you you you you you you you you you you you you you you I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm sorry. Thank you. Yeah evening. Sorry. I like to call this meeting to order. Today is Tuesday, March 4th and the time is 6 p.m. And we're gonna go ahead and we're gonna start with roll call. Mayor Barravan. Here. Vice Mayor Dynan here. Council Member Lincoln. Present. Council Member Romero. Present. And Council Member Abrika is currently absent, but he will be here shortly. Oh, he is present. So just for the record, Councilmember Abrika is present is here and you do have a quorum here. Okay. Would you like to go ahead and go over the interpretation? So for this special meeting, we don't have interpretation simply because there's a closed session, but there will be one available at 630. So. Okay. Thank you. So I think with that, we're going to go straight into our closed session. Correct me if I'm wrong. Is that, is that so? Um do public comment, but I don't see any public comment. I don't see anybody on Zoom or in person. But. Maybe our attorney, do you have your hand up? No, no, not for a specific. Oh, okay. Okay, then I guess we're going to a journey right now into our close session and we will be back by hopefully 630. Thank you, everyone. you you you you you you you you you you you you you you you you you you you you Thank you. And right out your code. the the city attorney is going to report out or if there's anything to report back. Thank you, Mayor. No report of election. Direction was given the staff. Thank you. Okay. Thank you. So I don't know if you could remind James or folks about the translation services before we move along. Thank you. Yes, so if you would like to listen to the Spanish portions of this meeting, usually I'd around public comment. Please use in Thank you. Yes, so if you would like to listen to the Spanish portions of this meeting, usually I around public comment, please use the interpretation feature located at the bottom of your screen by clicking on the globe icon and selecting English as your preferred language. So you If you would like to hear this together in Spanish, please use the interpretation mode, located under your screen pressing the icon of the globe, and choosing Spanish as its preferred language, it will speak available. Thank you. Thank you. So I believe we already went ahead and did the roll call and approval of the consent calendar. So we're moving on to public comment. At this time, do we have any James? Yes, Nan. Moving on to item 6 at this time. Do we have any James? Seeing none. Moving on to item 6.1 informational reports the West Side Area Plan. Who's going to present tonight? Yeah, those. No. So I guess we'll go ahead and start with our presentation for the West Side area plan. So who will be presenting tonight? Good evening, Mayor Margonne. That will be a planning manager at Elena Lee. Let me make sure that she's online. Oh, she's her. Okay. Thank you. Thank you. I will go ahead and give me a second. I can Through the chair. Did you pass by consent calendar as well? Yeah. Okay. Through the chair. Did you pass by consent calendar as well? Yes. We actually know. You're right. Oh, because I said, are we okay with the approval of the consent calendar? We didn't take a vote. Okay. Can we take a vote then? Sorry, Elena. We're going to go back to item three. Yes. So I don't know if, so should we go ahead and do the roll call or approval of the consent calendar? Anyone like to? I make a motion that we approve the consent calendar. OK. All in favor, please say aye. Aye. Aye. Aye. OK. We're ready for you, Ms. Lee. Thank you. Thank you. Go ahead and share my screen again. All right. Thank you mayor, members of the council. Alain Lee planning manager. And I believe any Chen is also here. I'm the director of community economic development. And so the item we're bringing to you today is the Westside area plan. This is something that the city council directed to return to you after the Woodland Park project. So the Westside Area plan was adopted as part of the General Plan update, the VISTA 2035. And the intention was for it to focus on an area that the city deemed was facing critical issues such as quality of housing and the fact that it is located in a nice-lated part of East Palo Alto. So it's a part of the general plan update, although it's not one of the prior general plan updates. So the plan was developed with intensive community input. It was the first thing that was adopted were 12 guiding principles. And those guiding principles were used to help put together 11 goals and 83 supporting policies for the West Side area of East Palo Alto. And so the West Side area as you can see on the screen is 107 acres along the southern border of city of East Palo Alto. It is adjacent to both the cities of Menlo Park and the city of Palo Alto. So this area of the city has 77% of the city's multi-family units and it is also, as I mentioned earlier, it's where Woodland Park is located as well as the University Circle Development and it is separated from the rest of East Pellowl to by Highway 101. So as I mentioned the Westside area has goals that were developed based on the guiding principles and these are some of the goals on their battle. So the first six goals involve revolve around preventing displacement and preserving affordable housing. It's also about equity and creating high quality affordable housing and also to introduce diverse land use specs to basically help create a livable west side and it really talks to about the long-term development, but also making sure that what is developed is attractive and beneficial to East Palo Alto. So the remainder of the goals, again, is about the beautification and greening of the West side, and also specifically about transportation and improving transit within this area. And it's about safe, sufficient, and well-maintained infrastructure and services. So the genesis of this inquiry was the Woodland Park Euclid Project, which was approved in 2022 by City Council. So the project basically involved the introduction of the neighborhood center overlay, both the land use as well as the development code designations, specifically to allow a 605 unit 5 to 13 story building, and this was a 3 building project. In 2024, the City Council approved an amendment that reduced the project to a smaller 550 units to 5 story buildings on those two parts that you see on the screen above here. So basically the again like I said the neighborhood center overlay was both a general plan, land use and development code designations and it was intended to allow high density housing when neighborhood serving commercial and community spaces. So the designation allows up to 86.1 to 175 dwelling units per acre of just 13 stories or 135 feet in height. And the one thing to note is that these two designations does require city council legislative approval. So, any time anybody wants to use these particular designations, they have to go through the whole public hearing process similar to the Woodland Park process. So during the time the City Council expressed concerns that the NCO would prompt similar density increases in the Westside area that was inconsistent with the general plan and the Westside area plan in particular. There was also a concern that it would undermine community planning process and change drastically change the character of the area. So in response to that, staff worked with the applicant to basically again clarify that any NCO requests would require State Council approval. And we also reduce the applicable area to parcel South of Woodland Park that are less adjacent to lower density uses. And on this screen, you can see where the designation was limited to. So you can see that. There's a reason project site above right next to 101 and then just below that would be the only areas where the future NCO designation could apply. could apply. But again, like I said, it would require council approval, so it's not an automatic process. So in addition to limiting the areas, we also made modifications to increased context sensitivity. That would include, again, reducing the density originally as 180. We reduced it to 175, don't even units per acre. We increased the minimum rear setbacks in general to 10 feet. And in particular, we increased the minimum rear setbacks to 20 feet if the properties of reyard was adjacent to lower or medium density residential units. So, so basically staff is coming to the City Council to summarize what changes were made and also to confirm that their approved and sealed refinements in approval process, which is the Council legislative approval process response to the Westside area plan policies. We also want to confirm that the requirement for council approval similar to zoning designation changes provides appropriate public process. And so we're also returning that if council would like to see additional amendments that you would direct staff to return to you with those amendments. And with that, I am available for further questions. Thank you. Thank you, Miss Lee, for your presentation. Do we have any questions or comments from the council before we go to public comment? You can go to public comment and then I'll. Do we have any public comment, James, in person via Zoom? I've seen none there. Okay. Then comments, questions from the council? Yeah, so one of the reasons we we wanted to this on the agenda and actually it's been on our priorities list for the last couple of years is because the process that we set up which which was quite detailed, and it's essentially goal five long-term development of new buildings, it's goal W5 within chapter 11. We set up as a city as well as a council set up a number of guidelines as well as requirements that developers on the west side had to go through to achieve increased density. It took about three and a half years to get that project approved. And in the process, we certainly learned, and much of that was actually due to the developer perhaps misunderstanding either deliberately or not, and, inadvertently, what we wanted within the development guidelines that are in chapter 11. So, you know, there are a number of things that I would like to point out that we should definitely ask staff to look into and come back to us, given that for those of us, and I don't see Councilor Marabica here, but we certainly went through a lot of heartache and headache with the developer. In particular, I think it's important for us to make sure that we revisit and look at the relocation plan that process. And when that process should be approved, what type of documents need to be provided to tenants beforehand, when timelines associated with providing a census to the city, which was never done in time by the developers, so there may have been a fair number of people, a amount of people, number of people who actually may have had relocation rights and or buy out rights that did not get them because they left before they actually knew that they had those rights. So, I mean, these are all legal issues that I think to a certain extent we need to think about. And so, again, I think it's important for staff to look at some of these issues and come back to us. The other thing that we learned from chapter 11 is that we required a number of studies. Unfortunately, the