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Addendums�` twMas t y 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 THIS PAGE INTENTIONALLY LEFT BLANK ANDREW L. FABER KC:VINF: KELLEY THOMAS P. MURPHY SANDRA G. SEPULVEDA RALPH I SW "ANSON MARK MAKIEWICZ THOA/AS D. MORELL MASON L. BRAWLEY PECKiY I. SPRINGGAY RORERTA S. HAYASHI TEN ALMADEN BOULEVARD SETH 1 COHEN JENNIFER 1'. LEUNG JOSEPH 1; DWORAK JEFFREYS. KAUFMAN ELEVENTH FLOOR LAMA PALAZZOIA MAZARIN A VAKHARIA .l. L. GI S' NERB ALAN) DINNER ORIA' I, SHEON e1HN L. SAN JOSE, CALIFORNIA C'ALtF 951:13 -2233 ANDR I RGIA ANDREW' VIVIA F WANG N F WANG LINDA CASH OMINGA E D, M. ME DONNA A M. M A 11, SH Y LL JAMES I' CASH" JAMES P HARRY LOPEZ HARRY. TELEPHONE: (408) 286-5800 MATTH TAYLOR MATTHEW A. TAYLOR SARA L. SARAC POR OCK I W VOLPE S VOL FACSIMILE: (408) 99$ -j336 DAWN C SWEATT EEAVC. G'OU E NANCY JOHNSON NANCY1 J011NSON MICHAFI VIOLANTI MICHAEL NF KAITILEENF SHERMAN $TIE N MARY E, LOUDEN JEROLDA KEITON CHRISTINE LONG \Vtm.berHner.com ROBERI I. CHORTEK. AARON M VALENTI Dr h Onkh JONATHAN D. WOLF KATHLEEN K. SIDLE CIiR snwE PICONE K)eend CA K /pdesw, Ca RETIRED y OF COUNSEL SAMUEL I. COHEN SAM1TORDA.REKLINER JUDY A. JENSEN ROBBR! W. HUMPHREYS STEVEN L HALLGRRHSON DORJ$ A KARLIN HUGHL ISOLA FRANK R URHAUS SUSANE. BISHOP ERIC WONG LESI.IEKN.W MClRK�Fi NANCY L. BRANDT ANTHONY D JOHNS' ION 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 4812 -02BOA763VI -3- ALPD9427065 This Page Intentionally Left Blank p 01)), 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