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Item 3.1 - Reso Approving a 2% Increase in RTCIP Traffic Mitigation Fee for FY 2019-20DATE: TO: FROM: CONTACT: SUBJECT: Summary: City of Poway COUNCIL AGENDA REPORT April 16, 2019 Honorable Mayor and Members of the City Counc� . " Robert Manis, Director of Development Services f,f/\ Tom Frank, City Engineer rf! (858)668-4603 or tfrank@poway.org APPROVED □ APPROVED AS AMENDED □ (SEE MINUTES) DENIED □ REMOVED □ CONTINUED ____ _ RESOLUTION NO. A Resolution Approving a 2% Increase in the Regional Transportation Congestion Improvement Program (RTCIP) Traffic Mitigation Fee for Fiscal Year (FY) 2019-20, as required by the TransNet Ordinance On April 1, 2008, the City Council adopted the Regional Transportation Congestion Improvement Program (RTCIP) Traffic Mitigation Fee pursuant to the TransNet Ordinance. The Ordinance calls for the fee to be adjusted annually on July 1 of each year to reflect increases in construction costs. SANDAG has informed all the Cities and the County of San Diego that the increase in the RTCIP fee for FY 2019-20 is set at 2%. This will increase the City's RTCIP Traffic Mitigation Fee from $2,483.48 to $2,533.15 per residential unit starting on July 1, 2019. Recommended Action: It is recommended that the City Council adopt the Resolution (Attachment A) approving a 2% increase in the RTCIP Traffic Mitigation Fee for residential dwelling units from $2,483.48 to $2,533.15 for FY 2019-20, as required by the TransNet Ordinance, starting July 1, 2019. Discussion: In November 2004, voters in San Diego County approved a 40-year extension to the existing TransNet program, which was first initiated in 1987. The TransNet program was designed to fund improvements to the region's transportation system through a half-cent sales tax. In addition to the sales tax extension, the TransNet Ordinance mandates implementation of a local traffic mitigation fee to fund missing improvements on the Regional Arterial System. The local traffic mitigation fee, also known as the RTCIP Traffic Mitigation Fee, was set at $2,000 per residential dwelling unit starting on July 1, 2008. Funds collected from this fee will be used for roadway and traffic signal improvements on Espola Road, Poway Road, Pomerado Road, Twin Peaks Road, Community Road, Ted Williams Parkway, Camino Del Norte, and Scripps Poway Parkway. On April 1, 2008, the City Council adopted the RTCIP Traffic Mitigation Fee pursuant to the TransNet Ordinance. The TransNet Ordinance mandates that the adopted RTCIP Traffic Mitigation Fee for residential dwelling units be adjusted annually for construction cost inflation, based on the construction cost index, but requires a minimum 2% annual increase. The fee was increased by 2% in 2009 through 2014, 2.5% in 2015, and 2% in 2016 and 2017, and 3.3% in 2018 and is currently at $2,483.48 per residential dwelling unit. SANDAG has informed all the Cities and the County of San Diego (Attachment B) that the percentage increase for FY 2019-20 is set at 2%. This will increase the City's RTCIP Traffic Mitigation Fee from $2,483.48 to $2,533.15 per residential unit starting July 1, 2019, for FY 2019-20. 1 of 7 April 16, 2019, Item #3.1 2% Increase in the RTCIP Traffic Mitigation Fee for FY 2019-20 April 16, 2019 Page 2 Environmental Review: This item is exempt from the requirements of the California Environmental Quality Act (CEQA), pursuant to Section 15061 (b)(3) of the CEQA Guidelines, as it entails a State­ mandated update to a current City fee, and there is no possibility that this will have a significant effect on the environment. Fiscal Impact: Using the new fee of $2,533.15 per residential dwelling unit, estimated revenue of $141,856 is projected for FY 2019-20. Public Notification: Notice of the public hearing was published twice in the Poway News Chieftain. Attachments: A.Resolution B.SANDAG Agenda Item No. 6 dated February 22, 2019 Reviewed/Approved By: Wendy Kaserman Assistant City Manager 2 of 7 Reviewed By: Alan Fenstermacher City Attorney Tina M. White City Manager April 16, 2019, Item #3.1 RESOLUTION NO. 19- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA, APPROVING A 2% IN CREASE IN THE REGIONAL TRANSPORTATION CONGESTION IMPROVEMENT PROGRAM (RTCIP) TRAFFIC MITIGATION FEE FOR FISCAL YEAR (FY) 2019-20, AS REQUIRED BY THE TRANSNET ORDINANCE WHEREAS, in November 2004, voters in San Diego County approved a 40-year extension to the existing TransNet program to fund improvements to the region's transportation system; WHEREAS, the extension Ordinance requires local agen cies to collect traffic mitigation fees, starting July 1, 2008, from residential dwelling units to fund the Regional Transportation Congestion Impr ovement Program (RTCIP) to ensure that new development directly invests in the region's transportation system to offset the negative impact of growth on congestion and mobility; WHEREAS, on April 1, 2008, the City Council adopted the RTCIP Traffic Mitigation Fee of $2,000 per residential dwelling unit pursuant to Section 9A