September 17, 2002

The City Council approved a 1998 Study Issue to develop a work plan for completion of a study of potential revenue sources for major transportation capital improvements in the City. Previously approved studies and the Land Use and Transportation Element of the General Plan identify a number of major roadway capital improvement projects that will be necessary to mitigate increased travel in the City generated by new development over the next 20 years. These projections have been recently confirmed by an updated City-wide transportation model. The Transportation Strategic Program seeks to identify a comprehensive improvement and funding program to mitigate new development over the life of the General Plan. Without adoption of a program and identification of funding for improvements, traffic congestion could negatively affect the City's economy, neighborhoods, and environmental health, among other things.

The study has not targeted specific funding mechanisms to date, although candidate types of revenue have been discussed. Input and endorsement of stakeholder groups is critical to the success of a revenue generation program. At this time staff intends to initiate a stakeholder outreach plan to explore the range of potential revenue sources available to fund major transportation capital improvements. Revenue potential, implementation and legal issues would be discussed to determine the viability of, and subsequently implement, a program of new revenue sources.

Staff has prepared a Work Plan and schedule outlining the approach to the stakeholder outreach program (Attachment 1). A list of potential stakeholders is also included (Attachment 2). Staff seeks Council endorsement of the Stakeholders Outreach Plan and requests that the City Council designate a member to serve on a review panel for final outreach materials. A similar request will be made of the Planning Commission to designate a review panel participant.

BACKGROUND

During the course of development of the updated Land Use and Transportation Element (LUTE) in 1997, it became clear that a program of major transportation capital improvements was required to support previously approved land use plans. At the time of adoption of the LUTE, no funding sources had been identified to fund these improvements. The Transportation Strategic Program, as it is currently named, was initiated in 1998 to provide the financial basis for the City's current land use and transportation plan.

Key components of the Strategic Program effort were the establishment of an interim revenue mechanism to recognize the impact of new development on future forecast transportation deficiencies, completion of an updated transportation forecasting model, and development of cost estimates. These steps have been completed. The revenue mechanism was instituted administratively beginning in January, 2000. The transportation model received a finding of regional consistency from the Santa Clara Valley Transportation Authority in March, 2002, and staff presented future transportation forecasts and cost estimates to the Council at a August 13, 2002 Study Session.

Study of potential development of new transportation revenue sources for transportation is consistent with Fiscal Sub-Element policy 7.IB.6, "Use all available funding sources to finance capital improvement projects consistent with City priorities." It implements Land Use and Transportation Element action statement C3.7. 1, "Develop alternatives and recommendations for funding mechanisms to finance the planned transportation system."

DISCUSSION

The City has adopted long range land use plans covering the next 20 or so years including the Futures Study, the Downtown Specific Plan, the Southern Pacific Corridor Plan, and the Lockheed Site Master Use Permit. In 1997 these plans were consolidated into a unified Land Use and Transportation Element (LUTE). These plans and the LUTE identify transportation mitigation required to support the plans, but do not identify funding sources. As a result, development is occurring without a solid financial plan for transportation mitigation.

The cost of this mitigation is considerable, estimated in the LUTE as in excess of $ 100 million. This level of funding cannot be accommodated by the City's current Resource Allocation Plan. In order to provide for planned, orderly development in Sunnyvale over the next 20 + years, new revenue sources must be identified and implemented for transportation improvements.

Revenue studies are typically very involved due to the complexity of some revenue mechanisms. While outside funding sources and the likelihood of receiving funding from those source can be relatively easily stated, more reliable sources such as fees and assessments require detailed study of revenue generation potential and legal issues with the scope, amount and justification of fees. Fairly detailed cost estimates of improvements that would be eligible for fee revenue is also necessary. Crafting a logical package of revenue sources and a proposed menu of capital improvements is another component of these studies.

Transportation models are computer forecasting tools that create a virtual replica of the roadway system and its operation. Land use types, roadway characteristics mode splits, and other information are collected, programmed, and calibrated to real traffic volumes and conditions observed on the roadway system. From this base, scenarios about future land use and transportation system improvements can be programmed to gauge the impact to transportation system capacity, and future improvement needs can be identified.

Transportation models, by virtue of their ability to link land development with traffic generation, are useful tools for revenue studies. Models can identify trip types, trip end locations and trip routes. At a basic level, a model can assist in determining what types of revenue mechanisms could meet legal tests of nexus and rough proportionality. This might be useful, for example, in making decisions about a general citywide tax versus a targeted assessment district or impact fee. At a more detailed level, models are useful for identifying specifically who should pay for what, i.e. determining assessment district boundaries and supporting the mathematical calculations necessary to develop equitable impact fees.

The City’s previous transportation model dated from 1989. Model assumptions were not up to date, and the software did reflect the current state of the art. Further, the Santa Clara County Congestion Management Program (CMP) establishes certain consistency and other requirements for municipal models. The City's 1989 model was only partially consistent and could not be used for some CMP planning requirements, like deficiency planning.

A new model has been developed by the firm of CCS Planning and Engineering, in conjunction with Hexagon Transportation Consultants. This model uses a base year of 1998 and projects future growth to buildout of the General Plan (2020). The model has been certified consistent by the CMP. Staff has applied the model to a range of alternative future scenarios reflecting the Moffett Park Specific Plan Project Alternative, the Fair Oaks ITR re-zoning, and the Downtown Specific Plan Project Alternative, as well as alternative transportation system assumptions.

