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Council looks at finance options for revitalization

DEL MAR — After hearing options to finance downtown revitalization, which is estimated to cost between $9.5 million and $12.5 million — City Council on March 19 authorized staff to apply for all applicable grants but chose to hold off implementing any new fees until after the November election, when residents will vote on the specific plan that is mandated to move the project forward.The two elements that require funding are $4.5 million to $5.5 million in street and pedestrian improvements that include installing roundabouts on Camino del Mar and a parking structure expected to cost about $5 million to $7 million.

“We have a whole variety of potential city funding strategies,” assistant City Manager Mark Delin said. “The city has typically financed a lot of its capital programs through cash. If we were to fund this through cash it would take a great deal of time.”

The city currently has about $650,000 in its capital reserve.

There are also grants available from TransNet, the San Diego Association of Governments and the state Department of Transportation. Community Development Block Grants are also an option.

Councilman Don Mosier said more funding options could be available because the city is planning to use smart-growth development, such as roundabouts.

“Smart-growth grants won’t fund stoplights at intersections,” he said.

Collectively, however, the city isn’t likely to get more than a few hundred thousand dollars from grants, Delin said.

Funding could also come from in-lieu parking fees and existing and additional parking meters, both of which could be implemented now.

Meters currently generate about $3.50 per meter per day. There are 223 meters downtown and 50 more are planned. That would create $350,000 annually. Additional meters in a proposed 200-space parking structure would generate another $250,000 each year.

“We could probably do better if street-side parking was metered,” Delin said, adding that he would recommend the park, pay and display meters that take credit cards rather than the coin devices.

The municipal code allows owners of developed parcels to satisfy up to half of their off-street parking requirements in the central commercial zone by paying in-lieu fees, but they cannot exceed the cost of parking, which is about $25,000 to $35,000 per space.

Other options are development impact and area of benefit fees.

Development impact fees are appropriate near build-out, Delin said. They provide limited means for reimbursement to the city for any incremental impact of new development on the existing infrastructure.

Area benefit fees are similar. They are imposed on private property that benefits from the public improvements. The fee equals the cost of the improvement apportioned to the area benefiting, payable when the permits are issued.

Debt is another alternative. The city could use its annual TransNet revenue to finance about $3 million in improvements, although that would lock up those funds for 30 years, Delin said.

General obligation, lease revenue and Mello-Roos bonds are other means of financing the project, as are community facilities and assessment districts. Those all require voter approval.

After full development, planned additional restaurant, retail, hotel and residential square footage could generate more than $800,000 annually from sales, transient occupancy and property taxes.

City Manager Scott Huth said most of the grant money would be used to fund studies, but once complete, the city could apply for additional grants for that project.

“Part of this is we’ve got to get in the queue now to start getting planning money that helps us get further on in the queue (for construction money),” he said.

Resident Al Corti said he supports moving forward with some of the recommendations. He said a lack of affordable housing, no contiguous sidewalk and “broken roadwork that is sending traffic into the community” are problematic in the village.

“It’s time to fix things,” he said. “Do it now. Construction costs and interest rates are low. It’s a good climate for borrowing money and making improvements.”

Council members had no problem moving forward with the application process, but some were reluctant to start implementing new fees now.

Terry Sinnott said doing anything before the specific plan is approved was causing him heartburn.

“I’d rather not move too far ahead of the basic core issue,” he said. “I’m worried that jumping into fees and jumping into financing before we get their OK as a community is a little premature.”

Mark Filanc said construction likely won’t begin for years. Even if approved in November, the project still has to be designed, which will take at least 18 months.

“We have lots of time to explore these financing options during that time,” he said. “I want to keep our focus on … reaching out to the community, finding out what they want to see. … I haven’t heard from the community regarding downtown parking meters.”

“In the current economic state I don’t see much appetite for increased taxes,” Mayor Carl Hilliard said. “I think we need to have a complete plan of financing.”

Hilliard also said parking has been a problem ever since he can remember. “I think that it would be foolish not … to go forward with any and every tool that we have to fund the solutions, whatever they may be,” he said.