Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
10-02-19 - Agenda Pkg - Study Session
Wednesday, October 2, 2019 6:00 PM City of Hermosa Beach City Hall 1315 Valley Drive Hermosa Beach, CA 90254 Council Chambers City Council Mayor Stacey Armato Mayor Pro Tem Mary Campbell Councilmembers Hany S. Fangary Justin Massey Jeff Duclos Adjourned Meeting Agenda Study Session: 1. Draft Coastal Zone Parking Assessment & Recommendations 2. Public-Private Partnerships (P3) Executive Team Viki Copeland, Finance Director Lucho Rodriguez, Acting Public Works Director Sharon Papa, Police Chief Ken Robertson, Community Development Director Vanessa Godinez, Human Resources Manager Kelly Orta, Community Resources Manager City Clerk Elaine Doerfling City Treasurer Karen Nowicki City Attorney Mike Jenkins Suja Lowenthal, City Manager Nico De Anda-Scaia, Assistant to the City Manager October 2, 2019City Council Adjourned Meeting Agenda All council meetings are open to the public. PLEASE ATTEND. The Council receives a packet with detailed information and recommendations on nearly every agenda item. City Council agenda packets are available for your review on the City's website located at www.hermosabch.org. Complete agenda packets are also available for public inspection in the City Clerk's office. During the meeting, a packet is also available in the Council Chambers foyer or you can access the packet at our website, www.hermosabch.org, on your laptop, tablet or smartphone through the wireless signal available in the City Council chambers - Network ID: CHB-Guest, Password: chbguest To comply with the Americans with Disabilities Act of 1990, Assistive Listening Devices (ALD) will be available for check out at the meeting. If you require special assistance to participate in this meeting, you must call or submit your request in writing to the Office of the City Clerk at (310) 318-0203 at least 48 hours prior to the meeting. Oral and Written Communication Persons who wish to have written materials included in the agenda packet at the time the agenda is published on the City's website must submit the written materials to the City Manager's office by email (anny@hermosabch.org) or in person by noon of the Tuesday, one week before the meeting date. Written materials pertaining to matters listed on the posted agenda received after the agenda has been posted will be added as supplemental materials under the relevant agenda item on the City's website at the same time as they are distributed to the City Council by email. Supplemental materials may be submitted via eComment (instructions below) or emailed to anny@hermosabch.org. Supplemental materials must be received before 4:00 p.m. on the date of the meeting to ensure Council and staff have the ability to review materials prior to the meeting. Supplemental materials submitted after 4:00 p.m. on the date of the meeting or submitted during the meeting will be posted online the next day. Submit Supplemental eComments in three easy steps: Note: Your comments will become part of the official meeting record. You must provide your full name, but please do not provide any other personal information (i.e. phone numbers, addresses, etc) that you do not want to be published. 1. Go to the Agendas/Minutes/Video webpage and find the meeting you’d like to submit comments on. Click on the eComment button for your selected meeting. 2. Find the agenda item for which you would like to provide a comment. You can select a specific agenda item/project or provide general comments under the Oral/Written Communications item. 3. Sign in to your SpeakUp Hermosa Account or as a guest, enter your comment in the field provided, provide your name, and if applicable, attach files before submitting your comment. Public Participation Speaker Cards: If you wish to speak during Public Participation, please fill out a speaker card at the meeting. The purpose of the speaker card is to streamline and better organize our public comment process to ensure names of speakers are correctly recorded in the minutes and where appropriate, to provide contact information for staff follow-up. Page 2 City of Hermosa Beach Printed on 10/1/2019 October 2, 2019City Council Adjourned Meeting Agenda 6:00 P.M. – STUDY SESSION CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL ANNOUNCEMENTS OPENING REMARKS FROM CITY MANAGER SUJA LOWENTHAL 1.REPORT 19-0644 DRAFT COASTAL ZONE PARKING ASSESSMENT & RECOMMENDATIONS (Environmental Analyst Leeanne Singleton) 1. Hermosa Beach Parking Management Study - September 2019 Draft 2. Hermosa Beach Parking Recommendations Handout 3. Parking Study Powerpoint 4. SUPPLEMENTAL Email from Ed Hart (submitted 10-1-19 at 9:21am).pdf 5. SUPPLEMENTAL eComment from Vincent Busam (submitted 10-1-19 at 7:46pm).pdf 6. SUPPLEMENTAL eComment from Claudia Berman (submitted 10-1-19 at 8:07pm).pdf Attachments: COUNCIL QUESTIONS PUBLIC PARTICIPATION: Although the City Council values your comments, the Brown Act generally prohibits the Council from taking action on any matter not listed on the posted agenda as a business item. COUNCIL DISCUSSION 2.REPORT 19-0649 PUBLIC-PRIVATE PARTNERSHIPS (P3) (City Manager Suja Lowenthal) 1. SUPPLEMENTAL Introduction Slides (added 9-30-19 at 7:30pm).pdf 2. SUPPLEMENTAL P3 Overview from Katherine Aguilar Perez (added 9-30-19 at 7:30pm).pdf 3. Successful Public/Private Partnerships - from Principles to Practices by Urban Land Institute 4. Long Beach Civic Center Presentation 5. Link to October 4, 2017 Civic Facilities Study Session Attachments: Page 3 City of Hermosa Beach Printed on 10/1/2019 October 2, 2019City Council Adjourned Meeting Agenda COUNCIL QUESTIONS PUBLIC PARTICIPATION: Although the City Council values your comments, the Brown Act generally prohibits the Council from taking action on any matter not listed on the posted agenda as a business item. COUNCIL DISCUSSION ADJOURNMENT Page 4 City of Hermosa Beach Printed on 10/1/2019 October 2, 2019City Council Adjourned Meeting Agenda FUTURE MEETINGS AND CITY HOLIDAYS CITY COUNCIL MEETINGS: October 8, 2019 - Tuesday - No Meeting (Re-scheduled to Oct. 10) October 10, 2019 - Thursday - Adjourned Regular Meeting: 6:00 PM - Closed Session and 7:00 PM - City Council Meeting October 22, 2019 - Tuesday - 6:00 PM - Closed Session, 7:00 PM - City Council Meeting November 12, 2019 - Tuesday - 6:00 PM - Closed Session, 7:00 PM - City Council Meeting November 18, 2019 - Monday - Adjourned Regular Meeting: 6:00 PM - Closed Session and 7:00 PM - City Council Meeting November 21, 2019 - Thursday - Adjourned Regular Meeting: 6:00 PM - Mayor Rotation November 26, 2019 - Tuesday - No Meeting (Re-scheduled to Nov. 18) December 4, 2019 - Wednesday - Adjourned Regular Meeting: 6:00 PM - Study Session December 10, 2019 - Tuesday - No Meeting (Re-scheduled to Dec. 12) December 12, 2019 - Thursday - Adjourned Regular Meeting: 6:00 PM - Closed Session and 7:00 PM - City Council Meeting December 24, 2019 - Tuesday - No Meeting (Dark) BOARDS, COMMISSIONS AND COMMITTEE MEETINGS: October 15, 2019 - Tuesday - 7:00 PM - Planning Commission Meeting November 5, 2019 - Tuesday - 7:00 PM - Parks and Recreation Advisory Commission Meeting November 19, 2019 - Tuesday - 7:00 PM - Planning Commission Meeting November 20, 2019 - Wednesday - 7:00 PM - Public Works Commission Meeting December 3, 2019 - Tuesday - 7:00 PM - Parks and Recreation Advisory Commission Meeting December 9, 2019 - Tuesday - 7:00 PM - Planning Commission Meeting CITY OFFICES CLOSED FRIDAY-SUNDAY AND ON THE FOLLOWING DAYS: November 11, 2019 - Monday - Veteran's Day November 28, 2019 - Thursday, Thanksgiving Day December 25, 2019 - Wednesday - Christmas Day January 1, 2020 - Wednesday - New Year's Day (2020) Page 5 City of Hermosa Beach Printed on 10/1/2019 City of Hermosa Beach Staff Report City Hall 1315 Valley Drive Hermosa Beach, CA 90254 Staff Report REPORT 19-0644 Honorable Mayor and Members of the Hermosa Beach City Council Study Session of October 2, 2019 DRAFT COASTAL ZONE PARKING ASSESSMENT & RECOMMENDATIONS (Environmental Analyst Leeanne Singleton) Background: As part of the City of Hermosa Beach’s efforts to obtain a certified Local Coastal Program,the City obtained a grant from the California Coastal Commission to conduct technical studies and develop a draft Coastal Land Use Plan and Implementation Plan that cover a range of topics from sea level rise, overnight accommodations, and parking resources. Over the past 18 months,the City hired a technical consultant to assist in evaluating the City’s current parking resources and programs and evaluating opportunities to improve the availability of parking resources in the Coastal Zone in a manner that balances coastal access requirements with efficient use of the City’s limited land resources and achievement of the City’s economic development and mobility goals. Staff began conducting a series of stakeholder meetings over the last month,presenting the draft report to the stakeholder group and engaging their feedback.It is timely to bring these materials and the feedback from the stakeholder meetings to the City Council and the community to provide initial feedback and discussion. Study Session Agenda: The Study Session format will allow staff to cover the following elements of the Parking Assessment before diving into a discussion of the recommendations and relative priorities for implementation.The agenda for this topic includes: ·Study Purpose, Goals, & Process ·Inventory & Zone Characteristics ·Occupancy & Demand Analysis ·Recommendations & Best Practices ·Stakeholder Feedback ·Study Next Steps & Discussion City of Hermosa Beach Printed on 9/26/2019Page 1 of 2 powered by Legistar™ Staff Report REPORT 19-0644 Discussion Questions: To help frame the discussion, staff seeks input and feedback from the City Council and the community on the following questions: 1.Which of the strategies interest you most? 2.Do you have feedback or concerns about any of the recommendations? 3.Do you think we have missed any general areas of recommendations? 4.Do you agree with the relative priorities identified for near- and long-term solutions? 5.Do you have recommendations on best practices we should look at that you’ve seen in other communities that you think work well? Next Steps: In order to realize the goals of this study, a series of procedural steps is needed to implement the recommendations. A series of next steps is outlined below: ·Review/Approval of Study by Planning Commission and Council ·Updates to Local Coastal Program Reviewed by Planning Commission and Council ·Review by Coastal Commission ·Implementation of Strategies Attachments: 1.Coastal Zone Parking Assessment Draft Report 2.Coastal Zone Parking Assessment Summary Handout 3.Presentation Slides Respectfully Submitted by: Leeanne Singleton, AICP, Environmental Analyst Concur: Ken Robertson, Community Development Director Concur: Peter Ahlstrom, Community Services Division Manager Concur: Nico De Anda-Scaia, Assistant to the City Manager Legal Review: Mike Jenkins, City Attorney Approved: Suja Lowenthal, City Manager City of Hermosa Beach Printed on 9/26/2019Page 2 of 2 powered by Legistar™ 1 City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 2 Table of Contents TABLE OF CONTENTS ............................................................................................................................. 2 LIST OF FIGURES ..................................................................................................................................... 4 LIST OF TABLES ....................................................................................................................................... 4 1. INTRODUCTION ........................................................................................................................... 5 PURPOSE ...................................................................................................................................... 5 STUDY GOALS .............................................................................................................................. 6 RELEVANT PLANS ......................................................................................................................... 7 PROJECT PROCESS ..................................................................................................................... 8 2. EXISTING CONDITIONS & PARKING INVENTORY .................................................................... 10 STUDY AREA CHARACTERISTICS .............................................................................................. 10 PARKING DATA SOURCES ........................................................................................................ 10 ZONE DEVELOPMENT AND CHARACTERISTICS ...................................................................... 12 INVENTORY OF PARKING ......................................................................................................... 23 EXISTING PARKING MANAGEMENT PROGRAMS ................................................................... 24 Parking Fees .................................................................................................................... 24 Residential Parking Permit Program ............................................................................. 24 Daily Parking Permit Program ........................................................................................ 24 Employee Parking Permit Program ............................................................................... 24 Off-Street Parking Requirements ................................................................................. 25 3. PARKING OCCUPANCY ANALYSIS .......................................................................................... 27 OVERALL OCCUPANCY SUMMARY ........................................................................................ 27 OCCUPANCY BY ZONE ............................................................................................................ 28 OCCUPANCY BY ON AND OFF-STREET PARKING .................................................................. 31 On-Street Parking ............................................................................................................ 31 Off-Street Parking (Public and Private) ........................................................................ 32 OCCUPANCY BY SPACE TYPE ................................................................................................. 33 On-Street Parking ............................................................................................................ 35 Off-Street Parking (Public and Private) ........................................................................ 35 KEY TAKEAWAYS ........................................................................................................................ 36 4. PARKING DEMAND ANALYSIS .................................................................................................. 37 City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 3 PARKING DEMAND ANALYSIS .................................................................................................. 37 Code Requirements for Existing Non-Residential Uses ............................................... 38 Actual Built Parking Ratios ............................................................................................. 43 ANTICIPATED PEAK PARKING DEMAND.................................................................................. 44 ANTICIPATED SEASONAL PARKING DEMAND ........................................................................ 49 ANTICIPATED FUTURE PARKING DEMAND .............................................................................. 51 KEY TAKEAWAYS ........................................................................................................................ 52 5. RECOMMENDATIONS ............................................................................................................... 53 DEVELOPMENT OF RECOMMENDATIONS .............................................................................. 56 STRATEGICALLY INVEST IN INFORMATION AND TECHNOLOGY ........................................... 56 MAXIMIZE USE OF EXISTING PARKING SUPPLY ........................................................................ 61 IMPROVE MOBILITY OPTIONS TO REDUCE PARKING DEMAND ............................................ 63 SIMPLIFY AND LEVERAGE THE ZONING CODE ....................................................................... 65 ENHANCE PARKING ADMINISTRATION AND OPERATIONS ................................................... 68 PROVIDE ADDITIONAL PUBLIC PARKING AS NEEDED ........................................................... 74 APPENDIX A ......................................................................................................................................... 77 APPENDIX B ......................................................................................................................................... 78 APPENDIX C ......................................................................................................................................... 79 C.1 VICTORIA TRANSPORTATION POLICY INSTITUTE .............................................................. 79 C.2 PORTLAND, OR REDUCED PARKING FOR MIXED-USE AREAS PROVISION .................... 80 C.3 PETCO PARK AREA TRANSPORTATION STUDY ................................................................. 80 City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 4 List of Figures Figure 1.1 – Project Timeline ................................................................................................................ 8 Figure 2.1 – Study Area Map ............................................................................................................. 11 Figure 2.2 – Zone 1 Boundary Map .................................................................................................. 14 Figure 2.3 – Zone 2 Boundary Map .................................................................................................. 15 Figure 2.4 – Zone 3 Boundary Map .................................................................................................. 16 Figure 2.5 – Zone 4 Boundary Map .................................................................................................. 17 Figure 2.6 – Zone 5 Boundary Map .................................................................................................. 17 Figure 2.7 – Zone 6 Boundary Map .................................................................................................. 19 Figure 2.8 – Zone 7 Boundary Map .................................................................................................. 20 Figure 2.9 – Zone 8 Boundary Map .................................................................................................. 21 Figure 3.1 – On-Street Parking Occupancy by Zone ..................................................................... 32 Figure 3.2 – Off-Street Parking by Zone............................................................................................ 32 Figure 4.1 – Map of Observed Non-Residential Land Uses ........................................................... 42 List of Tables Table 2.1 – Zone Descriptions and Parking Types ........................................................................... 22 Table 2.2 – Coastal Zone Parking Space Inventory by Zone ........................................................ 23 Table 2.3 – Coastal Zone Parking Space Inventory ....................................................................... 23 Table 2.4 – Hermosa Beach Off-Street Parking Requirements ..................................................... 25 Table 3.1– Summary of Overall Occupancy per Zone .................................................................. 28 Table 4.1 – Non-Residential Parking Spaces Requi red by City Code ......................................... 39 Table 4.2 – Actual Built Parking Ratios for Non-Residential Land Uses ......................................... 43 Table 4.3 – Anticipated Peak Parking Demand Rates for Non-Residential Land Uses ............. 46 Table 4.4 – Non-Residential Parking Demand by Number of Parking Spaces ........................... 47 Table 4.5 – Anticipated Peak Parking Demand Ratios ................................................................. 49 Table 4.6 – Seasonal Parking Demand ............................................................................................ 50 Table 5.1 – Recommendations ......................................................................................................... 53 Table 5.2 – Recommendations Matrix ............................................................................................. 55 City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 5 1. Introduction A sunny small beach city of 1.4 square miles, Hermosa Beach sits at the center of Los Angeles County’s South Bay coastline along the Santa Monica Bay. The town is the very essence of the Southern California lifestyle, with an average of 283 sunny days per year and nighttime temperatures that rarely dip below 50 degrees. With two miles of sandy beach shoreline, Hermosa attracts more than a million visitors to the beach each year. The small -town charm of Hermosa Beach is highlighted in commercial areas like Pier Avenue, well known for its many diverse restaurants and local retailers. There are architecturally diverse residences on the Strand, bungalows scattered throughout the town, and multi-level homes with ocean views. Outdoor activities such as beach volleyball, surfing, skateboarding, and biking are quintessential to the Hermosa Beach culture. Other favorite activities include jogging or walking along the Greenbelt or the Strand, the paved path paralleling the beach and connecting Hermosa Beach to cities up and down the Santa Monica Bay coastline. This lively beach city is also well known for its entertainment offerings including live music from rock to blues to jazz. Festivals, special events, and summer concerts occur throughout the year. The three-day weekends of Memorial Day and Labor Day bring thousands of visitors to the Fiesta Hermosa street fair, which has been a tradition for many years, features hundreds of crafters and artists and live bands. Home to nearly 20,000 residents, Hermosa Beach is within a short commute of many of the largest and best-known names in corporate America in the aerospace, tech, industrial, service and financial fields. The Hermosa Beach City School District, consistently recognized as a California Distinguished School, offers a high-quality education to students in kindergarten through eighth grade, while high schoolers attend Mira Costa or Redondo Union High Schools. The City of Hermosa Beach has recently completed a planning process to define the community’s vision for the future of the City. Elements of the community vision have identified the need for increased management of the City’s parking resources within the Hermosa Beach Coastal Zone. This technical report summarizes the findings of a parking management study conducted for both public and private parking within the Coastal Zone and provides associated recommendations for refining parking standards in the study area. Purpose The evaluation of parking within the Coastal Zone is primarily based on comparing existing parking inventory to both parking occupancy and demand, which ultimately inform specific recommendations based upon the analysis to achieve optimal utilization levels of parking resources. To this end, this report considers the goals and objectives from previous Hermosa Beach plans and studies, industry standards, and best practices that form foundational recommendations that the City of Hermosa Beach can implement to balance the parking needs for residents, visitors, and employees alike. This report is intended to provide additional parking analysis and related parking management strategies to satisfy the requirements set forth in the California Coastal Act. The study evaluates future parking availability and demand, based on the previously completed City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 6 parking utilization study (City of Hermosa Beach, Beach Access and Parking Study, January 2015), and with proposed parking strategies from the Downtown Core Revitalization Strategy, the City Facilities Master Plan, and the effect of parking policies and multimodal enhancements proposed within PLAN Hermosa. This study includes a review of the City’s current parking standards for various uses, identifies peak use times, and collects data from businesses to determine existing parking availability and demand. This study will form the basis to establish and/or revise parking standards and recommend adjustments to residential and employee parking permit and fee programs within the Coastal Zone to balance coastal access with efficient use of the City’s limited land resources and achievement of the City’s economic development and mobility goals. The results of this study includes recommended parking standards and/or fee rates for various uses within the Coastal Zone and specifically the Downtown Core. This study has four main sections: 1. Existing Conditions & Parking Inventory – this section documents the characteristics of the study area, the inventory of parking within the study area, and the City’s existing parking code requirements and programs to manage parking within the Coastal Zone. 2. Parking Occupancy Analysis – –This section also provides a detailed description of occupancy (utilization) counts by both zone and type, and by time of day and week. 3. Parking Demand Analysis – compares the occupancy rates to existing City parking code, peer city parking rates, and industry standard rates to determine the appropriateness of current minimum parking requirements. The purpose of this analysis was to assist in determining how to optimize parking within the study area for each of the defined zones. 4. Recommendations – The results of the inventory, occupancy, and demand analyses ultimately drive the Recommendations, and are aligned with the goals and objectives from PLAN Hermosa, the Beach Access and Parking Study, and the Downtown Core Revitalization Strategy. The recommendations made in this report draw from best practices by peer cities and industry-wide standards as guidance, and have been tailored to address the unique features of Hermosa Beach’s infrastructure, character, and geography. Study Goals The goals and objectives of this study were developed based on the current goals and objectives found in PLAN Hermosa and the Downtown Core Revitalization Strategy. Establishing these goals provides a guide for the recommendations in Section 6 that will focus and streamline the approach necessary to improve the parking within the City’s Coastal Zone: 1. Create a parking system that meets the parking needs and demands of residents, visitors, and employees in an efficient and cost-effective manner. This goal is established in the Mobility chapter of PLAN Hermosa. The goal in PLAN Hermosa is accompanied with numerous actionable parking-related objectives, which were incorporated into the recommendations section of this report. 2. Modify parking standards to encourage revitalization and investment in a pedestrian- oriented district. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 7 This goal is a summarization of a critical parking strategy found in the Hermosa Beach Downtown Core Revitalization Plan. While Hermosa Beach looks to relieve its parking congestion, the City is focused on assuring that its small-scale, pedestrian-oriented character is not hindered by parking standards that are more appropriate for suburban auto-oriented areas or require ground floors to be dominated by parking due to smaller lot sizes. 3. Expand mobility options and optimize parking availability. The analysis of the inventory, occupancy, and anticipated demand for parking demonstrate that parking challenges vary by area, time, and type and a nuanced approach to optimizing the availability of parking will be required. In some cases, increasing parking supply may not be the most effective method, and instead implementing a park-once strategy, expanding safe and convenient mobility options, or implementing shared parking agreements between uses with different peak periods could help to improve availability of parking. Most recommendations presented in this report use strategic parking management methods to achieve this goal. Some strategies to reduce demand include maximizing the use of the existing parking supply to better distribute demand, strategically investing in information and technology, and improving mobility options. Relevant Plans Over the past three years the City has initiated several important and forward-thinking planning processes to define the community vision for the future of Hermosa Beach. The City of Hermosa Beach has adopted numerous planning documents that were used to guide the development of this report. These previous plans include: • PLAN Hermosa (2017) • The City of Hermosa Beach: Beach Access and Parking Study (2015) by Fehr & Peers • The City of Hermosa Beach Downtown Core Revitalization Strategy (2015) by ROMA Design Group City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 8 These three documents are outlined in greater detail below. PLAN Hermosa (2017) – The City of Hermosa Beach has recently completed a multi-faceted process to vision the future of the community by integrating the General Plan and Local Coastal Program into PLAN Hermosa, adopted in August 2017. The City is ensuring a comprehensive review of the community’s needs through outreach with its residents to discuss needs and continued development opportunities. Using community input as the backbone for planning updates, the City is conducting various technical studies to complete and certify their Local Coastal Program (LCP). The LCP identified multiple initiatives including sea level rise, affordable accommodations, and parking management to better serve residents, employees, and visitors of Hermosa Beach. PLAN Hermosa’s Mobility section recognizes that the City is continuing to attract higher numbers of visitors from surrounding areas with diverse and changing mobility demands. Beach Access and Parking Study (2015) - In an effort to evaluate the existing conditions of parking management, the Beach Access and Parking Study was prepared for the Coastal Zone. The study notes that an appropriate quantity of well-managed automobile parking is necessary for the success of the City’s businesses and for the quality of life of its car-owning residents. The study also found that efficient management of parking can help provide sufficient space for vehicles while also encouraging more effective use of existing facilities to reduce the impact of parking facilities and reduce automobile use. Downtown Core Revitalization Strategy (2015) - In February of 2015, the Hermosa Beach City Council accepted the Hermosa Beach Downtown Core Revitalization Strategy, a guiding document to improve upon the pedestrian-oriented area, referred to as the “Downtown Core.” The study defined the Downtown Core as the area from the Strand to Hermosa Avenue between 14th Street and 10th Street, as well as along Pier Avenue from the Pier east to Valley Drive. The objective of this plan was to create a strategy that maintains the small-town feel of the downtown, while creating opportunities for revitalization and reinvestment in the City core for the future. The plan’s Parking Strategy contains parking and land use elements which ultimately guided this study’s goals, objectives, and final recommendations. Project Process Below is a flowchart (Figure 2.10) of the Hermosa Beach Parking Management Study and Recommendations. This flowchart details the key milestones of this effort from project inception to this technical report. Figure 1.1 – Project Timeline City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 9 City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 10 2. Existing Conditions & Parking Inventory The City of Hermosa Beach has substantial commercial, retail, restaurant, and other non-residential uses that create a unique mix of parking demand due to the distinct character of the community and walkability of the downtown core. Study Area Characteristics The Coastal Zone of Hermosa Beach represents approximately 43% of the City’s land area and includes two miles of sandy shoreline, the City’s downtown core of commercial activity, the civic center area, neighborhood commercial establishments, and a mix of residential land uses including single-family homes, small multi-unit complexes, mobile homes, and larger multi- family apartment complexes. Most of the area land uses and properties were initially developed from 1900 through the 1960s and there is limited undeveloped land area with the exception of the City’s network of parks and open spaces. The majority of public parking within the Coastal Zone in Hermosa Beach is provided through on-street parking within or adjacent to residential uses, with additional on and off-street metered parking provided in the commercial core, and a number of remote parking areas available at no cost at City facilities, parks, and recreational facilities. Parking Data Sources The initial Beach Access and Parking Study 1 prepare in 2015 divided the Coastal Zone into three subzones of analysis: northern residential use, central commercial use, and southern residential use. In order to provide a more detailed evaluation of parking needs within the Coastal Zone, those subzones were redefined as part of this parking study into eight zones to generally reflect the relationship between the existing parking network and the PLAN Hermosa character areas. Rather than following the exact boundaries of the PLAN Hermosa character areas, divisions between zones was often dependent on whether the zone provided metered or non- metered parking. Dividing the zones in this manner provides the opportunity to develop recommendations that are more specifically tailored based on the types of parking present in each zone. Figure 2.1 illustrates the resultant zones used in this study. For reference, a map of the delineated zones overlaid on the City’s Coastal Zone character areas can be found in Appendix A. 1 Image Source: Beach Access Parking Study, Fehr & Peers (2015) City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 11 Figure 2.1 – Study Area Map City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 12 All data as part of this study was obtained from previous parking study efforts and other sources directly from the City. Parking occupancy within each zone was based on existing data provided by the City from two sources. Public parking data was obtained from the Beach Access and Parking Study. Parking supply and occupancy data was collected from the City for all public on-street and public off-street parking in the Coastal Zone. Public on- street parking counts were conducted for the entirety of the Coastal Zone. Public off-street parking counts were collected in Hermosa Beach Public Lot A, Lot B, and Lot C. All three public lots are located in Zone 5: Walk Street – Downtown west of Hermosa Avenue from 11th Street to 14th Street. Lots A and B provide surface parking; Lot C is a three story-parking structure. Public parking occupancy counts were collected during three time periods in August of 2014: a Tuesday afternoon (2:00 pm – 3:00 pm), a Tuesday evening (7:00 pm – 8:00 pm), and a Saturday afternoon (2:00 pm – 3:00 pm). Afternoon observation times were intended to capture the peak beach visitation period, and the evening time were intended to capture the peak weekday evening restaurant dinner hour. While this data was initially collected in 2014, we believe that the overall inventory and occupancy conditions remain relevant today. Private off-street parking data for the Coastal Zone was collected separately in 2017, as part of a City-led inventory and occupancy count. While every private lot was inventoried, observed data included only select properties with 15 or more parking spaces given their potential for shared use opportunities. Parking occupancy counts were collected during six time periods: a weekday morning, weekday afternoon, weekday evening, weekday night, weekend afternoon, and weekend evening. For consistency, only the three time periods that aligned with the public occupancy counts were chosen for analysis. Therefore, the data utilized for the purposes of this study included the occupancy observed during the weekday afternoon, weekday evening, and weekend afternoon. No assumptions were made for properties that were not observed for occupancy. Zone Development and Characteristics Data on parking inventory, occupancy, and anticipated demand is aggregated at the zonal level, meaning everything within a zone is treated equally. For example, if occupancy within the northern area of a given zone is higher than occupancy in the southern area of the same zone, the analysis would reflect the aggregate of the entire zone. Therefore, any recommendations tied to that particular zone will address overall trends but will not reflect issues on a block-by-block basis. Data for each of the zones was obtained from the City and was grouped and subsequently analyzed as follows: • Off-Street (Public and Private) Parking Total Inventory and Occupancy • On-Street (Public) Parking Metered Yellow Meters Non-Yellow Meters Non-Metered Within the Preferential Parking Zone Outside of the Preferential Parking Zone City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 13 For consistency with the City’s defined character areas, the naming convention for the eight zones are as follows: Zone 1: Walk Street – North End Zone 2: North End East Zone 3: Walk Street – Sand Section North Zone 4: Sand Section – Valley Zone 5: Walk Street – Downtown Zone 6: Sand Section – Civic Center Zone 7: Walk Street – Sand Section – Herondo Zone 8: Sand Section – Cypress Figures 2.2 through 2.9 illustrate each zone in greater detail. Following the figures outlining the boundaries of each zone, Table 2.1 provides a full description of the eight zones based upon the City’s character areas, types of parking spaces available, and status as either public or private. