10MEETING DATE: 04/01/13
ITEM NO: ID
COUNCIL AGENDA REPORT
DATE: MARCH 27, 2013
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
SUBJECT: REVIEW OF DOWNTOWN PARKING ASSESSMENT DISTRICT
BACKGROUND:
On February 19, 2013, in response to public inquiries regarding the Los Gatos Theater
application, Council directed staff to provide an informational report regarding the Downtown
Parking Assessment District (PAD), historic applicability of PAD standards and the requirements
for expansions and new developments within the District.
DISCUSSION:
Following is a summary regarding the creation and history of the current Parking Assessment
District and how it relates to the Los Gatos Theater at 41 N. Santa Cruz Avenue.
A. Downtown Specific Plan
On May 18, 1982, the Town Council adopted the Downtown Specific Plan (DTSP) to guide
and coordinate downtown implementation programs designed to resolve existing downtown
issues and address future needs. The DTSP was amended on February 23, 1986, to
incorporate a parking program, including priorities for constructing parking facilities. The
DTSP was again amended on April 18, 1994 to change the priority of future parking
facilities. The DTSP was repealed on August 7, 2000, on the basis that the plan was no
longer needed as the implementation measures had either been completed or were carried
forward to the General Plan 2000.
The DTSP stated that a single unified parking district shall be formed for the Central
Business District /East Main St area and membership in that Parking District shall be required
for removal of non - conforming status due to parking. A policy of the DTSP was that the
non - conforming status of downtown uses due to the lack of adequate parking shall be
removed contingent upon the owners' continuing participation in the implementation of the
downtown parking program.
PREPARED BY: Todd Capurso, Acting Director of Community Development
Reviewed by: Assistant Town Manager Town Attorney Finance
N: \DEV \TC REPORTS\2013\PADA- 1- 11docx
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MAYOR AND TOWN COUNCIL
SUBJECT: Parking Assessment District
March 27, 2013
B. Parking Assessment District
A report from the Town's Parking Committee, dated August 17, 1982, in regards to the
creation of the Downtown Specific Plan, which ultimately led to the creation of the Town's
PAD, notes that parking assessments are based on gross floor area. As defined by Town
Code in 1982 (and currently), gross floor area means the entire area of all floors, including
basements and cellars, measured from the outer face of exterior walls or, in the case of party
walls, from the centerline.
The Downtown Parking Survey used for the PAD, dated October 29, 1982, notes that floor
areas for business establishments are all estimates. Existing floor areas for the PAD were
calculated from floor plans that were on file with the Town or were calculated from aerial
photographs and then allocated to each business by measuring the business frontage. Since
this information was not precise, property owners were encouraged at that time to provide
additional information regarding the calculations. Since the floor areas were all estimates,
the Town has subsequently found that several businesses downtown do not have the precise
square footage calculated for the PAD. Typically when a discrepancy is found, it is that the
old square footage estimate is less than what really exists. However, Town staff has found a
few instances where the property owner over estimated their square footage originally.
The PAD data notes the following category of land uses for each parcel: retail, office,
restaurant, and residential. Miscellaneous uses, such as the theater, were classified under
retail. Although the PAD data notes whether or not a parcel had a residential unit at the time
of the survey, and documents the square footage, property owners were not assessed for
parking for the residential use.
To finance the parking improvement projects of the PAD, on December 5, 1988, the Town
issued 25 -year Limited Obligation bonds (Attachment 1) which will sunset in December
2013. The bonds are not a financial liability of the Town and were issued upon and secured
by assessments on properties within the PAD. Installments of principal and interest
sufficient to meet annual bond debt service are included in the property owners' regular
county tax bills. Property owners were also given the option of paying their assessment in
advance.
As noted in a report to the Town Council for the meeting of September 11, 1995, regarding
parking challenges and opportunities in the downtown central business district to fund the
creation of more parking, the PAD established the number of parking credits for each parcel
in the district. The fee was based on a formula and the number of spaces (credits) a property
owner purchased, and from that point on, was unchangeable. These credits did not translate
into a dedicated space and exclusive ownership, but a right to use space from the "pool" of
spaces created by the PAD. As noted in that report, the "PAD is inflexible in amending or
adding credits."
