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HomeMy WebLinkAboutAgenda Statement 1986/03/04 Item 4 COUNCIL AGENDA STATEMENT Item 4 Meeting Date 3/4/86 ITEM TITLE: a. Report on the feasibility of forming an assessment district for funding the Telegraph Canyon Creek Flood Control Project b. Public Hearing to determine necessity to acquire real property for the construction of the Telegraph Canyon Creek Flood Control Project c. Resolution /02 39 - Declaring the public necessity for the acquisition of real property for the construction of Telegraph Canyon Creek Flood Control and authorizing the City Attorney to commence eminent domain proceedings to acquire real properties or interest to therein for said project # SUBMITTED BY: Director of Public Works/City Engineer!f ) . REVIEWED BY: City Manager 9 (4/5ths Vot : es X No ) On January 21 , 1986, Council by minute action, ordered a public hearing to be held on February 18, 1986, to determine the necessity to acquire real property for the construction of the Telegraph Canyon Creek Flood Control project. At the hearing, Council directed staff to prepare a report on the feasibility of forming an assessment district for funding the project. The public hearing was continued for two weeks to allow time for the preparation of this report and a summary of the procedures the County followed in the appraisal of the project' s right-of-way. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. RECOMMENDATION: That Council : a. Accept the report. b. Conduct the public hearing to determine the necessity to acquire real property. c. Adopt the resolution of public necessity and authorize the City Attorney to commence eminent domain proceedings to acquire the real property. d. Authorize the Director of Finance to deposit funds as necessary for security deposits, filing fees and expert witness fees, court awards and any sums required to be deposited in court. Page 2, Item 4 Meeting Date 3/4/86 DISCUSSION: Background Since May 1977, the Telegraph Canyon Creek Flood Control Project has been pursued as a small project under the authority contained in Section 205, Flood Control Act of 1948 (as amended). The City and County requested such action by the Corps of Engineers because (1 ) the construction cost was not expected to exceed the then-current Federal cost limitation of $2 million, and (2) the implementation of the program was expected to be greatly accelerated under that authority. Unfortunately, neither of the two "expectations" occurred and now the project is estimated to cost about $8,900,000. The Federal participation to the project has increased to $4 million. However, the City of Chula Vista is the sole Agency responsible for the $4,900,000 balance. The County of San Diego is no longer involved since November 1985, when the Montgomery area residents elected to annex to Chula Vista. The $4,900,000 "local" share of the project consists of: 1 . Right-of-way acquisition $ 676,200 2. Construction/relocation/modification of bridges 650,000 3. Relocation/modification of utilities 167,500 4. Construction/engineering cost in excess of $4 million Federal participation 3,400,000 $4,900,000 The State of California Department of Water Resources (DWR) has traditionally reimbursed local agencies for the majority of the utility relocation, bridge reconstruction, and 75% of the right-of-way acquisition expenses incurred in the construction of Federally assisted flood control projects that benefit the community. In fact, when the Corps of Engineers Draft Detailed Project Report (DPR) was prepared in 1979, their cost estimate showed that the local share of the project was about $948,000. The DWR reimbursement was estimated at $664,000, leaving the County and City to split (on a 50/50 basis) $284,000. The City' s "front end money" was estimated at $142,000 and was budgeted in FY80-81 . Based on the original City/County support for this project, we continued budgeting the ever escalating "City share" of the project's cost. In FY85-86, Council approved in the Capital Improvement Program Budget (CIP) $1 ,737,000 to cover the estimated $2,337,000 City share of the project. A share that included "front end" funds for right-of-way acquisition costs and approved by Council on the basis that DWR reimbursement would be obtained after completion of the project. /, 1-t6 Page 3, Item 4 Meeting Date 3/4/86 The County of San Diego, only budgeted about $200,000 towards their share of the project. The County's funds have been used to cover (1 ) consultant expenses involved in the preparation of the bridge reconstruction plans and (2) their expense in the right-of-way acquisition process. There is expected to be no County funds for construction of the channel improvements. The annexation of the Montgomery area to Chula Vista changed the fiscal responsibilities for local cost of the project. Since the County of San Diego had no budgeted funds to transfer to the City for the construction of the channel , Chula Vista needs to find an additional $2,000,000 to make the project a reality. The total $4,900,000 not eligible for Federal funding needs to be budgeted prior to execution of agreement (known as the 221 Agreement) with the Federal Government obligating the City to the construction of the project. Staff has requested the $2,000,000 deficit in the proposed FY86-87 CIP budget. Another critical issue with this project has been the acquisition of the needed rights-of-way. At the beginning, the cost of