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 14 Figure 2.2 – Zone 1 Boundary Map City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 15 Figure 2.3 – Zone 2 Boundary Map City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 16 Figure 2.4 – Zone 3 Boundary Map City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 17 Figure 2.5 – Zone 4 Boundary Map Figure 2.6 – Zone 5 Boundary Map City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 18 City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 19 Figure 2.7 – Zone 6 Boundary Map City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 20 Figure 2.8 – Zone 7 Boundary Map City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 21 Figure 2.9 – Zone 8 Boundary Map City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 22 Table 2.1 – Zone Descriptions and Parking Types City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 23 Inventory of Parking Parking inventory for the Coastal Zone is summarized in Table 2.2 (by zone) and Table 2.3 (overall) On-street public parking in the Coastal Zone (all eight zones) consists of a total of 3,837 spaces, while the total off-street parking analyzed for this study includes 869 spaces, 521 of which are City-owned public spaces, and the remaining 348 being privately-owned. Parking within privately-owned lots was included only if the lot included 15 parking spaces or more. Zones 5, 6, and 8 were the only zones with private off-street parking that met that threshold. Table 2.2 – Coastal Zone Parking Space Inventory by Zone Zone Total Inventoried Spaces On-Street Off-Street Total Public Private Zone 1 Walk Street – North End 281 0 0 281 Zone 2 North End East 518 0 0 518 Zone 3 Walk Street – Sand Section North 493 0 0 493 Zone 4 Sand Section – Valley 738 0 0 738 Zone 5 Walk Street – Downtown 513 521 119 1,153 Zone 6 Sand Section – Civic Center 533 0 135 668 Zone 7 Walk Street – Sand Section – Herondo 543 0 0 543 Zone 8 Sand Section - Cypress 218 0 94 312 Total 3,837 521 348 4,706 Table 2.3 – Coastal Zone Parking Space Inventory Parking Type Total Inventoried Spaces On-Street Preferential Yellow Metered 1,155 Preferential Silver Metered 327 Preferential Non-Metered 1,662 Non-Preferential Yellow Metered 20 Non-Preferential Non-Metered 673 Total 3,837 Public Off-Street (City-Owned) Lot A 130 Lot B 37 Lot C 354 Total 521 Private Off-Street Total 348 Overall Total 4,706 City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 24 Existing Parking Management Programs Management of the City’s parking resources has long been a policy priority in Hermosa Beach given the built-out nature of the community and the popularity of the city as a destination for visitors, beachgoers, and nearby residents. Over the years, a number of different parking management programs have been implemented to manage the limited parking resources of Hermosa Beach. These programs are described briefly below. Parking Fees Within the Coastal Zone, Hermosa Beach maintains a supply of on-street metered or lot/structure pay-by-space parking in the two blocks nearest to the beach throughout the coastal zone. The hourly meter/lot rates cost $1.25 per hour, with meters/lot rates in the commercial core increasing to $1.50 per hour from 8 PM to 2 AM daily. Yellow post meters maintain a rate of $1.25 per hour throughout the day. Residential Parking Permit Program In 1984, the City of Hermosa Beach applied for and was granted permission by the California Coastal Commission to establish a preferential parking permit program in conjunction with remote beach parking locations and a park and ride shuttle system. The preferential parking permit program was developed to discourage oversaturation of the City’s downtown and coastal parking, to provide free long-term parking at inland locations, and to allow residents within the impacted area to park beyond the one-hour time restrictions or without having to pay the meter at yellow pole/cap meters. The impacted area is bound by the North and South City boundaries; by the Strand on the West; by Loma Drive, Park Avenue, or Morningside Drive on the East. Parking spaces on the West side of Cypress Avenue between 11th Street and Pier Avenue are also included. Residential parking permits are issued on an annual basis and cost $40 annually. Vehicle permits are available at a rate of one non-transferrable sticker per vehicle registered to an address (no limit on number of vehicles), and one transferrable hang tag guest pass per legal address. As part of the program, a property owner not residing at the address may also obtain one pass per address and residents within the impacted area may purchase one-day event permits at a rate of $1 for event permits one through five and no charge for permits six through twenty. Daily Parking Permit Program As part of the residential parking permit program, the City is required to make daily parking permit passes available to non-residents or those that live outside of the impacted area that allow them to park at yellow pole/cap meters or beyond the one-hour time restrictions at non- metered locations. Per the City’s Coastal Development Permit for the Residential Parking Permit Program, the maximum daily fee for this permit is $5 and is valid from 8 am to 5 pm. Employee Parking Permit Program For those who work in Hermosa Beach and do not have parking available through their employer, monthly and annual parking passes are available. These permits are available to anyone and monthly permits are available for off-street parking lots/structures at a cost of: • $62 per month to park anytime up to 72 hrs • $31 per month to park only between 5am to 7pm daily City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 25 Employee permits are also available to purchase that allow employees to park at on-street spaces with yellow pole/cap meters and in the unmetered, but one-hour time restricted areas at an annual cost of $143 (pro-rated to $71.50 on September 1st). Off-Street Parking Requirements The current parking requirements for land uses within the Coastal Zone are defined within Title 17 of the Hermosa Beach Municipal Code. Chapter 17.44 includes off-street parking requirements for residential uses, commercial and business uses, downtown district uses, mixed-uses, and common parking facilities, among other requirements for space sizes, tandem parking, and maintenance of parking areas. Table 2.4 below details parking requirements for land uses from Title 17 of the Hermosa Beach Municipal Code. Table 2.4 – Hermosa Beach Off-Street Parking Requirements Land Use Parking Requirement Commercial Uses Retail 1 space per 250 square feet of GFA2 Offices, general 1 space per 250 square feet of GFA Offices, medical 1 space per 1,000 square feet of GFA Restaurants 1 space per 100 square feet of GFA Fast Food 1 space per 50 square feet of GFA Assembly 1 space per 50 square feet of GFA Service / Repair 1 space per 1,000 square feet of GFA Light Manufacturing 1 space per 300 square feet of GFA Warehousing / Storage 1 space per 1,000 square feet of GFA Commercial Uses in the Downtown District3 Retail 1 space per 333 square feet of GFA Offices, general 1 space per 333 square feet of GFA Offices, medical 1 space per 333 square feet of GFA In Hermosa Beach, common parking facilities may be provided to wholly or partially satisfy the off-street parking requirements of two or more uses when one or more of such uses will only infrequently generate use of such parking area at times when it will ordinarily be needed by the patrons or employees of the other use(s). Multiple-use parking areas are allowed through a Parking Plan approved by the Planning Commission. Hermosa Beach allows parking in-lieu fees for uses in the Downtown District. Building sites with a building floor area to building site of one to one or less may pay an “in-lieu” fee for all required spaces. Otherwise, building sites shall be required to provide a minimum of 25% percent of the required parking on-site. 2 GFA: Gross Floor Area City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 26 Hermosa Beach also allows off-site parking allowable by code up to 300 feet from the use for which the spaces are provided. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 27 3. Parking Occupancy Analysis The parking occupancy analysis paints a detailed picture of how public on-street, public off-street, and private off-street parking is utilized in the Coastal Zone. The following terms are used when discussing parking occupancy. • Occupancy: The number of cars parked in a specific area, lot, or blockface 4 during one period of observation. It is often expressed as the percentage of the total supply of spaces that is occupied by parked cars. • Peak: The time period associated with the highest observed level of occupancy in a specific area or parking facility. • Optimal Capacity: The occupancy level or number of vehicles that can be parked in a facility or area before it becomes difficult for a driver to find a space without having to circle or “cruise” for parking. Optimal capacity is typically set at an 85% occupancy level.5 For on-street parking this equates to roughly one vacant space per blockface. • Space Type: Space type is defined as the main characteristic given to a parking space based upon meter or curb type (i.e. green, silver, yellow etc.) This report presents the findings from this data collection effort in three sections: • Overall occupancy summary • Occupancy by zone • Occupancy by on or off-street parking • Occupancy levels by space type. • Occupancy findings Overall Occupancy Summary The following discussion presents overall occupancy trends for public on- and off- street parking, as well as private off-street parking during these three distinct times of day or week. Note that occupancy data was collected during the summer period in order to represent a typical peak season within the Coastal Zone of Hermosa Beach. A summary of the occupancy rates by zone and on or off-street parking is provided in Table 3.1. 4 A blockface is one side of a street between two consecutive features intersecting that street. 5 An on-street parking occupancy of 85% has been demonstrated by parking experts, most notably by Donald Shoup of UCLA, as the benchmark for the practical or optimal capacity of on-street parking. At 85% occupancy, approximately one available space is expected per block, thus limiting the cruising phenomenon and generally assuring the availability of a space. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 28 Table 3.1– Summary of Overall Occupancy per Zone Zone On-Street Parking Types Off-Street Parking Types Observed On-Street Occupancy Observed Off-Street Occupancy Metered Non- metered: Preferential Zone Non-metered: Non- Preferential Zone Public Private Weekday Afternoon Weekday Evening Weekend Afternoon Weekday Afternoon Weekday Evening Weekend Afternoon Zone 1 ✔ 61% 66% 91% N/A N/A N/A Zone 2 ✔ ✔ 53% 62% 82% N/A N/A N/A Zone 3 ✔ 69% 73% 88% N/A N/A N/A Zone 4 ✔ ✔ 47% 62% 83% N/A N/A N/A Zone 5 ✔ ✔ ✔ 77% 84% 94% Public: 89% Private: 10% Public: 78% Private: 3% Public: 86% Private: 16% Zone 6 ✔ ✔ ✔ ✔ 75% 68% 77% Private: 64% Private: 30% Private: 21% Zone 7 ✔ 63% 79% 97% N/A N/A N/A Zone 8 ✔ ✔ ✔ ✔ 66% 86% 100% Private: 46% Private: 45% Private: 95% Occupancy by Zone This section serves as a summary of the study’s findings by zone. Previous sections have detailed figures based upon parking type, while this section provides findings to better show general trends per zone. Table 3.5 summarizes the previous section and highlights the overall occupancy observed for both on-street and off-street parking along with space types found in each zone. Given the study’s findings for the three data collection times, the weekend afternoon tends to have a higher occupancy rate than weekday afternoon and weekday evening. Zone 5 (Walk Street – Downtown), Zone 7 (Walk Street – Sand Section – Herondo), and Zone 8 (Sand Section – Cypress) exceed optimal occupancy during the weekend afternoon time period for both on- street and off-street parking. In general, Zones 1 through 4 have lower occupancy than Zones 5 through 8 for all observed times. This can potentially be explained due to the higher rate of beachgoers in the summer months who prefer to park closer to the beach. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 29 Zone 1: Walk Street – North End Zone 1 represents the northwest parking zone in Hermosa Beach. This zone consists of high- density residential east of Hermosa Avenue, and low-density residential on the Strand. There are a few commercial/retail uses on Manhattan near Longfellow Avenue such as Boccato’s Groceries. This zone is characterized primarily by yellow-metered parking at over 87% occupancy. The remaining parking inventory in this zone is either unmetered or green. Parking in this zone on weekdays in relatively constant, at around 60% occupancy overall, but upticks above 90% occupancy for the weekend afternoon time period. Relatively constant occupancy with an uptick during the weekend afternoon can be explained because the area is primarily residential with beachfront access. Zone 2: North End East Zone 2 represents the northeast corner of the Coastal Zone and the eastern portion of the North End Character Area. The zone consists of mainly medium-density residential, with low- density residential to the south east along Gould Avenue. There are also a few commercial/retail land uses on Manhattan Avenue split by 33rd Place. This area is split roughly in half for parking within and outside of the preferential parking district. Although parking occupancy rose nearly 30% from a weekday afternoon to a weekend afternoon, all three observation times showed occupancy under optimal capacity. Due to the primarily residential nature of this zone and that it is further from the beach, change in parking occupancy between weekday and weekend is not expected. Zone 3: Walk Street – Sand Section North Zone 3 represents the zone just north of downtown adjacent to the beach. This area is primarily zoned medium-density residential with low-density along the Strand and Manhattan Avenue to the north. There are two commercial hubs at Greenwich Village and Palm Drive, as well as the west side of Hermosa Avenue at 22nd Street. This zone contains mainly yellow-metered parking, but also has silver-metered and unmetered parking, as well as green and handicapped spaces. According to the three observation times, there is a steady rise in occupancy from the weekday afternoon, to a weekday evening, then weekend afternoon. Both yellow- and silver-metered parking reach over optimal capacity during the weekend afternoon. Similar to Zone 1, this rise in parking occupancy is likely attributed to its close proximity to the beach. Zone 4: Sand Section – Valley Zone 4 is just east of Zone 3 and south of the North End Character Area. This area is primarily zoned low-density residential with medium-density residential to the north and south. This zone also includes Valley Park and a portion of Hermosa Valley School to the northeast and southeast, respectively. This zone consists primarily of preferential parking, occupied at 81%, and is the zone with the highest number of parking spaces in total. As such, this zone did not reach optimal capacity during any of the three observation times. Furthermore, this was the only zone that produced overall occupancy rates of less than 50% during any of the three times. Due to the primarily City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 30 residential nature of this zone and that it is further away from the beach, any changes in occupancy between the time periods are nominal. Zone 5: Walk Street – Downtown Zone 5 represents a large portion of the Downtown Core of Hermosa Beach. Most of the area is zoned recreational west of Hermosa Avenue and community east of Hermosa Avenue. High and medium-density residential uses are located to the north and northeast, as well as to the south and southeast. The Hermosa Beach Pier is located west of this zone. Zone 5 consists of yellow and silver meters, unmetered parking, and a small portion of other parking types such as green, handicapped, and reserved. This zone contains more silver- metered parking (48% of zone) than yellow-metered parking (30% of zone). Yellow-metered parking occupancy was measured above optimal capacity at all observation times. On- street occupancy was above 90% for metered and unmetered spaces during the weekend afternoon. As the commercial center of Hermosa Beach, higher occupancies are expected. This same occupancy trend is prevalent for off-street parking in Zone 5 as well, as the occupancy for the 521 observed spaces was above optimal capacity for two of the three observation times. Observed private parking occupancy was measured to be fairly low at all three times, reaching no greater than 16%. The sample size is relatively small compared to the entirety of private parking in Zone 5. A number of factors could have contributed to the low figure for private parking occupancy, such as no show being playing at the Comedy & Magic Club during the three selected time periods. The club was one of two private parking lots counted for analysis in Zone 5. Zone 6: Sand Section – Civic Center Zone 6 is situated just east of the Downtown Core. It is characterized as mainly high-density residential, with community and public facility uses adjacent to Pier Avenue. The zone also includes uses such as the Marineland Mobile Home Park, and a portion of Hermosa Valley School to the northeast. Similar to Zone 2, on-street optimal capacity was not reached during any of the three observation times in Zone 6. In addition, Zone 6 was the only zone to not exceed 80% capacity. Parking in this zone is largely in the preferential parking district, with just under 100 more spaces than in the non-preferential parking area. The low parking occupancy could be attributable to the area being primarily residential, combined with a higher number of off-street spaces to account for the Civic Center, City Hall, and shops along Pier Avenue. Zone 6 had the most off-street private parking spaces observed. Occupancy for off-street parking in this zone was highest at 64% during the weekday afternoon. The weekday evening and weekend afternoon times did not reach above 30% occupancy. Zone 7: Walk Street – Sand Section – Herondo Zone 7 represents the southwest parking zone in Hermosa Beach, and extends across the City’s southern boundary. The zone is primarily high-density residential, with a few commercial parcels along Hermosa Avenue south of 3rd Street. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 31 Parking types in this zone consist primarily of yellow-metered spaces at 80%, with 20 of the total 437 yellow meters outside of the preferential parking district. Zone 7 experienced the second highest occupancy rate of any zone for the weekend afternoon time period at 97%. Yellow- metered and unmetered parking in this zone have noticeably higher occupancy rates than silver-metered parking. The high rate of occupancy can be attributed to lack of sufficient parking spaces for visitors in the residential area combined with visitors from the adjacent Redondo Beach. Zone 8: Sand Section – Cypress Zone 8 is located east of Zone 7 and north of 2nd Street. Zone 8 consists primarily of light manufacturing uses within the northeast portion of the zone, and a combination of high- density and medium-density residential spread throughout. Zone 8 provides the lowest number of parking spaces and the highest occupancy rate at 100%. In addition, Zone 8 is the only zone that reaches above optimal capacity during the weekday evening. High occupancy is likely due to a greater number of 24-hour spaces in combination with demand generated from South Park. Private parking in this zone is generally higher than private parking observed in other zones. Zone 8 measured 95% occupancy during the weekend afternoon for private parking, which is the only private parking rate observed to be above optimal capacity during any of the three observation times for this zone. Occupancy by On and Off-Street Parking On-Street Parking In general, all odd numbered zones, or zones that border the beach experience higher levels of parking occupancy than zones further away from the beach, which is expected due to a high rate of beachgoers during summer months. In all zones, peak occupancy occurred during the weekend afternoon. In particular, weekend afternoon occupancy rates exceeded optimal capacity in the following zones: • Zone 1: Walk Street – North End (average occupancy of 91%); • Zone 3: Walk Street – Sand Section North (average occupancy of 88%); • Zone 5: Walk Street – Downtown (average occupancy of 94%); • Zone 7: Walk Street – Sand Section – Herondo (average occupancy of 97%), and • Zone 8: Sand Section – Cypress (average occupancy of 100%). Weekday evening occupancy only exceeded optimal capacity in Zone 8 (Sand Section – Cypress, occupancy of 86%). All zones, except Zone 6 (Sand Section – Civic Center), experienced the lowest levels of occupancy during the weekday afternoon (average occupancy of 62%). The highest peak, measured in Zone 8 (Sand Section – Cypress), reached nearly 100% occupancy during the weekend afternoon. While not every spot was occupied in this zone, some segments registered higher occupancy than the available supply due to parking in non- designated parking spaces. For instance, some on-street segments that restricted parking entirely still registered one parked car (i.e. east side of Manhattan Avenue from 6th Street to 8th Street.) Zone 1 (Walk Street – North End), Zone 3 (Walk Street – Sand Section North), Zone 5 City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 32 (Walk Street – Downtown), and Zone 7 (Walk Street – Sand Section – Herondo) saw peaks in occupancy above 90% during the weekend afternoon. Zone 5 (Walk Street – Downtown) and Zone 8 (Sand Section – Cypress) saw peaks in occupancy above 80% for weekday evening. Zone 5 (Walk Street – Downtown) and Zone 6 (Sand Section – Civic Center) saw peaks in occupancy above 70% for weekday afternoon. Figure 3.1 – On-Street Parking Occupancy by Zone Off-Street Parking (Public and Private) Specific parking lots and structures in Zone 5 (Walk Street – Downtown), Zone 6 (Sand Section – Civic Center), and Zone 8 (Sand Section – Cypress) were observed for off-street parking occupancy. Zone 5 (Walk Street – Downtown) is the only zone where public, city-owned off- street parking is provided, consisting of Lots A, B, and C. For these three public lots, average occupancy among the three observation times are fairly consistent ranging, between 78% and 89%. The lowest occupancy observed was 78% during the weekday evening, suggesting that the public lots have availability while being generally well-utilized. Private off-street parking in Zone 5 (Walk Street – Downtown) registered relatively low (less than 16% at peak) occupancy for the two sites counted. One site, at 1301 Manhattan Avenue, serves an office/commercial use that is relatively new and the other is the Comedy & Magic Club which serves as an assembly use. Both uses show high parking availability compared to surrounding uses in the Downtown Core, which may have contributed to the low parking occupancy observed in a typically dense zone. Zone 6 (Sand Section – Civic Center) exhibited a peak of 64% occupied of off-street private parking during the weekday afternoon, where Zone 8 (Sand Section – Cypress) showed a peak of 95% occupied during the weekend afternoon. The total observed off-street parking, regardless of zone, registered a peak of 78% occupancy. Figure 3.2 – Off-Street Parking by Zone City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 33 Occupancy by Space Type Table 3.3 presents the on-street occupancy rates by parking and post type for the following zones: • Zone 1: Walk Street – North End; • Zone 3: Walk Street – Sand Section North; • Zone 5: Walk Street – Downtown; and • Zone 7: Walk Street – Sand Section – Herondo. On-street occupancy rates were classified by the preferential zone designation in the following zones: • Zone 2: North End East; • Zone 4: Sand Section – Valley; • Zone 6: Sand Section – Civic Center; and • Zone 8: Sand Section – Cypress. As shown in the table, the total of on-street parking inventory as well as total occupancy per time period by zone, and an overall occupancy rate of all on-street parking spots is provided. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 34 Table 3.2 – On-Street Occupancy On-Street Parking Type Inventory Occupancy Weekday Afternoon Weekday Evening Weekend Afternoon Zone 1: Walk Street – North End Yellow Meter 246 62% 64% 91%6 Silver Meter 0 0% 0% 0% Green 3 0% 67% 33% Unmetered 32 63% 81% 94% Total 281 61% 66% 91% Zone 2: North End East Preferential Zone 304 49% 59% 82% Non-Preferential Zone 214 58% 67% 81% Total 518 53% 62% 82% Zone 3: Walk Street – Sand Section North Yellow Meter 337 75% 75% 91% Silver Meter 40 68% 55% 95% Unmetered 96 57% 83% 84% Green 6 67% 67% 83% Handicap 8 13% 0% 13% Unidentified 6 0% 0% 0% Total 493 69% 73% 88% Zone 4: Sand Section – Valley Preferential Zone 600 45% 59% 83% Non-Preferential Zone 138 56% 74% 82% Total 738 47% 62% 83% Zone 5: Walk Street – Downtown Yellow Meter 155 88% 95% 98% Silver Meter 247 73% 80% 94% Unmetered 61 82% 90% 97% Green 22 41% 32% 68% Handicap 5 40% 80% 80% Other 23 65% 83% 78% Total 513 77% 84% 94% Zone 6: Sand Section – Civic Center Preferential Zone 306 77% 76% 78% Non-Preferential Zone 227 72% 57% 76% Total 533 75% 68% 77% Zone 7: Walk Street – Sand Section – Herondo Yellow Meter (Preferential) 417 69% 81% 98% Silver Meter 40 48% 58% 78% Unmetered 56 48% 95% 102% Green 7 29% 43% 100% Handicap 1 0% 0% 0% Yellow Meter (Non-Pref.) 20 30% 65% 100% Loading (Non-Pref.) 2 0% 0% 0% Total 543 63% 79% 97% 6 All percentages in bold have measured to reach at or above optimal capacity (85%) City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 35 On-Street Parking Type Inventory Occupancy Weekday Afternoon Weekday Evening Weekend Afternoon Zone 8: Sand Section – Cypress Preferential Zone 126 60% 96% 102% Non-Preferential Zone 92 73% 73% 96% Total 218 66% 86% 100% Overall Total 3,837 63% 71% 87% On-Street Parking Overall occupancy during the weekend afternoon, regardless of parking type, yielded consistent levels of occupancy greater than the optimal capacity of 85 percent. Yellow- metered parking occupancy reached levels above 90% during the weekend afternoon. Unmetered parking occupancy reached levels at or above 94% during the weekend afternoon in: • Zone 1: Walk Street – North End; • Zone 5: Walk Street – Downtown; and • Zone 7: Walk Street – Sand Section – Herondo. Silver-metered parking reached over 85 percent optimal capacity in: • Zone 3: Walk Street – Sand Section North; and • Zone 5: Walk Street – Downtown. Zone 8 (Sand Section – Cypress) is the only zone that does not border the beach to register levels greater than optimal capacity. In total, all on-street parking experienced occupancy levels just above optimal capacity for the weekend afternoon (87%). Off-Street Parking (Public and Private) Parking occupancy reached optimal capacity twice in the three public lots, during the weekday afternoon and the weekend afternoon, at 89% and 86% respectively. Zone 8 (Sand Section – Cypress) experiences a very high occupancy rate during the weekend afternoon for its private off-street parking at 95%. Overall off-street parking, in total, did not reach optimal capacity for any of the three surveyed times. Table 3.3 – Off-Street Occupancy Off-Street Parking Inventory Occupancy Weekday Afternoon Weekday Evening Weekend Afternoon Zone 5 (Public) 521 89% 78% 86% Zone 5 (Private) 119 10% 3% 16% Zone 6 (Private) 135 64% 30% 21% Zone 8 (Private) 94 46% 45% 95% Total 869 78% 59% 76% City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 36 Key Takeaways Key takeaways from the parking occupancy analysis conducted in this section are presented below. These takeaways are intended to guide the development of parking management strategy recommendations for the Coastal Zone later in this report. Overall: • The weekend afternoon time period tends to experience a higher occupancy rate than weekday afternoon and weekday evening, at 87% occupancy in total. • Zones in the southern part of the study area generally experience higher occupancy that zones in the northern part of the study area. • Zones that border the beach experienced the highest levels of occupancy, along with the southern Sand Section – Cypress area. This likely correlates with the higher rate of beachgoers expected on weekends, especially during the summer months. • Zones 1, 3, 5, and 7 consist of on-street parking bordering the beach. During the weekend afternoon: o These zones exceeded optimal capacity (90% occupancy). o Yellow-metered parking exceeded optimal capacity in Zones 1, 5, and 7 (above 90%). o Unmetered parking exceeded optimal capacity in Zones 1, 5, and 7 (above 94%). o Silver-metered parking exceeded optimal capacity in Zones 3 and 5 (above 85%). • Zone 8 is the only zone that does not border the beach that exceeded optimal capacity. During the weekend afternoon, this zone: o Experienced the highest occupancy out of all of the study zones (100%). o Reached optimal capacity for its private parking supply (95%). Weekday time periods experienced significantly less occupancy. o Reached above 100% occupancy in on-street parking due to parking in non- designated spaces. On Street Parking: • Total on-street parking occupancy is above optimal capacity during the weekend afternoon (87%). • Weekday afternoon on-street occupancy remains below optimal capacity in all zones. • All zones experience their lowest on-street occupancy during the weekday afternoon, except the Civic Center area. • Weekday evening on-street occupancy only exceeded optimal capacity in the southern Sand Section – Cypress area. Off-Street Parking: • Public parking lots in the Downtown Core generally remain available while being well- utilized (occupancy ranges from 78-89%). They reach optimal capacity during the weekday and weekend afternoons. • Private parking occupancy in the Downtown Core is relatively low, likely due to high utilization of public parking in this zone during observation times. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 37 4. Parking Demand Analysis Combined with the analysis of existing conditions, analyzing anticipated parking demand in the study area is essential to determine the appropriate parking management strategies for the Coastal Zone. Anticipated parking demand is typically calculated based on industry standards. However, due to the study area’s unique coastal character, it was necessary to create a more complex methodology tailored to Hermosa Beach, which is detailed in the following section. Parking Demand Analysis To determine the City’s current non-residential off-street parking requirements for the study area, the square footage of each land use type in the study area was aggregated by zone. Building square footages were used to calculate the minimum number of off-street parking spaces required by code for each zone. The calculated minimum parking requirement was then compared to the existing number of off-street parking spaces currently available for each type of non-residential use. In order to provide additional data points for determining anticipated parking demand for non-residential land uses (as municipal code requirements are often outdated and may not reflect actual conditions), an anticipated demand of private off-street parking was calculated using the following three sources: 1. Peer City Code – Parking rates from peer city code were averaged among eight (8) comparable cities. Each peer city is listed below. The location of each city respective to Hermosa Beach is found in the image below. 1. Santa Monica 2. Manhattan Beach 3. Redondo Beach 4. Long Beach 5. Huntington Beach 6. Newport Beach 7. Laguna Beach 8. Carlsbad The eight peer cities chosen were based on four main characteristics: • Proximity to Hermosa Beach • Similar distinction as a beach city • Similar land use distribution • Parking requirement code describing a parking overlay district (i.e. downtown district) that reduces their parking regulations as a deviation from the remainder of the city due to higher density, mix of uses, and mode split. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 38 2. Institute of Transportation Engineers Parking Generation: 4th Edition (ITE) - ITE rates are more reflective of suburban uses that are not prevalent throughout the study area, therefore parking demand rates by land use were adjusted to reflect the coastal character of Hermosa Beach. Rates were reduced in the Downtown District by 35% to account for a higher mix of uses and greater modal split (i.e. walkability/ bike-ability/ transit). 3. Urban Land Institute Shared Parking Manual: 2nd Edition (ULI) - ULI rates are more reflective of suburban uses that are not prevalent throughout the study area, therefore shared parking rates by land use were adjusted similar to ITE rates to account for synergy amongst land uses and the overall walkability of Hermosa Beach. Parking ratios from each source (peer city code average, ITE and ULI) were then averaged and calculated against built square footages of non-residential land uses to determine spaces anticipated to be utilized based on demand. This analysis is then compared to the number of parking spaces currently provided. Built and utilized parking ratios are important as they provide insight on whether an area is under- or over-parked, and the parking strategies need to be adjusted to meet anticipated demand. Section 5 of the report provides detailed calculations for the aforementioned parking ratios. Code Requirements for Existing Non-Residential Uses The City provided land use classifications for the majority of the non-residential parcels in the study area. The aggregate square footage of each land use type in the study area was calculated by zone and further analyzed against the City’s existing zoning code. Since each land use type requires a different amount of parking, parking rates vary from use to use. Land Use data was organized by the following non-residential land uses, which are consistent with the designations provided by the City: • Commercial / Retail • Office / Professional • Restaurant • Assembly • Fast Food • Service / Repair • Medical Office • Light Manufacturing • Warehouse / Storage In addition to these uses, the City of Hermosa Beach implements an overlay district for the Downtown Core which reduces the parking requirement for some of the same uses stated above. The Downtown Core uses are: • Commercial/ Retail (Downtown District) • Office/ Professional (Downtown District) • Medical Office (Downtown District) • Restaurant (Downtown District) 7 7 Although the City of Hermosa Beach does not provide a reduction in parking rate for restaurants within the Downtown District, the distinction is made for consistency with Section 5 Parking Demand Analysis, in which the restaurant parking demand is reduced. Justification for restaurant parking demand reduction is also found in Section 5. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 39 Table 4.1 below shows the resulting total number of parking spaces required for each land use type based on the total square footage as well as corresponding parking requirement ratios currently specified in Chapter 17.44.030 and Chapter 17.44.40 of the City of Hermosa Beach Zoning Code. Total existing private off-street parking inventory is also shown for comparison to the number of parking spaces required by the municipal code. Table 4.1 – Non-Residential Parking Spaces Required by City Code Land Use Square Feet by Use Type Existing Minimum Parking Requirements Spaces Required by Code Existing Private Off-Street Parking Spaces Zone 1: Walk Street – North End Commercial / Retail 6,659 1 space per 250 sf 27 4 Total 6,659 27 4 Zone 2: North End East Office / Professional 3,168 1 space per 250 sf 13 6 Commercial / Retail 4,905 1 space per 250 sf 19 4 Total 8,073 32 10 Zone 3: Walk Street – Sand Section North Office / Professional 2,842 1 space per 250 sf 12 12 Commercial / Retail 12,002 1 space per 250 sf 48 4 Restaurant 5,114 1 space per 100 sf 51 2 Total 19,958 111 18 Zone 4: Sand Section – Valley N/A 8 N/A N/A N/A N/A Zone 5: Walk Street – Downtown Office / Professional (Downtown District) 28,640 1 space per 333 sf 86 104 9 Commercial / Retail (Downtown District) 67,915 1 space per 333 sf 203 50 10 Restaurant (Downtown District) 39,871 1 space per 100 sf 399 11 11 Assembly 9,483 1 space per 50 sf 190 42 Fast Food 2,800 1 space per 50 sf 56 4 Service / Repair 2,900 1 space per 1,000 sf 3 0 Total 151,609 937 211 Zone 6: Sand Section – Civic Center 8 There is no off-street private parking in Zone 4: Sand Section – Valley 9 1301 Manhattan Ave: Parking Plan 14-8, CUP 16-5 10 1301 Manhattan Ave: Parking Plan 14-8, CUP 16-5 11 1301 Manhattan Ave: Parking Plan 14-8, CUP 16-5 City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 40 Land Use Square Feet by Use Type Existing Minimum Parking Requirements Spaces Required by Code Existing Private Off-Street Parking Spaces Office / Professional (Downtown District) 20,684 1 space per 333 sf 62 66 12, 13, 14 Commercial / Retail (Downtown District) 72,438 1 space per 333 sf 217 179 15 Restaurant (Downtown District) 1,600 1 space per 100 sf 16 0 Medical Office (Downtown District) 2,000 1 space per 333 sf 6 4 16 Light Manufacturing 13,676 1 space per 300 sf 46 22 Total 110,398 347 271 Zone 7: Walk Street – Sand Section – Herondo Commercial /Retail 15,979 1 space per 250 sf 64 39 17 Restaurant 4,542 1 space per 100 sf 45 15 Total 20,521 109 54 Zone 8: Sand Section – Cypress Office / Professional 8,933 1 space per 250 sf 36 13 Light Manufacturing 87,900 1 space per 300 sf 292 169 Warehousing / Storage 14,519 1 space per 1,000 sf 15 1 Service / Repair 9,057 1 space per 1,000 sf 9 13 Total 120,409 352 196 Overall Total 437,627 1,915 764 The table shows that Zones 3 (Walk Street – Sand Section North) and Zone 5 (Walk Street – Downtown), in particular, have less existing parking spaces than required by code. In the City of Hermosa Beach, multiple Common/Shared Parking Plans, Conditional Use Permits (CUP’s), in-lieu fees, and resolutions are in place that allow for a deviation of parking spaces from the City’s existing code. As these deviations are specific to individual sites, this analysis reflects aggregate parking requirements on a zone level. The deviations within each zone level in Table 4.1 are provided as footnotes to explain any potential discrepancies between City parking requirements and associated existing spaces. Although there were 348 private off-street parking spaces observed for occupancy in the Coastal Zone as noted previously in table 3.1, there are actually a total of 764 private off-street 12 205 Pier Ave: Parking Plan 08- 1 and 10-2, Planning Commission Resolution 08-29 13 Note for 425 Pier Ave: Parking Plan to allow the expanded business to use 8 off-site shared parking spaces at 555 Pier Ave (PARK 12-8, CUP 12-5) 14 Parking Plan 98-2 shared use of existing parking for off-site business CON 04-15 15 205 Pier Ave: Parking Plan 08- 1 and 10-2, Planning Commission Resolution 08-29 16 555 Pier Ave: Planning Commission Resolution 93-60 for a Parking Plan to allow less than required for a medical office 17 Parking Plan 03-6, Conditional Use Permit 04-8, Precise Development Plan 04-9 City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 41 parking spaces. Since the analysis using municipal code is not limited to only observed parking demand, all 764 private off-street spaces in the Coastal Zone were included in the calculations for non-residential uses. Figure 4.1 illustrates the locations of the non-residential uses that were observed. The total number of spaces required for non-residential uses in the Coastal Zone based on the City’s code is approximately 1,915 spaces compared to the 764 spaces that currently exist for the same uses. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 42 Figure 4.1 – Map of Observed Non-Residential Land Uses City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 43 Actual Built Parking Ratios Comparing land use ratios to existing parking spaces may not provide the whole picture in determining whether the number of existing spaces is sufficient and adequate for the City’s needs. It is important to analyze the total square footage of a land use to the total parking spaces provided to create an actual built 18 ratio for each zone and for the Coastal Zone as a whole. The following analysis shows actual built ratios of private off-street parking supply (Table 4.2). The actual built ratio per space was determined by dividing the actual total built square footage by the actual parking supply in each zone. For comparative purposes, Table 4.2 also includes the actual built ratio of parking spaces per 1,000 square feet of non-residential land uses. This was determined by dividing the parking supply by the actual built square footage per 1,000. The resulting total figure of 1.75 shows that for every 1,000 square feet of non-residential land use in the Coastal Zone, there are 1.75 existing off-street parking spaces. 1.75 spaces per 1,000 square feet for this specific mix can be compared to the Adjusted Peak Demand Ratio per 1,000 square feet found in Table 5.5. Table 4.2 – Actual Built Parking Ratios for Non-Residential Land Uses Zone Actual Built Square Footage (sf) Actual Parking Supply Actual Built Ratio per Space (sf) Actual Built Ratio per 1,000 sf (spaces) Zone 1: Walk Street – North End 6,659 4 1,665 0.60 Zone 2: North End East 8,073 10 807 1.24 Zone 3: Walk Street – Sand Section North 19,958 18 1,109 0.90 Zone 4: Sand Section – Valley N/A N/A N/A N/A Zone 5: Walk Street – Downtown 151,609 211 719 1.39 Zone 6: Sand Section – Civic Center 110,398 271 407 2.45 Zone 7: Walk Street – Sand Section – Herondo 20,521 54 380 2.63 Zone 8: Sand Section – Cypress 120,409 196 614 1.63 Total 437,627 764 573 1.75 18 “Actual built” implies that there is no distinction between occupied sf or vacant sf, and includes all building sf. Example: Zone 1 Walk Street – North End 6,659 sf (actual built square footage) / 4 spaces (actual parking supply) = 1,665 sf (actual built ratio per space) 1,000 sf (typical sf figure to determine parking ratios) / 1,665 sf (actual built ratio per space) = 0.60 spaces (actual built ratio per 1,000 sf) City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 44 Anticipated Peak Parking Demand The anticipated peak parking demand for each non-residential land use type was determined based on a rate that combines peer city rates (including reduced-parking demand districts), adjusted ITE rates, and adjusted ULI rates. These three rates were averaged together (where data was applicable) to create an anticipated peak parking demand rate for each use (Table 5.1). Table 5.1 also presents Hermosa Beach’s current required parking rates as well as observed demand based on the City’s Beach Access Study. Each comparative demand rate is discussed in detail below. Average City Required Rate The peer cities chosen were based on four main characteristics: their proximity to Hermosa Beach, their similar distinction as a beach city, their similar land use distribution, and parking requirement code describing a parking overlay district (i.e. downtown district) that reduces their parking regulations as a deviation from the remainder of the City due to higher density, mix of uses, and mode split. The eight cities that were studied are: • Long Beach • Santa Monica • Newport Beach • Laguna Beach • Manhattan Beach • Huntington Beach • Carlsbad • Redondo Beach Using the parking requirements found in each of the eight peer cities, an “Average City Required Rate” was created for comparison to the land use types studied in Hermosa Beach and is presented in Table 5.1. For walkable, high-density areas with a mix of uses where ridesharing is commonly used, most cities create a specialized overlay district where parking requirements are reduced. The Average City Required Rate was created by averaging all eight city codes based on land use. For land uses within an overlay district, the Average City Required Rate in the table reflects the reduced requirements found in the cities’ overlay districts. Uses found in the overlay district include commercial/retail, office/professional, medical office, and restaurant uses. A table of all city rates for each land use type can be found in Appendix B. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 45 ITE Rate The Institute of Transportation Engineers (ITE) Parking Generation Manual: 4th Edition is used as the industry standard for parking demand rates. Since these rates are based mostly on suburban land uses and may not be accurate for the beach city character of Hermosa Beach, uses in the overlay district were reduced by 35% to account for a higher density of uses, a mix of uses, and a greater variation in mode split. Numerous case studies were considered when developing a specific and appropriate reduction rate. Data was taken from the Victoria Transport Policy Institute Parking Management Strategies, the ‘Reduced Parking for Mixed-Use Areas’ provision of the City of Portland, Oregon Off-street Parking Management and Guiding Policies, and the Petco Park Area Transportation Study found in the Escondido Ballpark Project Traffic Impact Analysis by Linscott, Law & Greenspan in 2010. These case studies, coupled with other industry standards and previous parking studies similar to the Hermosa Beach’s Downtown Core, show that a 25% reduction from the standard ITE rate is necessary to account for mode split, citing a higher rate of ride hailing services and alternative modes. An additional 10% reduction in parking is also appropriate to account for a walkable area with a high mix of uses where “park once” is a common approach by downtown users. More detail on these case studies can be found in Appendix C. ULI Rate The Urban Land Institute (ULI) Shared Parking Manual: 2nd Edition has established the industry standard for shared parking demand among mixed uses. ULI differs from ITE as ULI considers the synergy and efficiency amongst compatible land uses by time of day, time of week, or time of year. ULI rates presented in Table 5.1 were also reduced by 35% for the Hermosa Beach Downtown District based on the same findings mentioned above. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 46 Table 4.3 – Anticipated Peak Parking Demand Rates for Non-Residential Land Uses Land Use Comparative Demand Rates 19 Anticipated Peak Parking Demand Rate Hermosa Beach Rates 20 Average City Required Rate ITE Demand Rate ULI Shared Parking Demand Rate Hermosa Beach Required Rate Hermosa Beach Observed Demand Commercial / Retail 250 sf 214.1 sf 277.8 sf 247 sf 250 sf 609.7 sf Commercial / Retail (Overlay District) 329.2 sf 329.4 sf 427.4 sf 362 sf 333 sf 642.4 sf Office / Professional 287.5 sf 352.1 sf 263.2 sf 301 sf 250 sf N/A Office / Professional (Overlay District) 307.8 sf 541.7 sf 404.9 sf 439 sf 333 sf 413.3 sf Medical Office (Overlay District) 181.3 sf 480.8 sf 341.8 sf 335 sf 333 sf 500 sf Restaurant 119.3 sf 181.8 sf 95.2 sf 132 sf 100 sf N/A Restaurant (Overlay District) 135 sf 279.7 sf 146.4 sf 187 sf 100 sf 201.4 sf Fast Food 159.4 sf 121.9 sf 66.7 sf 116 sf 50 sf N/A Service / Repair 362.5 sf 444.4 sf No rate 404 sf 1,000 sf N/A Assembly 3.8 seats 2.6 seats 2.5 seats 3 seats 50 sf 378.3 sf Light Manufacturing 537.5 sf 980.4 sf No rate 759 sf 300 sf 785.8 sf Warehousing / Storage 1,187.5 sf 1,960.8 sf No rate 1,574 sf 1,000 sf 1,051.8 sf After developing an Anticipated Peak Parking Demand Rate for each use, the number of parking spaces anticipated to be occupied in each zone at peak was calculated using the actual built square footage of non-residential land uses21 and their associated Anticipated Peak Parking Demand Rates, presented in Table 5.2. Existing off-street parking inventory is also shown for comparison to the anticipated peak demand. The total number of parking spaces forecast for non-residential uses in the Coastal Zone is 1,283 spaces compared to the 764 spaces that exist for the same uses, suggesting that the anticipated parking demand for the Coastal Area exceeds the actual off-street parking supply.22 19 The comparative rates (purple) were summed and averaged to establish the Anticipated Peaking Parking Demand Rate. All rates represent square footage per one parking space. 20 These Hermosa Beach rates (blue) are presented for comparative purposes only. All rates represent square footage per one parking space. 21 This calculation assumes 100% of actual building square footage is occupied and generating parking demand, as building vacancy rates were not collected for this study. 22 Although some zones show a higher anticipated demand than supply available, it is important to note that there may be additional supply not included in this analysis. Private lots were only observed if they consisted of 15 or more spaces. Additionally, Zone 5: Walk Street –Downtown contains public, city-owned, off-street lots that are not included in this private off-street inventory and may account for any inconsistencies between the number of existing spaces and the number anticipated to be occupied. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 47 Table 4.4 – Non-Residential Parking Demand by Number of Parking Spaces Land Use Square Feet by Use Type Anticipated Peak Parking Demand Rate Anticipated Number of Occupied Parking Spaces Existing Private Off-Street Parking Spaces Zone 1: Walk Street – North End Commercial / Retail 6,659 1 space per 247 sf 27 4 Total 6,659 27 4 Zone 2: North End East Office / Professional 3,168 1 space per 301 sf 11 6 Commercial / Retail 4,905 1 space per 247 sf 20 4 Total 8,073 31 10 Zone 3: Walk Street – Sand Section North Office / Professional 2,842 1 space per 301 sf 9 12 Commercial / Retail 12,002 1 space per 247 sf 49 4 Restaurant 5,114 1 space per 132 sf 39 2 Total 19,958 97 18 Zone 4: Sand Section – Valley N/A N/A N/A N/A N/A Zone 5: Walk Street – Downtown Office / Professional (Downtown District) 28,640 1 space per 439 sf 65 104 Commercial / Retail (Downtown District) 67,915 1 space per 362 sf 188 50 Restaurant (Downtown District) 39,871 1 space per 187 sf 213 11 Assembly 9,483 1 space per 3 seats 75 42 Fast Food 2,800 1 space per 116 sf 24 4 Service / Repair 2,900 1 space per 404 sf 7 0 Total 151,609 572 211 Zone 6: Sand Section – Civic Center Office / Professional (Downtown District) 20,684 1 space per 439 sf 47 66 Commercial / Retail (Downtown District) 72,438 1 space per 362 sf 200 179 Restaurant (Downtown District) 1,600 1 space per 187 sf 9 0 Medical Office (Downtown District) 2,000 1 space per 335 sf 6 4 Light Manufacturing 13,676 1 space per 759 sf 18 22 Total 110,398 280 271 Zone 7: Walk Street – Sand Section – Herondo Commercial / Retail 15,979 1 space per 247 sf 65 39 Restaurant 4,542 1 space per 132 sf 34 15 Total 20,521 99 54 Zone 8: Sand Section – Cypress City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 48 Land Use Square Feet by Use Type Anticipated Peak Parking Demand Rate Anticipated Number of Occupied Parking Spaces Existing Private Off-Street Parking Spaces Office / Professional 8,933 1 space per 301 sf 30 13 Light Manufacturing 87,900 1 space per 759 sf 116 169 Warehousing / Storage 14,519 1 space per 1,574 sf 9 1 Service / Repair 9,057 1 space per 404 sf 22 13 Total 120,409 177 196 Overall Total 437,627 1,283 764 To further compare anticipated demand for each zone, an analysis of anticipated parking demand ratios is shown in Table 5.3. The ratio of built square footage per parking space was calculated by dividing the actual built square footage of non-residential land uses in the study area by the corresponding number of parking spaces anticipated to be occupied during peak demand, as calculated in the previous table. For comparative purposes, the demand ratio of parking spaces per 1,000 square feet was determined by dividing the anticipated demand rate by the actual built square footage per 1,000 square feet. The resulting total figure of 2.93 shows that for every 1,000 square feet of non-residential uses in the Coastal Zone, there is an anticipated demand of 2.93 parking spaces during peak times. Below is a sample calculation for Zone 1: Walk Street – North End. Example: Zone 1 Walk Street – North End 6,659 sf (actual built square footage) / 27 spaces (anticipated number of occupied spaces) = 247 sf (adjusted peak demand ratio per space) 1,000 sf (typical sf figure to determine parking ratios) / 247 sf (adjusted peak demand ratio per space) = 4.04 spaces (adjusted peak demand ratio per 1,000 sf) City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 49 Table 4.5 – Anticipated Peak Parking Demand Ratios Zone Actual Built Square Footage (sf) Actual Parking Supply Actual Built Ratio per Space (sf) Actual Built Ratio per 1,000 sf (spaces) Zone 1: Walk Street – North End 6,659 27 247 4.04 Zone 2: North End East 8,073 31 266 3.76 Zone 3: Walk Street – Sand Section North 19,958 97 206 4.84 Zone 4: Sand Section – Valley N/A N/A N/A N/A Zone 5: Walk Street – Downtown 151,609 572 265 3.78 Zone 6: Sand Section – Civic Center 110,398 280 395 2.53 Zone 7: Walk Street – Sand Section – Herondo 20,521 99 207 4.82 Zone 8: Sand Section – Cypress 120,409 177 680 1.47 Total 437,627 1,283 341 2.93 In Section 4, Table 4.2 shows the actual number of spaces provided per 1,000 square feet, and comparative Table 5.3 above shows the peak number of spaces demanded per 1,000 square feet. Each zone’s anticipated demand exceeds the actual built supply of off-street parking, except for Zone 8 (Walk Street – Sand Section – Herondo). In general, the average supply of off-street parking for non-residential land uses is currently 1.75 spaces per 1,000 square feet, while average demand is 2.93 parking spaces per 1,000 square feet at peak. While non-residential land use comparisons to private off-street parking provide insight on their lot utilization, the availability of nearby on-street parking should also be considered. If on-street parking utilization in the vicinity of non-residential land uses is high, then it may be possible that these non-residential land uses are demanding more parking than can be measured through observing respective private lot capacity exclusively, as users are willing to park on-street to access these uses. Although no formal survey was conducted, street segments adjacent to non-residential land uses were evaluated to determine if there was any correlation between land use and adjacent on-street parking utilization. On a zone-by-zone basis, there is no definitive correlation between the two. However, in general, specific on-street parking segments within each zone that are adjacent to non-residential land uses, such as on Hermosa Avenue and Pier Avenue appear to experience higher rates of occupancy than other areas and are either at or above optimal capacity. Anticipated Seasonal Parking Demand Peer city code, ITE, and ULI all provide rates for peak times, however, parking demand for every land use rarely peak simultaneously. The parking demand findings in Section 5.1 reflect parking demand at peak times for all individual uses, regardless of season. To more accurately reflect parking demand in Hermosa Beach, demand rates should also be analyzed according to season, as different land uses may reach peak times at different times of the year. For instance, commercial/ retail uses have the highest parking demand in December, but office uses do not reach their highest parking demand in the same month. Because of this, demand for uses varies from season to season. According to ULI, the month of December typically has the greatest parking demand among all months, and therefore often represents City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 50 peak parking demand in this analysis. Seasonal adjustments are based on demand anticipated every three months starting from December, reflecting typical conditions for Spring (March), Summer (June), and Fall (September). To adjust accordingly to seasonal parking demand rates, the ULI Shared Parking Manual: 2nd Edition was used. This nationally accepted shared parking manual provides seasonal demand rates adjusted for customer/visitor parking. Using the ULI Shared Parking Manual has limitations since it averages numerous U.S. cities to determine averaged seasonal peak demands, where unique cities such as Hermosa Beach may not be represented as accurately. Due to the greater influx of summer visitors in Hermosa Beach compared to a typical U.S. city, Hermosa Beach could expect peak demand in summer months fairly close or higher than the calculated demand in December. Table 5.4 provides a summary of seasonal demand parking rates per zone and per land use. The table includes the anticipated number of occupied spaces found in Table 5.2 for comparative purposes, which represents the “Peak” (if all land uses simultaneously reach peak demand). According to the ULI manual, the month of December represents the highest anticipated parking demand for any of the 12 months. For Hermosa Beach, the analysis indicates that 1,246 spaces would be demanded overall in December, which is 37 spaces less than the number of spaces demanded during the simultaneous total peak. The month that saw the lowest parking demand was September, with only 1,050, or 233 less spaces than the number of spaces demanded at the simultaneous total peak. Table 4.6 – Seasonal Parking Demand Land Use Square Feet by Use Type Anticipated Number of Occupied Parking Spaces Existing Private Off- Street Parking Spaces Peak Dec. Mar. Jun. Sep. Zone 1: Walk Street – North End Commercial / Retail 6,659 27 27 17 18 17 4 Total 6,659 27 27 17 18 17 4 Zone 2: North End East Office / Professional 3,168 11 9 11 11 11 6 Commercial / Retail 4,905 20 20 13 13 13 4 Total 8,073 31 29 24 24 24 10 Zone 3: Walk Street – Sand Office / Professional 2,842 9 8 9 9 9 12 Commercial / Retail 12,002 49 49 31 33 31 4 Restaurant 5,114 39 39 37 37 35 2 Total 19,958 97 96 77 79 75 18 Zone 4: Sand Section – Valley N/A N/A N/A N/A N/A N/A N/A N/A Zone 5: Walk Street – Downtown Office / Professional (Downtown District) 28,640 65 52 65 65 65 104 Commercial / Retail (Downtown District) 67,915 188 188 118 126 120 50 City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 51 Land Use Square Feet by Use Type Anticipated Number of Occupied Parking Spaces Existing Private Off- Street Parking Spaces Peak Dec. Mar. Jun. Sep. Restaurant (Downtown District) 39,871 213 213 203 203 194 11 Assembly 9,483 75 71 74 68 69 42 Fast Food 2,800 24 23 23 22 23 4 Service/Repair 2,900 7 7 7 7 7 0 Total 151,609 572 554 490 491 478 211 Zone 6: Sand Section – Civic Center Office/ Professional (Downtown District) 20,684 47 38 47 47 47 66 Commercial/ Retail (Downtown District) 72,438 200 200 126 134 128 179 Restaurant (Downtown District) 1,600 9 9 8 8 8 0 Medical Office (Downtown District) 2,000 6 5 6 6 6 4 Light Manufacturing 13,676 18 18 18 18 18 22 Total 110,398 280 270 205 213 207 271 Zone 7: Walk Street – Sand Section – Herondo Commercial/ Retail 15,979 65 65 41 43 41 39 Restaurant 4,542 34 34 33 33 31 15 Total 20,521 99 99 74 76 72 54 Zone 8: Sand Section – Cypress Office/ Professional 8,933 30 24 30 30 30 13 Light Manufacturing 87,900 116 116 116 116 116 169 Warehousing/ Storage 14,519 9 9 9 9 9 1 Service/ Repair 9,057 22 22 22 22 22 13 Total 120,409 177 171 177 177 177 196 Overall Total 437,627 1,283 1,246 1,064 1,078 1,050 764 Anticipated Future Parking Demand The City of Hermosa Beach’s Coastal Zone has a unique character that will slowly transform and progress in the future. As part of the character, the Coastal Zone is fairly built-out, meaning that there is little area for newly built structures in west Hermosa Beach. A large majority of growth in the Coastal Zone will come in two ways: • Additional or modified construction on existing infrastructure • A change to more intensive land uses while maintaining existing infrastructure To plan for future growth in the Coastal Zone, the City should reconsider all new projects, modifications, and land use changes as an alteration to parking demand. The basis for formulating changes in anticipated parking demand should stem from two key documents, PLAN Hermosa and this report. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 52 In PLAN Hermosa, Table 2.1 Land Use Designations 23 outlines density and intensity constraints for each land use designation. The limits set by dwelling units per acre (Du/Ac) and floor area ratio (FAR) would be facilitated to maintain the future character of Hermosa Beach and limit the amount of accompanying parking per use. Dwelling units per acre and floor area ratio for any new growth in the Coastal Zone should be studied against the Anticipated Peak Parking Demand established in Table 5.1 in this report. Using both of these datasets would create meaningful parking requirements that support the planned character of the Coastal Zone while maintaining a level of parking supply that is suitable for efficient automobile access. Key Takeaways Key takeaways from the parking demand analysis conducted in this section are presented below. These takeaways are intended to guide the development of parking management strategy recommendations for the Coastal Zone later in this report. • A total of 764 spaces currently exist for non-residential uses in the Coastal Zone, as observed for this study, while the total number of spaces required for the same non- residential uses based on the City’s code is approximately 1,915 spaces. • The total number of parking spaces forecast for the same non-residential uses is 1,283 spaces, suggesting that the anticipated parking demand for the Coastal Area exceeds the actual off-street parking supply. • The average supply of off-street parking for non-residential land uses is currently 1.75 spaces per 1,000 square feet, while average demand is 2.93 parking spaces per 1,000 square feet at peak. • As a result, on-street parking segments that are adjacent to non-residential land uses generally appear to experience higher rates of occupancy than other areas and are either at or above optimal capacity. Parking management strategies should account for this trend in parking utilization. • Seasonally, the highest peak in parking demand can be anticipated to be in December, as well as the summer months due to the Coastal Zone’s proximity to the beach and various commercial/retail/recreational uses. • PLAN Hermosa Land Use Designations should be used in conjunction with the Anticipated Peak Parking Demand Analysis conducted in this report to determine appropriate parking requirements in response to the anticipated growth in the Coastal Zone. 23 Image Source: Plan Hermosa (2017) City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 53 5. Recommendations The City of Hermosa Beach’s unique character makes the Coastal Zone a destination for residents, employees, and visitors alike. Hermosa Beach’s positioning as a small town paired with a destination city creates a host of parking challenges that should be addressed to optimize the City’s parking resources in the short and long-term . The recommendations presented below lay the foundational aspects to resolve current parking limitations found in the parking occupancy and demand analyses with the intent to improve upon the overall parking system. The recommendations follow the use of nationally-recognized best practices, case studies, and peer cities to inform parking management solutions, and are tailored to the unique character of Hermosa Beach. All potential recommendations were evaluated and selected based upon alignment with the stated goals and objectives found in PLAN Hermosa and the Downtown Core Revitalization Plan. The following recommendations are actionable and feasible with the given characteristics of the Coastal Zone. There are twelve (12) specific recommendations categorized by six (6) overall strategies. These recommendations and strategies are organized in Table 6.1 below: Table 5.1 – Recommendations Recommendation Number Recommendation Strategically Invest in Information and Technology 1 Implement an App -Based Mobile Pay System 2 Design and Implement a Demand-Based Parking Management Program 3 Invest and Implement a Comprehensive Parking Signage and Wayfinding System Maximize Use of Existing Parking Supply 4 Pilot a Shared Parking Program and Facilitate Shared Parking 5 Maximize Flexibility of Curb Space to Accommodate Rideshare, Other Modes, and/or Valet Service Improve Mobility Options to Reduce Parking Demand 6 Reinvest Parking Revenues into Multimodal Improvements Simplify and Leverage the Zoning Code 7 Revise the Zoning Code to Better Support Walkable, Mixed-Use Development in the Coastal Zone Enhance Parking Administration and Operations 8 Enhance Event Management Practices to Maximize Parking System Flexibility and Predictability 9 Improve the Residential Parking Permit Program 10 Improve Employee Parking Permit Program 11 Establish an Ongoing Collection, Monitoring, and Evaluation Process Provide Additional Public Parking as Needed 12 Strategically Invest in New Public and Shared Parking Supply in Key Locations City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 54 Several parameters were used to screen the specific recommendations. The matrix in Table 5.2 provides a summary of recommendations with the following key implementation criteria: • Cost o Level of cost is relatively based against all other recommendations (i.e. constructing a parking structure would have a high cost respective to an employee parking permit program). • Level of Difficulty o Level of difficulty is relatively factored against all other recommendations based upon the amount of coordination or space available needed to implement the recommendation. • Priority o Priority level is factored against all other recommendations based upon the greatest impact that is in line with the City of Hermosa Beach’s goals. • Implementation Timeline o Cost, level of difficulty, and priority were all factors weighted to inform the short- , mid-, or long-term implementation goals for each recommendation. • Recommended Zones for Implementation o Recommended zones indicate where the recommendation would be most beneficial for implementation based on the zone’s unique character and observed demand. • Relation to Study Goals o Relation to Study Goals details how a recommendation aligns with the goals for the Coastal Zone stated in the Introduction. The goals are also listed below: #1: Create a parking system that meets the parking needs and demands of residents, visitors, and employees in an efficient and cost - effective manner. #2: Modify parking standards to encourage revitalization and investment in a pedestrian-oriented district. #3: Expand mobility options and optimize parking availability. The recommendations listed below utilize policies and programs that will efficiently use existing parking supply while maintaining land use flexibility within the Coastal Zone. The recommendations emphasize a zonal and performance-based management approach that will better utilize parking assets. Improved parking management will enable Hermosa Beach to continue to grow sustainably, while reducing parking demand and traffic congestion. The recommendations that follow are designed to work together to meet the City’s parking management goals. It is important that to the greatest extent possible the recommendations be implemented as a cohesive “package” of reforms. As the Coastal Zone area continues to grow and evolve, its parking needs will change as well. This report recommends techniques to both address current challenges and allow the City to be nimble in reacting to future parking challenges. Finally, it is important to emphasize that these recommendations are specific to the established parking zones studied and would not necessarily apply to other neighborhoods outside the City of Hermosa Beach Coastal Zone. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 55 Table 5.2 – Recommendations Matrix City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 56 Development of Recommendations Each of the recommendations in this report are driven by inventory, occupancy, and demand analyses and are aligned by the goals and objectives from PLAN Hermosa, the Beach Access and Parking Study, and the Downtown Core Revitalization Strategy. The recommendations made in this report draw from best practices by peer cities and industry-wide standards as guidance, but were tailored to address the unique features of Hermosa Beach’s infrastructure, character, and geography. Strategically Invest in Information and Technology Information and technology solutions are key aspects in advanced parking demand management. A strategic vision for technology solutions tied to new parking management policies would ensure successful implementation and monitoring of the City’s parking goals. These first two recommendations set a framework for innovating data collection, communicating critical information, and promote change in parking behavior. Recommendation #1 Implement an App-Based Mobile Pay System Cost: Average Level of Difficulty: Average Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals: #2, #3 Why? Most payment systems are antiquated. Finding current parking in in high-demand areas consist of circling, which has secondary effects of congestion and could leave an unpleasant experience for users. After parking, drivers have to leave their car and check the meter before they would know the cost of parking in that space. After a driver pays with coins or card, users with longer visits tend to need to return to their car and “feed the meter” if they wished to stay in Hermosa Beach longer, compelling them to find a new parking space if they’ve hit the hours restriction or cut their visit short altogether. Implementing application-based mobile pay system for parking in Hermosa Beach would allow drivers to find open spaces immediately, know the price of the space in real- time, and be able to pay for the parking space from anywhere. The application-based system would allow the users to have multiple options, regardless of how long or short their stay. How? The City of Hermosa Beach has a strong desire to stay ahead of the technological curve for parking and mobile payment systems. There are numerous payment applications that are able to make parking in Hermosa Beach as convenient and efficient as possible. Mobile phone applications, such as Passport, ParkMobile, SpotHero, and Parking Panda allow users the ability to be as informed as possible and take control of their parking. There are wide-ranging benefits with minor City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 57 infrastructure changes for converting the current pay system to an app-based program online. The multiple benefits to installing and implementing an app-based pay system include the ability to: • Show available parking spaces in real-time, allowing potential parkers to know exactly where to go, which would reduce and/or eliminating the need to circle • Pay for parking spaces from the app before a user begins their journey, offering peace of mind to those visiting Hermosa Beach • Expand the number of payment options, increasing the likelihood a user will park at a paid spot • Allow users to know prices and dynamic rate changes in real-time before they choose a parking spot, affording the users to make informed decisions on pricing compared to the distance to their final destination • Become informed on events in Hermosa Beach, which may influence dynamic rates and availability of parking • Pay from anywhere, pay for additional time, and know the duration of time left on the meter, eliminating the need to constantly “feed the meter,” or stress about their length of time their car has been parked Many application-based parking solution companies have demos that allow municipalities to explore solutions, demo administrative tools, implement pilot programs, and view the technical capabilities of the system. Case Study In terms of payment systems, there are various emerging technologies with a range of applications that municipalities are starting to utilize. For example, the City of Long Beach in 2018 launched the Passport parking mobile app which simplifies parking payments at their beachfront parking lots. Similarly, the City of Newport Beach launched a program called ParkMobile, which shows available parking meters in real-time in addition to reserving metered spots before a user arrives. Recommendation #2 Design and Implement a Demand-Based Parking Management Program Cost: High Level of Difficulty: High Priority: Average Implementation Timeline: Long-Term Zones for Implementation: 1, 3, 5, 6, 7 Related Study Goals: #2, #3 Why? Static parking rates do not match the level of demand or patterns of behavior. For example, silver post meters in Hermosa Beach are set at $1.25 every hour, then $1.50 every hour after 8:00 PM. In addition, yellow post meters are always $1.25 every hour, including those adjacent to Lot A. Often, on-street prices cost less than off-street prices, which can provide incentive for drivers to circle and wait in traffic to find the best deal. In this system, some spaces may be City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 58 underutilized. Additionally, the current Hermosa Beach parking system varies in payment, information and technology; this can overwhelm the user and decrease the system’s value. It is recommended that the City of Hermosa Beach look to adopt and implement a demand- based parking program that adjusts rates and regulations to make it as easy as possible for users to find a parking space. The main goal of this demand-based pricing strategy is to ensure consistent availability of parking spaces while distributing parking demand throughout the Coastal Zone, with additional revenue as a positive effect. Ideally, this demand-based program would allow off-street parking to be a cheaper, long-term option, as opposed to using on-street spaces for long-term parking. Alternatively, on-street parking should be available to be the short-term parking solution. The City should also look to price public parking assets at a lower rate for centralized locations in order to promote a “park once/walk many” environment. Visitors not having to go back to their cars to feed meters or to add time allow the centralized parking locations to be more utilized for longer periods of the day. How? In this program, parking demand will set the “right price” at all times, which is the lowest price that will achieve a set target of parking availability. The demand-based parking management system can be developed with the following actionable items: • Set specific availability targets for on- and off-street parking locations. It is recommended that no more than 85% occupancy should be targeted at all times in each of the eight zones. (For instance, 100% occupancy in Zone 5 and 50% occupancy in Zone 3, totaling 85% occupancy would not meet the target.) • Establish minimum and maximum parking price changes for demand, like increasing rates by $1 during the high demand periods. Peer city Laguna Beach fluctuates parking charges between $1 and $2 per hour, while Huntington Beach fluctuates between $1 and $3 an hour. The best price rate to set is one that allows 85% availability at all times. On-going monitoring of occupancy is necessary to determine the rate that achieves the 85 percent target. • Mark meters and lots based upon convenience and demand on tiers of price, such as ‘premium’, ‘value’, or ‘discount’. A tiered system can be found at airport and sports stadiums traditionally but can be applicable for Hermosa Beach as well. • Track occupancy data, including location, and length of stay per car, to create algorithms to predict demand and adjust pricing accordingly by reading collected meter data. • Develop a database with this inventory and occupancy information to provide staff real- time understanding of utilization. Include parking regulations and key enforcement metrics. • Evaluate price-determining rate methodologies at least annually and adjust as needed with the intent to allow a consistent occupancy rate that allows the lowest prices while avoiding a parking shortage. • Make parking inventory and occupancy data open to the public by creating an online website in which transportation users can view relevant parking information such as location, prices, and restrictions. • Issue reports approximately every six months to inform city staff, key stakeholders, City Council, and the public on system performance. System performance would be measured upon revenue generation, occupancy statistics, citation numbers, and parking user satisfaction. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 59 The program implementation should have effective outreach and messaging including: • An overall demand-based program brand • Marketing materials, including websites, apps, social media, brochures, ads, and service announcements • On-going workshops and trainings with downtown stakeholders • Use of social media platforms to communicate system information and updates This recommendation should be implemented in all parking zones where metered or paid spaces exist, but would be most impactful in the Downtown Core which would see the highest turnover of short-term parking users. Specific streets include Hermosa Avenue from 8th Street to 16th Street, and Pier Avenue from Hermosa Avenue to Valley Drive. Although implementing this initiative requires a high level of cost and difficulty, this is a high priority recommendation. Case Study SFpark in San Francisco implemented a major price reform for on-street parking. The City of San Francisco established pilot zones with sensors that reported the occupancy of each curb on every block. Parking rates were adjusted solely on observed occupancies to charge the lowest prices possible without creating a parking shortage. A target range was set between 60% and 80% occupancy, with prices readjusting every 3 hours. After the pilot, 31% of the cases noted an increase in prices, prices decreased in 30% of the cases, and remained the same in 39% of the cases. In two years, 62% of the blocks were within the target range (60%- 80%), a 30% increase from before the pilot began. San Francisco uses all of its parking revenue from SFpark to subsidize public transit.24 Recommendation #3 Invest and Implement in a Comprehensive Parking Signage & Wayfinding System Cost: Average Level of Difficulty: Average Priority: High Implementation Timeline: Mid-Term Zones for Implementation: All Related Study Goals: #2, #3 Why? Parking signs are critical to the success of the parking network, however signage that varies from zone to zone can create confusion. Providing a well-designed, branded parking signage system can effectively communicate critical wayfinding information the second you enter the city, enabling visitors to find venues and parking options more easily. A lack of consistent signage can lead to additional congestion, driver confusion, and potential conflicts between pedestrians/bicycles/vehicles as vehicles look for parking. These negative factors can lead to 24 SFpark: Pricing Parking by Demand by Gregory Pierce and Donald Shoup City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 60 an outcome where available parking options are underutilized, solely because motorists do not know where available parking exists. Signage and wayfinding is a core component of communicating a demand-based management program. As mentioned in Recommendation #3, street signage should be used to display pricing tiers and level of availability for multiple parking locations so drivers can make an informed decision. How? In conjunction with Recommendation #, dynamic signage and wayfinding becomes especially important to communicate pricing, regulations, and parking availability. A Wayfinding Plan should be a part of the Demand-Based Parking Management Program. The wayfinding plan should include: • A signage implementation program that is created in conjunction with city stakeholders • Wayfinding and signage that serve the customer to make finding parking and payment as easy as possible • Dynamic and variable sign messaging that is recognizable, intuitive, and strategically placed • Uniform and distinct signage that is reflective of Hermosa’s Beach’s character and promote a sense of place • Real time availability information via on-the-ground signage, advanced signage, a one- stop website, and a mobile phone application. • Marketable information about a new parking wayfinding strategy Wayfinding would be applicable in all eight zones, especially at key destinations and entry points within the city. Key entry points include all streets that have access to cross the Hermosa Valley Greenbelt, including Gould Avenue, Pier Avenue, and 8th Street. Priority and cost for this recommendation is high while level of difficulty is average. Case Study Laguna Beach implemented a similar marketing/signage parking pilot program in 2014, utilizing dynamic electronic message boards and consistent wayfinding. The pilot program led to a 25% decrease in expired-meter parking citations and a 36% increase in total parking revenue. Their program has since been continued. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 61 Maximize Use of Existing Parking Supply Maximizing the existing parking supply is a crucial element of parking management and is aligned with Study Goals 1 and 2. This strategy aims to extract more value out of all existing private and public parking by expanding shared parking and maximizing curb space. Recommendation #4 Pilot a Shared Parking Program and Facilitate Shared Parking Cost: Average Level of Difficulty: Average Priority: High Implementation Timeline: Long-Term Zones for Implementation: 5, 6, 8 Related Study Goals: #2, #3 Why? Shared parking programs maximize use of existing parking facilities, reduce the need for additional parking, reduce congestion, and facilitate more walkable and active downtowns. Determining the most efficient use of parking facilities is crucial to the success and growth of the Hermosa Beach Downtown Core. Hermosa Beach currently undertakes numerous shared parking plans in the Coastal Zone (such as plans noted in Table 5.1), including shared parking between private entities on the same site, but shared parking agreements between private entities on separate properties or between private and public entities in the Coastal Zone could further increase parking availability for visitors. Not all private parking needs to be shared, but even if 25% of private parking can be included in a shared parking arrangement during any portion of a day, public parking supply in the Coastal Zone can increase by 60 spaces at a fraction of the cost of new construction of parking facilities. Shared parking works best when multiple uses have different peak use periods such as an office, which typically does not operate or reach peak parking demand during the evening hours, can be paired with a restaurant or assembly use that is primarily used during those evening hours. How? To facilitate shared parking among private property owners, the City can proactively provide technical assistance. This may include: • The creation of a parking ownership database, connecting parties to each other. • Educational materials about the benefits of shared parking. • Sample language and agreements. • Cost and revenue sharing information. • Potential use of technology/ signage. The City could take the lead in engaging property owners in their willingness to develop private-private or public-private shared parking agreements. These agreements could allow for the City to: • Directly lease parking from a private facility for use in public parking. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 62 • Open parking for public use at certain hours or days, depending on the tenant use. • Facilitate shared agreements between nearby properties with different peak hours. • Collect data to facilitate demand-based management of each shared parking agreement. • Incentivize business owners to open up their parking to other uses during off-hours through the provision of an umbrella liability policy or agreements to tow unauthorized users. Implementation of this recommendation would see the best results in Zone 5 (Walk Street – Downtown), Zone 6 (Sand Section – Civic Center), and Zone 8 (Sand Section – Cypress) due to the concentration of private parking supply in these zones, as well as the fact that parking in Zone 8 is currently not time-restricted. There is an average level of cost and high level of difficulty for this medium priority recommendation stemming from coordination, feasibility studies, and agreement implementation. Recommendation #5 Maximize Flexibility of Curb Space to Accommodate Rideshare and Other Modes Cost: Low Level of Difficulty: Average Priority: High Implementation Timeline: Short-Term Zones for Implementation: 5, 6 Related Study Goals: #2, #3 Why? Through previous studies, every curb and parking space within the Coastal Zone has been inventoried by street segment and curb type. Curb types and their roles are static. A loading zone, for instance, stays as a loading zone at all times even if it is only used during specific days. Off- and on-street facilities should be inventoried in a manner that allows for real-time understanding of parking by curb regulation type by time of day and day of week, to evaluate the potential for other uses of curb space. Curb space in the Coastal Zone is currently occupied mostly by metered or unmetered on- street parking. As of May 2019, Hermosa Beach has created three new rideshare zones in a four-block area on Hermosa Avenue between 10th and 14th Streets within Zone 5 (Walk Street – Downtown). The designated rideshare zones were converted from previously underutilized taxi zones. The City has communicated the availability of the new zones through updates to their website as well as signage and mobile ridesharing application updates. Dedicating curb space for ridesharing near Pier Plaza is a great example of maximizing the use of curb space and provides more opportunities to access the beach and the Downtown Core efficiently. How? To continue to maximize the flexibility of the curb space in the Coastal Zone, the City should monitor the newly-designated rideshare zones and additionally, evaluate the use of supplemental valet service. To achieve this, the City can: City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 63 • Utilize the inventory and occupancy database mentioned in Recommendation #3 to track curb space utilization and parking regulations at all times of day and week. • Conduct resident, visitor, employee, and employer intercept surveys to evaluate the success of the new rideshare zones, measuring frequency of use and proper locations. • Evaluate the need for additional designated rideshare zones, if appropriate. • Evaluate curb space and re-configure spaces where appropriate to maximize the use of red zones or re-configure spaces to accommodate on-street parking space for other modes through bicycle corrals, motorcycle parking, or Neighborhood Electric Vehicle (NEV) parking. These methods of maximizing curb space would be most effective in Zone 5 (Walk Street – Downtown) and Zone 6 (Sand Section – Civic Center). Priority for this recommendation is high compared to other recommendations, with low cost, and an average level of difficulty. Case Study The Institute of Transportation Engineers has recently released their Curbside Management Practitioners Guide which details planning considerations, available tools and treatments, and the treatment selection process for curbside management. In this guide, ITE highlights the City of Seattle as a standout example of flexing curb spaces to allow streets to safely and efficiently connect and move people and goods to their destinations while creating inviting spaces within the right-of-way. In the study, Seattle was able to reduce commercial vehicle loading zones during peak parking periods and flex them back during prime loading/unloading times, which has led to an increase in curbside efficiency. Improve Mobility Options to Reduce Parking Demand Hermosa Beach can reduce parking demand by providing safe, accessible, and convenient options for residents, employees, and visitors to access the beach without a car. Mobility options such as public transit, bicycling, car share, bike share, micro-mobility, and walking would all factor in to reduce vehicle demand. Reinvesting parking revenues for this cause is key to the success of the Downtown Core and the rest of the Coastal Zone. Recommendation #6 Reinvest Parking Revenues into Multimodal Improvements Cost: Low Level of Difficulty: Low Priority: Average Implementation Timeline: Mid-Term Zones for Implementation: 5, 6 Related Study Goals: #2, #3 Why? Every motorist becomes a pedestrian at some point on their trip. Parking is about more than vehicle storage; it is about access and mobility. For every trip taken by alternative mode, there is another parking space available for someone who drives. Demand-based management City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 64 may create additional revenue, which, in turn, should be used in programs that directly support multimodal improvements in the Coastal Zone. Parking utilization data shows that many prime on-street parking spaces are full, while many off-street spaces outside the core remain empty throughout the day. Multimodal transportation can help alleviate and redistribute parking demand. This would improve connections to underutilized parking assets to distribute parking demand more evenly. An example would be a pilot program to introduce peripheral parking outside of the high- demand areas in conjunction with a frequent shuttle circulator. Hermosa Beach has been successful in improving multimodal accessibility by enhancing bicycle access on Hermosa Avenue, maintaining a scramble crossing at Hermosa Avenue and Pier Avenue, implementing bulb-outs, maintaining vibrant zebra pedestrian crossings, and increasing shade and lighting. Hermosa Beach can build on these efforts by providing more bicycle hubs, drop-off and rideshare cutouts, and more transit opportunities. How? The City should increase and diversify the allocation of parking revenue to investments that will improve overall mobility in the Downtown Core. These improvements include: • Improved pedestrian, bicycle, and multimodal mobility, especially to and from parking outside the Downtown Core. For instance Hermosa Beach’s proposed bicycle facilities includes many Class III bike routes, but does not propose any bike paths or bike lanes in the Coastal Zone. Hermosa Beach could increase the number of pedestrian plazas to fulfill the goal to create a pedestrian-oriented district. • Streamlined implementation of bike-share, rideshare, public transit, and potential circulator shuttle. • The evaluation of micro-transit use to establish a remote parking network and improve alternative mobility. • Shared parking initiatives to improve access to parking for the general public, as mentioned in Recommendation #4. • A Coastal Zone Wayfinding System, as mentioned in Recommendation #3. • Promotions encouraging employees to bike and walk to work. • Enhanced event management, as mentioned in Recommendation #8. • Improved marketing and communication of the parking system, as mentioned in Recommendation #3. • Technology upgrades to the parking system, as mentioned in Recommendations #1 and #3. • Streetscape and safety improvements, including parking enforcement and street cleaning. • Evaluation of the potential to continue the shared mobility program currently being piloted with neighboring cities. • Further evaluation and monitoring of parking initiatives, as mentioned in Recommendation #11. Hermosa Beach can also look to mobility initiatives in addition to mobility investments. Alternative mobility initiatives also include: • Create an employee parking database including store location and employee origin, and mode of transportation. • Travel training and analysis for employees. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 65 • Branding and marketing highlighting the ease of switching from vehicle to alternative commute mode. • Pursue incentives for employers who provide demand-management initiatives for employees. • Create “Bike to Work” days. • Free or subsidized transit passes. • Subsidized shuttles, carpools, guaranteed rides home, and other programs. • Bicycle/ pedestrian safety and encouragement programs. • Restrict employee parking to top floors of structures for long term occupants Revenue would be generated from all parking spaces excluding unmetered spaces, and should be reinvested in in all zones, with Zone 5 (Walk Street – Downtown) being at the top of the priority list. Priority, cost, and difficulty are all low for this recommendation. Case Study Laguna Beach teamed up with OCTA in 2016 to start the Summer Breeze trolley service. Summer Breeze is a summer-only route that allows users to park remotely and shuttle them to Downtown Laguna Beach at no expense for the user. The service runs only on Saturdays and Sundays from 11:00 am to midnight from late June to early September. Providing a multimodal alternative for visitors reduces Laguna Beach’s parking demand in its downtown core and also alleviates congestion in the street network locating the lots on the outskirts of the city. One of the issues facing the City of Hermosa Beach is a long-term parking shortage, and implementing a similar remote parking with shuttle service like Summer Breeze could relocate a portion of long-term parkers outside of the Downtown. Simplify and Leverage the Zoning Code Simplifying and leveraging the zoning code to work in favor of a pedestrian-oriented district supports Goal #3 from Section 1.3. Pedestrians should have just as much access and mobility options as vehicles on the road, and the following recommendation supports this end. Recommendation #7 Revise the Zoning Code to Better Reflect Urban Uses and Walkable Commercial Uses in the Coastal Zone Cost: Average Level of Difficulty: Average Priority: Average Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals: #1, #3 Why? In the Coastal Zone, undeveloped parcels are all but gone, and most future development will utilize existing buildings and/or smaller parcels. Flexible and innovative management of City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 66 parking and mobility in the zoning code will be crucial to support this type of infill development and continued reinvestment. The existing code offers opportunities for improvement and revision, as data analysis has shown discrepancies between minimum code requirements, actual parking provided, and adjusted parking demand for non-residential uses. How? Some zoning code revisions that can be made to better suit Hermosa Beach include: • Adjust parking minimums within the Downtown District to their “right-size” according to demand for specific uses, specifically offices, retail, and restaurants. Uses that generate invariable demand regardless of location, such as assembly uses or visitor accommodations, may not be applicable to a parking minimum adjustment (which is consistent with peer cities). This will give property owners the flexibility to build or repurpose according to market demand. In addition, this supports the City’s land use goals to maintain the small scale, pedestrian-oriented character of Downtown. See Appendix C for examples of parking minimums established in peer cities with similar parking demand. • Consider no parking minimums in certain pedestrian-emphasized locations within Zone 5: Walk Street -Downtown and Zone 6: Sand Section - Civic Center. • For the addition to a building, addition of outdoor space, or a change in use, allow required parking to be reduced by providing implementing extensive transportation demand management measures. • Reduce or exempt requirement of additional parking for certain uses that change to uses typically considered more intensive in the zoning code, like restaurant or food service use, when located in a pedestrian district provided that square footage remains the same. This reduction of exemption would not be applicable to uses that generate consistent demand, such as assembly uses or visitor accommodations. • Allow for in-lieu fees to contribute more towards on-site parking requirements to improve development and tenant flexibility to produce context-sensitive design. This would allow property owners to consider a greater reduction in on-site spaces. Revenue from fees should continue be used to fund the shared parking supply. • Consider incorporating site-specific requirements related to all mobility options. This could include linking bicycle, car share, and electric vehicle requirements in proportion to the size of a given use, phased down above a certain number of spaces. Code can also be included to allow space for micro-mobility docking as well. • Allow trip reduction incentives for private development to create more mode share opportunities within the City. • Incorporate design requirements that support a walkable environment. These include: o Limit driveways and driveway widths along walkable corridors. o Provide high-visibility pedestrian accommodations at crosswalks and curb cuts, such as signage, striping, or flashing lights. o Incentivize the design and construction of parking that can be converted to active uses. o Parklets, or an extension of the sidewalk into one or more on-street parking spaces, at pedestrian-oriented locations. Parklets introduce new streetscape features such as seating, planting, bicycle parking, or elements of play. o Pedestrian/ Bike Plazas, whether temporary or permanent, have potential in dead-end or short street segments with little auto-oriented needs. Examples for opportunity include any numbered street, such as 11th Court, west of Beach Drive. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 67 A revision of the zoning code would be applicable throughout the City. Revising the zoning code has moderate cost and moderate difficulty. This recommendation has average priority compared to other recommendations. Case Study In July 2017, the City of Santa Monica updated their parking code based upon the Parking Zoning Ordinance Update (2013) completed by Nelson\Nygaard. The land uses in the city were split among three designations: Downtown Core, Transit-Oriented and Mixed Use, and Low-Intensity Neighborhood. In 2015, the City took the approximate designation boundaries established in this plan to adopt a new off-street parking code that regulated parking into three separate categories: Citywide, Parking Overlay Area 1, and the Downtown Community Plan Area. Both the Citywide and Parking Overlay Area 1 designations set parking minimums. The Downtown Community Plan Area set parking maximums but eliminated any parking minimums required of new development. The Plan included amendments to the existing ordinance and new zoning ordinance provisions for: • Parking waivers • Parking maximums • Parking in-lieu fees • Leasing programs • Unbundled parking • Carsharing • Parking cashout The City could formulate an EV Action Plan, similar to the Santa Monica EV Action Plan, which plans to have 300 smart chargers in the City by 2022. Additionally, in Santa Monica, businesses with over 10 employees are given a choice between three TDM strategies and must implement at least one or pay a fee for each parking space per day. The City of Santa Monica provides a mandatory survey to determine Average Vehicle Ridership in which the results determine a reduction in fee for workplaces with high non-auto ridership. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 68 Enhance Parking Administration and Operations To better plan for the daily and peak parking demand for its visitors, employees, and residents, parking management programs will effectively minimize the stress on parking supply. This strategy recommends enhancing event management practices, improving residential and employee permit parking programs, and establishing a monitoring and evaluation process to adapt to different events, businesses, and various uses coming into the City. Recommendation #8 Enhance Event Management Practices to Maximize Parking System Flexibility and Predictability Cost: Low Level of Difficulty: Low Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals: #2, #3 Why? Hermosa Beach is home to many unique and diverse events each year. These events spur economic activity and are a fundamental part of Hermosa Beach’s character and culture. However, events can place a burden on the parking system and disrupt access due to street closures and increased numbers of visitors. Today, there are limited requirements for producers of mid to large-scale events to implement alternative transportation plans for participants/spectators of their events, as well as the general beach-going population when event production may require the use of nearby public parking. There are also opportunities to ensure consistent communication of event parking policies, from communications strategies, signage, and alternative options available. These issues can create a disconnected system that oversaturates certain areas or impacts beachgoers. How? There are a number of strategies to maximize the parking system for each event effectively and consistently. These strategies include: • Adjust parking rates via the demand-based program (Recommendation #2) to include peak event pricing in high demand areas. Conversely, value, discount, or City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 69 remote peripheral parking should be priced at a lower rate to incentivize use of those areas to balance demand and reduce traffic. • Provide online information and education in advance of the event (similar to Recommendation #3), including location-based prices and parking locations to limit searching, traffic, and frustration. Parking information can be linked to information provided by event organizers, hotels, tickets, and key event stakeholders. • Provide GPS-compatible updates with real-time utilization to allow event-goers to begin their search for parking at their origin, not their destination. • Coordinate temporary signage during the event permitting process to divert and direct drivers to multiple parking locations. This signage can be dynamic to instruct best parking locations in real time. • Implement a pilot program for purchasing parking for off-street locations in advance of an event. Advanced purchases can be advantageous to both users and operators, as it makes parking demand more predictable and ensures that available spaces are effectively used, reducing congestion related to circling. Advanced parking purchases can be incentivized by allowing lower rates than those who park without a reservation. No parking lot should be reserved completely, as parking facilities should still allow short-term spontaneous parking for those who may not have access to the technology to do so, or for visitors who may be unaware of the program. Pavemint is a parking application in Los Angeles that allows the ability to reserve parking weeks in advance, a similar approach could be applied to Hermosa Beach. • Use dynamic parking inventory mentioned in Recommendation #1 to predict potential event demand hotspots. • Coordinate event-based shuttle systems if needed, during the event permitting process. Shuttles can be used to reduce the distance barrier from the user’s car to the event location. Coordination with peripheral lot owners, such as schools and churches, including those outside of the City limits, are encouraged. • Require an event parking plan during the event permitting process, regardless of event size. Smaller events may require fewer demand management strategies, but event parking plans should be developed to adequately manage and accommodate the variety of Hermosa Beach events. The size of event and therefore the level of parking demand management strategies should be determined by the Impact Level already established in the Hermosa Beach Special Events Policy Guide. Event parking management would be applicable in all zones that incorporate events. Priority is rated high for this strategy while cost, and difficulty are low for this recommendation. Case Study The City of Long Beach provides multiple large events every year that are completely inaccessible by automobile, such as the Smokin’ Grooves Fest and Once Upon a Time in the LBC. For these events, event attendees park in designated structures in the Downtown Area, City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 70 and shuttle to the event site using two shuttle locations. Attendees can pre-pay for a parking spot in one of the designated structures using an official Long Beach web portal. Rideshare drop-offs are only allowed to the shuttle stop locations and not at the event site. Besides the shuttle, attendees can either walk, bus, water taxi to the event grounds. The capacity for these events is set above 10,000 attendees. Recommendation #9 Improve the Residential Parking Permit Program Cost: Low Level of Difficulty: High Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals: #2, #3 Why? With the amount of residential uses in the Coastal Zone, residents are a crucial part of the parking discussion when considering efficient solutions to meet the parking needs of the Coastal Zone. As mentioned in Section 1.1 of this report, the City’s Preferential Parking District Permit Program currently allows residential parking permit holders to park at 24-hour meters without paying the meter, or in one-hour residential zones without regard to time limit for up to 72 hours. The preferential parking district is bound by the City’s northern and southern boundaries, by the Strand on the West, and Loma Drive, Park Avenue, and Morningside Drive to the east. Residential permits cost $40 annually and require that the vehicle is registered to an address in the Preferential Parking Permit District. Currently, the City does not place a limit on the number of permits purchased per household. Furthermore, many residents utilize their garage space as storage rather than parking spaces and park on-street, which exacerbates occupancies on many residential streets. With recent interest from the City, the residential parking permit program should be revisited to establish a system that is equitable, yet supports a reduction in parking demand. Data and observations from City of Hermosa Beach Parking Enforcement demonstrated that the City sells almost twice the number of residential parking permits than spaces available. Peer cities, such as Newport Beach and Corona Del Mar, price residential parking permits at an escalating rate, so the price for each additional permit per household increases. How? It is recommended that the first annual permit per household is priced at $40 to stay in line with the current Hermosa Beach rate, while the second permit is priced at $60, the third at $80, and the last permit at $100 for a maximum of 4 permits. These rates provided are an average of multiple peer cities methods and prices for limiting the number of permits provided. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 71 After sufficient data is collected, the City of Hermosa Beach can create residential parking zones for areas in need of greater restrictions, similar to a recently adopted permit program by the City of Newport Beach. Hermosa Beach would essentially create eight residential parking zones using the same boundaries established in the data collection process, as these bounds were created specifically to distinguish between car-restrictive sections in the Coastal Zone. Using zones for residential parking is beneficial as it would prevent residents from using their residential pass for other areas in the City, which could oversaturate demand in specific areas. Guest permits can be registered by their license plate number through an official Hermosa Beach online web portal to ensure guest permits are non-transferrable and cannot be used past their allotted time. Parking enforcement would be able to determine if a license is permitted through an online, real-time database. Residential parking locations should be subject to parking for only the residence assigned to the permit. An online database of guest parking permit requests can be managed after its creation to determine what residential areas require the most guest permits, and how many permits are being issued per day of week, or time of year. A cap on guest parking permits or any other relevant modifications to the system should be considered after substantial data has been collected in the guest permit database. For instance, the City of Carlsbad caps guest parking permits at five two-week passes a year. Residents with extra spaces can post on the app, and can be used in conjunction with special events. Hermosa Beach can implement a test guest parking restriction to allow permits to be available for up to 30 days in a year, or 3 times a month. App-based guest parking solutions are also a possibility. Pavemint is a parking application in Los Angeles that allows people to connect residents with people who have an extra parking space to share. An update for residential and employee parking permits would be valuable in all parking zones. Updating residential parking permits has high priority, with high difficulty and low cost. Case Study The City of Newport Beach has adopted a comprehensive parking permit program that provides residential permits in zones. There are three residential zones where residents in those zones can apply for their respective residential permit. Permits can be purchased through an official Newport Beach web portal. Permit holders of a single zone cannot park in the other zones. Creating specific zones for residential permits ensures permit holders must stay with a certain boundary to use their permit. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 72 Recommendation #10 Improve the Employee Parking Permit Program Cost: Low Level of Difficulty: Low Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals: #2, #3 Why? Employees are also a crucial part of the parking discussion as many employees come from outside of the Coastal Zone and contribute to parking demand daily. Currently, employees of local businesses are allowed to purchase parking permits for an additional fee in designated areas. For employees, monthly permits are available for off-street parking lots/structures at a cost of: • $62 per month to park anytime up to 72 hrs • $31 per month to park only between 5am to 7pm daily Employee permits are also available to purchase that allow employees to park at on-street spaces with yellow pole/cap meters and in the unmetered, but one-hour time restricted areas at an annual cost of $143 (pro-rated to $71.50 on September 1st). How? The employee parking permit program should be retained, however the City should update the locations and pricing of employee permit parking to encourage off-street parking availability for employees. It is preferred that on-street parking be reserved for short-term users to promote higher turnover. Programs and alternative mobility initiatives, such as those mentioned in Recommendation #5 can reduce employee parking demand. Improving mobility choice does not mean that every employee has to stop driving. In fact, a shift in behavior for a fraction of employees can have a significant impact on reducing parking demand and congestion. An update for residential and employee parking permits would be especially valuable in Zone 5 (Walk Zone – Downtown) and Zone 6 (Sand Section – Civic Center), as these zones contain a large concentration of retail and commercial uses. Updating the employee parking permits has high priority, with low difficulty and cost. Case Study UCLA introduced the BruinGO program in an effort to incentivize students and employees to utilize transit instead of commuting by single-occupancy vehicles. The UCLA BruinGO program is an unlimited access transit program which subsidized the cost of transit commutes for students and university employees. The goals of the study were to increase bus ridership to campus, reduce vehicle trips to campus, and to reduce parking demand on campus. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 73 Commutes by bus increased by 73% after just one year of the program’s initiation. In addition, 37% of new bus riders were previously solo drivers to campus. Over 1,000 solo drivers relinquished their parking permits after BruinGO’s initiation, and 19% of commuters who kept their permit still took BruinGO at least two times a week. Since the introduction of the program as an alternative to solo driving, UCLA was able to utilize this service to recruit new employees to the university while also reducing fare payments for riders and reducing the demand for parking. Recommendation #11 Establish an Ongoing Collection, Monitoring, and Evaluation Process Cost: Low Level of Difficulty: Low Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals: #2, #3 Why? For parking, you can only manage what you measure. This recommendation seeks to improve the “measurement” process by creating a centralized parking database established in a new demand-based parking management program. This program, as previously mentioned, would create real-time data automatically, which would move the focus away from manual data collection and unwieldy datasets, and onto innovative parking analysis for monitoring and evaluation. Decisions based on high-level real -time data would be exponentially quicker and can be made with more confidence. If real-time data is not feasible, the City can conduct before and after studies or introduce pilot programs to test the efficiency of various programs and initiatives. Each iteration of data monitoring will allow the City to make informed decisions regarding the continued use of the recommendations, as well as real-time modifications or adjustments to the system as needed. The parking system will always need to be monitored and evaluated, especially due to seasonal change or event management. How? To better track, monitor, and evaluate data, the City can: • Develop and implement specific methodologies for tracking occupancy data for on- and off-street parking. Initial approaches could include manual spot counts and could evolve into utilizing algorithms based on meter and payment data. • There are many innovative technologies available that can be used to collect and track parking data. Technologies include: smart meters, magnetometers, lasers, inductive loops, ultrasound, or automated license plate readers. Some technologies are more suited for parking lots or garages, while others are better for large zones and on-street counting. • Establish data-sharing protocols, including making inventory and occupancy data “open source,” as mentioned in Recommendation #2. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 74 • Issue quarterly reports on system performance for parking/city staff and key stakeholders, as also mentioned in Recommendation #2. The collection, monitoring and evaluation system would be valuable for the entire Coastal Zone. Priority for this recommendation is high, with a low cost and low level of difficulty to implement. Case Study The City of Los Angeles and LADOT launched LA Express Park in 2012 which is a parking management strategy with innovative parking data collection and monitoring. LA Express Park was implemented to achieve 10% to 30% parking space availability on each block by using demand-based pricing. The system relied upon a highly integrated back-end system with an advanced pricing engine. The system required a continuous compiling of occupancy and payment data, analyzing it, and then relaying information to customers and enforcement officials in real-time. After the first 6 months, parking congestion decreased by 10%, under- utilized parking spaces decreased by 5%, pilot-wide parking rates decreased by 11%, and parking revenue increased by 2%. Provide Additional Public Parking as Needed In some cases, provision of additional parking resources is necessary for zones that are truly constrained by physical impediments and constantly yield high occupancy. Adding parking spaces should be done strategically and with substantial caution, as new resources such as parking garages or structures are cost-prohibitive and could be obsolete within the next decade. This recommendation should be treated as the recommendation with the lowest priority. Recommendation #12 Strategically Invest in New Public and Shared Parking Supply in Key Locations Cost: High Level of Difficulty: High Priority: Low Implementation Timeline: Long-Term Zones for Implementation: 5, 6, 8 Related Study Goals: #2 Why? Hermosa Beach’s success as a destination for residents and visitors has attracted new development in the Coastal Zone. Multimodal access, complimented by convenient and accessible parking, is a key factor for the Downtown Core’s success. After a study of parking demand, analysis indicates that parking demand often peaks above optimal capacity rates in Zone 3 (Walk Street – Sand Section North), Zone 5 (Walk Street – Downtown), Zone 7 (Walk Street – Sand Section – Herondo), and Zone 8 (Sand Section – Cypress). City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 75 Hermosa Beach faces a parking management problem, not a parking problem; spaces are available during peak times, drivers may just be unaware of their availability or unwilling to park further from their destination. Adding more parking, especially private spaces, could exacerbate the City’s current dilemma should those spaces remain underutilized. Nevertheless, to provide adequate parking for current and continued growth in the Coastal Zone, Hermosa Beach could strategically invest in public and shared parking supply in key locations. How? Recommendations #1 through #11 should be prioritized to address current issues related to high on- and off-street demand, time limit violations, varied signage, fragmented technology and payment systems. All decisions to build more parking should be evaluated against the City of Hermosa Beach’s primary goals to reduce vehicular congestion and improve multimodal travel established in PLAN Hermosa and the Downtown Core Revitalization Strategy. Creating additional parking can also bring more vehicles into the Coastal Zone if motorists find that more spaces are available. New structures should be evaluated based upon their cost effectiveness/potential revenue compared to other recommendations presented above, which are designed to improve overall management, enhance mobility, and reduce demand for parking. It is recommended that the City conduct independent need, market, funding and fiscal studies for constructing a multi-story parking structure within the Civic Center or Cypress character area. For Lot A, conversion of the parking lot to a parking structure identical to Lot C, for example, would increase the total number of spaces by approximately 224 25. Assuming a full capacity in the potential Lot A structure by transferring as many on-street parked cars into Lot A, on-street parking occupancy in Zone 5 would drop from 94% to 65% on peak weekday afternoons. This potential decrease in on-street occupancy at the busiest measured time in a highly commercialized zone would have secondary benefits such as reducing occupancy rates in neighboring zones, as parking would become easier to find closer to the Downtown District and the beach. There is a significantly greater cost associated with constructing a parking structure compared to other recommendations, but the benefits of increasing supply in Zone 5 (Walk Street – Downtown), Zone 6 (Sand Section – Civic Center), and Zone 8 (Sand Section – Cypress) may be necessary to alleviate current or future parking constraints throughout Hermosa Beach. When considering constructing renovations to existing parking lots, efforts can be guided from the Hermosa Beach Parking Lot D Demonstration Project with respect to proposed design improvements, sustainability features, and plant palettes in order to maintain consistency throughout the Coastal Zone among public parking. This is the recommendation with the lowest priority, but has an associated high level of difficulty and cost. Case Study 25 Lot C, a three-story structure, has 354 spaces. Lot A, a surface lot, has 130 spaces. The difference between the two lots is 224 spaces. Although more research needs to be done on the exact number of added spaces including the size of the lot and its compatible use with adjacent buildings, using Lot C as a potential duplicate in this report gives a rough estimate for a Lot A three-story parking structure. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 76 The Pacific Beach Visitor Oriented Parking Facilities Study by Wilbur Smith Associates analyzed a potential future parking structure in the San Diego area. The study showed that an efficient structure must be consumer friendly, be a good neighbor, be operationally efficient, and have a certain ease of implementation. Some factors that should be considered in deciding to build a structure are: • Capacity considerations • Existing Use • Site accessibility for both vehicles and pedestrians • Compatibility with adjacent uses • Proximity to principal parking generators and areas with parking deficiencies • Security/ visibility • Environmental considerations, including potential noise and visual impacts • Sources of funding • An increase of rideshare and the onset of autonomous vehicles This study found that the revenue generated by erecting a parking structure would be far short of the amount needed to cover the costs of operation and the debt service of the bonds issued to fund the construction of the structure. City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 77 Appendix A City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 78 Appendix B Appendix B – Hermosa Beach and Peer City Code Matrix Land Use (1 space per sf) Hermosa Beach Long Beach Santa Monica Newport Beach Laguna Beach Manhattan Beach Huntington Beach Carlsbad Redondo Beach Commercial / Retail 25026 250 300 250 250 200 or 250 200 300 250 Commercial / Retail (Overlay District) 333 500 450 or 500 0 spaces 250 Reduced rate 27 200 300 250 Office / Professional 250 250 or 500 300 250 or 300 or 35028 250 300 250 or 300 250 250 Office / Professional (Overlay District) 333 500 or 1,000 300 or 500 0 spaces 250 Reduced rate 250 or 300 300 250 Medical Office (Overlay District) 333 400 250 or 300 0 spaces 29 250 Reduced rate 175 200 150 Restaurant 100 100 125 or 200 or 500 30 to 5030 100 200 60 Gradual rate 31 75 Restaurant (Overlay District) 100 100 125 or 200 or 500 0 spaces 100 Reduced rate 60 Gradual rate 250 Fast Food 50 300 300 50 100 200 200 Gradual rate 75 Service / Repair 1,000 300 300 500 300 500 500 300 250 General Assembly 50 3.3 seats 4 seats 3 seats 3 seats 10032 35 33 5 seats 5 seats Light Manufacturing 300 500 400 500 or 1,000 500 750 500 400 500 Warehousing / Storage 1,000 1,000 1,000 2,000 1,000 34 1,500 1,000 1,000 Gradual rate 35 26 For all uses, rates are to be read as 1 space per number given. For instance, for Commercial uses in Hermosa Beach the parking requirement is 1 parking space per 250 square feet. 27 For all overlay districts in Manhattan Beach: If the site GFA is equal or less than lot area, no parking required; If site GFA is greater than lot area, full parking requirements excluding 5,000 sf and above is required. Code can be circumvented with a use permit if found that demand is less than what is required, and long-term occupancy will not generate additional demand. 28 1 space per 250 sf for first 50 tsf; 1 space per 300 sf after 75 tsf; 1 space per 350 sf after 125 tsf 29 A rate of 1 space per 200 sf to be applied for medical office outside of the Newport Beach overlay district. 30 Of public restaurant area 31 For all food uses in Carlsbad: 1 space per 100 sf for the first 4,000 sf, plus 1 space per every 50 sf thereafter 32 100 sf of seating area 33 35 sf of assembly area 34 Plus two spaces 35 For warehousing and storage in Redondo Beach: 1 space per 1,000 sf for the first 10,000, plus 1 space per every 5,000 sf thereafter City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 79 Appendix C C.1 Victoria Transportation Policy Institute From the Victoria Transportation Policy Institute Transportation Demand Management Encyclopedia (https://www.vtpi.org/tdm/tdm28.htm, November 2018): The table below is taken from the Parking Management chapter of the TDM Encyclopedia and summarizes parking management strategies, indicates their typical reduction in parking requirements, and whether they tend to reduce vehicle traffic and therefore provide additional benefits (such as reductions in congestion, accidents, energy consumption, pollution emissions and consumer costs). Summary of Parking Management Strategies: Strategy Description Typical Reduction Traffic Reduction Shared Parking Parking spaces serve multiple users and destinations. 10-30% Parking Regulations Regulations favor higher-value uses such as service vehicles, deliveries, customers, quick errands, and people with special needs. 10-30% More Accurate and Flexible Standards Adjust parking standards to more accurately reflect demand in a particular situation. 10-30% Parking Maximums Establish maximum parking standards. 10-30% Remote Parking Provide off-site or urban fringe parking facilities. 10-30% Smart Growth Encourage more compact, mixed, multi -modal development to allow more parking sharing and use of alternative modes. 10-30% X Walking and Cycling Improvements Improve walking and cycling conditions to expand the range of destinations serviced by a parking facility. 5-15% X Increase Capacity of Existing Facilities Increase parking supply by using otherwise wasted space, smaller stalls, car stackers and valet parking. 5-15% X Mobility Management Encourage more efficient travel patterns, including changes in mode, timing, destination and vehicle trip frequency. 10-30% X Parking Pricing Charge motorists directly and efficiently for using parking facilities. 10-30% X Improve Pricing Methods Use better charging techniques to make pricing more convenient and cost effective. Varies X Financial Incentives Provide financial incentives to shift mode, such as cash out. 10-30% X Unbundle Parking Rent or sell parking facilities separately from building space. 10-30% X Parking Tax Reform Change tax policies to support parking management objectives. 5-15% X Bicycle Facilities Provide bicycle storage and changing facilities. 5-15% X Improve User Information and Marketing Provide convenient and accurate information on parking availability and price, using maps, signs, brochures and electronic communication. 5-15% X Improve Enforcement Insure that parking regulation enforcement is efficient, considerate and fair. Varies City of Hermosa Beach Parking Management Study IBI Group - August 30, 2019 80 Strategy Description Typical Reduction Traffic Reduction Transportation Management Associations Establish member-controlled organizations that provide transport and parking management services in a particular area. Varies X Overflow Parking Plans Establish plans to manage occasional peak parking demands. Varies Address Spillover Problems Use management, enforcement and pricing to address spillover problems. Varies Parking Facility Design and Operation Improve parking facility design and operations to help solve problems and support parking management. Varies C.2 Portland, OR Reduced Parking for Mixed-Use Areas Provision From page 11 of the City of Portland Off-Street Parking Management and Guiding Polices (https://www.portlandoregon.gov/transportation/article/547704): In all cases, minimum parking requirements can be reduced by up to 50%, using combinations of the following provisions: • One space reduction for every 12-inch diameter tree that is preserved (reduction of up to 2 spaces, or 10% of the total required parking); • One space reduction for every 5 non-required bicycle parking spaces (reduction of up to 25% of the total required parking); • Transit-supportive plazas may replace up to 10% of required parking, provided that at least 20 parking spaces are required and certain design standards are met; • One space for every 4 motorcycle spaces provided (reduction of up to 5 spaces or 5% of the total required parking) • Two spaces for every car sharing (e.g., Zipcar) space provided (reduction of up to 25% of the total required parking); and • Three spaces for every 15-dock bike sharing station, with a further one-space reduction for each additional 4 docks (reduction of up to 25% of the total required parking). C.3 Petco Park Area Transportation Study From page 29 of the Escondido Ballpark Project Traffic Impact Analysis (https://www.escondido.org/Data/Sites/1/media/pdfs/Planning/Ballpark/TrafficImpactAnaly sis.pdf, October 2010): Petco Park conducted a Transportation Survey for the 2007 season. The survey provides information on travel characteristics of ballpark fans. The survey indicates that the automobile represents the primary mode of travel at approximately 71%. This equates to 29% for transit and other non-auto travel modes such as pedestrian, bicycle, etc. This compares with the Petco Park Environmental Impact Report (EIR) conducted in 1999 which assumed an 80% split for auto and 20% for transit/non-auto modes. City of Hermosa Beach Parking Management Study and Recommended Parking Standards for the Coastal Zone SEPTEMBER 2019 48:00 Introduction The City of Hermosa Beach has recently undergone a planning process to define the community vision for the future of the City. Elements of the community vision have identified the need for increased parking management within the Hermosa Beach Coastal Zone. To satisfy the requirements set forth in the City’s Local Coastal Program, a parking management study was conducted for both public and private parking within the Coastal Zone. This brochure provides a summary of the resulting parking management recommendations found in the study’s technical report. The three (3) goals established for this study were based on the goals and objectives found in the City’s existing plans and documents, including PLAN Hermosa, The City of Hermosa Beach: Beach Access and Parking Study, and The City of Hermosa Beach Downtown Core Revitalization Strategy. Establishing these goals provided a guide for developing the recommendations to improve parking within the City’s Coastal Zone: 1. Create a parking system that meets the parking needs and demands of residents, visitors, and employees in an efficient and cost-effective manner. 