Oct 07, 2019 City Council on 2019-10-07 11:30 AM

Everybody to this meeting of the Dent City Council, it is Monday October the 7th, 2019, 1137 p.m. We do have a quorum. Councilmember Davis and Councilmember Armitage are absent at this time. We will move through our work session reports. Agenda item 1A, which is receive report, hold discussion, give staff direction regarding roadway impact fees. Good morning, good morning, Mr. Mayor, members of the council. My name is Pritam Deshmukh. I am the deputy city engineer, and we'll be talking about roadway impact fees. So quick overview of what I'm going to talk about, a little bit of history. Start with that, what happened, where were we at. Talk about the actual impact fee study, the full-blown study was conducted back in 2015. Talk about some of the construction cost increases in the last four or five years since the study was conducted, and then recommendations at the end. History, state legislature for assessing roadway impact fees passed 1987. So the city didn't have a roadway impact fee until 2017 when it was implemented. So we have about a 30-year period where there was state legislature which allowed local governments to charge impact fees for roadways, and we were not charging that. So what happened in 2015, we hired a consulting firm, Kimley-Horn, to conduct our full-blown impact fee study. So the study estimated a recovery fee for new developments. Council adopted an impact fee that was lower than the eligible recovery fee that was recommended in the study. The ordinance, actual ordinance, was adopted back in March of 2016 that implemented roadway impact fees, and that was effective after a grace period of one year in March of 2017. So what was included in the study? Now I'll go, next few slides I'll talk about the steps involved in the actual impact fee study that was conducted in 2015. So in a little bit of detail of what the steps are, I've tried to keep it pretty high level, so if you have any questions, you can ask me to get into deeper depths, but start with the entire city. The city was divided into five areas, A through E, which are called service areas. This was to identify what are the CIP projects, what are the roadway projects that are needed within each of these study areas, and then also identify what was the growth, what is the actual demand and actual trips being added with new development. So the impact fee, this is the basic formula that's used, this is a very simplified version, it is the sum of eligible CIP costs divided by the growth in travel only due to new development. It is actually an 18-step process, that's why I have this 18-step here. It is not a simple formula of taking a ratio, but it's an 18-step, very involved process. I have a quick snapshot of what the table looks like somewhere in the middle of the presentation. Now I'm going to go into a little bit of detail of what these sum of eligible CIP costs are, and then also talk about how do we come up with the growth in travel for these new developments. So what's eligible CIP cost is the cost of adding the portion of the roadway capacity that is attributable to new growth. So it's only that capacity that is required by new growth. And then what is growth in travel? It's the travel related to new development coming online. So let's get into the details of the numerator aspect of this. So how do we come up with the new eligible cost for capacity enhancement for the roadway? So we started with, as I mentioned, each of the service areas. If you can look at some of these pictures, these are the projects. Everything in red are the CIP projects that were identified within each of these areas. And I have, later on, I list how many projects are within each of these specific areas. But what we did is we calculated the net capacity increase for all of these projects. So if there is existing, there is a two lane roadway and we're going to a four lane roadway. So the net capacity increases, we're adding two lanes. Then within that net capacity increase, we identified the cost. So we only identified the cost to put in the new increase or the net increase in capacity. And then we calculated, within the cost, how much can be attributable towards new growth. So that's how we came up with the eligible cost. Now, this is the same formula that we talked about. And these are the number of projects within each of these service areas. So as you can see, service areas had a lot of projects ranging from lowest of 27 all the way to 46. And these are the eligible costs within each of these service areas. So this is, we're talking about the capacity increase that is only directly attributable to new growth. So you can see, for example, service area A has over $136 million worth of required capacity that can be attributable back, that is attributable back to new growth only. >> [INAUDIBLE] >> Go ahead. >> And you're going to go over how you come up with that particular number, the percentage of capacity attributable to new growth. >> So this is fairly high level, but I can get into the exact details of percentage attributable. As I mentioned, it is the amount of capacity. I'll get into the next formulas and then we can get into details. So that's the total cost for CIP. Now we're talking about the denominator, which is lower part of it. How are we measuring growth in travel due to new development? So it's measured in vehicle miles and it is the capacity consumed in a single lane during PM peak hour by a vehicle that is making a one mile trip. So new development comes in, the new development adds this, a new housing for example. You're making a trip to work or to a grocery store and the capacity consumed by that one vehicle during the PM peak hours within the roadway system is what this vehicle mile is all about. And then finally we calculate the growth by multiplying a transportation demand factor. I'll get into that in the next few slides. But a transportation demand factor times the number of units that is new growth. So this is how we're calculating growth. Get into the transportation demand factor. So this is a standard formula. This is from Institute of Transportation Engineers manual. I didn't want to get into the real details and depths of it. I just wanted to show that it is an equation that calculates a maximum length. This is the maximum length, it's about six miles. And then the trips, number of trips that are generated by a new development. And then you can go percent pass by trips and stuff like that. It goes through a whole process. And at the end of the process, the transportation demand model factor for residential is 4.9. For services and retail, you can see so on and so forth. All these different types of land uses and the trips that are generated create transportation demand factors differently. So what is anticipated growth? Is actually the number of single family units or multi-family units multiplied better there, transportation demand factor. So this land use assumption was based on how many households or how many residential units are coming on board within each of these service areas. And based on that, we multiply that with the transportation demand factor and come up with the vehicle miles that we're calculating. Similarly, we do the same for non-residential uses. We take the basic service and retail numbers, that many square footage is coming on board within each of the service area, each single row is service area. And then multiply with their transportation demand factor to get to the total vehicle miles. And then when we add these two green columns, it gives you the final vehicle miles for each of these service areas. So these are the new development trips or vehicle miles generated by the new cars that will be coming on board based on the land use assumptions within the service areas. >> Yeah, we're going to go ahead and take a question on this last one. It's just so detailed, let me- >> Sure. >> Yeah, I'm just trying to remember what you asked, so go ahead. >> Yeah, it's actually on the previous slide. Is the pass by discount a variable factor that's sort of an assumed constant that you discount things by? >> So the way this was calculated is if a person is coming back from work. They're coming back, say they're coming back from work and they make a stop at a grocery store to pick up something and then get back home. That trip from work to home is considered one. That trip to the grocery store and back and forth is not considered at all. So that's a pass by advantage. So when we're considering the transportation demand factor, it's considered one trip for the person from going from work to home. So that's how the pass by is calculated within this formula and applied here. >> But is that something that comes from a study and it varies by- >> It is. >> Segments? >> Correct, so the Institute of Transportation Engineers has a manual. And they conduct data, they collect data and update their manuals. Very often, I think every year, there's a new duration. And what they do is they actually measure how many people are doing pass by. A lot of retail is pass by. Retail has about 30% of pass by traffic. So you're traveling and you see a store, you jump in and get back. So that's what they conduct studies and they have specific factors for different uses for pass by. Any other questions? >> The question I have is on the next slide. >> This one? >> I'm sorry, the next one. >> The one that's got all this, I'm sorry. >> Okay. >> So in 2000, when did we initiate this? >> It was initiated in 2014, but the study was done in 2015. >> All right, so this is the study information. >> From 2015. >> And that's to, so this single family units and multi family units. That is a projection of, is it a ten year projection, 20 year projection? >> It's a ten year projection. >> Ten year projection. >> So we've got almost four years since this study. >> Correct. >> Have we gone back to do a means testing on how, where we are in the actual number of single family units that have come online at that time, and the multi family units to see how we're doing on that calculation? >> No, we've not done that. >> I would probably suggest that, just so that, I mean, this is based upon just an assumption. But now we have at least some data that we might can use to backstop that or to determine if, are we on track? Are we way off base? Either way. Because I think that's important, depending on what you're saying is the ultimate number. >> Todd is the city engineer. I think to answer that question, this is really looking at the current impact fee study, which we can't update until we've updated the entire mobility plan. So this just allows us to make an adjustment for the impact fees as was authorized by council in 2016. But the current mobility plan will have a new roadway impact fee study with all new assumptions. Taking a look at all of this growth in that study. >> No, I understand that. >> Okay. >> I think, so maybe I'm wrong in some of my thinking. So you're saying we want to go, we're having this work session to determine, is there an appetite or is there approval or some kind of consensus to make an adjustment to the roadway impact fee based upon the data? This data, is that right? >> Yes. >> So I'm not saying we should go back and do a whole new study. I'm just simply saying that if we're basing that decision upon the assumption that it's single family units of 3,700, multifamily units of 1,800 or 1,900, well, multifamily units, sometimes we're talking about multifamily units in terms of bedrooms instead of units. So I don't know if these are one bedroom units, two bedroom units, however that's defined. Just so that because I've struggled with this concept ever since we've done it. Because this isn't about a maintenance issue, it's not about getting money to reconstruct our roads. This is about getting an impact fee to enlarge our roads, to increase the capacity of a road. In other words, yeah, what road are we changing from, let's take Ryan Road for instance. And if I get out of hand on the, I just wanted to use this as an example. I know we got a bond program up and coming. The facts are, Ryan Road's a two lane road. I believe in the bond proposition there was moving it to two lanes with a center thing. So that's to help with the movement of traffic, the capacity of how many cars can be on here. And that's really what an impact fee is looking at is to say, not we got to repair it because it's broken down. >> Correct. >> We need to make it bigger because of the number of cars. The total number of vehicles that are traveling through the area projected based on development that has come. >> Based on this data. >> That we don't know for sure, but if it were to build out based on our current land use projections, this