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MAYOR AND TOWN COUNCIL
SUBJECT: Parking Assessment District
March 27, 2013
C. Town Code
On May 18, 1987, The Town Code was amended concerning rules for properties within a
PAD. Section 29.10.150(f)(2) of the Town Code states that the creation of a PAD relieves
those properties located within the district which were nonconforming as to parking from
having to supply on -site parking spaces as required by Town Code. Based on this code
section and that there is no direction in the historic PAD reports on how to handle corrections
to the estimates, the Town has not required businesses in the PAD to:
• Meet required parking for their existing floor area (which would be impossible due to
lack of onsite space); or
• Pay additional funds into the parking assessment district for their existing floor area
(it has been documented that there is no mechanism to pay into the district); or
• Reconfigure their buildings to remove excess square footage (this would be a
hardship to the business and property owner and goes in the opposite direction of
economic vitality of the downtown).
Pursuant to Section 29.10.150(f) (4) of the Town Code, additional parking would only be
required if additional square footage was added (excluding those properties which paid into
the district to increase their floor area to the maximum permitted) or the use was
intensified. It is important to note that the Town has never considered that these businesses
that have more floor area than what is documented in the PAD were nonconforming as to
parking since the PAD was created to eliminate that nonconformity. Town Code regulations
for properties in the PAD are noted in Attachment 2.
D. Parking Credits for Expansions, New Development, and Intensification of Use
The maximum floor area ratio (FAR) for new construction in the PAD is .60. The option to
include additional floor area in the PAD calculation was intended to give vacant properties
and properties with smaller buildings (FAR less than .60) an opportunity for future building
or intensification up to a FAR of .60. Some property owners did not take advantage of this
opportunity. For those properties that took the opportunity and paid into the district for these
credits, they can possibly add additional square to their building or intensify the use without
providing on -site parking.
Based on the 1998 data, out of the 186 parcels in the district that have the potential for
additional floor area, approximately only 71 of those parcels have the possibility to do so.
This is due to the fact that the Town Code requires PAD properties to maintain whatever
existing on -site parking they many have since those spaces were included in the PAD
assessment calculations, which greatly restricts adding onto a building. The remaining 115
parcels that paid into the PAD for potential additional floor area have site constraints that
may never allow them to add square footage. The square footage that may never be built
equates to 318 parking spaces. Therefore, depending on the use of these businesses, there is
a possibility that up to 318 spaces within the PAD are not assigned to a use.
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MAYOR AND TOWN COUNCIL
SUBJECT: Parking Assessment District
March 27, 2013
E. Exceptions
Although no mechanism was established in the PAD to allow a property owner to pay into
the Assessment District for additional parking spaces, Council has approved two requests to
purchase additional parking spaces to intensify a use through the earthquake restoration
process. The basis for these approvals was that Town Council adopted Urgency Ordinances
1800 and 1860, which included a provision that allowed any Town Code requirement to be
waived in response to the earthquake restoration process.
On April 17, 1990, Council approved a request at 19 N. Santa Cruz Avenue to allow on site
tandem parking and to pay an in -lieu fee for one parking space to increase the building
square footage. The Council found that in this instance, the most logical, safe method of
restoring this earthquake damaged building required the construction of additional floor area.
The in -lieu fee was estimated be to be $16,000 per space. The property owner chose to
reduce the number of restaurant seats to avoid the in -lieu fee.
On January 6, 1992, Town Council approved a request for a new restaurant at 21 N. Santa
Cruz Avenue, to create on site tandem parking and to pay an in -lieu fee for four additional
spaces to increase the number of seats. The Council found that the "appropriate
circumstances" to waive the requirements was that it would help revitalize the downtown
area since the space had been vacant since the earthquake. The property was badly damaged
by the earthquake, the property owner had passed away and the building was going through
foreclosure. The applicant paid the in -lieu fee which was determined to be $17,000 per space,
for a total of $68,000, and the funds were required to be used by the Town to construct future
parking.
