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HomeMy WebLinkAbout25 - Open Space Acquistion Ballot MeasureCITY OF NEWPORT BEACH OFFICE OF THE CITY MANAGER July 26, 1993 TO: Honorable Mayor And Members Of The City Council FROM: Kevin J. Murphy, City Manager li,-� SUBJECT: OPEN SPACE ACQUISITION BALLOT MEASURE Agenda Item No. 25 CITY OF NEWPORT BIAC:H JUL 2 6 1993 PURPOSE: To seek City Council approval of the necessary resolutions calling an advisory election in November 1993, consolidating the election with the County of Orange in conjunction with the Statewide ballot, determining the process for the ballot arguments, and requesting an impartial analysis by the City Attorney of the measure for the voters' pamphlet. FA CTS : I. The City Council, in order to place a measure on the Statewide ballot on open space acquisition, must adopt the appropriate resolutions no later than July 26th in order for the matter to conform with the election calendar of the County Registrar's office and the State Elections Code. The City Attorney's office has prepared the necessary resolutions to accommodate this action, if the City Council desires to do so. 2. At the last City Council Study Session there were three issues discussed relative to this ballot measure. These three were the assessment formula, the percentage vote for "approval," and the public participation process in the formation of the District if the voters give an affirmative approval in an advisory vote. Of the three issues the City Council asked that at this Council meeting there be the formal establishment of a voter "approval" percentage for the City Council. 3. On the voter approval percentage there are many options, however, four have been discussed at length at the Open Space Committee and Council Study Sessions. These four are 50%, 55%, 60% and 66.6%. While one can make cogent arguments for each, it appears that the City Council and Open Space Committee have the most comfort with 55%. Given this fact, staff recommends that the voter "approval" percentage be set at the 55% level and that the public be so informed. (It appears in fact that the media has adopted this percentage, even before the City Council has formally acted, based on comments made at prior meetings). 4. If the City Council desires to further discuss the issue of the voter "approval" level, the item should be pulled from the consent agenda and discussed and if deemed necessary straw vote the four options outlined above. RECOMMENDATION: If desired by the City Council, adopt the Resolutions calling for an advisory vote on the formation of an assessment district for the purchase, improvement and maintenance of the Castaways and Newporter North properties as described in the feasibility study prepared by Willdan Associates and set the voter approval level at 55%. ENGINEERING FEASIBILITY STUDY OPEN SPACE BENEFIT DISTRICT CITY OF NEWPORT BEACH July 26, 1993 ENGINEERING FEASIBILITY STUDY CITY OF NEWPORT BEACH OPEN SPACE BENEFIT DISTRICT TABLE OF CONTENTS PAGE BACKGROUND 1 DISTRICT BOUNDARIES 2 DESCRIPTION OF SITES AND PROPOSED ENHANCEMENTS 3 METHOD OF ASSESSMENT 5 EXHIBIT A - BOUNDARY MAP EXHIBIT B - PLAN OF IMPROVEMENTS ENGINEERING FEASIBILITY STUDY CITY OF NEWPORT BEACH OPEN SPACE BENEFIT DISTRICT BACKGROUND On August 24, 1992, the City Council of Newport Beach approved the Circulation Improvement and Open Space Development Agreement for several infill parcels owned by The Irvine Company. Three of these parcels border Upper Newport Bay and are known as Upper Castaways, Lower Castaways, and Newporter North and are planned for future commercial and residential development. Over the last two years, public support has arisen supporting the acquisition of these sites for permanent open space or park use. It has been proposed that the City should explore the possibility of forming an Open Space Assessment District (District) to finance the purchase of these sites from The Irvine Company. Willdan Associates was retained to perform this feasibility report. Since its founding 28 years ago, Willdan has been involved with the formation and administration of hundreds of special districts resulting in bond issuances in excess of $3 billion. Willdan has participated in the formation of over 25 landscaping and/or lighting maintenance districts using the Landscaping and Lighting Act of 1972. The proposed District for the City of Newport Beach would fund the acquisition and partial improvement of the Newporter North and Castaways parcels through long-term bonds. An annual assessment would be levied which would pay for the annual debt service of the bonds and basic maintenance costs of the properties. This assessment would be levied on all assessor parcels within the City of Newport Beach with the exception of properties owned by public agencies or properties not benefited. After the retirement of the bonds, the assessment would cease or could be substantially lowered to a rate sufficient to fund only ongoing maintenance of the sites. 