Last Fiscal Year, in response to the requirements of Proposition 218, staff developed and Council approved a new assessment methodology for the operation and maintenance component of the Downtown Parking Maintenance District. The proposed assessment methodology for this year remains the same as last year.

Staff is recommending that Council adopt a Resolution to levy and collect the assessment and approve the Engineer’s Report for the Downtown Parking Maintenance District for Fiscal Year 1999/2000. By adopting the Resolution, Council will give the City the necessary authority to levy and collect the non ad valorem assessments for public parking facilities from property owners within the Maintenance District.

Council Resolution 6643, dated September 1, 1964 authorized the City to levy an annual assessment on all lands and improvements within the Parking District to pay debt service, and maintenance, operations, and improvement costs.

Since 1964, the City Council has annually levied an assessment for the debt service requirements associated with the acquisition of land for parking facilities. A separate assessment is levied to cover maintenance, operation, and construction of improvements for the City’s Downtown Parking Maintenance District parking facilities. Both of these assessments have been ad valorem based on the value of each property within the District boundaries. Proposition 218, passed by California voters in 1996, requires certain assessments to be based on specific benefit to the property and required a change to the City’s methodology. This law applies to any assessments made for the Parking Maintenance District after FY 1997/98.

Proposition 218 only affects the operation and maintenance component of the Parking District. The existing method of assessing for the bonded indebtedness component can legally continue as an ad valorem assessment. The bonded indebtedness portion of the assessment will be completely retired in the year 2002. Once retired, property owners will be assessed for only the operations and maintenance costs by separate assessment.

This action is consistent with the City of Sunnyvale’s Fiscal Sub-Element Goal 7.1A.1i: "Establish user charges and fees at a level closely related to the cost of providing those services."

The Downtown Parking Maintenance District consists of approximately 100 parcels in Sunnyvale’s downtown area. Over 95% of the Parking Maintenance District consists of commercial businesses, of which Sunnyvale Town Center is the largest.

In response to the 1996 passage of Proposition 218 ("The Right to Vote on Taxes Act"), staff developed a plan to bring the Downtown Parking Maintenance District assessment into compliance with the new legal provisions. Proposition 218 requires assessments to be based on specific benefit to each property and to be supported by an engineer’s report prepared by a registered professional engineer certified by the State of California.

Staff retained the firm of Berryman & Henigar (B&H) to assist in conducting the Parking Maintenance District assessment analysis. The proposed methodology for calculating the assessment remains the same as last year and is based on the parking demand the property generates, less the existing number of off-street parking spaces that each parcel contains. Parking demand is based on the City’s Municipal Code zoning requirements. The result of this calculation is based upon each parcel’s pro rata share of "parking deficit." This methodology appears to be the fairest and most equitable way to assess property owners for the operation and maintenance component of the parking facilities.

On March 15, 1999 an information letter was mailed to each property owner explaining the proposed assessment methodology. Specific information pertaining to the demand for onsite parking, the number of existing off-street parking spaces, and any respective deficit was provided for each parcel within the district. The letter also notified property owners of an informal property owner meeting scheduled for March 31, 1999.

Five property owners attended the meeting on March 31, 1999. Questions regarding the proposed assessment were addressed. Staff explained that the proposed per space parking deficit assessment is $54.14, which is the same as last year’s assessment. Staff recommends maintaining the parking deficit assessment at the same level as last year because of the changes occurring in the downtown area as a result of proposed new development. Sufficient reserves are available in the Parking Maintenance District fund to offset any shortfall created by the proposed assessment. The parking deficit assessment and reserve fund balances will be reviewed each year as part of this process.

On April 20, 1999, the City Council adopted Resolution No. 133-99 declaring its intention to levy and collect an assessment for the Downtown Parking Maintenance District for FY 1999/2000, approve the Preliminary Engineer’s Report, and authorize the mailing of the Notice of Proposed Assessment and ballots to all Downtown Parking Maintenance District property owners. A public hearing on the proposed assessment was scheduled for the June 15, 1999 Council meeting.

Property owners had 45 days to submit their ballots, with City Council final action to occur at the public hearing. An informational public meeting was held on June 3, 1999, to allow property owners the opportunity to have any of their questions answered regarding the ballots and the proposed assessment. No property owners attended the meeting.

Under Proposition 218, property owners have the opportunity to accept or reject the proposed assessment methodology by vote. A simple majority vote weighted by assessment obligation of over 50% is required to either pass or reject the proposed assessment.

During the open public hearing, any protests which have been filed with the City Clerk will be heard and considered. At the conclusion of the hearing, the following items should be considered:

1. Report of ballot tabulation.
2. Council vote on Resolution Ordering the Improvements and Levy and Collection of the Assessment for FY 1999/2000.

If the vote as tabulated is in support of the proposed assessment methodology, the City Council may either approve or reject the recommended assessment. If approved by Council, staff will forward the assessment for operation and maintenance to Santa Clara County for collection on the property tax rolls. The ad valorem tax rate for debt service will be considered by the Council in a separate action and will be sent to Santa Clara County for collection as well.

If the vote is not in favor of the proposed assessment methodology, the City will not have the authority to levy and collect the assessment for FY 1999/2000.

If the assessment is not successful, the property owners will have to identify alternative methods of providing and maintaining parking for the benefit of their businesses. It is clearly the obligation of the downtown business owners to provide parking for their businesses, and the Parking Maintenance District was established as an inexpensive and cost-effective mechanism for those businesses that do not have adequate parking on their property to meet parking requirements. It is unlikely the individual property owners could do this as cheaply as the Parking Maintenance District. For these reasons, if the assessment methodology is not approved, staff would recommend that the City investigate contracting with a parking operator for a paid parking program for all City owned lots within the Parking Maintenance District.

Approval of the operation and maintenance component of the recommended assessment methodology will generate approximately $158,000 in revenue. The expenses incurred in maintaining the parking lots are estimated at $197,000 for FY 1999/2000. There are sufficient funds in the Parking Maintenance District fund to offset this shortfall.

1. If the vote as tabulated is in support of the proposed assessment, Council may adopt the Resolution to levy and collect the assessment for the Downtown Parking Maintenance District for FY 1999/2000.
2. If the vote as tabulated is in support of the proposed assessment, Council may elect to not levy the assessment for FY 1999/2000.
3. If the vote as tabulated is not in support of the proposed assessment, Council may not levy the assessment for FY 1999/2000 and must identify an alternative method for operating the parking lots.

Since March 1999, staff has held two public property owner meetings. The most recent meeting occurred on June 3, 1999.

Required public notice will be given through the publication of the City Council Agenda. A copy of this report is also available in the Library and on the City’s Internet home page.

Based upon the final tabulation of the property owner ballots, it is recommended that Council approve Alternative 1.

Prepared by:

Therese B. Balbo
Administrative Services Manager

Reviewed by:

Mary J. Bradley
Director of Finance

Approved by:

Robert S. LaSala
City Manager