2. Modify parking standards to encourage revitalization and investment in a pedestrian-oriented district. 3. Expand mobility options and optimize parking availability. In addition to these goals, the recommendations also consider results of the study’s parking inventory, occupancy, and demand analyses; existing city code requirements; industry-wide parking demand standards; and best practices by peer cities. There are twelve (12) specific recommendations categorized by six (6) overall strategies. The following pages are presented on a zone-by-zone basis, providing quick facts for each zone, and recommendations that are tailored to address the uniqueness of each zone’s infrastructure, character, and geography. 1 IBI Group . City of Hermosa Beach / Parking Management Study and Recommended Parking Standards for the Coastal Zone Cover image source: Flickr/Kent Kanouse Recommendations Implement a comprehensive parking signage wayfinding system 3 Maximize flexibility of curb space to accommodate rideshare and valet service 5 STRATEGY 1: Strategicially Invest in Information and Technology Implement an app-based mobile pay system1 Design and implement a demand-based parking management program 2 Enhance event management practices to maximize parking system flexibility and predictability 8 Improve the residential parking permit program9 STRATEGY 2: Maximize Use of Existing Parking Supply Pilot a shared parking program and facilitate shared parking4 Improve the employee parking permit program10 Establish an ongoing collection, monitoring, and evaluation process 11 STRATEGY 3: Improve Mobility Options to Reduce Parking Demand Reinvest parking revenues into multimodal improvements6 STRATEGY 4: Simplify and Leverage the Zoning Code Revise the zoning code to better support walkable, mixed-use development in the Coastal Zone 7 STRATEGY 5: Enhance Parking Administration and Operations Strategically invest in public and shared parking supply in key locations 12 STRATEGY 6: Provide Additional Public Parking as Needed 2IBI Group . City of Hermosa Beach / Parking Management Study and Recommended Parking Standards for the Coastal Zone Zone 1 Walk Street – North End 0 500 1,000250 Feet° Zone 1 Boundary Metered Street Parking Hermosa Beach City Boundary North End Character Area Walk Street Character Area Quick Facts On-street parking types: Metered Off-street parking types: None Observed on-street occupancy: Below practical occupancy during weekdays, above practical occupancy during the weekend afternoon at 91%. Observed off-street occupancy: None Existing land use types: Residential, Commercial Challenges: High parking occupancy on weekends can limit access to the walk street area/beach. Future vision: Maintain high quality pedestrian connections through the walk streets for access to residential and neighborhood-scale commercial services. Recommendations STRATEGY: Strategicially Invest in Information and Technology STRATEGY: Improve Mobility Options to Reduce Parking Demand STRATEGY: Provide Additional Public Parking as Needed Implement a comprehensive parking signage wayfinding system 3 Design and implement a demand-based parking management program 2 Implement an app-based mobile pay system1 STRATEGY: Improve Mobility Options to Reduce Parking Demand Reinvest parking revenues into multimodal improvements6 STRATEGY: Enhance Parking Administration and Operations Enhance event management practices to maximize parking system flexibility and predictability 8 Improve the residential parking permit program9 Improve the employee parking permit program10 Establish an ongoing collection, monitoring, and evaluation process 11 Revise the zoning code to better support walkable, mixed-use development in the Coastal Zone 7 Strategically invest in public and shared parking supply in key locations 12 STRATEGY: Maximize Use of Existing Parking Supply Maximize flexibility of curb space to accommodate rideshare and valet service 5 Pilot a shared parking program and facilitate shared parking4 Hermosa Beach City Boundary Zone 1 Boundary North End Character Area Walk Street Character Area Metered Street Parking Not applicable for this zone Long-Term Improvements Mid-Term Improvements Near-Term Improvements 1,000 Feet7505002500 3 IBI Group . City of Hermosa Beach / Parking Management Study and Recommended Parking Standards for the Coastal Zone Quick Facts On-street parking types: Non-Metered Off-street parking types: None Observed on-street occupancy: Below practical occupancy, ranging from 53% - 82% occupied. Observed off-street occupancy: None Existing land use types: Residential, Commercial Challenges: Regulation of the residential parking permit program is especially important in this zone as it consists primarily of residential uses. Future vision: Maintain neighborhood connectivity and access to nearby commercial services within the compact grid network. STRATEGY: Strategicially Invest in Information and Technology STRATEGY: Improve Mobility Options to Reduce Parking Demand STRATEGY: Provide Additional Public Parking as Needed Implement a comprehensive parking signage wayfinding system 3 Design and implement a demand-based parking management program 2 Implement an app-based mobile pay system1 STRATEGY: Improve Mobility Options to Reduce Parking Demand Reinvest parking revenues into multimodal improvements6 STRATEGY: Enhance Parking Administration and Operations Enhance event management practices to maximize parking system flexibility and predictability 8 Improve the residential parking permit program9 Improve the employee parking permit program10 Establish an ongoing collection, monitoring, and evaluation process 11 Revise the zoning code to better support walkable, mixed-use development in the Coastal Zone 7 Strategically invest in public and shared parking supply in key locations 12 STRATEGY: Maximize Use of Existing Parking Supply Maximize flexibility of curb space to accommodate rideshare and valet service 5 Pilot a shared parking program and facilitate shared parking4 Zone 2 North End East 0 500 1,000250 Feet° Zone 2 Boundary Unmetered Street Parking Hermosa Beach City Boundary North End Character AreaRecommendations Hermosa Beach City Boundary Zone 2 Boundary North End Character Area Non-Metered Street Parking Not applicable for this zone Long-Term Improvements Mid-Term Improvements Near-Term Improvements 1,000 Feet7505002500 4IBI Group . City of Hermosa Beach / Parking Management Study and Recommended Parking Standards for the Coastal Zone Quick Facts On-street parking types: Metered Off-street parking types: None Observed on-street occupancy: Below practical occupancy during weekdays, above practical occupancy during the weekday afternoon at 88%. Observed off-street occupancy: None Existing land use types: Residential, Commercial, Restaurant Challenges: High parking occupancy on weekends can limit access to the beach and commercial uses along Hermosa Avenue. Future vision: Maintain high quality pedestrian connections through the walk streets for access to residential and neighborhood- scale commercial services. Enhance multimodal connectivity and access to community parks and the Greenbelt. Maintain an integrated mixture of small-scale apartments and single-family homes. STRATEGY: Strategicially Invest in Information and Technology STRATEGY: Improve Mobility Options to Reduce Parking Demand STRATEGY: Provide Additional Public Parking as Needed STRATEGY: Improve Mobility Options to Reduce Parking Demand Reinvest parking revenues into multimodal improvements6 STRATEGY: Enhance Parking Administration and Operations Enhance event management practices to maximize parking system flexibility and predictability 8 Improve the residential parking permit program9 Improve the employee parking permit program10 Establish an ongoing collection, monitoring, and evaluation process 11 Revise the zoning code to better support walkable, mixed-use development in the Coastal Zone 7 Strategically invest in public and shared parking supply in key locations 12 Zone 3 Walk Street – Sand Section North 0 500 1,000250 Feet° Zone 3 Boundary Metered Street Parking Hermosa Beach City Boundary North End Character Area Sand Section Character Area Walk Street Character Area Recommendations Hermosa Beach City Boundary Zone 3 Boundary Sand Section Character Area North End Character Area Walk Street Character Area Metered Street Parking Not applicable for this zone Long-Term Improvements Mid-Term Improvements Near-Term Improvements 1,000 Feet7505002500 5 IBI Group . City of Hermosa Beach / Parking Management Study and Recommended Parking Standards for the Coastal Zone Implement a comprehensive parking signage wayfinding system 3 Design and implement a demand-based parking management program 2 Implement an app-based mobile pay system1 STRATEGY: Maximize Use of Existing Parking Supply Maximize flexibility of curb space to accommodate rideshare and valet service 5 Pilot a shared parking program and facilitate shared parking4 Quick Facts On-street parking types: Non-Metered Off-street parking types: None Observed on-street occupancy: Below practical occupancy, ranging from 47% - 83% occupied. Observed off-street occupancy: None Existing land use types: Residential, Open Space, Education Challenges: Access to open space and educational facilities must be balanced with the single-family residential patterns in this zone. Future vision: Enhance multimodal connectivity and access to community parks and the Greenbelt. Preserve the single-family development pattern of the Valley character area that is part of this zone. STRATEGY: Strategicially Invest in Information and Technology STRATEGY: Improve Mobility Options to Reduce Parking Demand STRATEGY: Provide Additional Public Parking as Needed STRATEGY: Improve Mobility Options to Reduce Parking Demand Reinvest parking revenues into multimodal improvements6 STRATEGY: Enhance Parking Administration and Operations Enhance event management practices to maximize parking system flexibility and predictability 8 Improve the residential parking permit program9 Improve the employee parking permit program10 Establish an ongoing collection, monitoring, and evaluation process 11 Revise the zoning code to better support walkable, mixed-use development in the Coastal Zone 7 Strategically invest in public and shared parking supply in key locations 12 Zone 4 Sand Section – Valley 0 500 1,000250 Feet° Zone 4 Boundary Unmetered Street Parking Hermosa Beach City Boundary North End Character Area Sand Section Character Area Valley Character Area Recommendations Hermosa Beach City Boundary Zone 4 Boundary Sand Section Character Area North End Character Area Valley Character Area Non-Metered Street Parking Not applicable for this zone Long-Term Improvements Mid-Term Improvements Near-Term Improvements 1,000 Feet7505002500 6IBI Group . City of Hermosa Beach / Parking Management Study and Recommended Parking Standards for the Coastal Zone Implement a comprehensive parking signage wayfinding system 3 Design and implement a demand-based parking management program 2 Implement an app-based mobile pay system1 STRATEGY: Maximize Use of Existing Parking Supply Maximize flexibility of curb space to accommodate rideshare and valet service 5 Pilot a shared parking program and facilitate shared parking4 Quick Facts On-street parking types: Metered Off-street parking types: Public, Private Observed on-street occupancy: Below practical occupancy during weekdays, above practical occupancy during the weekday afternoon at 94%. Observed off-street occupancy: Public parking reaches practical occupancy during the afternoons, peaking at 89%. Private parking is below practical occupancy, at 16% on weekend afternoons. Existing land use types: Office/Professional, Commercial, Assembly, Office/Store Challenges: A mix of uses creates high parking demand. Public spaces are mostly occupied while private spaces are underutilized. Future vision: Continue to offer an array of uses for residents and services and maintain the high quality pedestrian environment. STRATEGY: Strategicially Invest in Information and Technology STRATEGY: Improve Mobility Options to Reduce Parking Demand STRATEGY: Provide Additional Public Parking as Needed STRATEGY: Improve Mobility Options to Reduce Parking Demand Reinvest parking revenues into multimodal improvements6 STRATEGY: Enhance Parking Administration and Operations Enhance event management practices to maximize parking system flexibility and predictability 8 Improve the residential parking permit program9 Improve the employee parking permit program10 Establish an ongoing collection, monitoring, and evaluation process 11 Revise the zoning code to better support walkable, mixed-use development in the Coastal Zone 7 Strategically invest in public and shared parking supply in key locations 12 Zone 5 Walk Street – Downtown 0 500 1,000250 Feet° Zone 5 Boundary Metered Street Parking Hermosa Beach City Boundary Downtown Character Area Sand Section Character Area Walk Street Character Area Recommendations Hermosa Beach City Boundary Zone 5 Boundary Sand Section Character Area Downtown Character Area Walk Street Character Area Metered Street Parking Not applicable for this zone Long-Term Improvements Mid-Term Improvements Near-Term Improvements 1,000 Feet7505002500 7 IBI Group . City of Hermosa Beach / Parking Management Study and Recommended Parking Standards for the Coastal Zone Implement a comprehensive parking signage wayfinding system 3 Design and implement a demand-based parking management program 2 Implement an app-based mobile pay system1 STRATEGY: Maximize Use of Existing Parking Supply Maximize flexibility of curb space to accommodate rideshare and valet service 5 Pilot a shared parking program and facilitate shared parking4 Quick Facts On-street parking types: Mostly Non-Metered Off-street parking types: Private Observed on-street occupancy: Below practical occupancy, ranging from 68% - 77% occupied. Observed off-street occupancy: Below practical occupancy, peaking at 64% occupied during weekday afternoons, but occupied at just 21% on weekend afternoons. Existing land use types: Commercial, Office/Professional, Office/Store, Medical Office, Residential Challenges: The Civic Center creates high parking demand that must be balanced with the surrounding commercial and residential uses. Future vision: Enhance the streetscape and circulation of all modes and users. Expand the Civic Center facilities to provide consolidated parking to serve commercial uses along Pacific Coast Highway, Downtown, and the surrounding residential neighborhoods. STRATEGY: Strategicially Invest in Information and Technology STRATEGY: Improve Mobility Options to Reduce Parking Demand STRATEGY: Provide Additional Public Parking as Needed STRATEGY: Improve Mobility Options to Reduce Parking Demand Reinvest parking revenues into multimodal improvements6 STRATEGY: Enhance Parking Administration and Operations Enhance event management practices to maximize parking system flexibility and predictability 8 Improve the residential parking permit program9 Improve the employee parking permit program10 Establish an ongoing collection, monitoring, and evaluation process 11 Revise the zoning code to better support walkable, mixed-use development in the Coastal Zone 7 Strategically invest in public and shared parking supply in key locations 12 Zone 6 Sand Section – Civic Center 0 500 1,000250 Feet° Zone 6 Boundary Unmetered Street Parking Metered Street Parking Hermosa Beach City Boundary Civic Center Character Area Downtown Character Area Sand Section Character Area Valley Character Area Recommendations Hermosa Beach City Boundary Zone 6 Boundary Sand Section Character Area Downtown Character Area Civic Center Character Area Valley Character Area Non-Metered Street Parking Metered Street Parking Not applicable for this zone Long-Term Improvements Mid-Term Improvements Near-Term Improvements 1,000 Feet7505002500 8IBI Group . City of Hermosa Beach / Parking Management Study and Recommended Parking Standards for the Coastal Zone Implement a comprehensive parking signage wayfinding system 3 Design and implement a demand-based parking management program 2 Implement an app-based mobile pay system1 STRATEGY: Maximize Use of Existing Parking Supply Maximize flexibility of curb space to accommodate rideshare and valet service 5 Pilot a shared parking program and facilitate shared parking4 Quick Facts On-street parking types: Metered Off-street parking types: None Observed on-street occupancy: Below practical occupancy during weekdays, above practical occupancy during weekend afternoons, at 97%. Observed off-street occupancy: None Existing land use types: Residential, Commercial, Restaurant Challenges: High parking occupancy on weekends can limit access to the beach and walk street area. High density residential uses in the Herondo area may create higher parking demand. Future vision: Maintain high quality pedestrian connections through the walk streets for access to residential and commercial services. Protect high density multi-family residential development patterns in the Herondo character area. Improve pedestrian access through the large apartment blocks to the Greenbelt and the beach. STRATEGY: Strategicially Invest in Information and Technology STRATEGY: Improve Mobility Options to Reduce Parking Demand STRATEGY: Provide Additional Public Parking as Needed STRATEGY: Improve Mobility Options to Reduce Parking Demand Reinvest parking revenues into multimodal improvements6 STRATEGY: Enhance Parking Administration and Operations Enhance event management practices to maximize parking system flexibility and predictability 8 Improve the residential parking permit program9 Improve the employee parking permit program10 Establish an ongoing collection, monitoring, and evaluation process 11 Revise the zoning code to better support walkable, mixed-use development in the Coastal Zone 7 Strategically invest in public and shared parking supply in key locations 12 Zone 7 Walk Street – Sand Section – Herondo 0 500 1,000250 Feet° Zone 7 Boundary Metered Street Parking Hermosa Beach City Boundary Herondo Character Area Sand Section Character Area Walk Street Character Area Recommendations Hermosa Beach City Boundary Zone 7 Boundary Sand Section Character Area Herondo Character Area Walk Street Character Area Metered Street Parking Not applicable for this zone Long-Term Improvements Mid-Term Improvements Near-Term Improvements 1,000 Feet7505002500 9 IBI Group . City of Hermosa Beach / Parking Management Study and Recommended Parking Standards for the Coastal Zone Implement a comprehensive parking signage wayfinding system 3 Design and implement a demand-based parking management program 2 Implement an app-based mobile pay system1 STRATEGY: Maximize Use of Existing Parking Supply Maximize flexibility of curb space to accommodate rideshare and valet service 5 Pilot a shared parking program and facilitate shared parking4 Quick Facts On-street parking types: Non-Metered Off-street parking types: Private Observed on-street occupancy: Below practical occupancy during the weekday afternoon, above practical occupancy during the weekday evening and weekend afternoon, at 100% occupied. Observed off-street occupancy: Below practical occupancy at about 45% during weekdays, above practical occupancy during the weekend afternoon, at 95%. Existing land use types: Light Manufacturing, Service/Repair, Warehouse/Storage, Residential Challenges: Much of the public parking in this zone has no time restriction. Private parking spaces are underutilized during the week. Future vision: Maintain an integrated mixture of small-scale apartments and single-family homes in the Sand Section area. Accommodate a variety of flexible use spaces and creative industries. STRATEGY: Strategicially Invest in Information and Technology STRATEGY: Improve Mobility Options to Reduce Parking Demand STRATEGY: Provide Additional Public Parking as Needed STRATEGY: Improve Mobility Options to Reduce Parking Demand Reinvest parking revenues into multimodal improvements6 STRATEGY: Enhance Parking Administration and Operations Enhance event management practices to maximize parking system flexibility and predictability 8 Improve the residential parking permit program9 Improve the employee parking permit program10 Establish an ongoing collection, monitoring, and evaluation process 11 Revise the zoning code to better support walkable, mixed-use development in the Coastal Zone 7 Strategically invest in public and shared parking supply in key locations 12 Zone 8 Sand Section – Cypress 0 500 1,000250 Feet° Zone 8 Boundary Unmetered Street Parking Hermosa Beach City Boundary Cypress Character Area Herondo Character Area Sand Section Character Area Recommendations Hermosa Beach City Boundary Zone 8 Boundary Herondo Character Area Cypress Character Area Sand Section Character Area Non-Metered Street Parking Not applicable for this zone Long-Term Improvements Mid-Term Improvements Near-Term Improvements 1,000 Feet7505002500 10IBI Group . City of Hermosa Beach / Parking Management Study and Recommended Parking Standards for the Coastal Zone Implement a comprehensive parking signage wayfinding system 3 Design and implement a demand-based parking management program 2 Implement an app-based mobile pay system1 STRATEGY: Maximize Use of Existing Parking Supply Maximize flexibility of curb space to accommodate rideshare and valet service 5 Pilot a shared parking program and facilitate shared parking4 IBI Group 18401 Von Karman Avenue, Suite 300 Irvine, CA 92612 949-833-5588 www.ibigroup.com For more information, please contact: The City of Hermosa Beach Leeanne Singleton 1315 Valley Drive Hermosa Beach, CA 90254 310-318-0239 lsingleton@hermosabch.org PARKING MANAGEMENT STUDY City of Hermosa Beach 10.02.19 Hello. Thank you for joining us as we evaluate opportunities to improve the availability of parking resources in the Coastal Zone in a manner that balances coastal access requirements with efficient use of the City’s limited land resources and achievement of the City’s economic development and mobility goals. Agenda. Study Purpose, Goals, & Process Inventory & Zone Characteristics Occupancy & Demand Analysis Recommendations & Best Practices Stakeholder Feedback Study Next Steps & Discussion 01 02 03 04 05 06 STUDY PURPOSE, GOALS & PROCESS 01 STUDY GOALS 3. Expand mobility options and optimize parking availability. 2. Modify parking standards to encourage revitalization and investment in a pedestrian-oriented district. 1. Create a parking system that meets the parking needs and demands of residents, visitors, and employees in an efficient and cost-effective manner. RELEVANT PLANS PLAN Hermosa (2017) •Comprehensive community vision for land uses and mobility •Recognizes diverse and changing mobility trends Beach Access and Parking Study (2015) •Inventory of public parking in the Coastal Zone •Recognizes efficient management can support more convenient access to parking for residents, businesses, customers and beach visitors Downtown Core Revitalization Strategy (2015) •Identified opportunities for revitalization and reinvestment in the City core and includes parking and land use strategies to support reinvestment PROJECT PROCESS WE ARE HERE PARKING INVENTORY & ZONE CHARACTERISTICS 02 STUDY AREA •Extent of Coastal Zone •43% of the City’s land area •Residential Parking Permit Area Parking Type Total Inventoried Spaces On-Street Preferential Yellow Metered 1,155 Preferential Silver Metered 327 Preferential Non-Metered 1,662 Non-Preferential Yellow Metered 20 Non-Preferential Non-Metered 673 Total 3,837 Public Off-Street (City-Owned) Lot A 130 Lot B 37 Lot C 354 Total 521 Private Off-Street Total 348 Overall Total 4,706 ZONE DEVELOPMENT Zone Total Inventoried Spaces On- Street Off-Street TotalPublicPrivate Zone 1 Walk Street –North End 281 0 0 281 Zone 2 North End East 518 0 0 518 Zone 3 Walk Street –Sand Section North 493 0 0 493 Zone 4 Sand Section –Valley 738 0 0 738 Zone 5 Walk Street –Downtown 513 521 119 1,153 Zone 6 Sand Section –Civic Center 533 0 135 668 Zone 7 Walk Street –Sand Section –Herondo 543 0 0 543 Zone 8 Sand Section -Cypress 218 0 94 312 Total 3,837 521 348 4,706 ZONE CHARACTERISTICS EXISTING PARKING PROGRAMS •Parking Fees + Time Limits •Residential Parking Permit Program •Daily Parking Permit Program •Employee Parking Permit Program •Off-Street Parking Requirements PARKING OCCUPANCY & DEMAND ANALYSIS 03 OCCUPANCY SUMMARY •Optimal capacity is typically set at an 85% occupancy level. •For on-street parking this equates to roughly one vacant space per blockface. Zone On-Street Parking Types Off-Street Parking Types Observed On-Street Occupancy Observed Off-Street Occupancy Metered Non-metered: Preferential Zone Non-metered: Non- Preferential Zone Public Private Weekday Afternoon Weekday Evening Weekend Afternoon Weekday Afternoon Weekday Evening Weekend Afternoon Zone 1 ✔61%66%91%N/A N/A N/A Zone 2 ✔✔53%62%82%N/A N/A N/A Zone 3 ✔69%73%88%N/A N/A N/A Zone 4 ✔✔47%62%83%N/A N/A N/A Zone 5 ✔✔✔77%84%94%Public: 89% Private: 10% Public: 78% Private: 3% Public: 86% Private: 16% Zone 6 ✔✔✔✔75%68%77%Private: 64%Private: 30%Private: 21% Zone 7 ✔63%79%97%N/A N/A N/A Zone 8 ✔✔✔✔66%86%100%Private: 46%Private: 45%Private: 95% Weekday Afternoon: Tuesday 2-3 PM Weekday Evening: Tuesday 7-8 PM Weekend Afternoon:Saturday 2-3 PM ON-STREET OCCUPANCY SUMMARY Weekend afternoon occupancy rates exceeded optimal capacity in the following zones: •Zone 1: Walk Street –North End (average occupancy of 91%) •Zone 3: Walk Street –Sand Section North (average occupancy of 88%) •Zone 5: Walk Street –Downtown (average occupancy of 94%) •Zone 7: Walk Street –Sand Section –Herondo (average occupancy of 97%) •Zone 8: Sand Section –Cypress (average occupancy of 100%) Weekday evening occupancy only exceeded optimal capacity in Zone 8 (Sand Section –Cypress, occupancy of 86%) All zones, except Zone 6 (Sand Section –Civic Center), experienced the lowest levels of occupancy during the weekday afternoon (average occupancy of 62%). OFF-STREET OCCUPANCY SUMMARY Lots A, B, and C: •For these three public lots, average occupancy among the three observation times are fairly consistent ranging, between 78% and 89%. The lowest occupancy observed was 78% during the weekday evening, suggesting that the public lots have availability while being generally well-utilized. Private off-street parking •Zone 5 (Walk Street –Downtown) registered relatively low (less than 16% at peak) occupancy for the two sites counted. •Zone 6 (Sand Section –Civic Center) exhibited a peak of 64% occupied of off-street private parking during the weekday afternoon •Zone 8 (Sand Section –Cypress) showed a peak of 95% occupied during the weekend afternoon. •Assessment of Required Off- Street Parking Ratios for different land uses. •Use of Overlay District which reduces parking requirements for certain uses in downtown core. •Generally expressed in a ratio of parking space required per square feet of floor area (1/350 sq ft). Commercial / Retail Office / Professional Restaurant Assembly Fast Food Service / Repair Medical Office Light Manufacturing Warehouse / Storage PARKING DEMAND ANALYSIS Land Uses Evaluated OFF-STREET PARKING RATE REQUIREMENTS Urban Land Institute Shared Parking Manual: 2nd Edition (ULI) Institute of Transportation Engineers Parking Generation: 4th Edition (ITE) Peer City Codes: 1.Santa Monica 2.Manhattan Beach 3.Redondo Beach 4.Long Beach 5.Huntington Beach 6.Newport Beach 7.Laguna Beach 8.Carlsbad OFF-STREET PARKING RATE REQUIREMENTS Land Use Comparative Demand Rates Anticipated Peak Parking Demand Rate Hermosa Beach Rates Average City Required Rate ITE Demand Rate ULI Shared Parking Demand Rate Hermosa Beach Required Rate Hermosa Beach Observed Demand Commercial / Retail 250 sf 214.1 sf 277.8 sf 247 sf 250 sf 609.7 sf Commercial / Retail (Overlay District)329.2 sf 329.4 sf 427.4 sf 362 sf 333 sf 642.4 sf Office / Professional 287.5 sf 352.1 sf 263.2 sf 301 sf 250 sf N/A Office / Professional (Overlay District) 307.8 sf 541.7 sf 404.9 sf 439 sf 333 sf 413.3 sf Medical Office (Overlay District)181.3 sf 480.8 sf 341.8 sf 335 sf 333 sf 500 sf Restaurant 119.3 sf 181.8 sf 95.2 sf 132 sf 100 sf N/A Restaurant (Overlay District)135 sf 279.7 sf 146.4 sf 187 sf 100 sf 201.4 sf Fast Food 159.4 sf 121.9 sf 66.7 sf 116 sf 50 sf N/A Service / Repair 362.5 sf 444.4 sf No rate 404 sf 1,000 sf N/A Assembly 3.8 seats 2.6 seats 2.5 seats 3 seats 50 sf 378.3 sf Light Manufacturing 537.5 sf 980.4 sf No rate 759 sf 300 sf 785.8 sf Warehousing / Storage 1,187.5 sf 1,960.8 sf No rate 1,574 sf 1,000 sf 1,051.8 sf Expressed as one parking space per ____ sf STUDY RECOMMENDATIONS & BEST PRACTICES 04 1.Which of the strategies interest you most? 2.Do you have feedback or concerns about any of the recommendations? 3.Do you think we’ve missed any general areas of recommendations? 4.Do you agree with the relative priorities identified for near and long term solutions? 5.Do you have recommendations on best practices we should be looking at that you’ve seen in other communities that you think work well? DISCUSSION QUESTIONS Recommendat ion Number Recommendation Strategically Invest in Information and Technology 1 Implement an App-Based Mobile Pay System 2 Design and Implement a Demand-Based Parking Management Program 3 Invest and Implement a Comprehensive Parking Signage and Wayfinding System Maximize Use of Existing Parking Supply 4 Pilot a Shared Parking Program and Facilitate Shared Parking 5 Maximize Flexibility of Curb Space to Accommodate Rideshare, Other Modes, and/or Valet Service Improve Mobility Options to Reduce Parking Demand 6 Reinvest Parking Revenues into Multimodal Improvements Simplify and Leverage the Zoning Code 7 Revise the Zoning Code to Better Support Walkable, Mixed-Use Development in the Coastal Zone Enhance Parking Administration and Operations 8 Enhance Event Management Practices to Maximize Parking System Flexibility and Predictability 9 Improve the Residential Parking Permit Program 10 Improve Employee Parking Permit Program 11 Establish an Ongoing Collection, Monitoring, and Evaluation Process Provide Additional Public Parking as Needed 12 Strategically Invest in New Public and Shared Parking Supply in Key Locations STUDY RECOMMENDATIONS Cost •Level of cost is relatively based against all other recommendations (i.e. constructing a parking structure would have a high cost respective to an employee parking permit program). Level of Difficulty •Level of difficulty is relatively factored against all other recommendations based upon the amount of coordination or space available needed to implement the recommendation. Priority •Priority level is factored against all other recommendations based upon the greatest impact that is in line with the City of Hermosa Beach’s goals. Implementation Timeline •Cost, level of difficulty, and priority were all factors weighted to inform the short-, mid-, or long-term implementation goals for each recommendation. Recommended Zones for Implementation •Recommended zones indicate where the recommendation would be most beneficial for implementation based on the zone’s unique character and observed demand. Relation to Study Goals •Relation to Study Goals details how a recommendation aligns with the goals for the Coastal Zone stated in the Introduction. IMPLEMENT AN APP-BASED MOBILE PAY SYSTEM Cost: Average Level of Difficulty:Average Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#2, #3 1 DESIGN AND IMPLEMENT A DEMAND-BASED PARKING MANAGEMENT PROGRAM Cost: High Level of Difficulty:High Priority: Average Implementation Timeline: Long-Term Zones for Implementation: 1, 3, 5, 6, 7 Related Study Goals:#2, #3 2 INVEST AND IMPLEMENT IN A COMPREHENSIVE PARKING SIGNAGE & WAYFINDING SYSTEM Cost: Average Level of Difficulty:Average Priority: High Implementation Timeline: Mid-Term Zones for Implementation: All Related Study Goals:#2, #3 3 PILOT A SHARED PARKING PROGRAM AND FACILITATE SHARED PARKING4 Cost: Average Level of Difficulty:Average Priority: High Implementation Timeline: Long-Term Zones for Implementation: 5, 6, 8 Related Study Goals:#2, #3 MAXIMIZE FLEXIBILITY OF CURB SPACE TO ACCOMMODATE RIDESHARE AND OTHER MODES5 Cost: Low Level of Difficulty:Average Priority: High Implementation Timeline: Short-Term Zones for Implementation: 5, 6 Related Study Goals:#2, #3 REINVEST PARKING REVENUES INTO MULTIMODAL IMPROVEMENTS6 Cost: Low Level of Difficulty:Low Priority: Average Implementation Timeline: Mid-Term Zones for Implementation: 5, 6 Related Study Goals:#2, #3 REVISE THE ZONING CODE TO BETTER REFLECT URBAN USES AND WALKABLE COMMERCIAL USES 7 Cost: Average Level of Difficulty:Average Priority: Average Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#1, #3 ENHANCE EVENT MANAGEMENT PRACTICES TO MAXIMIZE PARKING SYSTEM FLEXIBILITY & PREDICTABILITY8 Cost: Low Level of Difficulty:Low Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#2, #3 IMPROVE THE RESIDENTIAL PARKING PERMIT PROGRAM9 Cost: Low Level of Difficulty:High Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#2, #3 IMPROVE THE EMPLOYEE PARKING PERMIT PROGRAM10 Cost: Low Level of Difficulty:Low Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#2, #3 ESTABLISH AN ONGOING COLLECTION, MONITORING, AND EVALUATION PROCESS11 Cost: Low Level of Difficulty:Low Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#2, #3 STRATEGICALLY INVEST IN THE PUBLIC AND SHARED PARKING SUPPLY IN KEY LOCATIONS12 Cost: High Level of Difficulty:High Priority: Low Implementation Timeline: Long-Term Zones for Implementation:5, 6, 8 Related Study Goals:#2 STAKEHOLDER FEEDBACK 05 STAKEHOLDER ENGAGEMENT •Parking + Enforcement Staff •Residents + Businesses In and Outside of theCoastalZone •Parking + Mobility Professionals •Commercial Real Estate Brokers •Architects/Land Planners •Commercial Property Owners/Developers •Renters Association •School District 1.Which of the strategies interest you most? 2.Do you have feedback or concerns about any of the recommendations? 