Addendums�` twMas
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COUNCIL AGENDA REPORT
DATE: MAY 16, 2014
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
MEETING DATE: 05/19/14
ITEM NO: S
ADDENDUM
A��-
SUBJECT: AMENDMENT OF TRAFFIC IMPACT MITIGATION FEES
ADOPT A RESOLUTION CONFIRMING ACTION TAKEN BY THE TOWN
COUNCIL AT A SPECIAL METING HELD ON MARCH 24, 2014,
AMENDING THE TOWN OF LOS GATOS TRAFFIC IMPACT MITIGATION
FEES AS PROVIDED FOR IN SECTION 15.70.035 OF THE TOWN CODE.
REMARKS:
After the staff report was prepared for distribution, additional correspondence (Attachments 7 -9)
was received.
Attachments 1 -6 Previously Received with Staff Report:
1. Resolution Amending Traffic Mitigation Impact Fees
2. Resolution 1994 -55
3. Traffic Mitigation Improvement Project List
4. March 24, 2014 Council Report
5. March 24, 2014 Council Report Minutes
6. Communication from the Public
Attachments 7 -9 Received with Addendum:
7. Letter from Berliner Cohen dated May 9
8. Letter from Grosvenor dated May 15
9. Letter from Matt Morley to Andrew Faber (Berliner Cohen)
PREPARED BY: MATT MORLEY
Director of Parks and Public Wor
Reviewed by: Assistant Town Manager `town Attorney Finance
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THOMAS ARMSTRONG
May 9; 2014
Matt Morley
Director of Parks & Public Works
Town of Los Gatos
110 East Main Street
Los Gatos, CA 95030
Re: Proposed Traffic Impact Fee Increase
Our File No.: 09427 -065
Dear Mr. Morley.
We represent the interests of Grosvenor Americas and Summerl Iili Homes with regard to
their interests in the North 40 property. As you know, They have been working very closely with the
Town in the development of the Specific Plan for the North 40 region for the past several years.
Grosvenor and SummerHill were shocked to see the proposal that would increase the total North 40
traffic fees from $2,298,300 to $12,568,936, a 547% increase.
In addition to this enormous additional expense that would be difficult for any project to
bear, there are two general categories of legal concerns that we have with regard to the proposed fee.
Both of these relate to the apparent failure of the fee to comply with the governing State statute, the
Mitigation Fee Act, Government Code § 66000 et seq. These concerns will be outlined in the rest of
this letter.
We have reviewed the Nexus study (the "AB 1600 Report") prepared by FCS dated March
18, 2014 entitled Traffic Impact Mitigation Fee Update. As you know, for a development impact fee
to be valid, it must be based upon a study showing a reasonable nexus between the projects that are
proposed to be constructed with the fee and the burdens upon the city infrastructure caused by the
4812 -028DA763VI
ALFIiM27065
ATTACHMENT 7
Matt Morley
May 9, 2014
new development to which the fee is to be applied. See Gov't Code § 66001; ShWell Industries.
Inc. v. Governing Board (fa' Dist. 19991) 1 CA4th 218.
In our review, we have reviewed the Nexus study and have also had it reviewed by a traffic
engineering firm. Their conclusion is that the study that was made public lacks sufficient
information and detail to verify that in fact it is a valid study. In particular, it cannot be determined
from the public documentation:
• How average daily trip rates were developed, since they were not taken directly from
the ITE Trip Generation Manual. The average daily trip rates are based on
households and jobs; ITE does not generally provide trip rates in terms of jobs.
How the particular infrastructure needs were determined to be "capacity- increasing:'
Several of projects listed do not appear to be capacity- increasing, such as adding
infill sidewalks and unfunded deferred street maintenance. There is no analysis to
explain whether any such improvements are necessary to accommodate future traffic
needs, and thus ifthere is any nexus to require new development to contribute to the
improvement.
• How the construction costs for each improvement were developed.
The methodology for allocating a percentage of each improvement to a new
development vs. the percentage that should bome by existing development (that is,
paid for from sources other than the traffic mitigation fee).
A second major concern is the apparent lack ofa policy for credits and reimbursements from
the traffic impact fund. Such a policy is necessary for the common occurrence where, as part of a
development, a developer constructs an improvement that is on the list of traffic impact fee projects.
