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HomeMy WebLinkAboutStaff Report 5.A 12/07/2015Agenda Item #5.A DATE: December 7, 2015 TO: Honorable Mayor and Members of the City Council through City Manager FROM: Scott Duiven Senior Planner SUBJECT: Resolution Repealing and Replacing the Current Traffic Development Impact Fee Resolution for Future Development within the City of Petaluma, Resolution No. 2014 -112 N.C.S., Adopted July 7, 2014, to Amend Provisions Establishing the Amount of the Traffic Impact Fee RECOMMENDATION It is recommended that the City Council adopt the attached resolution repealing and replacing the current traffic development impact fee resolution for future development within the City of Petaluma, Resolution No. 2014 -112 N.C.S., adopted July 7, 2014, to amend provisions establishing the amount of the Traffic Impact Fee. BACKGROUND In 2012 the City Council adopted an updated development impact fee program to meet the City Council's goal of reducing development fees while preserving funding for planned infrastructure necessary for implementation of the General Plan 2025 and entitlement of projects relying on the General Plan EIR and related improvement plans for mitigation of cumulative impacts. In March of 2014, the City Council adopted updated fees to address largely administrative changes addressing definitions, amount of the fee, fee adjustments, and time of fee payments. Later in 2014 it was determined that some of the contested bond proceeds related to dissolution of the City's former redevelopment agency could be applied to project costs that were to be funded by the Redevelopment Supplement portion of the Traffic Development Impact Fee, allowing a further reduction in the fee. On July 7, 2014 the City Council amended provisions for the amount of fee related to the Redevelopment Supplement and created a new fee category for gas /service stations. After adoption of the revised fee the City received a letter from Rutan & Tucker (Attachment 2), representing Safeway, protesting the new gas /service station fee and methodology. DISCUSSION Peet Review In response to the letter from Rutan & Tucker, the City contracted Willdan Financial Services to conduct a peer review of the 2012 Traffic Mitigation Fee Program Update and the 2014 staff prepared Addendum to that study. The focus of the Peer Review was to examine the overall methodology employed by Fehr & Peers in the 2012 Traffic Mitigation Fee Program Update and the Addendum. The Peer Review did not revisit the improvements funded by the fee. Willdan reviewed the 2012 study prepared by Fehr and Peers and found that in general the study uses standard industry methodologies and assumptions, and meets the requirements of the Mitigation Fee Act. There is one aspect of the study that is different from Willdan's practice in this area. In Table 3 -7 of the 2012 report there are two columns, one labeled "new trips" and one labeled "bypass trips ". The second of these columns is 100 percent for every category except commercial /shopping, where it is 50 percent. Although the table indicates a cited source as the ITE Trip Generation Handbook, 2003, Willdan has not been able to find any reference to this in that document. The effect of this additional column was a reduction in the commercial /shopping category and an increase in noncommercial categories. Willdan's standard practice is that the nexus study calculates the maximum fee allowed by law and any reductions made by the City for other reasons are handled in the implementing ordinance or resolution. As such, Willdan has updated the PM peals hour trip rates to those available in the most recent edition of the ITE Trip Generation Handbook (9th Ed., 2012). Willdan has also updated the "Percent New Trips" assumption corresponding with the "Primary" trip category, by land use with the most recent available from SANDAG's Brief Guide of Vehicular Traffic Generation Rates (July 2002). Elimination of the "bypass trips" column addresses the calculation error identified in the Rutan & Tucker letter for gas /service stations in the 2014 Addendum. A new addendum to the 2012 Traffic Mitigation Fee Program Update has been prepared to address the findings of the Peer Review and to correct the methodology employed in Tables 3 -6 through 3 -12 (Attachment 1, Exhibit A). This updated Addendum will supersede the 2014 Addendum. Government Code 66005.1 (Transit Trip Rates). In addition to the updated methodology contained in the Addendum, Willdan also noted in their review that with SMART rail service expected to commence in December 2016, a provision of the Mitigation Fee Act (Government Code 66005.1) will need to be addressed in the City's traffic fee program. The Mitigation Fee Act provides for a reduced fee for housing developments (defined as a development project with common ownership and financing with not less than 50 percent of floor space for residential use) that are in close proximity to a "Transit Station ". The housing development must meet the following conditions: • Within 1/2 mile transit station (measured as direct access along a barrier -free path not to exceed 1/2 mile); • Convenience retail, including food, within 1/2 mile; • The housing development provides no more than a specified number of parking spaces (either the minimum allowed by local ordinance or 1 per 0 -2 BR unit, 2 per 2+ BR unit, whichever is less); and 2 • "Transit Station" means a rail or light -rail station, ferry terminal, bus hub, or bus transfer station (intersection of three or more bus routes with minimum headway of 10 minutes during peak hours). If the housing development meets these conditions, then the City must set a lower transportation impact fee to reflect lower trip rates for such developments, unless the City adopts findings after a public hearing establishing that such a housing development, even with these characteristics, would not generate fewer automobile trips. To comply with this provision, the attached resolution includes a new section under "Amount of Fee" that references the opportunity for a reduced fee for projects that meet the stated criteria. The provision does not establish the amount of fee reduction but rather that the reduced fee amount shall be established on a project -by- project basis and based on an individual project's traffic report demonstrating a lower trip rate and basis for such a reduction. In order to implement the above changes, the following additional revisions have been made to Resolution 2014 -112 N.C.S.: Definitions The definition of Commercial /Shopping was updated to remove the reference to fueling stations and gas stations which are now separately defined. Annual CPIAdjustment The traffic development impact fee escalates or decreases annually by the same percentage as the latest "Engineering News Record Construction Cost Index — 20 City Average" ( "Index ") annually escalates or decreases. The adjustment takes effect each July 1St. The basis for the fee included in the addendum needs to reflect this adjustment for both 2014 and 2015 (2.70% and 2.44% respectively). The amount of fee in Exhibit B of the attached resolution reflects both CPI adjustments. The next CPI adjustment will occur on July 1, 2016. Amount of Fee The Amount of Fee in Exhibit B has been updated as shown in the table below to reflect the annual CPI adjustments outlined above. TRAFFIC DEVELOPMENT IMPACT FEE Land Use Type Fee Amount Unit of Measurement Single Family Residential $13,623 Unit Multiple Family Residential $8,363 Unit Accessory Dwelling $3,777 Unit Senior Housing $3,642 Unit Office $17,995 1,000 square feet of building space Hotel /Motel $5,367 Room Commercial /Shopping $26,326 1,000 square feet of building space Industrial /Warehouse $10,656 1,000 square feet of building space Education $1,341 Student Institution $5,521 1,000 square feet of building space Gas /Service Station $44,070 Fuel Position Conclusion Incorporation of the Peer Review findings results in the following fee comparison between the existing methodology and the proposed methodology for each land use type. The result of the above changes to the Traffic Mitigation Fee Program on the Safeway proposal is a revised traffic fee estimate of approximately $350,000 in comparison to $1,500,000 under the current fee schedule. In both cases, the fee estimate includes credit, per the resolution, for the prior commercial uses on the site. 11 Unit of i Existing Proposed % Land Use Type Measurement Fee Amount Fee Amount Change Single Family Residential Unit $18,944 $13,623 -28% Multiple Family Unit $11,559 $8,363 -28% Residential Accessory Dwelling Unit $5,304 $3,777 -28% Senior Housing Unit $5,077 $3,642 -28% 1,000 square Office feet of $18,187 $17,995 -1% building space Hotel /Motel Room $10,988 $5,367 -52% 1,000 square Commercial /Shopping feet of $17,428 $26,326 51% building space 1,000 square Industrial /Warehouse feet of $12,882 $10,656 -17% building space Education Student $2,842 $1,341 -54% 1,000 square Institution feet of $6,630 $5,521 -18% building space Gas /Service Station Fuel Position $110,444 $44,070 -60% The result of the above changes to the Traffic Mitigation Fee Program on the Safeway proposal is a revised traffic fee estimate of approximately $350,000 in comparison to $1,500,000 under the current fee schedule. In both cases, the fee estimate includes credit, per the resolution, for the prior commercial uses on the site. 11 FINANCIAL IMPACTS Financial impacts beyond the staff time required to prepare this report and provide public notice include the potential underfunding of the overall traffic development impact fee program due to the prior calculation noted in the staff report which resulted in a lower commercial /shopping impact fee and higher fees for other non - commercial projects. However, some of that difference is made up by the changes in DUEs which increased the amount of costs attributed to future development. The fee program overall is a plan, based on currently available information, which continues to include the cost of future traffic infrastructure projects and estimated future development which on the whole is balanced. ATTACHMENTS 1. Resolution Replacing the Traffic Development Impact Fee 2. Rutan & Tucker Letter (November 19, 2014) ® Items listed below are large in volume and are not attached to this report, but may be viewed in the City Cleric's office. 1. City of Petaluma Traffic Mitigation Fee Program Update (Fehr & Peers, August 2012) 5 ATTACHMENT 1 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA REPEALING AND REPLACING THE CURRENT TRAFFIC DEVELOPMENT IMPACT FEE RESOLUTION FOR FUTURE DEVELOPMENT WITHIN THE CITY OF PETALUMA, RESOLUTION NO. 2014-112 N.C.S., ADOPTED JULY 7, 2014, TO AMEND PROVISIONS ESTABLISHING THE AMOUNT OF THE TRAFFIC IMPACT FEE RECITALS WHEREAS, the City of Petaluma General Plan 2025 ( "General Plan ") outlines future land uses within the City of Petaluma ( "City ") and applies to a planning area which includes the City and land outside the City in unincorporated Sonoma County which must also be considered to properly plan for the City's future; and, WHEREAS, the General Plan of the City was adopted by the Petaluma City Council ( "City Council ") on May 19, 2008; and, WHEREAS, an Environmental Impact Report (` EIR ") was prepared for the General Plan (State Clearinghouse #2004082065) pursuant to the California Environmental Quality Act ( "CEQA ") and certified by the City Council on April 7, 2008 by Resolution No. 2008 -058 N.C.S.; and, WHEREAS, the General Plan area is shown on the land use maps contained in the General Plan; and, WHEREAS, the City Council last updated the Traffic Development Impact Fee by Resolution No. 2014 -112 N.C.S., adopted July 7, 2014; and, WHEREAS, the General Plan designates a defined land use for all property within the City and, based on those uses, calculates the expected number of residents, residential units, employees, and square footage of nonresidential development that will result when all property in the City is developed as anticipated in the General Plan 2025; and, WHEREAS, the General Plan incorporates policies and programs to mitigate the impacts of such anticipated new development, including policies that require new development to pay for its proportional fair share of the costs of acquiring and improving public facilities necessary to meet the demands of residents, employees, customers, and businesses; and, C, WHEREAS, the General Plan and its EIR analyze the impacts of development under the General Plan and proposed mitigation measures, including the creation of fee programs to require new development to pay for its proportional fair share of the cost of acquiring and improving public facilities necessary to meet the demands of new residents, employees, customers, and businesses for such facilities; and, WHEREAS, Goal 1 -G -6 of Chapter 1 of the General Plan provides that the City should "Maintain a residential growth management system to ensure public infrastructure keeps pace with growth "; and, WHEREAS, Policy 1 -P -48 of Goal 1 -G -6 of Chapter 1 of the General Plan provides that the City should "Ensure that all new development provides necessary public facilities to support the development," and includes program A which provides that the City should: "Collect proportionate fair share of long -term infrastructure improvement costs as entitlements are granted" and program B: "Initiate design of long term infrastructure improvements in a timely manner to ensure their completeness to coincide with demand "; and, WHEREAS, the General Plan includes, among others, the following principles, goals, policies and /or implementation programs regarding providing and financing the cost of traffic improvements required to accommodate new development in the City: "ensure infrastructure is strengthened and maintained" (Guiding Principle No. 12, p. i -8); "ensure the identified mobility system is provided in a timely manner to meet the needs of the community by updating the City's transportation impact fee program to insure that necessary citywide improvements are funded" (Policy 5 -P -2, Goal 5 -G -1: Mobility Framework, p. 5 -9 ); "ensure public improvements are constructed and maintained in a manner that is economically feasible to the budgetary constraints of the City" (Policy 5- P-3, Goal 5 -G -1: Mobility Framework, p. 5 -9); and, WHEREAS, the City retained Fehr & Peers Transportation Consultants (hereafter "Fehr & Peers ") to determine, based in part on the land use designations provided by the General Plan, what roadway facility improvements would be necessary to maintain the community's level of service, as set forth in the General Plan and also discussed in the EIR, and to prepare proposed updates to the City's traffic development impact fee to fund new development's share of those facility improvements; and, WHEREAS, a study of the impacts of anticipated future development on existing traffic facilities in the City, and an analysis of the need for such new facilities required by future development was prepared by Fehr & Peers, dated August 15, 2012, entitled "Traffic Mitigation Fee Program Update," ( "2012 Update "), a copy of which is on file in the Office of the City Clerk, and is hereby incorporated by reference; and, WHEREAS, an Addendum to the Report was prepared by the City of Petaluma, dated June 2014, entitled "Traffic Mitigation Fee Program Update: Addendum 1" ( "2014 Addendum "); and, 7 WHEREAS, Willdan Financial Services conducted a Peer Review of Fehr & Peers methodology used in preparing the 2012 Update and the 2014 Addendum prepared by the City; and, WHEREAS, based on the Peer Review a revised "Traffic Mitigation Fee Program Update: Addendum 1" ( "2015 Addendum ") has been prepared to replace and supersede the 2014 Addendum; and, WHEREAS, as used in this Resolution, "Report" refers to and encompasses both the 2012 Update and the 2015 Addendum; and, WHEREAS, the Report, the General Plan and the General Plan EIR list the street extensions, interchange and intersection improvements, traffic signal upgrades, and improvements to bicycle, pedestrian transit and other traffic facilities as defined in this Resolution that are necessary to maintain the community's level of service and thereby meet the transportation demands of new residents, businesses, employees, customers, and other users of local streets and transportation facilities through build out under the General Plan; and, WHEREAS, the Report, the General Plan and the General Plan EIR describe the impacts of contemplated future development on existing transportation facilities in the City of Petaluma and analyze the need for the new transportation facilities required by future development within the City of Petaluma, as described herein and in the Report; and, WHEREAS, the Report sets forth the relationship between contemplated future development, the traffic Facilities required to serve such development, and the estimated cost of the needed traffic Facilities; and, WHEREAS, the Report estimates the cost in current dollars of those improvements, assigns the portion of those costs attributable to new development, and calculates the fees necessary to raise the revenue necessary to pay for the portion of the improvement costs attributable to new development; and, WHEREAS, the Report identifies a component of the cost of the Old Redwood Highway /U.S. 101 Interchange Project and the Rainier Avenue/U.S. 101 Interchange Project to which funds of the former Petaluma Community