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HomeMy WebLinkAboutCity Council Meeting - Council Workshop - Minutes - 03/03/2020 Approved City Council Workshop Workshop Regular Meeting Minutes March 3, 2020 Date: March 3, 2020 Time: 5:00 p.m. Place: Chambers I. CALL TO ORDER Council President Troutner called the meeting to order. Attendee Name Title Status Arrived Toni Troutner Council President Present Bill Boyce Councilmember Present Brenda Fincher Councilmember Present Satwinder Kaur Councilmember Present Marli Larimer Councilmember Present Zandria Michaud Councilmember Present Les Thomas Councilmember Present Dana Ralph Mayor Present II. PRESENTATIONS 1 Transportation Master Plan Financial Plan Emily Alice Gerhart from Fehr & Peers reviewed GMA requirements for the transportation element, including land use, funding, infrastructure and level of service. The City is working on developing policies. Requirements of RCW 36.70A.070 were reviewed. The TMP project list development was reviewed. Performance metrics help prioritize projects and the funding plan will identify funding constrains for a priorities project list. Gerhard indicated headwinds regarding funding transportation today include streamlined sales tax, the economy, grant availability and future trends. Gerhard reviewed the current state of transportation in Kent and the final TMP Goals were reviewed. Kristin Maidt from BERK, discussed sources of funding available to cities in Washington for transportation activities. Kent anticipates declining availability of general fund revenues for transportation in the next 20 years Public Works Director, Tim LaPorte provided information on the use of LIDs to fund projects. City Council Workshop Workshop Regular Meeting Minutes March 3, 2020 Kent, Washington Page 2 of 4 Gerhard discussed Transportation Impact Fees. Kent began collecting TIFs in 2010 and has collected an average of $950K per year. Senior Transportation Planner, April Delchamps provided information on all grant funding options. Kent should be realistic about what it can afford, update the TIF, think creatively about funding sources and explore partnerships. The project team will return to the City Council on May 9th, will continue the development of the project list using the recently adopted goals, continue to develop creative solutions, and then present a Transportation Fees 101 to the Council this summer. 2 Targeted Residential Investment Program Long Range Planning Manager, Hayley Bonsteel presented the Targeted Residential Investment Program. Bonsteel would like to get a sense of how the council feels about this program and would like feedback on what it would take for the council to support this program. Bonsteel conveyed what a Multi-Family Tax Exemption program requires in addition to providing a brief history of the program. The proposed program would provide an exemption on improvements (not on land) There will be an RTA program in Midway and Downtown Kent. · Minimum number of units - 4 · TIF waived due to presence of high-capacity transit · On-site management for rentals required · Projects must be completed within 3 years · Cannot be layered with other subsidies · Structured parking required Why MFTE? · Nearly every other City has MFTE · This program has become a standard · Development costs are high - real estate is risky, subsidies and incentives have become the standard practice in the region, Kent is competing with other cities for high quality urban development. Why subsidize Market Rate? · Most development that happens at all today is subsidized in some way City Council Workshop Workshop Regular Meeting Minutes March 3, 2020 Kent, Washington Page 3 of 4 · Without market rate incentive, Kent risks only seeing subsidized affordable development. Growth targets · Very little greenfield development potential left in single and multi-family zones · Continue to meet growth targets, development will necessarily be looking to our downtown The benefits of urban development · People need housing · People = community (more people = more successful retail) · Urban fabric around transit = easier to serve Bonsteel indicated that the prior Midway MFTE program focused on affordability and the downtown program focused on market-rate housing to encourage ownership to support community in downtown Kent. Bonsteel provided supporting information in determining that 20% of units at 30% AMI should be used in Midway and why using the market-rate is important for downtown Development Cycle: · There