Loading...
HomeMy WebLinkAboutMINUTES-11/08/2005-AdjournedNovember 8, 2005 COUNCIL OF THE CITY OF FORT COLLINS, COLORADO Council -Manager Form of Government Adjourned Meeting - 6:00 p.m. An adjourned meeting of the Council of the City of Fort Collins was held on Tuesday, November 8, 2005, at 6:00 p.m. in the Council Chambers of the City of Fort Collins City Hall. Roll Call was answered by the following Councilmembers: Brown, Hutchinson, Kastein, Manvel, Ohlson, Roy and Weitkunat. Staff Members Present: Atteberry, Harris, Eckman. Resolution 2005-115 Ratifying and Adopting the Proposed Transportation Development Review Fees in Accordance with Section 2 2 3(D) of the Land Use Code Adopted The following is staff s memorandum on this item: "FINANCIAL IMPACT The fee would be established with the intent to recover 80% of the costs for the Transportation Service Area to provide development related services. The amounts anticipated to be collected for the budget years 2006 and 2007 ake $488, 621 and $513, 557 respectively. EXECUTIVE SUMMARY Transportation Services currently recovers approximately 44% of its development related costs from fees collected for the Development Construction Permit for administration to issue the permit and for construction inspection. At present no fee is collected for development review. As part of the City's budgeting process for 2006 and 2007, the City Manager's proposed budget includes increasing development charges to recover 80% of the development related costs for the Transportation Service Area. The additional revenues required for this purpose in the proposed budget are $488,621 for 2006 and $513,557 for 2007. The activities supported by the Transportation Development Review Fee include Engineering Development Review; portions of Traffic Engineering and Transportation Planning; and some Engineering overhead expenses. Section 2.2.3(D)(1) of the Land Use Code establishes development review fees for the purpose of recovering the cost incurred by the City for processing, reviewing, and recording applications. Section 2.2.3(D)(2) ofthe Land Use Code states that the amount ofthe development reviewfees shall be established by the City Manager, or by the City Council if the City Manager so requests, and shall be based on the actual expenses incurred by the City. By approval of this resolution the City Council ratifies and adopts the proposed Transportation Development Review Fee to recover about 80% of the City's cost for the Transportation Service 1 Area to perform development related work. The Fee should be set to begin on January 1, 2006 The fee structure is shown in Attachment 1. BACKGROUND Upon determination that a Transportation Development Review Fee would be part of the proposed Transportation budget for 2006 and 2007, staffbegan a task to develop a fee structure. Engineering staff gathered information from other cities along the Front Range and Larimer County, and gathered information related to development submittals in Fort Collins for the past two years. Data on projects submitted to the City includes the types ofwork submittals, the number ofsubmittalsper year, and development project information that includes numbers of units, square footage of buildings, and acreage size of the development. No supporting data is available from Transportation Development Review for actual time spent on each project or by project type. Therefore, to develop a fee structure, staff used its best judgment to estimate time charges per project and assume numbers ofprojects expected to be submitted per year. Other assumptions used to develop the fee structure are shown in Attachment 2. Before developing a fee structure, staff hosted a meeting for development professionals on September 26, 2005. Staffexplained its charge to meet the proposed budget requirement, received their comments, and heard theirpreferences on developing afee structure. With their comments and the data staff collected, we designed a proposed fee structure and some alternatives. Another meeting was held with the development community on October 13, 2005, where staff presented the proposed fee structure information. Some revisions were made based on input received at the meeting. Comments received from the development community at the two meetings are included as Attachment 3. The proposed fee structure was presented to the Planning and Zoning Board at a work session on October 14, 2005. Written comments, if any, will be provided under separate cover. The Transportation Board reviewed the proposed fee structure at its regular meeting on October 19, 2005 and voted to recommend adoption of Option 1 of three options presented with a recommendation to look at ways to streamline the development review process. A letter from the Transportation Board is included as Attachment 4. Changes to improve the development review process are in process. In 2003 a consulting team was hired to review and evaluate the whole development review process. The team produced a report ("Zucker Report') that made recommendations for change. A memo summarizing the status of the Zucker recommendations and the status of the changes made to date is included for reference as Attachment 5. Included for your information is a chart titled "Historical Comparison of Impact Fees to Sales Price" (Attachment 6). Important for this issue, the chart