SR-03-27-1984-11A
.
~
".
.
.
tj/tJ-OOtJ-o/
CED:PPD:PS:BR:lw
CounCIl MeetIng: 3/27/84
11- A
MAR 2 7 1984
Santa Monica, CalIfornIa
TO:
The Mayor and CIty CouncIl
FROM:
CIty Staff
SUBJECT: RecommendatIon to Adopt a ResolutIon SettIng
Development Agreement Fee Schedule
INTRODUCTION
ThIS report presents a recommendatIon to establIsh fees for the
flllng and proceSSIng of development agreements In accordance
WIth SectIon 9802 of the Municlpal Code and to amend the
Munlclpal Code as necessary to Include an annual fee to offset
the costs of monItoring complIance WIth the development
agreement. whIle staff does not antICIpate a great number of
development agreement applicatIons, nevertheless a substantIal
amount of staff tIme 15 expended on each applicatIon flIed and It
15 approprlate to recover those costs through an applIcatIon fee.
Staff experience wlth the Inn at Santa Monlca and MartIn CadIllac
development agreements provldes the baSIS for the proposed fee.
Included IS a review of proceSSIng fees charged by other
CalIfornIa cItles which have development agreement ordlnances.
Staff recommends adoptIng the proposed fee at thIS tIme so that
revenue prOJectIons can be lncluded ln the FY 1984-85 Clty Budget.
II-A
MAR 2 7 1984
1
~
....
.
.
Mayor and C~ty Counc~l
March 27, 1984
BACKGROUND
CalIfornIa Government Code SectIon 65864 author~zes cIt~es and
countIes to enter Into agreements w~th developers.
These
development agreements ~re used to structure a proJect that
benefIts the CIty whIle prov~d~ng more regulatory certainty for
developers durIng an extended development process.
On February
9, 1982, the CIty of Santa Monica added SectIon 9800 et se~ to
the MunICIpal Code.
These sectIons establIsh the CIty'S
procedure for proceSSIng development agreement applicatIons.
SInce October 27,1981, the CIty has accepted and approved
development agreements for SIX projects: the Colorado Place
mIxed-use proj ect (10/27/81), the Greenwood off lce bu~ldIng and
hOUSIng project (1/26/82), the Kendall Paseo del Mar mIxed use
pro] ect (1/26/82) I the l'olbb condomInIum proJect (2/23/82), the
2701 Ocean Park commerCIal and hOUSIng proJect (9/14/82), the Inn
at Santa Monica expansion (6/28/83) and the Martln CadIllac
offIce bUIldIng and auto dealershlp (11/8/83),
Development Agreement Process
PrIor to formal submIttal of a development agreement applIcatIon,
weekly and sometImes dally diSCUSSIons and negotIatIons occur
WIth the developer and hIs/her aSSOCIates.
Key CIty staff from
CommunIty and Economic Development and other Departments are
Involved throughout thIS process.
Once a complete development agreement applIcatIon has been
submItted to the CIty as prOVIded In MunICIpal Code SectIon 9801,
a varIety of staff IndIVIduals process the applIcation.
2
Mayor and Clty coun~
~ <t .
.
March 27, 1984
The Dlrector of Communl. ty and Econom l.C Development manages the
development agreement process in consultation wIth the Clty
Manager. The City Attorney lS prImarl1y responsl.ble for
revlewlng the development agreement language to protect the
Clty'S interests. The Economic Development DivlSlon 15
responslble for analyzing the proposed development and
negotIatIng WIth the applicant. The Program and policy
Development DIVISIon 1S primarIly responSIble for envIronmental
reVIew, reVIeWIng the applicatIon and plans, and preparIng all
staff reports for the PlannIng CommISSIon and CIty CounCIl.
Once a completed applIcatIon has been flIed, staff begIns formal
reVIew of the proposed proJect. The appll.cation and exhIbIts
descrlblng the proJect are reVIewed by the TechnIcal Look
Commi ttee (TLC). ThIS commi ttee conSIsts of representat1ves of
strategIC Departments and DIVISIons includIng PolIce, FIre,
TraffiC, PlannIng and BUIldIn3 and Safety who reVl.ew the proposed
proJect for maJor Impacts on CIty resources and serVIces. They
also prOVIde the developer WIth early warnIng that an aspect of
the proJect may be unacceptable or reqUIre speCIal treatment If
It IS to meet the requlrements of the BuildIng Code, Fire Code,
or other local or State law. There are usually at least two TLC
meetIngs for each development agreement. AddItional TLC meetings
are reqUIred If s1gniflcant changes 1n the proposed development
are Introduced during the reVIew and approval process.