3.Do you think we’ve missed any general areas of recommendations? 4.Do you agree with the relative priorities identified for near and long term solutions? 5.Do you have recommendations on best practices we should be looking at that you’ve seen in other communities that you think work well? DISCUSSION QUESTIONS 1 WHICH OF THE STRATEGIES INTEREST YOU MOST? 1 –Mobile Pay Option 2 –Demand-Based Pricing 3 –Signage and Wayfinding 4 –Shared Parking Opportunities 7 –Revisions to Zoning Code 8 –Event Parking Practices 9/10 –Revisions to Residential/Employee Parking Programs 2 DO YOU HAVE FEEDBACK OR CONCERNS ON THE RECOMMENDATIONS? o Like the idea of mobile pay as an option for businesses to provide coupons or validation or parking for customers o Bump up the daily rates for commercial use of parking (events, production) based on level of event impact –then put funds back into a parking benefit district o Shared parking opportunities would be great for both business and event uses (has not been previously allowed) o With demand-based pricing options, be sure to consider seasonality in addition to day of week, location, time of day o Opportunity to purchase the employee permit online or by app rather than requiring in-person would be helpful o Some concern about potential of shared parking agreements and logistics of implementing for public parking purposes o Stop using parking standards as a tool to stifle development and renovations. In-lieu fee is too high. 3 DO THINK WE’VE MISSED ANY GENERAL AREAS OF RECOMMENDATIONS? o Time Limits –consider adjusting time restrictions for evening hours or off-season hours so that customers can dine without worrying about a ticket at a 2 hr meter o Parking Benefit District -Creation of a district to focus revenue on improvements to downtown area on improvements like an electric shuttle/pedestrian amenities, parklets o Parking Code -Enforcement of existing code requirements which stipulate garages are to be used for parking of vehicles and not storage –leverage can be providing proof in advance of issuing annual parking permits. o Scooter Parking -Find areas for additional scooter/vespa parking 4 DO YOU AGREE WITH THE RELATIVE PRIORITIES? General Agreement on Priorities with the following exceptions: o 7 as a high priority o 8 to be considered with updates to special events policy guide o 12 to consider as part of civic center upgrades in long-term 5 DO YOU HAVE RECOMMENDATIONS ON BEST PRACTICES FROM OTHER COMMUNITIES? o Manhattan Beach –Extended time limits for evening/dinner hours allow through mobile app for overnight hours o Redondo Beach and West Hollywood –No parking minimums for smaller changes in use or redevelopment of property under certain square footage o Carmel –Central parking at top of district that encourages people to walk through downtown to get to beach o Manhattan Beach –Downtown Shuttle –maybe re-visit/look at a shuttle between the three beach cities o Mammoth Lakes –Downtown Shuttle o Paso Robles –just implemented mobile pay option and uptake and feedback is good from the businesses o Newport Beach –hourly rate escalates the longer you stay during peak periods, also includes no parking minimums o Tustin –Requires proof of garage being available prior to issuing parking permits for districts OTHER TOPICS OF DISCUSSION o Request for more focused stakeholder meetings related to the zoning standards recommendation specifically o More envisioning and planning needed for the future downtown area (decide what it wants to be/look like, etc) o Lack of outdoor dining along Upper Pier creates a “freeway” like atmosphere that funnels everyone down Pier Ave o Would like to see momentum behind these efforts to get some changes implemented o Interest expressed in understanding how the number of employee permits has changed in the last few years as more Uber/Lyft available and as more employees may be living further from Hermosa because they can no longer afford to live nearby o More envisioning and planning needed for the future downtown area (decide what it wants to be/look like, etc) STUDY NEXT STEPS 06 •Review/Approval ofStudybyPlanningCommission and Council •Updates to Local Coastal Program Reviewed by Planning Commission and Council •Review by Coastal Commission •Implementation of Strategies NEXT STEPS Questions & Discussion From: Maximus Salon <419maximus@gmail.com> Sent: Tuesday, October 1, 2019 9:21 AM To: Mayor Stacey Armato <sarmato@hermosabch.org>; Mayor Pro Tem Mary Campbell <mcampbell@hermosabch.org>; Councilmember Justin Massey <jmassey@hermosabch.org>; Councilmember Hany Fangary <hfangary@hermosabch.org>; Councilmember Jeff Duclos <jduclos@hermosabch.org> Cc: Leeanne Singleton <lsingleton@hermosabch.org> Subject: Parking Study and strategies before you. From Ed Hart 419- 421 Pier Ave, Since 1985 Dear Hermosa Beach Mayor and Councilmembers First, please allow me to empower you with your own words of wisdom from Plan Hermosa... “PLAN Hermosa presents our vision for Hermosa Beach over the next 25 years. We seek to retain our reputation as the “Best Little Beach City” while simultaneously enhancing our local economy and making strides to improve the health of our environment and our residents.” As you well know, this parking conversation it’s Not just about cars! it really is about our economic and fiscal stability, it’s about growth and progress to attain the financial strength to improve the quality of life for our residents and our environment, it’s about the future of our community and the perception of others to perceive us as the “Best Little Beach City” that we truly are. From a perspective of someone who has spend 10 hours a day, 5 days a week for the last 34.5 years on Pier Ave, and someone who has seen the good, lived through and survived the bad and the ugly economy—I must encourage you to keep on being bold and revolutionary in your decision-making and leadership, because parking related permits and policies have been crippling and strangling the life of out of our business community... as a property owner, I am very concerned about our vulnerability and our level of economic preparedness!! should we be hit by a national economic downturn,....we will be far more effected by it and our recovery time will take lots longer than our neighbouring cities, and, waiting to make policy changes then... may deem too little too late! Therefore, may I ask you to please consider using this opportunity strategically, bringing our community together to inspire investment and growth of our economy Now ...perhaps this could be a kickoff party and bringing Plan Hermosa to life! I like to finish with some encouraging thoughts from Plan Her mosa... “Be a catalyst for innovation • Our business culture cultivates innovation, the arts/creative industries, locally owned business, and environmental stewardship. 10/2/19 STUDY SESSION AGENDA SUPPLEMENTAL EMAIL SUBMITTED BY ED HART TO THE CITY COUNCIL ON 10/1/19 AT 9:21 A.M. • Innovative, forward-thinking approaches to anticipating future lifestyles, transportation trends and environmental realities are necessary for creating a durable sustainability plan.” “CATALYST FOR INNOVATION Decision-Making Tool Is this a potential catalyst for strategic, transformative, and differentiated development or is this “business as usual”? Will this define and enhance the City brand to attract businesses, investment, tourists, and like- minded residents? Will this activate community involvement, participation, and innovation?” Thank you so very much for your valuable time and being in service to our community, Best, Ed From: noreply@granicusideas.com <noreply@granicusideas.com> Sent: Tuesday, October 1, 2019 7:46 PM To: Ann Yang <anny@hermosabch.org>; City Council <citycouncil@hermosabch.org>; Suja Lowenthal <suja@hermosabch.org> Subject: New eComment for City Council Adjourned Regular Meeting (Study Session: 1. Draft Coastal Zone Parking Assessment & Recommendations, 2. Public-Private Partnerships) New eComment for City Council Adjourned Regular Meeting (Study Session: 1. Draft Coastal Zone Parking Assessment & Recommendations, 2. Public-Private Partnerships) Vincent Busam submitted a new eComment. Meeting: City Council Adjourned Regular Meeting (Study Session: 1. Draft Coastal Zone Parking Assessment & Recommendations, 2. Public-Private Partnerships) Item: 1. REPORT 19-0644 DRAFT COASTAL ZONE PARKING ASSESSMENT & RECOMMENDATIONS (Environmental Analyst Leeanne Singleton) eComment: I’m pleased to see our city is evaluating options to improve parking. I was recently invited to a meeting with city staff and other stakeholders where I was able to share some of my concerns with our current parking situation, and listen to how others see the situation. I’d like to note that the city staff was excellent - I was impressed with their knowledge of parking policy and the latest trends, as well as their attention to the pulse of the city and the desires of the residents. Moving forward, I think the best way to improve parking would be to dynamically adjust the pricing according to demand. During the peak season, our parking is too cheap, the spots are filled up, and cars stay in the space longer then need be. I’m frequently unable to find parking at all, and have reached the point where on the times that I need to drive, I won’t even head downtown during this peak season, and will just head to other businesses. Raising prices is the classic way to balance this supply and demand problem. Conversely, during the low season, there are frequently many empty spaces, and lowering the prices would attract more visitors to our town and businesses. Additionally, there are several programs operated by the city to offer much lower cost parking to some businesses and residents (I am not eligible). It doesn’t seem fair that I should effectively be subsidizing their parking and dealing with the increased trouble to find parking for their benefit. I’d also worry that extending that benefit to all residents would only compound the problem, so it’s best it be phased out. And while we’re having this discussion, while I don’t count myself a member of the business or “green” environmental communities, I support their efforts to eliminate the parking minimums. The business shouldn’t be forced to build parking they don’t need, as long as we’re not subsidizing their parking as previously mentioned. To summarize, I’d like to see the city move on the following items in conjunction: Move to demand based pricing Phase out residential and employee parking permits Eliminate minimum parking requirements From: noreply@granicusideas.com <noreply@granicusideas.com> Sent: Tuesday, October 1, 2019 8:07 PM To: Ann Yang <anny@hermosabch.org>; City Council <citycouncil@hermosabch.org>; Suja Lowenthal <suja@hermosabch.org> Subject: New eComment for City Council Adjourned Regular Meeting (Study Session: 1. Draft Coastal Zone Parking Assessment & Recommendations, 2. Public-Private Partnerships) New eComment for City Council Adjourned Regular Meeting (Study Session: 1. Draft Coastal Zone Parking Assessment & Recommendations, 2. Public-Private Partnerships) Claudia Berman submitted a new eComment. Meeting: City Council Adjourned Regular Meeting (Study Session: 1. Draft Coastal Zone Parking Assessment & Recommendations, 2. Public-Private Partnerships) Item: 1. REPORT 19-0644 DRAFT COASTAL ZONE PARKING ASSESSMENT & RECOMMENDATIONS (Environmental Analyst Leeanne Singleton) eComment: I strongly support recommendation #1: App-Based Mobile Pay system. Since our parking spaces are in so many locations, an app-based system like Redondo's recently installed "Park Smarter" solution would help alleviate parking frustration (e.g. driving in circles, pay station annoyance of waiting in line, forgetting the parking space number, etc.) and maximize our current parking footprint. Businesses definitely lose money when drivers just drive on by when they don't see a spot along their route. A parking app can be used to check for spots available even before someone leaves their current destination. It would be great to bring back the investigation of a RB, HB, MB shuttle for the summer. I know the MB shuttle vendor didn't work out, but not sure the reason. It may have been cost factors. City of Hermosa Beach Staff Report City Hall 1315 Valley Drive Hermosa Beach, CA 90254 Staff Report REPORT 19-0649 Honorable Mayor and Members of the Hermosa Beach City Council Study Session of October 2, 2019 PUBLIC-PRIVATE PARTNERSHIPS (P3) (City Manager Suja Lowenthal) Executive Summary In anticipation of future discussions regarding civic facilities and other significant infrastructure projects throughout the City,this Study Session is intended as an introductory informational workshop on the structure, principles and benefits of public-private partnerships (P3). The Study Session format will allow staff and industry professionals to cover the elements of public- private partnership financing,provide examples of successful models elsewhere in the region toward the development of comprehensive civic facility projects,and an opportunity for Councilmembers to consider and ask questions regarding potential P3 project options moving forward. Background: In addition to streets,sewers and stormwater systems,civic facilities are an important component of the City’s infrastructure.Unfortunately,the City’s facilities have been aging and their replacement has been deferred for many years.The current City Council has demonstrated a commitment to addressing these needs by making long-term financial planning and review of City infrastructure and facilities a top priority in its capital improvement program and strategic planning efforts. Toward this end,over the past few years,facility studies have been commissioned to assess the structural/seismic conditions (CivilSource Study,2015)and space/operational needs of city buildings (Mary McGrath Architects Assessment,2016).In parallel with these studies,a facilities workgroup was established comprising of representatives from the departments of Police,Fire,Public Works, Finance and the City Manager.The workgroup enlisted the services of Mary McGrath Architects to assist in developing a City Facilities Strategic Plan.This high-level plan looked at:1)Space Needs; 2)Facility Improvement/Development Scenarios,and;3)Preliminary Order of Magnitude Costs (range of costs)for the Police and Fire Stations,City Hall and Public Works Yards facility.The draft plan and development scenarios were presented to City Council for consideration and discussion at a facilities study session on May 4th,2016,with the goal of guiding the community toward a long-term vision for core facilities and helping the City Council prioritize and inform capital improvement decisions and potential funding alternatives. City of Hermosa Beach Printed on 9/30/2019Page 1 of 4 powered by Legistar™ Staff Report REPORT 19-0649 Following Council direction,in March 2016,the City issued a Request for Proposals to identify a team qualified to perform a community wide library services needs assessment in two phases.The first phase of work included conducting a space needs assessment with supporting community outreach, and the second phase of work would include using the identified space needs to develop conceptual plans and related budgets.Griffin Structures,Inc.was selected to perform the work and began Phase 1 in the fall of 2016.The final Library Needs Assessment report was submitted to the City in July 2017.Following completion of a Phase 1 in 2017,Griffin Structures,Inc.and City staff proceeded with development of conceptual site plan options and related budget estimates,which were presented to City Council for consideration at a study session in October 2017.Ultimately,City Council and the City Manager’s Department opted to hold off on further investment of consultant time until funding opportunities were fleshed out, and placed the project on hold. Since 2017,the City Council has made important decisions related to the City’s Fire services,the future of our Fire station and the closure of Bard Street,as well as the prioritization of the City’s Corporate Yard Facilities renovation project (CIP 615).Each of these decisions has significant impacts on the City’s budget and strategic planning of future civic facility improvements. As a basis for future discussions regarding the funding and prioritization of replacement or renovation of civic facilities, outlined below is a very general summary of current building conditions. Facilities Analysis City Hall The existing City Hall was built in the 1960’s and then renovated in 2000.Of the existing facilities studied,this building could serve the City for another 50 years if renovated and either reorganized or expanded to meet current staffing and service levels.Parking for staff and the public is one of the biggest challenges in expanding City Hall in its current location. Fire Station Remodel Following the transition of fire services to the Los Angeles County Fire Department,the City entered into a contract with the County to remodel the existing Fire Station per County standards.Demolition began in early October and the renovation will include a complete demolition of the second story, installation of a new roof,reconfiguration of the interior,including various other upgrades.The project is scheduled to be completed in March 2020. Public Works (Corporate) Yard The facilities at the Public Works Corporate Yard are obsolete.The oldest building,the maintenance shop,was constructed in the 19th century and the second oldest building has been in use for over 40 years.Per the CivilSource Condition Assessment Survey completed in June 2015,the site lacks basic storm water management systems and considerable maintenance and repair costs are anticipated in the years ahead.The replacement of this facility is necessary to providing a modernCity of Hermosa Beach Printed on 9/30/2019Page 2 of 4 powered by Legistar™ Staff Report REPORT 19-0649 anticipated in the years ahead.The replacement of this facility is necessary to providing a modern and safer work environment for public works staff.The FY2019-20 Adopted Budget (CIP 615)has funds set aside for the first of two phases toward the design and construction of a new City yard. Design plans for new corporate yard facilities are currently being developed. Police Station Similar to City Hall,this facility was built in the 1960’s and then renovated in 2000.However,the facility does not currently support modern policing requirements as its operational needs have outgrown the existing footprint.Furthermore,the existing police station was not built to the heightened structural criteria required for an essential facility.Renovating/relocating the Police Department has been a key element considered in previous facility strategic planning efforts by the City. Library The existing Library facility was built in the 1960’s and then refurbished in 2000.In 2015,the library was equipped with a new HVAC system.The facility is overcrowded,does not meet most current codes for accessibility,and its current footprint presents major service limitations for the community’s evolving needs.Although the building is owned and operated by the Los Angeles County Library system,the land is owned by the City of Hermosa Beach.This partnership presents an opportunity for creative funding scenarios with the County and through State grants. Community Center and Clark Building Although outdated and in need of major repairs,the Community Center and Clark Building were excluded from the draft City Facilities Strategic Plan scenarios presented to Council in May 2016 because the CivilSource study identified these buildings as being seismically sound,whereas other facilities presented more urgent action in this regard.However,if adequately rehabilitated,these facilities present significant potential for community programs and increased revenue-generating opportunities for the City. Policy Considerations: 1)Is City Council interested in pursuing public-private partnership (P3)options for comprehensive civic center improvements? 2)Shall the City prioritize key civic facility improvements beyond those already listed in the Capital Improvement Program?If so,would Council be more comfortable with renovations or rebuilding of specific facilities? 3)Following today’s discussion,City Council may decide to bring this item back as a formal agendized Council matter in order to provide specific direction for staff regarding next steps. City of Hermosa Beach Printed on 9/30/2019Page 3 of 4 powered by Legistar™ Staff Report REPORT 19-0649 Attachments: 1.SUPPLEMENTAL Introduction Slides (added 9-30-19) 2.SUPPLEMENTAL P3 Overview from Katherine Aguilar Perez (added 9-30-19) 3.Successful Public/Private Partnerships - from Principles to Practices by Urban Land Institute 4.Long Beach Civic Center Presentation 5.Link to October 4, 2017 Civic Facilities Study Session Respectfully Submitted by: Nico De Anda-Scaia, Assistant to the City Manager Approved: Suja Lowenthal, City Manager City of Hermosa Beach Printed on 9/30/2019Page 4 of 4 powered by Legistar™ PUBLIC-PRIVATE PARTNERSHIPS STUDYSESSION 10.02.19 10/2/19 STUDY SESSION AGENDA SUPPLEMENTAL INTRODUCTION SLIDES SUBMITTED BY THE CITY MANAGER'S OFFICE ON 9/30/19 AT 7:30 P.M. Overview ▪Purpose of this Study Session ▪Background Past Studies/Assessments General Condition of Civic Facilities ▪Public-Private Partnerships, Examined ▪Policy Considerations ▪Vision Forward Attachments to Session Agenda ▪Staff Report and General Background ▪P3 Overview (Katherine Aguilar Perez –LA Cities Leader) ▪Successful Public/Private Partnerships –from Principles to Practices (Urban Land Institute) ▪Long Beach Civic Center Presentation (City of Long Beach) ▪Oct. 4, 2017 Civic Facilities Study Session –Report and Related Materials (City of Hermosa Beach) Past (Most Recent) Assessments ▪Civil Source Study (2015) –Structural/Seismic Study ▪Mary McGrath Architects (2016) –Space/Operational Needs Assessment ▪Library Needs Assessment (2016) –Phase 1: Space and Community Needs Assessment with Supporting Community Outreach (Completed in 2017) –Phase 2: Development of Conceptual Plans and Related Budgets (On hold) CONDITION OF FACILITIES •City Hall •Fire Station Remodel •Public Works (Corporate) Yard •Police Station •Library •Community Center •Clark Building Funding Scenarios ▪Public Financing/General Obligation Bond ▪County Partnership ▪P3 Model Policy Considerations 1.Is Council interested in pursuing public-private partnership (P3) options for comprehensive civic center improvements? 2.Shall the City prioritize key civic facility improvements beyond those already listed in the Capital Improvement Program? If so, would Council be more comfortable with renovations or rebuilding of specific facilities? 3.Following today’s discussion, City Council may decide to bring this item back as a formal agendized Council matter in order to provide specific direction for staff regarding next steps. 4.Other considerations? Alternative Delivery of Public FacilitiesPublic Private Partnerships (P3’s) October 2, 2019 Katherine Aguilar Perez Associate Principal, LA Cities Leader 10/2/19 STUDY SESSION AGENDA SUPPLEMENTAL PRESENTATION SLIDES SUBMITTED BY KATHERINE AGUILAR PEREZ TO THE CITY MANAGER'S OFFICE ON 9/29/19 AT10:14 P.M. What are Public Private Partnerships (P3s)? Classic Real Estate P3s 3 P3s for Public Facilities 4 Thinking inception through the end of useful life. Traditional Design-Bid-Build (DBB) Structure 5 6 Risk Continuum Design-Bid-Build DBB DB Design-Build DBF DBFOM Design-Build-Finance Design-Build-Finance- Operate-Maintain USHSR Conference –Los Angeles. March 2017 Overview of Project Finance Structure Equity LendersProject Company Design Build Contractor DB Contract O&M Contract Facilities Management Coordination Agreement Lending Agreements Project Sponsor DBFOM Agreement USHSR Conference –Los Angeles. March 2017 Project Cashflow Comparison 1 2 3 4 5 6 7 8 30 DBB 1 2 3 4 5 6 7 8 30 DBFOM Design and Construction Operations Years YearsPaymentsPayments USHSR Conference –Los Angeles. March 2017 9 Procurement Considerations Partner Selection Market Engagement Clear Value Proposition Strong Project Rationale USHSR Conference –Los Angeles. March 2017 Key Ingredients of Successful P3s 10 The Long Beach Civic Center Project Overview Why a P3? ▪No new general fund obligation (no need for a voter-approved bond) ▪The lowest risk and shortest delivery model ▪Project Team assumes all risks of design, development, entitlement, change orders, cost overruns, construction delays and long-term operations and maintenance ▪City to occupy existing facilities until new facilities are available ▪Strategic forethought in the design of future O/M costs ▪After 40 years, the facility is transferred to the City in 85% “like new” condition ▪Monetize excess land on site with private development ▪Annual availability payment, adjusted by CPI for 40 years 12 13 14 Long Beach Civic Center Site Plan Long Beach Civic Center August 2019 15 Key Takeaways ▪Learn from others: Long Beach Courthouse was our example ▪Identify a Revenue Source: P3 needs a stable revenue stream ▪Analyst-Up: Get some professional help! ▪Identify Full Life Cycle Costs: compare apples to apples ▪Meet and Confer with employee associations/unions is key ▪Look at all your options ▪Know and understand the benefits and the risks, and what risks are worth transferring ▪Consider DBFOM for eligible projects, but not appropriate for all projects 16 17 Thank you Katherine Aguilar Perez Associate Principal | Los Angeles Cities Leader Arup 900 Wilshire Blvd., 19th Floor Los Angeles CA 90017 USA t:+1 310 578 4400 d:+1 310 578 2856 m:+1 310 633 4071 e: katherine.perez@arup.com www.arup.com USHSR Conference –Los Angeles. March 2017 FROM TO Public/Private PARTNERSHIPS SUCCESSFUL PRINCIPLES PRACTICES EDITED BY STEPHEN B. FRIEDMAN ULI Public/Private Partnership Councils FROM TO Public/Private PARTNERSHIPS SUCCESSFUL PRINCIPLES PRACTICES EDITED BY STEPHEN B. FRIEDMAN ULI Public/Private Partnership Councils Recommended bibliographic listing: Friedman, Stephen B., editor. Successful Public/Private Partnerships: From Principles to Practices. Washington, DC: Urban Land Institute, 2016. ISBN: 978-0-87420-378-3 © 2016 by the Urban Land Institute 2001 L Street, NW Suite 200 Washington, DC 20036-4948 Cover photos: center: Crossings/900, Redwood City, California (Chad Ziemendorf); top left: Shops and Residences of Uptown Park Ridge, Park Ridge, Illinois (OKW Architects, photographer: Charlie Mayer); top right: Governor George Deukmejian Courthouse, Long Beach, California (© Robb Williamson/AECOM). All rights reserved. Reproduction or use of the whole or any part of the contents without written permission of the copyright holder is prohibited. II About the Urban Land Institute The mission of the Urban Land Institute is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. ULI is committed to ■■Bringing together leaders from across the fields of real estate and land use policy to exchange best practices and serve community needs; ■■Fostering collaboration within and beyond ULI’s membership through mentoring, dialogue, and problem solving; ■■Exploring issues of urbanization, conservation, regeneration, land use, capital formation, and sustainable development; ■■Advancing land use policies and design practices that respect the uniqueness of both the built and natural environments; ■■Sharing knowledge through education, applied research, publishing, and electronic media; and ■■Sustaining a diverse global network of local practice and advisory efforts that address current and future challenges. Established in 1936, the Institute today has more than 38,000 members worldwide, representing the entire spectrum of the land use and development disciplines. Professionals represented include developers, builders, property owners, investors, architects, public officials, planners, real estate brokers, appraisers, attorneys, engi- neers, financiers, academics, students, and librarians. ULI relies heavily on the experience of its members. It is through member involvement and information resources that ULI has been able to set standards of excellence in development practice. The Institute has long been recognized as one of the world’s most respected and widely quoted sources of objective information on urban planning, growth, and development. About the ULI Foundation The mission of the ULI Foundation is to serve as the philanthropic source for the Urban Land Institute. The Foun- dation’s programs raise endowment funds, major gifts, and annual fund monies to support the key initiatives and priorities of the Institute. Philanthropic gifts from ULI members and other funding sources help ensure ULI’s fu- ture and its mission of providing leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. About the Public/Private Partnership Council The mission of the Public/Private Partnership Council (PPPC) is to develop, refine, and disseminate best practices for effective real estate public/private partnerships. The Council is a vibrant community of practitioners who learn from one another through hands-on examination of projects, discussion and debate of emerging industry trends, and the development of resources to improve outcomes for both the public and private sectors. The Council offers members the opportunity to examine completed projects in the cities where it meets through first-hand review of sites and presentations by the public/private development teams that made them happen. All property types are considered by the Council, as long as they have a tangible development and investment component from public and private sources. III ULI Senior Executives Patrick L. Phillips Global Chief Executive Officer Michael Terseck Chief Financial Officer/Chief Administrative Officer Cheryl Cummins Global Governance Officer Jeanne R. Myerson Chief Executive Officer, Americas Lisette van Doorn Chief Executive Officer, ULI Europe John Fitzgerald Chief Executive Officer, ULI Asia Pacific Kathleen B. Carey President and Chief Executive Officer, ULI Foundation Adam J. Smolyar Chief Marketing and Membership Officer Steve Ridd Executive Vice President, Global Business Operations Stephanie Wasser Executive Vice President, Member Networks ULI Project Staff Kathleen Carey President and Chief Executive Officer, ULI Foundation James A. Mulligan Senior Editor Laura Glassman, Publications Professionals LLC Manuscript Editor Betsy Van Buskirk Creative Director John Hall Design Group, Beverly, Massachusetts Book Design and Production Craig Chapman Senior Director, Publishing Operations About This Report This document was the work of a committee organized from the membership of the ULI Public/Private Partnership Councils, both the Gold and Blue Flights. Organizer Tyrone Rachal, Principal, Red Rock Global Chair and Editor Stephen B. Friedman, President, SB Friedman Development Advisors Contributing Authors Mark Burkland, Partner, Holland & Knight Joseph E. Coomes Jr., Of Counsel, Best Best & Krieger* Stephen B. Friedman, President, SB Friedman Development Advisors* Jeffrey Fullerton, Director, Edgemoor Infrastructure and Real Estate Clayton Gantz, Partner, Manatt, Phelps & Phillips LLP* Ryan Johnson, Director, Edgemoor Infrastructure and Real Estate Neisen Kasdin, Office Managing Partner, Akerman LLP Charles A. Long, Principal, Charles A. Long Properties David Scheuer, President, the Retrovest Companies † Russ Weyer, President, Real Estate Econometrics Inc.