April 6, 2004

SUBJECT: Funding Request for the Downtown Parking Maintenance District Engineer’s Assessment and Budget Modification No. 34

REPORT IN BRIEF

This report requests Council approval for a special project to determine the Downtown Parking Maintenance District Assessment for Fiscal Years 2004/05 and 2005/06, and Budget Modification No. 34 to appropriate $19,250 from the Parking District Fund reserve to fund the project. 

BACKGROUND

The Downtown Parking Maintenance District consists of approximately 70 parcels in the downtown area.  Over 90% of the parking maintenance district consist of commercial uses. 

Since 1964, the City has levied an assessment to cover operation and maintenance for the City’s Downtown Parking Maintenance District parking facilities.  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.  This law applies to any assessment made for the Parking Maintenance District after Fiscal Year 1997/98.

While the downtown area is in a state of transition, City staff has reviewed the assessment methodology on a regular basis.  The methodology for calculating the assessment used for Fiscal Years 2002/03 and 2003/04 is based on the number of parking spaces that each 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 the deficit parking spaces.  This methodology appears to be the fairest and most equitable way to assess property owners for the operation and maintenance of the parking facilities.

Members of the parking district approved the current assessment on January 14, 2003.  This assessment was for Fiscal Years 2002/03 and 2003/04 and will expire on June 30, 2004. 

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, authorizes 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 roll.  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

A new Parking District assessment and engineer’s report is required for Fiscal Years 2004/05 and 2005/06.  The preliminary engineer’s report is expected to be presented at the May 18, 2004 Council meeting.  Ballots are expected to be mailed to property owners on or about May 28, 2004.  The final engineer’s report and public hearing is expected at the July 13, 2004 council meeting.

In 1998, when the requirements of Proposition 218 came into force, staff reviewed qualifications from several different firms specializing in assessment engineering. Section 2.08.070 (b) of the Sunnyvale Municipal Code exempts contracts for professional services from competitive bidding.  After interviewing those firms, the City retained the firm of Berryman & Henigar to assist with the assessment methodology for the operations and maintenance of the Downtown Parking District.  Berryman & Henigar assigned responsibility for the Sunnyvale project to Mr. Joseph Francisco. 

In 2000, Mr. Francisco left Berryman & Henigar and started his own business, Francisco & Associates.  Because of his expertise and familiarity with this particular project and to maintain continuity with district property owners, staff continued to use Francisco & Associates for the assessment methodology for Fiscal Year 2001/02 and again for the two year assessment for Fiscal Years 2002/03 and 2003/04.  The cost for the two year contract was $16,847.

Staff again proposes to enlist the assistance of Francisco & Associates to prepare the draft and final engineer’s report and to develop the methodology for the parking district assessment.  They will facilitate all aspects of the assessment such as preparing and coordinating printing and mailing of individual notices and ballots to all property owners within the parking district assessment boundaries.  The cost of this two year contract will be $19,250.  The increase of 14% in the contract amount is due to a change in the scope of the work to be performed.  For example, in the previous contract, the City hand billed the first year’s assessment because the vote on the assessment did not pass initially and when it was later passed by the property owners, it was too late to place the assessment on the tax roll.  Staff therefore had to hand bill all assessments and handle all property owner questions and follow up with all unpaid assessments.  Under this contract, Mr. Francisco will handle all questions from property owners and place both assessment years on the tax roll. 

Since this contract falls within the City Manager’s awarding authority, staff is not requesting Council approval for the contract.  However, Council approval is necessary to establish a special project and approving funding for the assessment work.  In the past, the engineer’s fee was charged to the Downtown Redevelopment Project.  This was due, in part, to the development occurring in the downtown.  Nevertheless, the cost of the assessment should be charged to the Parking District Fund, as it is clearly a direct cost of administering the Parking District.  The Parking District Fund has reserves available to cover these costs.  Because of the development in the downtown, staff is proposing that the City use the Parking District Reserve Fund to pay these costs.  However, in future assessments staff recommends that these costs be included in the assessment.

FISCAL IMPACT

Staff recommends Council approve Budget Modification No. 34 to appropriate $19,250 from the Parking District Fund 20 Year Resource Allocation Plan Reserves into a new special project.  The Parking District Fund has reserves to pay these costs.

PUBLIC CONTACT

Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, and the availability of the report in the Library and the City Clerk’s Office.

ALTERNATIVES

1. Approve Budget Modification No. 34 for $19,250 to fund the Downtown Parking Maintenance District Assessment for Fiscal Years 2004/05 & 2005/06.

2. Do not approve Budget Modification No. 34.

RECOMMENDATION

Staff recommends alternative 1.

Prepared by:

Connie Verceles
Business Development Manager, Economic Development Division

Reviewed by:

Karen Davis
Manager, Economic Development Division

Reviewed by:

Robert Paternoster
Director, Community Development Department

Reviewed by:

Mary Bradley
Director, Department of Finance

Approved by:

Amy Chan
City Manager