is what we would estimate it to be. >> Well so, and I'll go back and then I'll move on, stop with this line of thought. But just like we're coming to update to see if there's a, to update the fee potentially. I think at that time we can also look to make sure that our assumptions, like let's say for instance, at this point our single family units from the day this was done is only 1,500 units. I don't know what percentage of that is over the ten years, or our multi family units are 500. It just helps us understand more of, we're setting a number here than if we're either overshooting it, or we're undershooting it. At least the data would be helpful for me to understand. >> So just to be clear, you want to see just a comparison of what we assumed in '15 versus what's actually on the ground now? >> Yeah, that's all, just to say, hey, we may be right on track. You got four years, you got six years left, you do that proration, that percentage or we're way off. Let's say we're way off too little or we're way off because the growth hasn't been there. >> Sure. >> Then it just helps us get a little bit more accurate. Because these costs, I mean, actually I need to have somebody look at my computer. I can't get my presentation up, but I know that you start talking about roadway impact fees per house on a 200 unit subdivision. That's pretty large. >> Yes. >> So that's it. It's just to get us in a ballpark where we really can try to make it as much of a guesstimate as possible with some of the data. It's not a criticism or anything like that, it's just more of an observation. >> Yeah, okay. >> Yes, Councilmember Briggs and then Councilmember Ryan. >> I just wanted to make a comment that that information is normally found in the stand reports. And so it should be pretty easily accessible to go in and look every month and add that up. We can look at it. >> And I just want to follow up on what the Mayor said as well, because I look at it, and the example he used of Ryan Road is in section B. And that had the least dollar amount and is not very high as far as the number of homes. There's probably half of those homes just that have been built on Ryan Road or being platted right now on Ryan Road. So it would be good to do that comparison and see where we actually stand. >> Yeah, I think we're missing an important concept here. Maybe an impact fee is not based on the exact growth. It's based on those projects, the capacity that needs to be added in these areas should the growth occur. And as it occurs, the point of this presentation was even if we went back and used the same growth, let's say we're exactly on point, the cost of those roadway improvements that you saw in 2015 versus 2019 is off by a factor of almost 50% in four years. So even if you are collecting those dollars, the growth rate, let's assume it's the same, I think we're kind of missing the message here a little bit, and that is you might be able to change a little bit of the growth rate, and we can certainly do that. The costs are outstripping the impact fees so fast that it's almost rendering it to a point where the real policy discussion is, do you try to adjust it up to some reasonable amount for the developers to contribute towards those street improvements, or do we just simply put those on a bond referendum? Because really, the whole purpose of an impact fee, it's really an equity buy-in on road projects. There's a much easier way of looking at it on a water/wastewater perspective. We know exactly what it's going to take to service certain demands on water/wastewater infrastructure, but from a street widening perspective, the policy question is, is it appropriate that existing residents pay for these things, pay for road improvements through a bond referendum? Or is there some upfront contribution towards the cost of those off-site improvements? We can certainly work with formulas and how we're dealing with the development community through the planning process, but you never want to be in a situation where it's cheaper to pay our impact fees than to require the off-site improvements. I'm afraid that's where we're heading right now. So we can double check the numbers and run that formula again, but the real crux of this discussion is, in four years, the costs of building these major improvements in that study are up 50%. >> Well, and I appreciate that. I think where I really get challenged on this discussion is when you're talking about capacity on a roadway. >> Correct. >> I mean, first of all, look at all this data and this formula. I mean, you almost have to be a calculus major to understand, you have to be an engineer to understand that. But when you're going from two lanes to four lanes, it's not just the development that's contributed to that in that zone. It's also development all over the city, and then you still have a benefit to the current citizens, because they do have less traffic, less congestion. So, and I don't think you were saying this, but I don't think it's so easily bifurcated or differentiated between, it's the new growth that's creating this need to widen this road. I know you'll have a percentage based upon how we did it in our, like the residential. So we'll get through this and see what the recommendation is. >> So just to quickly answer what you were saying is the capacity. The way the definition for this vehicle model is, if I go back, it is that capacity consumed by that one car that was added as part of the new development. So if we're widening a two lane facility to a four lane, not the entire two lanes that we're adding will be required by the new development. So what is measuring is it's actually calculating if new development is contributing 100 trips. So what is the capacity required for those 100 vehicles to be on in that particular area? And that's how we're arriving to that, all right, so. >> Appreciate that. >> So this is the actual table, and it's in the study, and it goes through 18 steps. It talks about, it talks about. >> Yeah, yeah, sorry. >> That's okay. So, technical issues we're having everywhere. So this is the actual table from the study. It talks about how do we dwindle it down. These are the, this is the capacity added by the new network. So this is total capacity, and it goes through steps of percent wise. If the new development comes in, how much is contributed and comes up with these numbers that we saw. This is vehicle miles for each of these service areas, and these are the costs. And within the cost, there is also definition for a lot of talking about financing, how these things would be funded. So it was a detailed analysis that was performed to get to these costs for the CIP projects that are part or recoverable through the new development. So if you want to get into the details, I can, but I wanted to give you a quick overview. There is too much calculation in the background that happens. It's not like we just simply pick one number or choose or guesstimate it. >> Of course, sure, sure. >> So this is a simplified version of the same thing. So it's eligible CIP cost versus the growth in travel. We looked at the transportation demand factor and then the recovery fee, recoverable fee per service unit. So for example, for area A, the recoverable fee per house, single family house, is about $10,780. That's the eligible recovery fee. And this, looking at each of these service areas, you can see that these are the costs. This is per single family household, this is how much you can recover to pay towards eligible CIP cost. It is not the entire CIP. I understand there's a lot of traffic that's going to be cut through other regions or overlapping into other regions. But this is just a portion within each of the service area that is towards new growth. And currently, these are the adopted numbers. These were in the study for 2015. And in the next couple of slides, I want to go over what has happened with the construction cost. As Todd alluded earlier, that in the last four or five years, the construction costs have gone through the roof. So we looked at this numerator, they're increasing at a much faster pace. We looked at some of these projects and recalculated our eligible costs. And you can see there's a 40 to 50% jump in these costs. So if we have to go out there and build this infrastructure today, we're talking about those costs jumping up to that level, they're almost at 200, 436. So what is the eligible recovery fee based on the new costs? And leaving the travel growth in the same, leaving the denominator the same. We're looking at almost a 50% increase in all of the areas for eligible recovery costs. This was a quick analysis that was done in 2019 by the same consultant that performed the 2015 study. So what does that do? This will show you a quick overview of where we're at. In all these service areas, the adopted fee that was adopted in 2015 is 2,000. 2015 eligible recovery fee is in the 10,000 range. And then based on the construction inflation that we've seen, we cannot build those CIP projects within the allocated cost back in 2015. We need more monies, which is 15,000. So I want to show you a quick comparison of how much are we recuperating from costs from some of the impact fees that we're collecting. So in 2015, we had an eligible recovery fee of 10,700. So per household, single family household, we're recuperating about 19% based on the adopted $2,000 value. If we continue, if we use the same number for eligible fee, we would continue to recuperate only 13% because the construction costs are rising at a much higher pace. So if we continue with the $2,000 today, we'll only recover 13% of the cost for area A example and so on and so forth down the list. So what staff is really recommending is to, at a minimum, recover 50% of the 2019 eligible recovery fee values, which is also under the maximum values or the eligible values that are recorded in the 2015 study. So that would help us at least get to a 50% level, and I think that is our recommendation. So really, the team here is construction costs are going higher. We already have an adopted rate at 2,000. Are we looking to recuperate some of the cost higher, or does this fall back on the taxpayers? That's the, just any questions? >> Councilmember Meltzer and Councilmember Ryan. I'm wondering what the logic was behind the definitions of A, B, C, D, and E. With the exception of the fact that E sort of covers a lot of the in town, it's mostly treating the city like a pie. Whereas the wisdom of the community in the 2030 plan was to encourage growing compactly precisely because it doesn't require as much infrastructure. >> And you had housing where you've already got roads and utilities and all that stuff. Whereas it appears to me that if somebody builds relatively in town in A, you're dinging them for the cost of constructing new roadways way out on the outskirts of A. I don't understand why the map doesn't look more like a bullseye than a pie. >> So typically these areas look at, if I go back to the number of projects within each of these areas, we're fairly between a range of 20 to 40 something projects within each of these areas. I think we had a lot of community meetings and public hearings as well at the time to come up with these areas. So there's, I can have the consultant get into precise details of how we came up with the areas. But it is focusing on how much capacity is required overall and then also how much growth. It's a balancing, so if there's higher growth in certain areas, that is clubbed up into some areas that are not growing at the faster pace. >> I seem to recall when we did similar analysis for utility impact fees, that the zones were a little bit more like a bullseye because the impact on infrastructure is different. I mean, is there a scatter plot of where these projected segments are? I can't imagine they're falling as much within the kind of core of the city. >> Well, and I would add, you're right that in some of the parts of town where the growth started and kind of were moving out, the impact fees were a little bit lesser. And there was also, it was anticipated that for redevelopment we'd try to manage those fees as well. But there were areas exactly that is very similar to this that I can think out near ropes and manage that sort of thing where they're having, we're incurring significant costs to get infrastructure out there to do upsizing, that sort of thing. Those fees are about double. So, I mean, it's very similar, and in this particular instance, it's going to depend on how much existing infrastructure is in that zone, how much has to be added to it from a capacity perspective, those sorts of things. So you're going to see two or three of these zones with very different impact fees. >> And to your comment about