are many options and lots of opportunities. · The program is very flexible (for now) · Kent’s proposed program implements adopted city policy · This program is a critical tool to help realize community vision. Boyce indicated he is an advocate for the program and for Kent to be competitive, we will need to use every tool available. Larimer indicated Kent could do better with a better plan. She appreciates the flexibility of the plan and indicated this current proposal will serve Kent better. Michaud requested details on how Kent’s proposed plan compares with other cities and indicated more research needs to be done regarding the option of waiting TIFs. Fincher expressed that she is not a fan of waiving TIFs Kaur indicated this is a good start. She would like to see more housing at 30% AMI and is not a fan of waiving TIFs. Troutner expressed appreciation of staff’s presentation and advised this City Council Workshop Workshop Regular Meeting Minutes March 3, 2020 Kent, Washington Page 4 of 4 program would give us the tool we need to get us to where we want to be. Council expressed tentative support for the concept, more research needs to be don on waiving TIF and what other cities are doing. Staff should try to quantify the benefits of the program and return to a future council workshop. Meeting ended at 6:09 p.m. Kimberley A. Komoto City Clerk Presentation to City Council City of Kent April Delchamps, AICP Senior Transportation Planner Fehr & Peers Emily Alice Gerhart, AICP BERK Kristin Maidt March 3, 2020 •Background •Funding Transportation Today •Revenue sources •Next steps Outline Background GMA Requirements for Transportation Element •Travel forecasts align with land use assumptions •Intergovernmental coordination •Defines level of service objectives for all modes •Projects align with level of service objectives •Financially constrained RCW Guidance RCW 36.70A.070 requires: A.An analysis of funding capability to judge needs against probable funding resources B.A multiyear financing plan based on the needs identified in the comprehensive plan C.If probable funding < identified needs, discuss how additional funding will be raised, or how to change land use assumptions TMP Project List Development Flowchart Funding Transportation Today Headwinds Streamlined Sales Tax Economy Grant availability Future trends Kent Today •The roadway network is largely built out •Maintenance needs are growing •Desire to complete the multimodal system and meet TMP goals •Developing the TMP under current financial realities Final TMP Goals Connectivity & Options Expand and strengthen the multimodal network, specifically walking, biking and transit, to increase options for those who have fewest opportunities. Safety & Health Promote community health by improving safety and by making walking, biking, and getting to transit viable and comfortable alternatives to driving. Placemaking Make investments that emphasize Kent as a welcoming place and enhance the character of the community. Strategy Pursue grants, partnerships and technologies to maximize resources and find new efficiencies. Stewardship Maintain and improve what we have, and focus new investments on projects that have long term community and economic benefits Revenue Sources Transportation Revenue Sources available to Cities in WA *I-976 repeals this authority City State Transportation-restricted sources •Transportation Benefit District Sales & Use Tax •Transportation Benefit District Vehicle Licensing Fees* •Transportation Impact Fees •Commercial Parking Tax •Local Improvement Districts •Motor Vehicle Fuel Tax (Gas Tax) •Connecting Washington distributions •Local project appropriations •State competitive programs (grants) Multi-purpose sources (including transportation)Federal •Property Tax •Utility Tax •B&O Tax •Local Retail Sales & Use Tax •Real Estate Excise Tax (REET) •Debt (LTGO & UTGO) •Federal pass through programs (PSRC Grants) •Federally managed programs (HSIP Grant) •Federal discretionary programs General Fund Support: Property Tax, Sales Tax, and Other Local Sources •Historically, most transportation funding in cities comes from general fund sources that compete against other city priorities (e.g. Public Safety, General Government, and Parks) •Kent anticipates declining availability of general fund revenues for transportation in the next 20 years •Streamlined sales tax •Structural challenges with Property Tax (see graph at right) Source: JTC City Funding Report, 2019 Illustrative example of property tax revenue growth