Del Mar discusses specific plan financing

DEL MAR — As finance options for the village specific plan were presented at the June 4 meeting, it was stressed that no residential fees, assessments or taxes would be required to pay for improvements to the downtown commercial area. 

There were, however, a few concerns about the appropriateness of some of the suggested funding mechanisms.

Estimates are between $4.5 million and $5.5 million for improvements to Camino del Mar and $5 million to $7 million for a public parking structure, bringing the total project cost to approximately $9.5 million to $12.5 million.

Once the project is complete, the city expects to take in about $1 million more annually from increased property, sales and transient occupancy taxes generated by new residential units and additional and renovated businesses.

While those new revenues will be an ongoing source of funding for future capital projects or public services, they aren’t being considered to help pay for the revitalization project.

“We’re not assuming that we’re going to use this new revenue as a way of financing the plan,” Assistant City Manager Mark Delin said. “This is just new revenue that we think is going to trickle in over time and it’s going to be very beneficial to the city.”

Improvements can be paid for using bonds, capital improvement fund reserve, grants, TransNet money, development impact and in-lieu parking fees and parking meter money.

“I really wanted to stress that nothing in the plan requires any residential fees or residential assessments or taxes,” Delin said.

For the roundabouts and pedestrian improvements, the city could use a $2.9 million TransNet bond available at 4.5 percent interest and $2.6 million in California Infrastructure and Economic Development Bank financing at 2.6 percent.

Payments would be made using the $178,000 received annually from TransNet, a half-cent sales tax available for roadway and transportation projects and $125,000 from the general fund.

To repay the general fund and make up for the commitment of TransNet revenue the city could impose a variety of fees. About 50 or 60 additional parking spots will be created. At $30,000 per space, the city could receive up to $1.8 million from in-lieu parking fees.

In-lieu parking fees, parking meter money and I-Bank financing are being considered to pay for the parking structure. Delin said the city may want to consider a program that allows businesses to pay the in-lieu fees over time rather than in full prior to development, as it does now.

Unlike many cities, Del Mar doesn’t charge transportation impact fees, which are often required as a condition of new development so “growth pays for growth,” according to the staff report.

Delin said transportation impact and in-lieu parking fees allow for “equitable sharing of expenses that would otherwise be borne by the community.”

Grants are available from the state Department of Transportation and San Diego Association of Governments, but they aren’t being considered in the funding plan because receiving them is uncertain.

Delin said SANDAG grants are unlikely until a certified housing element is approved and most of the Caltrans grants are planning related and not for construction.

“But we are going to apply for all grants and hope for the best,” he said.

In responding to the draft environmental impact report, some residents were concerned the city could lose money during construction because of impacts to businesses.

“We really believe that the impacts are going to be minimal,” Delin said. “We’re having a tight construction schedule. This would increase the construction costs but we can reduce the impacts.”

Delin said he didn’t anticipate businesses having to close, but the city could compensate them if this happens.

He said most sidewalks adjacent to the businesses will be maintained and new sidewalks will be built on the street side, allowing continuous access in most cases.

“We really shouldn’t be taking anyone’s access away,” he said.

Businesses will also be given additional sales opportunities, such as tent sales on city property. Any short-term inconvenience will be more than offset by the investment in downtown, Delin said.

Delin said the improvements aren’t expected to result in additional expenses for fire or law enforcement. He said he doesn’t expect much more than $35,000 per year in additional costs to the city for street sweeping, landscape maintenance and trash collection.

Resident Tom McGreal said he didn’t believe using the capital improvement reserves is appropriate to fund the improvements.

He said money has been set aside during the past four years to build a reserve based on a 2006 plan for a forecasted list of capital projects that totaled $122 million.

“We believed that we had a set of projects that demanded that we set up a reserve … to accommodate them,” McGreal said. “We should therefore not consider the capital improvement funds as a source of potential ready cash to fund the streetscape project under the village specific plan.”

Resident Al Corti agreed.

“I don’t think we need to rob the general fund,” he said. “This is going to add $1 million a year to the general fund and we don’t need to use that money to make these improvements.”

Corti supported other aspects of the proposed plan.

“To finance at 2.6 percent, it would be criminal not to try to take advantage of this at this point in time and try to fix these things that we’ve been trying to fix for 30 years,” he said. “I believe that there’s more than enough revenue to do those things and the sooner we do them the better off we’re all going to be.”

Delin said the specific plan doesn’t rely on capital reserves for funding. He said that while the 2006 plan included a means to finance long-term capital projects, council adjusts the capital improvement program as part of each budget cycle.

“As projects get completed and fall off the list, new projects are added and priorities are adjusted as appropriate,” he said. “The 2006 capital improvement program list did include sidewalks and streetscape improvements, and pedestrian improvements were noted as a high priority in the project selection criteria.”

McGreal also questioned the use of TransNet money. “If you divert these funds you have to find alternate money for roadway maintenance,” he said. “So that’s actually not a source of funding that’s available to us.”

He urged the council “not to abandon the good financial management practices that the city has adopted that have really made it possible for us to have the kind of credit rating that we have.”

Resident Wayne Dernetz urged council members to “provide the courage needed to move forward.” He said since 1976 the city has been successful in implementing most of the community plan goals by creating space, parks and strong regulations protecting the environment.

“And I think most would agree we have protected the residential character of the town,” Dernetz said. “What remains to be accomplished is to reduce the impact of the automobile, to enhance the pedestrian environment and to assure the economic viability of the downtown village center in order that it may continue to serve the needs of residents and visitors.”

Howard Gaad said not moving forward with the specific plan could actually hurt the local economy.

“As the downtown deteriorates, if we do nothing it can infiltrate like a cancer in the rest of the residential neighborhoods,” he said.

Councilman Terry Sinnott said he was concerned about businesses being hit with two fees.

“Let’s remember what we’re trying to do and who we’re trying to motivate here,” he said. “On the one hand, through the specific plan, we’re trying to encourage property owners to move forward with their projects.

“But on the other hand we could potentially be slapping them on the wrist again with fees in order to pay for it,” he said. “I worry about that one.”

“I think this debate is extremely robust and very helpful,” Mayor Carl Hilliard said. “Bringing out both sides of it just helps a whole lot in making a decision.”

At the June 4 meeting, council authorized $10,000 for a transportation impact fee study. Should it be adopted, it could be applicable to any new development anywhere in the city, including the fairgrounds.



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