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2004-07-19 CITY COUNCIL PUBLIC HEARING MEETING MINUTESMINUTES OF A PUBLIC HEARING OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, HELD ON JULY 19, 2004, AT 6:30 P.M., IN THE COUNCIL CHAMBERS, CITY HALL, 3519 LIBERTY DRIVE, PEARLAND, TEXAS. The meeting was called to order with the following present: Mayor Mayor Pro -Tem Councilmember Councilmember Councilmember City Manager City Attorney City Secretary Tom Reid Charles Viktorin Woody Owens Larry Marcott Kevin Cole Bill Eisen Darrin Coker Young Lorfing Absent: Councilmember Richard Tetens. Others in attendance: Deputy City Manager Alan Mueller, Executive Director of Economic Development Corporation Fred Welch; City Engineer Doug Kneupper; Purchasing Officer Gordon Island; Planning Manager of Community Development Lata Krishnarao; and Planner 1 Theresa Grahmann. PURPOSE OF HEARING — PROPOSED TRAFFIC IMPACT FEES FOR ROADWAY FACILITIES. CONSIDER THE IMPOSITION OF TRAFFIC IMPACT FEES FOR ROADWAY IMPROVEMENTS WITHIN THE CITY LIMITS, IN ACCORDANCE WITH CHAPTER 395, TEXAS LOCAL GOVERNMENT CODE. Mr. Alan Mueller, Deputy City Manager. STAFF REVIEW OF THE PROPOSED TRAFFIC IMPACT FEES FOR ROADWAY FACILITIES. Deputy City Manager Alan Mueller stated this first Public Hearing relates to the proposed Roadway Impact Fees and an additional Public Hearing will take place August 23, 2004. Following the Public Hearing this evening, Council will conduct a Special Meeting in order to authorize the publication of the notice for the second Public Hearing on August 23, 2004. The concept regarding Roadway Impact Fees dates back to 2001. The City Council and Staff received comments regarding new developers paying for some of the costs for roadways in addition to the Bond Program, similar to the way the City currently utilizes water and sewer impact fees. One of the goals adopted by City Council in Fiscal Year 2002-2003 was to investigate the adoption of a Traffic Impact Page 1 of 12 — 7/19/2004 Fee. Based on the goal, funding was included in the Fiscal Year 2003 Budget for the studies to be prepared. The study was broken into two phases. Phase One was an investigation and analysis of the Traffic Impact Fees. Phase One of the study was completed in March 2003. Based on the presentation from Phase One, City Council authorized the consultants to proceed with Phase Two of the study. Phase Two was the actual development of the Traffic Impact Fee. The report was submitted to City Council in May 2004, and the first Public Hearing took place June 7, 2004. Mr. Mueller introduced Gary Mitchell of Wilbur Smith and Associates. Mr. Mitchell will give a more detailed overview of the Traffic Impact Fee and how it has been calculated. Gary Mitchell of Wilbur Smith and Associates stated Roadway Impact Fees have been utilized throughout Texas in the Metroplex, Dallas and Fort Worth; one other city in the Austin area has used Roadway Impact Fees as well. Based on this information, Council wanted to continue moving forward in developing a potential Ordinance. The hearing held last month was to adopt a set of land -use assumptions. This study utilized the existing assumptions from the Water and Wastewater Impact Fees and allocated those to the eight service areas. A Capital Improvement Plan for road improvements was also adopted last month. The next step is to have a Public Hearing on the proposed fees based on those assumptions and the Capital Improvement Plan. This is the first Public Hearing; another Public Hearing will take place leading to an official/potential vote regarding the issue. Roadway Impact Fees is another way cities have considered for funding of road improvements. Mr. Mitchell gave a list of suburban areas that currently use impact fees. Basically the idea is to look at the impact of new growth and how this impact could be funded in the terms of roads. He stated this does not rule out road maintenance and other road improvements that may be done. The City has a Bond Program to build certain roads. This is another way to do some additional improvements. Water and Wastewater Fees can be used outside into the extraterritorial jurisdiction. Roadway Impact Fees can only be used within the City Limits. Any roads built through this program must be on the City's adopted Thoroughfare Plan. At this point, based on the Capital Improvement Plan, the City is looking at supply and demand. This is to make sure that the major roadways in the City can handle the worst traffic situation. Mr. Mitchell gave a brief explanation of the presented map and service areas. He stated in the Ordinance a table will exist that shows calculations based on land -use. The fees will then be calculated per service area. He gave a brief explanation of the