As an example, in the North 40 project, it is expected that the developer will construct several of
these improvements, including certain widening of Los Gatos Boulevard, intersection improvements
at Lark and Los Gatos Blvd., the widening and improvements on Lark, and the addition of a second
right turn lane onto the northbound Highway 17 ramp.
Some of these may or may not be required as mitigation measures for traffic impacts
analyzed in the North 40 EIR as a result of the North 40 traffic impact assessment ( "fIA "). Ifthese
projects are on the list of traffic improvements used as a basis for calculating the traffic impact fee,
then if they are in fact funded by a private developer, that developer must receive either a credit
against its own traffic impact fees, or reimbursements from the fund. Failure to do so would result,
in effect, in the Town "double- dipping" or collecting twice for the same improvement, once through
the traffic impact fee assessment and once by having the developer fund the improvement. If a
developer is required to construct one of these improvements, then it cannot also be assessed traffic
impact fee to pay for a portion of the same improvement. A fee cannot exceed the cost of providing
the service or improvements for which it is collected. See Ehrlich v. City of Culver City (1996) 12
C.46'854; Bixel Associates v. City of Los Angeles (1989) 216 CAM 1208.
4812 -0290-0769vl -2-
nLnoe427%5
Matt Morley
May 9, 2014
SummerHill and Grosvenor have always been willing, and remain willing, to pay a fair share
of traffic impact fees, and to provide appropriate traffic improvements that may be necessary for
buildout of development on the North 40 Specific Plan area. However, due to the inadequacies and
uncertainties of the present Nexus study, we request that any consideration of increasing the traffic
impact fee be continued until, at the very least:
• Our traffic engineers have been able to access data that establishes the validity of the
nexus study, particularly concerning the points bulleted above; and
• The Town develops a legally adequate reimbursement and credit policy for traffic
improvements that may be installed by a developer.
Thank you for your consideration.
Very truly yours,
BERLINER COHEN
ANDREW L. FABER`
E -Mail: andrew.faber @berlineccom
ALF:cem
cc: Rob Schultz, Esq.
Wendi Baker, SHH
Don Capobres, Grosvenor
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ALPD9427065
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EDEN
GROSVENOR HOUSING
May 15, 2014
VIA EMAIL AND U.S. MAIL
Mayor Steven Leonardis
Town Council Members
Town Hall
110 E. Main Street
Los Gatos, CA 95030
sl eona rd i s@ Ioseatosca.aov
council @ losaatosca.aov
Re: Council Agenda, May 19, 2014
Traffic Impact Mitigation Fee Increase
Dear Mayor Leonardis and Members of the Town Council:
COMMUNITIES OF DISTINCTION
Grosvenor Americas and SummerHill Homes are proud to have worked with the community
with the North 40 portion of the 2010 General Plan and now the Specific Plan for the past few years. At
this time, we are quite concerned about the sudden appearance of a proposal to increase the traffic
impact mitigation fees that would be applicable to a potential project at the North 40 from $2,298,300
to $12,568,936, a 547% increase. Our attorney, Andrew Faber, wrote a letter to you on April 2, 2014,
initially expressing our concern. He wrote a further letter addressed to Matt Morley on May 9, 2014.
We have met with Staff to discuss our concerns about the fee, and are pleased with the cooperation
that Staff have shown us.
We do, however, continue to have concern in two respects. Our first concern is with the vague
and possibly legally inadequate definition of the projects for which the fee is being assessed. In
addition, although our understanding is that the draft resolution now calls for credits to be paid to
developers who put in an improvement that is on the Town's list, there is no reimbursement policy to
cover the eventuality where a developer puts in improvements that cost more than the fees that are
then due. Without both a policy for credits and reimbursements, the Town could end up collecting fees
twice for the same improvements, and such "double dipping" would clearly not be consistent with the
statutory limitation of such fees (the Mitigation Fee Act), Government Code 466000, et seq.
To focus on the nexus study and the definition of the fee, we have shown the study to our traffic
engineers and they are unable to evaluate its adequacy due to lack of supporting data. Staff has
indicated it will share the data but we have not yet received it. In particular, the definition of the
various traffic improvements that are listed in Appendix A to the study is not known. Accordingly, there
is no way to know whether a traffic improvement that may be either imposed upon a North 40
ATTACHMENT
developer, or volunteered by them, would match up with the improvement as listed in the fee. In
addition, it is not possible to tell how the percentage allocation to new development was made in the
nexus study, nor why those particular projects are deemed to be "capacity increasing" projects.