Development Commission ( "PCDC ") have been committed in accordance with the Community Redevelopment Law and through cooperative agreements with the Sonoma County Transportation Authority and CalTrans, the binding nature of which commitments has been disputed by the State Department of Finance pursuant to ABxl 26 as of the time of adoption of this Resolution; and, WHEREAS, the Report identifies the disputed funds as a "Redevelopment Supplement" of $18.8 million dollars that the Report includes in the cost of the Traffic Impact Fee program so that Traffic Fee proceeds are sufficient to fund the Old Redwood q Highway and Rainier Avenue interchange improvements in case the City is ultimately unsuccessful in obtaining confirmation from the State Department of Finance or the courts that the disputed funds are in fact legally binding obligations of the City as successor agency to the former PCDC; and, WHEREAS, on April 2, 2014 the City received approval from the California Department of Finance of it Recognized Obligation Payment Schedule (ROPS) for the period of July through December 2014, including $8,836,001 ( "Bond Proceeds "), representing the balance of the proceeds of bonds issued by the former PCDC on or before December 31, 2010; and, for construction of the Old Redwood highway Interchange. WHEREAS, the Bond Proceeds have been applied to partly satisfy the City's obligation to provide funding for the Old Redwood highway Interchange Project, permitting a reduction of the $18.8 million dollar Redevelopment Supplement that would otherwise be needed to cover the funds of the former PCDC on which the City relied to fund the Old Redwood highway and Rainier projects, and as well permitting a corresponding reduction in the Traffic Development Impact Fee, resulting in a reduction of the Redevelopment Supplement and a commensurate reduction in the Traffic Development Impact Fee from the original $18.8 million specified in the Report to a new total of $9,972,739, which cost of the new, reduced Redevelopment Supplement is included in the updated Traffic Development Impact Fee; and, WHEREAS, the Report demonstrates the appropriateness of updating the Traffic Development Impact Fee based on current estimates of the need for and cost of transportation improvements needed to accommodate new development, including (1) an analysis of existing roadways, transportation facilities and land available for such facilities; (2) an estimate of the increase in the City's service population at build out; (3) the cost of providing the transportation improvements identified as necessary to meet the demands of the estimated increase in the City's service population at build out; and (4) other sources of funding, such as the Bond Proceeds, that may be applied to City transportation improvement projects; and, WHEREAS, The Traffic Development Impact Fee is not a "tax" as defined in Section 1, paragraph (e) of Article XII1C of the California Constitution ( "Proposition 26 ") because such fee is imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable cost to the City of providing the service or product; and /or the fee is imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable cost to the City of providing the service or product; and /or the fee is imposed for the reasonable regulatory costs to the City of issuing licenses and permits, performing investigations, inspections and audits, enforcing agricultural marketing orders and the administrative enforcement and adjudication thereof; and /or the fee is imposed as a condition of property development; and, I WHEREAS, the Traffic Development Impact Fee is not subject to the requirements of Article XIIID of the California Constitution ( "Proposition 218 ") concerning property related assessments and fees pursuant to Apartment Association of Los Angeles County v. City of Los Angeles (2001) 24 Cal.4" 830, in that such fee is not applicable to incidents of property ownership, but rather to actual use of and need for City services and /or facilities; and, WHEREAS, in accordance with Government Code Section 50076, fees and charges that do not exceed the reasonable cost of providing the service or regulatory activity for which the fees are charged and which are not levied for general revenue purposes are not special taxes as defined in Article 3.5 of the Government Code; and, WHEREAS, in accordance with Government Code section 66016, at least 14 days prior to the public meeting at which the City Council considered the adoption of this Resolution, notice of the time and place of the meeting was mailed to eligible interested parties who filed timely written requests with the City for mailed notice of meetings on new or increased fees or service charges; and, WHEREAS, in accordance with Government Code Section 66016, the Report was available for public inspection, review, and comment for ten (10) days prior to the public meeting at which the City Council considered the adoption of this resolution; and, WHEREAS, ten (10) days advance notice of the public meeting at which the City Council considered adoption of this resolution was given by publication in accordance with Government Code Section 6062a; and, WHEREAS, on September 10, 2012, the City Council adopted Ordinance No. 2444 N.C.S, which adds a new Title 19, entitled "Development Fees," to the Petaluma Municipal Code and amends, repeals and /or recodifies various provisions authorizing the City's development - related fees, including the City Facilities Development Impact Fee, Open Space Land Acquisition Fee, Park Land Acquisition Fee (Non- Quimby Act), Park Land Acquisition Fee (Quimby Act), Traffic Development Impact Fee, Water and Wastewater Capacity Fees and the Commercial Development Housing Linkage Fee; and FINDINGS WHEREAS, the City Council finds as follows: A. After considering the Report, the testimony received at the noticed public meeting at which this resolution was considered, the accompanying staff report, the General Plan, the General Plan EIR, and all correspondence received at or prior to the public meeting (the "Record "), by adoption of this Resolution the City Council hereby approves the Report as previously adopted by Resolution No. 2012 -125 N.C.S. adopted August 27, 2012; and the City Council further finds that the future development in the City 10 of Petaluma will generate the need for the Facilities, as defined below, and that the Facilities are consistent with the City's General Plan. B. By adoption of this Resolution, the City Council also approves and adopts the December 2015 Addendum replacing and superseding the June 2014 Addendum and malting up part of the entire Report as defined in this Resolution and which is hereby made a part of and incorporated herein by this reference as Exhibit A. C. The City currently provides facilities to the community and the fee set forth in this resolution will be used to maintain current service levels. As such, the Traffic Development Impact Fee as it relates to development within the City is not a "project" within the meaning of CEQA (Pub. Res. Code §21080(b)(8)(D)). D. In adopting this resolution, the City Council is exercising its powers under Article XI, § §5 and 7 of the California Constitution, Chapter 5 of Division 1 of the Government Code ( "Mitigation Fee Act "), commencing with Section 66000, Section 54 of the City of Petaluma Charter, and Chapter 19.24 of the Petaluma Municipal Code, collectively and separately. E. The Record establishes: 1. In accordance with Section 66000, subdivision a, paragraph 1 of the Mitigation Fee Act, the purpose of the City Traffic Development Impact Fee ( "Fee "), set forth in this Resolution, as specified in the Report, is to provide funding to achieve the City's goal of maintaining existing traffic service levels and provide traffic facilities to mitigate the traffic impacts of new development within the City, consistent with the land use and transportation polices of the General Plan by developing an overall transportation system that will accommodate the City's expected future traffic demand. 2. In accordance with Section 66000, subdivision a, paragraph 2 of the Mitigation Fee Act, the Fee collected pursuant to this resolution shall be used to help fund circulation improvement projects necessary to accommodate future traffic demand in Petaluma as described in the Report, the General Plan and the City's budget for capital improvements. Such traffic Facilities, which are specifically described in the Report and listed in Table 3 -3 of the Report, include the following: • Rainier Avenue Extension and interchange (locally preferred alternative) • Caulfield Lane Extension 11 • Old Redwood Highway Interchange Improvements • Caulfield Lane/Payran Street Intersection Improvements • Petaluma Boulevard /Magnolia Avenue/Payran Street Intersection • Construction of New Intersections throughout the City • Traffic Signal Upgrades throughout the City • Pedestrian/Bicycle Improvements throughout the City • Transit Improvements throughout the City • Redevelopment Supplement 3. In accordance with section 66000, subdivision a, paragraph 3 of the Mitigation Fee Act, there is a reasonable relationship between the Fee's use (to pay for the construction of the Facilities) and the type of development for which the Fee is charged in that the fee will be applied to all development in the City — including residential, commercial, office, and industrial development projects, which will generate new demands for traffic facilities. As described in the Report, different types of development generate traffic with different characteristics. The calculations presented in tables 3 -7 and 3 -8 of the Report account for these different characteristics by applying different per -unit fee factors to each type of development. These considerations account for the differential impacts on the local transportation system generated by different development types. 4. In accordance with Section 66000, subdivision a, paragraph 4, of the Mitigation Fee Act, there is a reasonable relationship between the need for the Facilities and the types of development projects on which the Fee is imposed in that the Fee will be applied to new development in the City of Petaluma — both residential and non- residential. These development projects will generate new residents and employees who live, work, and /or shop in Petaluma and who generate or contribute to the need for traffic facilities as follows: • New residents and employees will add vehicle trips to transportation infrastructure, including roadways, intersections, interchanges and traffic signals. • New residents and employees will add pedestrian and bicycle trips to pedestrian and bicycle facilities. • New residents and employees will use City transit facilities and services. The need for the traffic facilities listed in Table 3 -3 of the Report has been established through the development of the EIR, as described in Chapter 3 of the Report. The Report indicates that 12 there are no existing deficiencies in any of the Facilities to be included in the City's Traffic Development Impact Fee program, and that as a result, the program will not result in imposition of the cost of addressing currently deficient traffic facilities on new development. All of the traffic Facilities costs allocated to new development under the Fee program are allocable to new development in accordance with the analysis in the report, either in their entirety, or according to the fair percentage allocable to new development as indicated in the Report. 5. In accordance with Section 66000, subdivision b of the Mitigation Fee Act, there is a reasonable relationship between the amount of the Fee and the cost of the Facilities, or the portion thereof attributable to the development in the City on which the Fee is imposed in that the Fee has been calculated by apportioning the cost of the Facilities to each type of new residential dwelling unit, and to the "dwelling unit equivalent" or DUE of each non- residential (commercial, office and industrial) use. For Facilities that are necessary solely because of future development, the full cost of the Facilities has been allocated to the Fee. For Facilities that will serve existing and future residents and employees, the costs have been allocated proportionally. The analysis presented in the Report accounts for existing deficiencies in the local transportation system and does not include the cost of rectifying deficiencies in the fee program. The costs attributable to traffic demand generated outside the City of Petaluma are similarly excluded from the program. Thus, the City's Fee program allocates to new development only the cost of public improvements attributable to new development within Petaluma. Tables 3 -9, 3 -10 and 3 -11 in the Report provide detailed information on these calculations 6. The cost estimates set forth in the Report are reasonable estimates for constructing or acquiring the Facilities, and the Fees expected to be generated by future development will not exceed the projected cost of constructing and /or acquiring the Facilities. 7. The method of allocation of the Fee to a particular development bears a fair relationship and is roughly proportional to each development's burden on and benefits from the Facilities to be funded by the Fee, in that the Fee is calculated based traffic impacts each pat icular development will generate. 8. The Report is a detailed analysis of how traffic services will be affected by development in the City and the public facilities required to accommodate that development. 13 9. The Fee is consistent with the General Plan and, pursuant to Government Code Section 65913.2; the City Council has considered the effects of the Fee with respect to the City's housing needs as established in the housing element of the General Plan. 10. The Fee amounts set forth in Exhibit A include the reasonable costs of administration and compliance of the Fee program with the requirements of the Mitigation Fee Act and other applicable law. The Fee program and administration cost is calculated to be approximately .074% of the total Fee as shown in Table 3 -11 and Appendix C of the Report. ADOPTION OF FEE NOW, THEREFORE, BE IT RESOLVED, 1. Definitions. a. "Accessory Dwelling" shall mean a second unit which meets the standards set forth in Section 7.030 of Chapter 7, "Standards for Specific Land Uses" of the City of Petaluma Implementing Zoning Ordinance ( "IZO "), as modified by any subsequent amendment or successor zoning ordinance and /or development code provision adopted by the City which defines Accessory Dwelling, second unit or second dwelling unit." b. "Commercial /Shopping" shall mean any development constructed or to be constructed on land having a General Plan 2025 land use or zoning designation, as established in the Implementing Zoning Ordinance, No. 2300 N.C.S., or any successor ordinance, for facilities for the purchase and sale of commodities and services and the sales, servicing, installation, and repair of such commodities and services and other uses incidental to these activities. Commercial land uses include but are not limited to: apparel and clothing stores; auto dealers and malls; auto accessories stores; banks and savings and loans; beauty salons; book stores; discount stores and centers; dry cleaners; drug stores; eating and drinking establishments; furniture stores and outlets; general merchandise stores; hardware stores; home furnishings and improvement centers; laundromats; liquor stores; service stations; shopping centers; supermarkets; bicycle shops; cameras and photographic supply stores; convenience stores; department stores; drug stores and pharmacies; jewelry stores; luggage and leather goods stores; sporting goods and equipment stores; stationery stores; collectible 14 stores; second hand goods stores; religious goods stores; hobby materials stores; small wares stores; plant sales; bowling alleys; coin - operated amusement arcades; dance halls, clubs and ballrooms; electronic game arcades; ice skating and roller skating establishments; pool and billiard rooms; amusement and theme parks; go -cart tracks; golf driving ranges; miniature golf courses; water slides; banks and trust companies; credit agencies; holding companies; lending and thrift institutions; securities /commodity contract brokers and dealers; security and commodity exchanges; vehicle finance leasing agencies; restaurants, cafes and coffee shops; and movie theatres and civic theatres. C. "Developed" and "Development" shall mean the construction or alteration of or addition to, other than by the City, of any building or structure within the City of Petaluma. d. "Education" shall mean educational Development as defined in the Report that may lawfully be made subject to payment of the Fee. e. "Facilities" shall include those municipal public facilities as are described in the Report related to providing general traffic circulation improvements necessary to accommodate future traffic demand in Petaluma including improvements to streets, interchanges and intersections, traffic signals, bicycle, pedestrian, transit and other traffic facilities that are necessary to maintain the community's level of service and thereby meet the transportation demands of new residents, businesses, employees, customers, and other users of local streets and transportation facilities through build out under the General Plan. "Facilities" shall also include comparable alternative facilities should later changes in projections of