City of Ferndale CITY COUNCIL STAFF REPORT

Transcription

1 City of Ferndale CITY COUNCIL STAFF REPORT MEETING DATE: July 6, 2010 AGENDA BILL # SUBJECT: Grandview Annexation Open Record Public Hearing DATE: July 6, 2010 FROM: Jori Burnett PRESENTATION BY: Jori Burnett RECOMMENDATIONS: The Planning Commission will provide a recommendation to approve or deny the proposed Grandview Annexation (approximately 144 acres of commercial land) at their June 30 th meeting. Staff has recommended approval of the annexation (please see attached Planning Commission staff reports, Fiscal Impact Analysis, and supporting documents), with a Regional Retail zoning designation. BACKGROUND: Property owners in the vicinity of Grandview Road have submitted a Petition to Annex approximately 144 acres in the vicinity of Grandview Road within the unincorporated Urban Growth Area (UGA). The petition has been determined to be complete, and includes 100% participation of impacted property owners. The annexation area includes properties on the east side of Portal Way, from the City limits to just north of Grandview Road, on both sides of Interstate Five. The area is relatively undeveloped and contains the AM/PM convenience store and gas station, as well as the American Business Center on the east side of Interstate Five. The American Business Center includes a mini-storage facility, a coffee stand, and U-Haul rentals. A towing business has been established in the southwest portion of the annexation area, along Portal Way. Several existing houses also lie within the area and are considered non-conforming uses. All established uses are serviced by onsite septic and a combination of private wells and water provided by the Public Utility District in that area. City services (water and sewer) currently terminate at Trigg Road and extensions of those services will not be necessary until new development in the annexation area is proposed, or when existing onsite services fail. The costs of extending these services will likely be substantial, and will be paid for by new development, City-initiated expansions, or a combination of both.

2 No formal objections to the proposed annexation have been made, although property owners in the vicinity of Malloy Road have suggested that the annexation will reduce sewer capacity along Portal Way and in the area of ULID #7, which includes some properties along Malloy. The City has reviewed the sewer capacity in this area and has determined that capacity exists to service both the proposed annexation and existing properties within the City. As described above, the annexation itself will have no impact on sewer capacity, as there are no requirements that existing uses in that area hook up to City services. ANALYSIS: Annexation petitioners have met all procedural requirements for an annexation, as described in FMC (Annexations). The annexation of property does not compel property owners to develop their properties now or in the future, nor does it compel the City to extend utilities or infrastructure. Administrative support, the extension of City rules and regulations to the area, maintenance of existing infrastructure (generally roads) and law enforcement will be extended upon annexation. The Fiscal Impact Analysis that was completed by Weden Engineering projects a modest short-term economic benefit to the City, as the costs of law enforcement, administrative services, etc. will be less than the benefits of sales and property taxes for existing uses. If and when build-out occurs on the properties, the potential financial benefits to the City could be significant. As noted previously, the extension of water and sewer service will likely be one of the more significant costs associated with future development. It is likely that these costs will prevent small, short-term development in the area. Therefore, future development may be delayed until such time as a large development is proposed. The establishment of large developments in this area is required by the Regional Retail zone and therefore the costs of utility extensions, combined with the City s stated desire for coordinated large commercial developments in this area will likely provide a nexus for such a project. An annexation does not constitute a development action it merely creates the potential for future development actions to take place. The timing of such development cannot be anticipated at this time, nor can the specific demands such a development would have on City services or capacity. ALTERNATIVES CONSIDERED: Annexation denial: if the City Council denies the Petition to Annex, property owners would be required to wait at least 180 days until submitting a new petition. Although there are a number of unknowns related to the Grandview area, most of them relate to future development. Thus, the denial of the annexation at this time would have little effect, as a future annexation would likely have similar questions. However, if the City Council desires to delay future annexations in this area until a point in the future when services are more readily available, it may indicate that determination at the public hearing on July 6 th.

3 FISCAL REVIEW: See attached Fiscal Impact Analysis LEGAL REVIEW: The petitioners have met all regulatory requirements. CONCLUSION: Staff recommends approving the Grandview Annexation.

4 COMMUNITY DEVELOPMENT DEPARTMENT STAFF REPORT PLANNING COMMISSION MEETING OF JUNE 30, 2010 APPLICATION TYPE: APPLICANT: PROJECT DESCRIPTION: PROJECT LOCATION: Petition to Annex Ron Bennett, et al Proposed annexation of approximately 144 acres of land Within the unincorporated Ferndale Urban Growth Area, on both the north and south sides of Grandview Road, stretching from the Portal Way Right of Way east to the UGA boundary and south to the Ferndale City limits, not including the I-5 Business Center in the vicinity of Buchanan Loop EXHIBIT LIST EXHIBIT 1 EXHIBIT 2 Regional Retail Zone Annexation Map OVERVIEW At an open record public hearing on June 9, 2010, the Ferndale Planning Commission requested that Staff provide additional information prior to making a recommendation to the City Council on the proposed Grandview Annexation. The Planning Commission has indicated to Staff that there are two primary issues which require more detail: 1) sewer capacity/the impact of the Grandview Annexation on other uses, and 2) the City s ability to require that future development in the Grandview Road Petition to Annex (09001.ANX) Page 1 of 9

5 Grandview area be planned in advance so as to avoid a hodge podge of commercial uses. Annexations are not development actions. The City has little or no ability to require subsequent development on approved annexations. Thus, the annexation cannot include conditions requiring a development activity, including master planning. Similarly, the act of annexation does not directly impact sewer capacity: there are no requirements at this time that the existing development in the area must connect to the City s water or sewer lines, or to extend lines to that area. However, if the property is annexed and development occurs, the zoning and land use regulations which have been applied to the area will guide development. If and when development occurs, and if the Regional Retail zone is applied to the area, one or more master plans will almost certainly be required. Sewer lines will need to be extended, most likely at the cost of the applicant or through shared payment with the City. If necessary, capacity will need to be increased, although there is no indication that capacity is lacking. Capacity Staff must preface a capacity discussion by pointing out that projections be they population projections, revenue projections, or capacity projections - are based on best available data. Generally speaking, the more data that is available, the more accurate a projection will be. Projections of short term changes are often more likely to be accurate than long term projections. However, no projection is absolute, and they should not be considered to be infallible. It is not unusual for two qualified professionals, given the same information, to come to different conclusions based upon their projection models and techniques. Unlike simple mathematical equations, there is no right answer. Ultimately, time is the final arbiter of correctness. Projections are typically developed in one of two ways: a system (or area-wide) growth estimate which utilizes average growth rates to develop a projection, or a case-study analysis in which the analyst identifies future build out scenarios on individual parcels or lots. In either case, there is a likelihood that market factors beyond the City s control will alter growth. For instance, if a large company or organization were to locate in or in close proximity to Ferndale, growth may spike as new residents are lured to the area to work at the large facility. Such a spike is generally not anticipated in an analysis based on average growth rates and may require that improvements be made sooner, rather than later, often at the cost to the developer. On the other hand, development may occur at a slower rate and in different locations than originally projected: the 1996 Comprehensive Plan anticipated that Grandview Road Petition to Annex (09001.ANX) Page 2 of 9

6 the Ferndale UGA would have a population of 19,600 by 2015 (the actual population is approximately 12,500 in 2010). The original service area in the vicinity of Portal Way/ Grandview Road has also been reduced by more than half, due to reductions to the UGA in 1995 and again in Thus, the original projections (and design) of the sewer system along Portal Way over-estimated the demand, leaving a substantial surplus in Understanding that projections may vary and must be periodically re-evaluated, the City has initiated two independent reviews one by Reichardt and Ebe Engineering, and one by City staff. Both reviews have analyzed the proposed Grandview annexation and its impacts on capacity within both the ULID # 7 service area and the surrounding Urban Growth Area. As of Friday, June 25, 2010, both reviews have concluded that surplus capacity likely exists to serve both the Grandview annexation and other areas of ULID #7. 1 Both parties are in the process of finalizing their conclusions and developing cover letters/exhibits documenting their process. This documentation will be made available to the Planning Commission on or before the June 30 th meeting date. Both parties will also be available to present their conclusions to the Planning Commission, and will be ready to respond to any questions that are brought forward at that time. Growth in this or other areas of the City which outperforms projections, or increased demands placed on the system by new or existing development, may alter capacity projections or may require that pipes in certain locations be upsized or replaced. This could occur with or without the Grandview Annexation. Ultimately, as the City grows, capacity will need to be expanded and conveyance systems will be improved and replaced. As a matter of course, the Public Works Department Staff is routinely consulted on projects through the Technical Review Committee and in this process, in order to determine if a proposed development project will exceed the capacity of the plant or the conveyance pipes leading to the project. Staff must also remind the Planning Commission that an annexation is not the proper vehicle through which to generate development scenarios or specific conveyance options. At this time, there are no identified capacity issues along the Portal Way corridor, and Reichardt and Ebe has estimated that it is likely that not only the plant capacity but the pipe capacity along Portal Way is sufficient for twenty years of growth, based on current growth rates. 1 The City cannot and will not state that surplus capacity will exist at the time of development, as the City cannot know when and to what extent development will take place. Grandview Road Petition to Annex (09001.ANX) Page 3 of 9

7 The City acknowledges the concerns of other property owners in the area who may wish to develop in the future and will at that time depend on available capacity. In some cases, these individuals have made payment to the City to increase capacity. The Grandview annexation will not directly impact sewer capacity, although future development in that area may. There is little question that property owners who have made payment to the City are due consideration, however there is no evidence that those property owners have actually connected to City services, or that those property owners will not now or in the future be able to develop their properties independent of the Grandview Annexation. The failure to develop property in a timely manner cannot prevent other property owners from developing their own properties. Opponents of the Grandview Annexation have not demonstrated to Staff how the annexation would reduce sewer capacity, nor have they provided information documenting how the development of the Grandview Area would prevent other properties from developing. Ironically, in at least one development scenario the opponents of the Grandview annexation could depend on future development in that area to pay for the costs of installing pump stations which would convey utilities to Malloy Road, within the 1994 North Ferndale annexation. It is unlikely (at this time) that development within the North Ferndale area would be of sufficient size to bear the initial costs of extending utilities beneath Interstate Five. Characteristics of Future Land Use The Planning Commission has stated that future development in the area should not result in a hodge podge of uncoordinated development, and that this expectation should be established clearly. Staff believes that there are controls already in place that will limit hodge podge development. However, if the Planning Commission believes that additional controls should be put in place, there are at least two ways to accomplish that goal: zoning and master planning. Neither method can be completed as part of the annexation itself, and instead must be examined separately from that process. Staff and the petitioners have recommended a Regional Retail zoning designation, for reasons discussed in previous staff reports. The Regional Retail zone (attached) contains language which requires master planning for a majority of projects: : Purpose: It is the intent of the City to encourage large projects in this zone, and to require that such projects reflect a master plan developed by the applicant and approved by the City. The City may approve mixed use development, including accessory residential development, subject to the conditions contained within an approved master plan if no master plan has been approved for the Grandview Road Petition to Annex (09001.ANX) Page 4 of 9

8 site 2, the City requires that the initial structure(s) on a site contain at least 100,000 square feet of gross floor area. Any accessory use may be considered a permitted use if it occupies at least 100,000 square feet of gross floor area. Once a large (100,000 square feet or greater) structure or combination of structures has been permitted, accessory uses and structures may be approved on the site, regardless of the size of the building or use. The Regional Retail zone also identifies a number of land use objectives which must be addressed in development applications. The land use objectives include Establishing public or private connecting roads between parcels in order to increase the efficiency of primary roadways in the area Create shared parking and loading areas Establish a comprehensive sign plan when more than two uses are proposed Create large commercial developments with a well-defined and coordinated sense of place and continuity within the project Efficiently use available space through the use of combined or integrated parking, stormwater, and other infrastructure The recently adopted Commercial Zoning Chapter also includes language specifying the requirements for master plans: (FMC : Master Planning Required) A. In most commercial zones, the City requires that land proposed for development equal to or in excess of three gross acres, whether in one parcel or a combination of parcels, requires master planning, in the form of a Binding Site Plan, which is administered pursuant to FMC For properties with a combined area of over five acres, the applicant may choose to propose a Planned Unit Development in lieu of the Binding Site Plan requirements. This requirement shall be enforced regardless of the size of a specific development permit or structure. This requirement is intended to ensure that development on large properties makes efficient use of space, and where necessary, is designed to obscure the appearance of large structures. In addition to requirements of the Binding Site Plan and Planned Unit Development chapters, the following guidelines shall apply: 2 For clarification purposes, a site (site area) is defined by the Ferndale Municipal Code as the total gross floor area between property lines, excluding right of way. This can be interpreted to be one lot of record or multiple lots of record, depending upon the proposed scope of the master plan. In other words, 100,000 square feet could theoretically be placed on one small lot or could be distributed among all lots within the annexation area. However, the land use objectives have been designed to prevent such an outcome, and the intent of the code is clearly to encourage consolidated development. Grandview Road Petition to Annex (09001.ANX) Page 5 of 9

