TIF revision passes first reading, adoption slated for Oct. 31

The County of San Diego’s Transportation Impact Fee (TIF) rates are a second reading and adoption away from being revised.

On Oct. 10, the San Diego County Board of Supervisors voted 5-0 to approve the introduction and first reading of the revised TIF rates. The second reading and adoption is scheduled for Oct. 31.

“After seven years this is what the board and the stakeholders are looking for,” said Rich Crompton, the director of the county’s Department of Public Works (DPW).

In April 2005, the county supervisors adopted a TIF ordinance in order to comply with state law and provide funding for the construction of transportation facilities needed to support the increased traffic generated by new development. The TIF is actually an option rather than a requirement; developers may still perform an individual cumulative impact traffic study and make the appropriate mitigation. The TIF ordinance was expected to help small developers who could address their projects’ impacts easier with a single check rather than with a comprehensive cumulative impact study.

Prior to a 2002 court case, the California Environmental Quality Act (CEQA) allowed exemptions for relatively small “de minimus” cumulative traffic impacts, but after the exemptions were declared invalid CEQA was changed to require all traffic impacts, no matter how minimal, to be addressed and mitigated. That eliminated the county’s ability to make “de minimus” findings, so all new projects now require mitigation for cumulative traffic impacts.

The change in the CEQA law held up approximately 300 projects in the county’s unincorporated area due to the difficulty of the smaller projects’ developers being able to fund the required traffic studies as well as the road improvements. In some cases, the road improvements on a project by project basis would have exceeded the actual cost of the project, and the TIF program was intended to allow the applicants to pay the fee as a “one-stop” process.

“It was the result of a court case that changed the state law,” said Supervisor Dianne Jacob. “You could still do the traffic impact study or you could just pay the fee.”

In 2008, the TIF was modified to reflect more accurate regional needs. The economic downturn had not yet started, and concerns had surfaced that businesses were locating in incorporated cities with lower impact fees. Jacob’s district includes Lakeside, where plans to build a new restaurant fell victim to the TIF assessment making development economically unfeasible.

“The TIF fees for that commercial development were so high that they were not able to do it,” Jacob said.

“The fee that we had before us was a real killer,” said Supervisor Greg Cox, whose district includes Otay Mesa.

“This was something that we had to get changed,” said Supervisor Ron Roberts. “For four years this hurt us.”

In September 2010, the county began working with a consultant on a comprehensive update. That review evaluated alternatives to determine if a reduction in fee rates was possible while being consistent with the updated general plan and maintaining the cumulative mitigation nexus necessary for CEQA compliance. The review included the concept of redistributing the TIF costs (but not reducing the total program obligation) based on vehicle miles traveled. In January 2011, the county supervisors received a progress report on possible changes.

Rather than changing the methodology in 2011, the supervisors and DPW waited until the county’s updated general plan was adopted. Developers are not required to mitigate for existing roadway deficiencies, but the TIF is intended to pay for road impacts of future development and the update of the general plan’s Circulation Element altered future road improvement costs and thus a development’s share of the costs. The general plan update was adopted in August 2011, and the elimination of certain widening plans reduced the cost for the future transportation road network from approximately $912 million.

Because the general plan update included certification of a Programmatic Environmental Impact Report which considered the change in the road network, only an addendum which incorporated that PEIR was needed to make the TIF revisions compliant with CEQA review procedure and the supervisors adopted those findings Oct.10.

DPW also held stakeholder meetings before bringing the revised fees to the Board of Supervisors for approval. On June 27, the county supervisors were given methodology options before selecting one with a built-in credit system which assumes that all potential frontage improvements will be completed by future developers and thus removes them from total program costs. The combination of reduced lane miles in the general plan update and the built-in credits reduced the total road network cost to approximately $353 million.

The new TIF program also provides for a 10 percent discount for projects built within a community’s village area and a 20 percent discount for projects in a village core area. (The discount reflects reduced traffic in such areas due to proximity to destinations and alternative transportation.) Not including those discounts, the revisions reduce the fee by an average of 46 percent for residential development, 75 percent for industrial buildings, and 80 percent for commercial structures.