service areas and stated the maximum chargeable fee will need to be determined, as well as the adopted fee the City will charge. The maximum charge has been determined, but the City has the freedom under the statute to set a lower charge. These fees could be lowered based upon the current or future build -out. He gave examples of cities that have lowered impact fee amounts due to limited build -out. Page 2 of 12 — 7/19/2004 CITIZEN COMMENTS Kevin Holland, Friendswood Citizen, addressed Council and stated he is currently with the Greater Houston Builder's Association. He is here to represent approximately 400 homeowners. He stated the current item is taxation without representation and is not fair. The Pearland residents that want to buy a new house within Pearland will have to pay this fee. There is no ability for future homeowners to complain or be represented. The only people able to protest at this time are the builders and the developers. He gave additional comments regarding other cities that do not have these fees. He gave some other ideals for Council to consider versus the Road Impact Fee. He asked Council for some more time for considering the Road Impact Fee. C.D. Anderson, 3215 Jaquelyn, addressed Council and stated he has lived at his resident for thirty-seven years. He gave brief comments regarding the prior speaker and his statement referring to taxation without representation. He stated he has lived in Pearland for thirty-seven years and could comment regarding taxation without benefit. He has paid to subsidize these developers coming into Pearland. Mr. Anderson stated he has not received any benefits from his tax money aiding the developers of Pearland. He is tired of paying for the developers to come into Pearland. He gave comments supporting the Road Impact Fee and suggested expanding the fees to the maximum charge. Mr. Anderson stated the Road Impact Fee is allowing the developers and new homeowners to pay their fair share of fees for the benefits they will receive in Pearland. Tricia Holland, Pearland Independent School District, addressed Council and stated she is representing the Board of Trustees of the Pearland Independent School District. She stated the City and the District are acutely aware that roads cost a lot of money. She asked that the City remember the School District is also a governmental entity that is troubling to keep up with the growth of Pearland as well. The School District is not a developer, but in fact with another impact fee the District will be facing an unnecessary burden. Ms. Holland stated the District has worked very hard to be a partner with the City and has supported the City's Road Bond Election. The District has paid a great amount in water and sewer impact fees. She stated the District has also spent a great amount in road improvements around school campuses. Ms. Holland gave examples of water and sewer impact fees and road improvements paid by the District. She stated the money used for these fees would have been much better served educating the children. Ms. Holland stated a recent demographic study shows enrollment for the Pearland Independent School District will double within the next seven years. This will require many new campuses all over the District. She stated water and impact fees are already included in the District Bonds. If the District has to pay Road Impact Fees, this will put another burden on the taxpayers. The purpose of the District is to educate the children, not build roads. Ms. Holland stated it is her understanding that other cities Page 3 of 12 — 7/19/2004 utilizing the Road Impact Fees have exempted the School Districts in their area. The -- Pearland Independent School District is asking Council to exempt the District from such fees. She asked Council to schedule another Joint Workshop between the City and the Pearland Independent School District to further discuss the issues surrounding the Road Impact Fees. Susanne Elliot, 6614 Broadway, addressed Council and stated she is here to speak against the proposed Road Impact Fees. She is concerned certain individuals will be required to pay the fee, and others will not be required to pay the fee. This will give certain advantages to those not required to pay the fee. She asked Council to consider another way to raise the revenue needed for road improvements. Richard Prone, Greater Houston Builder's Association, addressed Council and stated members of the association have turned out tonight to voice their opposition against the Road Impact Fee Ordinance. He stated this fee would certainly affect housing affordability in Pearland. This fee will hit first-time homebuyers especially hard. This fee places an unfair burden on lower income households. He asked Council to give the