Two years ago, in response to the requirements of Proposition 218, staff developed and Council approved a new assessment methodology for the operation and maintenance component of the Downtown Parking Maintenance District. The proposed assessment methodology for this year is consistent with the past two years.

Staff is recommending that Council take several actions; adopt a Resolution of Intention to levy and collect the assessment; approve the Preliminary Engineer’s Report; set the time, date, and place for the required public hearing; and authorize mailing of the Notice of Proposed Assessment and ballots.

By adopting the Resolution of Intention to levy and collect the assessment and approve the Preliminary Engineer’s Report, Council will begin the annual process of giving the City the necessary authority to levy and collect the non ad valorem assessments for public parking facilities from property owners within the Maintenance District.

Since 1964, the City Council has annually levied an assessment for the debt service requirements associated with the acquisition of land for parking facilities. A separate assessment is levied to cover maintenance, operation, and construction of improvements for the City’s Downtown Parking Maintenance District parking facilities. Both of these assessments had been ad valorem, based on the value of each property within the District boundaries. Proposition 218, passed by California voters in 1996, requires certain assessments to be based on specific benefit to the property and required a change to the City’s methodology. This law applies to any assessments made for the Parking Maintenance District after FY 1997/98.

Proposition 218 only affects the operation and maintenance component of the Parking District. The existing method of assessing for the bonded indebtedness component can legally continue as an ad valorem assessment. The bonded indebtedness portion of the assessment will be completely retired in the year 2002. Once retired, property owners will be assessed for only the operations and maintenance costs by separate assessment.

Council Resolution 6643, dated September 1, 1964 authorized the City to levy an annual assessment on all lands and improvements within the Parking District to pay debt service, and maintenance, operations, and improvement costs. Prior to the passage of Proposition 218, this assessment had been levied by means of an ad valorem assessment placed on the annual property tax bills.

On April 21, 1998, Council adopted Ordinance No. 2576-98 amending the City’s Improvement Procedure Code (Sunnyvale Municipal Code Title 14) which incorporates procedures for levying non ad valorem assessments for public parking facilities (the operations and maintenance component). Ordinance No. 2576-98 became effective on May 21, 1998.

The Downtown Parking Maintenance District consists of approximately 75 parcels in Sunnyvale’s downtown area. Over 90% of the Parking Maintenance District consists of commercial businesses, of which Sunnyvale Town Center is the largest.

In response to the 1996 passage of Proposition 218 ("The Right to Vote on Taxes Act"), staff developed a plan to bring the Downtown Parking Maintenance District assessment into compliance with the new legal provisions. Proposition 218 requires assessments to be based on specific benefit to each property and to be supported by an engineer’s report prepared by a registered professional engineer certified by the State of California.

Staff retained the firm of Berryman & Henigar to assist in conducting the Parking Maintenance District assessment analysis. The proposed methodology for calculating the assessment is based on the parking demand the property generates, less the existing number of off-street parking spaces that each parcel contains. Parking demand is based on the City’s Zoning Code requirements. The result of this calculation is based upon each parcel’s pro rata share of "parking deficit." This methodology appears to be the fairest and most equitable way to assess property owners for the operation and maintenance component of the parking facilities.

On February 19, 2000 an informational letter was mailed to each property owner explaining the proposed assessment methodology. Specific information pertaining to the demand for onsite parking, the number of onsite parking spaces, and any respective deficit was provided for each parcel within the district. Property owners were provided the opportunity to review the parcel information and report any inaccuracies to Berryman & Henigar.

The proposed per space parking deficit assessment of $55.00 is slightly higher than last year’s assessment of $54.14. It is anticipated that the assessment will not be sufficient to cover the operating expenses. Sufficient reserves are available in the Parking Maintenance District fund to offset any shortfall created by the proposed assessment. The parking deficit assessment and reserve fund balances will be reviewed each year as part of this process.