development in the region necessitate construction of such alternative facilities; provided that the City Council later determines (1) that there is a reasonable relationship between development within the City of Petaluma and the need for the alternative facilities; (2) that the alternative facilities are comparable to the facilities in the Report; and (3) that the revenue from the Fee will be used only to pay new development's fair and proportionate share of the alternative facilities. f. "Fuel Position" shall mean the number of vehicles that can be fueled simultaneously at a Gas /Service Station. g. "Gas /Service Station" or "Fueling Station" shall mean a retail business selling gasoline and/or other motor vehicle fuels, and related products. A gas or fueling station may also include a 15 convenience store, vehicle services, and restaurant facilities as ancillary uses. h. "Hotel /Motel" shall mean transient occupancy Development as defined in the Report. i. "Industrial /Warehouse" shall mean any development constructed or to be constructed on land having a General Plan 2025 land use or zoning designation as established in the Implementing Zoning Code, Ordinance No. 2300 N.C.S., or any successor ordinance, for the manufacture, production, assembly, and processing of consumer goods, uses incidental to those activities, and research, development and warehousing. Industrial land uses include, but are not limited to: assembly; contractor's storage yards; fabrication; lumber yards; manufacturing; outdoor stockyards and service yards; printing; processing; warehouses and distribution centers; wholesale and heavy commercial enterprises; clothing, fabric and other product manufacturing; electronics, equipment, and appliance manufacturing; metal products fabrication, machine and welding shops; paper product manufacturing; food and beverage product manufacturing; small -scale manufacturing; lumber and wood product manufacturing; machinery manufacturing; motor vehicle and transportation equipment manufacturing; stone and cut stone product manufacturing; structured clay and pottery product manufacturing; processing 'of building materials, chemicals, fabricated metals, paper products, machinery, textiles, and /or equipment; and collection, sorting and processing enterprises. j. "Institution" shall mean institutional Development as defined in the Report. k. "Mixed Development" shall mean a development that includes more than one of the types of development defined in this Section 1. Mixed developments may combine residential types of development (Single Family and Multifamily), non - residential types of development (Commercial, Industrial, and Office), or a combination of residential and non - residential types of development. 1. "Multifamily Residential" shall mean any residential Development that does not qualify as detached single family dwelling unit Development as defined in the Report, as adopted by the City. m. "Office" shall mean any development constructed or to be constructed on land having a General Plan 2025 land use or zoning designation, as established in the Implementing Zoning Ordinance, ffel Ordinance No. 2300 N.C.S., or any successor ordinance, for general business offices, medical and professional offices, administrative or headquarters offices for large wholesaling or manufacturing operations, and other uses incidental to these activities. Office land uses include but are not limited to: administrative headquarters; business parks; finance offices; insurance offices; legal offices; medical and health services offices; office buildings; professional and administrative offices; professional associations; real estate offices; and travel agencies. n. "Redevelopment Supplement" shall mean $18.8 million of the cost of the Old Redwood Highway/U.S. 101 Interchange and the Rainier Avenue/U.S. 101 Interchange Projects to which funds of the former PCDC were committed in accordance with the Community Redevelopment Law and through cooperative agreements between the City and the Sonoma County Transportation Agency and CalTrans, the binding nature of which commitments has been disputed by the State Department of Finance pursuant to ABx1-26 as of the time of adoption of this Resolution. Such disputed former PCDC funds are referred to in this Resolution and the Report (see, e.g., Tables 3 -3 and 3 -11 of the Report) as the Redevelopment Supplement, and have been included in the costs of the Traffic Development Impact Fee program to ensure that Fee proceeds are sufficient to fund the Old Redwood Highway and Rainier Avenue interchange improvements in case the City is ultimately unsuccessful in obtaining confirmation from the State Department of Finance or the courts that the disputed funds are in fact a legally binding obligation of the City as successor agency to the former PCDC. On April 2, 2014 the City received approval from the California Department of Finance of it Recognized Obligation Payment Schedule (ROPS) for the period of July through December 2014, including bond proceeds of the former PCDC in the amount of $8,836,001 representing the balance of former PCDC bond proceeds issued on or before December 31, 2010. Allocation of such funds to the City's obligation to fund construction costs of the Old Redwood Highway Interchange results in a reduction of the Redevelopment Supplement and makes possible a commensurate reduction in the Traffic Development Impact Fee. Application of the former PCDC bond proceeds results in a new Redevelopment Supplement amount reduced from the original $18.8 million to a new total of $9,972,739. The cost of the new, reduced Redevelopment Supplement is included in the updated Traffic Development Impact Fee. 17 o. "Senior Housing" shall mean senior housing Development as defined in the Report. P. "Single Family Residential" shall mean detached, single - family dwelling unit development as defined in the Report, as adopted by the City. 2. Traffic Development Impact Fee Imposed. Pursuant to the Mitigation Fee Act and Chapter 19.24 of the City of Petaluma Municipal Code, a Traffic Development Impact Fee ( "Fee ") shall be imposed and paid at the times and in the amounts and otherwise apply and be administered as prescribed in this Resolution on each type of development set forth in Exhibit A, which is attached to and made a part of this Resolution, including each portion of such Development within Mixed Development. 3. Time for Imposing Fee. In accordance with Government Code Section 65961, the Fee for residential subdivision development for which tentative or parcel maps are required pursuant to the Subdivision Map Act (Government Code Section 66410 et seq.) shall be imposed at the time of approval of the conditions that apply to the tentative or parcel map for such residential subdivision development, as applicable. Payment of the Fee shall be deemed to be a condition of all such tentative or parcel maps. Notwithstanding this Section 3, the time for payment of the Fee for all development, including Single Family Residential and Multiple Family Residential subdivisions, shall be as specified in Section 4, below. 4. Time for Fee Payment. a. In accordance with Government Code Section 66007, the Fee shall be charged and paid for each residential development upon the date of final inspection or issuance of the certificate of occupancy for such residential development, whichever is earlier; however, if the Fee is to reimburse the City for expenditures previously made, or if the City determines that the Fee will be collected for Facilities for which an account has been established and funds appropriated and for which the City has adopted a proposed construction schedule prior to issuance of the building permit for such residential development, then the Fee shall be charged and paid upon issuance of the building permit for such residential development. However, with respect to a residential development proposed by a nonprofit housing developer in which at least forty -nine percent (49 %) of the total units are reserved for occupancy by lower income households, as defined in Health and Safety Code Section 50079.5, at an affordable rent, as defined in Health and Safety Code Section 50053, the payment procedures described in Government Code Section 66007(b)(2)(A) -(B) shall apply. b. The Fee shall be charged and paid for each non - residential Development upon issuance of the building permit for such non- residential Development. C. The Fee shall be charged and paid for each Mixed Development upon the times specified in this Section 4 that apply to such Mixed Development. For example, if a Mixed Development includes residential Development and non - residential Development, and the Fee is to reimburse the City for expenditures previously made, or the City has made the required determination to permit requiring payment of the Fee upon issuance of the building permit, and the procedures in Government Code section 66007(b)(2)(A) -(B) do not apply, the Fee as applicable to the entire mixed development shall be paid upon issuance of the building permit for the Mixed Development. If a Mixed Development includes residential and non - residential development, and the Fee is not to reimburse the City for expenditures previously made or the City has not made the required determination to permit requiring payment of the Fee upon issuance of the building permit, the Fee as to the residential portion of the mixed development shall be paid upon the earlier of the date of final inspection or issuance of the certificate of occupancy for such residential portion, and the Fee as to the non- residential portion of the Mixed Development shall be paid upon issuance of the building permit for such non - residential portion. 5. Amount of Fee. a. The amount of the Fee for residential and non - residential development shall be as set forth in Exhibit B. b. The amount of the Fee for Mixed Development shall be the sum of the following, as applicable: 1. The applicable amount per unit pursuant to Section 5(a), above, for each residential development within a Mixed Development. 2. The applicable amount per 1,000 square feet of Development or per other applicable unit pursuant to Section 5(a), above, for each nonresidential Development or portion of such Development within a Mixed Development. 19 C. Any non - residential development on property on which a building or structure was demolished or on which the use of an existing structure changes to a more intensive use shall pay a prorated fee equal to the fee calculated pursuant to this resolution that is applicable to the new development or use, less the fee applicable to the prior development or use, so long as such prior use was in existence at the time of adoption of General Plan 2025. d. Any development on any parcel any portion of which is located within one half -mile of any portion of a parcel identified as a possible future location for a SMART Rail Station on which parcel proposed for development a building or structure was demolished or on which the use of an existing structure changes to a more intensive use shall pay a prorated fee equal to the fee calculated pursuant to this resolution that is applicable to the new development or use, less the fee applicable to the prior development or use, so long as such prior use was in existence at the time of adoption of General Plan 2025. e. In accordance with Government Code section 66005. 1, housing developments with common ownership and financing where not less than 50 percent of the floor space is for residential use and that satisfy all of the following characteristics will be eligible for a reduced Fee reflecting the lower rate of automobile trip generation associated with such developments, unless the City adopts findings after a public hearing establishing that a housing development would not generate a lower rate of automobile trips than housing development that does not satisfy the requirements of this provision: • The housing development is located within 1/2 mile of a transit station as defined in Government Code section 65460.1, including planned transit stations whose construction is programmed to be completed prior to completion and occupancy of the housing development, and there is direct access between the housing development and the transit station along a barrier -free, walkable pathway not exceeding 1/2 mile in length); • Convenience retail uses, including a store that sells food, are located within 1/2 mile of the housing development; • The housing development provides no more than the minimum number of parking spaces required by local ordinance, or not more than one onsite parking space for 20 zero to two bedroom units, and two onsite parking spaces for three or more bedroom units, whichever is less. The reduced Fee, if any, applicable to housing developments that meet the requirements of this provision as determined by the City will be determined on a project -by- project basis. Any applicable reduced Fee amounts must be supported by a development - specific trip generation analysis acceptable to City staff that substantiates a lower trip generation rate for a housing development that meets the requirements of this provision as compared with housing developments that do not meet the requirements of this provision. 6. Designation of Developments. Nonresidential developments, other than Mixed Developments (but including non - residential developments within Mixed Developments) that are not within the definition of a use defined in this resolution shall be assigned to one of the defined use categories by the City Manager for purposes of imposition and charging of the Fee. The City Manager shall assign such categories as consistently as possible within the definitions of such categories established pursuant to this resolution or as later amended by the City Council. The City Manager may also designate Development as Multifamily or Single - Family based on the actual number of dwelling units per structure within the development. 7. Inapplicability of Fee. The Fee shall not apply to: a. Any alteration or addition to a residential structure, except to the extent that a residential unit is added to a single family residential unit or another unit is added to an existing multi - family residential unit. b. Any replacement or reconstruction of an existing residential structure that has been destroyed or demolished, if the building permit for reconstruction is obtained within one year after the building was destroyed or demolished. This subsection shall not apply if the replacement or reconstruction increases the square footage of the structure by 50 percent (50 %) or more. C. Any replacement or reconstruction of an existing non - residential structure that has been destroyed or demolished, if the building permit for reconstruction is obtained within one year after the building was destroyed or demolished, there is no change in the 21 land use designation of the property, and the square footage of the replacement building does not exceed the square footage of the building that was destroyed or demolished. d. Any addition to an existing non - residential structure of 500 square feet or less. e. Any public or quasi- public development on lands designated Public /Semi - Public or Education on the General Plan Land Use Map, as of the effective date of the Fee, so long as such development is intended to serve development in the City and does not itself generate a need for additional public infrastructure needed to serve new development, as in the way new residential development generates new residents requiring City services, and new non - residential development generates new employees in the City using City services. f. The City Council, in its discretion, may determine that the Fee is inapplicable to certain development constructed or to be constructed by a public entity on land having an appropriate General Plan land use designation provide that the City Council finds that such inapplicability is in the interest of the public health, safety and /or welfare, for reasons specified in the findings. Such reasons may include, but are not limited to, that the Fee as it would apply to such development by a public entity will be sufficiently recovered in whole or in part from residential development, the residents of which may constitute the primary users of the public entity development. 