the 2030 plan, it would be nice to see growth kind of in more of a concentrated area, but that is just not what is happening. You're seeing platting all over this community, and mostly north and south right now, and that's just not how this was broken down. It just doesn't work as easily as the 2030 plan. If you're in a state where you can control growth, like Oregon, then it would probably be more in line with that thinking. >> I somehow don't think I've made my basic point clearly. Where's the construction? Where is the growth? Is it? >> They're all tied to projects. >> Exactly. >> But are they, is there a difference, let me ask another question, if I may. Is there a difference between the amount of road construction required for someone to build way on the outskirts of Den, versus someone growing, say, within the loop? >> So if you're within the town, so the way this thing works is there's congestion. We're targeting projects that require capacity enhancements. And if someone's building in town, yes, there are capacity enhancements required in that areas as well. So we're planning projects to address intersection improvements, address congestion improvements, and we're doing that all over the town. We have some of the impact fees that people that are growing within the town go towards addressing congestion at intersections and along segments that are already included. So we are using the impact fees to address their local needs, as well as when they're traveling and accessing the interchange that they're coming off of. That's also as part of the impact fee as well. So yes, the network itself is spread out, it looks like it. But a lot of these folks that are inside the town, they get through some of these roadways to get to their place, in and out, and go to their job site. So that's why it's not the same as water or waste water impact fee. It's more organic because of the nature of travel. >> No, sure, go ahead. >> So, all right, I hear you saying there are capacity related pressures for someone adding housing close in as well. Are they comparable? Is the impact, is the CIP impact comparable for someone adding housing close in as for adding housing in the outskirts? Or is there different in type, perhaps, but are they comparable in dollars? >> So in dollars, they are all paying the same impact fee per single family house. >> But it's the cost impact. I'm not saying, I get it, that you're blurring that difference if there is one. But it's the cost impact comparable. >> So if you're asking the cost to construct? >> You're going to require a certain amount of CIP for a new house on Locust street. >> Sure, the cost of construction does change a bit as you move out. But it changes to the point where overall cost of actual construction itself is consistent throughout the city. The amount of infrastructure impacted as you move further out may be less. Because you just don't have as big a roadway or you have as many utilities to move, I mean, you just may not have. But what you're also recognize is the impact of that development doesn't just impact that area. That traffic moves throughout the city in different places. So they're getting to the stores, to the shops, to different places, to work. So when you go with a service area approach, and you can define the service area in so many different ways. As we go into the next impact fee study tied to the mobility plan that will come out next year, we are absolutely looking for a better way of defining those service areas. This was the service area layout that the council at the time approved. And then the methodology and our consultant is here if we want to ask a few more questions about that. But that was the service area layout they went through. And they went through multiple versions of that to come to this layout. >> In some appropriate time, I'd be interested in knowing more about that. The logic of it isn't obvious to me, but I take your word for it that lots of thought went into it. >> Well, and part of what the service area allows is in the past we had a mechanism called Aid to Construct, which did similar things that said your personal development or your own development impacts this little piece of roadway or this intersection. So you need to put that money in to help that piece. The problem is, is we may have already done that improvement, or that may have been accounted for in some other mechanism. But I've got an intersection, four intersections down that needs a similar improvement. And your development really kind of tips the scale on that. So with that being the case, Aid to Construct was limited to just the area right by your parcel. The service area says, okay, well maybe you don't need it specifically here, so you pay your impact fee. But I have another area inside the same service area I could apply it to today. Because I don't have a bond package or some other mechanism to fund that similar type of improvement. I don't know if that fully answers your question, but that's a lot of the logic that goes into it. >> I'm going to stop, I've asked six questions. >> Yeah, and maybe y'all can get offline if you need some, a little bit deeper dive. Council Member Ryan, did you have a question? >> Yes, yes, can you briefly describe how a project becomes CIP eligible? What's the factors involved in making it that? Because again, I'm looking at B at 15 million and there is a lot of projects that are either underway, started since 2015, or still need to be done that didn't make it into future plans quite yet, that just seems so little. >> So if you look at, I don't know if you can zoom into this corner, but this is area that you're focusing on. This is area B, and anything that is in red, you can see these are all the projects that were envisioned at the time for CIP. So you can see you have Hobson right here, and then you have Ryan Hickory Creek that's coming in there. So you have all these different projects that were identified as requiring capacity. And then you go through a whole process of determining what the cost estimates are. You see some of the CIPs are text out roadways, so they're not considered within our roadway impact fees. So those are left alone, but definitely that capacity enhancement component is required on those roadways as well. But the identification was based on mobility plan. And mobility plan gives you an idea of if there is so many new developments going in, in the next 10 years, we will require widening of Ryan Road or widening of Hickory Creek. And that's, we've already identified all of those in this particular study. And that's what was part of it, part of the 2015 study. >> Let me put it a different way. Right now we're widening Hickory Creek from 2181 to River Pass. >> Correct. >> And this fall we're going out to bid to widen from 2181 to 2499. >> Were those eligible projects, is part of that money paying for those coming out of this? >> Those were eligible projects, but we found funding through RTR to get those going and found other sources of funding and our impact fees could be leveraged to pay our components or the 20% from our side, the local match that was needed. So we did find, we continue doing this if we find money for larger regional connection projects, then we'll go and find funding and then leverage our impact fees because the impact fees that are being collected are collected at a very slow rate. As every single family comes in, then you get the $2,000. So by the time we're collecting about a million dollar pot, it's two, three, four years down the line. So that's why we're not seeing that upfront cash in order to fund these projects. So we're looking for opportunities to fund either ways because we're seeing a lot of congestion in this area. >> Okay, so the 15 million included the Hickory Creek? >> Correct, it included a portion of Hickory Creek, definitely. There's a portion that's outside, the portion that we're working on right now in design is outside our city limits. So it was not originally included in the- >> Right, in the river pass. >> Okay, yeah, I guess I'll get with you offline at some point and kind of get a better feel for this. I just feel like that area B is, everybody's being charged 2,000 right now. But if we went to the adopted or the proposed rates, then they are way under everybody else and it doesn't seem like it's quite. >> I may just not be understanding that amount of capacity needed in the other areas. >> I think he brings up an interesting point about how these are used. And I can tell you the right turn lane on Ryan Road that we went in exhausted, as I recall, most of the funds in that area, which is why he had to go to RTR. And as we're seeing, there's at least four or five new developments being constructed and platted along Ryan Road right now. Those impact fees are gonna come in so late that by the time you actually collect them, the road costs us X percent more than it's even worth at the time. So they're coming in so slow and it's so low we're able to do targeted small projects. They've just been very creative in terms of going out for outside money to try to supplement the impact fees. But I can tell you that one project alone that took out all the money we had in that one. >> We did. >> Quick follow up on that then, can the impact fees be used to pay bonds for projects that were identified prior to and then built afterwards? >> I think the answer is yes. We've started slowing that process down in the utilities, simply to not pay interest on the bonds. Instead, do as much cash in hand as we can do right now, but the answer is yes. Where you're seeing this, thank you. We aggregate the impact fees the last year or two. As you know, council approved probably about a dozen small transportation projects around the city, adding capacity on several of those roadways that interface with Loop 288 in Colorado. Some of them they're interfacing on university, that sort of thing. We're taking those dollars to plan right there, basically taking all the funds down to add capacity improvements at the intersections. Just to try to supplement those projects. But there's just not enough dollars in it to carry out all the projects that were in these funds, not even close. >> Mm-hm. >> Council member Briggs. >> Are these the funds that are refundable, if not used, is that- >> No, these are not. >> Okay. >> The city keeps them and uses them within the same service area. >> Okay. >> There's a type of fee that is refundable, if not used. >> Yeah, that's, I mean, there's some question on whether. Yeah, because sometimes if people have a sidewalk they need to put in, or something that is a public improvement enhancement, that for some reason doesn't make sense at the time to do it, like let's say a sidewalk. You don't have any sidewalks on that side of the street, so you put a sidewalk segment in that goes to nowhere. In the past, and whether this is still applicable or not, I don't know. A developer could put that money in escrow, so that when the city came through and put the sidewalks in, the city would then draw down on that money to put the sidewalk segment in front of that. If they don't do that, I think it used to be within ten years, then you could ask for a refund of that back. But I don't know the state of that policy, at least at this moment. Okay, I've got a couple of questions, but Mayor Pro Tem, do you have any comments just before we start our second or third round? >> No, sir. >> Okay, all right, Council Member Meltzer. If there isn't a really obvious rationale for the carving of the slices, if they're more or less equal in town and out of town, they each have costs, but just different CIPs associated, why bother having sectors? Why wouldn't you just have a city-wide, this is the impact of a new growth. >> Your residence unit pays that fee. I mean, I understand that we're moving from, in this conversation, from the idea of general shared burden of everybody. Okay, we can identify there is CIP impact specifically from new growth, but yeah, why have sectors? >> I'll let the consultant answer that. >> Or service areas, rather. >> Sure, Pete Kelly with Kimley-Horn did the study. >> To Council Member Meltzer's question, the local government code, chapter 395, limits roadway service areas to six miles only. For water and wastewater, it could be the city limits or the service area of those particular utilities. But for roadways, that's the reason for the sectors. And if you had any other questions about why they were divided, how they were, we can talk about that too. Could you go to the recommended fees? So in some sense, and this is for, this is just single family? >> Yes, this is a single family. We're just focusing, and it'll be translated based on the numbers here. It'll be translated to