the rights-of-way was less important than it is now. Then, the majority of the project cost was to be funded with the Federal funds or reimbursed to the local agencies by DWR. Most of the right-of-way that needed to be acquired was in the County area. To obtain the right-of-way in the City, we requested dedication of drainage easements as property developed and also expected donation of the right-of-way from SDG&E. The City's estimated right-of-way cost was less than $150,000. Acquisition of the rights-of-way has always been the critical path to the scheduling of this project. The procedure itself is complicated and when Federal or State funds are involved, the Local Agency must strictly follow their acquisition rules or risk losing project funding. An appraisal has to be prepared and the property owners must be offered just compensation for the easements. Although asked by our Agent, none of the 39 affected owners offered to donate the needed easements. Some property owners did express an interest in donating their easements, provided that all other owners donated theirs as well . To date, we have obtained dedications from 21 property owners. Council accepted 16 of these easements on January 21 , 1986, by Resolution No. 123420. The other five easements were obtained by our Agent after January 21 , 1986, and have not been presented to Council for acceptance. The 16 accepted easements were obtained at a cost of $90,000 plus $16,000 in construction related work. No funds have been paid to the property owners as Escrow proceedings will not be opened by staff prior to a final Council decision on funding obligation for these costs. The five recently obtained easement dedications have a total just compensation value of about $22,000 and $2,000 in construction-related work. Construction-related work is needed to assure that improvements affected by the channel construction are restored or protected to the satisfaction of the property owner. In some cases, this work has been requested by the property owner as a condition to the granting of the easements. At the February 18th public hearing, staff requested Council authorization to begin eminent domain proceedings to acquire the 16 remaining easements. These easements have an estimated just compensation value totaling about $280,000 and construction-related work amounting to about $97,000. At the public hearing, Page 4, Item 4 Meeting Date 3/4/86 Council directed staff to prepare a report on (1 ) the feasibility of forming an assessment district for funding the project and (2) the procedures followed by the County in the appraisal of the needed rights-of-way. Feasibility of Forming an Assessment District Chula Vista, as a Charter City, has the authority to form an assessment district to finance all or part of the project cost not covered with Federal or State funding. An assessment district is a mechanism by which revenue can be obtained from the property owners receiving a "benefit" from the improvements to be built. The mechanism consists of two statues; a procedural statute and a revenue (bond) statute. In general , the most difficult factors considered when forming an assessment district are the basis for spread of assessments and the boundary of the district. In the Telegraph Canyon Creek Flood Control Project there are other factors to consider: a) formation of the district will require a 4/5ths vote by the City Council if there is a majority protest by the property owners being assessed; (b) time limitations associated with the availability of Federal funding; and (c) historical Council "commitment" to the project. The formation of an assessment district for this project has advantages and disadvantages that need to be weighed by Council in reaching a decision on whether or not to establish the district. These are: Advantages Di sadvantages 1 . Raises funds. 1 . Takes 6 to 12 months to establish. Cost of project 2. People receiving benefit will increase due to contribute towards the cost of inflation. the project. 2. If district established 3. Establishes policy for future only to purchase the right- drainage improvement projects. of-way, DWR reimbursement for this expense could be 4. Council could set City's contribution refunded back to district. to the project equal to the Difficult to administer. reimbursement from DWR 3. Very likely that Council would have to override by 4/5ths vote, a majority protest. 4. In conflict with Council position paper on the Montgomery annexation. (Resolution 17177, items 012 and D16 (attached). Page 5, Item 4 Meeting Date 3/4/86 Advantages Disadvantages 5. Potential for loss of a Corps of Engr. funding ($4 million) 6. Administrative costs will increase. We do not recommend that a district be established for this project. However, continuing with the premise that Council would establish the district, staff would suggest that we follow either the 1913 Act statute or that Council adopt an enabling ordinance establishing the district. We feel that a district can be formed within six to twelve months to recover or finance all or part of the cost not covered with Federal or State funding. The Federal funding for this project is only assured until September 31 , 1986. Therefore, it may be necessary for the City to fund the project and be reimbursed from bond proceeds (1913 Act) or from assessment payments collected on the tax roll . It must be noted, however, that not all the property owners involved will derive a clear benefit from