City staff are aware that there is a potential short term parking impact as a result of the Mozart project on property owners in the immediate vicinity. It is recommended that should any parking displacement occur as a result of the Mozart project during the 2000/2001 assessment year, the number of parking spaces affected by the construction will be determined and an amount equivalent to the assessment amount ($55.00) for each displaced parking space will be placed into a special account for parking mitigation. These funds will be used to pay for shuttles, signage, and other purposes related to the Parking Maintenance District as mutually agreed upon by the property owners and the City. The developer will be asked to pay an equivalent amount to be used for the ongoing maintenance of the Parking Maintenance District.

There are four recommended actions that the City Council must take to give the City the necessary authority to levy and collect the non ad valorem assessments for public parking facilities from property owners within the Parking Maintenance District.

1. Adopt a Resolution of Intention to levy and collect the Parking Assessment (attachment 1).
2. Approve the Preliminary Engineer’s Report (attachment 2).
3. Set the May 9, 2000 City Council meeting for public hearing on the assessment.
4. Authorize the mailing of a Notice of Proposed Assessment and ballots to all Downtown Parking Maintenance District property owners. Mail ballots to each address as shown on the County of Santa Clara secured property tax roll.

Should the City Council adopt the Resolution of Intention to levy and collect the assessment and approve the Preliminary Engineer’s Report, staff expects to mail property owner ballots on March 24, 2000. Property owners will have 45 days to submit their ballots, with City Council final action at the public hearing scheduled for May 9, 2000.

Under Proposition 218, property owners have the opportunity to accept or reject the proposed assessment methodology by vote. A simple majority vote weighted by assessment obligation of over 50% is required to either pass or reject the proposed assessment.

If the vote as tabulated is in support of the proposed assessment methodology, the City Council may either approve or reject the recommended assessment. If approved by Council, staff will forward the assessment for operation and maintenance to Santa Clara County for collection on the property tax rolls. The ad valorem tax rate for debt service will be considered by the Council in a separate action and will be sent to Santa Clara County for collection as well.

If the vote is not in favor of the proposed assessment methodology, the City will not have the authority to levy and collect the assessment for FY 2000/2001.

If the assessment is not successful, the property owners will have to identify alternative methods of providing and maintaining parking for the benefit of their businesses. It is clearly the obligation of the downtown business owners to provide parking for their businesses, and the Parking Maintenance District was established as an inexpensive and cost-effective mechanism for those businesses that do not have adequate parking on their property to meet parking requirements. It is unlikely the individual property owners could do this as cheaply as the Parking Maintenance District. For these reasons, if the assessment methodology is not approved, staff would recommend that the City investigate contracting with a parking operator for a paid parking program for all City owned lots within the Parking Maintenance District.

Approval of the operation and maintenance component of the recommended assessment methodology will generate approximately $160,000 in revenue. The expenses incurred in maintaining the parking lots are estimated at $190,900 for FY 2000/2001. There are sufficient funds in the Parking Maintenance District Fund to offset this shortfall.

1. Take four actions necessary to give the City the necessary authority to levy and collect the non ad valorem assessments for public parking facilities from property owners within the Maintenance District; adopt a Resolution of Intention; approve the Preliminary Engineer’s report; set the May 9, 2000 City Council meeting for the required public hearing; and authorize the mailing of Notice of Proposed Assessment and ballots.
2. Reject the four actions necessary to give the City the necessary authority to levy and collect the non ad valorem assessments for public parking facilities within the Downtown Parking Maintenance District.

Property owners will be notified of the public hearing with the assessment ballot. Required public notice will be given through the publication of the City Council Agenda.

Based on the final tabulation of the property owner ballots, it is recommended that Council approve Alternative 1.

Prepared by:

Therese B. Balbo
Administrative Services Manager

Reviewed by:

Mary J. Bradley
Director of Finance

Approved by:

Robert S. LaSala
City Manager

1. Resolution of Intention to levy and collect the assessment for the Downtown Parking Maintenance District.
2. Preliminary Engineer’s Report.