all the land uses and all the tables can be updated. >> Okay, so let me make sure I understand what you just said. Because we had a fee, we've got, you have a slide that shows sort of the summary of what our fees are now. It was $2,000, right? >> Yes, so this is all for single family as well. >> Okay, so then the impact fee is different for multifamily? >> Correct, it's lower. >> And it's different for industrial? >> Correct. >> And it's different for commercial? >> That's right. Zero, I'm going to be challenged to recommend a single family fee if I don't know how that translates into the other ones. >> Okay. >> Do you know, are you all able to do that quickly or? >> We can. >> No, but so this is for single family, which is three times the cost on some of these that it was currently. In fact, most of them except for the B. Where I struggle with this is what was just mentioned, and that is with utility impact fees. Basically it's the service area, city limits, or even beyond that because we do service outside the city limits. And that to me is a little bit more understandable since you put in a 500 home subdivision, you're going to have more water that you're going to need to come into the city. We may have the capacity now, but that means it may fill that up, so we got to build a bigger water line. Somehow that makes a lot of sense to me. Truthfully, this just doesn't make sense. And maybe it's because for the enterprise funds, utilities are enterprise funds, they're rate based. This is basically taxpayer based, shared burden as you said across the city. And so this is a pretty seismic shift from what we've been doing. And based on what I've heard is the money doesn't really collect fast enough to even really. And even when you look at the percentages, you're still got 80% of whatever project you're doing, there's going to be a shared burden across the taxpayers. So it almost can create a situation where you're creating different type of either economic opportunities, or different types of environments based upon your cost. Can you add $7,500 to the cost of a single family home medium, sales price now is probably $300,000, let's say. That's 2%, 2.5%. Whereas right now, all of our bond programs have always been, hey, is this what we need? The city goes out, we issue a bond election, people vote if that's what they want. And everybody sort of has a shared kind of perspective of that. I'm not saying give the developers a free ride. I understand we want to try to figure out how do we do this. This just gets so complicated. I'm not saying, well, therefore, it's too complicated for me to understand. Therefore, I don't want to do it. It's just there's a lot of different nuances and approaches that are more than just the technical calculations. And I would really struggle with going to this recommended eligibility eligible recovery. For the simple fact of it's going to get a 6%, and if you're talking $136 million, and to get that 6% of that, which is what is that, $8 to $10 million, that's going to take quite a bit of time to do that. So it's not like we've identified a project. These impact fees go to pay for this project. Here's a big pot of money. We're going to use it to pay for the eligible costs of a project that's identified. Is that my understanding on that? And it's when I think of capacity of roads, this city, we're shifting the paradigm, basically, on how we do this. Some, because we're still going to have to come up with the 80%. And I think philosophically, I just struggle with it. And there's no secret I did back in 2015, if y'all were here, then I know you weren't here, but I really struggled with that. And I think that's why it was so low. I think the reason it was $2,000 was it's like, okay, we don't want to add those costs to single family homes. We don't want to affordability, but also the multifamily units, the commercial. And so we picked a number that would be helpful, almost somewhat a little symbolic. Whereas this is becoming more, it's higher and it's more of a significant change. So, I mean, those are just some of my thoughts. It's not a criticism. It's just an observation. I appreciate that. There's a lot of work behind the scenes on this. There's a lot of number crunching, a lot of people looking at this. So, yes, Councilmember Romter. >> So first of all, I want to apologize for coming in late. I just taught three classes, got here as soon as I could. I like this model, and I want to make sure that I understand what I'm liking about it. So am I correct that this is about, this would apply to developers, right? So you're not talking about your individual homeowner, but developers. We've got, I'm thinking of the big picture not only in the department's affected. But really from a general budget point of view, general fund point of view, that we've got a big gap in our general fund. And if it doesn't get filled up by developers, it's going to be to taxpayers. So we also have a growth issue in our city and the growth is going to happen no matter what. But I think one of the reasons that growth is happening is so rapidly in a way that we can hardly keep up with financially and infrastructurally is because, in spite of people complaining, that it's hard to build here. And it is in some ways, but it's not so much the cost is prohibited, but the processes. And we've fixed up the processes, and now we're seeing, we've seen it in other departments too, in our planning department, that we haven't been recovering what the actual impacts are. So because these are tied to impacts, because not only are the average taxpayer not affected, but I see them as being relieved of a burden, because it will fall to them if it's not covered by the developers. So I strongly support this. >> Councilmember Briggs. >> Yeah, so just to that point, I want to mention that the increase will fall onto the homeowner, because it will likely go into the cost of the house. And so we have non-profits now that are developers that will see this, and then we have other individuals who will see this who aren't developers, but will still need to pay this fee. My concern is that we increase the water or wastewater impact fee. We increase the development fee, which is good, right? We were recovering that, we needed to do that. And this will transfer to the home price, I know it, but I would like to, on direction here on options, I would like to provide more direction in kind of in lines with the mayor asked for earlier. I think it's pretty important to see how it's going to impact all developments, not just single family, with the increases. And also, on the data, I'd like to see the data. What we have on the ground now as compared to the assumptions, because it could be more, as in Councilmember Ryan was speaking about, and it could be less. And so for me, before I make any kind of decision on an increase such as this, that will affect our homeowners and the developers as well, I would like to see more data on that. >> Okay. >> Yeah, this is, I mean, Councilmember Armitage, you talked about a gap in the general fund. I'm not sure, what are you referring to exactly on that? >> I just mean we have a cost of service that is not being fully. >> Well, this is very different than, I think, our cost of service analysis for the planning department. And here, when I hear that this doesn't really create a burden on the additional taxpayers, let's be very clear. Well, let's just look at it from another perspective. If we were to do 100% cost recovery of the eligible fee, so somebody help me with the math. So we've got the 2,000, so the total cost recovery fee would be $15,000 if we went by the calculation and analysis, this would be what each, the single family home and then prorated out to whatever it came to for the other uses. >> Yes. >> So that would be, but that's still not going to cover the cost of the projects. It's only going to cover the cost of the projects that were, I'm going to say presumably, pursuant to the study, the number crunching, attributable to new development. So even with the 7,500, you still got the general taxpayers, but the general taxpayers will also benefit from this new capacity. So that's what's so difficult for me is, I mean, Carol Boulevard, let's say. It's not even close to capacity, I don't think, right now. I mean, four lanes, and so we're going to be charging people for capacity. People are coming in, the town is growing. So I would be interested, as we do this, and I'll make it an offline request, just with the new development fees, with the new impact fees for water and wastewater. With, let's just say these for just discussion purposes, how much that adds to a single family equivalent. I think that's how we're measuring it, even in the wastewater, and the water's the single family equivalent of that. So I get it, and I guess this is, and we can talk about the philosophy of it and all that all day long, but it comes down to what do we want to do from a numerical perspective and a fee recovery. And I think I've heard somebody say it'd be interesting to have some of those other, what that impact would be for multifamily, for industrial. I think this goes to a big push, or it shows the need to continue to bring in quality businesses who can help share some of the tax burden. Because when you build a 500 home subdivision, depending on the price, which I forgot what it is that they really cover their cost of service, I think it's $350,000 or $400,000, but we're not getting that. Then when we bring in a 500 home subdivision, we're already typically in the hole. Whereas when you bring in businesses that have a high tax base, either a sales tax or a business, their cost of service is relatively small, comparatively so. So it's just another indication that we need to make sure that we continue to reach for that balance. So direction, I think Councilmember Briggs sort of gave her direction of wanting to see some additional numbers. Councilmember Ryan? >> Yeah, I agree with that. And I'd also say, do we want to, as a council, look at this from a perspective of where we could control growth? Are there areas that we want to set the fees a little higher to keep from having that growth come in as quickly? Or areas that we keep a little bit lower that we're planning growth right now that we know we're ready for? >> Okay, Councilmember Armitage? >> So I'm for option, well they weren't lettered, but option A, the first one. Yeah, I don't know if it would be considered fair or unfair to do that. To say, well, this is where we want growth, this is where we don't want growth. I prefer this approach, which is really just looking, as I see it, in an objective way at what the costs are. I would like to respond to what Councilmember Briggs said. I like the idea of an affordable housing, or this isn't what you mentioned, but in my response to that. I like the idea of an affordable housing waiver of fees or fees could increase what this would be for another discussion, but increase what we have in the pot for our fund, for affordable housing voucher, I forget what they're called. >> Could be a grant fund. >> Funding, yeah, the grant fund, which now only applies to single family housing. I would love to see a bigger fund apply to more kinds of housing, so this could cover something like that. >> Could you explain what the word recovery, am I right to understand it means recover the cost? >> Correct. >> Okay, yeah, so that's what I meant by a hole in our general fund that's not being filled, was the recovery of the cost. >> Again, it's a very different analysis and approach. I mean, they're the same words, but they mean very different things. And I do want to address, so, Councilmember Barmichael, when you talk about not putting the burden on the ordinary taxpayer, and it's on the burden of developers. But when you talk about beginning to offset this with additional budgeted dollars in a fund to provide some type of waiver or some type of assistance, that money comes from somewhere, that money comes from the general taxpayers who are paying for that. >> But there's more of it when we recover the cost. >> Not necessarily. I mean, it's a one for one. So I'm okay with, I'd like to get the other data on how it affects the other uses. >> Yes. >> Just so that we can have an idea of that. >> Definitely. >> Before I make a decision on this particular number. Yep. >> Councilmember Meltzer. >> Still one area of question for straight on direction. >> Sure, go ahead. >> Yeah. >> I mean. >> Just how should we think about this whole area as opposed to CIP funded by bonds? I feel like we just got done with a big exercise to fund expansion. And the concept there is shifting the cost onto future taxpayers because they're the ones who are going to enjoy the