3
Mayor and C~ty coun~
} 4 .
. March 27, 1984
Env~ronmental rev~ew of proposed development agreement proJects
must comply w~th State and C~ty env~ronmental rev~ew procedures,
~nclud~ng preparation of an In~t~al Study.
If the proJect
warrants a Negat~ve Declarat~on, staff prepares the necessary
reports and forms.
If the proJect requ~res an Env~ronmental
Impact Report (EIR), staff contracts w~th a private consultant
for this purpose.
Rev~ew of consul tant proposals, ~nterviewlng
cand~dates, and execut~on of a contract w~th the selected
consultant, WhICh Involves the C~ty Attorney's offIce, are all
requ~red parts of the process.
Although the development
agreement appl~cant re~mburses the C~ ty for
the Env~ ronmental
Impact Report consultant fees, CIty staff tIme for the
prellffilnary work and the mon~torlng of the Draft and F~nal EIR
are not covered through the fees paId by the applIcant.
When staff determInes the proJect has been thoroughly analyzed
the proposed proJect IS presented to the Planning CommiSSIon.
Current practIce calls for at least three reviews:
1. Prel~m~nary concept rev~ew by Plann~ng Comm~SSlon and
ArchItectural Rev~ew Board (ARB).
2. PlannIng Comm~sslon reVIew durlng ErR or Negatlve
Declaration rev~ew perIod (may be a publIC hear~ng).
3. FInal Planning Commlss~on review (must be a public hearlng)
per Code Sect~on 9812 at close of EIR rev~ew period.
Each meetIng reqUIres a wrItten staff report and at least one
meet~ng reqUIres publIC notIce. From recent experIence, these
meetings often last several hours and reqUIre attendance of
numerous CIty staff members. For the latter two reVIews, a draft
development agreement must be prepared by the CIty Attorney.
4
f
.
.
Mayor and CIty CouncIl
March 27, 1984
When the PlannIng Comm~sslon makes its formal recommendatIon, the
development agreement IS sent to CIty CouncIl for consideratIon.
Here agaIn, public not~flcatlon procedures must be followed,
staff reports prepared and key staff must be present at these
publIC hearIngs to answer questIons.
Analysl.s
In order to determIne the approprIate fee level, staff was
surveyed (ExhIbIt A) to gather informatIon on the amount of tIme
CIty staff expended processlng the two most recent development
agreements, the Inn at Santa MonIca and Martln CadIllac proJects.
Other proJects were not included because of the amount of time
WhICh has elapsed SInce those development agreements were
processed. SuffICIent Information was collected to estImate the
total number of hours spent by staff and assoclated dIrect costs
(duplicatIng, publIcatIon costs of FInal EIR, and notlflcatlon
cost). The FInance Department prOVIded estImates for fringe
benefIts and IndIrect costs.
Table 1 IS a summary of the total estimated cost for these two
development agreements. ExhibIts Band C prOVIde detaIled
breakdowns by staff person hours. A.ssoclated dlrect costs
breakdowns are lIsted In ExhIbIts D and E.
The Inn at Santa MonIca development agreement took approXImately
ten months to process. It took four months to process the MartIn
CadIllac development agreement. Martin CadIllac requIred
5
Mayor and City CouncIl
.
.
March 27, 1984
approxImately 1,002 hours compared to the Inn at 819 hours. The
average hourly rate per employee (wlthout benefits and Indlrect
costs) was $17.07 for Mart1n Cad1llac and $16.32 for the Inn.
Ind1rect costs, whlch Include all 1nternal and C1ty
adminlstrat10n (I.e., C1ty Manager, Purchasing, FInance, Data
ProceSSIng, City Clerk, and Personnel) were calculat2d by Clty
Department uSlng cost factors developed by the FInance
Department.
Fr1nge benefIts costs were estImated by the F1nance
Department to add $1 per hour of staff tIme for health and dental
plus 19.5% of total personnel hour costs for PERS (retirement).
Overt1me was not calculated 1n the figures presented In ExhIbits
Band C. It was not feaSIble to obta1n overtIme calculations for
each employee, although It IS known that both proJects reqUIred
substantIal overtl.me hours from employees In the CommunIty and
Econom1c Development Depar tment and the C1 ty Attorney's Off Ice.
Total costs presented In Table 1 are therefore SlIghtly
understated.
The total hours presented l.ncludes staff tIme spent on
enVironmental reVIew.
MartIn CadIllac and the Inn reqUIred
EnVIronmental Impact Reports (EIR) whereas preVIOUS development
agreements dId not.
