April 16, 2024, Item #3
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Summary:
AGENDA REPORT CityofPoway
April 16, 2024
Honorable Mayor and Members of the City Council
Robert Manis, Director of Development Services
Tracy Beach, City Engineer
858-668-4652 or [email protected]
CITY COUNCIL
Resolution Approving a 4.9% Increase in the Regional Transportation Congestion Improvement Program Traffic Mitigation Fee for Fiscal Year (FY) 2024-25, 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 cities and the County of San Diego that the increase in the RTCIP fee for FY 2024-25 is set at 4.9%. This will increase the City's RTCIP Traffic Mitigation Fee from $2,741.97 to $2,875.06 per new residential unit starting on July 1, 2024.
Recommended Action:
It is recommended the City Council adopt the attached Resolution (Attachment A) ordering the increase to the City's RTCIP Traffic Mitigation Fee for new residential units starting on July 1, 2024.
Discussion:
In November 2004, voters in San Diego County approved a 40-year extension to the existing Trans Net program, which was first initiated in 1987. The Trans Net 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 the adopted RTCIP Traffic Mitigation Fee for new residential dwelling units be adjusted annually for construction cost inflation, based on the April 16, 2024, Item #3
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construction cost index, but requires a minimum 2% annual increase. The fee was increased by 2% on July 1 of 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 2023. It is currently set at $2,741.97 per residential dwelling unit.
SANDAG has informed all the cities and the County of San Diego (Attachment B) the percentage increase for FY 2024-25 is set at 4.9%. Per SANDAG, this increase is based on an analysis of construction cost trends and relevant indices and matches the rise in the Construction Cost Index, observed in the last complete fiscal year (FY 2023). This will increase the City's RTCIP Traffic Mitigation Fee from $2,741.97 to $2,875.06 per residential unit starting July 1, 2024, for FY 2024-25. The estimated annual revenue fluctuates based on the number of new residential building permits issued.
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 $2,875.06 per new residential dwelling unit and the anticipated development for next fiscal year, estimated revenue of $333,506.96 is projected for FY 2024-25.
Public Notification:
None.
Attachments:
A. Resolution
B. SAN DAG Agenda Item No. 6 dated February 23, 2024
Reviewed/Approved By:
f)J,.}l. L---
Wendyilaserman
Assistant City Manager
Reviewed By:
Alan Fenstermacher
City Attorney
Approved By:
~)
Ch~a~e1
City Manager
April 16, 2024, Item #3
RESOLUTION NO. 24-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
POWAY, CALIFORNIA, APPROVING A 4.9% INCREASE IN THE
REGIONAL TRANSPORTATION CONGESTION IMPROVEMENT
PROGRAM (RTCIP) TRAFFIC MITIGATION FEE FOR THE
FISCAL YEAR (FY) 2024-25, 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 $2,741.97 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 2024-25 is set at 4.9%; and WHEREAS, the City Council intends by this Resolution to increase the City's RTCIP Traffic Mitigation Fee from $2,741.97 to $2,875.06 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, 2024, hereby increases the RTCIP Traffic Mitigation Fee from $2,741.97 to $2,875.06 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 16, 2024, Item #3
Resolution No. 24-
PASSED, ADOPTED AND APPROVED at a Regular Meeting of the City Council of the City of Poway, California on the 16th day of April, 2024 by the following vote, to wit:
AYES:
NOES:
ABSTAINED:
ABSENT:
DISQUALIFIED:
Steve Vaus, Mayor
ATTEST:
Carrie Gallagher, CMC, City Clerk
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April 16, 2024, Item #3
SA ltem:6
Board of Directors February 23, 2024
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 fee's purpose 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
Action: Approve
The Board of Directors is asked to approve a
4.9% adjustment to the Regional
Transportation Congestion Improvement
Program, raising the fee from $2,741.97 to
$2,875.06 beginning July 1, 2024.
Fiscal Impact:
The Regional Transportation Congestion
Improvement Program (RTCIP) fee would
increase from $2,741.97 to $2,875.06
beginning July 1, 2024.
Schedule/Scope Impact:
Pending Board approval, the adjusted RTCIP
fee would become effective July 1, 2024.
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 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.
Based on an analysis of construction cost trends and relevant indices, staff recommends a 4.9% fee adjustment to the RTCIP, raising the minimum RTCIP fee from $2,741.97 to $2,875.06 beginning July 1, 2024 (Attachment 1 ). This increase matches the rise in the Construction Cost Index, that was observed in the last complete fiscal year (FY 2023). It helps to ensure that the RTCIP fee maintains its purchasing power to complete necessary transportation improvements.