roads over the next 10 to 30 years. But this is a different model, and are we covering, are we double counting, recovering the same projects twice, or how do we think about that? >> As I said earlier, I think it's more of an equity buy in on these systems. When you're having to, when your development is directly causing a road to start operating from a level of D to an F, whatever, it is to make sure that the system is kept as whole as possible. In this particular case, I just want to also kind of one step further. We did not ask Todd and Preetam to rethink the development impact fees. All they did was update the costs that were approved by the previous council in 2015. So I just, there is a new impact fee study that will be going on in association with the mobility plan next year, so we'll have updated projects. But I think it's real important to understand that they're trying to figure out ways. What is an equitable contribution from developers who are bringing additional traffic, who are bringing additional impact to our intersections. So we've got another instance where we've got a development or two that's causing us to rethink adding two more traffic signals and signalized intersections. And that's the purpose of these types of fees, is to make sure that the taxpayer is not, existing taxpayer is not being burdened with that. You can, and I view the bond programs just simply updating existing streets that are there, meeting those up to current standards where they've fallen apart, and that benefit is shared down the road. But it's not necessarily putting the capacity on the backs of all the existing taxpayers for new growth. And in our particular case, the fee is low enough that that's happening anyway. So it's kind of interesting. I think your point has been brought up a couple times here. There's been a lot of good feedback, which I think next year with that update we need to take into consideration in terms of, are there areas that we want to disincent growth, or you're going to pay a larger impact fee? There's some logic behind that, and it's exactly how we approach the utility, the water and wastewater utilities. And then on the more standardized fees, I mean, maybe we just take a look at known intersection improvements that are in conjunction with the mobility plan. You can build those fees based on that as well. But at the end of the day, it's going to get down to where are you comfortable setting these fees? There's no, we didn't even bother recommending more than the 50% recoupment, which still means that you're going to be bond electioned or funding them in a different way through the majority of these projects. It's just, where is your comfort level overall? And all the things that you're bringing out, they're all very legitimate points that we need to take into consideration and we figured would come out. >> So I do want to address your example, because I'm really struggling with the concept of, I mean, I understand the concept of developer buy-in that somehow they need to pay, I get that. But I doubt very seriously that yes, a development may come in that requires a signal light. But that signal light, but that developer isn't the sole source of that requirement of that signal line. I mean, you're talking about 10 or 20 years of growth and from all over the city. And so this is not an exact science of saying this development is going to create this problem. Because you get 500 houses, that's a lot of cars. But when you're talking about road capacity, you're going to have to have, in your example, 1,800, 2,000 homes, 4,000 multifamily units or something like that to really begin to see that impact. So I just, I really want to not send a message that we can identify with such certainty that this project has created this problem. Because if that's the case, then that problem was right on the cusp before that came in. And so we've got to figure out how to address it. But it's just, this is a long term kind of very scientific but also very conceptual kind of approach to find additional revenue. So that when we come down to bond programs, instead of it being $221 million, it may be $200 or $180 or something like that. So it's certainly, this isn't the silver bullet to fill a bunch of funding gaps or things such as that. So it's trying to find a more equitable way to deal with traffic. And that's not as easy as it is with wastewater. It's one pipe in the ground. So it's a little bit more complicated than that. >> So we've heard one for option A. We've heard, I think, three, four, maybe just to get the number, how it impacts. And we'll just come back and we'll make a, we don't need to go through this whole theoretical discussion. Again, it's more of, hey, here's the data. And it could even be in the form of an ISR or something. And then we can just put it back on the agenda so we can have that. Yes, Council Member Meltzer. >> Yeah, I'll weigh in the, we need a little more information camp. I think we're looking at it a little bit in a silo. That would be good to say, what is the collective impact of our decisions that we've made on developer fees, on utility impact fees, and this kind of what is the total look of our policy decisions. I share both Council Member Ryan and Council Member Armitage's impulses to say, how does this fit into a larger strategy too? What do we want to encourage? What do we want to discourage? Whether that's type of buyer geographically, it ought to fit into a strategy. Right now it's just a, it's only one piece of the puzzle. >> Right, okay. Mayor Pro Tem. >> Thank you. I fall into the camp of we should change the fees. I think maybe you split the baby because what I've not heard is a challenge of the calculation staff provided. And I thank you for that analysis. I've not heard anyone say that the numbers are not true. And so what this, my fear and concern is that then this opens the door for a project to flood request or time the request to avoid the increase. And so I think unless I hear something that says the numbers are not true and we are under recovering at a greater extent than we were in the past. I think we should take some action today versus say we're going to do nothing. We're going to accept it as true, do nothing, and come back later. I think there is somewhere between what staffs recommended and under this recovery that is $2,000 is not what we're recovering today. Those numbers don't hold true. So we're recovering less than what we set out to recover before. So we should at least normalize it with the new data. That at least validates the works that's been done and at least holds the line, which is what doing nothing would purport to do, but it's disingenuous. It does not hold the line. It allows that backslide. So I'm not for that. I think we need to be intentional about growth. And so I think there is a conversation going forward about how we want to shape that. But I just, and I have a couple of other notes here that I'll touch on. I think I did not hear anyone touch on the fact that the moniker for it is that no new tax requirements and how that affects us going forward. We're not allowed the same flexibility we had in the past when we're talking about making up errors or miscalculations. And so we have to factor that in, that we've got to be better about recouping these costs and sensitive to the fact that we can only go so high now, we can't, hey, we had a bad year, we had a 2008, here's what we have to do. We're not afforded that without a vote. I think also in the conversation that was missed, that jumps out at me, is if we're talking about more and more, because this community's not had more and more MMDs, more and more HOAs, those type things. As those additional assessments increase, I hear the conversation about bonds. But I think those are going to be scrutinized more as individual homeowners and begin to have to pay more in taxes and are further from the core of the city, they then may take a different look. I think when I talk to people in Pecan Creek, they shop more in Corinth and Louisville. They live in Denton, but just kind of their habits take them to the south. And so I think there's going, so they may not feel as much connected to Denton. And so I think when you're talking about bonds and those things, that kind of reshaping of thinking coming to mind and those additional fees then begin to strike different homes differently. Whereas before we've not had as many HOA components, we've had no MMD costs, those type things, water districts, etc. So I think doing nothing kind of does not account for how bonds will be perceived in the future. So in summary, for me, it really is, I wish there was a consensus to do something versus allow the $2,000 that we were recouping to erode to less than $2,000. I don't know what the math is backwards, but let's say round number $1,700 is what we're collecting. So a council before us said we want $2,000, this council would then propose that we accept $1,700 today, and I can't support that. >> Okay, couple of responses, your question was, how did the legislature affect this conversation? The tax cap does not apply to debt service, the debt service component of the tax rate. So that cap, somebody correct me if I'm wrong, but that's my understanding, is that the debt service portion primarily deals with bonds, so there's no impact on that. Secondly, I'm not sure what part of the conversation you're referring to as being disingenuous. I have to take exception to that description of that, for myself at least, I can't speak for anybody else. And I certainly don't think that this council has said we're doing nothing. I think what this council has said, at least from what I understand on four people at least, that what we want to understand is how is this going to create the overall impact, just not on this one particular use, but on all the uses. And then we'll come back and take a look at how we look at this number. Now, you had also mentioned splitting the difference, but you didn't throw a number out there as far as what you would be okay with. But if we could go back to the percentage, so if I understand this chart correctly, the $2,000 in 2015 recouped 19%, but the $2,000 today recoups 13%. >> Correct. >> So that's 6%, which is 120 bucks, that's $1,880. If we used, not the time value of money, but sort of what you're looking at there, is that? So if you were to do a 19%, just so that we'll have this data, would that not include this in your data? Because you're asking for a 50% recovery of the eligible cost. But if we stuck with what the council voted with from a percentage perspective, then the 19% of the 15,000, that would be about 3,000 bucks. >> Okay, all right, so I would probably put that in there as well. In other words, if we kept the percentage the same, that was agreed upon in 15, what would that, and I think that's what, I can't speak for Mayor Pro Tem, but I think the erosion was part of that. But if we kept it the same, percentage wise, what would that look like? And then we would have a little bit better idea of what the delta is that we're really talking about. If that makes sense. >> Okay, Council Member Brans. >> Last question. >> No, go ahead. >> Yeah, go ahead. >> Yes. >> Thank you. So disingenuous means, in my mind, false appearance. $2,000 in 2015, does that have the same purchasing, this question for you, pre Tem. Does $2,000 in 2015 have the same purchasing power as $2,000 in 2019? >> No. >> So then I personally say, no change, means we're going to hold the fees. Alleging we're going to have the same buying power in 2019 as we did in 2019. If my reconciliation of that is wrong, that's the transparency on how I get to a false appearance that we're holding the line. We're not holding the line, the line as he wrote it, and we're not adjusting the line back up. No, that's that. >> Okay, can I ask you a question on that? >> Sure. >> Because you said that we're doing nothing. No, we're not making a decision today. >> Correct. >> But I don't think anybody on this council has said we're not wanting to do anything as far as changing that fee. >> Okay. >> That's my only thought on that. >> Certainly, okay. And then, Regarding a number, there's four of you that have indicated you want to keep the same purchasing powers 2015. >> No, nobody said that. >> Well, again. There's four people that have indicated they want to keep the number at $2,000, which was set in 2015. If I, that's a fact, I can give you the names. Council, Mayor Pro Tem, I'm going to challenge you on that. >> Okay. >> Because you're assuming that because we've asked for more data, that therefore we're keeping it at $2,000. Now, if you want to go on that technicality, that's fine. But what we're saying is we want more data to understand