F. New Parking
Subsequent to the construction of the eight parking lots /structures which equates to
approximately 1,005 spaces created through the parking assessment district, the Town has
constructed two additional public parking lots in the Central Business-District which were_
not funded through the PAD. In approximately 2003, a 16 space parking lot (Southside Lot)
was constructed at 145 S. Santa Cruz Avenue across from the Toll House Hotel. In 2009, 29
off street parking spaces were added to Parking Lot 6 at 224 W. Main Street. These two
projects contributed 45 additional off street spaces to the inventory. In addition, in 2002 the
Town secured a parking lot lease with Verizon at 15 Montebello Way east of the Post Office
(Montebello Lot). The current lease runs until 2019 and is subject to amendments and adds
26 off street spaces. So in all, there have been 71 spaces added to the Downtown Parking
Inventory since 2002 that are not included in the PAD.
It should be noted that the expanded Lot 6 parking was purchased with former
Redevelopment Agency 20 % funds dedicated for affordable housing, with the expectation
that the site would ultimately be considered with the balance of Lot 6 for some variation of
mixed use development including parking, retail, a few affordable housing units, and /or
office. Given the State's elimination of Redevelopment, the Town will now need to
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MAYOR AND TOWN COUNCIL
SUBJECT: Parking Assessment District
March 27, 2013
reacquire the expanded Lot 6 using non- affordable housing funds (e.g., from the Parking
Reserve or the General Fund) or consider that parcel for affordable housing as required by
the State.
G. Future of Assessment District
With the Parking Assessment District expiring at the end of 2013, there are several options
for future community and Council consideration, including:
• No action — Let the PAD expire with no further property assessments for parking or
other improvements
• Re- establish the PAD — Prepare a package for election by the property owners to re-
establish the PAD for an extended period of time to fund future parking
improvements and opportunities. Any new PAD would likely have to include
assessments significantly higher than the last one to fund any new structured parking.
• Establish an Alternative Assessment District — Prepare a package for election by the
property owners to establish a business improvement or other property owners
assessment district to fund district marketing, maintenance and other improvements
given the State's elimination of Redevelopment.
Council can provide direction on any of these options.
H. Los Gatos Theater and Retail Space Background
Parking Assessment District — In 1982 the floor area noted for the theater and retail space
was 7,732 square feet for which the property was assessed when the parking district was
created in 1984. There was no opportunity for this site to add additional square footage in
the future beyond what actually existed. The square footage noted in PAD records was
entirely credited to retail; no separate residential, office or restaurant square footage was
noted. Based on retail square footage, 26 PAD spaces were allocated to the theater. The
property is still being assessed for the PAD.
While researching historic records of the PAD and the theater, staff learned that a theater
caretaker's unit was located upstairs as well as office space for the theater, which confirms a
comment by a resident that a living unit was located on the second floor of the theater.
Documentation regarding this unit was that the caretaker's unit and the office space were part
of the theater. The caretaker's unit was not considered as residential square footage and
documentation was noted that the unit could not be rented out as separate living quarters. In
addition, the Town's land use survey indicated that in 1983 there was no apartment above the
theater. Therefore, all second story square footage is part of the theater square footage and
use.
Earthquake Restoration - On May 23, 1991, the Earthquake Restoration Committee
considered a request to 1) reinstate a CUP for the theater which was closed for more than a
year due to damage from the Loma Prieta Earthquake, 2) to allow the single cinema to divide
into two theaters and maintain the caretaker's unit, and 3) as an option, to allow the single
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MAYOR AND TOWN COUNCIL
SUBJECT: Parking Assessment District
March 27, 2013
theater to divide into three theaters, maintaining the caretaker's unit. As part of this process,
it was estimated that the theater had approximately 9,030 square feet. This square footage did
not take into account the existing 200 square foot retail space which would total an estimate
of 9,230 square feet for the entire building. It was determined at that time that the project
was not an intensification of use since the number of seats was not increasing. There was no
discussion that the existing square footage exceeded the square footage noted in the parking
assessment data by approximately 1,500 square feet nor was there any discussion that the
project deviated from any Town Code requirements which was permitted by Urgency
Ordinance 1800 with Town approval. Town Council approved the application, EU -7 -5A, on
June 13, 1991. The applicant vested the two theater option. If the Town had decided that
the increased square footage had required parking, then the property owner at that time
would have been required to provide or pay for five additional spaces.