of the TransNet Ordinance; WHEREAS, Section 9A of the TransNet Ordinance also mandates that the RTCIP Traffic Mitigation Fee shall be increased annually, in an amount not to exceed the percentage increase set forth in the Engineering Construction Cost Index published by the Engineering News Record or similar cost of construction index with a minimum increase of 2%; WHEREAS, the City Council has adopted annual increases to the RTCIP Traffic Mitigation Fee and the current fee is $2,483.48 per residential dwelling unit, pursuant to Section 9A of the TransNet Ordinance; WHEREAS, SANDAG has informed the City that the percentage increase in the RTCIP Traffic Mitigation Fee for FY 2019-20 is set at 2%; and WHEREAS, the City Council inten ds by this Resolution to increase the City's RTCIP Traffic Mitigation Fee from $2,483.48 to $2,533.15 per residential dwelling unit to meet the requirement of Section 9A of the TransNet Ordinance. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as follows: Section 1: The City Council finds that the adoption of this Resolution is exempt from the requirements of the California Environmental Quality Act (CEQA), pursuant to Section 15061 (b)(3) of the CEQA Guidelines, as it entails State-mandated updates to current City regulations, and there is no possibility that this will have a significant effect on the environment. Section 2: The City Council, starting July 1, 2019, hereby increases the RTCIP Traffic Mitigation Fee from $2,483.48 to $2,533.15 per residential dwelling unit, regardless of type, to fund roadway and traffic signal improvements on Espola Road , Poway Road, Pomerado Road, Twin Peaks Road, Community Road, Ted Williams Parkway, Camino Del Norte, and Scripps Poway Parkway considered part of the Regional Arterial System. 3 of 7 ATTACHMENT A April 16, 2019, Item #3.1 Resolution No. 19- Page 2 PASSED, ADOPTED AND APPROVED by the City Council of the City of Poway, California, at a regular meeting, this 16th day of April 2019. ATTEST: Faviola Medina, CMC, City Clerk STATE OF CALIFORNIA ) ) ss COUNTY OF SAN DIEGO ) Steve Vaus, Mayor I, Faviola Medina, City Clerk, of the City of Poway, California, do hereby certify under penalty of perjury that the foregoing Resolution No. 19-was duly adopted by the City Council at a meeting of said City Council held on the 16th day of April 2019, and that it was so adopted by the following vote: AYES: NOES: ABSENT: DISQUALIFIED: 4 of 7 Faviola Medina, City Clerk City of Poway April 16, 2019, Item #3.1 ltem:6 Board of Directors February 22, 2019 TransNet Regional Tran sportation Congestion Im provement Program Proposed Fee Adjustment Overview The TransNet Extension Ordinance requires the 18 cities in the San Diego region and the County of San Diego to collect a Regional Transportation Congestion Improvement Program (RTCIP) fee from the private sector for each new housing unit constructed in their jurisdiction. The purpose of this fee (sandag.org/rtcip) is to help ensure that future development contributes its proportional share of the funding needed to pay for the impact of new growth on the Regional Arterial System and related regional transportation facility improvements, as defined in the most recent Regional Transportation Plan adopted by SAND AG. Key Considerations SANDAG is required to adjust the minimum RTCIP fee amount on July 1 of each year based on an analysis of construction cost indices, but ne ver less than 2 percent. The purpose of this annual adjustment is to ensure that the RTCIP retains its purchasing power to improve the regional arterial system. Based on an analysis of construction cost trends and releva nt indices, staff recommends a 2 percent fee adjustment to the RTCIP, raising the minimum RTCIP fee from $2,483.48 to $2,533.15 beginning July 1, 2019 (Attachment 1 ). Action: Approve The Board of Directors is asked to approve a 2 percent adjustment to the Regional Transportation Congestion Improvement Program, raising the minimum fee from $2,483.48 to $2,533.15, beginning July 1, 2019. Fiscal Impact: Pending approval by the Board of Directors, the minimum Regional Transportation Congestion Improvement Program fee would increase from $2,483.48 to $2,533.15 beginning July 1, 2019. Schedule/Scope Impact: The Regional Transportation Congestion Improvement Program fee is collected for each new housing unit constructed and may be used for projects on the Regional Arterial System, such as new or widened arterials, traffic signal coordination, freeway interchange and related improvements, railroad grade separations, and improvements required for express bus and rail transit. The Independent Taxpayer Oversight Committee (ITOC) reviewed the proposed RTCIP fee adjustment at its February 13, 2019, meeting and had no comments. Next Steps In accordance with TransNet Extension Ordinance provisions, each jurisdiction's RTCIP Funding Program 1 must be submitted for review by the ITOC by April 1 of each year to remain eligible for TransNet local street and road funding. The annual submittal of RTCIP funding programs by local jurisdictions is scheduled for review at the April 10, 2019, ITOC meeting. Hasan lkhrata, Executive Director Key Staff Contacts: Jim Miller, (619) 699-7325, jim.miller@sandag.org Ariana zur Nieden, (619) 699-6961, ariana.zurniedenr@sandag.org Attachment: 1 . Discussion Memo 1 Section 9 of the TransNet Extension Ordinance requires that local jurisdictions establish a program or mechanism for funding the Regional Arterial System. For purposes of the RTCIP, the Regional Arterial System is defined in the most recent Regional Transportation Plan adopted by SANDAG. 