the impact of an increased fee on the other uses. >> Okay. >> So what you're asking this council to do is to make a decision on something. We don't have the numbers of how it's going to affect multi-family, industrial, commercial. And you may be ready to do that, I'm not ready to do that. But I can tell you unequivocally, I've not said that I'm okay with keeping the $2,000 fee. >> Okay, so I'll let everyone reconcile that they can watch the videos and see for themselves. So my direction is, I would ask that we assume or take up the staff's numbers and update the new fees. I'd suggest taking action to recommend new fees that would recover the same buying power that the council decided back in 2015. So whatever that 6% loss, I would ask that we recover that and apply that to 2019 holding it equal. Thank you. >> So that's the number that you're saying is the split number? That percentage, that 19% of the 15,000, that 32% of 8,600, 19% of 14,000. That's what I'm understanding is you're saying your proposal on what that new cost recovery fee should be. >> Yes, sir. >> Okay, thank you. >> Just last question on this, is the timing critical? And if so, can we get this coming back to us pretty soon if it's in connection with the mobility plan? >> Yeah, so this is a short term change, because the new mobility plan comes in next year. There'll be a brand new study that'll look at the entire thing again. And we're thinking about next fall is when the new roadway impact fee will be set. And we're coming to council and public hearing and all that. So we have a short window to make any changes and implement this. So there is a timing constraint right there. I want to say almost one year, 12 months. >> Okay. >> So what I'm hearing you say is whatever change, if there is a change made, is going to only be in effect for a year? >> Correct. >> How much money did we collect last year in impact fee, roadway impact fees, do you have any idea? >> I can find that out, I don't know. >> Because, I mean, we've had this big long discussion, and I'd just like to understand what impact are we really talking about if we're going to be here next fall. I won't be here next fall. Somebody will be here next fall talking about an updated number, and that this change will only go into effect for one year. Okay, all right, thank you very much. Let's see, we can go ahead and, when did we start, 1130, let's take a little five or 10 minute break, and then we'll come back and do. Do you all have proper direction on that? >> Yes. >> Okay, thank you. All right, let's take, let's come back at 1 o'clock. Welcome back to this meeting of the Denton City Council on Monday, October the 7th, 2019. It is 1 o'clock PM, moving through our work session reports at work session report 1B. Receive report and hold discussion, give staff direction regarding City Hall West. >> Hi, Mayor and Council, I'm Sarah Hensley, I'm Assistant City Manager here, and I wanted to share some information with you regarding City Hall West. This is obviously a priority for you, not only last year, but this year. And we have before you the agenda for, and the outline for this afternoon, to give you just a very, very brief cursory bit of information in regard to the history in the background. Many of you are probably very familiar with this. Sort of current reality and where we are from a conditions assessment. The opportunities and options that you have as a council before you, or other things that you might want to do, and then discussion and possible direction. As you know, in July of 2017, the city engaged a company called Architects, which was hired to assist with the proposed renovation of City Hall to look at how and what would be done and what could be done. They gave some preliminary conceptual designs with cost analysis for each concept. And before you here on the slide, you have those concepts not only with the projected budget of 2017, but what it would approximately cost in today's dollars. And this is in no way a final amount of money, but this is approximate cost at about a 9.6% increase per year, 0.08% per month. And that's based on today. And again, I'm not sure that we do anything today, but this gives you some idea and indication of the cost. Option one would be complete restoration of the exterior and interior, and that goes to its original design. That would be complete to go back and do as much as we could as an original design of what it looked like before. Option two is to look at the rehabilitation of the building and restoration of the exterior and adaptive reuse strategy to accommodate a complimentary use, so a new use. And option three would be restoration of the exterior and renovation of the interior to meet minimum requirements for life safety and accessibility. As far as the history and the background, you directed the staff in August of 2017 to establish a city hall or a city hall west committee. That encompassed 24 individuals who looked at their charge of considering and advising you on the extent of the building and what should be renovated if any financial options, acceptable uses, and any grant options. The estimated total cost for the recommended renovation, which by the way was a 17 to 0 vote with one abstention, was to spend $6.63 million for a renovation of the facility to its original design with a few little caveats. They wanted to look at adding a garden, a courtyard, and looking at a couple of other things. And they did put some money in for FF&E, and that's why you see the number of 6.63 million instead of one of the option numbers, because they added a little bit to it. I do want to make sure you recognize that, again, in today's dollars, the amount is a little bit more significant amount. And there's also a maintenance backlog of items. Approximately $639,000 of things that would need to be fixed. The HVAC, the elevators are not in very good working order at all. The flooring, the fire system, and the generators as well. >> So that's not in those other numbers? >> No. >> Okay. >> You directed the staff at the time to go back and look at getting the windows at least replaced. Because it was expressed to you that there was some sincere and significant deterioration around the windowsills, and there is. And so we are moving forward now. We received approval from the Texas Historic Commission to move forward. And so right now we are underway. There's not anyone on site yet, but we have moved through the process to get the windows repaired and renovated. Because we don't want to lose those structures. Let me go back. To give you just a little bit of information in regards to the condition. In the report that was completed by architects, they talked about the exterior, the interior, and the infrastructure itself. And so you can see that the brick and the limestone are in fairly good condition. The roof was recently compared and is overall in good condition. Although we would ask that it would need a thorough assessment to make sure that it would last throughout whatever you choose to do from a renovation standpoint. As I mentioned, the windows are being replaced. The landscaping, as you can see when you drive by, is okay, but would require some type of maintenance. And it's going to continue to deteriorate if we don't do something to that. And of course, accessibility is a huge issue. Not only in the exterior of this building, but the interior as well. It does not meet accessibility guidelines whatsoever. Under interior, again, you're looking at some structural issues where when walls were put in place over the existing structure, it appears to be in good condition, but again, they did not go in and tear down the walls to look at the behind the scenes part of it. So what they can tell, it's in good shape, but to go back and establish it into its original condition, you would need to take out some of those walls that had been placed. The recommendation was to reconstruct the original staircase, and then of course, the beams are intact. Infrastructure I mentioned to you, that's the HVAC, the elevators and things. Those are going to need to be repaired or replaced, especially the air handler. Because the air handler system does not even really get up to that final floor where it doesn't keep it very heated or cooled. And then our lighting there is in not very good shape, and they recommended LED lighting system to be more environmentally sensitive, but also to save on cost. With that, you have before you today basically those three choices again, understanding that we are moving forward with the window replacement. But there is an opportunity, and really that's why I'm here today, is to just share with you an opportunity to look at maybe a request for information so we can investigate and evaluate some proposals from maybe private entities or non-profit entities or both. To look at a desired adaptive reuse of this facility. Staff's recommendation is that we do that, to go ahead and conduct a request for information. To see if there are parties out there that might be interested in partnering or developing the facility. And the reasoning behind that is, you can set the prescriptive requirements. You can say the things you want left in, the things you want as a major part of it. You can talk about the historic nature of it and how you want to reclaim or keep the characteristics. It allows you to take a look first to see what those proposals might be from an adaptive reuse strategy. And it also doesn't put the city in any financial situation whatsoever because we're merely researching for information. Who's interested, if anyone, what would you do, how would you do it, those kinds of things. It is a planning document, it doesn't commit you. But it also opens up ideas from other community members or business community or even non-profits that we may not be able to accommodate or be able to think about as we move forward. There's benefits to using an RFI that could help us to maintain it being an environmentally, socially, and economically facility that's sustainable in the long run. And it also creates, possibly, an opportunity for a public-private partnership, depending on how you want to move forward. I put in the packet, which I think all of you received earlier, that through our research, we found that the city of Tacoma, Washington, did something very similar. Although, I want to be very clear that this was an older building, a 125 year old, it dates back to 1892, and they actually wanted to sell their building, their city hall building. They did several, at least one to two iterations of an RFP process and were not satisfied. And then just recently, received a good proposal that they took under advisement and then signed an agreement. But some of their goals were a long term economic vitality, meaning that the building be able to sustain the cost of operation. They wanted to make sure that the building design and what went into it had a synergy with the surrounding development. And that it had the characteristics of the things that happened there in Tacoma in the historic district because that building is in a historic district area. And then they wanted specific public benefits, and so they listed that as a part of their proposal. They required anyone who submitted a proposal the following things. They wanted to know what type of reuse or reuses. They wanted to know the estimated amount of space that they would require for each designated use. They specifically asked for market rate, affordable residential units, or hotel rooms, if applicable. And they wanted to know the number of staffing and if it would create livable wage jobs. They also wanted the entity to provide a parking plan, so that it didn't create problems for the surrounding area. And then they wanted a commitment to historic restoration. The successful bid was a company called Surge Tacoma, which is a local entity in Tacoma itself that has a long history there. And this was their proposal. They submitted a proposal for a restaurant and a bar, 20,000 square feet of real-tel space, office space, co-working space for a tech center. They proposed micro-apartments, those are little tiny apartments. They have rooftop restaurants. And then they wanted to provide a space for the public to be able to use, excuse me. Part of the benefit for the public was the free use of a conference room. And then free access for tours for specific hours. Free space for the historical society to use for a public exhibit area and also a work area. And as I understand it, they're now negotiating a deal to actually house an office there. And then also the proposal aligned with the building's history as a welcoming public place and open to the public at times. Here is their schedule that they recently were able to