Because the type and SIze of the proJect
usually determInes whether a proJect needs an EIR, a fee for
envIronmental reVIew should be charged In additIon to the total
proceSSIng fee.
Some development agreements may requlre a
conSIderable amount of staff time for environmental review while
others may not. For thIS reason, a separate fee structure W111
be developed for recovery of staff's envIronmental rev~ew costs.
6
.
.
Mayor and Clty Councll
March 27, 1984
However, the time spent by staff to prepare the Inltlal Study,
wh1ch determ1nes whether a Negative Declaratlon or EIR is
required, should be Included as part of the development agreement
processlng fee.
In determlnlng total costs for processLng development agreement
appllcatlons, "dlrect costs" Includ ing pr lntlng the Flnal ErR,
publIC notlce, legal ads, and dupllcatLng costs were calculated.
For MartIn CadIllac these costs were estImated at $1,194 and for
the Inn at $1,195. The total dIrect costs includIng staff tIme
for the Inn at Santa Monica and MartIn CadIllac development
agreements are estimated at $21,583 and $27,535 respectlvely.
DEVELOPMENT AGREEMENT FEES IN OTHER CITIES
Staff's research on fee schedules 1n other cltles indIcates
there 1S no state-wide conslstency in setting development
agreement fees. Many CItl€S have ordinances but do not charge for
the processing of development agreement appllcatlons. Others
have provIslons in their ordInances authorizing the establishment
of such fees, but have yet to do so. Of those wlth establlshed
fees, the range and method of calculating varles greatly.
For comparlson, the League of Callfornla CItIes was contacted to
obtaln a I1st of those citles WhICh have development agreement
ordlnances. A summary of the 1.nfor-matlon gathered is presented
below.
The CIties of San Dlego, IrVIne, Anahelm, Oxnard, Oakland, San
Franc1sco, Novato and Brisbane each have an ordlnance WhICh
7
. .
Mayor and C~ty Counc~l
.
, .
.
March 27, 1984
authorizes them to process development agreements. Anaheim,
Oxnard, San Franc~sco, Novato and Brisbane do not charge an
appl~catIon and processIng fee for development agreements, but do
charge other development perm~t fees based upon the type of
developmen t (i .e., subd I VIS ~on, condi t~onal use perm ~ t, specIf IC
plan, EIR's, etc.).
Anahelm's and Novata's ordInances have provisIons to establIsh a
development agreement applIcatIon and processIng fee.
The CI ty
of AnaheIm plans to establish a fee In the near future. They have
recently processed two very large development agreement proJects.
On the other hand, the City of Novato has processed only one
development agreement SInce the adoption of their ordinance and
does not plan to establIsh a fee for the applIcatIon and
processIng of development agreements.
Irvine, San DIego and Oakland have establIshed a development
agreement applIcation and processing fee. Procedures In the
cIt~es of IrVIne and San DIego are sImilar. Both CItIes' fee
schedules for development agreements are based on an hourly rate,
as are theIr other development permit/fees.
IrVIne, for
instance, charges $44.00 per hour to process development
agreements.
Tlme spent on the p~ocesslng of the appllcatlon is
documented and the appllcant IS charged prIor to the Issuance of
a bUlld~ng permit.
The process~ng cost of a recent 4,000
resldentlal un~t development agreement proJect totaled $4,000 -
$5,000, or about 100 hours of staff processlng t~me.
8
'. May~r and Cl ty counl
San Diego requires a $3,000
.
March 27, 1984
deposlt at the time a development
agreement application IS submItted for reVIew. The $3,000 is
drawn down on an hourly basIs. The hourly rate varIes based upon
the staff required to process the applicatlon.
The cost for
profeSSIonal staff (i.e., plannIng analyst) is $50 - 60 per hour,
clerIcal IS less, and management time 15 charged at a higher
hourly rate.
This amount includes a 50% overhead factor. If
the total cost exceeds $3,000 the applIcant is notIfied and
billed for the additional cost.
If the cost IS less than the
$3,000 depOSIt, the difference IS refunded to the applIcant. One
of San DIego's most recent development agreement proJects
Involved a 200-300 acre specifIc plan/mIxed use development near
the San DIego Rlver. The total proceSSIng cost for the proJect
charged to the applIcant was approximately $50,000.
Oakland charges a development agreement application and
processing fee of $ 2,650.00 per application.
Other development
perml t fees are added based upon the type of development (l.e.,
subdlvislons, C.D.P., zone change). Another fee that IS charged
In conjunction with the development agreement fee is an annual
reVIew fee of $800.00.