5 of 7 ATTACHMENT B April 16, 2019, Item #3.1 Attachment 1 Discussion Memo Background The TransNet Extension Ordinance requires the 18 cities and the County of San Diego to collect a fee from the private sector for each new housing unit 1 constructed in that jurisdiction for contribution to the Regional Transportation Congestion Improvement Program (RTCIP). RTCIP revenue is required to be used to construct impr ovements on the Regional Arterial System, such as new or widened arterials, traffic signal coordination and other traffic improvements, freeway interchange and related freeway improvements, railroad grade separations, and improvements required for express bus and rail transit. The Ordinance further requires SANDAG to adjust the RTCIP fee amount each year, and states that in no event shall the adjustment be less than 2 percent per year or more than the perc entage increase set forth in the Engineering Construction Cost Index (CCI) published by the Engineering News Record (ENR), or a similar CCI.The purpose of this annual adjustment is to ensure that the RTCIP ret ains its purchasing power to improve the Regional Arterial System and to help ensure future development contributes its proportional share of the funding needed to pay for the impact of new growth on the Regional Arterial System and related regional transportation facility improvements, as defined in the most recent Regional Transportation Plan adopted by SANDAG. The RTCIP funding programs fall under the responsibility of the 19 local jurisdictions, which must maintain their RTCIP funding programs and comply with specific administrative requirements in order to remain eligible for TransNet local street and road funding. The RTCIP has been implemented in the San Diego region since July 1, 2008. Annual RTCIP fee adjustments, funding program reports, and related audits can be found at sandag.org/rtcip. Relevant excerpts can be referenced at TransNet Extension Ordinance and SANDAG Board Policy No. 031 . Analysis of Construction Cost Indices SANDAG staff evaluated changes recorded in the ENR Los Angeles CCI, which is based on monthly price changes in four areas: lumber, cement, structural steel, and labor. Los Angeles reflects construction cost trends similar to those in San Diego. During the period that covers December 2017 to December 2018 (latest available data), the ENR Los Angeles CCI increased by 0.64 percent. The other CC ls grew faster, with the ENR National CCI growing 3.3 percent and the Caltrans CCI increasing 1.1 percent. While there is general consensus that construction costs will continue to increase in 2019, there always is uncer tainty in forecasting costs in the construction industry due to factors such as changes in domestic and intern ational growth and uncertainties in global politics. In addition, all indices show some volatility, and for that reason, it is important to analyze the longer-term picture from 2008, when the RTCIP was first instituted when considering the required annual adjustment. The cumulative growth of the RTCIP has been 24.2 percent, with the ENR Los Angeles CCI seeing a 22.3 percent growth over the same period. The ENR National CCI (33.1 %) and Caltrans CCI (54.3%) both exceeded this rate over the same period. This comparison over time shows that by maintaining the annual adjustment at the minimum 2 percent increase required, the RTCIP had last year begun to fall behind the overall goal of keeping pace with inflation. While the ENR Los Angeles CCI is the slowest growing of the CCls considered, the chart below shows it also has increased at basically the same rate as the RTCIP. 1 Units constructed for extremely low-, very low-, low-, and moderate-income households may be exempted. 2 6 of 7 April 16, 2019, Item #3.1 Construction Cost Index (2008 = 100) 125 120 115 110 105 100 95 2008 2009 Comparing Construction Costs (2008=100) Trans Net RTCI P vs. EN R LA CCI 2010 2011 2012 2013 2014 2015 2016 -TransNet RTCIP -ENR LA CCI 2017 2018 To ensure that the RTCIP fee maintains its purchasing power to complete necessary road improvements, staff recommends the minimum required 2 percent increase that would mirror the small increase in the ENR CCI for Los Angeles. Increasing the fee by a lesser percentage would not keep pace with construction inflat ion, meaning the RTCIP would have less ability to mitigate transportation impacts of new development, which would be inconsistent with the Ordinance. 3 7 of 7 April 16, 2019, Item #3.1