Estimating the cost of improvements is a critical phase of a revenue study, particularly for projects that are deemed necessary in the near term. Order of magnitude cost estimates have been prepared, and conceptual designs and planning level cost estimates are being refined. At a minimum, those projects that the Strategic Program effort determines are short term priorities must be engineered to the point that highly reliable, legally defensible cost estimates can be determined.

Identification of revenue alternatives involves evaluating things like levels of anticipated development, location of development, trip generation/impact on congestion, equity of mechanisms for assessing fees (i.e. per square foot, number of trips, etc.). The relative impact of various revenue mechanisms given this information will then be compared and recommendations derived.

Stakeholder input is also critical, and is the focus of this Report to Council. Staff is proposing a "two phase" stakeholder outreach plan to elicit input from the development community, property owners, and other groups with an interest in land use and transportation in the community. A list of potential stakeholders as identified by staff is included as Attachment 2. The first "phase" will present, via a series of workshops, information on future growth projections, future transportation system deficiencies, and revenue and policy alternatives for meeting transportation needs. The intent will be to gather broad, general feedback on revenue and policy choices, given future projections.

Input from the initial workshops and outreach will feed into the formulation of a Program Strategy. This Strategy will encompass the details of a comprehensive transportation funding program. Development of the Strategy will involve a working group of City departments and divisions as well, including the Finance Department Budget and Revenue divisions, the Public Works Traffic Engineering divisions, the Community Development Department Planning and Building divisions, and the Office of the City Attorney. Staff proposes that the working group findings be assessed by a designee of both the City Council and Planning Commission prior to release for final public consideration.

Another tool that may be used in the refinement process is a public balance sheet. Development of a public balance sheet will clearly show the financial ramifications of required improvements versus comprehensive land development cost and financial resources. The sheet is an evaluation tool for balancing revenue needs, transportation improvement efficacy, land use value, cost of development and potential revenue sources. This tool has been used in areas with constrained land use and transportation resources as a means attaching value to, and prioritizing, land development and transportation improvements.

Once approved by the Council and Planning Commission designees, the Program Strategy will again be subjected to stakeholder review through a second round of workshops. The final Program Strategy along with comments received at the workshops and any recommended revisions as a result of the workshops will be presented to Council at it’s January 28, 2003 meeting.

The Draft Moffett Park Specific Plan and EIR are scheduled to be released for review in the same time frame as the initial round of Stakeholder Outreach workshops. Formulation of the final Moffett Park Specific Plan project alternative will occur simultaneously with refinement of the Program Strategy for the Transportation Strategic Program. This will facilitate a consistent approach to the menu of capital improvements necessary for any proposed land use changes. Council consideration of the final Transportation Strategic Program is currently scheduled to take place after Planning Commission consideration of the Moffett Park Specific Plan but before the Council hearing on the Plan. Staff anticipates that the close coordination of hearing dates will allow for coordination between the two programs. A follow-on hearing on the Transportation Strategic Program may occur if significant changes to the land use plan occur during Council review of the Moffett Park Specific Plan.

A third element to the Transportation Strategic Plan that is currently budgeted in the Resource Allocation Plan and is also linked to future development and transportation modeling is development of a Citywide Deficiency Plan. Deficiency plans are CMP-required transportation mitigation plans. A deficiency plan is required when traffic levels on the regional roadway system fall to a CMP-established standard of level of service "F," or if a pre-1991 condition of level of service "F" is worsened. Local agencies must prepare a deficiency plan or risk losing a portion of their annual gas tax subventions. The deficiency plan quantifies the traffic impact and identifies a course of action to relieve the congestion. If improvement cannot be made at the impacted location, the plan identifies a mechanism or mechanisms to provide offsetting relief of congestion on some other part of the regional roadway system.

Sunnyvale is not yet required to do deficiency planning. However, projections clearly show that the City will need to prepare a plan in the future. While very few deficiency plans have been prepared by Santa Clara County jurisdictions, one approach has been to prepare a deficiency plan based on projected rather than existing congestion. The Resource Allocation Plan contains a special project to develop a Citywide Deficiency Plan. The intent of this project is to proactively, on a citywide basis, deal with deficiency plan requirements. Having an approved plan in place eliminates the potential for revenue loss due to loss of CMP-linked gas tax subventions, and allows development in the community to proceed without delays to the planning process. Also, a plan based on projected congestion can look at a broader area and develop more comprehensive mitigation.

Because of the need to develop future travel projections, future deficiency planning and transportation modeling are integral. Also, improvement plans stemming from development of a deficiency plan must include a financing plan, it makes sense to complete a deficiency plan in the context of developing a transportation capital revenue plan for the City. Staff is proposing developing a Citywide Deficiency Plan as an offshoot of the Strategic Program as a logical extension of these efforts. Subsequent to approval by the City Council, the Transportation Strategic Plan will be "re-packaged" as a Citywide Deficiency Plan to meet CMP requirements.

There is no fiscal impact from endorsing the stakeholders outreach plan and designating a review panel representative.

Posting of the Council agenda. Reports to Council are also on the City's Web Site.

Recommendation

Staff recommends that the City Council endorse the Stakeholders Outreach Plan and requests that the City Council designate one member to act on a review panel for final outreach materials. A similar request for participation in a review panel will be made of the Planning Commission.

Prepared by:
Jack Witthaus

Transportation and Traffic Manager

Reviewed by:
Marvin A. Rose

Director of Public Works

Approved by:
Robert S. LaSala
City Manager

1. Work Plan and Schedule for Stakeholders Outreach Plan
2. Stakeholders List