shows theproportion ofthe historical sale price of the average single family home that goes to development impact fees. The proposed fee structure would, for the worst case of $500 per unit, result in a 0.14% increase in the sale price of the average single family home. However, if all of the proposed fee increases are approved for 2006, would total a maximum $26,358. The Development Impact Fees would make up 7.5%, 2 November 8, 2005 including the phased -in implementation of the Sewer Plant Investment Fee increase (113 in 2006), of the average single family home sale price of $350, 790. Following the Transportation Board meeting, staff continued to analyze the optional fee structures to develop fees that will be as fair as possible. The final three options developed are shown in Attachment 7, titled "Transportation Development Submittal Fees and Options for PDP Rates. " Staff recommends Option 2 for the City Manager's Recommended Budget, which was revised to reflect the concerns of the Transportation Board to reduce impacts on small projects. Some additional supporting information used to compare the options are shown in Attachments 8 and 9, titled "PDP Fee Ranges as %, " and "Effect of Recommended Fee on Sample Projects, " respectively. The sample projects used were projects for which the development review process as been completed or are already in the review process. It is proposed that the fee structure be adopted with the understanding that data will be gathered annually to provide support for further adjusting of the fee structure. " City Manager Atteberry introduced the agenda item. Don Bachman, City Engineer, presented background information relating to the agenda item. He stated the 2006-2007 recommended budget included a recommendation that a transportation development review fee be established to generate 80% cost recovery of the costs for processing development applications. He stated this would be about $488,000 for 2006 and $515,000 in 2007. He stated there were three issues discussed at the November 2 Council meeting: (1) the general policy to collect 80% of the fees, (2) a desire where possible to continue improvements to the development review process to improve efficiencies, lower costs and shorten time, and (3) the fee structure itself i.e. the manner in which the 80% cost recovery would be implemented. He stated the 80% cost recovery policy came from a Council policy that was adopted in the mid 1990s. He stated this indicated that the City Manager should establish fees based on the cost of development review that would generate 80% of the cost of that review. He stated this policy was not part of the Code but was a practice that had been used as a guideline. He stated the policy was discussed during the budgeting for outcomes process it that it was noted that the 80% recovery had previously been looked at City-wide rather than for each department. He stated Transportation Services had the lowest cost recovery rate of the departments involved in the development review process. He stated the department then presented an offer to increase transportation development review fees. He stated with the proposed increase there would be about a 74% overall cost recovery in 2006. He stated the Zucker Report had a number of recommendations for process improvements and that 36 of the recommendations had been adopted to date. He stated two of the Zucker Report recommendations relating to Transportation Services had been implemented and that other recommendations were being considered to make additional improvements to the development review process. He stated outreach was conducted before the fee structure was decided at the time the draft budget was available. He stated developers indicated that they wanted something predictable and fair for the different types of submittals. He stated the developers indicated their frustration with fees in general. He stated at a second meeting three options for the fee structure were presented and the proposed fee structure was modified to reflect the feedback that had been received. He stated the proposed fee 3 November 8, 2005 structure was taken to the Transportation Board on October 19 and that the Board recommended one of the options. He stated the Board expressed concerns that the fees could be unduly burdensome (i.e. that there could be a high cost per unit) for small developments, particularly small residential developments. He stated after the outreach the staff established some attributes for the fee: (1) that the fee structure should be based on anticipated costs per the City Code, (2) that there should be an affordable housing credit in accordance with the Land Use Code, (3) that revenues must meet the budget, (4) that the fee structure must reflect the relative size and complexity of the project to be fair, and (5) that charges must be predictable so that developers could calculate their anticipated costs. He stated staff considered several types of fee activities. He stated some activities were relatively small and the estimated hours would be easy to determine (annexations, vacations of right-of-way, dedications of right-of-way, etc.). He stated fixed fees were identified for such activities based on the estimated hours and costs. He stated Project Development Plans were submittals that became larger projects and were the "meat' of