West Side Area Chapter Plan, goal five, did not indicate who was doing the studies. So we had the developer doing a community impact study. Well, it makes absolutely no sense to have the developer do a community impact study. That should be done by a third party. So I think the other thing that needs to happen is that the studies that are enumerated and they're not a number of them, all of them were done by the developer. That happens to be a conflict. There is a direct, they have a direct financial interest to make sure that those studies are in their favor. We should be requiring a third party not related to the developer to do those studies. That's a relatively simple change. Again, it should be the city and I'm hoping that staff could come back to us with what the criteria would be, third party consultant hired by the city, paid for by the developer, however, to do these studies and analyses. The other thing that we talked about in terms of studies, which we don't have, and I know the former city manager had discussed this also, is that we do not require a value capture analysis conducted by a third party. So again, what we had was a developer telling us that their project could not tolerate any additional community benefits or the community benefits that we were requiring that we're hardwired or not possible. And so they did their analysis, but we did not require that we as a city authorize a value capture analysis that would allow us, and again, a third party consultant that we would hire, to do this analysis to compare our numbers, or I should say this third party consultants numbers, with the developers numbers so that indeed we could keep the developer honest. Remember, developers do not, unlike affordable housing developers, they do not have to share their performance with us, and they never do. So it's a game of trying to figure out, well, where are the numbers? What are the costs of funds? What's capital? What is the general equity that's included? What are construction costs? And I think requiring this value-caption analysis is fundamental to making sure that the community, as well as the west side and the city, can indeed confirm that they are getting enough benefits. I mentioned the relocation plan. I mean, to me, what's critical on the relocation plan is all relocation plans should be approved well before entitlements are going to be approved. If you recall, with this particular developer, they did not have an approved relocation plan until entitlements were agreed to. This relocation plan is vitally important for residents so that they can have some stability in their life and understand where they're going, how potentially they might be impacted and what are some of the benefits that they would receive if they left or if they decided to be relocated within the city and then move back. I also mentioned this initial tenant census. Critically important, we don't mention that a tenant census needs to be done. I think, again, a third party can be hard to do that tenant census so that we know exactly who's living in those buildings. And so those people who are there once the application is submitted, and this is just standard for affordable housing developments. Once that application has been submitted to the city, those tenants should be notified that there could be a building that is going to remove them from that land and that they have relocation rights that they need to recognize and if necessary if they want to release those real location rights and have a document that says that they did that. See, I mentioned the real location piece again. Oh, the other thing that's caused us a lot of problems was allowing a developer to do relocation on a project that was not approved. It's very risky for a for the city as well as for residents to allow a developer to relocate tenants based on a future project that does not have its entitlements. And I think that we should look into how we can circumscribe a developer's ability to relocate tenants well before any project is approved. It has caused a lot of consternation with tenants. Some tenants moved early. Some tenants were lost in the process. And again, we need to protect the rights of those residents that are living there, most of whom are actually all of whom are in rent control buildings. The other question that I think may make sense to look at is our inclusionary ordinance requires 20% affordability, excuse me, 20% affordable units for any project on the west side and an additional 5% if they decide to do an alternative compliance by building the units off of the site. I think it might be well worth our interest as well as the developer's interest to look at whether or not that additional 5% inclusionary requirement might be at a higher AMI level, perhaps 80 or 100% because that could meet some of the middle income housing that folks have said they wandered up here. So if they were to do the alternative compliance offsite, they could do the 20% at the normal 35, 50 and 60% and that additional 5% could be allowed, the additional 5% could be done at 80 or 100% of AMI, which makes the project that affordable project much more sustainable and financeable. And then the other question that I think we really, two other ones that are tenant related is one, and we've heard this from tenants who came up to discuss how they are being treated in their concerns is, we need to understand better how overcrowding, quote, unquote, is treated in terms of relocation benefits and perhaps have some rules in place and perhaps the senses that we take would be important because we need to think about this issue when it comes to relocating people back into units because some of these units are one bedrooms or studios and they may have four or five people in them. And if they relocate back to another unit and they have four or five people in them, that may be considered overcrowding in the new building. So we need to really understand how that works and what rules we want to put in place so that we can protect those families so that they don't wind up being evicted from new units they move into. And lastly, tenants were very, very concerned about understanding and having clarification from the city written into this chapter that would codify comparable relocation unit standards. So many units that they were, that these, that this particular developer was, were, were removing had garage storage units and parking stalls, integral to the rental agreement. And in many cases, some of these tenants were relocated into units that didn't have garage, didn't have storage units that didn't have the parking stalls. Since those were part of the agreement, I believe our guidelines should speak to how a developer must treat those amenities, which are in the contract, and maybe that's a discount in rent. Maybe if they can't find the garage, they can't find the storage units, they can't find the parking stalls. But Tenon said that they were very frustrated with the owners of the future development and the owners of Woodland Park because they were not able to provide them with the garage's storage units and parking stalls. and they felt that indeed they were deprived of value, which they had within their previous units. So those are a number of them that I think would be well worth looking into, as well as again, I do want to say, making sure that all developers understand that the inclusionary ordinance applies to them and that they must comply. It took about two years for this developer to understand that they had to provide inclusionary units. We need to make that more explicit in the West Side area plan. So those are some of the items that I think are important for staff to come back to us with potential ways of remedying these concerns or at least discussing them further when you come back to us with these items that you talked about in some of these items. Thank you, Council Member for Metal. Do we have any other council members that would like to comment or ask questions? Yeah, to the chair. Yes, I apologize. I was having to make some fun. But and that might have been covered already, but I think it's I remember the rent board was tasked with sort of keeping track of this process of the relocation. And yes, and so you want to just remind me of that, that is the case, that there's been some sort of monitoring or religious sort of keeping track, right? Of this whole process by the rent board. Thank you for that question. Yes, that is that is the case. Right. So, you know, I was going to suggest that this may already be included in your plans for thinking that it'd be very, it'd be good, very instructive to make use of whatever reporting or monitoring or questioning concerns that have been brought before that board and use that already as, you know, as a source of information and guidance for us to make sure that, you know, whether another case where to happen similar to it or whatever, that, so, you know, we have built up some experience and some knowledge on a very concrete way. So is that, do you want to make sure that that information or, I don't know if there was a formal report or and I know it was something added to them, you know, a little bit outside of their purview, but because it does have relevance, just want to make sure that it's not lost. So what steps are being done to make sure that that happens? Sorry. Thank you for the question. So yes, so those items have been brought to the remboard and so the rent, the RSO staff is working closely with the board and the tenants. And so planning staff can also work closely with the RSO staff to make sure that that information is captured and incorporated into our process. Yeah, okay. Thank you. Okay, so I don't know if you guys have any more comments, questions? Marked out. Yeah, I think my primary concern is I've lived in East Palo to 15 years and there hasn't been a market-rated apartment building ever constructed. I know there was one approved. I have real questions about our approach and I think building more housing is the only way that you address our housing shortage and that we can't have a process that's going to inhibit that because you may, you know, with our current system, we may benefit a few inclusionary zoning units, but if that delays or stops the construction of 2,000 units that would, you know, create a bigger market for housing, a bigger supply. I don't see any reason to change the plan, and I'm not sure what the ask is from staff with this informational report. I think we have the Westside plan as it is and we can obviously make things more efficient. I have questions about the overall approach that the city of East Palo has taken with housing. But I don't think changing decision. We're not making the same decision. We're not making the same decision. We're not making the same decision. We're not making the same decision. We're not making the same decision. We're not making the same decision. We're not making the same decision. We're not making the same decision. We're not making the same decision. We're not making propose on that. Thank you, too. We have any more comments? So I live in this area. I've grew up here on my own property in this area. But nevertheless, I'm probably in favor of just keeping it the way it is. And you know, we're not wasting time trying to amend or