service” for Highway 17. •Combines two options that have survived legal challenge. •May reduce the proposed fee to below the previous level of $1,104 per trip. •Unfunded costs for most projects would be allocated to the fee based on the new development’s share of total future land use in Los Gatos. •Requires the Town to clearly document how funding gaps will be filled for all transportation projects on the project list.