SR-11-B (26)
......., -r"-'
;5 C ~ -VL' ,s.- c>/
11.-' B
OCT ~ 1990
C/ED:CPD:PPD
artcc
COUNCIL MEETING: October 2, 1990
Santa Monica, California
TO: Mayor and city Council
FROM: City staff
SUBJECT: Recommendation to Direct the City Attorney to Prepare
an Ordinance Implementing the proposed Fee-For-Art
Program
INTRODUCTION
This report recommends that the City Council direct the City
Attorney to prepare an ordinance implementing the Proposed
Fee-For-Art program for all new non-residential development in
the city.
BACKGROUND
In September of 1988, the city Council reviewed a percent for
arts program adopted by the city Arts Commission. This program
recommended requiring any new commercial or industrial project
wi th a construction cost exceeding $500,000 to contribute at
least one percent of the private development costs to help
finance cultural and artistic facilities in the city. At that
time, the City Council directed the city Attorney t.o draft an
ordinance implementing the percent-for-art program.
11-8
- 1 -
OCT
f) lQr:lO
h. I'~
The City Attorney returned with an opinion that, because of the
passage of state Assembly Bill 1600 in 1987, the City must
perform a nexus study prior to adopting an ordinance enacting a
percent-for-art program. Assembly Bill 1600 requires that in
establishing or imposing a fee as a condition of approval of a
development project, a local agency must first perform a nexus
study establishing, among other things, the relationship between
the fee's use and the impacts of development. In response, the
City council directed staff to conduct a nexus study for a
percent-for-art program.
Attached to this report is the nexus study entitled IIFee-For-Art
studyll prepared for the City by Stanley Hoffman Associates. The
study includes the theoretical and legal rationale required by
state law. It also includes a review of selected programs in
other cities and recommends a fee calculation methodology.
This staff report highlights the findings of the nexus study and
provides an overview of the proposed Fee-for-Art Program
including the preliminary Art/Cultural Master Plan (December,
1989) and the proposed fee calculation methodology.
NEXUS STUDY FINDINGS
state law requires that in establishing or imposing a fee as a
condition of approval of a development project by a local agency,
the agency shall do the following:
- 2 -
1. Identify the purpose of the fee. The fee program is designed
to mitigate the reduction in the quality of life which can
result from commercial and industrial development within the
City by providing public art facilities and programs.
2. Identify the potential use of the fee. The funds from the
fee program would be expended pursuant to an adopted
Art/Cultural Master Plan. This plan would be reviewed
annually and the fee amounts would be modified accordingly.
3. Determine the relationship between the fees' use and the type
of development project that will generate the fee. New
commercial and industrial development within the City creates
a need for cultural, visual and performing arts services and
facilities. The fee-for-art program would fund a portion of
the cultural, visual and performing arts facilities and
services in a manner which reasonably mitigates the impact on
the social environment attributable to commercial and
industrial development.
4. Determine the relationship between the need for the public
facility and the type of development project on which the fee
is imposed. The impact fee for art would be levied on new
non-residential development. The basis for this is that
commercial and industrial development cumulatively result in
higher urban densities, increased daytime employment,
increased visitor population, increased trafflc and other
social and environmental impacts which must. be mitigated.
- 3 -
Non-residential development impacts may be mitigated by
providing public cultural, visual and performing arts
services and facilities throughout the City. While
imposition of certain design standards may help to mitigate
certain of these impacts on-site, it is necessary that art
facilities and programs also be provided in public locations
in order to meet the goal of mitigating the impacts of the
development on the urban environment.
5. Determine the relationship between the amount of the fee and
the cost of facilities and services for which the fee is
charged. The impact fee for art would be levied on new
non-residential development and be apportioned based upon the
total square footage of the building to be constructed. In
other policy documents, the City has established that there
is a relationship between the number of employees potentially
working at project site and the square footage of that
facility. Further, for commercial structures, square footage
relates to the number of commercial visitors expected to use
the facility. The square footage of a project also relates
to bulk, scale and intensity of a project and is an indicator
of the extent of proj ect impacts. For these reasons, the
most equitable method of apportioning the cost of facilities
to new development is a formula based upon the square footage
of the project.
- 4 -
FEE-FOR-ART PROGRAM DESCRIPTION
The program is designed to mitigate the adverse impacts caused by
new non-residential development through the creation and
enhancement of art/cultural facilities. It will provide a
revenue source in addition to existing sources.
The art fee is structured so that all new non-residential
development, redevelopment and sUbstantially remodeled
development would contribute a fee based on the project's prorata
share of impacts on a square footage basis. Single family and
mUlti-family development projects would be exempt from the fee to
avoid discouraging the development of affordable housing.
Non-residential development would be charged only it's fair
share. It would not be charged for new residential development's
share which would be covered primarily by City contributions. A
square footage fee-for-art formula, as opposed to a percent of
development costs, was determined to be the most equitable method
of apportioning the pro-rata share of the art/cultural facilities
costs. The square footage of a development project is used in
the formula as an indicator of the level of intensity that a
development project has on the surrounding social and physical
environment.