you know the fuck I think there's other things we need to address in the community and I think that we shouldn't make any additional changes at this time so I'm happy with it you know we are we need to be building more housing in general we also need to preserve our existing housing stock of affordable housing. And I think we also, like my vision, you know, for the West Side is to have a lot of a lot more mixed use urban kind of design, properties so that we do have places where people can not only shop where they live but also reduces the reliance on cars and improved transit in that area. So nevertheless, like I think this plan is, you know, I guess the general plan has been a lot of time on it. If anything, I would recommend that we take a look at our general plan, which states that we should review at every five years to see if that's still the community's vision but nevertheless I'm not in favor of making any changes at this time. Okay thank you council member Lincoln. I'd like to see the needle to continue to move forward. And I just wanted to point out, I know that I came in in the process of some of the properties over at the west side. They were in the process of getting approved. And I do recall that there was an extensive discussion and report about the tenants knowing their rights and having the right to either have compensation or not. So I just wanted just to touch bases on that. And I do remember hearing that they do the outreach. Like you said, Councilmember Romero, some probably left before they probably decided to take perhaps what was being offered to them at that time. But nonetheless, I would like to see that the rest of the projects continue to move forward. I know that we had that night when we approved the renovation of the apartments over across by the four seasons hotel. I heard quite a few residents that showed up and then they were saying that they were super excited to see that finally the project was going to start moving along. And I particularly remember this one constituent that came and she said my father has lived there for X amount of years and he's super excited that finally, you know, he'll be getting a new place that's up to date and up to code. So with that, I would like to thank you. So I do want to remind the council that the West Side has the greatest concentration of rent controlled affordable, low income apartments in East Palo Alto. The greatest concentration of low income residents who struggle every day to be their rents. one of the reasons JJ passed by 77.9%. As presently struck, and I also want to remind the council that the council has approved 750 units of market rate, housing including 605 units on the west side that the developers decided to drop down to 550. So this council has been, and these are not affordable units, these are market rate units. This, what we are asking, what we prioritized is indeed looking at a chapter that we know has problems, that we know has some contradictory issues in terms of who has the ability and who should be doing the city's analysis. It should never be a developer. Absolutely not. And if we move forward saying, oh, this particular chapter, and by the way, this is the general plan that we are talking about, right? This is chapter 11 of the general plan. And don't fix these issues, these problems that we know had occurred, such as a developer trying to move people out, moving people out and losing them. And those folks lost their right to return, lost their right to receive benefits. We are denying low income people in this community, the ability to remain in this community and to have their NNC, their tenant rights, their relocation rights protected. There are some issues and some concerns with this and I think it is prudent to have staff look at some of these issues and come back to us and say, here are some potential remedies. Remember, there are no development projects out there right now. There is one that hasn't started yet, the 515-year development. So, we know that there were problems with this. Staff knows there were problems with this. They spent three and a half years going back and forth with the developer who failed to see,, you know, that it was claimed, that it was clearly written, but there were some ambiguities. I think we owe it to the community, to the residents there, to the low income residents, to people who are living in these rent controlled units. We owe it to them to make sure that we have a, these development guidelines that indeed are protective and at the same time, I think allow a developer to understand precisely what is obligations and what are the benefits that he receives from complying with these obligations. So this is not an owner's process. This is one where it's a reiterate process where we solve it didn't work and now let's have staff come back to us with these, you know, possible potential revisions that address these issues that have been brought to us by residents, by planning staff and by council members. I just want to say that I live in this area and I know they've been talking about tearing down those main head and apartment since like the 80s. It's like 30 years ago. I think that we need to stick with what we have and just, you know, proceed with it. the community already provided input and I'm afraid that you know this whole process is going to take another four years you know given the RBD stuff and even the developer trying to get the project approved four or five years since 2019 is 2025 I'm just not in favor of going through the process. I think the city can separately come up with a policy to handle relocation and an ordinance or whatever, but I'm just not in favor of revisiting this at this time. Yeah, I hear three votes to report. But I'm speaking. I hear three votes to receive the report but take no additional action Well through the chair. I think this item is really asking It's an informational item, you know if I had to Remind us once again like when there are informational items, it's an opportunity for the council to throw out ideas and not force any vote one way or the other. And I also want to say to the community who lives on the west side. That includes the developers and the people who own homes and the people who rent who are the majority there. You know, I think we're confusing some things. Number one, the council approved the project. In fact, the developer asked for special consideration and the council gave them special considerations for the height. It gave them considerations and approved most of the units to be market units. So I don't think this is this discussion tonight. It's not about whether the project is going to move forward or not. The project is going to move forward. The only question was that any time you develop guidelines, in this case the West Side Plan, it was understood both by the developers and the affected tenants that there was going to be a period where there was, it's a learning period, I'm going to put it that way. The developer has learned some things, the tenants have learned other things and the council asked the rent board to sort of monitor that process because when things are not working is better to learn from the experience. So that next time if a similar situation occurs the guidelines will be a little clear and so you know I I think think that in some areas, there probably needs to be some changes in the regulations, in the guidelines. Not, you know, we're not talking about the big issues that decide whether there's going to be development or not. So I don't want to, people in the community to feel like this is somehow going to stop development. It is not. It's already been approved. And there's going to be plenty of market rate units. It's only a question of the rights of residents and the rights of developers. I think that developers realize that they probably violated the rights of tenants when they didn't let them know. Look, if you're going to move, you have the right to some relocation assistance. Right? And so some people moved. Now you might say, well, they left on their own. Yeah, they left on their own. But if somebody doesn't let you know what your rights are, then those rights can be violated. And so we don't want to be in a situation where we're violating either the rights of the developers or the rights of the residents. And so to me that's why when I came back, I didn't know what the discussion had been, but we have to learn from these processes processes and we set it up that way. And both the developer agreed and the residents agreed and the rent board agreed that they would keep track of this and see how the process could be improved. This is a very small part of this whole big picture. And you know, it's starting to sound like either pro development or N-stay development. I think that's the false analogy, because we're not dealing with that. This is not stopping the project at all. It's just trying to improve things. I think that's how we learn. You know, something works, something doesn't work. And if we can improve it, it's better to have guidelines that are very clear and consistent, and it also avoids the risk of people filing lawsuits. People will file lawsuits when their rights are violated either way. Thank you. Thank you, Council Member Abreka. So I'm looking to you, City Attorney, for guidance in terms of how we tackle this item. Should we go ahead and vote for what's recommended or no vote or just decide this item's on for informational. Yeah, this item's on for information. So then we just receive it and then just move on to the next item. Okay. So we wait, wait, wait, it looks like there's a handrails, but we did have public comment before we went for this item before we went went to council comment and for respect of the other folks that do have to present tonight and Some are hearing the audience and some are online. I don't know what you would you advise if we should go ahead and take this Comment or not even though we did ask for comment before we council started. That's your prerogative. The public comment period has come and gone. But if you want to entertain it, you can there. That's up to you. Okay. How many comments do we have at this? Just one? Okay, we'll just go ahead and take it then. Thank you, James. Thank you. Yeah. Just one speaker, Laura Rubio. Okay. Oh, well, that's not you. Is me. Yes. Yes. Okay. Gracias. Well, I just want to say, I respect you. I want to remind you of the consejales. I'm going to go to the doctor. What I would like to do if there is, obviously, more projects of development in the US, but I would like it to study from the beginning of the United States. I want to remind you that for the Euclid. El principio de este proyecto teníamos alrededor de 160 familias que eran las unidades o las viviendas que si van a mover. No hablemos de unidades, hablemos de familias. Paso Cobi, lo se tuimos lo de la pandemia y pasaron otras cosas things. And while we were organized, we lost our families. We don't know where they stayed. And the project ended up being finalized, we just found 55 families. So, for me, it's very important that from the beginning it was monitored, all the changes that will be done. Because we don't want to lose the families. I want to also remind you a data that I heard a few years ago, I think that the condado de