9 1. Where feasible, when the initial development of a parcel consists of structures or building footprints in excess of 75,000 square feet, the Binding Site Plan shall identify outparcels or other sight-obscuring measures along the perimeter of the subject parcel adjacent to primary roadways and/or residential areas. 2. Where feasible, when the initial development of a parcel or group of parcels consists of an individual structure with a building footprint of less than 75,000 square feet, the master plan shall identify lots or building pads which will support either the development of larger structures or a combination of smaller structures in a shopping center format, or a combination of structures in an open-air downtown format, or a combination of all three. 3. Regardless of the type of construction, the master plan shall reserve no more than 30% of the gross area of the subject properties for undeveloped, unplanned space. Wetlands, wetland mitigation, required buffers, storm water, building footprints (or pads) and parking shall not be used to calculate undeveloped space. The applicant may amend the master plan at a later date to identify potential uses for this unplanned area. 4. Where feasible, the applicant shall seek to establish a master plan in which primary anchor stores do not exceed 70% of the total building square footage for the development. 5. The master plan shall provide pedestrian and vehicular connectivity between the development area and adjacent parcels. 6. The proponent shall work with the City to develop a coordinated signage plan for the General Binding Site Plan, as well as general or specific architectural guidelines in order to promote internal compatibility within the development. 7. The requirements of this section shall not be used by the City to prevent the development of specific structures. However, as development progresses, the City reserves the right to identify areas in which development precedes required infrastructure, and to either deny development permits or require that necessary infrastructure is installed concurrent with development. The Planning Commission may wish to consider whether this language is strong enough to accomplish its goals. Staff believes that the zone is clear in its intent, and that there is limited benefit in constructing more restrictive or specific requirements. By comparison, Planning Commissioners have noted that the current Downtown zoning is very exact and is designed to result in a downtown environment which Grandview Road Petition to Annex (09001.ANX) Page 6 of 9

10 looks and operates in a very specific way. All other forms of development in the Downtown core are not subject to consideration. Staff is concerned that land use regulations which are overly precise will force the City to deny land use applications which are as good or better than those described in the zoning code simply because they were not anticipated. If the Planning Commission wishes to explore options to create specific design standards for the Grandview area that are separate or in addition to the retail design standards and regional retail zone, it may do so. However, such an action must be conducted separately from the annexation, through a Zoning Text Amendment. Such a zoning text amendment could follow the annexation, or the annexation could be denied pending completion of the amendment. Staff does not believe that such an amendment is necessary at this time. The Regional Retail zone was designed with the expectation that it would be applied to Slater Road and the Grandview area when and if it were annexed. The zoning code provides the ability for the applicant to interpret the regulations and to present a proposal to the City for review. Staff does acknowledge that there is some element of risk in every land use code, wherein the City must establish regulations which are clear but flexible and which emphasize best management practices without being so burdensome that the market cannot bear the cost. One potential solution is master planning but master planning requirements cannot be applied at the time of annexation. The development of such a plan takes time, can be quite costly, and depends upon market conditions as well as the participation and cooperation of property owners and developers. The Regional Retail zone requires master plans for the majority of projects, but does not require (or prevent) a master plan for the entire area. However, the Regional Retail zone is not a master plan unto itself and does not attempt to project the specific location of developments within its boundaries. At this time, it is unlikely that development will occur in the Grandview area in the near future until a large project is initiated. The costs of utility extensions and possible transportation improvements will simply be too significant for a small development to absorb. The initial large development would be required to establish a master plan, although as noted the plan might include only one land parcel. Small Lots Grandview Road Petition to Annex (09001.ANX) Page 7 of 9

11 The Planning Commission appears to be less concerned that large development will be master-planned, but instead focused on requirements for smaller pieces of land which may not have the land area or the financial means to develop to the 100,000 square foot threshold. As currently written, the Regional Retail zone does not provide exemptions for smaller properties: a master plan would be required, regardless of the size of the property. Staff feels that it is important to preserve this requirement, in order to prevent subdivisions or further parcelization with the intent of avoiding requirements to master plan. There is also the question of whether exempting smaller properties from master planning requirements would actually result in the hodge podge development that the Planning Commission is concerned with. If for some reason a small parcel is excluded from master plans in the future and has no reasonable method of achieving a 100,000 square foot threshold, the property owners may be eligible for a variance which they would be required to initiate. Finally, Staff must caution the Planning Commission on the use of annexation conditions which may compel the City or the property owners to enter into subsequent agreements or specific development concepts. According to the Municipal Research Services Center (MRSC), while pre-annexation agreements are allowed to a certain extent, they are generally in the form of no-protest agreements (such as an agreement to connect to City services when they become available). There are few examples of jurisdictions which have sustained legal challenges that result from annexation conditions requiring that a specific development take place. According to MRSC, such annexation conditions are somewhat coercive. Staff believes that the existing zoning is the most appropriate vehicle for guiding development. Therefore, while the Planning Commission may include a condition requiring that the City and property owners discuss the possibilities of a master plan, there should not be a condition requiring that a master plan be completed. Conclusions Staff has reviewed the Regional Retail zone as well as existing and projected conditions along the Portal Way corridor. While we believe the Regional Retail zone has protections in place to prevent the vast majority of hodge podge development, the Planning Commission may identify specific sections which require additional clarity. If the Planning Commission identifies changes, it should also determine whether those amendments are significant enough to warrant delay or denial of the annexation, or if they can be made either during the mandatory 45 day Boundary Review Board period or soon after. Grandview Road Petition to Annex (09001.ANX) Page 8 of 9

12 With regard to master planned developments, the annexation cannot compel the property owners or the City to enter into an agreement for future development. In fact, as Staff has consistently pointed out, the annexation cannot depend on future development whatsoever. Property owners are within their rights not to develop the land being annexed. Lastly, the City is responsible for determining whether capacity exists for serving existing uses in the area that will be required to connect to City services. The City has done so. The annexation does not reduce the capacity of the existing system in fact, until lines are extended, the annexation has no impact on the existing system. PLANNING COMMISSION OPTIONS FOR ACTION As required by the Ferndale Municipal Code, the Planning Commission shall consider the Petition to Annex and forward a recommendation of approval or denial to the Ferndale City Council, along with a recommended zoning designation The decision at hand is not the potential future use or a determination of when and if that potential future use should occur. If the City Council denies the annexation proposal, the applicants will be required to wait a minimum of 180 days before the annexation process can be re-initiated. All fees will be voided, but staff may accept the existing fiscal and infrastructure analysis, provided that re-submittal occurs in a timely manner. FINDINGS OF FACT Regardless of the decision of the Planning Commission, whether it is to recommend approval or denial of the Petition to Annex, the Annexation Goals included in this staff report may be adopted as Findings of Fact, in addition to the following: 1. The Whatcom County Assessor has confirmed that the proponent-supplied list of property owners is complete and accurate. 2. The Petition to Annex form is correct, the requisite signatures have been included, and appropriate fees paid. Grandview Road Petition to Annex (09001.ANX) Page 9 of 9

13 Chapter Regional Retail Zone (C7/RRZ) Purpose Land Use Objectives Permitted Uses Conditional Uses Accessory Uses Minimum Lot Size Minimum Lot Width Maximum Building Height Setbacks and Lot Coverage Parking Accessory Building and use regulations Sign Regulations Development Proposals Site Design Purpose: The Regional Retail Zone is a zone which provides commercial and recreational uses which are intended to serve a wide geographic area beyond Ferndale s City limits and immediate area of influence. Such developments may include concentrated retail establishments with a variety of tenants, or a number of large tenants. It is the intent of the City to encourage large projects in this zone, and to require that such projects reflect a master plan developed by the applicant and approved by the City. The City may approve mixed use development, including accessory residential development, subject to the conditions contained within an approved master plan. A wide range of Accessory land uses are permitted in the Regional Retail Zone, and may be developed as Permitted uses if a Master Plan (General Binding Site Plan, Planned Unit Development, or Planned Action, as defined by WAC , -168, -172) has been approved for the area, regardless of the size of the individual structure or use, provided that the master plan identifies a minimum of 100,000 square feet of potential building area. However, if no Master Plan has been approved for the site, the City requires that the initial structure(s) on a site contain at least 100,000 square feet of gross floor area. Any Accessory use may be considered a Permitted use if it occupies at least 100,000 square feet of gross floor area. Once a large (100,000 square feet or greater) structure or combination of structures has been permitted, accessory uses and structures may be approved on the site, regardless of the size of the building or use.

14 Limited residential uses may be allowed when incidental to the primary retail and commercial uses. Residential uses cannot be considered primary uses, even if the total gross floor area exceeds 100,000 square feet. Developments within the Regional Retail Zone shall be subject to the Retail Design Standards (FMC 18.58) and Ferndale EAGLE Program, where applicable. This zone may be applied to some portions of the City that are designated Commercial under thecity of Ferndale Comprehensive Plan Land Use Objectives: (a) Provide ancillary development around clearly defined anchor uses, and/or provide a variety of small-scale uses through a coordinated master plan. (b) Establish public or private connecting roads between parcels where practicable, in order to increase the efficiency of primary roadways in the area (d) Foster pedestrian and other non-motor vehicle activity (d) Consolidate, to the greatest extent possible, the number of access points from the primary roadways in the area. (3) Create shared parking and loading areas within and between retail developments (f) Minimize the use and appearance of large, free-standing signage, as well as establish a comprehensive sign plan when more than two uses are proposed. (g) Create large commercial developments with a well defined and coordinated sense of place and continuity within the project. (h) Efficiently use available space through the use of combined or integrated parking, storm water, and other infrastructure. (i.) Foster positive economic growth for Ferndale, as demonstrated through a market analysis provided by the applicant Permitted Uses Automatic Teller Machines General Park M and O Activities Passive Open Space Use Public Agency Facilities Public Parks Trail Head Facilities Trails for Equestrian, Pedestrian, or Nonmotorized Vehicle Use Indoor Cinema Department Store Publicly Owned Community Signs and Public Art

15 Conditional Uses A. In addition to the uses described in FMC , other uses similar in nature to the uses listed above which are consistent with the purpose and intent of the district, have similar effects on surrounding land uses, and can meet the performance standards for this district may be proposed as Conditional Uses. Micro Brewery Churches Cultural Institutions Drive-In Cinema Theater (Outdoor) Community Festivals and Street Fairs Convention Center, Including Banquet Facilities and/or Meeting Halls Stadium, Sport Arena, Auditorium or Other Place of Assembly with Fixed Seats Transportation Center Accessory Uses Automotive Repair- Minor Automobile Service Station Auto Part Sales Gas/Fuel Station Warehousing, Wholesale Use Barber/Beauty Salon Health Spa Hospital/Clinic Small Animal Mailing Service Personal Loan Businesses Personal Service Businesses Photo Processing, Copying and Printing Services Video Rental Store Tattoo Parlor Cafeterias Delicatessen Drinking Establishments Portable Food Vendors Restaurants/Drive-Through Restaurants/Lounge Restaurants/Sit-Down Restaurants/Take-Out Restaurants with Entertainment/Dancing Facilities Tavern Wineries-Tasting Room