1 City of Newport Beach ENGINEERING FEASIBILITY STUDY CITY OF NEWPORT BEACH OPEN SPACE BENEFIT DISTRICT DISTRICT BOUNDARIES The boundaries of the proposed district would coincide with the current boundaries of the City of Newport Beach, and would be amended to include all future annexations to the City. The Boundary Map is attached as Exhibit A. 2 City of Newport Beach ENGINEERING FEASIBILITY STUDY CITY OF NEWPORT BEACH OPEN SPACE BENEFIT DISTRICT DESCRIPTION OF SITES AND PROPOSED ENHANCEMENTS All three of the sites overlook Upper Newport Bay. The Newporter North site is approximately 89.2 acres and is bounded by Jamboree Road, San Joaquin Hills Road, and Back Bay Drive. At this time, the proposed improvements to this parcel include trails, parking lot, re -vegetation of native grasses and coastal sage, and enhancement of the existing wetlands. The Upper Castaways site is located at Dover Drive and 16th Street and is approxi- mately 56.6 acres in size. The enhancements proposed at this time for the site include trails, play fields, view park, parking lot, landscaping, restrooms, and re -vegetation of coastal grasses. The Lower Castaways, which is roughly 4.0 acres, is proposed to be improved with the privately -funded Nautical Museum. This district would fund the acquisition of the parcel only. 3 City of Newport Beach COST ESTIMATE OF SITE ACQUISITION AND ENHANCEMENTS Acquisition $58,300,000 Site Enhancement 2,000,000 Subtotal $60,300,000 Issuance Costs $ 300,000 Underwriting 700,000 Reserve Fund 5,000,000 Capitalized Interest 1.700,000 Bond Total $68,000,000 4 City of Newport Beach ENGINEERING FEASIBILITY STUDY CITY OF NEWPORT BEACH OPEN SPACE BENEFIT DISTRICT METHOD OF ASSESSMENT General The Landscape and Lighting Act of 1972 (1972 Act) has been used extensively in California for landscape and street lighting maintenance. In general, it allows cities to form an assessment district to fund installation and maintenance of landscaping and public lighting facilities, and the acquisition, improvement, and maintenance of land for park, recreational or open -space purposes. The 1972 Act provides that assessments may be apportioned by any formula or method which fairly distributes the assessment among all assessable lots or parcels in proportion to the estimated benefits to be received by each lot or parcel from the improvements. Benefit to Propertvrom Park and Recreation Facilities The acquisition of the Newporter North and Castaways sites and the subsequent enhancement as parks will benefit the properties in the District by increasing access to open space. Each property will benefit from the improved environmental quality attained by protecting and maintaining irreplaceable open space land. Additional open space will increase the attractiveness of the District as a place to work and live and improve the recreational opportunities within the District. In addition, the additional open space increases the property value of each property due to increased capacity to draw homebuyers, businesses, and others to the District. 5 City of Newport Beach The benefit of parks and other recreational facilities to residential and commer- cial/industrial properties has been determined by a number of studies. The United States Department of the Interior, National Park Service, in a publication dated June 1984, concluded that: • 'Parks and recreation stimulate business and generate tax revenues." "Parks and recreation create direct and indirect job opportunities." • 'Parks and recreation help conserve land, energy, and resources." • "An investment in parks and recreation helps reduce pollution and noise, makes communities more livable, and increases property values." In addition, a publication of the National Recreation and Parks Association states: "Industry is demanding recreation services" and in exploring site selection is increasingly taking into account "... the educational and recreational opportunities ..." available. Upper Newport Bay represents one of the last intact coastal wetlands in Southern California. Only recently has it been understood that wetlands and estuaries are perhaps the most ecologically -sensitive and important forms of landscape; as an interface between the ocean and the land, and subject to tidal flushing actions, healthy coastal wetlands support an outstanding variety of plant and animal life, and may be considered the "cradle" and supporting base of many surrounding