Next Steps
In accordance with TransNet Extension Ordinance provisions 1, each jurisdiction's RTCIP funding program must be submitted for review by the Independent Taxpayer Oversight Committee (ITOC) by April 1 of each year to remain eligible for Trans Net Local Street and Road funding. The annual submittal of RTCIP funding programs by local jurisdictions is scheduled for review at the ITOC meeting on April 10, 2024.
Susan Huntington, Director of Financial Planning, Budgets, and Grants 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 8 ATTACHMENT B
April 16, 2024, Item #3
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 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 SANDAG 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 SANDAG.
The RTCI P funding programs fall under the responsibility of the 19 local jurisdictions, which must maintain their RTCIP funding programs and comply with specific administrative requirements 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 on the RTCIP page of the SANDAG Website. Relevant excerpts can be referenced in the Trans Net Extension Ordinance and SAN DAG Board Policy No. 031: Trans Net Ordinance and Expenditure Plan Rules.
Construction Cost Increases
SANDAG staff evaluated changes recorded in the ENR Construction Cost Index for Los Angeles (ENR CCI-LA). 2 The index is based on monthly price changes in four areas: lumber, cement, structural steel, and labor. It helps track month-to-month fluctuations in construction costs, and when tracked over time, it measures year-over-year price increases.
Chart 1 shows annual increases in the ENR CCI-LA since Fiscal Year 2009. For about ten years (from FY 2010 through FY 2021 ), construction costs rose by less than 4% per year. FY 2022 marked the first sharp rise in costs (7.9%) and was followed by another strong year of cost increase (4.9% in FY 2023).
Only the first six months of data are available for FY 2024, suggesting another year of strong cost escalation.
Chart 2 shows how much construction cost growth in each fiscal year varied from (above or below) the 2% minimum specified by the Ordinance. Between FY 2009 and FY 2023, there were eight years where construction costs rose by more than 2% minimum (as specified by the Ordinance) and seven years where the costs rose by less than the 2% minimum requirement. 1 Some types of new construction can be exempted, such as low to moderate-income housing. 2 ENR produces construction cost indices for 20 US cities. SANDAG uses the Los Angeles index since it is the closest approximation of construction cost trends for San Diego. 6 of 8
April 16, 2024, Item #3
10%
8%
6%
4%
2%
0%
8%
6%
4%
2%
0%
-2%
Chart 1. Engineering New-Record Construction Cost Index -Los Angeles: Average Fiscal Year Change
7.9%
10.0%
0 I
I
I
I
I
FY09 FYlO FYll FY12 FY13 FY14 FYlS FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24* Chart 2. CCI Growth Above/Below the 2% Minimum Fee Increase I I • ■ I I
I • ■ I I -
FY09 FYlO FYll FY12 FY13 FY14 FYlS FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Recommendation on the RTCIP Fee Increase
Each year, SAN DAG recommends an increase in the RTCIP fee to ITOC. Staff usually bring the recommendation to ITOC in February, and the fee increase takes effect in the new fiscal year (starting July 1).
Strong construction cost increases mark the last two years_. Despite this, SANDAG staff had recommended the 2% minimum, maintaining that the RTCIP fee could preserve the purchasing power needed to complete necessary transportation improvements. Chart 3 shows that through FY2021, RTCIP fee growth was in line with construction cost increases. However, the region is now entering its third year 7 of 8
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of construction costs rising well above 2%, even as general economic conditions are improving (inflation is easing and fears of a recession are receding). Between FY 2021 and FY 2023, construction costs increased by 13% while the RTCIP fee grew by 4%. The gap is likely to widen in FY 2024 based on how construction costs are rising in the first half of FY 2024.
As a result of these conditions, staff recommend a 4.9% increase ($133.09) to the RTCIP fee for FY 2025. The increase will bring the RTCIP fee to $2,875.06. The proposed 4.9% increase will be the third time (since FY2009) that staff recommends an increase above the 2% minimum. \.?
v
CJ
X
CJ
v ,-
1.35 1.30
1.23 1.20
1.13 1.l0
:.o.3
1.00 Chart 3. CCI and RTCIP Growth Since FY 2009
FY09 FYlO FYll FY12 FY13 FYl~ FY~5 FYlG FY17 FY_8 FY!9 FYZO FY21 FY22 FY23 Note: The RTCIP fee has Increased by more than 2% only two times since FY 2009. In FY 2016, the fee Increase was 2.5%; In FY 2019, the increase was 3.3%.
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