San Mateo. Bueno, cada condado necesita tener un mínimo de viviendas accesibles. I think the condition of San Mateo, well, each condition needs to have a minimum of accessible housing. And I think our city is the city that provides the accessible housing of the most part of the housing accessible is in Ispal Hu alto. That is why it is important to protect our city,eger, quiero recordarles que estas viviendas están bajo control de renta por un a bajo el artículos del estado que dice que viviendas construidas antes de cierto año, creo que es 1989, no recuerdo, califican para control control of rent. This type of living gives you the opportunity to many families to survive and give them and offer them a better life for their children. That's why I repeat, I would like you to try any project or always be in account that we must monitor the number of families. Even having a list with the names of people and how many members are in this family. Thank you. Thank you, Ms. Rubio. Okay. Moving along, we have a special presentation tonight. Yeah, that was a final comment. So we're moving along to item seven, which is special presentations. I believe that today we have the item 8.1, the adoption of the Nexus study. So I believe Mr. Hanson will be presenting today is that correct? Yes, that's correct. Thank you. Thank you Mayor, Mayor again and members of the council. We're very pleased with Will Dan or consultants we've been working with for the past year on the next to. Yes, through the mayor. I just want to make sure that we're noticing this is a public hearing, not a special presentation. That's correct. That's all just, Madam, just to make sure. Yeah, because I think there's a legal requirement that it be a public hearing. Yeah, this is a public hearing. So our consultants is coming up right now. Carlos Fala-Rial and James Edison with the well-danned financial services have been working with us on these studies to update the city's impact fees, which were last done about five years ago. And by general practice practice you should be looking at your impact fees About every five years or so to update cost estimates projects that that come and go, you know funding that may have been received On some of the projects so this is about the right time about five years. So we've we'll start the next slide James so Whoops, okay, can't see. Okay, I have to look at James Scree. So for the presentation, we'll cover a little bit about background, although we've covered some of this before, also as kind of refresher. And then we'll summarize the next study of the natural feasibility analysis that feed comparison survey, mainly focusing on the updates that we've incorporated into the latest draft that's before you for review and adoption tonight. And then finally, I'll conclude with some recommendations or some suggestions for updated impact fees beyond that may be adjusting some of the maximum impact fees. Next slide. So as the council was aware this next study focused on five impact fees. The water capacity fee, parks and trails, public facilities, transportation and store drainage. The next study as we indicated previously does not analyze the inclusionary housing requirements or the linkage fees or the senator's sewer impact fees. We are engaged in what's called grant nexus study with other San Mateo County cities to look at inclusionary zoning ordinances including commercial linkage fees. So that's a separate study which the council will hear more about in the future. The sanitary sewer impact fee is including the scope of work for well down, but we held off. It was a phase two effort until we knew the EPA SD issue was fully resolved. So that next study will be beginning this spring and hopefully we'll bring that to the council to you in the summer. Next slide. So a lot has happened since 2019 when we adopted the first phase. Next slide. Oh, okay. It's not showing it. Oh, okay. Okay. Okay, sorry, on the screen. So there's a number of new plans that have really helped provide a lot of input for this latest nexus study. There was the water system master plan that adopted in 2022. The park's open space and recreation master plan. And then as part of the Ravenswood Business District 4-corner-specific plan update, two technical studies were done. One was to transportation impact analysis. Oh, okay, it's just a delay. Sorry, my screen's delayed reaction. Transportation impact analysis that focuses on the impact of increased e-filment in the specific plant area and the traffic improvements that would be needed. There was an infrastructure study also that looked at water, sanitary sewer, and storm drainage. As I mentioned earlier, the sanitaryi sewer nexus study, which will build off of this utility infrastructure study, that nexus study is pending right now. Then quite a bit of cost updates and project analysis was done for public facilities. You'll be hearing about the library master plan, design plan this evening also, but updating costs related to this city hall, police station, and storm drainage improvements. So the CIP that was adopted last year, those costs and project descriptions have been incorporated into the next study. Next slide. So the public review draft during the review process, we've gone through three drafts of the public review drafts of both the Nexus study and the financial feasibility study. First draft, which the council, we have a study session on, was in June, and then a second draft was issued in November and then the draft before you tonight was issued towards the end of January. For all of these three plans we did allow we did ask for 30-day review period and we did receive a fair number of comments which the comment letters are included in your packet packet. And working with well done and also meeting with the developers at stakeholder meetings, we did address and modify substantial portions of the plan. And well done, we'll get into more details on what those revisions were. This is the fourth council meeting on the impact fees. you can see we had initial meeting to discuss rationale for the next study and the methodology in April and then in July, as I mentioned, we presented the conclusion of the first draft to the council for some comments. And then on November, we had a special study session regarding financing district options that could offset the impact fees. Next slide. So now I'd like to turn it over to Wilden. First Carlos, Philia Reair will cover the Nexus study update and then James Wilson will cover the financial feasibility analysis and the fee comparison that we did with surrounding cities. So Carlos. OK. Great. Thank you. Carlos Vario with Wild End Financial Services. Happy to be here with you all again. I'm going to start with a little bit of Impact V101. So we're all on the same page. And then we'll get into some of the assumptions and the results of the Nexus study. So impact fees are a one time charge typically charged at the building permit stage. That are imposed on all projects within a defined geographic area. In this case, there are a number of citywide fees that are charged same citywide. And then there are some RBD specific plan fees that are only charged in that area. But the key to the next study is that we need to demonstrate that the impact fees are used to fund facilities that are needed to serve new development. So they can't be used for ongoing operations and maintenance or rehab. It really needs to be, you know, capacity-expanding facilities and a relationship to new development. Next slide, please. So in California it's the mitigation FIAC that lays out how a local agency would calculate and implement an impact fee. Next a study needs to make several key findings. First that new development creates the need for facilities. Then that new development will benefit from the use of the fee revenue and that the fees are roughly proportional to new development share of facility costs. We also need to make some housekeeping findings in terms of documenting the purpose of the fee and how the city intends to use the fee revenue. Also I should note that in 2022 the state adopted AB 602 which included several changes to how fees are calculated and implemented. The main technical change there being that residential fees are strongly suggested to be calculated per square foot as opposed to a lump amount per dwelling unit. And this would incentivize the creation of smaller residential dwelling units. There's also some housekeeping items in AB 602, namely that the city needs to make all of its impact fee schedules, next to studies and annual reporting, easily available online. Next slide, please. So this next slide lays out our basic approach for calculating a fee. We start by estimating demand for facilities that would be residents and jobs within the city, both today and out to a defined planning horizon. From there, can identify facility standards. The common example here being park acres per 1,000 residents. So we could, for example, set the fees to maintain that existing park standard. Then using those standards, but also using any other facility planning that the city has done and Hansen had just run through a list of all of those recent studies that informed our fee study. We can then identify the new facilities needed to serve the city and the cost of those facilities and then we can allocate a share of those facilities to accommodate growth. Obviously some facilities will benefit both existing and new development and it would be unfair and not proportional to ask new development to fully fund those facilities. So we calculate the proportional share needed to accommodate growth. In the case where a facility will benefit both existing and new development, that share must be funded with any funding source aside from the impact fee in order to serve existing development. So we would identify those alternative funding needs. And then finally, we calculate the fee schedule by allocating the costs per unit of new development. Next slide, please. So again, to reiterate the categories that were including the study, they're all shown on the slide here. So each facility category listed on the slide would generate a fee revenue that would be deposited into a segregated account. And then that funding could only be used on the purpose for which it was collected. So our study looks at parks and trails, public facilities, transportation infrastructure, both a citywide fee and an RBD fee, a water capacity and storm drain fee. And those last two fees also had a RBD and citywide component. Yes? I have a question about the water capacity fee. Um, is broken down by RBD and non RBD, but I know that we have some areas, any spala to they get their water from separate from the city, like the Palo Alto Park, Mitchell water company and the O'Connor track. So is that water capacity fee charged to those if there's the obviously most of places places already built out, but these impact fees apply in those service areas? If an area is not receiving city water service, then it would not be charged when it these fees. But the growth projections that we evaluated were citywide growth projections. So there wasn't necessarily a car box for those in the calculation, but they wouldn't be subject to the fee if they're not receiving service from the city. Okay, so it's like 600, I