Recent Application — On November 19, 2012, Town Council approved a CUP modification,
U- 12 -16, to allow special events with alcoholic beverage service in portions of the theater. A
new retail space, which was not part of the original or current CUP, was included in a portion
of the existing theater. The applicant did a detailed measurement of the building and
determined that the total floor area of the existing theater and retail space was 9,605 square
feet. The applicant's proposal was to eliminate 75 square feet on the second level for a total
of 9,530 square feet. The reduced square footage is 300 square feet more than was estimated
for the approval in 1991, and is 1,798 square feet more than what was estimated when the
PAD was created. Pursuant to Section 29.20.200 of the Town Code the use was not
intensified since the modified use generated zero peak hour trips and the existing square
footage was reduced. In addition, the maximum seating as approved was reduced from 492
seats to 388 seats. If the Town had decided that the property owner needed to provide or pay
for additional parking, it would have been one additional space over the five resulting from
the 1991 increase.
Following is a table summarizing the parking and square footage history of 41 N. Santa Cruz
Avenue:
*If recalculated square footage was determined to be assessable or an intensification of use
CONCLUSION:
Section 29.10.150(f)(2) of the Town Code states that the creation of a PAD relieves those
properties located within the district which were nonconforming as to parking from having to
supply on -site parking spaces as required by Town Code. Pursuant to Town Code and past
actions by the Town, additional parking in the PAD is only required if the use is intensified. The
1984 PAD
1991 EU -7 -5A
2012 U -12 -16
First floor sq ft
Not available
Not available
7,214
Second Floor sq ft
Not available
Not available
2,316
Total sq ft
7,732 est
9,230 est
9,530
Required Parking*
26
31
32
PAD shortage*
Not applicable
5
6
*If recalculated square footage was determined to be assessable or an intensification of use
CONCLUSION:
Section 29.10.150(f)(2) of the Town Code states that the creation of a PAD relieves those
properties located within the district which were nonconforming as to parking from having to
supply on -site parking spaces as required by Town Code. Pursuant to Town Code and past
actions by the Town, additional parking in the PAD is only required if the use is intensified. The
PAGE 7
MAYOR AND TOWN COUNCIL
SUBJECT: Parking Assessment District
March 27, 2013
recently approved use at the Los Gatos Theater was not an intensification of use; it was a
deintensification of use in that the existing square footage was reduced by 75 square feet and the
number of seats was reduced from 492 to 388.
When the PAD was created, the square footage for the Los Gatos Theater was noted significantly
less than what actually existed and staff acknowledges that the property owner at that time
apparently did not pay their fair share into the assessment district. As documented in numerous
historic reports regarding the PAD, square footages were estimates, there is no mechanism to
allow a property owner to pay into the Assessment District for additional parking spaces and
there is no direction in the historic PAD reports on how to handle corrections to the estimates.
Since there is no mechanism to pay for additional parking, and if there is no room on the site to
accommodate additional onsite parking, the Town has historically not required businesses to
physically eliminate the excess square footage from the building which would have been the only
alternative to balance out the excess square footage issue.
Attachments:
1. Excerpt from the Operating and Capital Summary Budget for Fiscal Year 2012/13,
Downtown Parking Assessment District
2. _,Excerpt from Town Code, Section 29.10.150(f), Properties in parking districts
Distribution:
Three Sisters, LLC, 18020 Los Gatos - Saratoga Road, Monte Sereno, CA 95030
Larry Arzie, 18000 Overlook Road, Los Gatos, CA 95030
TC:SB :ct
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r.