8. Use of Fee Revenue. The revenues raised by payment of the Fee shall be placed in a separate, interest bearing account to permit accounting for such revenues and the interest that they generate. Such revenues and interest shall be used only for the Facilities and the put-poses for which the Fee was collected, which are the following: a. To pay for design, engineering, right -of -way or land acquisition and construction and /or acquisition of the Facilities and reasonable costs of outside consultant studies related thereto; b. To reimburse the City for the Facilities constructed by the City with funds from other sources including funds from other public entities, unless the City funds were obtained from grants or gifts intended by the grantor to be used for the Facilities; 22 C. To reimburse developers who have designed and constructed any of the Facilities with prior City approval and have entered into an agreement, as provided in Section 9, below; and d. To pay for and /or reimburse costs of program development and ongoing administration and maintenance of the Fee program, including, but not limited to, the cost of studies, legal costs, and other costs of updating the Fee. 9. Credits and Reimbursement for Developer Constructed Facilities. The City and a developer may enter into an improvement agreement to allow the developer to construct certain of the Facilities. Entering such an agreement is in the City's sole discretion. Such agreement shall provide for security for the developer's commitment to construct the Facilities and shall refer to this resolution for credit and reimbursement. If the City enters into such an agreement with a developer prior to construction of one or more of the Facilities, the City shall provide the developer a credit in accordance with the following: a. Credit Amount. The credit shall be in the amount of the lowest bid received for construction of the facility, as approved by the City Engineer. However, in no event shall a ' credit pursuant to this provision exceed the current facility cost. For the purposes of this section, such current facility cost shall be the amount listed in the Report for the particular facility, as subsequently adjusted pursuant to Sections 13 and 14 of this Resolution prior to issuance of the building permit for that facility. Once issued, credit pursuant to this section shall not be adjusted for inflation or any other factor. Credit provided pursuant to this section is not transferable. b. Application of Credit. Developers may apply credit given pursuant to this section against the Fee applicable to a particular project until the credit is exhausted or an excess credit results. The total credit shall be divided by the number of units or square footage of building space (or combination thereof for a Mixed Use Development) to determine the amount of credit which can be applied against the Fee for each unit of measurement and, if the credit per unit of measure is less than the Fee per unit of measurement, the developer shall pay the difference for each residential unit or square footage of building space. 23 C. Reimbursement for Excess Credit. Reimbursement for excess credit shall only be from remaining unspent Fee revenues. Once all the Facilities have been constructed or acquired, and to the extent Fee revenues are sufficient to cover all claims for reimbursement of Fee revenues, including reimbursement for excess credit, developers with excess credit shall be entitled to reimbursement, subject to such developers certifying in writing to the City that the cost of constructing the facility that resulted in an excess credit was not passed on to homeowners, and indemnifying the City from land -owner claims for reimbursement under the Mitigation Fee Act, and Section 66001 in particular. If remaining Fee revenues after all of the Facilities have been constructed or acquired are insufficient to cover all claims for reimbursement of Fee revenues, such claims, including claims for reimbursement of excess credit, shall be reimbursed on a pro rata basis in accordance with applicable law. 10. Standards. The standards upon which the need for the Facilities is based are the standards of the City, including the standards contained in the General Plan and its EIR and those City standards reflected in the Report. 11. Periodic Review. a. During each fiscal year, the City Manager shall prepare a report for the City Council, pursuant to Government Code Section 66006, identifying the balance of Fee revenues in the Fee account. b. Pursuant to Government Code Section 66002, the City Council shall also review, as part of any adopted City Capital Improvement Plan each year, the approximate location, size, time of availability and estimates of cost for all Facilities to be financed with the Fee. The estimated costs shall be adjusted in accordance with appropriate indices of inflation. The City Council shall make findings identifying the purpose to which the existing Fee revenue balances are to be put and demonstrating a reasonable relationship between the Fee and the purpose for which it is charged. 12. Subsequent Analysis and Revision of the Fee. The Fee set forth herein is adopted and implemented by the City Council in reliance on the Record identified above. The City may continue to conduct further study and analysis to determine whether the Fee should be revised. When additional information is available, the City Council may 24 review the Fee to determine that the Fee amounts remain reasonably related to the impacts of development within the City of Petaluma and areas included in the City's General Plan. The City Council may revise the Fee to incorporate findings and conclusions of further studies and any standards in General Plan and /or the General Plan EIR, as well as increases due to inflation and increased construction costs. 13. Fee Adjustments. a. Annual CPI Adjustment. The Fee established will escalate or decrease annually by the same percentage the latest "Engineering News Record Construction Cost Index -20 City Average" ( "Index ") annually escalates or decreases. The adjustment shall be based on a comparison of the most recent Index to the Index in the month of adoption of the Fee, or the Index used for the prior adjustment of the Fee. The Finance Director shall compute the increase or decrease in such Fee. Such adjustments will take effect each July 1 st. b. Refund Applications Based on Redevelopment Supplement. In the case of any development which has incurred and paid a Fee which includes the Redevelopment Supplement, should the State Department of Finance or the courts finally recognize the obligations of the City as successor to the former PCDC pursuant to the above - described cooperative agreements such that the Redevelopment Supplement is retained by the City as successor to the former PCDC, current owners of development that paid development fees that included the Redevelopment Supplement may apply for a refund of the portion of the Fee that owner paid which is attributable to the Redevelopment Supplement, subject to the following: 1. To be eligible for a refund, current development owners must certify in writing to the City that the owner has not recovered or is not recovering from third parties such as tenants or others the amount of the fees paid attributable to the Redevelopment Supplement. 2. Any refunds pursuant to this provision shall only be paid from existing, un- obligated, unspent Fee revenue balances. The City will have no obligation to pay refunds to any owner absent sufficient existing, un- obligated, unspent Fee revenue balance available for that purpose. 3. If existing, un- obligated, unspent Fee revenue balances are insufficient to cover eligible applications for refund, such 25 eligible applications shall be paid refunds a pro rata basis in accordance with applicable law. 14. Administrative Guidelines. The Council may, by resolution, adopt administrative guidelines to provide procedures for calculation, credit, reimbursement, or deferred payment and other administrative aspects of the Fee. Such guidelines may include procedures for construction of designated Facilities by developers. 15. Effective Date. In accordance with California Government Code section 66017, subdivision (a), this Resolution and the updates to the Fee pursuant to this Resolution (including, but not limited to, the updates to the Report), shall become effective 60 days from the date this Resolution is adopted. 16. Severability. Each component of the Fee and all portions of this Resolution are severable. Should any individual component of the Fee or other provision of this Resolution be adjudged to be invalid and unenforceable, the remaining component or provisions shall be and continue to be fully effective, and the Fee shall be fully effective except as to that component that has been judged to be invalid. 17. Supersession/Repeal/Savings Clause. Resolution No. 2014 -112 N.C.S. adopted July 7, 2014 is hereby repealed on the effective date of this Resolution pursuant to Section 15. In addition, all resolutions and parts thereof in conflict with the provisions of this resolution are superseded and repealed, effective on the effective date of this resolution. However, violations, rights accrued, liabilities accrued, or appeals taken, prior to the effective date of this resolution, under any chapter, ordinance, or part of an ordinance, or resolution or part of a resolution, shall be deemed to remain in full force for the purpose of sustaining any proper suit, action, or other proceedings, with respect to any such violation, right, liability or appeal. !: IWIVO I no W-11 City of Petaluma Traffic Mitigation Fee Program Update ADDENDUM 1 Prepared by City of Petaluma December 2015 27 This addendum updates Tables 3 -6 through 3 -12 of the Traffic Mitigation Fee Program Update prepared by Fehr & Peers (August 2012). The revised tables incorporate updated cost figures associated with the Redevelopment Supplement of the fee program, establishes a new land use category and fee for gas /service stations, and updates the methodology from the 2012 fee study. Table 3 -6 presents the growth projections used in the analysis. Compared to the projections used in the 2012 analysis, 65 accessory dwelling units, and 16 gas /service station fuel positions have been added to the growth scenario. 28 Total Land Use Category Unit 2007 2012 2025 Growth (2012 to % Growth 2025) Single - Family Dwelling Dwelling Unit Unit 18,251 18,266 19,796 1,530 8% Multi Family Dwelling Unit Dwelling 2,558 2,820 6,380 3,560 126% Unit Accessory Dwelling Unit Dwelling 65 Unit Senior Housing Dwelling 1,554 1,612 1,731 119 7% Unit Office KSF 5,820 6,044 8,676 2,632 44% Hotel /Motel Room 682 682 879 197 29% Commercial /Shopping KSF 4,421 4,524 7,148 2,624 58% Industrial/Warehouse KSF 5,504 5,027 5,449 422 8% Education Student 18,036 18,036 23,087 5,051 28% Institution KSF 1,432 1,432 1,432 - 0% Gas /Service Station Fuel 142 142 158 16 11% Position Source: City of Petaluma, 2015. 28 Table 3 -7 recalculates the dwelling unit equivalent (DUE) factors, using updated data from the Institute of Traffic Engineers Trip Generation Handbook, 9th Edition, and SANDAG's Brief Guide of Vehicular Traffic Generation Rates (July 2002). The "Percent New Trips" column need only be multiplied by the peak hour trip rate in order to estimate vehicle trips per unit. Vehicle trips per unit for each land use is then divided by the vehicle trips per single family dwelling unit to determine the DUE factor for each land use. Peak Land Use Category Unit Hour % New s VT per Unit DUE per Hotel /Motel Room Trip Trips 0.34 Unie Commercial /Shopping' KSF Rate' 45% 1.68 1.93 Industria[/Warehouse' Dwelling 0.86 79% 0.68 0.78 Single - Family Dwelling Unit Student 1.01 86% 0.87 1.00 Institution" Unit 0.55 64% 0.35 0.41 Multi - Family Dwelling Unit 5 Dwelling 0.62 86% 0.53 0.61 Notes: Unit 1. ITE Trip Generation, 8th Edition, 2008. Rates based on PM peak hour of adjacent traffic. 2. SANDAG Brief Guide of Vehicular Traffic Generation Rates, July 2002. Accessory Dwelling Unit12 Dwelling 0.28 86% 0.24 0.28 6. ITE Senior Adult Housing - Detached rate used. Unit 7. ITE General Office Building (PM peak hour) rate used. 8. ITE Shopping Center rate used for all commercial uses. Senior Housing' Dwelling 0.27 86% 0.23 0.27 12. Calculations based on Resolutions Amending Resolutions Memo to the City Council dated 8/2/10. Unit For all other columns in table, assume same % as other housing. 13. ITE Service Station w /Convenience Market used. Office' KSF 1.49 77% 1.15 1.32 Hotel /Motel Room 0.59 58% 0.34 0.39 Commercial /Shopping' KSF 3.73 45% 1.68 1.93 Industria[/Warehouse' KSF 0.86 79% 0.68 0.78 Education10 Student 0.15 57% 0.09 0.10 Institution" KSF 0.55 64% 0.35 0.41 Gas /Service Station13 Fuel Position 13.38 21% 2.81 3.23 Notes: 1. ITE Trip Generation, 8th Edition, 2008. Rates based on PM peak hour of adjacent traffic. 2. SANDAG Brief Guide of Vehicular Traffic Generation Rates, July 2002. 3. VT (vehicle trip) per unit = peak hour trip rate * % new trips. 4. DUE per unit = VT per unit / VT per single - family dwelling unit 5. ITE Apartment rate used. 6. ITE Senior Adult Housing - Detached rate used. 7. ITE General Office Building (PM peak hour) rate used. 8. ITE Shopping Center rate used for all commercial uses. 9. ITE Industrial Park rate used for all industrial uses. 10. ITE Elementary school (PM peak hour generator) rates used for all educational uses. 11. ITE Church rate used for all general institutional uses. 12. Calculations based on Resolutions Amending Resolutions Memo to the City Council dated 8/2/10. Assuming one person on average lives in accessory unit, use ITE peak hour rate of 0.28 per person. For all other columns in table, assume same % as other housing. 13. ITE Service Station w /Convenience Market used. Source: Fehr & Peers, 2012. Willdan, 2015. 29 Table 3 -8 recalculates the growth in DUE using the revised DUE factors from the preceding table. The growth per dwelling unit, thousand square feet, hotel room, student or fuel position is multiplied by the corresponding DUE factor from Table 3 -7 to convert projected growth into DUEs. Using the revised growth scenario and revised DUE factors results in a growth increment of 12,772 DUEs, compared to the 9,096 calculated in the City's 2014 analysis. Total DUEs at buildout have also increased. These adjustments result in new development representing a larger share of total build out DUEs, compared to the 2014 analysis (22.43% v. 19.53 %). Land Use Category I Unit I Total DUE per Growth Converted to DUEs Growth' I Unit Single - Family Dwelling Unit Dwelling Unit 1,530 1.00 1,530 Multi - Family Dwelling Unit Dwelling Unit 3,560 0.61 2,185 Accessory Dwelling Unit Dwelling Unit 65 0.28 18 Senior Housing Dwelling Unit 119 0.27 32 Office KSF 2,632 1.32 3,477 Hotel /Motel Room 197 0.39 78 Commercial /Shopping KSF 21624 1.93 5,071 Industrial/Warehouse KSF 422 0.78 330 Education Student 51051 0.10 03 Institution KSF - 0.41 0 Gas /Service Station Fuel Position 16 3.23 52 Total New Development DUEs 12,772 Total Build Out DUEs4 56,941 Percentage of Total Build Out DUEs5 22.43% Notes: 1. Table 3 -6: City of Petaluma Travel Demand Model Land Use Projections 2. Table 3 -7: City of Petaluma DUE Conversion Factors 3. While a growth in student enrollment is projected, no new schools are anticipated to be constructed. 4. Total Build Out DUEs = DUE per unit * 2012 land use projections (Table 3 -6) + total new development DUEs 5. Percentage of Total Build Out DUEs = Total New Development DUEs /Total Build Out DUEs Source: Fehr & Peers, 2012. Willdan, 2015. 30 Table 3 -9 recalculates new development's share of the intersection projects included in the TIF. Adjustments have been made to projects where the fair share is equal to the new development's share of DUES at buildout. After the adjustments, a larger share of projects has been allocated to new development compared to the 2012 analysis ($1,668,224 v. $1,646, 472). Intersection Net City Cost Cross -Town New Development Potential Fee 12772 Minimum Miles for new DUE Reliever ?2 Share Contribution Industrial @ Corona $300,000 Yes 100% $300,000 Rainier and Maria $450,000 Yes 100% $450,000 Caulfield and Ely $450,000 Yes 100% $450,000 Casa Grande / McDowell $450,000 No 22.43% $100,934 Lindberg /Lakeville $300,000 Yes 100% $300,000 South McDowell /Lakeville $300,000 No 22.43% $67,290 Total $2,250,000 -- -- $1,668,224 Notes: 1. Based on Traffic Impact Mitigation Fee Program Update Memo from the City dated 5/1/12. 2. Based on discussions with the City. Out of the six intersections encompassing the $2.25M cost, only four relieved crosstown traffic and were included 100% in the final fee contribution total. 3. See Table 3 -8 City of Petaluma Growth in DUES for calculation detail. Source: Fehr & Peers, 2012. Willdan, 2015. Table 3 -10 recalculates new development's share of pedestrian/bicycle projects. The "new miles contribution" is equal to: minimum new miles for new DUE / new miles X new value. This results in an allocation of $8,978,853 worth of pedestrian and bicycle improvements to new development. Existing Bicycle Miles' 74.6 Existing Value' $48,980,000 Existing DUE 44169.30 Existing Bicycle Miles per DUE 0.0017 New DUES 12772 Minimum Miles for new DUE 21.6 New Miles' 65.80 New Value' $27,389,000 New Miles Contribution $8,978,853 % of Total Cost 33% Notes 1. City of Petaluma, 2012 2. 2012 Land Use (per Table 3 -6 Travel Demand Model) * DUE per unit (per Table 3 -7 DUE Conversion Factors) 3. See Table 3 -8 Growth in DUE. 4. =Miles for new DUE /New Miles * New Value Source: Fehr & Peers, 2012. Willdan 2015. 31 Table 3 -11 recalculates new development's share of circulation improvement projects based on the adjustments in the preceding tables. In total, $165.4 million in improvement costs are allocated to 12,772 DUEs of growth, resulting in a fee of $12,949 per DUE. New Potential Fee Improvement Net City Cost Development Contribution Share Rainier Avenue Extension and Interchange — locally $84,064,004 100.00% $84,064,004 preferred alternative Caulfield Lane Extension $54,561,194 100.00% $54,561,194 Old Redwood Highway Interchange Improvements $2,879,990 100.00% $2,879,990 Caulfield Lane /Payran Street Intersection $500,000 100.00% $500,000 Improvements Petaluma Boulevard /Magnolia Avenue — Payran $500,000 100.00% $500,000 Street Intersection Construction of New Intersections Throughout the $2,250,000 74.14% $1,668,224 City, Traffic Signal Upgrades Throughout the City2 $1,885,000 22.43% $422,803 Pedestrian /Bicycle Improvements Throughout the $27,389,000 32.78% $8,978,853 city, Transit Improvements Throughout the City2 $2,500,000 22.43% $560,746 Redevelopment Supplement $9,972,739 100.00% $9,972,739 Administration Costs' $ - -- $1,278,262 Total $186,501,927 -- $165,386,815 Projected Growth in DUES' $12,772 Fee Per DUE $12,949 2014 Fee per DUES $18,007 Notes: 1. See Table 3 -9 Construction of New Intersections Fee Contributions for calculation detail. 