The primary impact of new development projects is projected to
occur within the commercial amd industria~ districts and
corridors. This includes the downtown area, Santa Monica Airport
- 5 -
and the corridors of Santa Monica, Olympic pico and Wilshire
Boulevards. These areas correspond to the location of the
art/cultural facilities found in the preliminary Art/Cultural
Master Plan. The facilities would be developed within proximity
to where commercial and industrial development is occurring to
mitigate the impacts attributable to new growth. Art fees would
be used to improve the areas of the City where development
occurs.
Procedures for the submission of developer's art/cultural plans
and due dates shall be established by the City of Santa Monica.
Standards of review, definition of appropriate art/cultural
works, and appeal shall be established by the City. It is
recommended that the formation of a review panel within the
City's Department of Cultural and Recreation Services be
established to determine on-site credits, review art/cultural
facilities plan and monitor the fee-for-art program.
The Preliminary Art/Cultural Master Plan
In order to implement a fee-far-art program that meets the
state's nexus requirements, it was necessary to determine certain
categories of costs that would be funded through the use of
development fees. For this reason, a Preliminary Art/Cultural
Master Plan was compiled to identify current and future
art/cultural facility needs, current funding sources and to
designate the potential uses of the fee-for-art proqram. The
plan, which was approved by the Arts Commisslon .2..'1 December,
- 6 -
1989, reflects the on-going planning activities of the city's
Arts Commission and staff. It is presented in detail in Chapter
Seven of the attached report. The Art/Cultural Master Plan
identi f ies total future capital costs at $ 4 9. 3 mill ion.
Anticipated maintenance costs are estimated to be $861,800 per
year.
The fee-for-art program would be used to supplement existing
funding sources to help pay for capital facility costs. Annual
maintenance costs would be funded through other sources. The
Arts Commission recommends requiring that up to 40% of the
fee-for-art be placed in a cultural Trust Fund that would
support artworks and projects throughout the city. Expenditures
from the Cultural Trust Fund would be determined by the Arts
Commission in accordance with the Art/Cultural Master Plan. The
Commission recommends that up to 60% of the fee be allowed to be
used for on-site pUblic artworks, programs or facilities, to be
selected by the Arts Commission and the developer. The developer
would also have the option to allocate 100% of the fee to the
Cultural Trust Fund.
Fee Calculation
The art fee is structured so that all new non-residential
development, redevelopment, and substantial remodeled development
would contribute a fee based on a project IS prorata share of
total development on a square footage basis.
- 7 -
The methodology used to calculate the art fee consists of four
major components. They are:
1. Future capital costs associated with the Art/Cultural
Master Plan. In the Preliminary Art/cultural Master
Plan, the Arts Commission has identified future art and
cultural needs totaling approximately $49.3 million with
recurring operations and maintenance costs of
approximately $861,800 per year.
2. New non-residential development growth projections.
Projections were based upon the findings in the Citywide
Traffic study. It was estimated that approximately 4.8
million square feet of new development would occur
between 1988 and 2010.
3 . The fee would only apply to commercial development.
Development would contribute it's pro-rata share of
total residential and non-residential development on a
square footage basis.
4. The fee is assessed on a square footage basis, not on a
percentage of the building valuation.
Based
upon
current
growth
projections,
non-residential
development's prorata share has been estimated to be just under 5
percent (see Chapter 8, Fee-For-Art study). The combination of
these factors in the formula results in a $0.55 per square foot
fee. At this rate, the fee would generate approximately $2.6
million by the year 2010.
Should any of the four components of the fee calculation be
modified, the fee would change.
For example, in the first
component,
if the capital costs estimated by the Preliminary
Art/Cultural Master Plan were increased, the fee would go up
- 8 -
proportionately. In the second fee component, if the projected
rate of development is paced, either the fee would have to be
increased or the 2010 revenue projection be reduced.
In the
third component, if the art fee were extended to include
mUlti-family
residential
development,
the
2010
reveune
proj ections would increase by the amount of that fee and the
non-residential art fee would remain constant. This is due to
the
pro-rata
share
calculation
that
protects
commercial
development from paying residential development I s share of the
costs.
In the fourth component, if the fee methodology were
changed to a percentage of building valuation basis, new
calculations and revenue estimates would have to be prepared.
BUDGET/FINANCIAL IMPACT
There would be no financial impact associated with drafting an
ordinance for implementation.
Beneficial budget impacts for
arts projects would be realized with the implementation of a
fee-for-art program.
RECOMMENDATION
staff recommends that the City Council direct the City Attorney
to prepare an ordinance implementing the Proposed Fee-Far-Art
program.
Prepared by: Paul Berlant, Director of Planning
Suzanne Frick, Principal Planner
Liz Casey, Associate Planner
- 9 -