16 Financial Institutions Medical, Dental and Other Clinics Office- Consulting Services Office- Corporate Office General Real Estate Office Trade Schools Art Galleries Batting Cages, Racquetball and Tennis Courts, Driving Ranges, Min Golf, Shooting Range Bowling Alley Commercial Recreation Indoor Commercial Recreation Outdoor Dance Hall Dart/ Billiard Room Health/Fitness Center with Instructional Classes Health/Fitness Center without Instructional Classes Theater (Indoor) Video Game Arcade Apartment or Condominium (3 or more Units) Assisted Living Facility Day Care Center Hotels or Motels with Stays Less than 15 Days Hotels or Motels with Stays More than 15 Days Mixed Residential and Commercial Uses Multifamily Development, Above First Floor Multifamily Development, Any/All Levels Nursing School Nursing or Rest Home Recreational Club Senior Housing/Retirement Community Antique Store Apparel and Accessory Store Auto Parts Supply Store Books, Stationery and Art Supply Stores Building, Hardware, Garden Supply Stores Convenience Store without Fueling Facilities Convenience Store with Fueling Facilities Drug Store/Pharmacy Electronic Equipment Stores Supermarkets Florist Furniture, Home Furnishings and Appliance Stores Liquor Store Lumberyards

17 Nursery, Plant Office Supply Store Shopping Center General Retail Outdoor Sales Park and Ride Parking Lot or Structure Pet Shop and Pet Supply Store Specialty Retail Stores Wholesale Store Bus Station Bus Terminal Storage in an Enclosed Building Visitor or Tourist Information Center Minimum Lot Width Minimum Lot Width is as follows: None Minimum Lot Size Minimum Lot Size is as follows: None Maximum Building Height Maximum Building Height is as follows: Sixty (60) feet Setbacks and Lot Coverage Setbacks and lot coverage are as follows: A. Setbacks a. Front: None b. Rear: Fifteen (15) feet, if rear of lot abuts side of residential property, otherwise none c. Sides: None B. Lot Coverage: None Parking For specific parking requirements, refer to Chapter of this title Accessory building and use regulations For specific regulations on accessory buildings or uses, refer to Ferndale Municipal Code Sign regulations For specific regulations on signs, refer to Ferndale Municipal Code : Development Proposals

18 A. The City of Ferndale has identified the Regional Retail zone as an area in which development shall make efficient use of total lot area by consolidating development to the greatest extent practical, and by utilizing shared infrastructure such as parking and storm water facilities. In addition, proposals which are anticipated to result in phased development shall be required to identify the project scope on a Master Project Application or, for commercial subdivisions, propose a General Binding Site plan which will guide the development and be binding upon the City and the applicant, but may be amended if necessary. Commercial subdivisions such as short plats are discouraged in this zone, unless no project is identified. Short plats shall be reviewed based on the highest Permitted Use in the zone Site Design A. Storm water facilities such as ponds shall not be permitted adjacent to the primary street on the property, unless landscaping and fencing is provided pursuant to Ferndale Municipal Code (Landscaping). Regional Retail Zone - Currently Conditional: Accessory:

19 Exhibit 2: Grandview Annexation Comprehensive Plan Map ATWOOD RD Grandview Area PROCTOR RD ATWOOD RD Whatcom County Rural Designation SR-548 Interstate 5 GRANDVIEW RD ENTERPRISE RD PORTAL WAY Legend Grandview Area City Limits Unincorporated Urban Growth Area Commercial Public Industrial High Density Residential Medium Density Residential Low Density Residential Residential-Unspecified Floodway BROWN RD MALLOY RD BROWN RD MATZ RD DISCLAIMER USE OF THIS MAP IMPLIES THE USER'S AGREEMENT WITH THE FOLLOWING STATEMENT: The City of Ferndale disclaims any warranty of merchantability or warranty of fitness of this map for any particular purpose, either express or implied. N o representation or warranty is made concerning the accuracy, currency, completeness or quality of data depicted on this map. Any user of this map assumes all responsibility for use thereof, and further agrees to hold the City of Ferndale harmless from and against any damage, loss, or liability arising from any use of this map Feet

20 COMMUNITY DEVELOPMENT DEPARTMENT STAFF REPORT PLANNING COMMISSION MEETING OF JUNE 9, 2010 APPLICATION TYPE: APPLICANT: PROJECT DESCRIPTION: PROJECT LOCATION: Petition to Annex Ron Bennett, et al Proposed annexation of approximately 144 acres of land Within the unincorporated Ferndale Urban Growth Area, on both the north and south sides of Grandview Road, stretching from the Portal Way Right of Way east to the UGA boundary and south to the Ferndale City limits, not including the I-5 Business Center in the vicinity of Buchanan Loop EXHIBIT LIST EXHIBIT 1 EXHIBIT 2 EXHIBIT 3 EXHIBIT 4 EXHIBIT 5 EXHIBIT 6 EXHIBIT 7 EXHIBIT 8 EXHIBIT 9 Vicinity Map Zoning Map Comprehensive Plan Map Fiscal Impact Report Petition to Annex Auditor Statement of Sufficiency Assessor Statement of Sufficiency Affidavits Notice of Decision: Notice of Intent to Annex Grandview Road Petition to Annex (09001.ANX) Page 1 of 14

21 OVERVIEW The applicants have submitted a Petition to Annex to the City, as per FMC (D): Petition for Annexation. The proposed annexation area is approximately one hundred forty-four acres within the Urban Growth Area (UGA) of the City of Ferndale, and thus may be considered for annexation. The annexation area currently carries a Comprehensive Plan designation of Commercial. As per the Ferndale Municipal Code, a Fiscal Impact Analysis has been prepared by a third party, which is attached as Exhibit 4. This staff report will identify areas of interest and concern, as well as describe the Planning Commission s role and options for action with respect to annexation petitions. The annexation area is large, and the potential for future development is significant due in part to its location, its size, and the fact that the properties are largely undeveloped. However, location, size, and the lack of development in the area may also mean that the extension of services will be costly. The ultimate development of the site may occur prior to a City-initiated expansion of services (specifically sewer). If this is the case, the private developer would most likely be responsible for the costs of such an extension, although a Latecomers Agreement may be approved that will provide the opportunity to recoup some or all of the costs. If the area is annexed, the City is under no obligation to extend services immediately or for the benefit of a current or future development. However, when considering an annexation, it is the responsibility of the City to determine if capacity exists to serve existing uses. The City has verified that capacity now exists to provide for a projected twenty-year buildout, although such capacity may be diminished over time as the result of construction activities or increased demand in other areas of the City. It should be noted early in this discussion that annexation requests cannot be considered based on specific plans for the future use of the site. Any suggestions by the petitioner, staff, the public, or other commissioners as to the advantages or disadvantages of a specific development are conceptual in nature and should be disregarded. The Fiscal Impact Report has been developed to provide the Planning Commission and City Council with a range of potential uses for the site, along with the relative fiscal and economic impacts of each. The scenarios discussed in the Fiscal Impact Report should not be assumed to reflect a specific development concept, but rather an estimate of impacts associated with generic developments. Due to the relatively large size of the annexation area, as well as the variety of potential uses and developments which could occur on the properties, it is impossible to determine the exact fiscal impact of the annexation at full buildout. Rather than develop an analysis which is precise but not accurate, the third party consultant Grandview Road Petition to Annex (09001.ANX) Page 2 of 14

22 (Weden Engineering), with approval by City Staff, has completed the Fiscal Impact Analysis based on average development throughout the City of Ferndale. LOCATION SITE AND VICINITY CHARACTERISTICS (Refer to Exhibits 1-3) The properties proposed for annexation are east of Portal Way 1 on both sides of Grandview Road. The southern boundary of the proposed annexation is north of and adjacent to the existing City limits at Brown Road. The northern boundary west of Interstate Five is approximately 1,200 feet north of the centerline of Grandview Road, along Portal Way. The annexation encompasses the entire UGA south of Grandview and East of Interstate Five, while on the north side of Grandview, a total of approximately forty acres on five properties is included. The I-5 Business Park north of Grandview Road did not participate in the proposed annexation. USE There are twenty-one parcels within the annexation area, five of which have been developed with single family residential uses, including one vacant/ abandoned house. To date, there has not been widespread commercial or industrial development in the area. A towing company operates along Portal Way towards the southern boundary of the annexation area, while a convenience store is located at the southeast intersection of Grandview Road and Portal Way. On the east side of the freeway, the American Business Center has been established north of Grandview Road. The center includes a drive through coffee shop, storage units, and a moving rental business. All existing uses rely on onsite sewage treatment (septic tanks), including a new system approved by Whatcom County within the last five years for the American Business Center and a replacement system at the convenience store, which was installed in 2009 to replace a failing system. 1 The Portal Way Right of Way is included in the annexation, and the City would assume jurisdictional control and responsibility for maintenance of Portal Way in this area upon annexation. Grandview Road would remain under the jurisdiction of the Washington State Department of Transportation (WSDOT). Grandview Road Petition to Annex (09001.ANX) Page 3 of 14

23 EXISTING ZONING Whatcom County has zoned the area Light Impact Industrial (LII) west of Interstate Five, with the exception of the convenience store, which is zoned Tourist Commercial (TC). Zoning east of the freeway is General Commercial (GC). In 2009, the City of Ferndale changed the Comprehensive Plan designation for this property from Industrial to Commercial. PROPOSED ZONING The applicant had requested General Commercial zoning in their application, but has indicated that the recently adopted Regional Retail zoning would be preferable. SITE DETAILS With the exception of improvements related to Interstate Five and the freeway overpasses, the annexation area is very flat. There are small stands of trees spread throughout the area, and mature evergreens abut the freeway south of Grandview Road, but only the southern portion of the proposed annexation could be considered wooded. The majority of the site is more accurately described as grass land. Approximately fifteen acres is utilized as pasture land for a small herd of cattle. Based on the City s GIS technology, there appear to be few if any wetlands in the area. Still, the headwaters of California Creek are within the general vicinity of the proposed annexation. California Creek is considered a salmon bearing stream, although there is some question as to whether or not the creek in this area supports or has supported salmonoid species. The annexation does not require resolution of this issue, but future development may be impacted if the creek is salmon bearing. The annexation area is within the Drayton Harbor Watershed. Drayton Harbor is a protected waterbody and Whatcom County has established a variety of requirements that are intended to minimize erosion, sediments, and pollutants that result from construction and completed development. The City has established similar regulations, and the gradual conversion from septic to City sewer may improve some environmental conditions in the immediate area. Transportation and Infrastructure Interstate Five bisects the proposed annexation area, and provides primary access to the site. Freeway exits in this area are controlled through stop signs. The northbound offramp is sometimes congested due to shift changes at the BP Refinery at Cherry Point, while the remaining off ramps operate at a relatively high Level of Service. Grandview Road, a State Highway, traverses the site from east to west and links with Enterprise Road, providing access to both Lynden and Ferndale. Portal Way is the Grandview Road Petition to Annex (09001.ANX) Page 4 of 14

24 western boundary of the annexation and is the primary locally-controlled surface street. Portal Way is a two lane road which is controlled by a four-way stoplight at the intersection of Portal and Grandview Road. FISCAL IMPACT REPORT The Fiscal Impact Report was prepared by Weden Engineering, and is intended to analyze the economic impacts associated with the potential annexation of this area. While specific annexation scenarios and methodology are discussed in the report, generally the document is intended to provide an estimate of the impact to various City services, infrastructure, and the City s tax base. The Fiscal Impact report concludes that it is likely that the City will experience a small short term economic benefit by annexing the territory as is, and that such economic benefits will increase substantially over time as build out occurs. The Fiscal Impact Report is based on gross property size, and does not attempt to delineate wetlands or predict the size of areas which must be reserved for infrastructure such as roads, storm water detention ponds, and setbacks. To that end, the size of potential developments suggested in the Fiscal Impact Report may not reflect site-specific conditions which could limit the actual build out of the site, if future development occurs. The Fiscal Impact Report must analyze the fiscal impact of annexation on the City. The costs associated with future development may vary greatly, and the timing of that development may vary the fiscal impact as much as the nature of the development itself. Please note that the Fiscal Impact Report anticipates that the costs of extending services such as water and sewer will be borne almost entirely by the applicant. While this may prove to be the case, the City may also be responsible for costs, which would likely reduce the net financial benefit to the City. Finally, the Fiscal Impact Report analyzes potential development based on 70% retail, 20% service, and 10% office. Development, if it occurs, will not necessarily match these ratios, and it is possible that residential uses may be included in a development scenario as an accessory use to the primary commercial uses. If residential uses are established in the area, the ratio of costs to benefits may change in some areas (an increase in park and school impact fees vs. an increased in law enforcement costs, for example). Grandview Road Petition to Annex (09001.ANX) Page 5 of 14