2. See Table 3 -8 City of Petaluma Growth in DUEs for calculation detail. 3. See Table 3 -10 Pedestrian /Bicycle Contribution Calculation for detail. 4. Provided by the City of Petaluma, 2012. 5. Based on Fee per DUE contained in 2014 Addendum 1. Source: Fehr & Peers, 2012. Willdan, 2015. 32 Table 3 -12 presents the revised traffic impact fees. The revised fee per DUE from Table 3 -11 is multiplied by the revised DUE factors from Table 3 -7 to determine the fee per land use category. Land Use Type Unit DUE Fee Fee Single - Family Dwelling Unit Dwelling Unit 1.00 $12,949 $12,949 Multi - Family Dwelling Unit Dwelling Unit 0.61 $7,949 Accessory Dwelling Unit Dwelling Unit 0.28 $3,590 Senior Housing Dwelling Unit 0.27 $3,462 Office KSF 1.32 $17,104 Hotel /Motel Room 0.39 $5,102 Commercial /Shopping KSF 1.93 $25,024 Industrial/Warehouse KSF 0.78 $10,129 Education Student 0.10 $1,275 Institution KSF 0.41 $5,248 Gas /Service Station Fuel Position 3.23 $41,889 Notes: 1. Table 3 -7 City of Petaluma DUE Conversion Factors 2. Table 3 -11 City of Petaluma Circulation Improvements Fee Contributions Source: Fehr & Peers, 2012. Willdan, 2015 33 EXHIBIT B TRAFFIC DEVELOPMENT IMPACT FEE Land Use Type Fee Amount Unit of Measurement Single Family Residential $13,623 Unit Multiple Family Residential $8,363 Unit Accessory Dwelling $3,777 Unit Senior Housing $3,642 Unit Office $17,995 1,000 square feet of building space Hotel/Motel $5,367 Room Commercial /Shopping $26,326 1,000 square feet of building space Industrial /Warehouse $10,656 1,000 square feet of building space Education $1,341 Student Institution $5,521 1,000 square feet of building space Gas /Service Station $44,070 Fuel Position 34 RUTAN RUTAN & TUCKER, LLP November 19, 2014 VIA FEDERAL EXPRESS Eric W. Danly City Attorney City of Petaluma I1 English Street Petaluma, CA 94952 Re: Traffic Development Impact Fees Dear Mr. Danly: ATTACHMENT 2N0V 2 D q/�/ Matthew D. YrancoisLU /� Direct Dial: (650) 798 -5669 E -mail: lnfrancois @rutan,corn RECEIVED N 0 V 2.0 2014 We are writing on behalf of our client, Safeway, Inc. ( "Safeway ") in response to Resolution No. 2014 -112 passed by the City of Petaluma City Council on July 7, 2014 ( "Resolution "), which created a new Traffic Development Impact Fee ( "TIF ") for "Gas /Service Stations." As you know, Safeway has, since July 25, 2013, had an application ( "Application ") pending with the City of Petaluma ( "City ") for Site Plan and Architectural Review ( "SPAR ") for the development of a new fueling station (the "Project ") at 335 S. McDowell Ave. (the "Property ") in the Washington Square Shopping Center (the "Shopping Center "). The Shopping Center is owned by Washington Square Associates, LLC ( "Owners ") and managed by Fulcrum Properties ("Fulcrum"), To our knowledge, the Application for the Project is the only application for a fueling station currently pending before the City. In the 15 months since the Application was originally made for the Project, the City has sent three SPAR incompleteness letters, citing the need for detailed technical information that cannot be used as a basis to deem an application incomplete under the Permit Streamlining Act. Nonetheless, each of those letters received a full and complete response by Safeway. Safeway has spent tens of thousands of dollars to provide the City a traffic study, a noise study, and an air quality study, including a comprehensive health risk assessment. The results of those studies, prepared by expert consultants, indicate that all potential environmental impacts of the Project will be less than significant. Among many other benefits, the Project would result in hundreds of thousands of dollars of tax revenues annually for the City. Despite the minimal impacts and overwhelming community support for the Project, the City Council unsuccessfully attempted to pass an unlawful moratorium designed specifically to stop the Project in March 2014. According to press accounts and City Council meeting minutes, it appears that the moratorium effort was prompted by other gas station owners who were Five Palo Alto Square, 3000 El Camino Real, Suite 200, Palo Alto, CA 94306 35 650.320.1500 1 Fax 650.320.9905 2592/031700 -0001 Orange County I Palo Alto I www.rutan.com 7762717,1 a11/19/14 �UTAN RUTAN A TUCKER; LLP Eric W. Danly November 19, 2014 Page 2 concerned about price competition. ( "City Council is Fighting the Wrong Battle," Argus Courier, March 3, 2014.) Following the failed legislative moratorium, the City Council passed the Resolution, which will almost certainly result in a de facto ban on the Project and other new gas stations. The Resolution will increase the TIF for the Project (exclusive of any credits) from $11,858 to $1,725,040, an increase of 14,447 percent, (That is not a typo; the TIF increase for the Project is in excess of 14- thousand percent.) If this new, illegal TIF is not repealed and the Project proceeds subject to the new TIF, this relatively small Project alone (occupying less than three - quarters of an acre) would be forced to fund 1.053 percent of the total cost of all of the City's circulation improvements. Furthermore, the new TIF for the Project will likely be nearly as much as the Project's total construction costs, even more evidence of the excessiveness of the new TIF. Please understand that Safeway supports sound infrastructure planning, and we have no quarrel with the general policy that new development should "pay its own way" with regard to the costs of new facilities necessary to accommodate development. Our clients recognize that development impact fees may be an appropriate means of implementing that policy. However, it is in the common interests of the City, the general public, and the development community that any new fees be factually and legally justifiable and be adopted by following appropriate procedures for infrastructure planning, fiscal analysis, and enviromnental review. In the case of the Resolution, the new TIF would cause the Project (a permitted use) to be financially infeasible and would effectively preclude any other new gas station from opening in Petaluma. Fulcrum has indicated that the Project is critical to the economic viability of the entire Shopping Center. We are writing because we believe that the new TIF for gas stations is unfair, unlawful and should be repealed, or not applied to the Project, for the following reasons, each of which is set forth in more detail below: The Resolution is fatally flawed in that the resulting TIF does not have the requisite constitutional and statutory nexus to the actual traffic impacts of Gas /Service Stations. In drafting the Resolution, the City segregated Gas /Service Stations from the broad Commercial /Shopping land use category without a nexus study considering the impact of segregating the unique uses from the broad category. As a result, the Gas /Service Station category is forced to bear an unfair and unlawful proportion of the cost of public facilities. 25921031700 -0001 36 77627[7.1 a11/19114 RUTAN RUTAN 6 TUCKER, LLP Eric W. Danly November 19, 2014 Page 3 • City staff, in trying to update, rather than redo, the 2012 nexus study by Fehr & Peers entitled "Traffic Mitigation Fee Program Update" (the "Nexus Study ") made fundamental errors in both calculations and drafting. • The Resolution appears to have been motivated by unlawful pretexts, including discrimination, restricting economic competition, and providing gifts of public funds. • The Resolution violates substantive due process requirements in that the Resolution was arbitrary and irrational. • The Resolution violates equal protection requirements in that it singles out the Project and other gas stations and subjects them to substantially higher impact fees than similarly situated commercial businesses. Safeway has been a member of the Petaluma community since 1926, providing quality jobs and investing in local charities and causes. Because of this longstanding relationship with the City, Safeway is simply asking that it be treated fairly and according to the law, which it has not been thus far with regard to the Project. Accordingly, Safeway requests that the City immediately repeal the Resolution or make clear in writing that the Project is not subject to it. Safeway further requests a written response from the City regarding whether the Resolution will be repealed or the Project will be grandfathered by the close of business on December 5, 2014. 1. Brief Project Overview The Project is a fueling station near a new Safeway store, It will include a 697- square- foot convenience store along Maria Drive and eight fuel dispensers (16 total fueling positions) under a lighted canopy. There will be sufficient space behind the fuel dispensers to permit cars to wait for open fuel pumps without disturbing street traffic or the traffic circulation in the Shopping Center. The Project will include, among other improvements, a new 4,500- square -foot landscape strip, bicycle parking, an electric vehicle refueling station, and an expanded and relocated (and safer) transit center along Maria Drive. The Property is zoned Commercial 2 ( "C2 ") pursuant to the City's Implementing Zoning Ordinance ( "IZO "). A gas station is a permitted use in the C2 zoning district as are general retail uses, grocery stores, and restaurants, IZO Table 4.4. The IZO creates no distinction between a fueling center or station and a gas station, defining "fueling station/gas station" as "[a] retail business selling gasoline and /or other motor vehicle fuels and related products." IZO § 27.020.6. It further states that a gas station "may also include a convenience store, vehicle services, and restaurant facilities." Id. 37 2592/031700 -0001 7762717,1 111/19/14 RU AN RUTAN 6 TUCKER, LLP Eric W. Danly November 19, 2014 Page 4 Currently on the Property, there is a vacant 13,770 square -foot multi- tenant commercial building that was not originally part of the Shopping Center. The building will be demolished, and the site grade, architecture, parking, and traffic circulation will be integrated with the Shopping Center. Based on understandings and assurances from City staff (going back. as far as early 2012) that the Project was an allowed use, the Owners relocated tenants and allowed leases in the existing building to expire in anticipation of the Project development. The steps that the Owners undertook, letting leases expire and relocating tenants, and the efforts that Safeway made in processing the Application, are things that businesses typically do in reliance on local zoning regulations. If the Project does not go forward, Safeway and the Owners will suffer damages in the millions of dollars. The people of Petaluma will lose, among other things, the opportunity for more affordable gas and hundreds of thousands of dollars per year in tax revenue. IL Factual Chronology A. Pre - Resolution Activities In Anticipation of The Project On August 19, 2012, representatives from Fulcrum and Safeway met with City Planning Manager Heather Hines to discuss the Project. Based upon representations made in that meeting that the Project was a permitted use in the C2 zone, Fulcrum and Safeway entered into a number of agreements that would have to be in place for the Project to proceed, including relocating tenants from the building on the site. On August 27, 2012, the City passed Resolution No. 2012 -125, which established traffic impact fees. In stark contrast to the 2014 Resolution, the 2012 Resolution had been supported by the Nexus Study prepared by Fehr & Peers, a reputable traffic consulting firm. On April 19, 2013, Stantec Architecture (the "Architect ") and a representative from Safeway met with City staff to discuss the Project. They were told, again, that the Project was a permitted use subject to the SPAR review process. SPAR review focuses on the architectural and site design aspects of proposed projects. In a pre - application meeting with the representatives of various City departments on May 2, 2013, the Architect and Safeway representatives were told the same thing. Based on these representations, Safeway submitted its Application for the Project on July 25, 2013, On August 19, 2013, at a special meeting of the City Council, several local gas station owners objected to Safeway's Application based upon a fear that it would adversely impact their business. At that meeting, City Council Member Mile Healy began to demonstrate- his animosity toward the Project. He encouraged City staff to "think outside the box on this and think proactively, Are there legislative changes we would want to consider in advance of that application [the Project] coming through? Because I think there are very dangerous precedents here." 2592/031700 -0001 38 7762717.1 a] 1/19/14 RUTAN RUTAN 6 TUCKER, LLP Eric W. Danly November 19, 2014 Page 5 On August 23, 2013, the City sent the Architect a first "Incompleteness Letter," The City asked Safeway to provide a traffic study, a noise study, and an air quality /greenhouse gas study. However, CEQA and related studies cannot be used to deem an application incomplete under the Permit Streamlining Act or under the City's SPAR review process. (Gov. Code § 65941(b); Petaluma Interim Zoning Ordinance see. 24.010(d).) In October 2013, plans were submitted to the City for development of a luxury hotel in downtown Petaluma called "The Petaluman." The Petaluman was proposed to be 54 -room hotel without any parking. The proposed site for The Petaluman had previously been an eight -pump Chevron gas station, which was closed and demolished several years ago. On January 14, 2014, the Architect provided a full and detailed response to the first Incompleteness Letter. Among other things, a comprehensive traffic study by TJKM Transportation Consultants was provided, and the Architect incorporated all of TJKM's recommendations. For instance, Safeway agreed to employ fuel ambassadors during peak hours to direct and coordinate traffic flows. The traffic study also found that the existing transit center on Maria Drive was unsafe because cars exiting the Shopping Center could not see past buses queuing at the transit center. As part of the Project, Safeway agreed to reconstruct the bus layover area to make it safer. A noise study and an air quality study were also provided, both of which demonstrated minimal impacts caused by the Project. On January 27, 2014, modifications to the Maria Drive Apartment Project, which is unrelated to the Project, came before the City Council. During the Council's discussion of the Maria Drive Apartment Project, Council Member Healy mentioned the Safeway Project by name and then asked whether there was support on the Council to consider a moratorium on the processing of applications for gas stations in the community. Mr. Healy stated: During the pendency of the temporary urgency moratorium, if it's enacted, we could consider adopting legislation that would give this Council the ability, at a minimum, to provide discretionary approval on that application and give Safeway the opportunity to convince us that it is a good thing for the community as well as being good for Safeway, which might be a difficult thing for them to do. The Council agreed to put the consideration of a temporary moratorium on the agenda of a future City Council meeting. On February 13, 2014, the City sent the Architect a second Incompleteness letter. Among other things, the City asked that Safeway's traffic impact study include the impacts of the pending Maria Drive Apartment Project and Addison Ranch Apartment Project. It also asked that the Air Quality/Greenhouse Gas Report include a Health Risk Assessment ( "HRA "). 