the development review process. He stated in order to ensure fairness staff explored a sliding scale. He stated for residential projects staff looked at a cost per acre and a charge per unit and for industrial and commercial projects staff looked at a cost per square foot of the improvement and a cost per acre. He stated the acreage charge was meant to address the overall scale of the project. He stated if there was more frontage there generally was a larger project and more infrastructure i.e. more plan sheets to be reviewed and more review cost. He stated projects with higher relative density also created more review work. He stated staff looked at a way of charging to "fine tune" and achieve fairness. He presented the fee structure that was part of the proposed Resolution. He stated three options were considered and that those options involved three levels of the fixed fee. He stated the recommended option provided for a $2,000 fixed fee plus unit costs. He stated the unit costs were calibrated to arrive at the amount of revenue that needed to be generated. He stated the option with the lowest fixed fee tended to favor small projects at the expense of large projects, that the option with the larger fixed fee tended to favor very large projects at the expense of small projects, and that the recommended option was the staff preference. He stated the Transportation Board was concerned that there could be a disproportionate burden on small housing projects and that staff therefore recalibrated all three options using a cap of $500 per housing unit for the application fee. He stated a table was included in the agenda material showing a "sensitivity test' for each iteration done to explore the fees. He stated applying the recommended fee to projects that had already been done provided information about what the fee would have been. He noted that the fees would have varied according to the scale of the projects. He stated the fee, with the recommended fee structure, would have been $78,000 for the large scale Summit at Lifestyle Center project. He stated the small Human Bean coffee shop project would have involved a $2,300 charge. He stated there would be economy of scale in the housing projects (a lower cost per unit) and cited examples of what the fees would have been for completed projects. He stated staff worked to arrive at a "reasonable scale" for the transportation development review fee. He stated most fees would be in the $200 range per unit and that the maximum would be $500. He stated staff s recommendation was that Council adopt the proposed fee structure. City Manager Atteberry stated if this fee increase was not adopted by the Council, there would need to be $500,000 more in reductions in the 2006-2007 budget. He stated staff was aware that there was an 80% Council policy and that this fee was not close to that. He stated during the budgeting for outcomes process staff developed a recommendation that Council approve this fee. He stated the Cl November 8, 2005 recommended budget anticipated that this revenue would be coming in and that the $500,000 was allocated for another General Fund purpose. He stated staff recommended that the Council adopt this fee. Michelle Jacobs, Director of Community Affairs for the Homebuilders' Association of Northern Colorado, read a statement from the Association. She stated staff continued to recommend the highest level of increase and that previous Councils had always approved the highest levels of fee increases over the last five years. She stated three options were presented to the development community but that staff was presenting for consideration the option that generated the most revenue. She stated the fee was being considered without any increase in services from the Transportation Services Department. She questioned how the Council could justify a $200 per house fee increase just for transportation development review. She asked if any other method had been considered to "shore up" budget shortfalls. She stated continuing to increase fees would not bring in new business or contribute to business expansion. She stated the per unit and per acre fee calculation appeared to "double dip." She stated the Homebuilders' Association asked that Council look at other methods to cover the $500,000 budget shortfall. She also asked that any fee increase be phased in over three years. She stated an increase from 44% to 80% effective January 2006 would be a hardship for those projects currently under review. David May, Fort Collins Chamber of Commerce, spoke in opposition to the fee and indicated that the transportation maintenance fee could also become a topic of discussion. He stated there was an issue on the fees in general compared with other communities. He stated fees were considered piecemeal and that an effort should be made to better understand the fees. He stated the progress being made on improvements to the development review process was not related to this specific fee. He stated the justification for this fee was to balance the budget rather than to improve the service to the development community. He suggested that Council freeze fees until they can be reviewed as a whole. He stated these kinds of fees had an impact on economic health and affordable housing. Mayor Hutchinson asked for an additional explanation of the per unit/per acre