25 Infrastructure Assessment The infrastructure assessment (included in the Public Works summary, which is attached as an addendum to this report) describes the existing ability of City utilities to serve the subject area. The purpose of this study is to determine whether or not existing City utilities are able to serve the proposed annexation area as it currently exists, not to identify improvements or deficiencies in the existing system, or to project the capabilities of the existing system onto future development scenarios. In short, the Public Works summary has estimated whether the capacity exists to serve existing development, and does not analyze the specific conveyance through which future development could be connected. Water and Sewer Currently, water service is provided by the local Public Utility District in that area. The PUD has encouraged the City to take over its services and water lines in that area upon annexation. While the City is open to this concept, there is some question as to whether the existing water infrastructure will meet City standards. There is no sanitary sewer in the area. Onsite septic systems are utilized by existing developments. If annexation occurs, any future development must connect to City sewer, which will require the extension of existing sewer lines from either Trigg Road or Malloy Avenue. Existing development is not required to connect to City services unless the septic system fails or if expansions are proposed. In the short term period following annexation, it is likely that small to moderate development in the area will be stalled, unless the City or a private developer extends services, particularly sewer service, to the area. The costs associated with such extension may not be cost-effective for smaller developments, although a large development (which is emphasized in the Regional Retail zone) may have the means to pay for such an extension. The Public Works Department has determined that water and sewer capacity now exists to serve existing uses on the site. Public Works has also estimated that capacity now exists to support projected build out of the site up to at least 800,000 square feet of retail/office/ service space. The 800,000 square foot projection is consistent with earlier projections for the West Slater Annexation, which estimated buildout at approximately 300,000 square feet on 45 acres. The estimate is also consistent with land use projections in the ongoing Transpo Study, which projects approximately 800 employees in the annexation area by 2034 at an average ratio of 1,000 square feet per employee. There are a number of conveyance options which could serve the annexation area when it is developed. Those options include extending utilities north along Enterprise Grandview Road Petition to Annex (09001.ANX) Page 6 of 14

26 Road, extending utilities immediately east of Interstate Five, boring beneath Interstate Five and extending the lines along Portal Way, and more. The costs associated with extensions may vary dramatically. It is likely that if development occurs in the near future, the applicant will bear the primary burden of paying for utility extensions, although a Latecomers Agreement may be established to recoup some of those costs over time. If development occurs at some point in the more distant future, it is possible that the City will initiate utility extensions, and may in turn establish a Local Improvement District (LID) in which property owners will be responsible for their share of fees at the time of development. A third option is a public/ private partnership in the form of a Planned Action. A Planned Action, which would occur after annexation but prior to development, could include agreements between the City and the property owner(s) to extend utilities and to develop the properties in accordance with a master plan. Transportation Transportation infrastructure in the Grandview area is generally adequate to support existing uses, and no major modifications are required, with one possible exception. The Transpo Group has determined that the northbound freeway off ramp at Grandview Road has a Level of Service F rating at certain peak periods (normally associated with shift changes at the BP Cherry Point Refinery). An LOS F means that traffic patterns are forced and may break down over time. For unsignalized intersections such as the Grandview off ramps, an LOS F means that wait periods may exceed fifty seconds. As the Grandview off ramps are controlled by the Washington State Department of Transportation, the City has no jurisdictional control over improvements. WSDOT has not provided the City with any plans to modify or improve the intersection. When development occurs within the annexation area, WSDOT will be notified and provided with the opportunity to make comment, suggest improvements, and more. There may also be the potential to coordinate with WSDOT and BP to identify modifications that could facilitate improved shift change transfers. Additional Services Whatcom County Fire District 7 is currently responsible for services in this area, and would maintain services upon annexation. The Whatcom County Sheriff responds to 911 emergencies on private property and along Portal Way, while the Washington State Patrol has jurisdiction along Grandview Road. The Ferndale Police Department Grandview Road Petition to Annex (09001.ANX) Page 7 of 14

27 would assume patrol responsibility from the sheriff upon annexation, while the Washington State Patrol would maintain its current responsibilities. The City has not identified any third parties that are likely to oppose the annexation or request payment for revenues lost resulting from the annexation. In some cases, these parties are identified during the mandatory forty-five day review process, which will be initiated following the Planning Commission s recommendation. PROCESS SUMMARY The City has received a Petition to Annex (Exhibit 5). The Ferndale Municipal Code outlines a ten-step process for annexation (FMC ). In summary those steps are as follows: 1. Pre Notice of Intent Meeting with staff. 2. Neighborhood Meeting 3. Notice of Intent filed with City. 4. City Council consideration of Notice of Intent. 5. Petition for Annexation filed with City. 6. Certificate of Petition Completeness issued by City. 7. Technical Review and Analysis conducted. 8. Planning Commission Public Hearing. 9. Whatcom County Boundary Review Board Review Initiated 10. Ferndale City Council Public Hearing 10a. Update to City/County Interlocal Agreement, subject to Council approval Annexation Ordinance adopted by City Council. With submittal to the City of a Petition to Annex and the completion of the City s technical review and the fiscal impact report prepared by Weden Engineering, the application has completed Steps 1-7. Step 8 will be completed tonight. 2 The Ferndale Municipal Code requires an update to the Interlocal Agreement between the City of Ferndale and Whatcom County. However as the previous interlocal agreement has lapsed, no update is required. If Whatcom County has questions, concerns, or requirements, they will be given the opportunity to make those issues known during the 45 day Boundary Review period. Grandview Road Petition to Annex (09001.ANX) Page 8 of 14

28 STAFF ANALYSIS The process for the Grandview Annexation has been relatively lengthy. A separate Comprehensive Plan Amendment was approved in 2009, changing the land use designation for this area from Industrial to Commercial. The City has also established a Regional Retail Zone at Slater Road, with the expectation that it could be applied to the Grandview area when it is annexed. Still, while progress has been made to prepare the area for future annexation, there should be no expectation that annexation at this time is a foregone conclusion. There are several areas of discussion: Annexation Need The Grandview Annexation would represent an expansion of Ferndale s commercial area by 144 acres, and follows the recent East Slater annexation of forty-five acres of commercial land. Arguments have been made that Ferndale requires more commercial business, not necessarily more commercial area. While this argument has some merit the annexation of territory does not directly translate into an injection of new business it does not fully recognize the current situation or recent philosophy of the City of Ferndale. The Grandview area s strategic location at a major undeveloped freeway interchange creates the potential for commercial development which may exceed the normal service area of Ferndale. As such, freeway interchanges are a valuable commercial resource which must be conserved. A cities market area is not restricted only to the City limits. In fact, the Growth Management Act, by limiting commercial development beyond municipal boundaries, implicitly encourages cities to serve a broad market area. The freeway provides a direct route to and from the Grandview area, further expanding the market area. Zoning Designation A Regional Retail zoning designation is consistent with the Commercial Land Use designation which has been applied to this area. Staff believes that the Regional Retail zone also provides for the highest and best uses on the site, in light of the areas proximity to Interstate Five, the Canadian border, and the extent to which the area has remained undeveloped. Grandview Road Petition to Annex (09001.ANX) Page 9 of 14

29 Extension and Cost of Services While the City is not obligated to extend services beyond police response and patrol at this time, and while the PUD will continue to provide water service, the City will ultimately assume responsibility for maintaining the existing water system. In addition, while the City has adopted developer pays principles, there are limitations as to what the City could reasonably expect development to pay for the extension of services, particularly sewer service, to this area. This means that at some point in the future, the City may choose to extend services to the area in order to promote development in this location, unless private development initiates the extension. The costs of such an extension, without a guarantee that development will immediately follow it, may leave the City with a substantial burden that the City has no reasonable means of recouping. Conversely, a single development may experience difficulty financing an extension, even if latecomers agreements are established. The Ferndale Comprehensive Plan provides one possible remedy for this situation: following annexation, the City may enter into a Development Agreement with property owners in the area that would commit the City and the proponents to installing specific improvements and approving specific development plans. Such an agreement could result in a Master Plan or Planned Action, which would guide the ultimate development of the site. The Planning Commission may wish to include as a condition of annexation that the City will work with the property owners on the site to determine if a development agreement can be established. Community Identity The Ferndale Municipal Code requires that annexation requests be considered in part based on the degree to which community identity will be impacted by the annexation. To date, surrounding property owners have not expressed support or opposition to the annexation proposal (or the possibility of large retail uses at this location). There are few residents in the immediate vicinity of the annexation, and those that are nearby are generally east of the site. While land development within the annexation area has been slight, there appears to be a psychological acknowledgement that the land area will be developed at some point in the future: the Grandview Industrial Center and Business Park, as well as the I-5 Business Center have altered the landscape, and attendees at the community meeting expressed the general opinion that the area would ultimately be developed with either industrial or commercial uses. On a larger scale, the Grandview Annexation would expand Ferndale s city limits northward. Unlike expansions to the south, into areas that currently carry a Bellingham address, the Grandview area is already included in the zip code. Grandview Road Petition to Annex (09001.ANX) Page 10 of 14

30 Thus, for many the area is already considered Ferndale. If and when the properties are developed, there will likely be some change in the communities identity overall, as new employment and shopping opportunities will be available north of the City, rather than within it or south of it. The Transpo Group transportation study anticipates future development on the site, and any recommended transportation projects in that area will be designed to anticipate increased traffic and connectivity between this area and the core of the City. Cost/ Benefit As the Fiscal Impact Report suggests, there will likely be a short term benefit to the City, as several new businesses (and their tax revenue) will be annexed into the City, without any substantial extension of services. However, depending on the timing of development and extension of services, there is the potential for costs to exceed revenues, especially if the City extends services prior to development. At this time, the City has not identified a specific utility extension project to take place in this area within the next six years. As such an extension would likely be the most significant cost that could be borne by the City, it would seem unlikely that substantial costs would be incurred in the short term as a result of this annexation. Still, the Planning Commission must understand that the scope of potential development in the area will require costly upgrades and extensions, and that the City may be responsible for at least some of these costs. PROCESS The annexation must be considered based on the following three goals for annexation, as described by the Ferndale Municipal Code ( ). Staff response is in bold italics: A. Ensure that there are urban densities within the City s corporate limits. Urban densities are typically associated with residentially-zoned property, which does not apply to this annexation. However, the City has recently approved several commercial zoning designations which place an emphasis on efficient use of land and master planning. To this point, Whatcom County places no such requirements on commercial uses. The proposed annexation area has not yet been developed to its fullest extent, which affords the City with the opportunity to apply City standards for density and development standards. Grandview Road Petition to Annex (09001.ANX) Page 11 of 14

31 B. Supply sufficient, safe, and suitable residential, commercial, and industrial land to meet the projected future needs for Ferndale over the next 20 years. There is little question that the area, with all services provided (and potential freeway interchange upgrades) will be suitable for large-scale regional commercial development. However, there is some debate as to whether the City of Ferndale has a demonstrated need for additional commercial land. From Staff s perspective, as there are few undeveloped freeway interchanges within Urban Growth Areas, and as such interchanges, once developed, often have the ability to serve an area beyond the local market, a better question to ask is whether there is a regional need for additional commercial space. It appears that there is such a need, as evidenced by the noted lack of undeveloped freeway interchanges and projections that population growth in Whatcom County will exceed sixty thousand residents in the next twenty years (to say nothing of growth in the Lower Mainland). Thus, while Ferndale may in the future have capacity to support the needs of the city s population, the City s proximity to the freeway offers it tangible advantages which other cities do not enjoy. This is similar to a waterfront city benefiting from shipping fees and a busy port, or a college town benefiting from niche retail and entertainment businesses. C. Ensure an orderly outward extension of public services, facilities, and publicly owned utilities. Unlike many recent annexations, portions of the Grandview area are some distance from the existing City limits. This is due in part to the size of the annexation as well as its location in relation to the remainder of the City. The extension of services will likely not be as simple as extending a line beneath a right of way or across a property line. The territory included in the Grandview annexation allows for an orderly outward extension of services: the annexation itself is not populated to the extent that services must be established immediately. City water and sewer has capacity to support existing uses plus a substantial increase in development in the area, but such services are not required at the time of annexation. Police protection will be extended to the area, but this service will be mobile and can be relatively easily provided. Based on these criteria, Staff recommends that the Planning Commission recommend APPROVAL of the Grandview Road Annexation, including assigning a zoning designation of Regional Retail, which is consistent with the existing Comprehensive Plan Land Use designation. Based on staff recommendation, a potential motion could read as follows: Grandview Road Petition to Annex (09001.ANX) Page 12 of 14