association a chance to meet with Council and discuss applying the fee fairly. Pamela Crawford, KB Homes, addressed Council and stated KB Homes is one of the largest builders in the metropolitan area. KB Homes has a diverse buyer pool that ranges from single adults and parents, white -collared professionals with children, and active adults. Ms. Crawford gave some background regarding the company. The company has two initial concerns regarding the proposed fee. The first concern is the number of single adults, growing families, and active adults who can afford housing in Pearland will be severely reduced. The second concern is KB Homes and other members of the Greater Houston Builders Association will have the burden of the additional fee that appears to be based on incorrect assumptions. She asked Council for additional time to provide more input to the consultants in order to ensure the- assumptions heassumptions are accurate. Ms. Crawford further asked if Council decides to continue forward with the Road Impact Fee, to phase the fee in over a three-year timeframe. Charles McMurray, 5209 Spring Branch Drive, addressed Council and asked Council to implement the fees. He stated the fee is fair. If the City can afford to phase the Road Impact Fee in, the City should do so. He gave comments regarding the impact on growth to the Pearland community. Dr. Glenn Garrison, 3609 Lindhaven, addressed Council and stated he is in favor of the Road Impact Fee more than not being in favor. He is concerned about who pays and what is the affect. The City should be concerned about any fee that would affect commercial growth, since the majority of the impact is from the building of homes. Mr. Page 4 of 12 — 7/19/2004 Garrison stated he is also concerned for the Pearland Independent School District. He stated there is some room for negotiation regarding the fees. He stated the best way to regulate infrastructure is through the orderly presentation to the voters through bonds. Mr. Garrison further stated he is concerned about the fee not being applicable in certain areas operating under the Tax Increment Reinvestment Zone. This would put the Pearland Independent School District in a competitive disadvantage with neighbors to the South. Steven Donnelly, 3913 Cedarwood Drive, addressed Council and stated he transferred to the Baytown area in 1991 and decided to move to Pearland in 1992. He stated if he knew the current rate of growth beforehand, his transfer would not have taken place. The streets and congestion are terrible. The developers have caused many drainage issues for new communities in Pearland. Mr. Donnelly stated the citizens are paying for the development in Pearland. The developers would not be present at the meeting tonight if they were not making money from new development in Pearland. Instead of passing the impact fee on to the homebuyers of the developments, the fee could be absorbed by the developers. Michael Klaus, 5016 Groveton, addressed Council and stated he is concerned for the School District. He stated there is no reason to spend money back and forth between taxing agencies. He stated the existing citizens of the community have the right to expect a certain level of service. His concern is for the commercial base. Mr. Klaus stated he has no sympathy for the developers and builders in the area. The concern should be what is good for the City of Pearland. Brad Baily, 18646 Prince William — Nassau Bay, Texas, addressed Council and stated he is actively looking to open a restaurant in the Pearland area. He owns Sudi's Catfish and Seafood House in League City, Pasadena, and North Houston. He stated in order to build a restaurant in Pearland, it would cost at least $26,000 to get a permit on the building. The fees would be a big problem. He asked Council not to alienate the hardworking business people trying to make it in the City of Pearland. Jamie Cornelius, Dallas, Texas, addressed Council and stated new development does pay its way in Pearland. He gave some information regarding the past home values of Pearland homes and current home values of Pearland homes. He stated the new homes have brought new retailers to the Pearland community, which brings additions to the City's tax roll. He stated the developers and commercial developers will go elsewhere to build. Mr. Cornelius stated the consultants stated nine reasons the City should not adopt the Road Impact Fee and six reasons it should. He stated the number one reason not to adopt was due to possible loss in business growth. The number two reason is increase cost of housing. He stated the most compelling reason is the Page 5 of 12 — 7/19/2004 marketplace itself. The reason the Road Impact Fee works in the Dallas area is because Dallas does not