Discuss adoption of a Resolution establishing the value of parking in-lieu fees at $105,044, per parking space based on the recently adopted 2019 California Building Codes; discuss other options regarding the Parking In-Lieu Fee Program; and provide direction to staff

Discuss adoption of a Resolution establishing the value of parking in-lieu fees at $105,044, per parking space based on the recently adopted 2019 California Building Codes; discuss other options regarding the Parking In-Lieu Fee Program; and provide direction to staff.

On December 8, 1965, the City Council adopted Ordinance No. 122 CS which established off-street parking requirements for the commercial districts of the City. The current parking requirements are listed below in Table 1. The reason for adopting Ordinance No. 122 CS was to require and develop off-street parking in the City’s commercial zones for business owners and their employees. Creating more off-street parking would allow curbside spaces to remain available to customers and would reduce the impacts of employee parking in adjacent residential neighborhoods.

Table 1. Current Minimum Off-Street Parking Requirements

In addition to creating minimum parking requirements, Ordinance No. 122 CS established a formula for calculating the value of a parking in-lieu fee for properties that could not provide the required number of off-street parking spaces.

The Ordinance further established that, no less frequently than annually, the City Council shall establish by Resolution the value of the parking in-lieu fee based on the value of improved parking facilities on a per stall basis. The funds collected are deposited into a special fund to be used by the city to develop off-street public parking in or near the business district. The current parking in-lieu fee fund balance is $714,000.

Historically, as property values and construction costs have increased, the parking in-lieu fee has also increased. Table 2 below provides a history of those increases.

Table 2. Historical Data on Adopted In-Lieu Parking Fees

The formula for calculating the value of the in-lieu parking fee is contained in Section 17.38.040 of the City’s Municipal Code (Attachment 2) and is also part of the City’s certified Local Coastal Plan. The in-lieu parking fee formula is summarized as follows:

• Current construction costs of public parking garages with a Type I or Type II fire resistance (refer to Attachment 3);
• Multiplied by the regional modifier for the San Francisco area (1.75 has been used historically in Carmel); and
• Increased by 50 percent to reflect land costs.

The resulting factor is multiplied by 400 square feet per in-lieu parking stall to determine the total amount of the fee to be charged. A fee reduction of 25 percent is granted for parking spaces required for newly established residential dwelling units.

The parking in-lieu fee is adjusted based on the adopted Building Codes in effect at the time of review. On March 3, 2020 the City Council adopted the 2019 editions of the California Building Codes. Based on staff’s review, it appears that the parking in-lieu fee has not been updated since the 2001 edition of the California Building Codes.

Proposed Parking In-Lieu Fee

Staff calculated the cost per square foot for a parking structure based on the February 2020 Building Valuation Data table published by the International Code Council (ICC). A parking structure with an S-2 Group Occupancy has an average Type I/II construction cost of $100.04 per square foot. The following is a summary of the calculation:

Construction Cost/Square Foot for a Type I/Type II Parking Garage ($100.04) x Regional Modifier (1.75) + Land Cost (50%) x 400 Square Feet = Cost of In-Lieu Fee/parking space

$100.04 x 1.75 = $175.07 x 50% = $87.54

$175.07 + $87.54 = $262.61

$262.61 x 400 SF = $105,044 per parking space

Table 3 provides the amount of parking in-lieu fees for up to 5 stalls based on the updated value of the fee. The in-lieu fee is collected at the time a building permit is issued for the project or at issuance of a business license if no building permit is required.

Table 3. Parking In-Lieu Fees

Proposed Parking In-lieu Fee Amendments

Due to the San Francisco area regional modifier and high land costs, the parking in-lieu fee can be cost prohibitive to property owners who want to redevelop their property but are unable to provide off-street parking or, in the case of properties located in the Central Commercial zoning district, are not permitted to construct off-street parking (CMC 17.38.030.A). To lessen the burden on development, staff is seeking direction from the Council on whether the value of the parking in-lieu fee should be updated or whether modifications to the parking in-lieu fee program should be further evaluated.

City Council Options

Option No. 1. Discuss adoption of a Resolution (Attachment 1) updating the value of the parking in-lieu fee from the 2003 rate of $54,080 per parking space to $105,044 per parking space based on the 2019 California Building Codes. If Council directs staff to pursue this option, a formal Resolution would be brought back to the Council at a future meeting for adoption. Under this option, the existing parking in-lieu fee program formula would remain unchanged.

Option No. 2. Discuss an urgency ordinance to defer taking action on updating the value of the parking in-lieu fee to a later date as determined by the Council. The current parking in-lieu fee of $54,080 would remain in place.

Option No. 3. Direct staff to study modifications to the current formula, including but not limited to,

a)      Eliminating the land cost factor;

b)      Eliminating the fee for new residential units;

c)      Reducing the parking space factor to less than 400 square feet; and/or

d)      Developing an entirely new formula.

Staff would engage the services of a consultant to evaluate the current parking in-lieu fee program and make a recommendation on modifications to the formula. The program has remained unchanged since it was adopted in 1965 and a specific public parking project has not been identified for the use of the funds collected. The consultant would evaluate different public parking projects, their associated costs, and propose adjustments to the formula commensurate with funding a specific project.

Option No. 4. Direct staff to amend Title 17 and eliminate the parking in-lieu fee program entirely. By eliminating the in-lieu fee program, property owners would be required to provide off-street parking either on their property or on private property at an off-site location. Properties in the Central Commercial zoning district where off-street parking is prohibited would be required to provide all parking on private property at an off-site location. This option could significantly constrain redevelopment in the commercial zoning districts.

Option No. 5. Provide other direction as determined by the Council.

Process to Amend/Eliminate the Parking In-Lieu Fee Program

Any modification to the parking in-lieu fee program, or elimination of the program altogether, would require an amendment to Title 17 of the Municipal Code and the Local Coastal Plan. The Planning Commission would review the proposed amendments at a public hearing and provide a recommendation to the City Council. The City Council would consider the amendments at two public hearings and following adoption, the amendments would be submitted to the Coastal Commission for certification.

The parking in-lieu fees collected are placed in a dedicated fund for the sole purpose of funding public parking improvements in the village. Updating the fee based on the 2019 California Building Codes could result in increases to the fund balance if a development project or new business requires additional off-street parking and the property owner is unable to provide it. Deferring the fee update could result in fewer fees collected during the deferment period. If directed to amend the parking in-lieu fee program, there would be costs associated with engaging a consultant to develop a new program.

The City Council adopted Resolution 2003-72 on June 3, 2003 establishing the parking in-lieu fee at $54,080 based on the 2001 California Building Codes.