32 Based on the Findings of Fact contained within this staff report, recommendation of approval of the proposed Grandview Annexation, which includes approximately 144 acres currently within the Ferndale Urban Growth Area, as described by the legal description contained in Exhibit 5 of this staff report. In addition, the Planning Commission recommends a zoning designation of Regional Retail for the entire subject property. The Planning Commission may also wish to consider the recommending the following condition: The Planning Commission further recommends that a condition be added to the annexation requiring that within six months of the effective date of the annexation, the annexation petitioners work with the City to determine the feasibility of entering into a Development Agreement for all or parts of the annexation area. PLANNING COMMISSION OPTIONS FOR ACTION As required by the Ferndale Municipal Code, the Planning Commission shall consider the Petition to Annex and forward a recommendation of approval or denial to the Ferndale City Council, along with a recommended zoning designation The decision at hand is not the potential future use or a determination of when and if that potential future use should occur. If the City Council denies the annexation proposal, the applicants will be required to wait a minimum of 180 days before the annexation process can be re-initiated. All fees will be voided, but staff may accept the existing fiscal and infrastructure analysis, provided that re-submittal occurs in a timely manner. FINDINGS OF FACT Regardless of the decision of the Planning Commission, whether it is to recommend approval or denial of the Petition to Annex, the Annexation Goals included in this staff report may be adopted as Findings of Fact, in addition to the following: 1. The Whatcom County Assessor has confirmed that the proponent-supplied list of property owners is complete and accurate. Grandview Road Petition to Annex (09001.ANX) Page 13 of 14

33 2. The Petition to Annex form is correct, the requisite signatures have been included, and appropriate fees paid. Grandview Road Petition to Annex (09001.ANX) Page 14 of 14

34 Public Works Department 2095 MAIN STREET/ P.O. BOX 936 FERNDALE, WA (360) Infrastructure Availability Assessment Report June 3, 2010 for Grandview Road Petition to Annex Applicant: Ron Bennett, et al Prepared by Jori Burnett, Reviewed and Approved by Janice Marlega Introduction: The proposed annexation area consists of twenty-five parcels comprising approximately 125 acres and is located within the Urban Growth Area of the City of Ferndale. The subject area is situated east of Portal Way on both the East and West side of Interstate Five, and on the north and south side of Grandview Road. Annexation of the area would include the adjacent Portal Way Right of Way. Currently, there is a vehicle towing business, a convenience store with fueling facilities, a coffee drive through, and a self storage/ rental business. All uses are currently served with water from the Public Utility District (PUD) in the area and are connected to onsite sewage systems (septic). This document is intended as a supplement to the Grandview Road Annexation staff report. As that report indicates, there is significant growth potential in the Grandview area. This report will focus on two primary annexation scenarios: Current Development (Scenario 1) and Future Development (Scenario 2). Summary Statement: Although City utilities are not yet available on the site, capacity exists to support both existing uses and the twenty-year buildout. Specific conveyance measures will be identified at the time of the Grandview Road Petition to Annex 1

35 submittal of a development application and/or may be identified at the conclusion of the ongoing updates to the various comprehensive plan elements. Existing Conditions: Existing development in the area is supported by onsite septic systems and water provided by the Public Utility District. Additional services are not required in the area until future development occurs or if existing systems fail. In either case, the City may determine that is the responsibility of the property owner to pay the costs of such extensions. Future development of any kind in the annexation area shall require the extension of City services (particularly sewer). Such costs may be borne by the applicant, the City, or both. The costs of such extensions will likely be substantial, although the actual expense will vary depending on the location of initial development, the specific conveyance route chosen, and the costs of time and materials. The City of Ferndale Public Works Department is in the process of updating the Water and Sewer Comprehensive Plans which will include the proposed Grandview Annexation area. The existing Comprehensive Plans identify specific conveyance measures to extend water and sewer lines to this area and they demonstrate that there is sufficient capacity to support the projected twenty-year buildout scenario. Utilities While the City may, through updates to the various Comprehensive Plans and the identification of specific private or public projects, extend utilities to the area, City policy has been that the costs of extending utilities (in the absence of a specific project) will be borne by the developer at the time of the establishment of specific uses within the area. Latecomer s agreements, Local Improvement Districts, and other funding options may be considered when private or public projects are identified and constructed, although they cannot be assumed. Traffic Current traffic generated by the existing businesses in the area is relatively minor, with the possible exception of the convenience store/fueling station, which services the traveling public. The most significant traffic is generated offsite by shift changes at the BP Cherry Point Refinery and passthrough traffic in the North Ferndale/ Birch Bay regions. It appears that both Grandview Road and Portal Way have the capacity to support additional vehicular traffic generated by potential uses within the annexation area. However, there is some Grandview Road Petition to Annex 2

36 indication that the freeway interchanges, particularly the north bound freeway off-ramp, may currently suffer from low Levels of Service. Water Service Availability: 1. Current Model, based on Existing Uses (Scenario 1): There appear to be adequate fire flows and pressure (20 psi minimum) in the vicinity of the proposed annexation for the existing uses. 2. Future Model, based on Future Uses (Scenario 2): Future development of the annexation area shall require expansion of both the water and sewer lines. As part of this expansion, upgrades may be necessary to achieve required fire flow. In some cases, existing PUD lines may be utilized to serve future uses. However, it is likely that new lines will be required to connect the area to the City s treatment plant as well. Sanitary Sewer Service Availability The City s sanitary sewer system currently extends to Trigg Road on the east side of Interstate Five and to the northern boundary of Malloy Village, west of the freeway. While capacity appears to exist to serve the area based on current and projected conditions, the conveyance of sewer services will represent a significant cost to the applicant at the time of development. Subsequent analysis of actual conveyance options may be appropriate once a specific development is identified. The City may wish to consider a Development Agreement with property owners in the area to develop a plan to extend services to the area. Treatment Facility Capacity: Staff reports that the sewage treatment plant treats approximately 1.5 million gallons of raw sewage per day (MGD) on an annual average basis. The plant has a capacity of 2.15 MGD, leaving approximately.65 MGD of future capacity. It is estimated that the future development of the site would not generate sufficient sewage to exceed the plant s operating capacity. Storm Water Service Availability: The proposed annexation area is within the Drayton Harbor drainage basin. The City is in the process of developing a capital plan for storm water detention, treatment, and conveyance, and will include this area once it is annexed into the City. Such a plan will likely precede development in the area. Grandview Road Petition to Annex 3

37 Street Availability/ Capacity: If the subject area is annexed into the City of Ferndale, Portal Way would become a City street. Grandview Road would remain a State Highway. While both roads appear to have surplus capacity at this time, Grandview Road becomes congested at certain periods of the day. No immediate modifications have been identified (with the possible exception of improvements to the north bound off-ramp), but the City and the Washington State Department of Transportation will be expected to coordinate plans if and when new development is proposed in the area. Conclusions: Based on available information, there appears to be sufficient capacity to continue to support existing uses in the subject area, as well as most potential uses in the Regional Retail zone. However, without updated Water, Sanitary Sewer, and Transportation plans, as well as proactive coordination with the property owners, the PUD, and the Washington State Department of Transportation, no long-term assurances can be provided. Public Works recommends approval of the Grandview Road Annexation Petition. Grandview Road Petition to Annex 4

38 ATWO OD RD Exhibit 1: Grandview Annexation Vicinity Mapo PROCTOR RD Grandview Area AT W O O D RD Interstate SR ENTER PRISE RD GRANDVIEW RD PO TA R L W AY RD BROWN RD BROWN MALLO Y RD MATZ RD Legend Grandview Area DISCLAIMER USE OF THIS MAP IMPLIES THE USER'S AGREEMENT WITH THE FOLLOWING STATEMENT: The City of Ferndale disclaims any warranty of merchantability or warranty of fitnes s of this map for any particular purpos e, either express or implied. N o representation or warranty is made conc erning the accuracy, currency, completenes s or quality of data depicted on this map. Any user of this map ass umes all res pons ibility for use thereof, and further agrees to hold the City of Ferndale harmless from and against any damage, loss, or liability arising from any use of this map. City Limits Unincorporated Urban Growth Area Feet

39 Exhibit 2: Grandview Annexation Existing Zoning Legend ATWOOD RD Grandview Area City Limits Unincorporated Urban Growth Area Central Business Grandview Area City Center General Commercial R5A R5A Highway Commercial Light Industrial Manufacturing Urban Residential RS 10.5-Single Family Dwelling PROCTOR RD RS 8.5-Single Family Dwelling RS 6.5-Single Family Dwelling RM 1.5-Multiple Dwelling ATWOOD RD Residential Office Floodway Whatcom County Zoning AG GC LII R5A ROS RR1 SR-548 Interstate 5 GC UR3 UR4 LII TC GRANDVIEW RD ENTERPRISE RD PORTAL WAY LII R5A R5A BROWN RD R5A BROWN RD MATZ RD MALLOY RD CITY DISCLAIMER USE OF THIS MAP IMPLIES THE USER'S AGREEMENT WITH THE FOLLOWING STATEMENT: The City of Ferndale disclaims any warranty of merchantability or warranty of fitness of this map for any particular purpose, either express or implied. N o representation or warranty is made concerning the accuracy, currency, completeness or quality of data depicted on this map. Any user of this map assumes all responsibility for use thereof, and further agrees to hold the City of Ferndale harmless from and against any damage, loss, or liability arising from any use of this map Feet

40 Exhibit 3: Grandview Annexation Comprehensive Plan Map ATWOOD RD Grandview Area PROCTOR RD ATWOOD RD Whatcom County Rural Designation SR-548 Interstate 5 GRANDVIEW RD ENTERPRISE RD PORTAL WAY Legend Grandview Area City Limits Unincorporated Urban Growth Area Commercial Public Industrial High Density Residential Medium Density Residential Low Density Residential Residential-Unspecified Floodway BROWN RD MALLOY RD BROWN RD MATZ RD DISCLAIMER USE OF THIS MAP IMPLIES THE USER'S AGREEMENT WITH THE FOLLOWING STATEMENT: The City of Ferndale disclaims any warranty of merchantability or warranty of fitness of this map for any particular purpose, either express or implied. N o representation or warranty is made concerning the accuracy, currency, completeness or quality of data depicted on this map. Any user of this map assumes all responsibility for use thereof, and further agrees to hold the City of Ferndale harmless from and against any damage, loss, or liability arising from any use of this map Feet

41 GRANDVIEW ANNEXATION FISCAL IMPACT ANALYSIS Prepared for: and RON BENNETT 1919 Cornwall Avenue Bellingham, WA May 2010 Prepared by: Weden Engineering, llc Civil Engineering Land-Use Planning Project Management PO Box 3246 / 2636 Nubgaard Rd Ferndale, WA fx Weden Project No info@wedenengineering.com

42 Fiscal Impact Analysis Grandview Annexation May 2010 Page 2 TABLE OF CONTENTS 1. Notice of Disclaimer Executive Summary Introduction Study Area characteristics Area Location & Description Population Fiscal Analysis Methodology Scenarios Scenario A: Scenario B: Costs & Revenues Costs General Government Law Enforcement Parks & Community Services Planning & Development Services Public Works Fire & Emergency Medical Services Major Revenues Property Tax Local Sales Tax EMS Sales Tax Utility Tax Gambling Tax Licenses and Permits State Shared Revenue Governmental Service Charges Fines/ Forfeitures Capital Costs and Revenue Capital Connection Fees Special Districts Library School District Summary Appendices References Key Assumptions Service Provider Matrix for proposed annexation area Service Provider Responses to requests for information Whatcom County Fire Protection District No. 7 Interlocal Agreement... 32

43 Fiscal Impact Analysis Grandview Annexation May 2010 Page 3 FIGURES Figure 1: Net Fiscal Impact of Scenario A... 6 Figure 2: Net Fiscal Impact of Scenario B... 6 Figure 3: Grandview Annexation Area Map... 8 Figure 4: Distribution of City of Ferndale Costs Figure 5: Distribution of Grandview Annexation Area Costs Figure 6: Distribution of City of Ferndale Revenues Figure 7: Distribution of Grandview Annexation Area Revenues TABLES Table 1: Summary of Costs and Revenues for Annexation... 5 Table 2: Properties Included in Annexation Proposal Table 3: Scenario A Existing Use Table 4: Scenario B Projected Use* Table 5: Costs for Grandview Annexation Area Table 6: Revenues for Grandview Annexation Area Table 7: Service Provider Matrix for proposed Grandview Annexation Area... 28

44 Fiscal Impact Analysis Grandview Annexation May 2010 Page 4 1. NOTICE OF DISCLAIMER The analyses, opinions, recommendations, and conclusions of this report are Weden Engineering, LLC s informed judgment based on market and economic conditions as of the date of this report. Changes in the market conditions or the economy could change or invalidate the conclusions contained herein. The contents of this report are based, in part, on data from secondary sources. While it is believed that these sources are accurate, Weden Engineering cannot guarantee their accuracy. The findings herein are based on economic considerations, and, therefore, should not be construed as a representation or as an opinion that government approvals for development can be secured. Conclusions and recommended actions contained in this report should not be relied on as sole input for final business decisions regarding current and future development and planning, nor utilized for purposes beyond the scope and objectives of the current study.