compared to transportation construction costs State Motor Vehicle Fuel Tax (MVFT) •Cities receive transportation dollars from the state through the gas tax, grants, and local project appropriations •4% of the gas tax in Washington is distributed to cities. •Statewide, MVFT revenues are estimated to decline up to 45% by 2035. Source: WSTC Road Usage Charge Website 2020 Source: BERK 2020 Local Improvement Districts (LIDs) •Special purpose districts created to fund capital improvements •Cities can form without voter approval •Generate revenue through special assessment on property owners that benefit from the improvement •Kent is collecting revenue from 5 LIDs to pay for built infrastructure •New LIDs have to be created to fund new projects and Special Benefit must be established Transportation Impact Fees •One-time charges paid by new development •Authorized by 1990 GMA •Funds improvements that add capacity to the transportation network Source: City of Kent 2020; BERK 2020 •Can only be used to fund facilities that serve new growth, not for existing deficiencies •Must be used within 10 years on public streets and roads, but can include multimodal projects •Kent began collecting TIFs in 2010 and has collected an average of $950k per year Federal GrantsFederal Grants Puget Sound Regional Council Regional Competition Countywide Competitions Large Jurisdiction Preservation Non-Motorized Transportation Alternatives Program (TAP) WSDOT Highway Safety Improvement Program (HSIP) Spot Locations Highway Safety Improvement Program (HSIP) Systemic StateGrants Local Appropriations Department of Commerce Public Works Board Department of Commerce Community Economic Revitalization Board (CERB) Freight Mobility Strategic Investment Board (FMSIB) Transportation Improvement Board (2 Grants) WSDOT (3 Grants) County Grants Sound Transit Access to Transit King County Metro Speed and Reliability Partnerships King County Metro Access to Transit Partnerships Options for Additional Transportation Funding City State Transportation-restricted sources •Transportation Benefit District Sales & Use Tax •Transportation Benefit District Vehicle Licensing Fees* •Commercial Parking Tax •Local project appropriations •State competitive programs (grants) Multi-purpose sources (including transportation)Federal •Property Tax Levy Lid Lift •Real Estate Excise Tax (REET) •Debt (LTGO & UTGO) •Federal pass through programs •Federally managed programs •Federal discretionary programs *I-976 repeals this authority What does this mean to the TMP? •Be realistic about what we can afford •Update our transportation impact fees •Think creatively about funding sources •Explore partnerships Aspirations Next Steps Next Steps •Project team will return to the City Council on May 19 •Continue development of the project list using the recently adopted Goals •Continue to develop creative solutions •Present Transportation Impact Fees 101 to Kent City Council this summer Appendix Transportation Benefit Districts •RCW 36.73 •Two primary revenue sources for TBDs: •Other TBD sources: GO Bonds, One-year excess levies, Vehicle tolls, LIDs, Transportation Impact Fees Sales & Use Tax Vehicle Licensing Fees (I-976 repeals this authority) •Up to 0.2% •Maximum duration of 10 years •Requires voter approval •Non-voted up to $50 ($20 for first 2 years, $40 for next two years, max of $50) •Voted up to $100 (simple majority) Commercial Parking Tax •RCW 82.80.030 •10 cities have levied a commercial parking tax, as of 2019. •Only available to cities with commercial parking lots •Use: General transportation purposes Property Tax Levy Lid Lift •RCW 84.55.050 •4 voter approval required options •Single-year or multiyear levy lid lift, temporary or permanent Source: MRSC Revenue Guide for Washington Cities and Towns Real Estate Excise Tax •RCW 82.46 •The two main REET options for cities and towns are: •REET 1 (“first quarter percent”) –Any city or town may levy a 0.25% real estate excise tax primarily for capital projects. •REET 2 (“second quarter percent”) –Additional 0.25% real estate excise tax primarily for transportation, water/storm/sewer, and park capital purposes. Local Option Gas Tax •RCW 82.80.010 •Available to counties to levy •Needs voter approval from majority of registered voters •Distribution made to cities on a weighted per capita basis if enacted at county-level •Use: transportation/highway purposes Other Transportation Revenue Sources available to Cities •Local Project Appropriations -Legislature may make direct appropriations to