have drainage and detention problems to handle. He stated the proposed fee for Pearland is widely inaccurate. In conclusion he stated the City could manage projects and create a more equitable fee structure. The consultant has identified more reasons to not adopt the fee than to adopt the fee. George Contes, 3633 Lee Lane, addressed Council and stated most people in opposition to this issue are people who stand to gain money. Concessions can be made for the school districts and businesses. Mr. Contes stated the impact of traffic has changed tremendously in the ten years he has lived in Pearland. In closing, he stated he supports the Impact Fee. Carol Artz, President of Pearland Area Chamber of Commerce, addressed Council and stated a breakfast was given to disseminate information to the community regarding the Impact Fees. The general consensus of those who attended was not for the Impact Fees. She urged City Council to do their due diligence on the right thing to do. Ms. Artz stated the Chamber is very much pro-business and does not want to be in a competitive edge with other communities in the area. In closing, Ms. Artz stated the Chamber trust Council will do its due diligence in doing what is best for Pearland. Steve Robinson, Ashton Woods, addressed Council and stated he is present on the behalf of Ashton Woods, the developer of the Southern Trails Project. This project has been ongoing for a couple years. He asked that before Council makes any decision, and or another Public Hearing is held that a copy of the final Ordinance be provided to the developer. He stated the developer has seen a copy of the draft Ordinance, but not a complete final Ordinance. Mr. Robinson wants to ensure that the final Ordinance complies with the Vested Rights Act. He gave some additional information regarding the Vested Rights Act. He stated the Southern Trails project is now faced with a very significant fee that could possibly have a detrimental impact for the project. Victor Botrey, Houston, TX, addressed Council and asked if Shadow Creek Ranch is a part of the Impact Fee. He understood that Shadow Creek Ranch is not a part of the Impact Fee because of an agreement with the City. He stated Shadow Creek Ranch is a 3000 -acre development. Mr. Botrey asked if the City has done a study showing the impact Shadow Creek Ranch will cause to the City. He stated a study should be done. Currently the Shadow Creek Ranch Development is being reimbursed for the construction of streets. He stated other developers present tonight are not being reimbursed for the roads built in their communities. Mr. Botrey stated this is very unjust. He agrees with all the citizens that stated the developers need to pay their way; he is a developer and he is willing to pay his way, but it needs to be fair and equitable. Page 6 of 12 — 7/19/2004 James Johnson, Houston, TX, addressed Council and stated Southern Trails would have to spend approximately $3 million in Road Impact Fees if the Ordinance is adopted. This would slow down the project substantially. There have been a lot of good things that have come from the residential growth in Pearland. He asked Council to come up with something that makes sense for everyone. David Miller, 2603 West Pine Orchard, addressed Council and stated he has been in Pearland since 1979. He stated this is an issue of government. The community has, and should be, responsible for water, sewer, police protection, roads, and schools. Different entities are involved in the process of providing these services, and the taxpayer base should provide the services. He stated there are some concerns from the school districts regarding the Impact Fee. Mr. Miller stated the school districts even feel that the growth can bring the possibility of lower taxes. He asked Council to get back to the basics of government. Mark Chambless, 3716 Aubrell, addressed Council and stated his comments are neither for or against the Impact Fee. He feels Council will come to the right decision based upon the facts presented. Due to the economic development and growth of Pearland, some control needs to take place. The Impact Fee would certainly reduce the number and homes and businesses in Pearland. Richard Simpson, Pearland resident, addressed Council and stated he is building a 22,000 square feet Strip Center. The amount of the Impact Fee is unbelievable; for every 1000 square feet, the fee is approximately $4000. He stated he believes in bonds and this is going too far with the Impact Fee. Virgil Gant, Pearland resident, addressed Council and stated he is concerned about the School District. As the growth increases, State funding reduces. It is more helpful to see more commercial development than rooftops in Pearland. It has been difficult for