April 5, 2022, Item #9
AG EN DA REPORT City of Poway
..
~-1;11 ~-,,~' CITY COUNCIL
DATE:
TO:
FROM:
CONTACT:
SUBJECT:
Summary:
April 5, 2022
Honorable Mayor and Members of the City Council
Robert Manis, Director of Development Services /,vt
Melody Rocco, City Engineer J..{t,
(858) 668-4653, [email protected]
Resolution Approving a 2% Increase in the Regional Transportation Congestion Improvement Program (RTCIP) Traffic Mitigation Fee for Fiscal Year (FY) 2022-23, 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. The San Diego Association of Governments (SAN DAG) has informed all the cities and the County of San Diego that the increase in the RTCIP fee for FY 2022-23 is set at 2%. This will increase the City's RTCIP Traffic Mitigation Fee from $2,635.50 to $2,688.21 per new residential unit starting on July 1, 2022.
Recommended Action:
It is recommended that the City Council take public input, close the public hearing and adopt the Resolution (Attachment A).
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 new 1 of 8
April 5, 2022, Item #9
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%
each
year
from
2009
through
2014,
2.5%
in
2015,
2%
in
2016
and
2017,
3.3%
in
2018,
and
2%
each
year
from
2019
through
2021.
It
is
currently
set
at
$2,635.50
per
residential
dwelling
unit.
SANDAG
has
informed
all
the
cities
and
the
County
of
San
Diego
(Attachment
B)
that
the
percentage
increase
for
FY
2022-23
is
set
at
2%.
This
will
increase
the
City's
RTCIP
Traffic
Mitigation
Fee
from
$2,635.50
to
$2,688.21
per
residential
unit
starting
July
1,
2022,
for
FY
2022-23.
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
$2,688.21
per
new
residential
dwelling
unit
and
the
anticipated
development
for
next
fiscal
year,
estimated
revenue
of
$954,315
is
projected
for
FY
2022-23.
Public
Notification:
A
Notice
of
Public
Hearing
was
published
in
the
Poway
News
Chieftain
on
Thursday,
March
24,
2022.
A
second Notice
of
Public
Hearing
was
published
in
the
same
publication
on
Thursday,
March
31,
2022. Attachments: A.
Resolution
B.
SANDAG
Agenda
Item
No.
4 dated
February
25,
2022
Reviewed/
Approved
By:
Assistant
City
Manager
2 of
8 Reviewed
By:
Alan
Fenstermacher
City
Attorney
City
Manager
April 5, 2022, Item #9
RESOLUTION
NO.
22-
A
RESOLUTION
OF
THE
CITY
COUNCIL
OF
THE
CITY
OF
POWAY,
CALIFORNIA,
APPROVING
A
2%
INCREASE
IN
THE
REGIONAL
TRANSPORTATION
CONGESTION
IMPROVEMENT
PROGRAM
(RTCIP)
TRAFFIC
MITIGATION
FEE
FOR
THE
FISCAL
YEAR
(FY)
2022-23,
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
agencies
to
collect
traffic
mitigation
fees,
starting
July
1,
2008,
. from
residential
dwelling
units
to
fund
the
Regional
Transportation
Congestion
Improvement
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
$2,635.50
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
2022-23
is
set
at
2%;
and
WHEREAS,
the
City
Council
intends
by
this
Resolution
to
increase
the
City's
RTCIP
Traffic
Mitigation
Fee
from
$2,635.50
to
$2,688.21
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,
2022,
hereby
increases
the
RTCIP
Traffic
Mitigation
Fee
from
$2,635.50
to
$2,688.21
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
8 ATTACHMENT
A
April 5, 2022, Item #9
Resolution
No.
22-
Page
2 PASSED,
ADOPTED
AND
APPROVED
at
a
Regular
Meeting
of
the
City
Council
of
the
City
of
Poway,
California
on
the
5th
day
of
April
2022
by
the
following
vote,
to
wit:
AYES: NOES
:
ABSENT: DISQUALIFIED:
Steve
Vaus,
Mayor
ATTEST: Carrie
Gallagher,
CMC,
City
Clerk
4of8
April 5, 2022, Item #9
SA ltem:4
Boa rd of Directors February 25, 2022
TransNet Regional Transportation Congestion
Improvement 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 its jurisdiction, with certain
exceptions, including low-income residential
units and accessory dwelling units.
The purpose of this fee 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
SANDAG.
Key Considerations
SAN DAG is required to adjust the minimum
RTCIP fee amount on July l, of each year based
on an analysis of construction cost indices, but
never less than 2%. The purpose of this annual
adjustment is to ensure that the RTCIP retains
its purchasing power to improve the Regional
Arterial System.