specific transportation projects in the state budget •FMSIB Grants •TIB Grants •WSDOT Local Programs: Safe Routes to School •WSDOT Local Programs: Pedestrian & Bicycle Funding •Department of Commerce Community Economic Revitalization Board (CERB) •Department of Commerce Public Works Board State Grants Source: JTC City Funding Report, 2019 Allocation of State Transportation Dollars to Cities, FY2017-2019 Targeted Residential Investment Program CITY COUNCIL WORKSHOP 03/03/20 What is it? Program of requirements to qualify for MFTE program per RCW 84.14, designed specifically to meet Kent’s housing supply needs Establishes Downtown and Midway as residential targeted areas, consistent with adopted policy Brief History of MFTE Details of Proposed Program Tax exemption on improvements (not on land) Midway RTA: •8-year exemption •12-year exemption if 20% of units are affordable to those making 30% AMI or below •New projects only Downtown RTA: •8-year exemption •12-year exemption if units are ownership only, affordable to those making 100-120% AMI •New or rehabilitation projects eligible Details of Proposed Program Minimum number of units: 4 Transportation impact fees waived due to presence of high-capacity transit On-site management for rentals required Projects must be completed within 3 years Cannot be layered with other subsidies Structured parking required Why MFTE? Every other city has it Development costs are high Has become standard Every Other City Has MFTE Auburn Tukwila Seatac Des Moines Renton Burien Covington Issaquah BellevueRedmond Kirkland Federal Way Woodinville Development Costs are High Real estate is risky Subsidies and incentives have become standard practice in the region Kent is competing with other cities for high quality urban development Why Subsidize Market Rate? Most of the development that happens at all today is subsidized in some way ◦Affordable housing is subsidized through federal housing tax credits Without market rate incentive, Kent risks only seeing subsidized affordable development ◦Homogenizes community ◦Our incomes are going up, we don’t have a lot of higher end options in our housing stock A Growing City Very little greenfield development potential left in SF and MF zones To continue to meet growth targets, development will necessarily be looking to our downtown and TOD areas ◦Targets are set by the County and PSRC ◦Kent is generally on track to meet targets (updated targeting to come in 2020) ◦Targets are based on forecasted population growth The Benefits of Urban Residential Development People need housing ◦Decades of supply constraint have caused/exacerbated affordability problem in region ◦Good economy = good jobs = people move here People = community ◦More people = more successful retail Urban fabric around transit = easier to serve Adopted Policy Analysis Midway: Focus on affordability Downtown Focus on market-rate Encourage ownership Why 20% of Units at 30% AMI in Midway? There are approximately 250-300 existing units in the census tract Most are mobile homes (likely affordable to those making less than 30% AMI) Number of households in census tract expected to grow by about 1,500 by 2031. Over course of buildout, 20% of 1,500 = 300 homes Why is Market-Rate Important Downtown? Need more disposable income to support downtown businesses Businesses depend on households within a certain walk or drive time Rents are still half what they are in Seattle, Redmond Bellevue – construction cost is the same Market Feasibility Downtown •Job growth in Seattle metro AND in the Kent Valley •Strong year over year rent growth, property value increases Pros of Investing in Kent •Competing with sites in metro with greater rent value with same costs •Plenty of existing multi-family to renovate as compared to new build (less risky but similar rewards) Cons of Investing in Kent Market in Midway Demand forecast higher due to more frequent service to Seattle and airport Land available in sufficient size and orientation for projects Nearby Employers: Highline College, Seatac Airport, Kent Valley businesses Knowns and Unknowns Changing Landscape State likely to change program; without an existing program to compare to, Kent has less role in shaping legislative change Can adjust based on data from Housing Action Plan; have a baseline program to evaluate Development cycle: ¯\_(ツ)_/¯ Many Options, Lots of Opportunity Program is very flexible (for now) Proposed program implements adopted city policy Program is a critical tool to help realize community vision