ecosystems. The undeveloped uplands surrounding upper Newport Bay (those properties known as Newporter North and Castaways) are, in fact, an essential element to the continued environmental integrity and health of the bay. Maintaining these parcels in largely undeveloped form, in particular, on Newporter North, assures an unfragmented habitat essential for various forms of wildlife. While nearly 200 species of birds call upper 6 City of Newport Beach Newport Bay "home," imagine the bay without stately herons, or the endangered light- footed clapper rail; and understand that upper Newport Bay may contain as much as 70 percent of the remaining population of light-footed clapper rails in the United States. As well, Newporter North could be restored as appropriate habitat for the endangered California gnatcatcher. People enjoy and value their connection with the open lands above the bay. Thus, on an environmental level, and from the perspective of maintaining the quality of life for the people of Newport Beach and beyond, there is a demonstrable value to the preservation of both Newporter North and Castaways. Determination of Benefit Units The method used to calculate the assessment for each parcel within the District is the Benefit Unit (BU). The BU assigned to each land use corresponds to the benefit that each land use receives. That portion of the benefit that inures to land use will vary with the type of land use. This benefit for land use is condensed and segregated into three categories below: 1. Environmental Quality The increase to property value due to the improved quality of air, water, visual aesthetics, attractiveness of the District as a place to live and work. The sites are an important part of the last intact coastal wetlands in Southern California. Open space sites will preserve continued environmental integrity and health of the upper Newport Bay. 7 City of Newport Beach 2. Recreation Enhancement The increase to property value due to the availability of useable parks and recreation facilities. 3. Economic Value The increase to property value due to increased economic activity and health, expanded employment opportunities and increased capacity to draw business, homebuyers, renters, tourists to the District. Benefits to land use vary; therefore, the above factors have been assigned to each land use as shown in Table 1. Average Lot Size Average k of Residents Areas of Benefit Environmental Recreational Economic Total Benefit Units Percent of Total Benefit TABLE 1 BENEFIT FORMULA Single -Family Multi -Family Home Residence Mobile Homes 5,400 sq. ft. of land 2,700 sq. ft. of land 1,800 sq. ft. of land 2.3 per house Benefit Derived 0.50 0.25 0.25 1.00 20,609 48% 1.9 per house Benefit Derived 0.50 0.22 0.13 0.85 11,256 26% 1-5 per house Benefit Derived 0.50 0.16 0.09 0.75 168 0.4% Commercial/Industrial Institutional Based on square footage of building compared to average single-family home of 2,000 sq. ft. Benefit Derived 0.50 0.25 0.25 1.00 10,829 25% Note: Vacant properties are assessed at 40 percent of one benefit for every 5,400 square feet of land. Single -Family Residential A single-family residence receives all three of the above benefits, therefore, 1.0 BU is assigned to each single-family residence. To assess land use benefit equitably, it is 8 City of Newport Beach necessary to relate the different parcel classifications to each other. Using one BU for a single-family residential unit, all other uses are related to this. Multiple -Residential and Mobile Home Multiple -residential and mobile home land use equivalences are reduced by multiplying the number of home units on each parcel by .85 and .75, respectively. This is due to the fewer number of people who reside in these types of dwelling units compared to the typical number of people who reside in single-family units. In addition, multi - residential and mobile homes have a smaller average lot size than single-family homes. The reduced impact on park and recreational facility use by residents of multiple - residential and mobile homes and the smaller lot size result in a lesser benefit per unit. Therefore, the Recreation Enhancement and Economic Value factors have been reduced, resulting in a BU of .85 for multi -residential and .75 for mobile homes. Commercial/IndustriallInstitutional All commercial/industrial/institutional properties benefit from increased environmental quality as a result of additional open space. In addition, these properties are used by or serve people which are benefited by improved and increased park and recreational facilities. Finally, as noted previously, studies of commercial/industrial/institutional properties have found that these properties receive the same