“The TIF rates have come down significantly,” said Supervisor Pam Slater-Price. “It’s cumulative impacts, not individual project impacts.”

The TIF ordinance complies with the San Diego Association of Governments’ TransNet ordinance which requires jurisdictions to collect a minimum fee for funding Regional Arterial System projects in order to receive TransNet funding for local streets and roads. The county’s TIF assessment exceeds the SANDAG minimum, and the revised TIF ordinance separates the SANDAG program money from the standard TIF collections while establishing a special trust fund to increase public transparency in tracking and monitoring the SANDAG fee. The village and village core discounts do not apply to the SANDAG assessment.

The travel demand unit methodology was based on trips generated per unit or thousand square feet, pass-by (as opposed to destination) trip rates, average trip length, and floor-to-area ratio (for non-residential buildings). The calculations attribute 14,435,216 travel demand units to future development including 4,195,643 in the north region. (Because Ramona and Julian are accessed more from East County than from North County, Ramona’s 839,980 future units and Julian’s 112,762 future units are part of the east region.) The north region totals include 1,901,141 in the Fallbrook planning area, 241,908 in Bonsall, 223,811 in Pala-Pauma, 154,802 in Rainbow, and 39,449 in Pendleton-DeLuz.

The estimated $148.105 million cost of future north region facilities was derived from estimates of $8.213 million for state routes, $9.608 million for state interchanges and ramps, $90.844 million for Regional Arterial System (RAS) regional roads, $28.841 million for non-RAS regional roads, and $10.599 million for local facilities. The local facilities total includes $4.020 million for Fallbrook and $2.659 million in Bonsall.

The total TIF assessment (including the SANDAG fee) for a single-family development in a non-village area is now $4,751 for Bonsall, $3,973 for Fallbrook and $3,840 for Pala-Pauma, Pendleton-DeLuz, and Rainbow. The previous fee was $12,295 in Bonsall, $12,067 in Fallbrook, $10,447 in Rainbow, $7,159 in Pala-Pauma, and $5,991 in Pendleton-DeLuz.

The new TIF per unit for multi-family residential in non-village areas is $3,888 in Bonsall, $3,370 in Fallbrook, and $3,281 in Pala-Pauma, Pendleton-DeLuz, and Rainbow. The TIF per unit for temporary lodging facilities such as hotels, motels, timeshares, and agricultural labor housing will be $1,077 in Bonsall, $753 in Fallbrook, and $697 in Pala-Pauma, Pendleton-DeLuz, and Rainbow. The fee per unit for congregate care residential in non-village areas is $539 for Bonsall, $377 in Fallbrook, and $349 in Pala-Pauma, Pendleton-DeLuz, and Rainbow.

The general commercial rate for non-village areas per thousand square feet is $4,504 in Bonsall, $3,149 in Fallbrook, and $2,971 for Pala-Pauma, Pendleton-DeLuz, and Rainbow. The general commercial rate per thousand square feet had been $21,955 in Bonsall, $21,559 in Fallbrook, $18,649 in Rainbow, $12,792 in Pala-Pauma, and $10,708 in Pendleton-DeLuz while general industrial had previously been charged 37 percent of the general commercial fee.

The furniture store rate per thousand square feet is now $616 in Bonsall, $431 in Fallbrook, and $399 in Pala-Pauma, Pendleton-DeLuz, and Rainbow. The general industrial rate per thousand square feet in a non-village area is $1,984 in Bonsall, $1,387 in Fallbrook, and $1,285 in Pala-Pauma, Pendleton-DeLuz, and Rainbow. The non-village area office TIF per thousand square feet is $3,562 in Bonsall, $2,491 in Fallbrook, and $2,307 in Pala-Pauma, Pendleton-DeLuz, and Rainbow.