think parcels and the politics, six more than more than 600 parcels in the politics of parking a few more on the kind of track, which is on the west side. So I was just wondering if that was factored in. Those specific parcels were not not far backed into it. No. Okay. Next slide, please. So just wanted to highlight some of the changes that we made to this version of the public review draft, compared to the prior versions. Your council gave direction to use the RBD scenario to which had more projected growth in the first scenario. and we also received direction to exclude the Loop Road project. So we've pulled out all of those project costs related to loop road. There were revised project costs that we incorporated. For several of the categories, storm drain and water, for example, we re-evaluated the cost allocation to new development based on some comments that we received. And then we added additional explanation to the narrative of the study to respond to some concerns about clarity. So we just cleared some of those things up. One factor, technical factor that we revised was the worker waiting factor for the parks and public facilities fees. Essentially, this factor allocates responsibility between non-residential and residential uses. One of the comments that we received was that post-COVID, a lot of office uses were incorporating more of a work from home model at least for a certain times of the week. So we reduced the worker waiting factor to shift some of that burden away from the non-residential land uses in light of this comment. We also included a TDM trip reduction for new development and the last comment there that reduced the storm drain fee was that there were some redundant storm drain projects depending on which project you built, you may not need to build some other projects. So we removed those redundant projects to not overcharge the fee for needed storm-drained facilities. Next slide, please. So in this slide, we just wanted to highlight the RBD growth scenario. It's often referred to as the 3.3 million square feet of office and R&D scenario. So you can see here we lay out the existing and projected residents and willing units. And employment and non residential building square feet that drive the growth scenario. Next slide, please. In terms of plant facilities, the fee study compulates capacity, expanding water, transportation, and stormed in projects to accommodate demand from new development. We just wanted to note that existing deficiencies are completely excluded from the allocation to new development. So new development is not paying for a deficiency. The RBD specific projects were identified in the planning documents for that specific plan update and the water improvements were identified in your water system master plan from 2022. A big change from the 2019 study was that in this revised study, the parks and trails fee is significantly higher. And the reason for that is that your city council recently updated a parks master plan. So we have a fresh document from 2023 that identified the improvements that drive that V calculation. And then from there your CIP highlights a number of public facilities that are not solely funded by new development, but new development is being asked to pay their proportional share of the community development facility, police department, courtyard, city hall, and library. Next slide, please. So this next slide here summarizes sort of the bottom line of the fee program. I should note that we did find one inconsistency in the RBD net project cost cost in the most recent draft and we've issued an en route to memo at the fee calculation was done correctly, but the net project cost was capturing some project costs that were no longer in the study. So that's been revised in the table that you have in front of you and just want to clarify that the development for your avenue was calculated correctly and the fees were calculated correctly. It was just that net project cost. In any event, the contemplated costs of the entire program, including existing development shares, nearly $400 million of which new development would be asked to pay about $203.4 million if you implement the fees at the maximum justified amounts, which leaves a balance. Then you can think of this as the existing deficiency, essentially existing development share of these facilities at about $196.3 million through the planning horizon. Next slide. And finally, the bottom line, this is the maximum justified fee schedule supported by the Nexus study. Now your council does not have to adopt the maximum justified amounts, but these were the amounts that are supported by the study. Just wanted to point out a couple things that you can see there's two sections to the table. One would be the non-RBD fees, which would be charged in all areas except for RBD, and then the section below would be the RBD specific fees. And all fees are expressed per square foot. Your current P program for residential has fees expressed per dwelling unit, but going forward the revision here is to express all fees per square foot. So larger dwelling units pay higher fees than smaller dwelling units within the same land use category. And I think that's it for me. Next slide, please. Good evening, Honorable Mayor, members of the Council, I'm James Edison, also with Wilden. I did the financial feasibility analysis, so I'll walk you through the updates. We've presented on this once before, maybe more than once, but I'll give you this sort of current thinking of our visions we've made. And then I think after that, Mr. Ham will have some comments. Next slide, please. So just briefly as an overview, the outside I want to mention, of course, that the fees themselves were not calculated on the basis of feasibility. They were calculated, I think as Carlis just went through based on the nexus and proportionality and then required facilities and future demographics. Nevertheless, impact fees are a cost of development. I mean, they affect development like any other cost. And so it's a sort of input into the public policy process. And the feasibility analysis examines the feasibility of development with and without the impact fees to get an idea of essentially how much difference it makes. It's also important to note that this feasibility analysis is not required by the mitigation fee act. It's not determinative. You know, it's not any kind of a legal requirement, but it's it's it's additional information and many jurisdictions asked for this to prepare this analysis and many also don't sort of a policy decision essentially. So So ultimately the way we're calculating this is what's called residual land value. The math of that is that you look at for how much a project's worth. I mean the simplest example would be a house. Say the house is worth half a million dollars. You subtract out the cost of building the house and the cost of permits and the cost of financing and anything else you you can think of a to build a house. Once you subtract out all those costs, you're hopefully left with some money left over from the sales price. And that's essentially what you can afford to pay for the land as a developer. And so the way we think about this is if we run a residual land value analysis and we come up with a value that's more than when we think about what the land's worth, then it looks like it's feasible. If the residual land value analysis is less than that or negative, then that suggests that someone who wanted to build that kind of development couldn't do so because they couldn't actually make it pencil, as they say. They end up having to whoever on the land would have to give them money to build it, which of course that's not going to happen. So that's sort of an economic measure it's very commonly used throughout the industry to get a sort of general idea of it's very commonly used throughout the industry to get a sort of general idea of feasibility. Next slide please. So for the performing we prepared, which is essentially what I just described, which is a matter of taking value, the value of the development once it's constructed and subtracting out costs, sort of key development costs, land price, we assume $2.2 million per square foot, sorry for Acre, it was about $50 per square foot as a residual land value. That's a pretty general. It's a pretty general assumption. And one of the comments from the stakeholders was we should use different values and different areas and different scenarios. We thought that was adding a lot of complexity. I mean, this is supposed to be kind of a rough measure, honestly. I mean, we're not pretending like we're doing the numbers for any particular project. It's meant sort of a policy guidance. And so we've tried to keep that simple by keeping one number. We recognize that that number moves. And in fact, the other piece is, of course, that it moves over time. So any piece of land worth amount now is gonna be worth a different amount in a year and a different amount in 10 years from now. is sort of a slice of time. A construction cost or an important obviously parking assumptions, which actually turned out to be pretty important as well. Parking is very expensive, structured parking is very expensive, and then soft costs, which are not only impact for you as well. So financing and other things. All the sort of random assorted costs that aren't, you know, materials and labor that you have to. you have to, that are expenditures, things like design and architecture, other things. For operating expenses, for residential, we assume that they'd be 25% of gross rent, for just running an apartment building and paying for its costs. For commercial, we assume what's called triple net, which means that the tenant actually covers all the costs. We also include measures, H and JJ, which are annual appropriation or annual cost that are imposed on development to fund affordable housing, must say, I think. Then operating income, sales and lease rates, which vary by prototype, developers return on investment. And for least projects or things that are rented, we use what's called a cap rate, which is basically a way of taking a stream of future revenue, like say you have $1,000 a year, and you have it. or least projects or things that are rented, we use what's called a caprate, which is basically a way of taking a stream of future revenue, like say you have $1,000 a year, and you have a caprate of 10%, you divide it basically, you say. So that $1,000 a year is worth $10,000 right now. That's sort of a math exercise. It's a way to say, well, I'm gonna get a stream of future lease payments. what's that worth to me now and how can I integrate that into a performance to understand if something's feasible. I'm finally profit margin. That's the profit that a vertical developer makes. payments, what's that worth to me now and how can I integrate that into a platformer to understand if something's feasible. I'm finally Profit Margin. That's the profit that a vertical developer makes for their trouble for doing the work they're doing. We've seen 12%, which is pretty average number. I mean, anyone project can be more or less than that, but that's a pretty typical number. And then we have a series of prototypes, which I'll show you in a moment, which are generally correlated with the community