the project. Establishment of an assessment district may require additional right-of-way acquisition and/or the redesign of portions of the project to make the district more acceptable to those adversely affected. There would also be new expenses associated with the retention of legal counsel and assessment engineers needed to assist staff in the formation of the district. Due to time limitations for the preparation of this report, we were unable to determine these costs. These additional costs, however, could be charged to the district (if Council so desired) and recovered from the benefited property owners. As shown above, the main advantage of establishing a district for the project is that revenue for its construction can be raised from the benefited property owners. As mentioned before, however, we would most likely jeopardize the availability of Federal funds ($4 million) if the district cannot be formed and construction begun before the Federal fiscal year ends. Federal funds for their next fiscal year (Oct. 1 1986 through September 30, 1987) may not be available due to austerity measures mandated by Congress (primarily the Gramm-Rudman Act). The risk of losing these funds, of course, can be diminished in significance by the costs Council chooses to include in the assessment district. If Council ' s intention is to limit the assessment levy to the right-of-way acquisition costs (about $676,200 excluding SDG&E right-of-way) , 75% of which are reimbursable by DWR, the net gain would probably be insignificant when compared to the potential loss of Federal funding. Page 6, Item 4 Meeting Date 3/4/86 Staff believes that the disadvantages outweigh the advantages in forming a district for this project. We recommend that Council accept this report and direct staff to continue with the eminent domain proceedings. Procedures of County Appraisal of the Project's Rights-of-Way The just compensation values of the needed rights-of-way vary from parcel to parcel . This fact was noticed by Council at the February 18 meeting and staff was requested to report on the procedures used to determine the values. Since we have contracted with the County for the right-of-way acquisition services, we requested County staff to prepare a brief summary of their method/ techniques. Because information or discussion about specific parcels cannot be made during a public hearing, the following is a general discussion prepared by County real property staff on their appraisal procedures. There are three techniques of appraising real estate. They are known as the market data approach, the cost approach, and the income approach. The market data approach uses actual recent sales of properties similar to the subject property. This approach is generally considered to be the most reliable approach to value and was extensively used for the Telegraph Canyon Channel Project (Telegraph Canyon) . The cost approach is used to determine the depreciated value of improvements. This method was used in valuing improvements to be acquired for Telegraph Canyon. The income approach is used to value income properties and was not used in Telegraph Canyon. Using the market data approach two County staff appraisers identified 26 recent sales of properties useful in valuing Telegraph Canyon properties. After identifying the most comparable sales to any given subject property, the appraiser made adjustments up or down for the subject property. Such adjustments were made because of variations in topography, zoning, location, flood plain status and the like of the subject property relative to the market data properties. The resulting value was then applied to the square footage actually being acquired. In Telegraph Canyon some properties gain considerable benefit from the project, some are damaged, and some are only marginally affected one way or the other. California law requires that special benefits can be considered in appraisal for public projects only if they are applied against damages. Special benefits cannot be applied against the value of the property being taken. There were properties that were damaged but none of these had damages that could be offset by special benefits. Both County appraisers working on Telegraph Canyon have over 20 years appraisal experience and have testified as expert witnesses in Superior Court in real estate valuation matters. The senior appraiser was Appraiser of the Page 7, Item 4 Meeting Date 3/4/86 Year, 1984-85, in the American Society of Appraisers and has taught the subjects of Real Estate Appraisal and Appraisal of Partial Acquisitions. (All the parcels in Telegraph Canyon are partial acquisitions). When a County appraiser has completed an assignment, the appraisal is reviewed by a review appraiser before being approved. County staff will be available to answer general questions regarding the appraisals at tonight' s meeting. Public Hearing Requirements The eminent domain proceedings require a public hearing at which time the owner(s) will be entitled to offer testimony which Council must consider before making a determination to proceed with the eminent domain process. At the public hearing, the issues to be discussed include: 1 . The public interest and necessity for the project. 2. Whether or not the project is planned or located in a manner which will be the most compatible with the greatest public good and the least private injury. 