Non-village area warehouses and storage facilities (including horse stables, wineries, and wine tasting rooms) have a rate per thousand square feet of $868 in Bonsall, $607 in Fallbrook, and $562 in Pala-Pauma, Pendleton-DeLuz, and Rainbow. A government or institutional building in a non-village area for which the county has land use jurisdiction (public schools, military bases, and Indian reservations are exempt from all TIF charges) will have a rate per thousand square feet of $2,126 in Bonsall, $1,487 in Fallbrook, and $1,377 in Pala-Pauma, Pendleton-DeLuz, and Rainbow. (Private schools will be subject to the institutional TIF charge, although churches, synagogues, mosques, and temples are classified as general industrial.)

The select industrial category covers uses which generate trips but which do not have sufficient structure square footage to cover the traffic impacts. These include quarries and other mining operations, landfills, asphalt batch plants, power generation plants, RV parks and campgrounds, recycling centers, wireless communication facilities, and fuel pumps added to an existing facility. The TIF is based on average daily trips with heavy equipment vehicle trips being converted to passenger vehicle equivalent trips. The select industrial rate per trip in non-village areas will be $253 for Bonsall, $177 for Fallbrook, and $164 for Pala-Pauma, Pendleton-DeLuz, and Rainbow.

The new TIF for single-family homes in village areas will be $4,492 in Bonsall, $3,792 in Fallbrook, and $3,672 in Pala-Pauma (there are no village or village core areas in Pendleton-DeLuz or Rainbow). The multi-family residential TIF per unit in village areas is now $3,717 for Bonsall, $3,250 for Fallbrook, and $3,170 for Pala-Pauma. Temporary lodging facilities in village areas will have a per-unit TIF of $970 in Bonsall, $678 in Fallbrook, and $628 in Pala-Pauma. Congregate care facilities in village areas will have a TIF per unit of $485 in Bonsall, $339 in Fallbrook, and $314 in Pala-Pauma.

The general commercial village area rate per thousand square feet is now $4,053 in Bonsall, $2,834 in Fallbrook, and $2,625 in Pala-Pauma with the furniture store rate being $556 in Bonsall, $389 in Fallbrook, and $360 in Pala-Pauma. The village general industrial TIF per thousand square feet will be $1,785 in Bonsall, $1,248 in Fallbrook, and $1,156 in Pala-Pauma. The village office rate per thousand square feet became $3,207 for Bonsall, $2,242 for Fallbrook, and $2,077 for

Pala-Pauma.

Warehousing and storage in village areas will have a TIF per thousand square feet of $781 in Bonsall, $546 in Fallbrook, and $506 in Pala-Pauma. The government/institutional village TIF per thousand square feet became $1,913 in Bonsall, $1,338 in Fallbrook, and $1,239 in Pala-Pauma. Any select industrial use in a village area will have a per-trip TIF of $227 in Bonsall, $159 in Fallbrook, and $147 in Pala-Pauma.

There are no village core areas in Bonsall or Pala-Pauma. In the Fallbrook village core area, the TIF will be $3,612 for single-family homes, $3,129 per unit for multi-family dwellings, $602 per unit for temporary lodging, and $301 per unit for congregate care facilities.

The TIF per thousand square feet in the Fallbrook village core area will be $2,519 for general commercial, $344 for a furniture store, $1,110 for general industrial, $1,993 for office, $486 for warehouse and storage facilities, and $1,189 for government or institutional structures. The select industrial rate per trip for any use in the Fallbrook village core area will be $142.

“I have not seen this much attention given to stakeholders in a long time,” said Craig Benedetto, who represented the National Association of Industrial and Office Properties (NAIOP).

“You’ve reached out to the regulated community,” said Matt Adams, who represented the Building Industry Association. “It has culminated in what we believe is a fair and reasonable fee that addresses the needs of the community.”

NAIOP focuses on commercial real estate development. “We think this will allow for jobs to be created and those services to be provided to your constituents,” Benedetto said.

“We all want to see the commercial and industrial sector prosper,” Adams said. “This is really going to help.”

Jacob noted the magnitude of the industrial and commercial reductions. “That is a big deal,” she said. “This definitely is going to help people who want to put in industrial, commercial development.”

Roberts and Bill Horn had voted against the 2008 revisions. “This is such an improvement I’m going to vote for it,” Horn said.