benefits as residential properties from increased economic activity and health, expanded employment opportunities and increased capacity to attract business. In order to determine the BU's to be assigned to commercial/industrial/institutional properties, these properties are first related to a single-family residential unit. The average square footage of a single-family unit in the District is approximately 2,000 square feet. Consequently, 1/2,000 of an BU is assigned to each square foot of 9 City of Newport Beach commercial/industrial/institutional property. A minimum of one benefit unit will be assigned to each commercial parcel. Vacant Property The average size lot for each single-family residential unit in the District is approxi- mately 5,400 square feet. Accordingly, 1/5,400 of an BU is assigned to each square foot of vacant or recreational property. The BU for vacant and recreational property has been reduced to 40 percent. Exempt Properties Properties owned by public agencies, such as city, county, state or the federal government, are not assessable without the approval of the particular agency and, normally, are not assessed. Public utility parcels are also exempt from assessment. 10 City of Newport Beach RATE OF ASSESSMENT As addressed in the balance of the report, the annual assessment for each BU would be $120, or $10 per month. For a commercial building, the annual assessment would be $0.06 per square foot of building area, which for example, would be $300 for a 5,000 square foot building. Table 2 details the monthly benefit cost by land use. TABLE 2 MONTHLY BENEFIT COST Land Use Cost per Parcel Cost per Unit Single Family $10.00 $10.00 Multi -Family Duplex 17.00 8.50 5 -Unit Apartment 42.50 8.50 100 -Unit Apartment 850.00 8.50 Mobile Home 7.50 7.50 Nonresidential 2,000 sq. ft. Industrial 10.00 0.005/sf 100,000 sq. ft. Commercial 500.00 0.005/sf 6,000 sq. ft. Institutional 30.00 0.005/sf Vacant Residential Lot 4.00 4.00 5 -Acre Parcel 161.33 1 32.27/acre The benefit cost was determined through consultation with Miller and Schroeder Financial, Inc. concerning projected interest rates, total bond issue amount, and the annual net debt service. 11 City of Newport Beach The total number of benefit units in the proposed district equals approximately 43,119. Assuming an assessment of $120 per BU, the total revenue generated by the District would equal approximately $5.2 million. ANALYSIS It is assumed that the sites would be acquired for $58.8 million, with the first increment of $32 million paid in 1994/1995 and the remaining $26.8 million funded by 1995/1996. Park enhancements to be funded equal $2.0 million and the annual maintenance would be approximately $160,000, increasing two percent per year. Approximately $68 million in bonds would be issued to fund the acquisition and enhancement of the sites and to provide for reserve funds and issuance costs. The major assumptions of such a bond issue are presented in Table 3. TABLE 3 SFR Annual Assessment Interest Rate Net Debt Service Bond Amount $120 6.6% (Projection) $5.0 million $68.0 million Assumptions: The bonds would mature in 30 years Bond amount includes acquisition, enhancement, issuance costs, and bond reserve funds SUMMARY The formation of an Open Space Benefit District would provide the City with a means of financing the purchase of the Upper Castaways, Lower Castaways and Newporter North sites which have been approved for commercial and residential development. Parcels within the City would be assessed according to the benefit each property . 12 City of Newport Beach receives from additional open space and park use. In order to fund the acquisition, enhancement, and maintenance of the sites, an assessment of $120 per BU would be required. 13 City of Newport Beach REFERENCES 1. National Park Service, June 1984, "Winning Support for Parks and Recreation," pages 47 through 50. 2. National Recreation and Park Association, 1984, 'Parks and Recreation - An Economic Justification," by Dr. Robert L. Wilder, pages 9 through 11. City of Newport Beach EXHIBIT A OPEN SPACE ASSESSMENT DISTRICT CITY OF NEWPORT BEACH BOUNDARY MAP City of Newport Beach EXHIBIT B OPEN SPACE ASSESSMENT DISTRICT CITY OF NEWPORT BEACH PLAN OF IMPROVEMENTS City of Newport Beach NE WP O RTE R NORTH CONCEPT PLAN PREPARED FOR: NEWPORT CONSERVANCY PREPARED BY: SCOTT BROWNELL, ARCHITECT k RON YEO, FAIR, ARCHITECT SCALE IN FEET ommm"immmm 0' 100' 200' 300' ACRE ACQUISITION AREA 77.2 ACRES TOTAL SITE ACREAGE 891 ACRES NORTH NORTH UPPER -CASTAWAYS CONCEPT PLAN SCALE IN FEET ACRE PREPARED FOR: NEWPORT CONSERVANCY PREPARED BY: SCOTT BROWNELL, ARCHITECT 0 300' 200' 300' do RON YEO, FAIA, ARCHITECT TOTAL SITE ACREAGE: 56.6 ACRES tiT r °F9�o