3. Whether or not the properties sought to be acquired are necessary for the project. A Statement of Facts regarding these issues is attached. In addition, U. S. Corps of Engineers staff will be present at the meeting to answer questions Council and/or the property owners may have about the project and its design. Eminent domain authorization is requested for: Area Just Parcel No. Owner Address S.F. Comp. 84-0200A Anne Collins & J. Roy P.O. Box 753 859 $ 900 Collins Bonita, CA 92002 84-0201-A,B,C Chula Vista Union 88 East "J" Street 38,496 13,000 School District Chula Vista, CA 92012 84-0214A,B,C Joe B. Royal and 45504 13,563 35,150 Nancy L Royal 84-0222-A&B Willard K. Brown and 970 Kittiwake Lane 175 1 ,075 84-0248-A&B Elinor M. Brown Chula Vista, CA 92011 84-0227-A&B Pasquale Oliveri , Santo 3358 F St. 800 11 ,900 Oliveri , Gaspare San Diego, CA 92102 Oliveri and Maria G. Cefalu Page 8, Item 4 Meeting Date 3/4/86 Area Just Parcel No. Owner Address S.F. Comp. 84-0233-A,B Earl Scheib Realty 8737 Wilshire Blvd. 970 11 ,500 Corp. Beverly Hills, CA 90211 84-0235-A Greenbrier Apartments, 6526 El Cajon Blvd. 325 2,700 Ltd. San Diego, CA 84-0236-A Elmer Ellis Parker 830 Second Ave. 7,668 58,700 Chula Vista, CA 92011 84-0237-A Gary R. Fleak 609 Arizona St. 2,700 25,200 Chula Vista, CA 92011 84-0239-A Charles Glad, Charles 3214 Winlow St. 2,280 23,100 Glad Jr. , Lal anya Glad San Diego, CA 92105 84-0241-A,B,C Roberto Martinez and 623 Arizona St. 2,438 22,200 Maria Villafranco de Chula Vista, CA 92011 Martinez 84-0243-A,B,C Adrian Lee and Cherry 971 Skylark Dr. 6,300 8,300 Lee La Jolla, CA 92037 84-0244-A,B,C,D Ratner Clothes Corp. 730 13th St. 680 1 ,900 San Diego, CA 92112 84-0245-A1 ,B1 ,C1 Anne E. Ryan, Oberlin J. 676 Moss St. 24,210 61 ,200 84-0247-A1 ,B1 and Vivian L. Evenson Chula Vista, CA 92011 3,057 1 ,000 84-0246-A1 ,B1 South California Paper, 695 Moss St. 1 ,840 1 ,600 Inc. Chula Vista, CA 92011 279,425 It should be noted that the amounts shown on the column headed "just comp. " do not include the cost of work (about $97,000) that needs to be done within the properties to accommodate the Telegraph Canyon Flood Control Channel improvements. The total cost to acquire all the easements and the associated construction work needed for the project is estimated to cost about $676,200. Funds have been budgeted ($2,313,400) that can be used to cover the entire right-of-way acquisition cost. Right-of-way plans showing the location and extent of each of the easements needed for the project will be available at the meeting for Council viewing. I,..: i Page 9, Item 4 Meeting Date 3/4/86 Conclusion It is feasible to establish an assessment district to finance costs not eligible for Federal or State funding associated with the Telegraph Canyon Creek Flood Control Project. Establishment of an assessment district very likely will require a 4/5ths vote by Council to override property owner protest. There are several benefits which make it desirable to form the district. However, the disadvantages particular to this project outweigh (in staff' s opinion) the benefit of creating an assessment district. The principal disadvantage is the risk of losing Federal funds if the district is not formed and the project is not under constructed prior to the end of the Federal fiscal year (Sept. 30, 1986) . Due to the many complications that may occur and delay the project, staff recommends that Council proceed with full City funding of the local costs. Upon completion of the project, reimbursement from the DWR will be obtained for certain expenses incurred by the City. DWR reimbursement is appropriate only if the project has Federal participation. FISCAL IMPACT: Right-of-way acquisition costs are estimated to cost about $676,200. Funds are available as of January 29, 1986, in the following project accounts to cover this cost: Project Account No. Amount Available 1 . 600-6000-RCO8 $277,837 2. 600-6000-RC22 290,020 3. 600-6000-RC32 525,000 WPC 1913E y he City Council of Chula Vista, Cclifornia Dated ;Y/144e/4- T` Form No. F-229 12/73 CERTIFICATE OF CITY/DIRECTOR OF FINANCE Certification of Unappropriated Balance I HEREBY CERTIFY that the money required for the appropriation of funds for the purpose set forth in the attached resolution is available in the Treasury, or is anticipated to come into the Treasury, and is otherwise unappropriated. Amount $ Fund Purpose Bidder Director of Finance The City of Chula Vista Date By Certification of Unencumbered Balance I HEREBY CERTIFY that the indebtedness and obligation to be incurred by the contract or agreement authorized by the attached resolution can be incurred without the violation of any of the provisions of the Charter of the City of Chula Vista, or the Constitution or the laws of the State of California, that sufficient monies have been appropriated for the purpose of said contract, that sufficient monies to meet the obligations of the contract are actually in the Treasury, or are anticipated to come into the Treasury to the credit of the appropriation from which the same are to be drawn, and that said monies now actually in the Treasury, together with the monies anticipated to come into the Treasury, to the credit of said appropriation are otherwise unencumbered. Amount Not to Exceed $ See Below v25'� 7Q 6 600-6000-RC08 4 �...d •0-� ` 600-6000-RC22 290,020 Director of Finance 600-6000-RC32 525,000 The City of Chula Vista Date 2/18/86 By Public Works/Engineering Fund See Above Dept./Activity Purpose Right-of-way Acquisition Costs Bidder ;.5 1 kfr Certificate No. 34