approve in April of this year. The city also put very stringent timelines on them so that they made sure that they met them, requiring the schematic designs that they finished up in September of this year. And they have to secure their 100% financing by April 2020, or it's a no deal. They'll start construction by August 15th of 2020, and they want it open by the 2022 new year, so they can ring in the new year in 2022. They also established specific milestones for the developer to meet, so that it would be successful. And so we're now to, and I can go back if you need me to, and I have some pictures I'll show you. To go to select one of the options that were already there before that you had seen prior to telling or directing staff to go ahead and do the windows, or you could direct us to conduct a request for information where we could investigate and evaluate proposals. And what we would do is we would draft one for your review and conduct a work session for you to be able to add to or take away. Then we would conduct another work session to share that final draft with you prior to the release. Or, again, take no action at this time, but continue to keep you updated on the status of the building and how we're doing on our windows replacement. Here are the pictures, I just wanted to show you, these were taken about two, three weeks ago, just to remind you of this building and its current state. As you may be aware, that it has had several different reiterations of renovations. The city staff have been able to be in this building and occupied in different forms. And so right now, the police department uses the top floor with some of their training. And then, the one over here on your far, well, it would be your far right is the entrance into it with the wood structures and those beautiful light fixtures are there as you enter in the front door. The one here below is, excuse me, in the basement of the building with some exposed structure there. You can see that there's very small hallways where we've added some walls and things where it's been sort of changed out in different formats. This is just a picture so you can see sort of a little bit of a difference, there's a big difference between our city hall and the city hall in Tacoma. But we do have a tower similar, this one's a lot bigger, they have a clock tower. We have a bell tower, and so it's considered to be a five story, more of a building. And that's it, happy to answer questions or. >> Comments, questions? Councilmember Meltzer. >> I like the proposal to relocate it to Tacoma. >> Okay. >> No, and generally I'm supportive of getting a bunch of new ideas in, and I see no downside to that. There are a few questions I have that I get from constituents that I have a hard time answering. And I thought maybe if I bring them up here, I can quickly get that taken care of. Well, one is, do you also see the potential for the 45% tax credit if it becomes part of the National Register District? Where the cost of the renovation would be a fungible, saleable tax credit? >> Yes, we absolutely do meet the criteria for that because of the historic designation that was given. Which is the, it's called, I have it here, the recorded Texas Historic Landmark. Which means it meets the historical significance. >> So that's pretty significant. >> And it's 25%. >> Well, there's a state and a federal. >> That's right, that's right. So it would be, yes. >> Yeah, so that affects any direction, whoever does. >> Can I ask a clarifying question? >> Yeah, I don't know, don't ask me to be an expert on it. >> Not for you, because when I hear a 25% tax credit, that's a credit that goes towards somebody's taxes. >> That's not going to be the case if the city continues to own it. >> That's correct. >> But it's a fungible credit, like you could sell that credit to someone else, I understand. >> That's right. You can transfer the credits. >> Okay, so even if the city owned it, you could sell that credit to someone and get money for that. >> You could transfer, I don't know about the selling of it, and I would refer to the law department on that. But I do know, under the state law at least, it talks about the transfer of those credits. >> Okay, that's if somebody gets involved and they do. >> That's right. >> That's only if you have another private entity that comes in and the seller continues. We continue, but if we did it ourselves, if we did all the rehab and all of that, I don't think, we're not going to get to 25%, it's going to be somebody else who has to do that. >> That's right. >> It's worth getting some follow up, because I've asked the exact same question. >> No, no, I just want to understand. >> I believe that is correct. >> At least I have been told that you can actually sell those credits. >> Okay, sure, sure, well that's something we need to get clarification. >> And just so you know, the qualifying, for the state, the qualifying amount is five million. So it has to be above five million to get that, I mean, the amount, it's not like you could do a $1 million renovation of something and get those credits. It has to be five million or above. >> I don't think there's any risk of it being one million. >> No, I can tell you there's not. >> Can I ask a couple more? >> Of course, yes, go ahead. I just need a clarification on that. >> So the other one, I was here, I probably ought to be able to answer this myself, but I find myself stumped when I'm asked, why are we in this situation? There used to be city offices there, right now we're buying a building a block away. Why did we just keep the city offices in there? What's your answer? Just not a usable space anymore, condition? >> Yeah, there's space, parking issues. I think that's probably the biggest thing. We've got a blank canvas across the street that we're able to acquire and rehab. The rehab's going to be far less than it would have been at City Hall West. But it really didn't solve any issues for us in terms of, if you did locate everyone over there in terms of the parking itself, you may have been in a position where we'd be back asking you to take the parking lot next door out, and just to accommodate. So it's probably the biggest issues, we've just simply outgrown it from a business perspective. >> Okay, I appreciate that, and I hope others wanted that answer or heard it. And then, last one, and again, I was here, I should be able to answer this question. But why didn't we put this in the bond package? I seem to remember raising it, and I couldn't honestly tell you how it ended up not in there. >> There was no plan, and that's one of my comments will be later on. But there was, I mean, we had the committee who made a recommendation on remodeling it. But there's been no discussion with this council as far as, well, how would we want it to be used? We've got some estimates on costs. There's been no discussion on necessarily how we would pay for that, depending if the city decided it. So the reason it wasn't in the bond program is it just wasn't packaged well enough to be able to make a decision on that. >> I appreciate your indulging me in helping craft those answers. And I'm, yeah, I'm very interested in seeing what others might propose. >> Councilmember Arger. >> So thanks for the presentation. I'm excited about the plans for City Hall West that the committee came up with. And received so many emails that I haven't had time to count them yet or even respond to all of them because some of them came in early today, but just skimming through them. I sense from these emails that I've received from constituents, not only a support of the City Hall West plan, but a sense of let's do this sooner rather than later. Obviously, any kind of government funding takes time, and for very good reasons, we want to do it right. But I would like us to explore funding, what it would take to fund this publicly, not necessarily 100%. But I wonder if we, why we're, and maybe you can answer this, kind of starting with the idea of a request for possible private funding. I'm not against the private funding, but why are we starting there instead of starting with the public funding? Since it would come from the city. And to add to Paul's question, so I too am learning about the historical tax credit in the 45%. So I don't exactly understand how it works. But as I understand, but the limited extent to which I do understand it, that these tax credits can be traded or transferred to a contractor, right? And we always use contractors to do our work. So that's a private entity doing the work so they can transfer to them. And then, and there's another option that I don't fully understand, but I know that our finance staff would understand it better, that for cities, that involves something with a national bank and being able to, and I can forward you the information that I have that I'm reading through. And I'll have to read it a number of more times to fully understand it. But it somehow involves getting, we're not calling it cash back or the cash equivalent. But something like that, in that 45%, again, I don't understand. >> It must be an amber alert. >> How it works. >> Okay, I thought maybe my time was up. >> Happy to send you, so it's not just the transfer credit, there's something having to do with banks and getting actual money for the city that could be used to fund the project. So for now, preliminary, that is my statement that I, again, just to be clear, I'm not saying we need to fund all of this public, I mean, I want it funded and people want to see it funded and they want to see it happen. But my concern about the private funding would be not only that it might take more time, again, it'll take time no matter what. But that some private entity might have their own ideas about what they want to do. Okay, we'll do it if we can such and such do this too. And I'm really committed to the work that the committee put in, what they came up with. I'm not saying it's, see it is infallible and I think that they must know that, that things happen, tweaks along the way. But I want it to be, whatever happens, I want it to be recognizable to that committee as the thing we decided on. >> Okay, thank you. >> Councilmember Ryan. >> Thank you, Mayor. Yeah, I served on the committee with the 24 members and there was a lot of discussion. But the one thing, you can have a final vote is always, that's consensus upon an idea. There were a lot of little things, but the one thing that we all agreed upon is that the significant spaces need to be restored to their original condition. So the auditorium would need to be restored. Some of the points of contention is the office space in there, who would be occupying that. My personal opinion is that we pay for office space for some non-profit entities. Keeping it beautiful is an example that those non-profits that we have MOUs with that include office space. That that would be an ideal place for them because they wouldn't need much space. I'm not opposed to the RFI to see if there are other ideas out there as far as how we get there from here. So the city may not have to have 100% of the burden. But I have a feeling in the end, it's probably going to come down to, it's going to be 100% on us. >> Councilmember Briggs. >> Yeah, so I'm in favor of full restoration of the building. I think that it deserves to be restored to all of its glory. And I would like to explore the tax credit incentive more for that funding. And of course, it'll be for public use. What specifics, not sure yet, but what I do know is that the building is not doing anyone good right now sitting empty and just withering away. So I am in favor of moving quickly in any way possible to search those things. I'm not necessarily in favor of the public-private partnership for this. But if the RFI was issued, I would look and see what came back. So that's my direction, is to restore it fully and to keep it for public use. >> Mayor Portu? >> Yeah, so my input would be, yes, I support the RFI in the public-private partnership and shape that. And I'll just say, as I said before, if we don't establish the use before we move forward with the funding, it is going to be, it's just going to be impossible. I believe it's going to be very painstaking to parse that out after the fact. I mean, we should have those concise conversations early. And as I said, sitting on the committee as well, I'm going to advocate for the veterans associations to be heavily involved just because their volunteer base can help manage that, and they have a proven track record of being available to kind of offset some of those costs. And so I'll get into the details of the RFI, if that's successful, and we have those conversations. >> So I think we've skipped a step. I'm hesitant to move forward with the