Administrative Services Department
DOWNTOWN PARKING ASSESSMENT DISTRICT
FUND 721
FUND PURPOSE
On December 5, 1988, the Town issued 25 -year Limited Obligation Bonds in the amount of
$1,587,956.29. The net proceeds of the bonds were used to finance several parking improvement
projects, which include the construction of a surface lot known as Parking Lot No. 3, located in the block
bounded by University and Santa Cruz Avenues, Grays Lane, and Royce Street; construction of surface
Lot No. 4, located in the block bounded by University and Santa Cruz Avenues, Grays Lane, and Elm
Street; reconstruction of an existing traffic island and. adjacent street located at the intersection of East
Main Street and Alpine Avenue, known as Parking Lot No. 8; and funding a portion of the constriction
costs of a two -level parking structure on Parking Lot No. 4, collectively with the Redevelopment
Agency's 1992 Certificate of Participation in the amount of $2,960,000.
The bonds are not a financial liability of the Town, and were issued upon and secured by unpaid
assessments on properties within the Downtown Parking Assessment District. Installments of principal
and interest sufficient to meet annual bond debt service are included in the property owners' regular
county tax bills which represent pro -rata shares of the total principal and interest coming due that year.
The pro -rata shares are based on the percentage of the unpaid assessment against the property relative to
the total unpaid assessments levied to repay the bonds.
Property owners pay their assessments to Santa Clara County, and the County remits the assessment
monies to the Town. The Town makes semi - annual payments to the trustee bank on behalf of the
property owners. Property owners may pay off their assessments to the Town at any time. These
prepayments are retained in this fund (earning interest) and used to make bond payments as they become
due.
To provide ftunds for the payment of the bonds, and interest due as a result of delinquent assessment
installments, the Town is required to establish a special bond reserve equal to 5% of the aggregate
principal amount of the bonds. Interest earnings on the special reserve are retained up to 8% of the
aggregate principal amount of the bonds. This trust fund provides for the servicing of this special reserve,
as well as the annual redemption of bonds.
iD -69 ATTACHMENT 1
to ADMINISTRATIVE SERVICES DEPARTMENT cz
Downtown Parking Assessment District
BUDGET OVERVIEW
The budget for this fund includes the expected assessment receipts and the semi - annual debt service
payments made to the trustee bank. Interest expense continues to decrease each year as bonds mature.
The September 2012 bond principal maturity payment of $125,000 will leave an outstanding bond
balance of $135,000.
STATOYDDNTOFSOURCEAND USEOFFUNDS
D -70
V
2008/09
2009/10
2010/11
2011/12
2011/12 2012/13
Actuals
Actuals
Actuals
Adopted
Estimated Adopted
SOURCES OFF, UNDS
Beginning Fund Balance
Designated
-
Undesignated
331,435
328,060
326,358
324,857
324,857
Total Beginning Fund Balance
331,435
328,060
326,358
324,857
324,857
Revenues
Assessments
92,034
101,434
121,625
116,968
116,968
Interest & Other Charges
53,048
42,748
24,414
24,862
21,062
Total Revenues
145,082
144,182
146,039
141,830
138,030 4
TOTAL SOURCE OF FUNDS
$ 476,517
$ 472,242
$ 472,397
$
466,687
$
462,887
USES OF FUNDS
Expenditures
Operating Expenditures
$ 2,776
$ 2,954
$ 2,957
$
2,825
$
2,825
Debt Service
145,681
142,930
144,583
145,440
145,440
Total Expenditures
148,457
145,884
147,540
148,265
148,265
Transfers Out
Transfer to Grant Funds
-
-
-
-
Total Transfers Out
-
-
-
Total Expenditures & Transfers Out
148,457
145,884
147,540
148,265
148,265
Ending Fund Balance
Designated
-
-
-
-
-
Undesignated
328,060