45 Fiscal Impact Analysis Grandview Annexation May 2010 Page 5 2. EXECUTIVE SUMMARY Consistent with Ferndale Municipal Code D, Weden Engineering, LLC, performed a fiscal impact analysis for the proposed annexation into the City of Ferndale of approximately 144 acres near the Grandview and I-5 interchange. The Grandview Area is north of the City of Ferndale limits in the City s Urban Growth Area (UGA). The zoning classification of the subject area was recently modified through a comprehensive plan amendment from mixed commercial and industrial to exclusively commercial use. The fiscal impacts for two scenarios were studied. Scenario A examined the impacts of annexing the current mix of commercial and residential, non-conforming uses. Scenario B studied the annexation impacts for the area at the projected 20-year commercial build-out. The study does not consider interim development over time. This study projects that over a twenty-year period, the City of Ferndale is likely to generate a higher amount of revenues than expenditures associated with the proposed annexation. The net financial benefit to the City if the area is annexed under existing uses was found to be in excess of $19,000. For 20-year, full build-out the benefit was found to be in excess of $5,300,000, (see Table 1: Summary of Costs and Revenues for Annexation, below). These dollar amounts represent a higher amount of revenues generated (i.e. property taxes, sales taxes, utility taxes and state-shared revenues) in comparison to governmental expenditures associated with each scenario. Table 1: Summary of Costs and Revenues for Annexation Item Scenario A: Existing Use Scenario B: Commercial Build- Out Total Cost $36,308 $123,371 Total Revenue $55,610 $5,440,503 Total Net Fiscal Impact $19,302 $5,317,131

46 Fiscal Impact Analysis Grandview Annexation May 2010 Page 6 Figure 1: Net Fiscal Impact of Scenario A Figure 2: Net Fiscal Impact of Scenario B

47 Fiscal Impact Analysis Grandview Annexation May 2010 Page 7 3. INTRODUCTION The City of Ferndale is currently processing a request by the City of Ferndale in agreement with Ron Bennett, et al, (the applicant), to annex acres located in the area surrounding the Grandview Road/ Interstate Five interchange, within Ferndale s Urban Growth Area (UGA). This Grandview Annexation Area is located north of the City of Ferndale limits, within the City s short term UGA. See Figure 3: Grandview Annexation Area Map on the following page for details. In 1990, Washington State adopted the Growth Management Act (GMA) to limit urban expansion in rural areas, reduce automobile dependence, stabilized local finances and ensure adequate available lands for projected population growth. The 1990 GMA sought to reduce urban sprawl by encouraging development in urban areas where adequate public facilities already exist or where such facilities can be more efficiently provided. The GMA requires that counties designate urban growth areas (UGAs) with sufficient land to accommodate the twenty-year population growth projected for the county, within which urban growth shall be encouraged and outside of which growth can occur only if it is not urban in nature, RCW 36.70A.110(1). The City of Ferndale has established policies and designated UGAs in order to accommodate projected growth in a manner that complies with the GMA policies and goals. The Ferndale Municipal Code (FMC) outlines the policies and annexation process for properties inside the UGA. A fiscal impact analysis is identified in FMC E, as an integral part of the City s Technical Review and Analysis of proposed annexations. In compliance with FMC E, the applicant commissioned this analysis through the City of Ferndale to determine the fiscal impacts of the proposed annexation of acres of unincorporated Whatcom County into the City of Ferndale. This study will help determine if the proposed annexation represents a financial benefit or burden to the City of Ferndale. The municipal costs and revenues generated by the annexation were evaluated for the Grandview Annexation Area. Estimated operating impacts were based on 2009 budgeted expenditures and 2009 tax and fee structures outlined in the adopted City of Ferndale 2009 budget. This analysis assumes that the current levels of services and current levels of taxes and fees would be maintained in the City, while also servicing the newly annexed area.

48 Fiscal Impact Analysis Grandview Annexation May 2010 Page 8 Figure 3: Grandview Annexation Area Map

49 Fiscal Impact Analysis Grandview Annexation May 2010 Page 9 4. STUDY AREA CHARACTERISTICS 4.1. Area Location & Description The Grandview Annexation Area is an unincorporated area within the City of Ferndale s Comprehensive Plan Sub-Area Number 6, the Grandview Area Neighborhood. The Annexation area is located northwest of the Nooksack River, surrounding the Grandview Road / Interstate Five interchange. The majority of the area proposed for annexation lies between Portal Way and Interstate Five, with approximately 77.7 acres of the total acres east of Interstate Five. The land-use designation for the subject area was recently changed in 2009 to exclusively commercial use through a Comprehensive Plan Amendment. Prior to the construction of Interstate Five, the area had been primarily used for agriculture. Today the existing land uses in the area are mixed, including retail commercial, residential, and pasture lands Population The Grandview Annexation area includes twenty one (21) individual parcels and twenty-six (26) property owners. The original area proposed for annexation included twenty-three individual parcels. However, 2 parcel owners declined to be included in the annexation area and were subsequently removed after the application was submitted. An existing convenience store/ fuel station is established at the southeast intersection of Portal Way and Grandview. A towing company exists on the south end of Portal Way. North of Grandview Road, a business center operates a drive through espresso stand, storage units, and a moving rental business. Several non-conforming residences lie south of Grandview Road, including at least one that is believed to be vacant. The parcels are described in Table 2: Properties Included in Annexation Proposal, as well as Table 3: Scenario A Existing Use, and included on Figure 3: Grandview Annexation Area Map on the previous page. Five of the parcels include single family residences, one of which is listed on the Assessor s web page as having two residences.

50 Fiscal Impact Analysis Grandview Annexation May 2010 Page 10 Table 2: Properties Included in Annexation Proposal # Property Owner Name Site Address Parcel # Parcel Size (acres) 1 EIFORD-EIFORD DEVELOPMENT LLC 2240 GRANDVIEW RD VITO ENTERPRISES US LTD 3 LJL INVESTMENTS INC 2184 BUCHANAN LOOP BUCHANAN LOOP JUAN CARLOS 2ND FAMILY LP 2070 GRANDVIEW RD DKT CORPORATION 2020 GRANDVIEW RD TIMOTHY D GIBBONS 2010 GRANDVIEW RD SAHOTA MART III INC 6890 PORTAL WAY A1WAYS LLC 0 PORTAL WAY WYBURN G & BRENDA J BANNERMAN 6810 PORTAL WAY DAN & TERESA BRIM 50% & DON & MARY MCCLARY 25% & RON & MARILYN BENNETT 25% 0 GRANDVIEW RD DON D INGHAM 2055 GRANDVIEW RD SHARON RAY 2069 GRANDVIEW RD CAMELOTT LLC & RON & MARILYN BENNETT LLC 2036 GRANDVIEW RD CAMELOTT LLC 50% & RON & MARILYN BENNETT 50% 2011 GRANDVIEW RD CAMELOTT LLC & RON & MARILYN BENNETT LLC GRANDVIEW RD ELINOR I BAILEY PORTAL WAY LOREN H BAILEY SR CREDIT PORTAL WAY LEROY C & MARY C RICHARDS 6742 PORTAL WAY ELINOR I BAILEY PORTAL WAY LOREN H BAILEY SR CREDIT PORTAL WAY LOREN H BAILEY SR CREDIT PORTAL WAY TOTAL

51 Fiscal Impact Analysis Grandview Annexation May 2010 Page FISCAL ANALYSIS 5.1. Methodology A fiscal impact analysis estimates the financial impact upon a City of a future development by studying the costs and revenues generated by the development. The analysis enables local governments to estimate the difference between the costs of providing services to a new development and the revenues that will be generated by the development. It is primarily a tool to make informed decisions for the benefit of the community. There are a number of standard approaches to choose from in conducting a fiscal impact analysis, ranging from a per-capita multiplier method to a case study method which relies on local interviews, among many other case-specific elements. The following discussion of the typical methods and applications was summarized from the Fiscal Impact Handbook, by Burchell and Listokin, All fiscal impact analyses follow certain common procedures: Projecting the population (residents, housing units, public school children, and employees) generated by the development. Estimating the public service costs to meet the demand of the new population. Estimating the increase in tax base and revenues associated with the annexation. Comparing the potential service costs and potential revenues. The Case Study Method more accurately portrays the immediate and usually significant impact of proposed growth in a small, rapidly growing area with minimal operating services and capital facilities than the Per Capita Multiplier method, especially for large nonresidential developments. The Case Study Method elicits, through interviews with knowledgeable public officials, information about immediate plans to expand or maintain local services. The method requires the time and cooperation of public officials and relies upon accurate, firsthand knowledge of a department s operations. It is a detailed approach and its accuracy depends on the ability of local officials to predict the public consequences of growth of a specified size and location. The Per Capita Method assumes a local fiscal condition in which the public service infrastructure bears a close relationship to service demand. In this situation, the average costs of providing services to current users is a reasonable approximation of the costs to provide similar services to future users. The Method assumes that tomorrow s costs are not unlike today s, and provides an approximation of the costs of new development based on historical and local data. Used in conjunction with the Proportional Valuation Method, the technique separates the local costs assigned to

52 Fiscal Impact Analysis Grandview Annexation May 2010 Page 12 nonresidential uses. The Per Capital Method provides a reasonably accurate analysis without an intimate knowledge of site-specific service systems. The Proportional Valuation Method is used in evaluations of the fiscal impact of nonresidential facilities. This method is least appropriate for a situation where a large nonresidential development is contemplated for a rural area with an unsophisticated service system, which is more accurately understood using the Case Study Method. The assignment of costs takes place using refinement coefficients that are sensitive to the non-linear impact of facility size versus service requirements. The fiscal impacts of the proposed Grandview Area annexation would likely be best identified through the Case Study Method, especially in identifying and addressing service capacity deficiencies. However, due to the lack of specific planning for future infrastructure and the level of staff knowledge, it became apparent that a case study approach was outside the reasonable scope of data available, (see April 29 th, 2010 letter from Public Works in the appendix). In light of this, a combination of the Per Capita and Proportional Valuation Methods were used to achieve the above-listed projections and estimates. This approach did not require extensive knowledge of the details of municipal or school district operations. Key assumptions for this analysis are given in the appendix Scenarios Two annexation scenarios were chosen for analysis to provide information on the cost to the City of annexing the twenty-one properties: Scenario A: The twenty-one properties included in the Grandview Annexation Area were studied asis, with six single family residences and an assumed existing population of 18. Parcels 1-5, 8, 10-14, 16-17, and were assumed to be vacant. Zoning for the annexed properties was assumed to be general commercial and existing residential uses as nonconforming. Residential use would not be allowed if any parcels were redeveloped. See Table 3: Scenario A Existing Use for details.

