Downtown property owners did not approve the Parking District in July 2002. At that time, staff was directed to work with the downtown businesses to develop an acceptable plan and bring it back to the City Council. On November 26, 2002, Council adopted the recommendations to resubmit the plan to the Parking District members for a revote. Based on Council action at the November 26, 2002 City Council meeting, staff is continuing to work with downtown property and business owners to explore the potential for a Property Improvement District and/or Business Improvement District that would replace the Parking District or a Parking District Advisory Committee. The property and business owners will also review the boundaries of the Parking District to make sure they are appropriate. As stated at the November meeting, this will be reviewed over the next eighteen months and be brought back to Council for consideration prior to the Fiscal Year 2004/2005 vote on the Parking District.

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 2002/2003 and Fiscal Year 2003/2004. 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

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 operation, maintenance, and construction of improvements for the City’s Downtown Parking Maintenance District parking facilities. Both of these assessments were ad valorem, based on the value of each property within the District boundaries prior to Proposition 218. Proposition 218 only affects the operation and maintenance component of the Parking District. The bonded indebtedness portion of the assessment will be completely retired in FY 2003/2004. Once retired, property owners will be assessed for only the operations and maintenance costs by separate assessment.

The Downtown Parking Maintenance District consists of approximately 70 parcels in Sunnyvale’s downtown area. Over 90% of the Parking Maintenance District consists of commercial businesses.

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. While the Downtown area is in a state of transition, City staff has reviewed the assessment methodology every year and established a one-year assessment.

The ballots for the most recent election to approve the assessment were tabulated at the July 16, 2002, City Council meeting. The assessment failed; 43.95% of those voting were in favor and 56.05% were opposed to the assessment. City Council approved continued maintenance of the parking lots within the Parking District while a long term parking plan was developed.

Staff met with the downtown businesses and property owners four times (August to October) to develop a long-term plan for managing parking in the downtown. The purpose of these meetings was to give property and business owners an opportunity to find solutions for funding maintenance in the Parking District. The top priority recommended by the group was to pay all or part of the costs for the Parking District from the General Fund or the Redevelopment Agency. The next ranked alternative was to use the same methodology used for the parking district in FY 2002 and proposed for the current fiscal year (FY 2003) but not approved by the property owners in July 2002. As part of this priority, the group proposed that the vote be for two fiscal years. The City Council approved this alternative.

On November 26, 2002, the City Council adopted Resolution No. 207-02 declaring its intention to levy and collect an assessment for the Downtown Parking Maintenance District for FY 2002/2003 and FY 2003/2004. This resolution also approved the Preliminary Engineer’s Report and authorized 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.

EXISTING POLICY

Municipal Code Section 19.46.010: Areas and facilities required—Location: the owner or occupant of land or buildings used for any purpose in any zoning district, except uses within the boundaries of a parking district created by the action of the city council, shall provide off-street parking and loading areas and facilities which conform with the regulations set forth herein.

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, operations, maintenance, 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, maintenance, and improvement component). Ordinance No 2576-98 became effective on May 21, 1998.

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

Staff retained the firm of Francisco & Associates, Inc. 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. (Sunnyvale’s Parking Demand Guidelines are based on the City’s Zoning Code requirements.) The result of this calculation is based upon each parcel’s pro rata share of deficit parking spaces. 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.

The proposed method of determining the per space parking deficit assessment reflects construction that is taking place within the Downtown Parking Maintenance District area. Previously, all property owners paid the same per space parking deficit assessment of approximately $55.00.

The Parking District is comprised of four benefit zones within the Downtown Parking Maintenance District area. The boundaries of each benefit zone were geographically determined. Each property located within each of the benefit zones will only be required to pay for the operation and maintenance of the parking facilities located within that benefit zone. The total cost to operate and maintain the parking facilities within each benefit zone will only be spread to each parcel within that benefit zone based upon their proportionate number of deficit parking spaces.

Under this method, City staff determines how much it will cost to operate and maintain the public parking facilities within the District for each benefit zone. City staff then identifies the use of each parcel and determines the number of required parking spaces needed to satisfy the City of Sunnyvale Parking Demand Guidelines. If the parcel has fewer parking spaces than that which is required under the parking guidelines, they are considered in deficit and are assessed for the number of deficit spaces multiplied by the rate per deficit parking space for the affected benefit zone.

Based upon the annual budget needed to operate and maintain the existing public parking facilities for FY 2002/2003 and FY 2003/2004 the assessment rate per deficit parking space for each benefit zone is as follows:

Table Assessment Rates per Benefit Zone
Benefit Zone No.	Assessment Per Deficit Space
1	$19.02
2	$96.60
3	$55.11
4	$30.00
Report of ballot tabulation. Council vote on Resolution Ordering the Improvements and Levy and Collection of the Assessment for FY 2002/2003 and FY 2003/2004.

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 hand-bill businesses for FY 2002/2003 and forward the assessment for operation and maintenance component to Santa Clara County for collection on the property tax rolls for FY 2003/2004. Delinquent payments for FY 2002/2003 will be forwarded to Santa Clara County for collection on the property tax rolls as well.