the District to deal with the amount of residential growth. COUNCIUSTAFF DISCUSSION Mayor Reid stated a need for over $206 million of roadways exist in Pearland. He stated that there is a point in which the Impact Fees would start. City Manager Bill Eisen stated during this process if a developer has already platted a development, the fees would not apply unless the plat expires and then it would be a one-year time limit before the new impact fees are applied to the development. Page 7 of 12 — 7/19/2004 Mayor Reid stated the comments from the hearings will be taken into consideration, and modifications will be made to the Ordinance prior to adoption. City Manager Bill Eisen stated once the Ordinance is in final form, it will be available to the public. Mayor Reid stated Shadow Creek Ranch currently has a Tax Increment Reinvestment Zone agreement, which excludes the development from any impact fees. City Manager Bill Eisen stated Shadow Creek Ranch has different mechanisms for construction of thoroughfares in that area of development and are not included as part of the Impact Fee Ordinance. He stated there are a few other developers as well that made financial improvements for construction of major roadways that will not be included in the Impact Fee Ordinance. Mayor Reid stated when the City went through the process of the Water and Sewer Impact Fee, the City was able to determine assumptions regarding impact. Those same numbers are being used for the Road Impact Fee. Council is currently reviewing the process of making a decision regarding the Road Impact Fee. There is a need for roadways in Pearland. The businesses and residents coming into Pearland will impact the roadways. The Road Impact Fee will be paid by those coming into Pearland and assist with the cost for road improvements. Councilmember Cole stated he had questions concerning the priority of roadway improvements in Pearland. He asked if there is any participation, within the Tax Increment Reinvestment Zone Agreement of Shadow Creek Ranch, that aids in the widening and extension of FM 518 to FM 521. He questioned the Land Use Assumptions given for determining the Impact Fee. Councilmember Cole stated he understood that over a ten-year period it was assumed that within a certain area only 100 units would be built for residential. However, the developer for Southern Trails has a Planned Unit Development with over 1500 lots proposed for development. He asked if the assumption is correct that only 100 of those units would be built over the next ten- year period. Deputy City Manager Alan Mueller stated the assumption is typically correct. He stated for clarification, the decision was made earlier in the process that the same Land Use Assumptions used for the Water and Sewer Impact Fee would be used for the Road Impact Fee. He stated the existence of an approved Planned Unit Development does not necessarily guarantee that any lots will be built on. The numbers are an assumption based on a projection. Page 8 of 12 — 7/19/2004 Councilmember Cole stated he understands, but the City is currently looking at charging a fee based on one Land Use Assumption. He stated an adjustment could be made to the assumptions in order to help those developers who have already invested their time and money into developments here in Pearland. Deputy City Manager Alan Mueller stated the numbers and cut-off point is not going to be perfect. Council will have to make a decision on what the cut-off point will be. He stated this Ordinance will be reviewed periodically. Councilmember Cole stated he is looking at it as being equitable to the developers, especially when you have some developers not paying any fees and other developers paying fees. Deputy City Manager Alan Mueller stated during the time that Shadow Creek Ranch was being developed, there were a lot of certain public policy issues surrounding what is being done for the development. However, he thinks in the long term, the agreement is beneficial to the City because of the quality and pace of development determined during the time of the agreement. Councilmember Cole stated he also has concerns regarding the twelve-month grandfather clause. He spoke with the City Attorney and was informed Council can extend it. He stated the twelve-month period is a short time frame in the development world. He stated most developers and homebuilders are generally two different entities. Both usually enter into an agreement, which contains fees. However, if twelve months down the road new fees are imposed, there is a possibility that a lot of builder contracts with developers will be voided out. This will cause a major strain to the financial packets of the developers. He wants the fair and equitable decision to be made. Councilmember