To date, Oakland has not processed a
development agreement and therefore they do not know whether
these fees are sufflc1ent to cover the cost for process1ng and
reVIew.
A development agreement for an eleven block
redevelopment proJect In the downtown area IS pendIng.
9
r .
, .
.
.
Mayor and Clty Councll
March 27, 1984
There appear to be at least three optIons for establishIng a
development agreement fee schedule:
1) Il~!_~~~. EstablIsh a slngle fee for all development
agreements, a procedure sImIlar to that for other PlannIng
and Zonlng fees (I.e., varIance, CUPs, etc). ThIS IS the
eaSIest system to admInIster, but given the WIde variety and
complexlty of development agreements, may not achieve the
ObJective of Off-settIng dIrect staff costs In all cases.
2) SlId Ins Scale Fee. Fees would be a functlon of proJect Slze.
ThIS IS conSIstent WIth the way bUIlding permIt and plan
check fees are usually calculated, and the way many CItIes
calculate fees for other development reVIews. ThIS system IS
also very easy to admInIster.
3) Hourly Fee Charged A9aInst an InItial DepOSIt. This IS the
San DIego model WhICh best ensures dIrect cost recovery, but
reqUIres record keepIng to account for all applicable staff
tIme chargeable to the proJect.
LIke the envIronmental reVIew process, time spent on a
development agreement IS related to the type and SIze of the
proposed proJect.
Based on recent experience, development
agreement proJects In Santa MonIca can be expected to range from
about 100,000 square feet (Paseo del Mar proJect was 63,000) to
over a mIllIon square feet (Colorado place). It is recommended
that an hourly fee charged agaInst an ~n~tlal depos~t (opt~on *3)
be utIlIzed to recover the cost of processlng development
agreement appllcatlons. It is also recommended that the lnlt1.al
depOSIt be a minimum fee of $10,000 since the processIng of any
development agreement requ1.res a mlnlmum amount of work
regardless of proJect SIze. ThIS mInimum fee would be suffiCIent
to cover these costs and would encourage only those w1.th a
serIOUS commltment to apply for an agreement.
10
.
.
Mayor and C1ty Counc1l
March 27, 1984
The $10,000 fee would be non-refundable and would pay for a
maX1mum of 333 1/3 hours of staff processing t1me (th1S 1S
roughly one-thlrd the t1me actually spent on Martin Cadlllac). If
the process1ng of a development agreement exceeded the 333 1/3
hour threshold, the applicant would be requlred to pay an
add1t1onal $5,000 deposlt WhICh the City would draw agalnst at
the establIshed rate of $30.00 per hour. (ThlS hourly rate
Includes average staff costs and other direct costs.) All CIty
employees workIng on development agreements WIll charge their
tIme to a spec1al tIme card account number. This will serve to
keep an accurate record of tIme spent on each project for future
analysl.s, and WIll provide the supportIng eV1dence for any
charges 1n excess of the m1n1mum fee. This fee does not Include
the cost for a consultant to produce an Environmental Impact
Report when reqUired, Wh1Ch 1S assessed separately. The cost of
tl.me spent WIth developers on negotl.atlons prlor to fl.llng a
formal applIcat10n for a development agreement (pre-applIcatIon
conference tune) should be accounted for on an hourly baSIS and
applied against the minimum appl1catlon fee.
Irrespectlve of the fee schedule method selected, Oakland's Idea
of charglng an annual monItoring fee should be conSIdered. State
law requires that each agreement be reVIewed annually for
compllance WhICh 1S a recurr1ng staff cost. Fees could be due
each year on the ann1versary date of the agreement. We estImate
an ASSOCiate Planner would expend 1 hour per week or 52 hours per
year per development agreement monitorIng and reportIng to
11
.
.
Mayor and City Council
March 27, 1984
Council. With clerical support staff, this would cost
approximately $1,500.00 annually, including indirect and
associated direct costs.
~udget, and Fiscal Impacts
Only one development agreement that would be subject to the
proposed fee schedule is anticipated during FY 83-84, the Plaza
Carrillo office/hotel project at Fifth and Broadway. On the
basis of the proposed fee this project would be assessed $10,000.
Followlng adoption of the draft Land Use Element, staff
anticipates progessing no more than one or two development
agreement proJects per year. The proposed fee will directly
offset the cost of staff labor and materials to process these
agreements.