RFI. I mean, we could do that, but I think there's an interim step before that, and that step is to have a conversation with this council. The recommendation from the committee was more about the structure. There was some discussion, and the committee members can correct me if I'm wrong on this, but there was some discussion on uses, but there wasn't a vote on uses or what should go in there and things such as that. So I think it would be more helpful for this council to begin to talk about what uses we see because I will unequivocally not support a public-private partnership that calls for the selling of the building, number one. I will not support a public-private partnership that does not restore the city hall to its original condition to where we can have meeting spaces that were the old council chambers. I mean, I'm the one that sort of pushed this forward many years back, and part of the reason was because they wanted to move out of there and rent a space for $400,000 a year. Now we're buying a $10 million building. I think when it's all in, the purchase price and the renovation is going to be $10 million. We're going to have need space. We're already paying lease space for Keep Denton Beautiful to the tune of about $20,000 or $30,000 or $40,000 a year. We have some other organizations sort of, you know, involved with the city nonprofits that could occupy. So I think we need to have a discussion. It sounds like the consensus is to restore it. >> Right. >> To restore it, the real concern is or the real question now is what do we do with it? So do we have someone else in it? Do we have city offices in it as need comes up? Do we have some of these quasi nonprofits that the city works with that we're paying rent for through the chamber contract, through Keep Denton Beautiful? I think we're, an RFI to me really wouldn't help with those questions. We've not ever discussed how city would fund it. Right now, bonds are, if I'm not out of line from what I remember, the bonds currently for the proposed bond package could anywhere be from two and a half to 2.75% over 20 years. Well, I mean, I'd like to see the options, the financing options of that because that's fairly inexpensive money. And then we had the unanswered question of the tech because I was reading through something that wasn't sent to me so that's the only reason I wasn't aware of it. Apparently it was sent to some but not to me. There's some question about, I see the historic tax credit program under Texas Historic Preservation Tax Credit. It applies to income producing properties, non-profit, and public universities. So I don't know if we're considered a non-profit, is the city of Denton considered quote unquote in the eyes of the law a non-profit organization if we could have that question answered. So I think there's a lot of detail that needs to be flushed out before. I mean, I would be hard pressed to talk about an RFI and all the things that would come about to put in there without all these other questions being answered so that we have some information to go because we may decide we've got enough alternatives that we've identified. We've got the financing identified and if we can get the tax credits, we can get them. So I think there's another comprehensive conversation that may be prior to that. Councilmember Armitage. >> Yeah, so I want to speak to just two things that have been mentioned. One, the veterans issue, and this is just an underscoring. Mayor Pro Tem had mentioned about the funding aspect. That veterans, if there were to be some sort of, something for veterans in there, there are a number of different possibilities, that would come with some funding as well. And discounts that would be combined with historical tax credit. So that's definitely something that should be explored. I also looked at alongside the committee recommendation, which leads to my next point, which is about use. So I was not a member of that committee. I attended, forget if it was two meetings or one really long one. But so it might be the case that there was not a vote on use. But I know that the plans themselves, the architectural plans are the plans for an art space. And that's very important to just the architecture of it. So in that, as I understand it, those plans were voted on. And that's what I'm hearing in these emails that people wanted to be, and I agree. I myself agree, a space that's for public use, and that is for the arts, broadly defined. I'm not hearing the arts to the exclusion of absolutely anything else. But those designs I'm seeing that, if as I understand it, it was those architectural plans that were voted on, is an art space with performance space and a lot of flexibility. So anyway, this is the very point I was talking about, about having a work session. Because I'm not sure that the characterization, I mean, I know there were plans and all that. But this is what we need to flush out before we have those kind of discussions. Because I think we can be all over the board and we're not going to take another two hours to do that here. So my direction would be if we could have a work session prior to, or you can do the RFI, I guess, at the same time. I would want to have a work session that really allows this council to comprehensively discuss, number one, what the committee's recommendations were and what they were not. And also what the implication of the tax credits on different types of either ownership or different types of control. The funding opportunities within the city, how would that be done? If it could be done with COs, what is our funding capacity within our debt service fund right now with things rolling off, things coming on? And then have a comprehensive discussion about who are we paying rent to, where? And could that be used as part of that? And then what are some of the other uses that could be identified? And we may get at the end of that conversation. And yes, okay, so we're going to start this way and come around, Council Member Briggs. >> Right, so I just want to say that it seems like it's going up the price on the restoration at a million a year. Or close to it, it feels like? >> About 9.6% a year. >> Right. >> And again, that was, I mean, when I spoke with someone who usually does this for a living, they said it isn't getting any cheaper at all, and so it's going up. >> And so I would just ask this council if the renovation and restoration is what we want. If we could look at those funding sources, I mean, because the use discussion could take quite a while. But if we can focus in and at least come up with a floor plan that we agree on, we can look at those funding sources and get that started. So that we're not four, three, four million dollars more after we end the discussion. That would be my request. >> Okay, Council Member Ryan. >> Well, I just wanted to clarify on the final set of plans that was voted on. Most of the rooms that were labeled office/studio, so they could be used either way. It wasn't a decision of the committee as to finalize which way it was going to be used. That was considered to be something that would be down the road a little bit. The main auditorium, there was discussion of the fact that we have so many boards and commissions that it'd be possible to have some of those. In particular, the Historic Landmark Commission, having them meet in that building would be a good idea. Plus, leasing it out some of the time to the campus theater because they're generally booked about 365 days in advance right now. So there is a need for that size space, and there's multiple different uses that can happen in there simultaneously. That you can use it for different entities, not to say it's only going to be this. But the thought pattern is, is that we need to weave through there and use it for multiple things. >> Yeah, Council Member Armitage, real quick. >> Yeah, just real quickly, I just wanted to vocalize my agreement with Council Member Briggs's point that we >> I agree that we need not, if I understood that point correctly, that we need not wait to decide, have the discussion about uses, or rather wait to go forward with pursuing funding, before having the discussion on uses. That that could come at the same time, it could come afterwards. Because, and I would underscore that we, and I don't know if you have in this PowerPoint buried somewhere, the plans, but again, if people were to look at the plans, you could see, it's very much about performance space and the arts. But then there's also a lot of flexibility for, where we could have those discussions about what happens afterwards. >> We'll pull all those and have that sort of the existing, and then we're at current reality of where they are now. So you can see what it looked like before, the best we have in pictures, and give you all the things you've mentioned. >> And can I ask you a question, so has the committee officially been disbanded, I know they're not meeting anymore. >> Yes. >> Yeah, because I mean, I would love, and I know this doesn't happen that much, maybe it would be complicated administratively. But for, when council's having these discussions, for the people who are on that committee not that long ago, to be invited to be a part of it, to attend. I'm sure they're following anyway, but I want to validate, even though the committee doesn't exist anymore, the input and the memories of the people who are there. >> We will absolutely go back and list that so you have access to that. And certainly, when we do the work session, it's open to the public to be here and listen and go from there. >> And were they, now they weren't filmed, right? But were they tape recorded, audio recorded? >> I don't know. >> I don't know. >> Were y'all recorded? Do you know if y'all were recorded? >> I don't think so. Bill did. >> Okay. >> Yes, ma'am, mail search, sorry. >> Yeah, my interest in the RFI is definitely not to the exclusion of other ways to get it done. I mean, I'm just interested in having more ideas. And I concur that figuring out how to accomplish the main areas of agreement, as Councilmember Briggs was saying, is probably the bigger task. We could probably talk all day about what to put in the performance space and what to put in the gallery space. So I think we'll have time for that after we figure out what are we going to use for money? That's, I think, the biggest question. And I would just add to the list of possible rents that might be avoided. I know there's an idea floating around about using PEG funds. If part of the space is used for running government TV, then that's another source. So just another one for the list. >> No, so I agree with Councilmember Meltzer regarding the request for information. That just adds to the conversation, understand what options are available. But too, but I also agree with the Mayor. There's, I mean, it's hard for me to, and I've said this all along, it is hard to imagine a conversation if you have a fully restored building of no designated uses and a city full of needs, that just will not work, that won't function. They will absolutely, every group would be, hey, we're the perfect fit for that room that's new and restored and at a low, low cost. Just, we have, it's no different than the smile conversation we had. There's just, the need overwhelms the space, and you can't manage it that way. You can't say every one of these groups gets this. You have to, we have to have a plan going in. It's going to be restored, it's going to be for this, and have those. Because I think that the conversation, also we're having open conversations with the public. They'll be able to react to what we're saying versus everyone thinking they have a shot at it. And ultimately, after the public conversations close, we say, no, we can't use your use. Those uses need to be vetted in the open conversations we'll have. >> Yeah, and I agree with Mayor Pro Tem. It's going to be hard, I mean, we're talking about restoring it and building it out without identifying what we're going to use it for. Well, that's a real big recipe for disaster. We need to have some idea of what we're going to use it for so that we can build it in a way that facilitates that, other than just we'll build it and we'll try to fit those pieces in. So I think all that can happen fairly concurrently. I mean, it may be a couple of conversations, but I think we can get through that. >> We'll prepare that information for you, Mayor and Council, and put it all in a package. Then have it as an actual work session that has all the items that you listed. >> Okay, all right, fantastic. Okay, any other questions, comments? Well, I guess Keely didn't have any. All right, I believe that concludes our Monday meeting of the Dent City Council. So we will adjourn at 1.30 or 1.42.