53 Fiscal Impact Analysis Grandview Annexation May 2010 Page 13 # Site Address Table 3: Scenario A Existing Use Zoning (from Co. Zoning Map, 12/16/09) Approx. Commercial Bldg sf (from aerial GIS) Estimated Residents* Property Valuation, 2009 Assessor GRANDVIEW RD Light Impact Industrial 0 0 $1,738, BUCHANAN LOOP Gen Comm 0 0 $1,586, BUCHANAN LOOP Gen Comm 0 0 $708, GRANDVIEW RD Gen Comm 0 0 $847, GRANDVIEW RD Gen Comm 0 0 $242, GRANDVIEW RD Gen Comm $850, PORTAL WAY Tourist Comm $1,023, PORTAL WAY Light Im Ind 0 0 $485, PORTAL WAY** Light Im Ind $1,014, GRANDVIEW RD Gen Comm 0 0 $247, GRANDVIEW RD Gen Comm $139, GRANDVIEW RD Gen Comm $414, GRANDVIEW RD Gen Comm 0 0 $643, GRANDVIEW RD Gen Comm $260, GRANDVIEW RD** Gen Comm $761, PORTAL WAY Light Im Ind 0 0 $130, PORTAL WAY Light Im Ind 0 0 $50, PORTAL WAY Light Im Ind $464, PORTAL WAY Light Im Ind 0 0 $ PORTAL WAY Light Im Ind 0 0 $25, PORTAL WAY Light Im Ind 0 0 $3, *Assume 2.9 residents per residence, from Transpo draft study 29, $11,639, **Existing Use assumed to be farm, per Whatcom Co. Assessor 18,224.0 = Commercial sf without farms

54 Fiscal Impact Analysis Grandview Annexation May 2010 Page Scenario B: The twenty-one parcels were assumed to be developed as an aggregate land unit under general commercial zoning. Assumed development, per the City of Ferndale Planning Department, was estimated at 800,000 square feet of retail space with an estimated 800 employees. Uses within the retail complex were further broken down into 70% retail, 20% service, and 10% restaurant. For revenue estimation, gross sales per square foot were obtained from comparable uses. See Table below for details. Projected Use Square Footage* Table 4: Scenario B Projected Use* Avg. Gross Annual Sales/ sf Gross Sales (Estimated Taxable Revenue) Estimated Employees* Retail 70% = 560,000 Service 20% = 160,000 Restaurant 10% = 80,000 TOTAL 800,000 $ $256,709, *estimate of annexation's 20 year build-out given by City of Ferndale Planning Department

55 Fiscal Impact Analysis Grandview Annexation May 2010 Page COSTS & REVENUES The following is a brief overview of the cost and revenue categories included in Table 5: Costs for Grandview Annexation Area and Table 6: Revenues for Grandview Annexation Area, as well as a discussion of the fiscal gap between the cost of city services and the city revenue base for the annexation area under the scenarios described in this study. As a useful reference, included in the Appendix is Table 7: Service Provider Matrix for proposed Grandview Annexation Area, which lists the current service providers and the future service providers if the area is annexed Costs The annexation related costs estimated in this analysis assumed that the existing conditions of utilities and capital facilities were sufficient to meet City standards for Scenario A, (existing uses). Please refer also to section 6.3 for further discussion of capital costs and revenues. There has been some discussion among City staff about concurrency laws, which state that a development is only responsible for mitigation commensurate (or proportionate) to the development impact, (RCW 36.70A.070, WAC ). The City has suggested that the State Environmental Policy Act (SEPA) process can be used to require off-site improvements that have health, safety, or LOS implications. However, if the City cannot require the developer to pay for improvements beyond the specific reductions in Levels Of Service (LOS) caused by the developer s project, then it is especially important that the City be aware of the improvements needed in the proposed annexed area that would be above and beyond what future developers will be responsible for. The City is currently in the process of updating their comprehensive plan elements, and thus is unable at this point to accurately detail what improvements are needed now or in the future for the proposed annexation area. Therefore the costs included in this analysis assumed that all improvements needed now or in the future, would be covered by future development and associated impact fees. Based on this assumption and utilizing the Per Capita and Proportional Valuation Methods, the following table and pie charts summarize the estimated annexation related financial costs to the City for both scenarios.

56 Fiscal Impact Analysis Grandview Annexation May 2010 Page 16 Table 5: Costs for Grandview Annexation Area (2009 Dollars) 2009 City Expense Category Department Budget Scenario A Scenario B General Government Council $50,638 Administration $190,562 Clerk/ Treasurer $345,355 General Government $467,544 SUB-TOTAL $1,054,099 $4,541 $7,548 Law Enforcement Court $276,881 Legal Services $74,500 Police $2,541,827 Detention $305,282 SUB-TOTAL $3,198,490 $13,779 $22,902 Parks & Community Services Parks $498,529 Alcohol Board $2,704 SUB-TOTAL $501,233 $2,159 $3,589 Planning/ Development Building Permits/ Inspection $259,230 Community Development (was Planning) $722,974 SUB-TOTAL $982,204 $4,231 $7,033 Public Works Clean Air Agency $3,689 General Building Maint. $87,853 Engineering Support $360,733 SUB-TOTAL $452,275 $1,948 $3,238 Fire/ EMS Fire $855,000 Emergency Services $111,148 SUB-TOTAL $966,148 $9,649 $79,061 TOTAL $7,154,449 $36,308 $123,371

57 Fiscal Impact Analysis Grandview Annexation May 2010 Page 17 Figure 4: Distribution of City of Ferndale Costs Figure 5: Distribution of Grandview Annexation Area Costs General Government This fiscal impact analysis assumes that the Grandview Annexation Area would receive the same level of governmental service that currently exists within the city limits. General government includes city services of the council, clerk/treasurer, city administration, and general governmental services. The city base in 2009 dollars for general government is $1,054,099. For the Per Capita and Proportional Valuation Methods, the non-residential share was determined to be 51.25% and the residential share to be 48.75%. Based on these percentages, Scenario A results in a governmental service cost of $4,541, (which includes costs for both the existing non-

58 Fiscal Impact Analysis Grandview Annexation May 2010 Page 18 residential and existing residential costs). Scenario B results in a governmental service cost of $7,548, for project non-residential costs only Law Enforcement The City of Ferndale s court, City attorney, police, and detention/probation services are included in this expenditure category. Estimated expenditures for law enforcement (with a 2009 budgeted costs basis of $3,198,490) are allocated to the Grandview Annexation Area based on provision of existing levels of city services under both scenarios. The Ferndale Police Department expects that the public safety impacts associated with either examined scenario would be minimal and would not result in requirements for additional patrol areas or personnel. The Department noted, however, that cumulative annexations to the City of Ferndale will be examined in the future as a whole and impacts to the Department found at that time may be allocated to the Grandview Annexation Area at a point when development or re-development occurs in the area. See attached letter, dated January 21, 2010, for details. Other law-enforcement related services included in this category are the City attorney, municipal courts, and detention/probation. The Grandview Annexation, under either examined scenario, is not expected to require additional staffing or facilities for these law enforcement functions. Per capital cost based on both residential and nonresidential allocation for Scenario A would result in a law enforcement-related cost of $13,779. Scenario B, based on non-residential allocations would result in a cost for law enforcement of $22, Parks & Community Services Parks services are provided within the City by the public works department. Ferndale parks expenditures are managed through a parks maintenance program which, for this analysis, was grouped with mental and physical health as a community service category that provides services to residents rather than workers. The City requires in-lieu park impact fees on a per unit basis for new developments. Although Regional Retail Commercial does allow for multi-family (MF) residential, for purposes of this analysis, no residential development was assumed and therefore, no park impact fees were counted. It should be noted that some or moderate impact fees could be realized for a residential component. In addition, no park land would be added to Ferndale as a result of the annexation. Costs for parks and community services associated with the annexation scenarios are $2,159 under Scenario A and $3,589 under Scenario B Planning & Development Services Planning and development service estimates are for costs associated with planning and with building inspection services, budgeted at $982,204 for Provision of these services in the contemplated annexation area is $4,231 under Scenario A and $7,033 under Scenario B).

59 Fiscal Impact Analysis Grandview Annexation May 2010 Page Public Works Public works functions that are included in this analysis are those functions that are funded out of the general fund. This category includes engineering support services, pollution control, and facility maintenance. Expenditures for this category are based on expected additional demand for services within the annexation area under each scenario. As stated previously, the Per Capita / Proportional Valuation Method used for this report does not give a detailed picture of the effect of nonresidential growth, including a projection of personnel requirements and intended capital facility improvements. The Method assumptions include that current average operating costs per capita are the best estimates of future operating costs, and that the local service levels within the City will continue on the same scale. As such, the costs for Scenario A would be $1,948 and for Scenario B would be $3, Fire & Emergency Medical Services The Grandview Annexation Area is located inside of Fire District 7 boundaries. The City of Ferndale and Whatcom County Fire Protection District No. 7 have an agreement that Fire District No. 7 will provide fire protection and emergency medical services for the City, including to annexation areas. A copy of the December 7 th, 2009, Interlocal Agreement between Whatcom County Fire Protection District No. 7 and the City of Ferndale is included in the Appendix. Fire district taxes are collected as part of consolidated property tax levies. The City of Ferndale contracts with Fire District No. 7 for fire and ambulance services at a rate established by the District for the tax value, as if Ferndale residents were included in the levy. The levy rate for Fire District No. 7 is $ per $1,000 property valuation, as given by Fire Chief Gary Russell. The 2009 contract amount for the City is $966,148. The contract amount attributable to the annexed area under Scenario A is $9,649, and $79,061 under Scenario B. Per Fire Chief Russell, Fire District No. 7 has not identified any additional equipment or personnel needs as a result of the proposed Grandview annexation, although eventual development of the annexed area would require fire lanes and the District expects to identify fire hydrant locations. In addition, the District noted that additional, future training needs related to the developed area would be paid at cost to the District by the developer Major Revenues The following table and pie charts summarize the estimated annexation related costs to the City for both scenarios.

60 Fiscal Impact Analysis Grandview Annexation May 2010 Page 20 Table 6: Revenues for Grandview Annexation Area (2009 Dollars) Revenue Category 2009 Relevant Projected City Revenues Scenario A: Existing Use Scenario B: Commercial Build-out Property Tax $1,900,230 $21,791 $178,554 Sales Tax $1,166,316 $26,126 $5,134,188 Sales Tax - EMS $129,600 $90 $0 Utility Tax $1,235,434 $5,561 $125,844 Electric $368,995 $1,590 $72,010 Natural Gas $278,162 $1,198 $17,053 Telephone $371,262 $1,599 $1,112 Water/ Sewer/ Storm $217,015 $1,173 $35,669 Gambling Tax $0 $0 $0 Licenses & Permits $535,600 $424 $1,918 State Shared Revenue $406,414 $660 $0 Governmental Service Charges $1,101,559 $872 $0 Fines/ Forfeitures $108,150 $86 $0 TOTAL $6,583,303 $55,610 $5,440,503 Figure 6: Distribution of City of Ferndale Revenues

61 Fiscal Impact Analysis Grandview Annexation May 2010 Page 21 Figure 7: Distribution of Grandview Annexation Area Revenues Property Tax Estimated property tax revenues result from taxable assessed value of real and personal property data provided by the Whatcom County Assessor s Office. The resulting values were multiplied by Ferndale s 2009 levy rate of $ per $1,000 of assessed value. An assessed value was assumed for Scenario B based on assessed values of similar commercial aggregate uses within the City of Bellingham. The Grandview Annexation Area would generate an estimated $21,791 in taxable property to the City under Scenario A, the existing property condition. For Scenario B, the theoretical full commercial build-out scenario, $178,554 in tax revenues would be generated Local Sales Tax Sales tax revenues are based on the estimated sales taxes collected within the proposed annexation area. Approximately $26,126 in sales tax is projected to be collected under Scenario A, (based on estimated existing commercial square footage from GIS maps and associated average taxable sales per square foot). Sales tax collected under Scenario B was generated based on randomly chosen commercial uses listed in Table 4: Scenario B Projected Use*, as defined by the 70 percent retail, 20 percent service, and 10 percent restaurant overall use division. The sales tax estimate for Scenario B is $5,134,188, based on retail sales per square foot data published by the HdL Companies (2007) EMS Sales Tax In January, 2006, Whatcom County adopted a sales and use tax to support emergency medical services. Selling prices for all taxable events, excluding some sales and leases related to motor vehicles, are taxed at a rate of one-tenth of one percent. Sixty percent of the collected revenues are distributed to the county and forty percent are distributed to cities on a per capita basis. Two-thirds of the revenues received by both cities and