In order to determine the continued financial viability of our interest in the North 40, we must
be able to calculate exactly what the fees will be, what improvements we will be required to put in, and
what credits and reimbursements we will be entitled to. It is not possible to make these calculations at
this time based upon the data that has been provided by the Town. Accordingly, we ask you to put off
consideration of adoption of the fee increase until the fee is further defined in a manner adequate to
allow us to make such calculation and to determine, incidentally, that the fee is legally adequate and can
be applied to development in the North 40.
Andy Faber will be representing Grosvenor and SummerHill Homes at the hearing and would be
happy to explain these issues further. Thank you for your consideration.
A. Don Capobres
Senior Vice President
Grosvenor
Very truly yours,
GROSVENOR AMERICAS /SUMMERHILL HOMES
i/
Wendi Baker
Vice President of Development
SummerHill Homes
cc: Greg Larson, Town Manager (manager @losgatosca.gov)
Robert Schultz, Town Attorney (attorney @losgatosca.gov)
Shelley Neis, Interim Clerk Administrator (ClerkPLosGatosCA eov)
Matt Morley, Park and Public Works Director (mmorley @losgatosca.gov)
Andrew L. Faber, Berliner Cohen (alf @berliner.com)
Wendi Baker, SummerHill (WBaker @shhomes.com)
TowN OF Los GATOS
PARKS R. PUBLIC WORKS DEPARTMENT
ENVIRONMENTAL SERVICES
41 MILES AVENUE
Los GATOS, CA 95030
408.399.5770
Andrew L. Faber
Berliner Cohen
10 Almaden Boulevard
San Jose, CA 95113
Dear Andy:
In response to your letter of May 9, 2014, and as a follow -up to our meeting on Monday, May 12,
2014, we are providing you with requested information regarding the proposed amendment of the
Town's Traffic Impact Mitigation Fee. Amendment of the Town Traffic Impact Mitigation Fee
was considered by the Town Council at a Public Hearing on March 24, 2014 and is scheduled for
confirming action by the Town Council at its regular meeting on May 19, 2014.
As stated in our March 24, 2014, Council Report, the Town retained FCS Group, a consulting firm
with extensive experience in user and impact fee analysis, to update the Traffic Impact Mitigation
Fee Study which they had previously prepared for the Town in 2010. The results of this most
recent update were then used to calculate the new Traffic Impact Mitigation Fee, which had not
been updated since it was put in place 20 years ago.
Our responses to the specific concerns outlined in your letter are provided below:
How were average daily trip rates developed?
The average daily trip rate factors were developed by the consultant by averaging employee related
trip rates published by ITE for specific business categories and land use types to create a summary
by general land use classifications (residential, retail, office, service, institutional, etc.). These
average rates were then applied to the most recently adopted ABAG job growth projections for the
Town of Los Gatos. This is consistent with the approach that was used to generate growth
projections for the Town's 2020 General Plan Update. A summary table showing the consultant's
calculation of trip generation rates is provided in Attachment 1.
How were the particular infrastructure needs determined to be "capacity- increasing " ?
Currently, all of the Town's intersections and roadway segments operate at Level of Service (LOS)
D or better.' Based on the traffic modelling that was done in conjunction with the 2020 General
Plan update, the transportation improvements identified in the General Plan have been deemed
necessary to ensure that planned growth in jobs and housing through the General Plan planning
horizon will not result in a degradation of traffic conditions and/or transportation system operations.
ATTACHMENT
Andy Faber —Page 2
May 14, 2014
The projects used for the calculation of the Traffic Mitigation Impact Fee (Town of Los Gatos
Traffic Mitigation Improvements Project List) all have capacity enhancing attributes, whether
directly, such as the addition of turning lanes or intersection improvements, or indirectly, such as
the construction of sidewalk infill improvements or the installation of bicycle improvements.
Sidewalk infill projects and bicycle improvements increase capacity by diverting existing motorized
trips from the existing roadway system to non - motorized alternatives, thereby freeing up capacity to
accommodate new growth related trips.
Deferred street maintenance, which you also inquired about, is only assessed a 9.68% growth
related cost share, which captures the impact of growth related vehicle trips on the Town's street
network. A well maintained roadway system preserves existing network capacity by minimizing
roadway condition related delay (both construction delay and incident delay); optimizes travel time;
and supports multi -modal trip diversion.