charges. Bachman stated the intent was to treat all projects proportionately to the level of effort that would be applied to the review of the applications. He stated this charge would address different aspects of the project. He stated the acreage charge would address the base level of infrastructure on the frontage of the developments. He stated the denser projects would have more internal infrastructure and that there would be a limited amount of streets and other infrastructure if there was a limited number of units. He stated the intent was to address both to make the fee structure fairer and as close as possible to the actual amount of effort that would be spent on the review for a particular project. He stated if the acreage charge was removed there would have to be a higher per unit cost to meet the revenue requirements. He stated this could make the fee structure less fair i.e. a dense project with lots of units would pay a large charge compared to a less dense project on equal acreage. CouncilmemberKastein asked ifthe amount ofwork involved in transportation development review vaned depending on the number of units and the size of the development. Bachman replied in the affirmative and stated the larger developments with more units and infrastructure would have more plan sheets to review and coordinate. k November 8, 2005 Councilmember Kastein asked if staff had looked at the possibility of allowing a "contribution in kind" if work was done by engineers or staff engineers for development projects. He asked if the same amount of work was needed on behalf of the City or whether there was a possibility to gain some efficiencies if that could be done. Bachman stated there was a lot of expense in creating the plans in accordance with the City standards. He stated it was the developer's responsibility to hire a traffic engineer to produce a traffic impact study that would then be reviewed by City staff. He stated the City's obligation was to provide "quality control" based upon the standards adopted bythe City for development. Councilmember Kastein asked if there was more or less work depending on the effort made by the developer's traffic engineer. Bachman stated there were plans of varying quality submitted. He stated the well done plans that met the City's standards might require fewer rounds of review. He stated this was reflected in some degree in the fee structure, which called for three reviews of the project plan submittal and an additional fee of $500 per review for each additional review required. He stated some developers stated in the outreach sessions that they believed that they did good work and should not be subsidizing the developers who did not do good work. Councilmember Kastein noted that reserves were set aside at the time of First Reading of the budget and asked if the Council could dedicate those reserves to offset some of the costs if the fee recovery was set at 50% for the first year instead of 80%. City Manager Atteberry stated this could be done. He noted that there was $256,000 left in one-time dollars in the money set aside on November 2. He stated the proposed fee was an ongoing proposal and that if the Council wanted to phase in the fee increase that could be done with the one-time dollars remaining. He stated there was some financial uncertainty and that it was advisable to leave dollars in reserves. He stated fee increases were difficult. He stated if the Council wanted to have fees to recover costs at the 80% level that the proposed fee was consistent with that policy. He stated he supported the 80% recovery level. He stated he would not advise the Council to use reserves to phase in the fee. Councilmember Kastein stated if revenues were greater than anticipated that money would be available to rebate. City Manager Atteberry stated if there were excess revenues that the Council could decide to rebate the fees collected. He stated he would like staff to have an opportunity to consider that suggestion. Councilmember Weitkunat stated the Homebuilders' Association commented that the City always selected the most expensive of the options. She stated there were three options and asked staff to explain how each would cover the costs. She stated she understood staff to say that the recommended option was not the most expensive. Bachman stated all three options were calibrated to generate an amount that would be close to the revenue target assuming an average activity level. He stated the recommended option had the lowest cost of the three options. Councilmember Weitkunat how option 2 was different than the other two options. Bachman stated the difference was in the fixed application paid up front (option 1 $1,000; option 2 $2,000; and option 3 $3,000. He stated the unit costs were calibrated for each option to meet the budget 3 November 8, 2005 requirement. He stated capping the per unit fee at $500 addressed the inequity because many smaller developments would not be required to pay the entire fixed fee. Councilmember Weitkunat asked about how equity would be assured in option 2. Bachman stated the Transportation Board was concerned that the cost per unit for small housing projects would be disproportionately high with the other options. Councilmember Weitkunat stated the City's policy was to collect 80% of the cost of development review and asked if 