benefits framework that you already have. It's a question on profit margin. The profit margin is not based on equity of the developer. It's actually based on the entire cost of the project. Yes, it's a return on cost. Right. So, if you looked at this from a return on equity, this number goes up incredibly high. Could be. It depends on the structure, whether they're at the end debt or it's all cash, but yes. You mean if their equity is debt in cash, you mean, you mean, MES? I mean, equity is equity. So if, you know, and these days, I think projects are probably going with, you know, 40% equity. So if what you have is 40% equity on a $10 million deal and you wind up, and if you do your profit margin based on the actual cost of the project, because the equity piece is so much smaller. well, it's not so much, but it's 40%, that profit margin should go up if you did an analysis based on equity from the developer, which is really what counts, right? Because real estate is all about using other people's money. So I guess this 12% number to me is a little confusing, because depending on the equity itself, again, by a cash, I can put it in several investment vehicles, right? I don't get the leverage of well, you can sometimes leverage it if you do crazy things in the stock market like options you lose your shirt So I guess I Does does the does profit on equity at all? You know change this this calculus in anyway. I haven't made any assumptions about equity or or debt structure I should clarify that profit margin is on a on a static performer So for example on a on $10 million project, you'd have $1.2 million in profit on that project, whether it, whether you did it in a year or 10 years, that would be the amount of profit related to the cost of the project. Now, you know, again, trying to keep this simple, that is a very typical number for a static vertical performance. You mean that number being 12% you're saying? Yeah, 12%. That's a typical number. It's common in the industry. And I think it's a reasonable number. I mean, static vertical performance. You mean that number being 12% you're saying? Yeah, 12%. That's a typical number. It's common in the industry. I think it's a reasonable number. I mean, the question of whether that's reasonable for how much someone should be earning doing any kind of work I can't stop for me to say. But I can tell you that it's a very common number and it's, I don't think it's particularly high or low. I think the comments we got that the stakeholder saw that number was kind of low. I don't think it is particularly low, but I also don't think it's pretty, particularly high. That's a number that's been pretty consistent over the years, even as real estate markets have changed for the sort of building industry. If you talk about a sort of a development project, we're actually taking on some entitlement risk where you're actually developing a larger project and getting entitlements and you've had a long phase in period, often the profits not measured that way. It's measured as a returner and equity or IRR. Yeah. That's in your channel way to return you. Right. Right. That's that's that's really a different exercise. We're talking here about fairly simple exercise. I've got a piece of land. I'm going to build a building that's going to take a year. Right. You're simplifying it to just the static performance. Yes. Yes. I am. In perfect as it is. All right. Thanks. OK. Thank you. Any other? All right. Next slide, please. So here, the development prototypes. I believe these are the same as the ones we presented before. you can see the sort of a range of types and density. There's one ownership town home, which would be fairly low density single family. A couple of residential, photo types apartments, a couple of mixed use, which would be apartments with some commercial space, usually on the ground floor, and then office life science and R&D and industrial, which is fairly low density. Next slide, please. So here are the draft feasibility analysis. You can see here that basically single family residential townhums are feasible. Industrial, which is quite low density, is kind of on the margin. I mean, it's lower than our target, but actually industrial land tends to be a little less valuable. So maybe that one is, the others are all very infeasible, which is not a reflection of the impact fee program. It's a reflection of current market conditions, I think as you've noted, things have been noted by the council already. They really aren't new projects going on, and that's not just a East Powell out to issue, that's all over the Bay Area. It's mainly a function of pretty ruined its construction costs. They're just too high. I mean, no. really aren't new projects going on. And that's not just a East Powell out to issue. That's all over the Bay area. It's mainly a function of pretty ruinous construction costs. They're just too high. I mean, no one can make anything pencil. There are some projects going on, but those are usually not spec buildings. That is, say, speculative buildings built for tenants or potential buyers. But if you have a business, a large corporation that needs space, they just build it and it costs what it costs. That's not really affected in the same way by feasibility. Because here we're looking at someone who owns a piece of land and wants to build a building and they want to rent it out or sell it, it will make sense to them. So you can see there basically that it's negative without the impact fees and quite negative. In some cases, spectacularly because the way it works is once you're upside down, once you can't afford the construction costs, then the more density you add, the worse it gets. All right, which you can see from the table. You know, that's adding more density, just makes your problem even bigger, which is again, why the single-family residential in the industrial are sort of close to being in, because they don't have as much to carry. And their construction costs are lower, because once you go vertical and add structure parking, you're adding a lot of construction costs. It's much more expensive than, especially when you have to use concrete or steel. Next slide, please. So there are some development costs we didn't include in the performance. A sewer impact fees, which are to be determined. I think we're going to be working on that over the next period. A transportation demand management program,and Management Program, which hasn't been said yet, so we haven't included that. And also some RBD costs. The Transpatiant Management Association, actually, we do have an estimate for that that's in the performance. So it's not true that it's not there at all. It's currently 20 cents per square foot, which works out to about a million dollars a year for the whole program. That's sort of just to put in a number because we think it's in the ballpark, but it's not, you know, it's not all vetted out yet or set up yet. Any maintenance districts for private streets, for public common areas, and then a specific plan fees. Those are not in our in our performance. Next slide, please. So we did have a series of meetings with stakeholders, especially a development community. One of a couple of things they commented on, they said that there were some floodplain elevation issues for some parcels and we didn't include those costs. We didn't because again, we're trying to make kind of a general case here. We admit some parcels are more or less, but I guess the answer to that is, well, if you have something that's got that kind of requirements, then probably the value of that land will be lower. So the feasibility will be different. We're assuming kind of a general case, and that's really a special. The same for extraordinary site remediation costs. So... probably the value of that land will be lower. So the feasibility will be different. We're assuming kind of a general case and that's really a special. The same for extraordinary site remediation costs. Someone owns a piece of land that's got those kinds of requirements can't ask as much money for it. So I mean, some of that would be accommodated within our performance in that way by changing the target. They said that our income assumptions were too high. So for residential and commercial lease rates, we actually reduced them slightly. They did also study expenses assumptions were too low. You might see a trend in how this works. But so we did increase the capital rate slightly, cap rates. We kept the developers profit the same. We thought that 12% was was reasonable and is the number that's been around for a long time. Finance and cost we increased slightly. We kept the vacancy rates the same. For operating expenses, they commented that even for triple net properties, there for a long time. Finance and cost we increase slightly. We kept the vacancy rates the same. And for operating expenses, they commented that even for triple net properties, there are some expenses the landlord has to pay and also some expenses when the property's vacant. So we added a small expense for triple net properties. Next slide, please. So the basic conclusions, I mean, as you said, there are pretty much everything's infeasible, except for industrial and maybe, and residential, which I think is what you're seeing in the market generally, right? There are some industrial projects, a few, there are residential, single-family projects still getting built when there's land for it, and entitlement for it. So most development prototypes are not feasible, at least in the near term. I mean, that will adjust right over time. We've all seen the cycle, but at the moment we're in a construction cost, especially coming out of COVID, just falsed it everything basically. So, but as far as the impact fees go, the basic conclusion is that the impact fees themselves, the development fees themselves are not the tail wagging the dog. They're not making a material difference to feasibility at this point. Infeasal projects, I mean, you add fees on the infeasal projects just become more infeasible. And that the really, the real important factors are things like cap rates, construction costs, parking requirements, and lease rates. Those are what would really drive a performance. That's, I mean, that's what the market is. That's why you see a cycle in when things get built and not get built. And something else you see is as these other factors get better as lease rates go up, a lot of that money filters down to the land. And so you see that land prices are much more variable than lots of other things. And that's because they're sort of the residual. they either, you know, has to make up the difference or benefits from better development economics. Next slide, please. I think, Mr. Ham now talk about the impact he compares. Maybe Carlos, one of the doctors here. Sure. So, just to start here, all the numbers in this table are expressed in thousands. And for the development prototypes that were included in the feasibility analysis, we conducted an impact fee comparison, where we just captured all one-time facility fees charged by a variety of your neighbors and maybe market competitors. So that included the city of Menlo Park, Mountain View, Palo Alto Redwood City, San Mateo, and Union City. So this slide here just kind of demonstrates the range of what