TO:
Honorable Mayor and Members of the City Council
THROUGH:
Bruce Moe, City Manager
FROM:
Steve S. Charelian, Finance Department Director
Libby Bretthauer, Financial Services Manager
Emy-Rose Hanna, Revenue Services Supervisor
SUBJECT:Title
Consideration of Fees Paid for Long-Term Commercial Usage of City Property (Finance Director Charelian).
DISCUSS AND PROVIDE DIRECTION
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council discuss and provide direction on the potential waiver of fees paid for Long-Term Commercial Usage of City Property.
FISCAL IMPLICATIONS:
The financial impact of waiving/reimbursing the fees paid for long-term commercial use of City property will depend on which of the four options is selected, as described below:
Options: Total Amount
a) Consider no fee waiver $ 0
b) Consider waiving fees covering July 1, 2021 - October 1, 2021 $ 9,348
c) Consider waiving fees covering January 1, 2021 - October 1, 2021 $23,370
d) Consider waiving fees covering July 1, 2020 - October 1, 2021 ______$37,392
These potential fee waivers would result in reduced revenues in the General Fund for FY 2021-2022.
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BACKGROUND:
In January 2000, the City Council established monthly encroachment fees for the long-term commercial use of the public right-of-way (MBMC 7.36). The initial monthly fee was set in 2000 at $1.00 per square foot and increased to $3.00 per square foot during the Citywide User Fee Study in March 2015. The fee is based on the square footage utilized for commercial purposes that is partitioned or restricted from public use.
It is important to note that the fees for the long-term commercial use have been in place since 2000, and are treated as monthly recurring payments in the same manner as tenant leases for City-owned properties, rentals, and other recurring receivables, none of which have received fee waivers during the COVID-19 pandemic.
Additionally, only four businesses are subject to paying the monthly encroachment fees for the long-term commercial use of City-owned public right of way, as follows:
Business Name Start Date Square Footage Monthly Fee
Ocean View Café - 229 13th St. April 2000 270 $810.00
Summers - 3770 Highland Ave. April 2000 44 ______$132.00
Uncle Bill’s - 1305 Highland Ave. April 2000 195 $585.00
Fusion Sushi - 1150 Morningside Dr. Sept. 2002 270 $810.00
Most notably, long-term encroachment fees are not associated with the short-term outdoor dining fees that were established as a result of the COVID-19 pandemic. Short-term uses differ from the above-mentioned long-term tenants in that the short-term users (25 in total) are temporarily located in metered parking spaces/roadway areas, whereas, the long-term users (4 in total) are located in the non-street areas of the public right-of-way on a long-term basis and have remained in place for the last 20 years. As such, this report does not pertain to any waivers for short-term outdoor dining fees.
On December 7, 2021, the City Council requested that staff provide options to consider waiving the monthly encroachment fees paid for long-term commercial use of public right-of-way, as required by MBMC 7.36.
DISCUSSION:
Options for the potential retroactive waiver of fees paid for long-term commercial use of City property are provided for a range between 4 months and 16 months. These potential fee waivers would run through an end date of October 1, 2021, which coincides with when the City suspended the fee waivers for the short-term outdoor dining program. Furthermore, the rationale and amount of the four potential fee waivers options are described below.
Options: Total Amount
a) No fee waiver as monthly fees have been in place for last 20 years $ 0
b) Waive fees beginning Fiscal Year (7/1/21 - 10/1/21) $ 9,348
c) Waive fees beginning Calendar Year (1/1/21 - 10/1/21) $23,370
d) Waive fees beginning Short-term Outdoor Program (7/1/20 - 10/1/21) $37,392
Additionally, options b, c and d will require additional administrative work to ensure the retroactive waivers are provided to the four businesses through a reimbursement process, of which options c and d would result in refunds for payments made from the prior fiscal year.
Staff recommends the City Council discuss and provide further direction as to which of the four options should be implemented.
PUBLIC OUTREACH:
City staff is in contact with each of the businesses and generates invoices for those businesses on a monthly basis.
ENVIRONMENTAL REVIEW
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that there is no possibility that the activity may have a significant effect on the environment; therefore, pursuant to Section 15061(b)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW
The City Attorney has reviewed this report and determined that no additional legal analysis is necessary.