80% of the cost for transportation development review was therefore approximately $500,000. Bachman stated to arrive at the 80% for transportation development review costs the gap of about $500,000 was being addressed through this fee schedule. Councilmember Weitkunat thanked staff for the additional information on how these fees were calculated and would be applied. Councilmember Brown stated he understood that the City was in the process of streamlining the development review process. He asked if the costs would remain the same when the process was streamlined. Bachman stated staff was continuing to look at ways to streamline the process. He stated the anticipated workload was reflected in the costs and that the same level of staffing was projected for the next two years due to the increasing volume of work. He stated the staffing structure would be reviewed if there was diminishing activity. Councilmember Brown asked when these fees were last raised. Bachman stated the transportation fees (development infrastructure inspection fees) had been incrementally increased with each budget. Ron Phillips, Executive Director of Transportation Services, stated the requirement that plans must be 90% final upon submittal had been changed to a 50% requirement. He stated this change allowed developers to make less of an investment at the beginning of the process. He stated there was more staff work required in a shorter time when the plans were at the review stage than was required when staff was reviewing plans that were 90% complete early in the process. He stated the staff time therefore remained the same in spite of this process improvement. Mayor Hutchinson stated much of the streamlining of the process did not necessarilymake less work for the staff but did benefit the developers. Councilmember Ohlson made a motion, seconded by Councilmember Manvel, to adopt Resolution 2005-115. Councilmember Roy thanked staff for bringing back more information on this item. He stated it was still somewhat clear which of the options was being presented in the Resolution. Councilmember Ohlson thanked staff for the extra work on this particular fee. He expressed disappointment that the fee was at 44%recovery for so long when the policy was set at 80% recovery of costs. He stated there was an issue of fairness to the taxpayers. He stated 80% of the cost of development review should be paid by those receiving the benefit of the review. He stated streamlining the process did not necessarily mean fewer employees and could actually mean more 7 November 8, 2005 employees. He stated if the $500,000 in revenue was not generated by this fee that could mean slowing down the development review process. He stated he would support the Resolution. Councilmember Manvel stated this was unfortunately a large percentage increase but that the actual dollar amount was less than other fees being collected. He stated Council was aware of the need to compare City fees with other communities. He stated Fort Collins seemed to be "competitive" as far as total fees. He stated he would support the Resolution. Councilmember Weitkunat stated this kind of thing was almost a "surprise." She stated these kinds of fee increases should not be "surprises" and should be planned. She expressed concern that the cost recovery for this was 44% for many years and that it was not good to include such a fee increase at a difficult budget time. She stated she would like to look at a process to handle this kind of thing better and suggested that it might be time to assess the 80% policy. She stated the development industry would "carry the burden" for these new fees and that this would impact the housing stock. She stated she would support the Resolution because it "had to be done" but that she did not find this to be a "palatable" decision to make. Councilmember Brown expressed "shock" that fees could be doubled in one year. He stated this should have been anticipated sooner and that he would prefer a phase -in of the fee increase. He stated he would not support the Resolution. Councilmember Kastein stated the City was in a "tough spot' because a lot of work had been done on the budget and this fee must be implemented or another half million dollars would have to be taken from the budget. He stated he wanted a better understanding about how the City was managing costs over time. He stated the City needed to have a harder look at why costs were where they were. He stated future fee increases should have a cost analysis to show what was contributing to the fee and what the fee had been over time. He stated he would "hesitantly" support the Resolution. Mayor Hutchinson stated this was difficult and that the budgeting for outcomes process had brought a new "visibility" to some of the budget process. He stated these kinds of changes should not be so "abrupt." He stated Deputy City Manager Jones was leading a compilation of all fees so that Council could look at the total structure. He stated it would be beneficial to have cost analysis done with that compilation. He stated he would also "hesitantly" support the Resolution. The vote on the motion was as follows: Yeas: Councihnembers Hutchinson, Kastein, Manvel, Ohlson, Roy, and Weitkunat. Nays: Councilmember Brown. THE MOTION CARRIED. �3 Adjournment The meeting adjourned at 6:57 p.m. ATTEST: Mayor November 8, 2005