Cole stated he agrees the School District needs an exemption. He asked for clarification regarding the credits. Deputy City Manager Alan Mueller stated the study is based broadly on general improvements needed. Councilmember Cole asked for a percentage of the bonds past in 2001 have been sold. City Manager Bill Eisen stated approximately 45 million out of 115 million, which is about 40% have been sold. Councilmember Cole asked if this has had an effect on the tax rate. Page 9 of 12 — 7/19/2004 City Manager Bill Eisen stated to date, a one -cent tax increase was generated. He stated later this evening a proposed budget would be given to Council proposing another one -cent tax increase. Councilmember Cole asked if School Districts and Public entities could be exempted from the Impact Fee. He also asked if different categories could be charged different percentages of the actual Road Impact Fee. City Attorney Darrin Coker stated to his understanding different percentages could be charged. Councilmember Marcott asked City Attorney Darrin Coker to explain the Flower Mound Case. City Attorney Darrin Coker stated the Flower Mound Case is a Texas Supreme Court Case, which received a lot of notoriety in the City of Flower Mound. A developer sued the City of Flower Mound for a road the developer was required to build as a perimeter street around the subdivision. His argument was that the requirement placed on the developer was disproportionate to the impact the development would have on the roadway. The developer was successful in the suit. The Supreme Court has stated to cities that if the entities are going to exact from a developer or make a requirement of a developer to build a roadway, then the entity has to first determine what portion of impact the development brings. The entity would be limited to that development's portion of impact. In order to determine the portion of impact, a study needs to be prepared. He stated the advantage to the Impact Fee is the Land Use Assumptions represent the study, which is the basis of the charged fee. The absence of an Impact Fee means each case would be handled on an individual basis. The portion of impact would have to be determined though a Traffic Impact Analysis. Councilmember Cole asked if in that particular case, was it requiring the developer to upgrade or build an existing road. City Attorney Darrin Coker stated the entity was requiring the developer to upgrade an existing asphalt road by pulling the asphalt road out and rebuilding a new concrete road. Councilmember Marcott asked if this has made it more difficult for cities to build roads tied in with development. City Attorney Darrin Coker stated it has made the City of Pearland examine how the City requires the developers to contribute towards roadways. Page 10 of 12 — 7/19/2004 Councilmember Owens stated he has had an opportunity to hear a lot of things and there is a lot of concern with the Road Impact Fee. He stated Shadow Creek Ranch gave the City an opportunity to take some land that was undeveloped and increase the City's revenue. It also added to the additional development that took place after Shadow Creek Ranch. He stated his concern is regarding the future homeowners of Pearland. If the increase from the residential and commercial did not take place in Pearland, the City would be in a lot worse shape towards revenue being brought into the City. He stated he has concerns regarding the commercial business owners as well. In the Country, approximately 85% of the businesses in the United States are small businesses. At the present time he does not think the City is at the point of utilizing a Road Impact Fee. He asked Council to table the item for now and possibly look at it in future years. Mayor Reid made some additional comments regarding the quality of service Pearland has to offer the citizens and people interested in coming to Pearland. Councilmember Marcott stated there are only two members of Council and Staff who have had to pay a Water and Sewer Impact Fee because they bought houses within the last few years. He stated the communities built in Pearland, including the community he currently resides in, impact the City. New homes impact the City and the fee is a way to help pay for that impact. Deputy City Manager Alan Mueller stated the next Public Hearing will be held on August 23, 2004. Councilmember Cole stated the preparations of the documents were very well done. He gave some additional comments regarding the added cost for the homebuyer if an Impact Fee Ordinance is adopted. ADJOURNMENT Meeting was adjourned at 8:19 p.m. Minutes approved as submitted and/or corrected this the 23rd day of August , A.D., 2004. Tom Reid Mayor Page 11 of 12 - 7/19/2004 Page .12 of 12 — 7/19/2004