the fees are demonstrating the lowest and the highest amongst the comparison cities. And then the two columns in the middle there are the East Palo Alto maximum justified fees both outside of the RBD area and within the RBD area summed in total. So you know we don't see the detail of the individual fees but really what this prototype would pay in total across all of the impact to be categories. And I think the results here are that first off, there is a wide range of what a neighbor-anger jurisdictions charge. That's all driven by their local policy direction and their facility needs. Really, the maximum justified East Palo Alto fees fall within that range. But again, it's a wide range. So I think that would probably conclude my comments. You're within the range, but it's a wide range and your neighbors charge based on their policy considerations. In next slide. OK, thank you, Carlos and James. What I would like to conclude with is going over the staff recommendation for adoption of updated impact fees. Next slide. So this slide does a comparison of what our existing fees are for various categories of land uses and what the proposed maximum fee would be. And there's some adjustments to these fees that we're recommending which I'll cover in later slides. But you see there's a big difference based on the feet. The parking trails feet is probably the ones that have gone up the most across all categories of land uses. And the key reason for this, as we've mentioned before, was back in 2019, the park projects were very few actually. Then we're in the CIP with adoption of the park's master quite a number of projects have been identified so the fees basically reflect the adopted Park Master Plan and the cost estimates for these projects that were developed by the Public Works Department. Public Facilities fees have also increased for residential uses probably not as significantly as for for the parks and trails. However, the fees did drop or below what we currently charge for non-residential projects. And the main reason for that, well, first of all, all these fees are spread across a larger development capacity, development pool, but also the non-residential fees, especially for public facilities and parks and trails, reflect that lower worker ratio that Carlos had mentioned. So that explains why residential increases, but non-residential actually less than what we currently charge. The transportation fees got interesting. All most all categories of land uses, whether it is in outside or within the RBD, have are supposed to be reduced. The only increases in the residential uses within the RBDD which are increasing slightly. The water cap and again I think a huge reason for the transportation fees reducing. There's a lot to know is that the next studies assume a 40% reduction in vehicle trips based on the city's TDM ordinance. The 2019 study did not built in that assumption. So the number of projects based on the TIA that was prepared for RBD reflects much fewer trips than if you used standard ITE, right? So that part of the reason for the reduction in the transportation fee. The water capacity fee has dropped across all land use categories. So you see in particularly in the RBD, the fees are close to 50% reduction in RBD, just because the number of projects where re-evaluated, some have been funded or in process of being completed. But in all categories, the fees have gone down, not as much as in non-RBD areas, but is consistently below what we currently charge. The storm drainage fee has, conversely, increased in all the categories. And that reflects some updates in storm drainage master plan or not master plan, but capital improvement projects. The most significant increase for the storm drainage, which is opposite of the water capacity fee is, does the significant increase have gone up in the RBD area? the D area because the infrastructure study has identified a substantial amount of storm-drage improvements for the new development in RBD. However, as Carl's mentioned, we did evaluate the study and we dropped a number of projects off of the lists that are duplicate projects if the running-meat pump station is constructed. So the fees did go down in this current draft, but it's still a substantial increase in the RBD at least. So next slide. So as CAUS has already mentioned, the city, the next study identified the maximum justifiable impact fees. However, the city can, through other considerations, whether policy priorities or, you know, to address project feasibility or meet other city objectives, can certainly adopt fees below the maximum justifiable fees. They cannot charge above the maximum, but they can, by policy, the decide to balance other considerations that reduce the fees. One thing to note, however, that any fee that's reduced basically has an opposite effect or impact in that it does increase the city's financial obligation. So what required the existing population to subsidize, to reduce fees, or to city to identify alternative funding sources, which continues to be an item the city's actually seeking anyway. One of the comments that we had from the community was, is there any way the fees can be adjusted? And the existing ordinance and the ordinance that we're proposing to move, not ordinance, but the resolution does continue to allow for considerations of fee reductions of adjustments or credits for individual projects. For instance, if the storm drainage calculation shows that you're actually generating less runoff on your site through some on-site incorporation like, you know, site retention or recite on-site recycling, etc. Then your fees could directly be reduced and it just matter submitting the calculations. That's the same with transportation impact fees. However, you know, it's probably going to be very challenging for a developer to show that they're going beyond the 40% TDM reduction. So there are opportunities for fee credit. Certainly credit for existing uses also, so it's a net increase of new developments. So those all spelled out in the fee resolution. Next slide. So we have included a couple recommendations recommendations for some fee adjustments beyond, but that goes the differs from the maximum supportable fees. First, the Trans-Station Impact fee for retail uses. And this was a conclusion that came up in 2019. Retail uses are very challenging, as you know, restaurant retail uses a favorite challenging to fill in the city. It is a high priority use of the city is seeking to provide more retail restaurant uses to serve residents in East Palo Alto. It's all mixed-use defilement. It's also promoted in the RBD-specific panel on Bay Road. And that, and actually in knots, nodes within the RBD area. The traffic generation rate, however, retail's very high. What got adopted in 2019 was dropping the fee for retail development to be the same rate as for office R&D. In other words, a mixed-use development, if it's an office on upper floors and retail ground floor, the impact fee for transportation would be the same. So the recommendation is to continue what was adopted in 2019 by setting the retail fee at the same rate as office. This basically reduces the fee to about 50% of what the maximum justifiable impact fee for transportation would be. The other, and there's a table in the staff report that kind of illustrates that. Another area that we are recommending a modification is regarding access to the dwelling units. Back in 2023, the council, you might recall, we had an item with the council of the defining direction to look at ways to streamline approval of ADUs and also look at ways to possibly waive, reduce, or, assess we're drawing unit fees to increase the affordability of these units and maybe allow more ADUsed or mod, which is a form of moderate income housing or even low income housing to be constructed. What the current state law is that impact fees for ADUs less than 750 square feet already exempt from impact fees. However, for ADUs over 750 square feet is based on proportional fees based on the primary dwelling unit. So it couldn't be quite high. And you see in the table that we provide the staff report that the based on the current nexus study, the fee for an assessment we do in it would double or more than double from about 14, 15,000 to over 30,000. What we're suggesting is changing how we calculate the fees for larger ADUs to first 750 square feet of any ADU it's exempt from impact fees and you only pay impact fees for the square footage above above 750 square feet. So you see in the table and Glundis staff report that that reduces the current fee for ADUs which are already quite high to about half of what they currently are. So just for a little bit of background, you know, since July 2022, we've had like 34 ADUs issued building permits. And there's been about eight of them that have been 7,750 square feet are above. And those usually more multi-bed Units that probably serve kind larger family household sizes and then finally One state law change this as mandatory is SB 3937 that requires These would win you actually require the payment of fees which can help a defelman's cash flow situation quite a bit. Our current practice is that you pay the fees prior to issues of billing permit for residential projects. SB 937 now says that you must allow the qualifying residential defelman to pay the fee at final inspection or approval of occupancy, whichever occurs first. So the state law does is incorporated into the fee resolution. Certainly one option the council can have is to choose to defer or postpone all fee payments where it all uses to the approval of occupancy stage. But that's a policy decision of the council. Next slide. So there are some items that are not included in the fee resolution, which I wanted to point out. First of all, there's another state law that just got passed AB 2553 that requires reducing transportation impact fees for residential projects within a half mile of a major transit stop For East Palo Alto the one location that could qualify that we looked at was University in Bay Because it requires locations has two transit stops would less than 15 minutes or less service intervals for these two stops. In analyzing the bus routes and the time tables for the two routes, that the universe in Bay does not meet the definition of a major transit stop but it's close and it could change in the future. One of the options that Council could have is just from Paul Z. standpoint, is reducing the fees for residential projects within the half mile radius of this intersection. I will note that however, as I mentioned before, residential projects are re-assumed to have a 40% of TDM reduction. The other option that's discussed by many cities is reducing the impact fees for affordable housing, workforce housing or senior housing. The fee resolution does not propose or include a reduction for these types of developments, but we know that the council on a project by project basis could consider financial assistance like offsetting the cost of these fees through existing sources such as measure HH funds commercial linkage fees or any inclusion in housing and loofies that we might collect. And the final comment which we discussed at the November study session is setting up a special financing district that transfers some of the impact fee costs