REVIEW OF DOWNTOWN PARKING ASSESSMENT DISTRICT

Transcription

1 MEETING 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 The DTSP was repealed on August 7, 2000, on the basis that the plan was no longer needed as the implementation measures had either been completed or were carried forward to the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 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

2 PAGE 2 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 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."

3 PAGE 3 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 ( 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 ( 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.

4 PAGE 4 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

5 PAGE 5 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 reestablish 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 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

6 PAGE 6 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, 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 , 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 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: 1984 PAD 1991 EU -7-5A 2012 U 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* PAD shortage* Not applicable 5 6 If If recalculated recalculated square square footage footage was was determined determined to to be be assessable assessable or or an an intensification intensification of of use use CONCLUSION: CONCLUSION: Section Section ( 150( f)( 2) 2) of of the the Town Town Code Code states states that that the the creation creation of of aa PAD PAD relieves relieves those those properties properties located located within within the the district district which which were were nonconforming nonconforming as as to to parking parking from from having having to to supply on - site parking spaces as required supply on - site parking spaces as required by by Town Town Code. Code. Pursuant Pursuant to to Town Town Code Code and and past past actions by the Town, additional parking in the PAD is only required if the use is intensified. The required if the use is intensified. The

7 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 ( f), Properties in parking districts Distribution: Three Sisters, LLC, Los Gatos - Saratoga Road, Monte Sereno, CA Larry Arzie, Overlook Road, Los Gatos, CA TC: SB :ct N: \DEV \TC REPORTS\ 2013\ PADA- 1-11doex

8 THIS PAGE INTENTIONALLY LEFT BLANK

9 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, 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 time. These property owners. Property owners may pay off their assessments to the Town at any 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

10 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 2008/ / / / / / 13 Actuals Actuals Actuals Adopted Estimated Adopted SOURCES OFF, UNDS Beginning Fund Balance Designated Undesignated 331, , , , , 857 Total Beginning Fund Balance 331, , , , , 857 Revenues Assessments 92, , , , , 968 Interest & Other Charges 53,048 42,748 24,414 24, , 062 Total Revenues 145, , , , , TOTAL SOURCE OF FUNDS 476, , , , , 887 USES OF FUNDS Expenditures Operating Expenditures 2, 776 2, 954 2,957 2, 825 2,825 Debt Service 145, , , , ,440 Total Expenditures 148, , , , , 265 Transfers Out Transfer to Grant Funds Total Transfers Out Total Expenditures & Transfers Out 148, , , , , 265 Ending Fund Balance Designated Undesignated 328, , , , ,622 Total Ending Fund Balance 328, , , , ,622_; V TOTAL USE OF FUNDS 476, , , , , 887 D D

11 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 YE S k... WO IrritrRl$ air fferangnt; ecembev -5 87, 956x 1989/ 90 91, , ,560 1, 587, / 1990/ ,956 61, , , 994 1, 560, / , ,560 59, , 145 1, 530, / , , , , 158 1, 500, / , , , , 095 1, 470, / , , , , 803 1, 435, / , ,280 55, , 300 1, 400, / , , , , 580 1, 360, / 98 7, 40 40, , , , 640 1, 320, / , , , , 472 1, 275, / 00 7, 60 50, ,392 48, , 885 1, 225, / , ,493 46, , 060 1, 175, / , ,568 44,423 90, 990 1, 120, / 0' ) , ,423 42, , 505 1, 060, / , ,083 39, , , / , ,515 36, , , / , ,750 33, , , / , , , , , / , , , , , / , ,229 23, , , / , , , , , / , , , , , / , , ,335 25, , / 13 ',, s Q00 5, Q # 2013/ , 000 5, 366 5, 366 TOTALS 1, 587, , , 762 1, 914, 958 D - 71

12 Th is Page Intentionally Left Blank

13 IF I 111 ' ! MU-21liffEnt 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. ATTACHMENT 2

14 This Page Intentionally Left Plank