The Pleasanton City Council is set to consider signing off on the rate structure for the new transportation fee that would be charged to developers who build on land near the I-580/I-680 interchange rezoned last year to become Pleasanton's newest commercial center anchored by Costco, two hotels and other businesses.
The council previously endorsed the concept of creating a fee to recoup up to $8.4 million for road improvements needed to accommodate the new Johnson Drive Economic Development Zone (JDEDZ), but city staff is bringing forward the formal proposed fee schedule for the first time Tuesday night.
The proposal recommends fees of $28.28 per square feet for retail, $13.70 per square feet for hotels and $13.46 per square feet for office uses for all new development within the 40-acre JDEDZ.
"To ensure all of the future developments in the JDEDZ contribute to the project costs ... city staff is proposing a JDEDZ transportation fee that would be charged to future JDEDZ development applicants at the time they pull permits with the city to develop their property with uses approved by the city within the JDEDZ," city officials said in their staff report.
To date, no project applications have been filed to develop in the JDEDZ, although city officials expect Costco will be the first project built, followed by two hotels with combined 231 rooms.
The JDEDZ, formally approved by the council in December, rezoned 12 parcels on Johnson Drive and Commerce Circle and established the framework for how redevelopment could occur in the largely underutilized 40 acres southeast of the freeways' interchange.
Central to the proposal was an agreement between Costco, which plans to buy land along Johnson Drive, and the city to pay for roadwork needed to accommodate traffic increases from the new warehouse store, plus hotels and other retail uses expected to arrive.
Those projects, which must be finished before Costco opens its doors, include improvements to the Stoneridge Drive and Interstate 680 northbound onramp, Johnson Drive widening and revamping the Johnson-Stoneridge intersection.
The pricetag for all the roadwork came in at an estimated $21.47 million, with design and construction costs at $19.97 million and $1.5 million for right-of-way acquisitions.
To pay for design and construction, the financing deal with Costco calls for $6.4 million to be paid by city traffic impact fee reserves and $6,785,000 in a cash payment from Costco as part of its developer fee package.
The third piece sees Costco is front the city $6,785,000 in cash for the infrastructure work and the city repay the money with 40% of the sales tax revenue generated by the Costco until the debt is repaid. The balance due to Costco will be subject to 1.5% annual interest, and the 60-40 sales tax sharing agreement would remain in place until the balance is paid off with a maximum period of 25 years.
To make sure other JDEDZ developers repay their share of the public infrastructure work, the city decided to create a JDEDZ fee -- payments of which the city plans to use to pay down its debt to Costco.
The fee structure is based on project size and percent of total car trips generated. Costco, which is already contributing almost $6.8 million toward the transportation projects, plus donating any of its right-of-way needed to complete the roadwork, would not have to pay the JDEDZ fee.
The fee would not be charged to current businesses in the JDEDZ, or to owners who redevelop their JDEDZ parcel in line with its existing land-use. Businesses already operating on the land rezoned into the JDEDZ are protected by grandfathering provisions.
Officials are also proposing credits to offer to developers to offset their JDEDZ fee total, including any right-of-way they donate to the city for roadwork and money already paid for previous work on the JDEDZ, such as landowner Nearon Enterprises paying for environmental review and early design work.
Some JDEDZ property owners also asked whether the city would consider a tax sharing agreement for tax revenues in excess of current projections as a means to cover a portion of the fee, similar to what Costco received, but city staff opposes that idea.
"Staff is not recommending future tax sharing agreements since the city's arrangement with Costco is to share sales tax proceeds as a means to cover future development's portion of the JDEDZ transportation improvements, not to cover Costco' s portion of transportation improvements," staff said.
The city is also facing a pending lawsuit filed by former City Council member Matt Sullivan and his Pleasanton Citizens for Responsible Growth, challenging the council's environmental clearances as part of the JDEDZ approval, but the civil case thus far has not precluded the city from moving forward with JDEDZ policies and potential project applications.
The council is set to consider endorsing the JDEDZ transportation fee structure as part of its regular meeting Tuesday at 7 p.m. in the Pleasanton Civic Center, 200 Old Bernal Ave.
The legislative package includes an ordinance to amend the municipal code to establish the JDEDZ fee and a resolution amending the city's master fee schedule to add the new fee. The resolution can be approved Tuesday, but the proposed ordinance would need to return for a second reading, likely May 1. The fee would then take effect 60 days later.
In other business
* The council will consider allocating Housing and Human Services grants and Community Grant Program funds to local nonprofits, as well as an action plan for how to use federal Community Development Block Grant funds.
* Council members will adopt policies for sustainable water supplies.
* They will present a proclamation declaring April as Fair Housing Month.
* The council's consent calendar includes a $3.7 million contract with MCK Services for the city's annual street resurfacing project (including Main and First streets) and approving the mayor's recommendations for new commission and committee appointments.
The consent calendar is a collection of items deemed routine and voted upon all at once unless pulled for separate consideration by the council, city staff or at the request of the public.