How were the construction costs for each improvement developed?
Cost estimates for the improvements are "planning level" cost estimates, and were developed by
staff using estimates included in the Transportation Element of the 2020 General Plan Update; the
adopted 2013/14 — 2017/18 Capital Improvement Program (CIP); actual project cost information for
similar projects; and other available data. Both the 2020 General Plan Transportation Element and
the CIP can be found on the Town's website (www.los¢atosca.eov).
What was the methodology used for allocating a percentage of each improvement to a new
development vs. the percentage that should be borne by existing development?
The project cost percentages that were allocated to new development vs. existing development were
developed by Public Works Engineering and Traffic Engineering staff. Five projects were assessed
a 90% share; 15 projects were assessed a 50% share, and one project was assigned a 9.68% share.
Because the Town's intersections all currently operate at LOS D or better, all of the projects will
mitigate traffic impacts associated with new trips. The 90% share projects are those facilities that
will be most significantly impacted by new trips due either to their geographic location, or the
condition of the existing facilities. The 50% share projects, while also necessary to accommodate
new trips, also provide benefits to existing developments, for instance by addressing multi-modal
capacity or operational issues. Unfunded Deferred Street Maintenance was allocated a 9.68% cost
share, which is based on the number of new trips as a percentage of total trips in through the 2030
forecast year.
The Town should develop a reimbursement and credit policy for traffic improvements that may be
installed by a developer.
As we discussed at our meeting, we are recommending the inclusion of specific credit language in
the resolution implementing the adjustment of the Traffic Impact Mitigation Fee. The proposed
language is as follows:
Andy Faber —Page 3
May 14, 2014
"Credit against Traffic Impact Mitigation Fees due shall be granted up to the
amount of the Estimated Project Cost shown on Attachment 1, Town of Los Gatos
Traffic Mitigation Improvements Project List, for any listed projects for which the
developer either constructs at his own cost, or contributes a fixed or percentage
amount. Where construction is fully funded and completed by the developer, said
credit shall be equal to the Project Cost as shown in Attachment]. Where
payment is a fixed amount or a percentage of Project Cost, credit shall be equal
to the actual amount due, whether the project is constructed by the developer or
others. "
As we also mentioned to you in our meeting, we also expect to return to the Council with an
updated Traffic Impact Policy in late summer or early fall, that we anticipate will address any
outstanding issues related to the implementation of the Town's Traffic Impact Mitigation Fees.
Sincerely,
Matt Morley
Parks and Public Works Director
Attachment —Los Gatos Trip Generation Assumptions
cc: Rob Schultz, Town Attorney
Wendi Baker, Summer Hill Homes
Don Capobres, Grosvenor
Andy Faber —Page 4
May 14, 2014
Attachment 1
Kesidennal
80% Single Family 1.02 Per DU 9.45 Per DU
20% Multifamily & Tow nhomes 0.60 Per DU 6.10 Per DU
100 %, Avg. Residential 0.94 Per DU 8.78 Per DU
Residential 0.935 Per DU 8.8 Per DU
Retail 2.690 Per Job 23.8 Per Job
Non- Retail 0.971 Per Job 5.2 Per Job
Notes:
weights assigned based on dwelling unit counts by type; and jobs by type; derived
from US Census, On The Map database for Town otLos Gatos, 2010.
2 trip data are derived from the ITE Trip Generation Manual
Retail
2.69 Per Job
23.84 Per Job
Avg. Retail
2.69 Per Job
23.84 Per Job
Non- Retail
26%
Service
0.66 Per Job
0.09 Per Job
30%
Office
0.55 Per Job
4.51: Per Job
20%
Medical
0.86 Per Job
6.50 Per Job
15%
Light Industrial
0.51 Per Job
3.42 Per Job
9%
Institutional
4.29 Per Job
22.45 Per Job
100%
AVa. Non - Retail
0.97', Per Job
5.21 Per Job
Residential 0.935 Per DU 8.8 Per DU
Retail 2.690 Per Job 23.8 Per Job
Non- Retail 0.971 Per Job 5.2 Per Job
Notes:
weights assigned based on dwelling unit counts by type; and jobs by type; derived
from US Census, On The Map database for Town otLos Gatos, 2010.
2 trip data are derived from the ITE Trip Generation Manual