CITY COUNCIL: Resolution of Construction Activity Road Impact Fee of 1% of Project Valuation of Building Permit

Meeting Date: October 6 2009
Prepared by: Joyce Giuffre, Admin Services Director

City Council
Agenda Item Summary

Name: Consideration of a Resolution to add a Construction Activity Road Impact Fee of 1% of the project valuation of a building permit and designate this fee for road maintenance.

Description: This Resolution would approve adding a Construction Activity Road Impact Fee to the Community Planning and Building fee schedule. The fee would be collected upon issuance of the building permit. Imposition of the Construction Activity Road Impact Fee would take effect on November 1, 2009, and charged at a rate of 1% of the sum of the building permit’s project valuation.

The collected fees will be deposited in a “Road Impact Fee Fund” and earmarked for street and road maintenance, based on approved street and road projects in the City’s annual capital budget.

Based on recent building permit activity, the City would collect between $150,000 and $175,000 annually.

Staff Recommendation: Approve the Resolution.

Important Considerations: City Council directed staff to investigate imposing a construction truck impact fee to help fund street and road projects. The City contracted with Nichols Consulting Engineers, which performed a traffic counts of construction trucks in June 2009, and updated its previous Construction Truck Impact Fee Study (see Exhibit “A” ) earlier this year. Based on the Nichols’ traffic count, construction trucks contribute approximately 24% of the total trucks in terms of Equivalent Single-Axle Load.

Decision Record: Resolution 2007-13 (March 13, 2007), approved the contract with Nichols Consulting Engineers for a 2007 Pavement Management and Truck Impact Fee study; Resolution 2009-38 (June 2, 2009), accepted Nichols Consulting Engineers’ proposal for traffic count and an update to the Construction Truck Impact Fee Study.

Reviewed by:

______________________________ _________________
Rich Guillen, City Administrator Date

CITY OF CARMEL-BY-THE-SEA
STAFF REPORT
TO: MAYOR McCLOUD AND COUNCIL MEMBERS
FROM: JOYCE GIUFFRE,
ADMINISTRATIVE SERVICES DIRECTOR
THROUGH: CITY ADMINISTRATOR RICH GUILLEN
DATE: OCTOBER 6, 2009
SUBJECT: RESOLUTION ADDING A CONSTRUCTION ACTIVITY ROAD IMPACT FEE OF 1% OF THE PROJECT VALUATION OF A BUILDING PERMIT AND DESIGNATE THIS FEE FOR ROAD MAINTENANCE

RECOMMENDED MOTION
Staff recommends that the City Council adopt the Resolution.

BACKGROUND AND DISCUSSION
In February 2008, Nichols Consulting Engineers (NCE) gave a presentation to City Council on a Construction Truck Impact Fee Study. The NCE study described the stress put on the City’s road surfaces by heavy weight loads from construction vehicles.

The February 2008 study, however, was based upon construction truck count data from the City of Monterey. So, in order to capture information tailored to the City of Carmel-by-the-Sea, City Council requested that NCE take a new traffic count in June 2009 on Carpenter Street and Rio Road, two of the City’s more heavily traveled streets. The results are included in NCE’s Revised Construction Truck Impact Fee report (Exhibit “A”).

Based on these June 2009 traffic counts in Carmel-by-the-Sea, it was found that construction trucks contribute approximately 24% of the total truck volume in the City in terms of Equivalent Single-Axle Load.

Two public workshops were held to meet and discuss the proposed new Construction Activity Road Impact Fee with contractors. The first workshop was held on May 13, 2008, and the second meeting was held on September 2, 2009. At the workshops, some of the comments about the proposed fee included:

• Contractors generally favor of road maintenance and improvements, but disagree that the construction industry should bear the costs unless other users (such as delivery vehicles and waste management vehicles) also are charged accordingly.

• Concern about the effect of a new fee on the construction industry during these
recessionary times.

• The June 2009 traffic count study did not identify the number of delivery vehicles or waste management vehicles. The counts included construction vehicles only.

• The rate of the new fee was questioned. Contractors wanted to know if the City would consider a lower fee. Table 6 in Exhibit “A” shows Road Impact fees for other Northern California cities, ranging from .7% to 1.0%.

FISCAL IMPACT
The fiscal impact of enacting a Construction Activity Road Impact Fee depends on construction activity and the respective building permit valuations. In the past year, there was a significant decrease in building permit activity in the City, as shown on Table 4 in Exhibit “A”. In FY 2008/09, building permit activity was about $15.8 million, based on these figures, a Road Impact Fee of 1% would generate approximately $158,000 for the City.

If building activity picks up in future years, the 1% fee could generate more revenue for road maintenance needs. The 2007 Pavement Management Study by Nichols Consulting Engineers concluded that the City’s annual road maintenance funding should be at least $660,000. Funds generated by a Road Impact Fee could be maintained in a separate fund and used to supplement General Fund monies for road projects.

SUMMARY
Clearly, construction activity takes a toll on the City’s streets and roads. By implementing a Construction Activity Road Impact Fee, the cost of annual road maintenance would be offset. Staff recommends that the City Council approve incorporating this new Construction Activity Road Impact Fee into the Community Planning and Building Fee schedule, effective November 1, 2009.

CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
RESOLUTION 2009-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA ADDING A CONSTRUCTION ACTIVITY ROAD IMPACT FEE OF 1% OF THE PROJECT VALUATION OF A BUILDING PERMIT AND DESIGNATE THE FEES COLLECTED FOR ROAD MAINTENANCE

WHEREAS, it was determined that the impact of construction vehicles on the City’s streets and roads requires additional road maintenance funding; and

WHEREAS, based on the 2007 Pavement Management Study by Nichols Consulting Engineers, the City’s annual street and road maintenance needs are approximately $660,000; and

WHEREAS, a Construction Activity Road Impact Fee of 1% of the sum of a building permit’s project valuation can be added to Community Planning and Building’s fee schedule to generate funds for road maintenance; and

WHEREAS, the Construction Activity Road Impact Fee will take effect November 1, 2009.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES:

1. Add a Construction Activity Road Impact Fee of 1% of the sum of a building permit’s project valuation to the Community Planning and Building Fee Schedule, effective November 1, 2009.

2. Deposit these collected fees in a special fund, designated for road maintenance.

PASSED AND ADOPTED BY THE CITY OF COUNCIL OF THE CITY OF CARMEL-BY-THE SEA this 6th day of October 2009, by the following roll call vote:

AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:

SIGNED,

_________________________
SUE McCLOUD, MAYOR

ATTEST:

_________________________
Heidi Burch, City Clerk