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DATE: November 7, 2007
TO:Board of Supervisors
SUBJECT: The Transportation Impact Fee: Is it fair or is there a better way?

SUMMARY:
Overview
On April 13, 2005 the Board of Supervisors adopted the Transportation Impact Fee (TIF) ordinance for the unincorporated area of San Diego County. The purpose of this fee program is to comply with State law and to provide funding for the construction of transportation facilities that are needed to support the increase of traffic generated by new development.

Since the adoption of this program, there have been on-going frustrations, increasing concerns and a number of questions raised by applicants, developers, citizens and local community groups over the validity of this program. The most common concern is that the fees associated with the industrial and commercial development are too high resulting in a heavy strain on the economic growth and development in the unincorporated communities of the County.

In early January, the County of San Diego plans to respond to these growing concerns by presenting to the Board of Supervisors the results of an assessment currently being prepared on the TIF program. Today’s action will direct the Chief Administrative Officer to address each question provided in this board letter (Attachment A); incorporate these findings into the County’s TIF review and bring back to the Board of Supervisors in 60 days recommendations that will change the TIF program to encourage commercial and industrial development in the unincorporated areas of San Diego County.

Recommendation(s)
SUPERVISOR DIANNE JACOB:

  1. Direct the Chief Administrative Officer to address each question provided in this board letter (Attachment A); incorporate these findings into the County’s TIF review; and bring back to the Board of Supervisors in 60 days recommendations that will change the TIF program to encourage commercial and industrial development in the unincorporated areas of San Diego County.

Fiscal Impact
There is no fiscal impact related to this proposal.

BACKGROUND:
On April 13, 2005 the Board of Supervisors adopted the Transportation Impact Fee (TIF) ordinance for the unincorporated area of San Diego County. The purpose of this fee program is to comply with State law and to provide funding for the construction of transportation facilities that are needed to support the increase of traffic generated by new development.

In the past, the California Environmental Quality Act (CEQA), allowed exemptions for relatively small, “de minimus” cumulative traffic impacts. However, because of a court case rendered in 2002, these exemptions became invalid and CEQA was changed to require that all traffic impacts, no matter how minimal, be addressed and mitigated. Prior to this change in state law, the County made those “de minimus” findings on many projects, saying essentially that the traffic impacts were so minimal that no mitigation was needed. The County of San Diego can no longer take that approach and the law now requires that every new project mitigate for any cumulative transportation impacts a project may cause.

In addition, after the CEQA law changed, nearly 300 projects in the process were put on hold. These smaller projects throughout the unincorporated area were having difficulty determining and addressing cumulative traffic impacts. The costs of the required traffic studies and road improvements prevented these projects from moving forward resulting in a “de facto moratorium” on development.

Rather than shut down these projects, the Board of Supervisors addressed the change in law by establishing the Transportation Impact Fee to allow applicants the ability to deal with cumulative traffic impacts by paying a fee rather than performing expensive traffic studies and constructing expensive road improvements that, on a project by project basis, sometimes exceeded the actual cost of the project.

The purpose of the TIF program is to comply with CEQA law as it is now and provide construction funding for transportation facilities needed to mitigate cumulative traffic impacts caused by new development. The TIF fees are intended to work in conjunction with public dollars to address future road capacity needs and existing deficiencies, respectively, which will benefit those traveling on roads in the unincorporated area.

However, since the adoption of this program, there have been on-going frustrations, increasing concerns and a number of questions raised by applicants, developers, citizens and local community groups over this program. The most common concern is that the fees associated with the industrial and commercial development are too high resulting in a heavy strain on the economic growth and development in the unincorporated communities of the County.

For instance, individuals in the community of Ramona allege that the TIF is directly effecting the development of commercial and industrial business. The Ramona Design Review Board has made note that they are reviewing fewer and fewer projects in general. In addition, a number of applicants have communicated to me that the TIF in the Ramona area completely compromises any desire to expand existing business or construct new ones because the fees are so high that the financials of the project do not pencil out. In the end, the concerns alone do raise the question whether the TIF has been a major roadblock to commercial and industrial development in Ramona, as well as any other communities in the unincorporated areas of San Diego County?

In early January, the County of San Diego plans to respond to these growing concerns by presenting to the Board of Supervisors the results of an assessment currently being prepared on the TIF program. Today’s action will direct the Chief Administrative Officer to address each question provided in this board letter (Attachment A); incorporate these findings into the County’s TIF review and bring back to the Board of Supervisors in 60 days recommendations that will change the TIF program to encourage commercial and industrial development in the unincorporated areas of San Diego County.

Respectfully submitted,

 

DIANNE JACOB
Supervisor, Second District

 

Attachment A

Questions on the Transportation Impact Fees

  1. Since the premise of the TIF was to address the cumulative traffic impacts of new industrial, commercial and residential development, what have been the impacts on commercial and industrial development? What does the data show related to the number of projects submitted to the County two years prior to the TIF being implemented and two years after the TIF was implemented?
  2. How much money has been collected under the TIF program? Specifically, how have the TIF fees been used?
  3. Has the TIF hurt commercial and industrial development in the unincorporated communities of the County? Explain why or why not.
  4. Is the change in State law that required the County of San Diego to create the TIF applied to other jurisdictions throughout the State of California? If so, what are other counties in the State doing to comply with this law? Are there other jurisdictions doing things differently? Provide examples.
  5. Why does the TIF calculate regional roads into the equation? Isn’t Transnet supposed to take care of regional roads as well as on and off ramps to freeways? What is Caltrans’ responsibility for State Highway improvements?
  6. Why has there been so much subjectivity over the TIF amount an applicant is required to pay?
  7. Has the reimbursement program within the TIF been successful? If so, to what extent? If not, why not?
  8. Are there any procedures that are being implemented to make certain that applicants receive the correct TIF fee information associated with their project during the pre-application meeting and/or in the beginning stages of their project? If so, please explain. If not, why not?
  9. What would be the absolute minimum fee required for the TIF program to achieve its goal of addressing cumulative traffic impacts for a project?
  10. Specifically, what can be done to reduce the TIF fees particularly on commercial and industrial projects and still comply with State law?
  11. If the TIF were to be eliminated or reduced in scale, what would be the risk? Are there other alternatives?
  12. Can the County apply Proposition 42 funding to reduce the TIF?
  13. Is there a dollar for dollar credit, reduction or reimbursement for road improvements? How is this value calculated?
  14. Are all road improvement costs, including right of way costs, used to reduce the TIF?
  15. Why is the TIF required on each permit to build a new home or business where a legal lot already exists?
  16. Why is the TIF required on each permit to build a new home or business on a lot that was created by an approved subdivision which already has a certified environmental document?
  17. Why not include a grandfather clause with the ordinance for those projects that were in the process prior to the TIF?
  18. The TIF was proposed as an interim measure in order to allow for 300 projects stuck in the process to proceed. When does the interim period?