RECOMMENDATION
It is respectfully re;commended that the City Council: 1) adopt
the Resolution establishing a development agreement processing
fee, attached as Exhibit F; 2) direct the City Attorney to
prepare any ordinances necessary to amend the Municipal Code to
lnclude an annual monitoring fee and a resolution establish~ng an
annual monitoring fee at $1500; and 3) direct the Director of
Finance to establish a new revenue account for Development
Agreements and to set the budget estimate for the new account at
$10,000 for FY 83-84.
12
.
.
Mayoc and C~ty Counc~l
March 27, 1984
Prepared by: Paul J. S~lvern, Act~ng Plannlng Director
Patrlc~a Rellly, Act~ng Manager
Barbara Renter~a, ASSIstant Planner
Program and POlICY Development DIvISIon
Commun~ty and Economic Development Department
Attachments: ExhIbIt A - Development Agreement Survey Form
B - Martin Cad~llac Development Agreernent-
DetaIled Costs Per Employee, IndIrect
Costs Plus FrInge BenefIts
C - The Inn At Santa Monica Development
Agreement - Detalled Costs Per
Employee, IndIrect Costs Plus Fr~nge
Benefits
D - DIrect Costs For MartIn CadIllac
Development Agreement ProJect
E - DIrect Costs For The Inn At Santa
MonIca Development Agreement Project
F - Draft ResolutIon of The CIty of Santa
Monlca EstablishIng Fee for
Filing and Processing Development
Agreement Applicat~ons and Documents
13
,
, ~ c
.
.
C~ty Counc~l Meet~ng 3-27-84 Santa Mon~ca, Cal~forn~a
RESOLU'frON NUMBER 6848 (CCS)
(Clty Council Serles)
A RESOLUTION OF THE CITY
OF SA~rA MONICA E3TABLISHING FEE
FOR FILING AND PROCESSING DEVELOPOE8'f
AGREE~ENT APPLICATIONS AND DOCUMENTS
THE CITY COUNCIL OF THE CITY OF SANTA BONICA DOES RESOLVE
AS FOLLm'lS:
SECTION 1. Pursuqnt to Mun~cipal Code SectIon 9802, the
follow1ng fees are establ~shed for the f~llng and processing of
any dcvelopoment agreement:
(a) The m1nlmum fee to be charged for the f111n3 and
.
processlng of dev~lopment agreement appl1catlons and documents 15
hereby establ1shed at $10,000.00.
ThlS fee shall be non-
refundable, shall lnclude up to three hundred thlrty-three and
one th1rj (333 1/3) hours of Clty staff processlng time and
other d1rect costs, and shall be due and payable upon f1110g of
a development agreement appl1cat1on.
(b) When the
processlng of a development
agreement
exceeds three hundred th1rty-three and one thlrd (333 1/3) hours
staff t1me, the developer shall deposlt an addltlonal $5,000
Wh1Ch shall be used to offset staff time for each add~t~onal
hour at a rate of $30.00 per hour.
(c) When a total of 500 hours staff tlrne has been expended
and th1S addltlonal deposlt has been exhausted, developer shall
1
J " t
.
.
be (egu~red to make succeSSIve deposits of $5,000 WhiCh shall be
s~m1larly admin1stered 10 order that all costs of process~ng the
development agreement appllcat10n sh~ll be pa1d by the
development appllcatlon fees.
SE~TION 2. The C1ty Clerk shall cert1fy to the adoptlon of
thIS Resoluclon, and thenceforth and thereafter the same shall be
~n full force and effect.
APPROVED AS Tv FORM:
. . A ...\.-.,
I k )A,....i. --- .
ROBERT [>,1. MYERS
Clty Attorney
~.-----~
"0
2
~ .. t
.
.
ADOPTEJ AND APPROVED 7nIS
27th
OA"
OF March
. 1 9 84 .
"';.L~ --r-~
./,/ /-
({ . .~-
-- ".,... -
MAYOR
/
\
..J
I YEREaY CERTIFY THAT THE FOREGOING RESOLUTION
NO. 6848[CCSj J.JAS DULY ADGP7ED BY THE CITY COUNCIL OF THE
CITY O~ SANTA MONICA pi A ~EET!NG THEREOF HELD ON
March 27
, 1984 BY THE FOLLOWING COUNCIL VOTE:
,;YES:
.
COUNCILMEMSERS: Conn, Epstein, Jennlngs, Press,
Zane and Mayor Ed~ards
NOES;
COUNCILMEM8ERS: Reed
ABSENT:
COUNC I U1EMBERS: Xone
ABSTAIN:
COUNCILMEMBERS: ~one
ATTEST:
/?
(/
I ~ "/(1_ ~ .
/.~ I
=-' _/ .:_1.-,.... ':::
CITY CLERK