62 Fiscal Impact Analysis Grandview Annexation May 2010 Page 22 the county are used for criminal justice purposes. Based on per capita distribution, Scenario A would generate $90 in EMS sales tax revenues, and no EMS sales tax revenues would be realized under Scenario B Utility Tax Ferndale levies a 6% tax on revenues that are generated in the City from the sale of telephone services (including cell phone services), natural gas, cable television, electricity, and water/sewer services. Distribution of electric utility tax is governed by RCW and natural gas tax is governed by RCW A large portion of tax collected for operating works, plants or facilities for the generation, distribution and sale of electric energy is allotted to state schools prior to distribution of cities and counties. Ferndale contracts with the state Department of Revenue for collection of natural gas tax, which is distributed based on actual usage. Electric and natural gas estimates were derived from expenditures per square foot based on building size per census region (West) as provided by the Energy Information Administration s 2003 Commercial Buildings Energy Conservation Survey. Telephone and cellular phone taxes are collected from customers by telephone companies and paid to Washington State as excise tax. Telephone expenditures were based on an assumed combined land based and cellular telephone bill of $164 per commercial use within the theoretical commercial complex. Water/Sewer/Stormwater expenditures were based on Ferndale s fee code, December Water and sewer estimated volumes were assumed based on flow rates per building square footage, provided by American Water Works Association. Water/sewer tax collected by Ferndale includes a base rate and additional costs based on actual gallons used. Total utility tax estimated for Scenario A is $5,561, and $125,844 for Scenario B Gambling Tax Gambling tax revenues reflect the gambling tax rates paid to Ferndale from area gambling establishments as reflected in the Ferndale 2006 budget. No gambling is projected to occur within the annexation area, therefore no gambling tax revenues would be realized under either annexation scenario Licenses and Permits License and permit fees that may be collected by Ferndale were analyzed on a straight per-capita basis for Scenario A ($424). Scenario B assumes that the City would realize revenues for licenses and permits equal to 50 percent of the planning and building costs under this scenario ($1,918) State Shared Revenue State-shared revenue projections are based on estimates of statewide per capita distributions of the liquor tax, liquor profits, restricted and unrestricted gas taxes, and criminal justice revenues as reported by the Municipal Research and Services Center.

63 Fiscal Impact Analysis Grandview Annexation May 2010 Page 23 These revenues are distributed to all cities in the state on a per capita basis, with the 2009 revenues estimated to be $36.68 per capita. Projected revenues, therefore, are arrived at by multiplying per capita revenue by projected populations under each scenario. This methodology results in a revenue gain of $660 under Scenario A and no expected revenue gain under Scenario B Governmental Service Charges Governmental service charges are costs and fees collected by municipalities for services provided to the public by a variety of City departments. Fee-generating services range from law enforcement and court-related fees such as warrant fees, deferred prosecution fees, charges for police reports, DARE program fees, and probation fees for plan check and building and inspection service fees. Fees and charges for governmental services are estimated on a per capita basis for Scenario A, ($872). Scenario B would not result in residential uses and, as this analysis assumes the commercial complex is constructed at the time of annexation, is assumed to not generate governmental service charges that would realize revenues for the City Fines/ Forfeitures Fines and forfeitures are revenues generated by required payments in cases before the Ferndale Municipal Court. Fines and forfeitures are estimated on a per capita basis for Scenario A, ($86). Scenario B would not result in residential uses and is assumed to not generate revenues in the fines and forfeitures category Capital Costs and Revenue Public Works has stated that any improvements needed in the annexed area will be identified in updates to the comprehensive plans (see letter in the Appendix), and that future developers will bear the cost to extend and update utilities at the time of development. There have been many changes since the outdated sewer comprehensive plan was completed in Public Works is in the process of updating the Sewer and Water Comprehensive plans. It is unknown whether the existing street system functions to City standards for Scenario A s existing commercial and non-conforming residential uses. The Transpo Group is currently performing an analysis that will provide information on current levels of service and projected growth, as well as identifying future theoretical traffic improvements needed for the region. The Ferndale Interim Transportation Concurrency Ordinance requires a professional transportation study identifying impacts and mitigation associated with development. Identified impacts and additional fees would be assessed by the City at the time of a development application Capital Connection Fees Ferndale collects capital water, sewer, and stormwater connection fees for residential and non-residential projects to off-set provision of services water connection fees

64 Fiscal Impact Analysis Grandview Annexation May 2010 Page 24 are $4,840, sewer connection fees are $6,050, and the stormwater fee is $0.025 per square foot of developed land. Capital connection fees are collected by the City to support a variety of utility-related funds. For example, water connection fees go toward the water capital improvement fund and sewer connection fees go to fund future improvements to the system. The funds and programs are largely supported through user fees, and transfers from the water and sewer funds go toward water and sewer debt service. Stormwater mitigation fees go toward the storm and flood control fund which, in turn, partially funds the utility loan service fund for sewer, street, street lights, and storm drainage improvements. The capital connection fees are not included in the costs or revenues generated by the annexation because the funds are used to offset administration and utility improvements caused by development. The funds go to a zero balance account, which is nontransferrable to any other type of fund Special Districts Library The Ferndale area currently receives its library services from the Whatcom County Library System (WCLS), which operates several city and regional libraries. The City of Ferndale Library would serve the Grandview Annexation Area. The 2009 levy paid by taxpayers in the Library District is $0.338 per $1,000 of assessed value School District School district boundaries are not affected by municipal annexations. Residents in the Grandview Annexation Area would continue to be served by Ferndale School District #502, which Skyline Elementary, Vista Middle School, and Ferndale High School. The District is supported though a variety of sources. The largest funding source is the State of Washington which provides a basic education allocation and other funding, federal government contribution, local no-tax sources, and tax dollars at a 2009 rate of $ per $1,000 assessed valuation. For a student population of 4,999 for the 2009/2010 school year, total budgeted revenues for the District for 2009 are $50,129,706. Total projected expenditures for the 2009/2010 school year are $50,320,270. Since the proposed annexation area is within the existing School District boundaries, there would be no change to the school district in terms of revenues or costs for any students added by Scenario A s non-conforming existing residences. No student population is assumed to be realized under Scenario B. The City of Ferndale collects a development impact fee for the School District in association with residential construction at a rate of $1,100 per residential unit. No impact fee revenues are assumed to be realized under either scenario examined in this study. Existing non-conforming single family residences are exempt from impact fees.

65 Fiscal Impact Analysis Grandview Annexation May 2010 Page Summary This analysis examines the net fiscal impacts of expanding the City of Ferndale to include the proposed Grandview Annexation Area. As shown in Table 1: Summary of Costs and Revenues for Annexation, the annexation would likely generate a net benefit fiscally to the City of $19,302 for Scenario A, (annexation of the property as it exists today), and a large net benefit of $5,317,131 for Scenario B, (a theoretical retail complex).

66 Fiscal Impact Analysis Grandview Annexation May 2010 Page APPENDICES 7.1. References Burchell, Robert W. and Listokin, David The Fiscal Impact Handbook: Estimating Local Costs and Revenues of Land Development. Center for Urban Policy Research. Rutgers University, New Brunswick, NJ. City of Ferndale. City of Ferndale 2009 Budget. City of Ferndale. December Water and Sewer Rates and Fees, Storm Drainage Fees. Energy Information Administration. October Commercial Buildings Energy Consumption Survey: Consumption and Expenditures Tables. Municipal Research and Services Centers of Washington. November Annexation Handbook. Municipal Research and Services Centers of Washington. Budget Suggestions for Ferndale School District. July 13, /2010 Budget Summary, Citizens' Budget, General Fund. Ferndale School District. December 23, Ferndale Schools Capital Facilities Plan and School Impact Fee Ordinance, Kask Consulting, Inc. Whatcom County Tax Assessor Office Statement of Assessed Valuations, Tax Rates and Taxes Levied Within the Various Taxing Districts of Whatcom County

67 Fiscal Impact Analysis Grandview Annexation May 2010 Page Key Assumptions The analysis conducted for the Grandview Annexation Area is based on several key assumptions as follows: A. Analysis is based on Per Capita and Proportional Valuation Methods, and not Case Study Method, due to lack of availability of specific localized information. B. The properties annexed would receive General Commercial zoning designation, per the December 2009 Comprehensive Plan Amendment. C. Commercial build-out is assumed to occur under Scenario B. A commercial complex of 800,000 square feet is assumed, with 70% assumed to be retail, 20% service, and 10% restaurant. Any fiscal gap that may occur with annexation would not occur at the time of annexation, but would occur in the future when build-out potential for the proposed annexation area is realized. This analysis assumes build-out as having occurred prior to annexation and provides information on the fiscal gap based on 2009 dollars. D. The Grandview Annexation Area would receive levels of service similar to those now provided by the City of Ferndale. This current level of service is the basis for determining the cost of annexation. The sustainability of the existing services is not examined in this analysis. E. The methodology used for this analysis directly estimates demand for services that will be introduced upon annexation and includes cost and revenue estimates only for those taxes or services that would change upon annexation. The net operating costs of the annexation are expressed as the costs and revenues that will accrue to the City's general fund. Services that are not specifically reported as being introduced or the demand for the service increased with annexation are assumed to not change. F. Calculations are based on the 2009 published City of Ferndale budget. Budgeted interfund transfers, interfund loan repayments, and debt service are excluded from this analysis. G. Residential and non-residential values are based upon 2009 Whatcom County Assessor s data for the City of Ferndale. H. An assumed assessed value for Scenario B was derived based on actual Whatcom County Assessor s data for similar uses within the City of Bellingham. I. The City of Ferndale population, on which this annexation fiscal study is based, as noted in the 2009 adopted budget, is 11,080.

68 Fiscal Impact Analysis Grandview Annexation May 2010 Page Service Provider Matrix for proposed annexation area Table 7: Service Provider Matrix for proposed Grandview Annexation Area Service Current Provider for Grandview If annexed to the City of Ferndale Administration (Executive & Whatcom County Executive and City of Ferndale Mayor Legislative Branch) Whatcom County Council City of Ferndale City Council Police Services Whatcom County Sheriff's Office and Washington State Patrol City of Ferndale Police Department and Washington State Patrol Court Services Whatcom County District Court (felonies, midemeanors, juvenile services, small claims, traffic and parking infractions) City of Ferndale Municipal Court (criminal misdemeanors & non criminal traffic & parking infractions); Whatcom County District Court (felonies, juvenile services, small claims) Fire Protection & Emergency Medical Services Whatcom County Fire District #7 Whatcom County Fire District #7 Land Use Planning and Zoning Whatcom County Planning Department City of Ferndale Planning Department Building Permits, Code Review and Inspection Whatcom County Planning Department Whatcom County Public Works, Road/Street Maintenance Maintenance and Operations Division Parks Maintenance Private owners Private owners No change All other parks none, n/a none, n/a City of Ferndale Community Development Department City of Ferndale Public Works Department Recreation Programs Whatcom County Parks & Recreation Department City of Ferndale Community/ Human Services Whatcom County Health Department No change Garbage Collection: Contractor Sanitary Service Company, Inc. or Private Sanitary Service Co., Inc. Garbage Collection Curbside collection or Private Curbside collection required Container Fully automated, contractor provides all carts; or Private Fully automated, contractor provides all carts Embedded fees (recycling & yard waste Rate Structure Embedded fees or Private/ fee for service service included in rates) Yard waste, mixed recycling, food scrap Yard waste, mixed recycling, food scrap Basic Recycling Services recycling or Private recycling Extra Recycling Services Fee for service Fee for service Water Service Private PUD #1 Grandview Center Water Assoc. City of Ferndale Public Works Department (at time of redevelopment) Sewer Service Private/ septic City of Ferndale Public Works Department (at time of redevelopment) Surface Water Management Whatcom County Public Works City of Ferndale Public Works Electric Provider Puget Sound Energy (PSE) No change Gas Provider Cascade Natural Gas Corp. No change Cable/ Satellite Television Personal choice No change Internet Service Provider Personal choice No change Telephone Service Provider Personal choice No change Library Service Whatcom County Library System No change Transit/Bus Service Whatcom Transportation Authority (WTA) No change Animal Control Whatcom County Humane Society Whatcom County Humane Society or Alternative Humane Society Code Enforcement Whatcom County Planning Department City of Ferndale Community Development Department General Policy Issues Whatcom County Code Ferndale Municipal Code Property Taxes Whatcom County Assessor Whatcom County Assessor Utility Billing (w/ss/sd) PUD, Grandview Center Water Assoc. City of Ferndale

69 Fiscal Impact Analysis Grandview Annexation May 2010 Page Service Provider Responses to requests for information

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