326,358
324,857
315,422
314,622
Total Ending Fund Balance
328,060
326,358
324,857
318,422
314,622_;
TOTAL USE OF FUNDS
$ 476,517
$ 472,242
$ 472,397
$
466,687
$
462,887
D -70
V
tn* ADMINISTRATIVE SERVICES DEPARTMENT cz
Downtown Parking Assessment District
Town of Los Gatos
{i Limited Obligation Improvement Bonds, Series 88 -1
Bond Debt Schedule
Annual September September March
Fiscal Year Bond
Fiscal Interest Principal Interest Interest
Total Interest Principal
Year Rate Payment Payment Payment
Payment Balance @ YE
S��� k £...� WO
IrritrRl$ air fferangnt;➢ecembev -5
1990/91
87,956x
1989/90
-
91,127
61,434
152,560
1,587,956
1990/91
6.25
27,956
61,434
60,560
121,994
1,560,000
1991/92
6.50
30,000
60,560
59,585
120,145
1,530,000
1992/93
6.75
30,000
59,585
58,573
118,158
1,500,000
1993/94
7.00
30,000
58,573
57,523
116,095
1,470,000
1994/95
7.10
35,000
57,523
56,280
113,803
1,435,000
1995/96
7.20
35,000
56,280
55,020
111,300
1,400,000
1996/97
7.30
40,000
55,020
53,560
108,580
1,360,000
1997/98
7,40
40,000
53,560
52,080
105,640
1,320,000
1998/99
7.50
45,000
52,080
50,392
102,472
1,275,000
1999/00
7,60
50,000
50,392
48,493
98,885
1,225,000
2000/01
7.70
50,000
48,493
46,568
95,060
1,175,000
2001/02
7.80
55,000
46,568
44,423
90,990
1,120,000
2002/0' )
7.80
60,000
44,423
42,083
86,505
1,060,000
2003/04
7.90
65,000
42,083
39,515
81,598
995,000
2004/05
7.90
70,000
39,515
36,750
76,265
925,000
2005/06
7.90
75,000
36,750
33,788
70,538
850,000
2006/07
7.95
80,000
33,788
30,608
64,395
770,000
2007/08
7.95
85,000
30,608
27,229
57,836
685,000
2008/09
7.95
95,000
27,229
23,453
50,681
590,000
2009/10
7.95
100,000
23,453
19,478
42,930
490,000
2010/11
7.95
110,000
19,478
15,105
34,583
380,000
2011/12
7.95
120,000
15,105
10,335
25,440
260,000
2032/13 ' ,,s 95 125 Q00 5,3
66 157Q1
135 000 #
2013/14
7.95
135,000
5,366
-
5,366
-
TOTALS
1,587,956
988,196
926,762
1,914,958
D -71
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IF I 111 '11111 1 !1 111 1111 1111111 1 M U-21 liff Ent
(a) .......
(f) Properties in parking districts. Required spaces in parking districts shall be as follows:
(g)
(1) For any building or open -air use in a public parking district, the number of
required off - street parking spaces is:
a. None, when the gross floor area of the building and open area
occupied by a use, combined, do not exceed the area of the building
and open area occupied when the district is formed; or
b. When the area limitation in subsection (f)(1)a. is exceeded or the use
is intensified, the required number is derived only on the basis of the
excess area.
(2) The creation of a parking assessment district relieves those properties
located within the district which were nonconforming as to parking from
having to supply on -site parking spaces in accordance with subsection (b).
(3) The assessment formula was based on a number of factors that included
existing floor area, existing use, in some cases potential floor area and
included credits for existing on -site parking spaces and for participation in
past assessment districts.
(4) The Planning Director shall develop a table using the floor area, parking and
previous assessment district information used to calculate the parking
assessment and translating that information into a parking credit based on
the parking requirements set forth in subsection (b).
When an application is filed to intensify the use within an existing building or
to expand an existing building, this information will be used to calculate the
amount of on -site parking, if any, that will be necessary to comply with the
parking requirements set forth in subsection (b).
(5) Any parking spaces that are credited in the parking assessment district
calculation may not be eliminated.
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