39 2592/031700 -0001 77627171 aI1/19/11 RUTAN .Im 6 TUCKER, I LP Eric W. Danly November 19, 2014 Page 6 Also on February 13, 2014, Ross Jones, the developer of The Petaluman, wrote to the City Council because his proposed 54 -room hotel without any parking would be required to pay traffic mitigation fees of $685,000, while receiving a credit of $23,655 for the long - vacant Chevron station that previously occupied The Petaluman site. In his letter, Mr. Jones asked the Council to consider two propositions: (1) that gas stations should be charged more in impact fees, perhaps based upon fueling positions rather than square footage, and (2) that hotels in the core district should be charged less in impact fees than are charged for the Hotel /Motel category in the City's impact fee tables. It appeared that Mr. Jones' interest was in maximizing the impact fee credit that he sought for the gas station that had previously occupied his proposed hotel site. If given a large enough fee credit per fueling station for the former 8 -pump Chevron station, The Petaluman's traffic fees would be eliminated completely. Attached to Mr. Jones' letter to the City was a traffic study for The Petaluman performed by W- Trans. The letter from W -Trans noted that the previous land use at the site was a gas station with eight fueling positions and calculated trip rates for that use using rates published by the Institute of Traffic Engineers ( "ITE "). W -Trans also noted that "[t]he counts for the study intersection were taken after the previous use was removed, therefore no trip credits were assumed as part of the analysis for this project." On February 24, 2014, Mr. Jones attended a City Council meeting, In his comments regarding the City's traffic impact fees, he set up a hypothetical as a developer having a choice between developing a gas station or a hotel and discussed the trip generation rates for each. He also asserted to the Council that the impact fees for a hotel lump together all hotels and motels and do not factor into the fee calculation the fact that a hotel in a downtown setting has less of a traffic impact than a hotel or motel on the outskirts of town. On March 3, 2014, the temporary moratorium on new gas stations in Petaluma proposed by Council Member Healy came before the City Council. Although the mayor and city staff tried to make it clear for the record that the hearing was not about the Project, the record of the meeting demonstrates that the proposed moratorium was aimed squarely at the Project, and virtually all of the discussion was about the Project. The temporary moratorium failed to receive enough votes to pass. The very next agenda item to come up at the March 3, 2014, City Council meeting was a discussion of six resolutions to replace various existing development impact fees, including Resolution 2014 -042 to replace the traffic impact fee resolution adopted on August 27, 2012 ( "2012 Resolution "). The staff report accompanying the six proposed resolutions stated: 40 2592/031700 -0001 7762717,1 111/19/14 RUTAN RUTAN 6 TUCKER, LLP Eric W. Danly November 19, 2014 Page 7 Since the adoption of the development impact fee resolutions, there have been a few issues associated with implementatioiiladministration of the new fees. Staff presented these issues to the City Council at its September 23rd workshop on zoning and fee updates for direction.' [ ... ] The recommended changes are administrative in nature and likely will generally not raise the impact fees charged for future development by type of use. (emphasis added.)2 Neither the staff report nor the proposed resolution replacing traffic impact fees mentioned anything about a new Gas /Service Station land use category for traffic impact fees, and the proposed resolution did not propose creating a new category to the ten land use categories contained in the existing 2012 Resolution. At the outset of the discussion, Council Member Healy stated: "Ironically, it seems more related than it is to the conversation we were just having [regarding the gas station moratorium]. That wasn't what motivated me on that, but it has to do with whether square footage on gas stations is an adequate metric for capturing trip generation." During the public comment on the six resolutions, Mr. Jones, of The Petaluman, expanded on his comments from the City Council meeting of February 24, 2014: "There is a flaw in the traffic mitigation fee matrix that you have. I wish I had an example for you today that had nothing to do with gas stations, just for variety, but I don't. [...] I think the problem here is looking at the denominator of these fee formulas. You're charging per guest room for hotels, and per square foot for gas stations. [,..] Look at the basis for the traffic impact fee on gas stations, The denominator should be relevant to the business model, and the traffic impact fees for both, for all, ought to have some reflection and correspondence to the traffic that is actually generated." Mayor David Glass asked what it would entail for the City to consider the gas station impact fee framework Mr. Jones suggested. Mayor Glass stated: "X know that you couldn't do that on a whim. We've established fees based on some criteria, and this would be different criteria." As City Attorney, you acknowledged that it would require re- examining the traffic fee study that supports the traffic fe e (the Nexus Study). In response to the Mayor's inquiry, Senior Planner Scott Duiven said that he and Heather Hines had a meeting with Mr. Jones, and added: "We need direction from Council, and we need to crime up with a solution. So our ability to provide, you know, the credit that he's lookingfor, 1 There was no mention at all in the September 23, 2013, workshop of adding a new Gas /Service Station land use category. 2 Any emphasis applied to the text of this letter is added by the undersigned unless otherwise noted. 41 2592/031700 -0001 7762717,1 al 1/19/14 RUTAN ..IAN & TUCKER, LLP Eric W. Danly November 19, 2014 Page 8 or an accounting of gas station uses, requires us to do some additional work and come back to Council." Mayor Glass then asked about the timeframe for analyzing Mr. Jones' suggestions. Mr. Duiven stated: "It could be as simple as we kind of come up with a set of language that gives the Council discretion to staff to come back and look at these, and that can be borne by a particular project. Or, we can look at the whole fee structure itself, and kind of look at a broader range of uses. But, that would take a lot more time because then you are having to hire a consultant." City Manager John Brown thought that it would take three to four months to address Mr. Jones' comments with regard to the fees for gas station, if "[f]or efficiency's sake, assuming we are not going through a complete redo of all of our fee assumptions, and just focusing on those ones that may be due like the gas station..." Mr. Brown added: "Just to caveat that for a moment... If [what] we are looking for is a larger retooling of our fee structure, that isn't going to be a good due date. If it is something that is fairly focused in a couple of areas where we want to look at the assumptions, then I think that is reasonable." Mayor Glass responded: "I would focus it for this right now because we are trying to incentivize getting some economic activity in the area of hotels, whether it is this or the Silk Mill or whatever else there is. In terns of fairness, it should be fair. It should be, `Here's your impact, and here's your bill for the impact that you are creating.' That's a compelling argument." The City Council ultimately adopted the six proposed impact fee resolutions. On April 29, 2014, the Architect responded to the City's second Incompleteness Letter dated February 13, 2014. The response included a revised traffic report, a new environmental noise assessment, a new health risk assessment, and a revised air quality /greenhouse gas assessment. As requested by City staff, the Maria Drive Apartment Project and Addison Ranch Apartment Project were incorporated into the Traffic Impact study, On May 28, 2014, the City sent a third Incompleteness Letter to Architect seeking, among other things, modifications to the fueling center kiosk and the Maria Drive transit center. On July 7, 2014, the City Council adopted the Resolution we are contesting here, to replace the traffic impact fee resolution that was adopted on March 3, 2014, a mere four months prior, Although the Project was the only gas station application pending in the City, neither Safeway or the Owners were given notice of the hearing on the Resolution and found out about it only through third parties after it was passed. At no point did the City ever attempt to communicate the affects of the Resolution to, or ask for feedback from, anyone involved in the Project, 42 2592/031700 -0001 7762717.1 all /19 /H RUTAN RUTAN &TUCKER, LLp Eric W. Danly November 19, 20 X 4 Page 9 In your comments made before the City Council considered the Resolution, you said that the new category of fees was in response to proponents of The Petaluman project, who were seeking a fee credit for the former gas station on the hotel site. B. The Staff Report On The Resolution And Addendum To Febr & Peers 2012 Nexus Study The staff report accompanying the Resolution proposed on July 7, 2014, prepared by Mr. Duiven, explained that impact fees for gas stations were assessed under the existing "Commercial /Shopping" fee category based upon the square footage of the building associated with the gas station. He stated that "[ p]ooponents of the Petaluman Hotel project have noted, in seeking a credit for the former gas station use, that square footage of building area is not the best metric for determining traffic impacts subject to the fee," and cited a February 13, 2014, Ietter from Mr, Jones, discussed above, which was attached to the Resolution as Attachment 3. Also attached to Mr. Jones' letter were estimates of development impact fees calculated by City staff under the existing TIF, estimating that the total traffic impact fee for the Petaluman would be $684,811.24 with a credit of $23,654.70 for the Chevron station previously located on the site. Thus, The Petaluman would be required to pay an estimated $661,156.54 in traffic impact fees prior to the Resolution being passed. The staff report stated that, at its March 3, 2014, meeting (when the gas station moratorium was voted down), the City Council asked staff to come up with a metric that better reflected the traffic impact of gas stations. The staff report cites the financial impacts of the new fee category as "an increase in development impact fee revenues in instances where new gas /service stations are built, and a corresponding increase in credits available to those eligible developers paying impact fees associated with a change of use on the site of a former gas station." Before the Resolution was passed, the City's traffic impact fees were calculated based on the Nexus Study. The Nexus Study indicates that assumptions of future land use changes were provided by City staff, and estimates of traffic impacts were calculated based upon those land use types. The Nexus Study states: "The City of Petaluma General Plan 2025 EIR included a forecast of land uses for 2025 in the Petaluma Planning Area. Both residential and non- residential uses were estimated in terms of dwelling units and square feet, respectively. The number of PM peak hour trips attributable to the future developments was estimated using standard industry trip generation rates, as utilized in the City of Petaluma Travel Demand Model [updated in 2007], These peak hour trip estimates were then summarized by land use type based upon dwelling unit equivalents (DUEs)." 43 2592/031700.0001 7762717.1 all/19/14 RUTA,N RUTAN 6 TUCKER. LLP Eric W. Danly November 19, 2014 Page 10 Any lawful change in traffic impact fees would require an update of the Nexus Study, including assumptions upon which the Nexus Study was based. However, it appears that in their rush to incentivize The Petaluman, City Council and City staff chose to shortcut this process, with disastrous results. Instead of engaging Fehr & Peers to update its Nexus Study, City staff prepared, apparently on its own, Addendum 1 (the "Addendum ") to the Fehr & Peers document, to add the new "Gas /Service Station" traffic impact fee category. In the Addendum, City staff attempted to update three key tables from the Nexus Study used to calculate traffic impact fees: Tables 3 -7, 3 -11 and 3 -12. The tables initially prepared by Fehr & Peers in 2012 had ten land use categories, including the following: Single- Family Dwelling Unit, Multi- Family Dwelling Unit, Accessory Dwelling, Senior Housing, Office, Hotel /Motel, Commercial /Shopping, Industrial /Warehouse, Education, and Institution. For the 2014 Resolution, City staff added an eleventh category to the tables: Gas /Service Station. As discussed below, City staff made numerous errors in attempting to update these three tables on their own resulting in a Resolution that is not supported by adequate evidence demonstrating the required nexus between the proposed new fees and impacts reasonably attributable to gas station uses. C. The Resolution The Recitals of the Resolution discuss that the General Plan allows "the creation of fee programs to require new development to pay for its proportional fair share of the cost of acquiring and improving public facilities necessary to meet the demands of new residents, employees, customers, and businesses for such facilities..." The Findings for the Resolution state that the City Council adopted the Addendum prepared by City staff and incorporated it into the Nexus Study. The Findings for the Resolution also included the following: In accordance with section 66000, subdivision a, paragraph 3 of the Mitigation Fee Act, there is a reasonable relationship between the Fee's use (to pay for the construction of the Facilities) and the type of development for which the Fee is charged in that the fee will be applied [sic] all development in the City including residential, commercial, office, and industrial development projects, which will generate new demands for traffic facilities. As described in the Report, different types of development generate traffic with different characteristics. The calculations presented in tables 3 -7 and 3 -8 of the Report account for these different characteristics by applying different per -unit fee factors to each type of development. These considerations account for the 44 2592/03 1700-000 1 7762717 1 al 1/19/14 RUTAN RUTAN 6 TUCKER, LLP Eric W. Danly November 19, 2014 Page I1 differential impacts on the local transportation system generated by different development types. Section 5.a. of the Adoption portion of the Resolution states: "The amount of the Fee for residential and non - residential development shall be as set forth in Exhibit A." Exhibit A to the Resolution sets the traffic development impact fee for each fuel position as $107,815 at the time of the Resolution. During the public comment on the Resolution, Mr. Jones, the developer of the Petaluman, thanked Senior Planner Duiven and City Manager Brown for their work on the new legislation, and the City Council for authorizing the work. The City never took up Mr. Jones' suggestion to consider fees for core hotels differently from the fees for the more general Motel /Hotel fee category. It did not matter because in passing the Resolution, and giving The Petaluman fee credits for a long - closed Chevron station that was not creating any traffic impacts according to The Petaluman's own consultant, the City wiped out almost $700,000 in traffic impact fees for the 54 -room hotel. Because the former gas station at the hotel site appears to have pre - elated enactment of the City's traffic fee ordinance in 1991, it appears no traffic impact fees whatsoever were paid to the City for that use, Yet, the City purported to credit the hotel use with over ,$850,000 in fees for the former gas station use, Following Mr. Jones' expression of gratitude, the City Council unanimously passed the Resolution, upon Council Member Healy's motion.3 On August 13, 2014, the Architect responded to the City's third Incompleteness Letter dated May 28, 2014. In response to the City's third Incompleteness Letter, the Architect, among other things, greatly modified the design of the fueling station kiosk to be more pedestrian - friendly along Maria Drive and relocated and expanded the Maria Drive transit center to make it safer. Throughout the application process for the Project, Safeway has repeatedly demonstrated a willingness to adhere to the City's design and zoning requirements. Despite its responsiveness to each and every City demand, Safeway's Application for the Project has now been pending for almost 15 months. III. The Real World Impact Of The Resolution For Safeway And The Shopping Center If the Resolution stands, the TIF for the Project (exclusive of any credits) will increase from $11,858 to $1,725,040, an increase of 14,447 percent. The TIF for this relatively small Project (occupying less than three - quarters of an acre) alone would be forced to fund 1.053 3 Nowhere in the Resolution, the staff report, or the records of the City Council meetings leading to the Resolution is there any evidence offered to indicate that gas stations in Petaluma were not paying their fair share of impact fees before the Resolution passed. 