MAY 9, 2000

SUBJECT:     APPROVAL TO LEVY AND COLLECT AN ASSESSMENT FOR THE DOWNTOWN PARKING MAINTENANCE DISTRICT FOR FY 2000/2001(RTC#00-143) 

REPORT IN BRIEF

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 adopt a Resolution to levy and collect the assessment and approve the final Engineer’s Report for the Downtown Parking Maintenance District for Fiscal Year 2000/2001.  By adopting the Resolution, Council will 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.

BACKGROUND

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. 

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 have 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, and will be brought to Council as a separate item.  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.

 

EXISTING POLICY

This action is consistent with the City of Sunnyvale’s Fiscal Sub-Element Goal 7.1A.1i: “Establish user charges and fees at a level closely related to the cost of providing those services.”

DISCUSSION

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 (B&H) to assist in conducting the Parking Maintenance District assessment analysis.  The proposed methodology for calculating the assessment remains the same as the prior two years and 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 Municipal Code zoning requirements.  The result of this calculation is based upon each parcel’s pro rata share of “parking deficit.”  This methodology has been 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 existing off-street 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.  Based on the preliminary budget for FY 2000/2001, it appears that the assessment will not be sufficient to completely cover the operating expenses.  Due to the construction of the downtown area in the near future and the possible disruption of parking availability, staff is recommending that the parking deficit assessment not be significantly increased at this time.  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.

On March 21, 2000, the City Council adopted Resolution No. 121-00 declaring its intention to levy and collect an assessment for the Downtown Parking Maintenance District for FY 2000/2001, approve the Preliminary Engineer’s Report, and authorize the mailing of the Notice of Proposed Assessment and ballots to all Downtown Parking Maintenance District property owners. Property owners had 45 days to submit their ballots, with City Council final action to occur at the public hearing.  The public hearing on the proposed assessment is scheduled for tonight’s Council meeting.

 

PROCESS

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.

During the open public hearing, any protests which have been filed with the City Clerk will be heard and considered.  At the conclusion of the hearing, the following items should be considered:

1.     Report of ballot tabulation.

2.    Council vote on Resolution Ordering the Improvements and Levy and Collection of the Assessment for FY 2000/2001.

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.

FISCAL IMPACT

Approval of the operation and maintenance component of the recommended assessment methodology will generate approximately $160,000 in revenue.  The expenses for 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.

ALTERNATIVES

1.   If the vote as tabulated is in support of the proposed assessment, Council may adopt the Resolution to levy and collect the assessment for the Downtown Parking Maintenance District for FY 2000/2001.

2.   If the vote as tabulated is in support of the proposed assessment, Council may elect to not levy the assessment for FY 2000/2001.

3.   If the vote as tabulated is not in support of the proposed assessment, Council may not levy the assessment for FY 2000/2001 and must identify an alternative method for operating the parking lots.

PUBLIC CONTACT

Notification of the public hearing was mailed out to the property owners with the assessment ballot.  Required public notice will be given through the publication of the City Council Agenda.  A copy of this report is also available in the Library and on the City’s Internet home page.

RECOMMENDATION

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

 

Approved by:

                                                                       

Robert S. LaSala

City Manager

 

Attachments

1.   Resolution to Order Improvements and to Levy and Collect the Assessment  for the Downtown Parking Maintenance District for FY 2000/2001.

2.  Final Engineer’s Report (.doc 106kb/.xls 226kb)