Action: Approve
The Board of Directors is asked to
approve a 2% adjustment to the
Regional Transportation Congestion
Improvement Program, raising the
minimum fee from $2,635.50 to
$2,688.21 beginning July l 2022.
Fiscal Impact:
The Regional Transportation
Congestion Improvement Program
(RTCIP) fee would increase from
$2,635.50 to $2,688.21 beginning July l,
2022.
Schedule/Scope Impact:
The RTCI P fee is collected for each new
housing unit constructed (with certain
exceptions) 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.
Based on an analysis of construction cost trends and relevant indices, staff recommends a 2% fee adjustment to the RTCIP, raising the minimum RTCIP fee from $2,635.50 to $2,688.21 beginning July l, 2022, (Attachment l). Due to past engineering Construction Cost Index {CCI) increases being less than 2%, the steep rise in construction costs in 2021 means that the CCI has only now matched the RTCIP increases. The current recommendation is enough to ensure that the RTCIP fee maintains its purchasing power to complete necessary transportation improvements, though an increase higher than 2% may be needed next year.
Further detail can be found in Attachment l.
The TransNet Independent Taxpayer Oversight Committee reviewed this item at its February 9, 2022, meeting, and had no significant comments. 5 of 8 ATTACHMENT B
April 5, 2022, Item #9
Next Steps
In accordance with TransNet Extension Ordinance provisions\ each jurisdiction's RTCIP funding program must be submitted for review by the Independent Taxpayer Oversight Committee (ITOC) by Aprill, 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 13, 2022, ITOC meeting.
Susan Huntington, Director Financial Planning and Budgets Key Staff Contacts: Ariana zur Nieden (619) 699-6961, [email protected] Jim Miller, (619) 699-1964,[email protected]
Attachment: l. Discussion Memo
1 Section 9 of the TransNet Extension Ordinance requires that local jurisdictions establish a program or mechanism for funding the RTCIP. For purposes of the RTCIP, the Regional Arterial System is defined in the most recent Regional Transportation Plan adopted by SANDAG. 6 of 8 2
April 5, 2022, Item #9
Attachment l
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 unit1 constructed in that jurisdiction for contribution to the Regional Transportation Congestion Improvement Program (RTCIP}. RTCIP revenue is required to be used to construct improvements 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 SAN DAG to adjust the RTCIP fee amount each year, and states that in no event shall the adjustment be less than 2% per year or more than the percentage 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 retains 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 SAN DAG.
The RTCIP funding programs fall under the responsibility of the 79 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 l, 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 SAN DAG Board Policy No. 031.
Analysis of Construction Cost Indices
SAN DAG 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 2020 to December 2021 (latest available data}, the ENR Los Angeles CCI increased by 7.0%, after an annual increase in 2020 of only 0.3%. The ENR National CCI grew by 7.4% in 2027.
As cost indices show some volatility, it is important to focus on the longer-term picture from 2008, when the RTCIP was first instituted, when considering the required annual adjustment.
The cumulative growth of the RTCIP from 2008 through 2021 was 37.8%, with the ENR Los Angeles CCI seeing a 37.4% growth over the same period. The chart below shows how the RTCIP and the ENR Los Angeles CCI compare over time. It shows that by maintaining the annual adjustment at the minimum 2% increase required, the RTCIP has kept pace with inflation and retained its purchasing power.
1 Units constructed for extremely low-, very low-, low-, and moderate-income households may be exempted.
7 of 8 3
April 5, 2022, Item #9
Construction Cost Index
(2008 = 100)
135
130
125
120
115
110
105
100
95 Comparing Construction Costs (2008=100)
TransNet RTCIP vs. ENR LA CCI
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 -TransNet RTCIP-ENR CCI -LA
As predicted, construction costs (and inflation generally) surged in the second half of 2021, after construction (and the economy generally) was negatively affected by the COVID-19 related recession in 2020 and the beginning of 2021.
The Ordinance requires SAN DAG to adjust the RTCIP fee amount each year and states that in no event shall the adjustment be less than 2% per year or more than the percentage increase set forth in the Engineering CCI published by the EN R, or a similar CCI. The most recent available data shows LA CCI increased much more than the minimum 2%, but staff recommends the RTCIP be adjusted only by the required minimum of 2% in 2022. Even though CCI inflation has accelerated from its previous low pace, this 2% increase is enough to ensure that the RTCIP fee maintains its purchasing power to complete necessary transportation improvements due to past CCI increases being less than 2%.
Staff will also continue monitoring the performance of the economy, and the construction cost indices. If global economic growth continues to surge in 2022, putting additional pressure on commodity prices and labor costs, it could result in another large CCI increase.
This could potentially necessitate an increase larger than the minimum 2% RTCIP increase for 2023.
8 of 8 4