45 2592/031700 -0001 7762717 1 al 1/19/14 RUTAN RUTAN 6 TUCKER, LLP Eric W. Danly November 19, 2014 Page 12 percent of the total cost of the City's Circulation Improvements. These improvements include street extensions, modifications to interchanges and intersections, traffic signal upgrades, pedestrian/bicycle improvements, and transit improvements. Such a fee lacks any proportionality to the traffic impacts of the Project. Fulcrum, the property managers for the Shopping Center, have reported that the Project is critical to the viability of the Shopping Center. Yet, the TIF would render the Project financially infeasible. IV. The Real World Impact Of The Resolution For The People Of Petaluma The Resolution, which could turn out to be a de facto prohibition of the Project, in particular, and new gas station development, in general, will have real and lasting consequences for the residents of Petaluma both in the short and long term. In the short term, if the Resolution kills this Project, the City will not receive any impact fees from Safeway, nor will it get any of the hundreds of thousands of dollars in annual tax revenues from Safeway gas sales. Add this loss of revenues to the loss of almost $700,000 in traffic impact fees to be credited to The Petaluman for a use that no longer exists and appears to have never paid any traffic impact fees to the City. This Resolution will cost the people of Petaluma millions in foregone traffic fees, unjustified credits, and tax revenues alone. In the long term, by making new gas station development cost - prohibitive through the new TIF, the City Council has put in place a regulatory regime that will likely protect current gas providers from future competition, essentially establishing a local monopoly. Without direct competition, providers will have no incentive to provide gas at competitive prices. This is evident today. While national gas prices have dropped significantly in recent months, it appears that Petaluma has not benefited from the same savings enjoyed in neighboring -communities. (See, www.gasbuddy.com) A local newspaper poll found overwhelming support in favor of the Project by the people of Petaluma. Citizens who spoke out in opposition to the proposed moratorium asserted that Petaluma's gas prices are already significantly higher than its immediate neighbors, even among identical gas providers. If the Resolution is allowed to stand, the people of Petaluma will have to continue to travel to other towns to find less expensive gas. But, not only will the outrageous traffic impact fees and fee credits set forth in the Resolution prevent Safeway from completing the Project, it will also likely prevent any new gas stations from opening in the City and will also incentivize developers, like Mr. Jones of The Petaluman, to redevelop gas stations into other uses. 46 25921031700 -0001 7762717,1 a11119/14 RUTAN RUTAN G TUCKER, LLP Eric W. Danly November 19, 2014 Page 13 V. How The New Traffic Impact Fees Compare With Those Of Other Municipalities As a matter of comparison, we have looked at how nearby municipalities would calculate traffic impact fees for the Project. While Petaluma's traffic impact fee for the Project under the Resolution would be $1.7 million, Novato's fee would be $10,942, Santa Rosa's fee would be $41,960, and Napa's would be $327,928. If the TIF is allowed to stand, the City will be at a gross competitive business disadvantage compared to neighboring jurisdictions. VI. Legal Arguments — The Resolution Must Be Repealed A, In Creating A New Fee CatMgory For "Gas /Service Stations," The _Resolution Violates Both Constitutional And Statutory Law The traffic impact fees to be imposed by the Resolution for the new "Gas /Service Station" land use category are subject to the common legal principles that limit development fees and exactions in general. Such limitations are of federal and state constitutional origin and provide the boundaries between permissible police power regulation and unconstitutional regulatory "taking" of property in violation of the 5th Amendment to the U.S. Constitution. The U.S. Supreme Court has expressly identified at least two constitutional constraints on such fees and exactions imposed as conditions of property development. Nollan v. California Coastal Comm., 483 U.S. 825 (1987); Dolan v. City of Tigard, 512 U.S. 374 (1994). Under Nollan And Dolan, the tests for validity of development fees and exactions are (1) there must an essential nexus between an exaction and a legitimate state interest (Nollan), and (2) the exaction must be roughly proportional (related in nature and extent) to the impacts of proposed development (Dolan), The United States Supreme Court recently confirmed that all governmental exactions (whether of property or monetary fees in -lieu of property) are subject to the constitutional requirements of Nollan and Dolan, and that the government is obligated to demonstrate compliance with those evidentiary requirements. (Koontz v. St. Johns River Water Mgt. District, 570 U.S. 133 S.Ct. 2586, 2599 (2013) [ "Such so- called `in lieu fees' are ... functionally equivalent to other types of land use exactions ,.. [and] so- called `monetary exactions' must satisfy the nexus and rough proportionality requirements of Nollan and Dolan. "].) Thus, "[a]s a matter of both statutory and constitutional law, [impact] fees must [at minimum] bear a reasonable relationship, in both intended use and amount, to the deleterious public impact of the development (Gov. Code § 66001,)" San Remo Hotel v. City & County of San Francisco, 27 Cal Ath 643, 671 (2002). (See also, Building Industry Assn of Central Calif. v. City of Patterson, 171 Cal.App.4th 886 (2009); accord, Rohn v. City of Visalia, 214 Cal.App.3d 1463, 1476 (1989). 47 2592/031700 -0001 776 ?717 1 all /19114 RUTAN RUTAN 6 TUCKER, LLP Eric W. Danly November 19, 2014 Page 14 The Mitigation Fee Act, Gov. Code § 66001 et seq., states, in relevant part: "In any action establishing, increasing, or imposing a fee as a condition of approval of a development project by a local agency, the local agency shall do all of the following: [ ... ] (3) Determine how there is a reasonable relation between the fee's use and the type of development project on which the fee is imposed." Gov. Code § 66001(a) The City's legal obligation to provide such evidentiary justification demonstrating a nexus between impacts -of a development and the fees imposed on it is well established under the applicable standards of Koontz, supra, San Remo Hotel, supra, and Ehrlich, supra, as well as the Mitigation Fee Act. When the City adopted its traffic impact fees in 2012, it used the Nexus Study to provide evidentiary justification for the then new traffic impact fees. However, City staffs attempt to provide evidentiary justification for the new Gas /Service Station fee in the Resolution through its Addendum to the Nexus Study was marred by errors and omissions, as detailed below, Accordingly, the Resolution is invalid. Patterson, 171 Cal.App.4th at 889 [unjustified "affordable housing in lieu fees" declared invalid]; Warmington Old Town Ass'n, 101 Cal.App.4th at 859 [unjustified school facilities fees declared invalid]; Shapell Industries v. Governing Board of Milpitas Unif. Sch. Dist., 1 Cal.AppAth 218 (1991) [unjustified school facilities fees declared invalid]. The Addendum Prepared By City Staff' lloe s Not Provide The Requisite Nexus For The Resolution Because It Assesses Gas Stati 1riIli Isolation From Other Comparable Commercial Uses In an attempt to provide the constitutionally and statutorily required nexus for the new Gas /Service Station impact fees, City staff prepared the Addendum, purporting to update Tables 3 -7, 3 -11 and 3 -12 of the Nexus Study. Table 3 -7 of the Addendum sets forth the City of Petaluma Dwelling Unit Equivalent Conversion Factors that are used by the City to determine the amount of traffic impact fees that a development is required to pay and provides a DUE per unit for each land use category. City staff simply added a row to the bottom for Gas /Service Stations and an accompanying note that indicates that the ITE "Service Station w/ Convenience Market" trip rates were used. Table 3 -11 shows City of Petaluma Circulation Improvement Fee Contributions. In Table 3 -11, the total potential fee contribution is divided by "Projected Growth in DUEs" of 9,096, to arrive at a fee per DUE of $18,007. Table 3 -12 then shows the fees per unit of "Land Use Type" is derived by multiplying the DUE per unit by the fee per DUE. Again, City staff simply added a row to the bottom of the table. In the case of the Gas /Service Station land use type, a DUE per unit of 5,83 (from Table 3 -7) is multiplied by the Fee per DUE of $18,007 (from Table 3 -11) to arrive at $104,981 per 48 25921031700 -0001 7762717 1 all /19 /14 RUTAN RUTAN 6 TUCKER. LLP Eric W. Danly November 19, 2014 Page 15 fuel position. This total fee was increased for inflation to arrive at the $107,815 per fueling station adopted by the Resolution. The notes to Table 3 -7 in both the Addendum and the Nexus Study indicate that the ITE Shopping Center trip rate is used for all other commercial uses other than gas stations. The Project will be located in and function as an integral part of the Washington Square Shopping Center. Indeed, Safeway club members will be entitled to receive discounts on gas as a result of grocery purchases made in the Safeway store. Thus, applying the shopping center rate to the Project is logical and makes sense. By comparison, treating stand -alone big box stores, drive - thrus, and numerous other high traffic- generating uses as subject to the relatively low shopping center rate makes no sense at all. Nonetheless, the staff report purports to justify a higher trip rate for gas stations noting: "Using the ITE trip - generation data to calculate gas /service station traffic impacts results in a fee calculation that is much more closely tied to the trips generated by gas /service station uses, in comparison with other uses." The Resolution's definition of the "Commercial/Shopping" land use category expressly identifies 55 unique land uses that are part of that category, only one of which is "shopping centers." (See Section B, below, for the full definition.) Included in the Commercial /Shopping category's list of 55 unique uses are, for the sake of example, auto accessories stores, eating and drinking establishments, supermarkets, convenience stores, drug stores, pharmacies, and restaurants. As stated by Senior Planner Scott Duiven in the staff report accompanying the Resolution: "Because the land use categories used for the [Fehr & Peers] fee study are general, unique land uses such as gas stations may not fit well in an existing category. [...] The ITE trip generation tables have a much more detailed set of land uses and trip generating metrics, including data for gasoline /service stations." If City staff were to single out other commercial uses in the same manner as they have singled out gas stations, and apply the same criteria (notwithstanding the calculation errors described below), the DUEs per unit and traffic impact fees for these unique land use categories would be exponentially higher. By way of example, applying the ITE's recommended trip generation rates for 'each unique use instead of the more general "shopping center" ITE rate would have the following results: Fast Food Restaurant: The DUE per unit would increase from 0.92 (using the Commercial /Shopping calculation) to 13.20, and -the traffic impact fee for a typical fast food restaurant would increase from approximately $63,000 to approximately $442,000. 49 2592/031700 -0001 7762717,1 a] 1/19/14 RUT'�A,N RUTAN &TUCKER, LLP Eric W. Danly November 19, 2014 Page 16 Convenience Store: The DUE per unit would increase from 0.92 to 14.40, and the traffic impact fee for a typical convenience store would increase from approximately $66,000 to approximately $610,000. Pharmacy: The DUE per unit would increase from 0.92 to 4.61, and the traffic impact fee for a typical pharmacy would increase from approximately $265,000 to approximately $731,000, Grocery Store: The DUE per unit would increase from 0.92 to 4.69, and the traffic impact fee for a typical grocery store would increase from approximately $828,000 to approximately $2,300,000. These examples demonstrate that including unique land uses in a broad, general category to which a single (relatively low) trip rate has been applied artificially depresses the true traffic impacts of the unique land uses included in that category, This has the effect of creating artificially high impact fees in any land use category not included in the broad, general category. Likewise, when you extract one use from the broad category and apply a more specific trip rate to that use, that unique use is going to bear substantially more than its fair share of the impact of fees because all other unique uses in the general category are still held artificially low, That is why the relatively small Project would be forced to bear the cost of more than one percent of the City's future infrastructure improvements under the Resolution. Neither the Addendum nor the Nexus Study from which it is derived contemplate the disparate treatment of unique land use categories when extracted from broader land use categories.4 In order to arrive at a fair proportion of traffic impact fees, and satisfy the statutory and constitutional standards set forth above, a nexus study would have to treat all unique land uses equally. The Addendum does not do this and, indeed, suffers from even more fundamental errors. 2. The Addendum Prepared By City Staff Does Not Provide The Requisite Nexus For The Resolution Becausc Of Errors And Omissions In Its Preparation In Table 3 -7 of the Nexus Study, Note 2 indicates that the numbers for all land use categories for the "% New Trips" column were originally taken from "SANDAG Brief Guide of Vehicular Traffic Generation Rates, July 1998." Instead of using the SANDAG Guide numbers 4 Although Mr. Jones called into question the City's Nexus Study by pointing out that his hotel should not be treated the same as other properties in the Hotel /Motel land use category, the City disregarded this issue and, instead, simply eliminated The Petaluman's fees with enormous fee credits through the Resolution. 50 25921031700 -0001 7762717.1 a11/19/14 RUTAI RUTAN 5 TUCKER, LLP Eric W. Danly November 19, 2014 Page 17 in the Addendum, however, it appears that City Staff simply used the numbers provided by consultants for the Petaluman Hotel. The SANDAG new trip percentage for gas stations is 21 percent instead of the 44 percent shown in the Addendum, resulting in a vastly inflated TIF amount for the Gas /Service Station category, Table 3 -7, Note 4 provides an equation to arrive at the "VT per Unit" number, which is used to derive DUEs per unit, and ultimately, the impact fee. The equation requires that peak hour trip rate be multiplied by the percent new trips and multiplied again by the percent pass -by /diverted linked trips. For the Gas /Service Station category only, however, City staff simply multiplied the peak hour trip rate by the percent new trips and neglected to multiply again by the percent pass -by /diverted link trip. As a result, the traffic impact fee for the Gas /Service Station category is artificially inflated on yet another basis. In order to calculate the ultimate fee (on Table 3 -12), one must multiply the DUE per Unit by the Fee per DUE. We have already demonstrated above the errors in Table 3 -7, making the DUE per Unit in Table 3 -12 wrong. But, there are also errors in Table 3 -11, malting the Fee per DUE wrong. The Fee per DUE is arrived at by dividing the total Potential Fee Contribution for new development by the Projected Growth in DUES. In Tables 3 -11 of both the Addendum and the Nexus Study the Projected Growth in DUEs is 9,096. Note 2 in both tables states that the source of the Projected Growth in DUEs number is Table 3 -8. In drafting the Resolution and preparing the Addendum, City Staff failed to update Table 3 -8 by including the new Gas /Service Station category. Because they failed to do this, no Growth Converted to DUES was added in Table 3 -8 for the new category, making the Total New Development DUEs number too small. Indeed, if done correctly, the Total New Development DUES should be revised substantially upward, given that the DUE per unit in the Commercial /Shopping category was set artificially low by applying the ITE Shopping Center rate to the 55 or more unique uses in that category. In a proper nexus study, Table 3 -8 would break out each of those unique uses and apply appropriate trip rates to them. Further, Table 3 -8 requires a Total Growth Calculation from Table 3 -6, which was also not updated to add the new Gas /Service Station category for the Addendum and Resolution. The ultimate outcome of these failures by City staff is that all of the traffic development impact fees set forth in Exhibit A to the Resolution are too high. In short, a cascade of errors in both assumptions and application by City staff results in all three of the tables in the Addendum being incorrect and the fees adopted in the Resolution being, simply, wrong. Because of this, the Addendum cannot possibly and does not meet even the rational relationship test let alone the heightened scrutiny of Nollan and Dolan. 51 2592/031700 -0001 77627171 a11/19114 RUTAN RUTAN b TUCKER, LLP Eric W. Danly November 19, 2014 Page 18 B. The Resolution Is Fatally Flawed In That It Includes Gas /Sei -vice Stations In Two Separate Land Use Categories Subject To The TIF The Resolution is also flawed in its drafting and is invalid for that reason alone. The "Adoption" portion of the Resolution includes the following definitions: "Commercial /Shopping" shall mean any development constructed or to be constructed on land having a General Plan 2025 land use or zoning designation, as established in the Implementing Zoning Resolution, No. 2300 N.C,S., or any successor Resolution, for facilities for the purchase and sale of commodities and services and the sales, servicing, installation, and repair of such commodities and services and other uses incidental to these activities, Commercial land uses include but are not limited to: apparel and clothing stores; auto dealers and malls; auto accessories stores; banks and savings and loans; beauty salons; book stores; discount stores and centers; dry cleaners; drug stores; eating and drinking establishments; furniture stores and outlets; general merchandise stores; hardware stores; home furnishings and improvement centers; laundromats; liquor stores; service stations; shopping centers; supermarkets; bicycle shops; cameras and photographic supply stores; convenience stores; department stores; drug stores and pharmacies; jewelry stores; luggage and leather goods stores; sporting goods and equipment stores; stationery stores; collectible stores; second hand goods stores; religious goods stores; hobby materials stores; small wares stores; plant sales; bowling alleys; coin - operated amusement arcades; dance halls, clubs and ballrooms; electronic game arcades; ice skating and roller skating establishments; pool and billiard rooms; amusement and theme parks; go -cart tracks; golf driving ranges; miniature golf courses; water slides; banks and trust companies; credit agencies; holding companies; lending and thrift institutions; securities /commodity contract brokers and dealers; fueling stations and gas stations; security and commodity exchanges; vehicle finance leasing agencies; restaurants, cafes and coffee shops; and movie theatres and civic theatres. "Gas /Service Station" shall mean a retail business selling gasoline and /or other motor vehicle fuels, and related products. A gas station may also include a convenience store, vehicle services, and restaurant facilities. 