of their special finances district. The fee resident, Lucien does not address this. However, if the council does in the future adopt such a district, we should revisit the impact fees and probably shift the projects. Our delete the projects are being proposed to be funded with a special finance district. So with that, I wanted to cover the staff recommendation. Next slide. So the recommendation is, as was mentioned, or conduct a public hearing to receive public comments. Consider the development impact fee financial feasibility nowses and the fee comparison survey the council does not need to adopt these two documents But is as was mentioned before by James these are for your consideration as you deliberate on the impact fees We the resolution can consist of parts, actually, it got four parts, but first part is finding that the proposed action is exempt from the requirements of the kind of sequa. And then the key part is approving the development impact fee next study update, which is now a requirement of AB 602 and adopting the parts in trails, public facilities, transportation, storm drainage, and water capacity impact fees as outlined in Exhibit B of the fee resolution. And then finally directing staff to file a notice of exemption for the updated development impact fees. And with that, that concludes my presentation. Next slide. And open up for council discussion and questions. Okay. So I'm gonna go ahead and open it up for the council to have any discussion or questions or comments. Okay, go ahead. Yeah, hi, thanks for the report. You know, I guess where I'm coming from is I want to see use pal to build stuff. We've had we've missed the last two development waves. I've lived here 15 years and there's been one office building. That one office building provides something like $600,000, a little bit more than almost $700,000 in tax. Nothing is viable right now. And definitely understand that like there's nothing to be built and the demand for office spaces is very low. I think where I'm coming from on this is I would like his politics to be first in line, not last in line, and miss the next development with. And I want to make sure that we have fees that make things feasible when the economy turns around. I have some concerns. We have existing deficiencies like the New City Hall, New Police Station, New Library, those't exist right now, and we're tacking them on to development fees. I think you can make an argument that residential can cover that, I mean, if you're, you know, park fees as well, existing deficiencies, you know, if I, if you're moving here, you're definitely gonna, well, hopefully you won't use the police station too much. You definitely would use library, and you might even come to City Hall once in a while and sit in the audience and wait patiently for your library program. Presentation come up. You know, so this is all very new to me, but my general philosophy, and I hope I've mentioned this in a part of my reading, is I want to make sure that we're first in line when people already spend money. And right And right now it's, we're talking theoretically, but because everything is infeasible because of the market conditions, I get that, but I just wanna make sure that we have nexus fees that set a signal to development that like we're ready to do business, we're not gonna try to hose you, we're not gonna try to make you pay for everything that's broken in East Pell Alta. I mean, I think it's the infrastructure issues are completely fair. If you go to the RBD, there's a million problems with water, sewage, all that. Developers need to pay that. It's not gonna happen unless they do. But I guess I'd like to see us be, you know, flexible with the fees in terms of one they're paid and how they're paid. Hanson had mentioned that there is certain ways of doing this or the fees are spread out over time as opposed to one set moment. I think I would love to see that. We want to see investment in East Palo Alto. We want to see a lot of tax revenue come in. We want to see things get fixed and things get built. And want to see nexus fees that reflect that. And I think that they look fair to me. And thank you for the job. I'm sure this was a lot of work. I just want to make sure that philosophically, we're aligning East Palo Alto with policies that will result in things getting built. And property tax is being empty-bladed lots being you know filled with businesses and you know people spending money in the community and paying property taxes. I don't know if I've mentioned property taxes, but You know if they want to grow the city, you know having a bunch of fees They're all theoretical that never actually result in anything built is not in the interest of the city. But thank you for the presentation. I mean, it all makes sense that these are some of my concerns and I'm not sure if there's a way to address them that would make everybody happy but I wanted to bring it up. Okay, thank you, Mr. Dynan. Do we have anybody else from the dies that we like to comment or my questions before I move to public comment? So, um, one of the concerns I have is that we're reducing impact fees for larger accessory, dull units over 750 square feet. I know a lot of single family homes that are like two bedroom, one bath, maybe 1200 square feet, 1300 square feet. So if someone constructs a larger ADU, and they're planning on say renting it out or doing something at market rate, I don't think that we should be reducing fees in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, in that, I don't think that we should be reducing fees in that scenario. If it's used for affordable or low income housing, I could justify that. Buies don't think for market rate, especially for a larger A to use that could be potentially standalone single family homes that we reduce on impact fees. That's just my opinion. But that's kind of the only issue or concern that I have. Thank you, Mr. Lincoln. Anybody else from the DAIS that would like to comment? Yes, so thank you for updating the information. I think your conclusion that with fees or without fees right now the market is not responding to development. So that, at least for people understand that, you know, if the city is considering these fees, it's not to keep development from taking place, at this point that wouldn't happen anyway. And so, you know, I think in the history of East Palo Alto, this next wave of development will be very important, in my opinion, one one because over the years, I think everybody has learned and I include all the councils, all the staffs that have come, maybe all the consultants have worked with us, the community that the city was founded on the premise that we wanted to better the local economy for everybody so that developers could come and make their profit that potentially there could be more jobs for local people that the city would get additional tax revenue. And I believe that we need to have these fees in place because as you stated in your report, and I think it's true everywhere in every city, regardless of where they are. And I'm glad you included several comparisons because I think we're not at any extreme. We're really, you know, in there and obviously we could go up or down, but that was good to see. The other table that compare the existing ones to what is being now updated does show that in fact some of the fees actually going down. So not everything is going up. But my main point about the, I think that collectively, we have learned over the years is that the developers will, in my opinion, automatically always want less fees. Why? Because they want to make more profit. And I understand businesses are in there to make profit. But even what you explained, the 12% sort of been an average, if we were to reduce fees, as was pointed out, then the city has to make up the money, which means the local taxpayers would have to pay for any reductions of fees that we give to the developers. So I'm definitely not in support of that. I think having the developers pay their fair share, have the local taxpayers pay their fair share is what I have appreciated over the years with these kinds of studies that do the numbers that look around the area that give us a good information. But I am definitely not in support of having the city feel in so that developers can make more profit. Now, so I guess that's just my philosophy that if right now a developer is going to make 12, 15%, but with the fees, they might make less. Instead of 12, they're going to make 10%. Well, so be it, they're still making profit because the other 2% is going to have to be paid by local residents. And so any development should not be done on the back of local taxpayers. And so I think what I get from this whole study also is that it does leave flexibility. It leaves flexibility so that its projects come before the city and then you get into the nitty-gritty that at that point, you know, if it does look like, well, maybe it's, you know, very unfeesable for the developer. And at that point, if it does look like, well, maybe it's very unfeasable for the developer. And at that point, I think then the city could consider lowering the fees because we don't want to stop development. So that's just my point. I don't want to stop development. I've been involved over the years in making sure that our city developed. But I don't want the local community to pay money so that the developers can make more profit. So that's basically my stance. But I very much appreciate really being current because we have, by having approved the RBD plan, I think the developers know exactly what the city expects and have it all these figures here. Also keeps us all current and up to date in order to be able to negotiate with the developers. And hopefully, I'm sure that in a few years the market will rebound. Well, who knows? My get worse considering the new administration. But I think in the Bay Area, I think usually it seems that the economy kind of rebounds. It doesn't necessarily reflect what's going on in the country. So I'm sure there'll be opportunities for more development for everybody to benefit from it. And so I didn't really have any particular questions, because I do appreciate, I think the approach of having everything updated, having some flexibility, even proposing reducing some of the fees. Or, well, I did want to clarify just on the ADUs, I think that the once about 750 are, you're not suggesting we don't charge fees for those, right? Or was that, because I know it a look infusing it. Yeah, sorry for the confusion. We are still proposing that our ADUs over 750 square feet does get charged. That's good charge. However, they only get charged for that amount over and above 750. So right now, for instance, all ADUs up to 750. Yeah, or exempt. So we're saying why don't we across the board say for 750 is exempt. But if you are building a larger EU, you do will need to pay the impact fees from that square footage of. Yeah. Okay. Yeah. I know you know it's also great that you included some of this new state laws because then they begin to also Impact what we're doing. Yeah, then we had to follow it. Yeah Okay, I think for now you know those from my comments or questions. Thank you very much Thank you council member of rica. I don't know if we have any more comments or questions