52 2592!031700 -0001 7762717, 1 a11/19/14 RUTAN RUTAN s TUCKER. LLP Eric W. Danly November 19, 2014 Page 19 Because the definition of the "Commercial /Shopping" land use category includes "service stations," and "fueling stations and gas stations," yet the Resolution also creates a new category for "Gas /Service Station," it is impossible to determine, from the face of the Resolution, which fee applies to a gas station, in general, or the Project, in particular. This makes the Resolution void for vagueness. A statute is. void for vagueness if persons of common intelligence must guess as to its meaning and differ as to its applications. The void- for - vagueness doctrine reflects the principle that a statute which either forbids or requires the doing of an act in terms so vague that [persons] of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first essential of due process of law. The requirement that government articulate its aims with a reasonable degree of clarity ensures that state power will be exercised only on behalf of policies reflecting an authoritative choice among competing social values, reduces the danger of caprice and discrimination in the administration of the laws, enables individuals to conform their conduct to the requirements of law, and permits meaningful judicial review. Schweitzer v. Westminster Invs., (2007) 157 Cal.AppAth 1195, 1206 (2007). (citations omitted.) C. The Resolution Was Enacted To Restrict Economic Competition. is Not A Valid Exercise Of The City's Police Power No city, including Petaluma, can use its land use powers to. dictate which companies can do business within its community and which cannot. Nor can a city use its land use powers to grant existing businesses a monopoly or shield' them from economic competition. As has been pointed out in multiple news articles, and by public comments made in the City Council meetings, the majority of the opposition to the Project appears to have been prompted by other gas stations in the area who feel threatened by potential competition. In Friends of Davis v. City of Davis, 83 Cal.AppAth 1004 (2000), a developer applied to a city for site plan and architectural review for a proposed retail center. The center was to include a nationwide retail chain store (Borders Books). Opponents sued claiming that the city had authority under its design review ordinance to approve or disapprove particular tenants. The Court of Appeal disagreed, ruling that a city could not use its design review ordinance to exclude a prospective tenant from a proposed retail development project on the basis that it was a nationwide chain store. While acknowledging that a city has broad authority over the regulation of land use, the court observed that this authority is not unlimited. See, e.g., Friends of Davis, 83 Cal.AppAth at 1013: Where certain uses are permitted, a city cannot arbitrarily exclude others who would enjoy a similar use. Zoning and building laws cannot be used unqualifiedly to restrict competition or simply to shield existing 25921031700 -0001 7762717.1 all /19 /I4 53 R_UTAN RUTAN A TUCKER, LLP Eric W. Danly November 19, 2014 Page 20 businesses from competition. While valid zoning regulations may affect competition and have other economic effects, a city does not have carte blanche to exclude a retail merchant that it, or some of its residents, do not like, The broad and standardless construction of the City's design review ordinance urged by plaintiff would confer on the City's planning department virtually unrestrained power to decide who may and who may not do business in the City, [Citations omitted.] As evidenced by the timing and circumstances surrounding the passage of the Resolution by the City Council, it is plainly aimed at blocking the Safeway fuel center because customers may choose to purchase gas at Safeway instead of at other nearby gas stations, The City's actions thus appear squarely aimed at restricting and shielding existing businesses from competition, which is not a valid exercise of the City's police powers. D. The Resolution May Result In An Illegal Gift Of Pul.)iic Funds The Resolution was enacted, in part, to give substantial fee credits to The Petaluman so that this traffic- intensive hotel with no parking would pay zero dollars in traffic impact fees to the City. Further, due in part to the errors made by City staff in the calculations of the traffic impact fee for the Gas /Service Station land use category, the City may have simply given hundreds of thousands of dollars in public funds to the proponents of The Petaluman, A city may not make a gift of public funds. Cal Const art XVI, § 6. An appropriation benefiting a private party constitutes an unconstitutional gift of public funds if the public agency receives no consideration in exchange for the expenditure (Allen v Hussey, 101 CA2d 457, 473 (1950), or if the expenditure does not fulfill apublic purpose (County of Alameda v Janssen, 16 C2d 276, 281 (1940)), The former Chevron station, for which The Petaluman project purportedly received a huge fee credit, had been closed for several years and was not creating any traffic impacts according to Mr. Jones' own traffic consultants. At most, proponents of The Petaluman should have been given credit for any impact fees actually paid by the developers of the former Chevron station. Again, as noted previously, because that gas station appears to pre -date the City's enactment of its traffic impact fee ordinance, it likely did not pay any traffic impact fees. It certainly did not pay over $850,000 in fees for which The Petaluman was or will be credited, E. 'f'be Resolution Violates Substantive Due Process' Requirements The Due Process Clause of the Fourteenth Amendment to the United States Constitution prohibits a state from depriving a person of life, liberty, or property without due process of law. 54 25921031700 -0001 7762717,1 al]/19/14 RUTAN RUTAN 6 TUCKER, LLP Eric W. Danly November 19, 2014 Page 21 See also, Cal. Con., art. 1, sec. 7, The touchstone of substantive due process is the protection of the individual against arbitrary government action; the due process clause was intended to prevent government officials from abusing their power or employing it as an instrument of oppression. Wolff v. McDonnell, 418 U.S. 539, 558 (1974); Collins v. City of Harker Heights, 503 U.S. 115, 126 (1992). A violation of substantive due process rights occurs if a government agency's actions are (1) irrational or arbitrary or (2) not rationally related to a legitimate government interest, The test is disjunctive. Thus, a property owner need only demonstrate facts to support one of the two bases in order to state a viable due process claim. In passing the Resolution, the City's actions were arbitrary and irrational, and constitute an abuse of power, subjecting it to liability under the due process clause. See, Arnel Development Co. v. City of Costa Mesa, 126 Cal.App.3d 330, 337 (1981) (enactment of initiative downzoning ordinance was arbitrary and discriminatory where enacted without considering appropriate planning criteria and for sole and specific purpose of defeating a single development). See also, Herrington v. County of Sonoma, 834 F.2d 1488 (9th Cir. 1987) (denial of subdivision and subsequent downzoning of property violated property owner's due process rights given evidence that county's general plan/subdivision inconsistency determination was irrational and arbitrary and aimed at defeating particular development project) and Del Monte Dunes, Ltd. v. City of Monterey, 920 F.2d 1496, 1508 (9th Cir. 1990) (allegations that city council approved a 190 -unit project with conditions that had been substantially met, then same council members abruptly changed course and rejected the project motivated not by legitimate regulatory concerns, but by political pressure from neighbors to preserve property as open space, could constitute arbitrary and irrational conduct). Passing the Resolution constitutes irrational and arbitrary conduct not based on appropriate planning criteria and for the sole and specific purpose of defeating the Safeway fuel center Project. F. The Resolution Violates Equal Protection Requirements The Fourteenth Amendment to the United States Constitution provides that no state shall deny to any person within its jurisdiction the equal protection of the laws. See also,' Cal. Con., art. I, sec. 7. The concept of equal protection has been defined to mean that no person or class of persons may be denied the same protection of law that is enjoyed by other persons or other classes in like circumstances. Hawn v. County of Ventura, 7' ) Ca1.App.3d 1009, 1018 (1977). A claimant must show that the state "has adopted a classification that affects two or more similarly situated groups in an unequal mamier." Walgreen Co, v. City & County of San Francisco, 185 Cal.AppAth 424, 434 (2010). An equal protection challenge to a regulation that does not involve a suspect class or fundamental right must nevertheless bear a reasonable relationship to a legitimate state interest. Young v, American Mini Theaters, 427 U.S. 50 (1976). "[A] deliberate, irrational discrimination, even if it is against one person (or other entity) rather than a group, is 55 2592/031700 -0001 7762717,1 a11/19/14 RUTAN RUTAN 6 TUCKER, LLP Eric W. Danly November 19, 2014 Page 22 actionable under the equal protection clause." World Outreach Conference Center v. City of Chicago, 591 F.3d 531, 538 (7th Cir. 2009). In Village of Willowbrook v. Olech, 528 U.S. 562 (2000), the U.S. Supreme Court ruled that a plaintiff stated a viable equal protection cause of action based on claims that a municipality required a 33 foot easement from her as a condition of connecting her property to the municipal water supply when it had only required a 15 foot easement from other similarly situated property owners. The Ninth Circuit has likewise upheld equal protection claims brought by property owners that were discriminated against or treated unfairly by local agencies ,as part of the land use approval process. See, e.g., Herrington, supra, (denial of proposed subdivision and subsequent downzoning violated property owner's equal protection rights where there was evidence that county had approved sizable residential development projects on three other agricultural properties shortly after it rejected the owner's proposal) and Del Monte Dunes, Ltd., supra, (allegation that city arbitrarily and unreasonably limited use and development of property and set aside open space for public use, whereas owners of comparable properties were not subject to these conditions and restrictions states viable equal protection claim). As explained above, by extracting gas stations from a larger group of commercial land uses to which lower traffic rates are ascribed, gas stations are subject to much higher traffic impact fees than other unique land uses that have high traffic rates. Existing gas stations paid no, or relatively low, impact fees. One, and apparently only one, gas station will have to pay an exorbitant fee in order to proceed with development. In doing so, the Resolution violates the equal protection rights of both the Project (the true target of the Resolution) and other similarly situated users to which the Resolution may apply. G. The Resolution Does Not Comply With The California Environmental Quality Act The Resolution may result in physical environmental effects and thus the City must conduct environmental review pursuant to the California Environmental Quality Act ( "CEQA ") before it can lawfully act on it. See, Public Resources Code §§ 21080, 21000, 21065. Given the incredible difference in traffic impact fees between the City and nearby jurisdictions, it is reasonably foreseeable that the Resolution will force certain gas station operators, like Safeway, to locate in other areas outside of the City. Given the huge fee credits now available through the Resolution for demolishing gas stations, existing gas stations will likely become the targets of developers hoping to avoid the City's notoriously high impact fees. This would result in fewer gas stations in the City and associated traffic, air quality, and noise pollution, including an increase in greenhouse gas emissions, vehicle miles traveled, and other related emissions. See, e.g., Muzzy Ranch Co. v. Solano County Airport Land Use Commn., 41 Ca1.4th 372, 383 (2007) (California Supreme Court observes that the impact of development 56 2592/031700 -0001 7762717 1 al 1/19114 RUTAN RUTAN &TUCKER. LLP Eric W. Danly November 19, 2014 Page 23 in other areas resulting from a ban on development within one jurisdiction should be considered in the CEQA process); accord, Napa Citizens for Honest Government v. Napa County Board of Supervisors, 91 Cal.App.4th 342, 369 (2001) ( "the purpose of CEQA would be undermined if the appropriate governmental agencies went forward without an awareness of the effects a project will have on areas outside of the boundaries of the project area."), Thus, prior to the enactment of the TIF, the environmental impacts associated with both displaced development of proposed gas stations and reasonably foreseeable development of existing gas stations needs to be addressed in an appropriate CEQA document. The City must also consider the urban decay impacts its actions will likely have on the Property, It is likely that the City could not proceed with such an ordinance without preparing and circulating an environmental impact report ( "EIR ") for public review and comment. See Public Resources Code §§ 21080(d) and 21081; CEQA Guidelines § 15091; Marr.'n Municipal Water District v. KG Land California Corp., 235 Cal.App.3d 1652 (1991) (water district prepared an EIR prior to adopting a water moratorium based in part on potential secondary impacts of moratorium); and City of Livermore v. LAFCO, 184 Cal.App.3d 531 (1986) (EIR was required for revision of LAFCO sphere -of- influence guidelines because change in policies could affect location of development, resulting in significant environmental impacts). The Resolution is a "project" subject to CEQA, and one likely to result in significant impacts. As such, the City was required to and should have considered its direct and reasonably foreseeable indirect environmental impacts. Because the City failed to do this, the Resolution is invalid. H. The City Will Be Estopped From Applying The Traffic Impact Fee To The Project Safeway and the Owners properly and foreseeably relied on the Property's planning and zoning, as well as the City's stated policy that the Property is an area of the City where gas stations are a principally permitted use. To date, Safeway and Owners have spent millions of dollars in reliance on the approved land use designations and planned infrastructure for the Shopping Center and its environs. These funds were used to purchase the Shopping Center, negotiate the lease of the Property to Safeway, prepare Project plans and environmental studies, and pay other direct and indirect expenses related to operation and maintenance of the Shopping Center, including the Property. As a result of the Owners' and Safeway's reliance on the City's plans and policies, the City would be estopped from applying the Resolution to the Project. See, e.g., Hock Investment Co. v. City and County of San Francisco, 215 Cal.App.3d X138, 448 -449 (1989). The court in Kieffer v, Spencer, 153 Cal.App.3rd 954 (1984) observed that estoppel was proper when a city "chose to pursue a course of conduct (for reasons not entirely clear) not only detrimental to petitioners but to public trust in local government." 153 Cal.App.3d at 964. If the 57 2592/031700 -0001 7762717,1 a] 1119/14 RUTAN RUTAN &TUCKER, LLP Eric W. Danly November 19, 2014 Page 24 City were to impose the Resolution upon Safeway, it would run afoul of this guiding principle. The City's plans and policies that Safeway and the Owners relied upon provide a substantial basis for estoppel against the City here. VII. Conclusion Safeway requests that the City immediately repeal the Resolution or make clear in writing that the Project, which was in the pipeline for nearly a year before the Resolution was enacted, is not subject to it. Safeway further requests a written response to our request no later than close of business on December 5, 2014, Also, please place us on the list of interested persons, so that we receive notice of any action with regard to the Resolution going forward. Very truly yours, TITAN Matthew D. Francois cc: Honorable David Glass, Mayor Members of the Petaluma City Council Mary Davi Steve Berndt Steve Gouig Mark Friedman Gary Semling John Brown Heather Hines MDF:ms 2592/011700 -0001 7762717.1 a] 1/19/14