* *Editing Committee †Deceased Other Committee Members Peter DiLullo, LCOR Inc. Sakura Namioka Brad Power Cassie Stinson, Shareholder, Boyar Miller Support Grace Kim, Marketing Director, SB Friedman Development Advisors Jess Zimbabwe, Executive Director, Rose Center for Public Leadership, National League of Cities and the Urban Land Institute Financial Support ULI Foundation I v This report is dedicated to the memory of David Scheuer, late president of the Ret- rovest Companies, Burlington, Vermont. David contributed to this report and more im- portantly was an environmentally sensitive and award-winning developer who practiced the art and science of high-quality development through public/private partnerships. He was also a leader in promoting ULI’s Healthy Places Initiative. He succumbed to ALS in August 2015 before this project was complete. He will be missed at ULI and from the ongoing effort to bring about better places through the collaborative and cooperative efforts of the public and private sectors. DEDICATION DEDICATION v 1 Introduction .........................................................................................................2 Joseph E. Coomes Jr. and David Scheuer2 What We Mean When We Say Public/Private Partnership ................................6 Joseph E. Coomes Jr., Mark Burkland, and Jeffrey Fullerton3 From Principles to Practices ...............................................................................14 CREATING A SHARED VISION AND PUBLIC PURPOSE ...............................................16 Neisen Kasdin ASSEMBLING THE DEVELOPMENT TEAM ..................................................................20 Mark Burkland and David Scheuer PROACTIVE PREDEVELOPMENT FOR SUCCESSFUL PPPS ...........................................24 Clayton Gantz CREATING RELATIONSHIPS BETWEEN DEVELOPERS ................................................28 AND PUBLIC BODIES Stephen B. Friedman and Clayton Gantz THE “BUT FOR” PROBLEM AND THE NEED TO MAKE A FAIR DEAL .........................32 Stephen B. Friedman and Charles A. Long ASSESSING FISCAL IMPACTS AND COMMUNITY BENEFITS OF PPPS ........................38 Russ Weyer STRUCTURING DEVELOPMENT PARTNERSHIP DEALS ...............................................42 Stephen B. Friedman and Charles A. Long EVALUATING AND STRUCTURING INFRASTRUCTURE AND FACILITY PPPS ..............52 Jeffrey Fullerton and Ryan Johnson MANAGING RISK AND SHARING SUCCESS ................................................................58 Joseph E. Coomes Jr. and Charles A. Long DOCUMENTING AND MONITORING DEALS ..............................................................60 Mark Burkland 4 Conclusion ..........................................................................................................63 Stephen B. Friedman, Joseph E. Coomes Jr., and Clayton Gantz Resources ...........................................................................................................65 NOTES ...........................................................................................................................66 CONTENTS INTRODUCTION JOSEPH E. COOMES JR. AND DAVID SCHEUER SB Friedman Development AdvisorsSouth Campus, University of Illinois at Chicago, Chicago, Illinois. 1 2 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS T en years ago, the Urban Land Institute published Ten Principles for Successful Public/Private Partnerships.1 That publication set forth core principles essential for successful accomplishment of joint development by the public and private sectors, benefiting both, that neither could achieve independently. Those ten principles remain as applicable today as they were then, but the challenges facing urban development have changed dramatically. >>> INTRODUCTION 3 Today, ULI’s priorities include leadership in global and domestic initiatives to improve quality of life and global competitiveness, including the following: ■■Supporting infrastructure investment to enhance competitiveness and sustainability; ■■Providing diverse and affordable housing; ■■Developing sustainable communities in economic, environment, social, and quality-of-life aspects; ■■Building healthy places by urban design that pro- motes personal and public health; and ■■Creating resiliency in public and private infrastruc- ture, buildings, and facilities to respond to and rebuild with less fragility in the wake of natural disasters, which appear to be increasingly more frequent and severe as a result of climate change. At the same time, new challenges face a public sector with diminished resources: ■■Meeting the needs of the aging baby boomer cohort; ■■Understanding the needs of the millennial cohort, the largest in U.S. history; ■■Addressing increased ethnic and racial diversity; ■■Coping with the national infrastructure deficit; ■■Linking transportation to land use and infill development; ■■Creating opportunities for affordable and workforce housing; ■■Stimulating job creation; ■■Improving access to high-quality education and health care; ■■Reducing carbon emissions; ■■Fostering global economic competitiveness; and ■■Incorporating principles of resilient, sustainable, and healthy communities into planning and community development practices. These challenges require a collaborative effort by the public and private sectors to effectively use the resources and skills of each to shape and carry out de- velopments that respond to these challenges. Neither sector can accomplish this task alone; hence, PPPs in development, infrastructure, and public facilities are a continuing necessity. As the Brookings Institution, based on case studies of selected metropolitan regions, recently stated: The tectonic plates are shifting. Across the nation, cities and metros are taking control of their own destinies, becoming deliberate about their eco- nomic growth. Power is devolving [from federal and state governments] to the places and people who are closest to the ground and oriented toward collaborative action.3 IN 2005, REAL ESTATE MARKETS WERE BOOMING and provided numerous examples of successful public/private partnerships (PPPs), many of them involving the use of public redevelopment authority and tax increment financing. In 2004 alone, $75 billion was spent nationally through PPPs on economic development and urban renewal projects.2 The recession that began in 2008 brought most real estate development to a halt, caused capital markets to dry up, precipitated several municipal bankruptcies, and left governments at all levels financially stressed. Although economists say the recession technically ended in June 2009, the trough was so deep that even in 2016 recovery is not complete. Whereas markets in some regions have recovered completely, others are still struggling. But everywhere, PPPs have become critical to enabling the transformations that are taking place in our urban environment in both primary and secondary markets, using new methods of financing from a variety of sources, including significant foreign investment. Ten Principles for Successful Public/Private Partnerships Mary Beth Corrigan et al., Ten Principles for Successful Public/Private Partnerships (Washington, DC: ULI, 2005), 1. 1. Prepare properly for public/private partnerships 2. Create a shared vision 3. Understand your partners and key players 4. Be clear on the risks and rewards for all parties 5. Establish a clear and rational decision-making process 6. Make sure all parties do their homework 7. Secure consistent and coordinated leadership 8. Communicate early and often 9. Negotiate a fair deal structure 10. Build trust as a core value 4 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS PPPs have never been easy. As the Ten Principles illustrated, successful PPPs require the building of trust between the public and private sectors and a change in mind-sets: for the public sector, from development regulator to facilitator of economically feasible projects providing public benefits, and for the private sector, from an adversarial private role as an applicant for development permits to a collaborative, open, and transparent role in negotiating profitable projects with public benefits. The divide between the two sectors is reflected in the survey summarized in the adjacent sidebar. However, creating effective PPPs is more necessary today than ever, given public sector needs and fiscal constraints when faced with challenging urban issues. In Ten Principles, PPPs were considered “creative alliances” formed between a government entity and private developers to achieve a common purpose. Over the past ten years and in the future, the need for these creative alliances is expanding in three broad areas: (a) to facilitate the development of a real estate asset to achieve greater benefits for both the public and private sectors; (b) to develop and ensure the maintenance of critical infrastructure; and (c) to design, build, operate, and maintain public facilities, all in the service of the goal of building sustainable, healthy, and resilient communities. The purpose of this publication is to build on the Ten Principles to provide public and private sector representatives with an understanding of both the necessity for, and the obstacles and opportunities inherent in, PPPs and a toolkit of best practices for the creation of effective PPPs. It is written with the goal of helping both the public and private sectors understand each other’s needs, expectations, and resources. It is intended to be applicable to a broad range of communities, not just large cities or other jurisdictions undertaking news-making projects. Ex- amples have been intentionally selected to be widely applicable. The next chapter distinguishes the three most com- mon types of PPPs, and chapter 3 discusses key prac- tices to build on the principles established in the Ten Principles. These include the necessity for creating a shared vision, assembling the right public and private teams, using proactive predevelopment to prepare for a PPP, establishing working relationships between the public and private sectors, demonstrating that a PPP is a fair deal, identifying fiscal impacts and demonstrating community benefits, structuring PPP development deals, using a value-for-money (VfM) analysis to test the benefits of PPPs for facilities and infrastructure, managing risks and sharing success, and documenting and monitoring a PPP. Best practic- es for success are summarized in the conclusion. 6. Make sure all parties do their homework 7. Secure consistent and coordinated leadership 8. Communicate early and often 9. Negotiate a fair deal structure 10. Build trust as a core value PUBLIC/PRIVATE SECTOR SURVEY CHARLES A. LONG ULI’s Public/Private Partnership Council surveyed its membership on their percep- tions of the significant challenges in crafting partnerships and the skill needed for both the public and private sectors. Here are the questions and the results of the survey. 1. Where are the greatest challenges in crafting effective public/private partnerships? 2. What expertise does the public sector need? 3. What expertise does the private sector need? Source: Charles A. Long Properties, Survey Monkey. Public sector understanding of private capital criteria and return requirements Validating the “fairness” of the deal to the public sector Negotiations dynamic—too much hard bargaining, not enough trust building Lack of public support for “public subsidies” Public sector understanding of risk of loss in predevelopment Determining a fair rate of return to the private sector Private sector understanding of public financing and investment constraints Sharing proprietary information Validating market and cost assumptions Public sector’s unreasonable performance schedule Private sector understanding of need to create community ownership Private sector lack of commitment to working with community groups Public sector selecting a developer based on “pretty pictures” instead of performance 60.98% 51.22% 48.78% 41.46% 36.59% 34.15% 24.39% 24.39% 14.63% 14.63% 12.20% 12.20% 9.76% Real estate finance—capital sources and required returns Standards providing a fair return to the private sector and protecting the public sector from “giving away the store” How to manage negotiations so they are transparent and respect proprietary information Negotiation as problem solving not hard bargaining How to reduce predevelopment risk and still achieve the community vision Risk profiles for each state of development How to build community support How to select a developer based on qualifications 58.54% 56.10% 43.90% 41.46% 39.02% 29.27% 24.39% 17.07% How to explain the project risk profile and capital financing so the public agency can respond effectively How to engage the community and create ownership How to create a deal that is fair to the public sector Negotiation as problem solving not hard bargaining The range of public sector tools that can reduce risk, lower financing costs, and address a financing gap Entitlement processing steps and their potential impact on project viability and processing time How to participate in negotiations so they are transparent and respect proprietary information 63.41% 46.34% 46.34% 43.90% 34.15% 24.39% 24.39% INTRODUCTION 5 WHAT WE MEAN WHEN WE SAY PUBLIC/PRIVATE PARTNERSHIP JOSEPH E. COOMES JR., MARK BURKLAND, AND JEFFREY FULLERTON Governor George Deukmejian Courthouse, Long Beach, California.© Robb Williamson / AECOM2 6 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS F or our purposes, public/private partnerships take three forms. The first section of this chapter summarizes the functions of a more traditional PPP, formed to develop or redevelop an area or a site in a community. The following two sections describe the use of PPPs as a tool to develop public infrastructure or as a method for a public body to realize the monetary value of an asset it holds that is unnecessary, is underused, or otherwise lacks value in its current form. The public partner may be any of a number of >>> WHAT WE MEAN WHEN WE SAY PUBLIC/PRIVATE PARTNERSHIP 7 governmental entities—municipalities, special districts, counties, states, and authorities. Throughout the report we often refer to these entities as municipal- ities as an all-inclusive term, which mirrors the new language of financial regulation in which all state and local issuances of securities are considered “municipal” and under the supervision of the Municipal Securities Regulatory Board (MSRB). Using PPPs to Facilitate Development of a Real Estate Asset or Community Area Development PPPs have the power to develop or redevelop an area or site, often blighted or underused, within a community. The partnership may be proac- tively initiated by a municipality to achieve key public objectives, such as downtown revitalization, affordable housing, industrial and commercial development, transit-oriented development, or neighborhood services. The municipality may have public land to include in a project or may be seeking to repurpose a surplus public facility for private use and return it to the tax rolls. A development PPP may also be initiated when a devel- oper envisions a project but cannot realize that vision without the help of the host municipality. The developer may need assistance with site assembly, remediation, extraordinary site preparation, public facilities, overly restrictive zoning, costs of structured parking, rebuilding infrastructure to serve the development or to access water and sewer services, stormwater management, or the like in a newly developing area (greenfield). Here is a familiar situation: The downtown business district of a bedroom community is distressed. A few businesses remain, but many buildings host nonretail tenants or have been shuttered. The post office and library generate some foot traffic, but not much. The municipality has revised its zoning regulations to encourage development. A developer sees an opportunity to build a mixed-use building but faces challenges: ■■The property may have been contaminated by operations of a long-shuttered gas station on abutting property. ■■The developer is struggling to acquire that abutting property, which is essential to the project. ■■The project requires numerous variances from the municipality’s newly revised zoning standards or a dramatic switch to form-based zoning. ■■The project requires upgrades to aging public infrastructure, including water and sewer mains and street reconstruction. ■■The first-floor retail component of the building won’t be viable any time soon. The building must contain a sufficient number of residential units to sustain the project. ■■The municipality would like the project to be a catalyst for further development in the area in which it is located The developer and municipality meet, and the seed of a partnership is planted. The municipality is eager for the project but wary of the developer’s numerous requests for assistance and of taking on too much financial risk. Issues are discussed touching every ele- ment of the project—from the exercise of the munici- pality’s eminent domain power to the size and design of the building; the establishment of a tax increment financing (TIF) district and issuance of TIF bonds for infrastructure improvements; the must-be-anticipated assault from nearby residents who will just hate how tall and ugly the building is; and the myriad other is- sues, standards, and milestones integral to the project. Partnerships between developers and host municipal- ities are necessary for several reasons: ■■Municipalities now expect that every significant development will benefit the municipality in ways in addition to attracting new residents or businesses. Those benefits may be traditional, such as infrastruc- ture improvements, or more contemporary, such as long-term sharing of the costs of infrastructure main- tenance or other traditionally public services, or the creation of community-building amenities, such as plazas, parks and open space, public art, or bikeways. Public/private partnerships are considered “creative alliances” formed between a government entity and private developers to achieve a common purpose. Other actors have joined such partnerships—including nongovernmental institutions, such as health care providers and educational institutions; nonprofit associations, such as community-based organizations; and intermediary groups, such as business improvement districts. Citizens and neighborhood groups also have a stake in the process. Ten Principles, v. 8 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS ■■Developers are more wary of financial risks be- cause of municipalities’ higher expectations, long and expensive entitlement processes, social media mobilization of opposition, and decision-making processes fraught with politics. ■■A municipality may see a favorable opportunity to invest in a project or project infrastructure. ■■A developer may need resources outside the four corners of its project to achieve economic viability and meet the goals of the municipality. When an effective PPP is formed, the needs noted can be met, financial and political risks can be better managed, and other controversy can be anticipated and mitigated. The range and scope of a partnership is limited only by enabling laws and the parties’ collective imagination: ■■Brownfield development, where a partnership can ease the burdens on both the developer and the municipality of regulatory processes, unanticipated obstacles and their costs, and public controversy; ■■Redevelopment of industrial property, which may involve environmental issues, railroads, and other regulatory hurdles; ■■Area-wide revitalization projects that require land assembly, regulatory compliance, and infrastructure improvements; ■■Infill site redevelopment, mixed-income housing, and transit-oriented development with their atten- dant planning and zoning challenges; and ■■Funding of public amenities or infrastructure in strategic locations to spur economic growth (as discussed further in the following section). Using PPP Tools to Develop Critical Infrastructure An infrastructure PPP is a partnership arrangement in the form of a long-term performance-based contract between the public sector (any level of government) and the private sector (usually a team of private sector companies working together) to deliver public infra- structure for citizens. A PPP could be created for any kind of infrastructure or service, such as a new hospital or bridge or highway, a new type of technology that delivers services in a faster and more efficient manner, or a new federal government building—anything that citizens typically expect their governments to provide. Figure 2-1 summarizes both the benefits and limita- tions of these types of partnerships. Emerging from the recession, many municipalities, as well as state and federal agencies, found themselves struggling with the dual problem of an increasing public debt burden and an increasing infrastructure deficit. In 2013, the American Society of Civil Engineers pegged the U.S. infrastructure deficit at $3.6 trillion. The need for internationally competitive infrastructure and the potential benefits noted in figure 2-1 have caused many public agencies of American jurisdictions to begin looking at the variety of PPPs used around the globe to deliver long-term infrastructure and their core public service missions expediently. These types of partnerships combine the strengths of both the public and private sectors. A typical infrastructure PPP transaction involves a public entity procuring a suite of services from a private entity to deliver some or all phases of development, design, construction, financing, and operations (design/build/finance/operate/maintain, or DBFOM). Each project uses some or all of the DBFOM suite, depending on the needs of the public sector. By including long-term maintenance in the procure- ment, agencies are ensuring they are not repeating the mistakes of the past that have caused building systems, roads, bridges, and water infrastructure to fail from chronic deferred maintenance. By including financing in the procurement, agencies can more effectively time the revenues associated with the economic uplift from the projects with the related expenditures for the infrastructure and thus effect risk transfer. Through design/build procurement in a competitive environment, agencies can harness private sector innovation while increasing the speed to market of critical infrastructure. PPPs for infrastructure enable the public sector to transfer risks to the private sector, which is a proven factor in their success. Risks typically transferred can include the risk of construction cost overruns, timing of delivery, and long-term maintenance and life-cycle costs. Infrastructure PPPs enable faster project delivery than traditional public procurement methods and can FIGURE 2-1 Summary of PPP Benefits and Limitations Potential benefits • Project risks transferred to private partner • Greater price and schedule certainty • More innovative design and construction techniques • Public funds freed up for other purposes • Quicker access to financing for projects • Higher level of maintenance • Project debt kept off government books Potential limitations • Increased financing costs • Greater possibility for unforeseen challenges • Limited government flexibility • New risks from complex procurement process • Fewer bidders Source: Legislative Analyst’s Office, Maximizing State Benefits from Public-Private Partnerships, November 8, 2012. WHAT WE MEAN WHEN WE SAY PUBLIC/PRIVATE PARTNERSHIP 9 often be used to preserve public sector debt capacity for additional projects. Throughout the world, this transaction structure has been used to deliver a wide range of public assets, including highways, mass tran- sit, airports, and public buildings. Although these in- frastructure PPPs have been commonplace in Canada, India, Europe, and Australia for decades, they are now increasingly being looked at in the United States to address a growing list of critical infrastructure needs. American public procurement strategies traditional- ly follow a design/bid/build procurement methodology. This method isolates the various aspects of asset deliv- ery. Each aspect is usually completed by independent teams as each activity is completed in a linear fashion. In contrast, a more integrated PPP model can be used by the public agency to contract for a more holistic result. By combining the aspects of real estate delivery, financing, and long-term operations and maintenance, public agencies can encourage more collaboration and high-quality delivery. One of the great benefits of public/private part- nership is that one size does not have to fit all, and FIGURE 2-2 Risk-Transfer Spectrum in a Turnkey Public Facility & Design AGENCY RISK PRIVATE RISKRISK CONTINUUMDevelopment Design & Construction O&M/ Life-Cycle Costs Financing Development Design & Construction O&M/ Life-Cycle Costs Financing Development Design & Construction O&M/ Life-Cycle Costs Financing Development & Design Construction O&M/ Life-Cycle Costs Financing AGENCY RISK RISK TRANSFERRED TO PRIVATE SECTORKEY: Design/Bid/Build (DBB) TRADITIONAL DBB RISKS • In traditional DBB, the agency retains all risk of development, design and construction, financing, and operation and maintenance/life-cycle costs Turnkey/Design/Build (TDB) DEVELOPMENT, DESIGN, AND CONSTRUCTION RISKS TRANSFERRED UNDER TURNKEY APPROACH (COST AND SCHEDULE) Turnkey/Design/Build/Finance (TDBF) FINANCING RISKS • Alternative private financing Turnkey/Design/Build/Finance/Operate/Maintain (TDBFOM) O&M/LIFE-CYCLE RISKS • Entitlement delays • Permit delays • Utilities (cost and schedule) • Site issues • Attracting third-party tenants • Change orders • Schedule delays • Scope creep • Code compliance • Baseline operating costs • Uncontrolled operating cost escalations • Energy/performance • Deferred maintenance • Deferral of major equipment and component replacements Source: © Edgemoor Infrastructure & Real Estate LLC. Note: O&M = operation and maintenance. 10 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS agencies can determine which risks are best managed by private sector parties (and thus transferred) and which are best retained. For example, a spectrum of risk transfer in a turnkey public facility is represented by figure 2-2. In considering where to land on the spectrum, pub- lic agencies need to consider a host of issues specific to the infrastructure or public facility they seek to deliver to the public. When considering an infrastruc- ture PPP, public agencies should ask questions such as the following: 1. Is this a complex asset that would benefit from private sector innovations and that would capture more creativity by transferring design/build risk to the private sector? 2. Is there a benefit to accessing private financing for public infrastructure? a. Does introducing private equity ensure more robust delivery and long-term operations? b. Does limited availability of traditional public financing necessitate using private capital for critical infrastructure? c. Does assigning revenue risk to the private sector come with social consequences because the con- sortium sets tolls or other rates for use? d. How can risk be shared or transferred from public to private as noted in figure 2-3? 3. By including maintenance and/or performance- based payment structures in the deal, does the pub- lic get a high-quality product over the long term? 4. Can the private sector use tools that are otherwise unavailable to a public agency to create value (e.g., subleasing a part of a facility, creating and monetiz- ing private development opportunities as part of the project)? If some or all of the preceding objectives are important, the public agency should consider a PPP. As an example, consider the delivery of the South County Secondary School in Lorton, Virginia. Under the traditional procurement process, the district would have delayed this project by several years, waiting for funding authority and ultimately paying more for the asset. By engaging a private developer in a PPP model, the district was able to reduce cost through design/ build innovation and used a creative private financing strategy that monetized excess. The school was deliv- ered three years faster and created $25 million in value that would not otherwise have been realized. One common tenet of any infrastructure PPP is that it typically allows faster delivery of public assets because the private sector is willing to take risk to advance the project. Figure 2-4 gives a hypothetical timeline comparison. Infrastructure PPPs are not the same as the privatiza- tion of public assets. In a privatized asset scenario, the assets are sold; but in an infrastructure PPP, owner- ship of the underlying land and improvements often remains with the public sector and, critically, the public sector is a key decision maker throughout the entire development and operation process. This participation is typically accomplished with a service agreement that details performance requirements for the private sector’s delivery of some or all of designing, building, financing, operating, and maintaining a building or piece of infrastructure. Life-cycle maintenance and upgrades by the private sector can mitigate the exten- sive buildup of deferred maintenance costs that are characteristic of many publicly owned facilities. To determine whether an infrastructure PPP makes sense for the delivery of a given public asset, the public sector can perform a value-for-money (VfM) analysis. This analysis compares the public sector’s cost to deliver and operate an asset using a traditional method such as design/bid/build with the public sec- tor’s cost to deliver and operate the same asset under a PPP arrangement. The mechanics of the VfM analysis are discussed further in chapter 3. Monetizing Public Assets for Public Benefit Public asset PPPs are partnerships that find ways to unlock the existing monetary value found in many public assets today. Whether through an outright sale, FIGURE 2-3 Major Risks Transferred in PPP Agreements Financing risks • Changes in financing costs • Estimated and actual inflation Design and construction risks • Interface between design and construction • Discovery of endangered species • Discovery of archeological, paleontological, or cultural resources • Discovery of hazardous materials • Discovery of unknown utility lines • Delays in getting permits approved Operation and maintenance risks • More facility maintenance required than planned • Operation of facility more costly than planned • Standards or requirements imposed in the future Revenue risks • Use of the facility lower than predicted • Public less willing to pay user fees than projected Source: Legislative Analyst’s Office, Maximizing State Benefits from Public-Private Partnerships, November 8, 2012. WHAT WE MEAN WHEN WE SAY PUBLIC/PRIVATE PARTNERSHIP 11 ground lease, or other transaction mechanism, the proceeds from the monetization of these public assets are then used to provide additional public benefit. Numerous types of public assets are good candidates for public asset PPPs, and the uses of the proceeds are seemingly endless. Potential underused public sector assets include the following: ■■Vacant land; ■■Surplus buildings; ■■Air rights; ■■Parking lots and garages; ■■Transit stations; ■■Assets on sites with higher and better uses; ■■Utility systems and infrastructure; ■■Fleet and equipment; and ■■Energy savings through cured deferred maintenance. The public sector must factor in a number of con- siderations before embarking on a public asset PPP. Does the asset in question play a role in long-term master-planning considerations for the public sector? Might existing legal, financial, environmental, or other aspects of the asset make a private sale or transfer difficult to execute? Does sufficient market demand exist for the asset? Selecting an appropriate private sector partner for a public asset PPP is a crucial decision. Finding a partner who has a proven track record with similar asset sales is a key factor, because that can play a significant role in the ultimate value the public sector is able to cap- ture from the partnership. Another key aspect of a public asset PPP is deter- mining a clear use for the proceeds of the asset mon- etization that will be beneficial to the public. Perhaps less clear-cut than a VfM analysis but no less import- ant, the public sector must analyze its current position and be certain that the monetization of an existing asset will ultimately provide more benefit to the public than keeping it as is. Monetization has not been with- out controversy, such as the monetization of parking and airports used to provide short-term monetary ben- efits to a municipality, for example to fill an operating budget gap, rather than reinvesting in further capital improvments or other longer-term strategies. No matter the type of public/private partnership, the principles for success discussed in this report apply. FIGURE 2-4 Hypothetical Timeline Comparison for Infrastructure PPP DESIGN/BUILD DESIGN/BID/BUILD TIME SAVINGS 6 months 12 months 18 months 24 months 32 months 38 months DESIGN CONSTRUCTION DESIGN CONSTRUCTION BID Source: © Edgemoor Infrastructure & Real Estate LLC. Facing page: Shops and Residences of Uptown Park Ridge, Park Ridge, Illinois. 12 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS OKW Architects; Photographer: Charlie MayerWHAT WE MEAN WHEN WE SAY PUBLIC/PRIVATE PARTNERSHIP 13 FROM PRINCIPLES TO PRACTICES Shops and Residences of Uptown Park Ridge, Park Ridge, Illinois.OKW Architects; Photographer: Charlie Mayer3 14 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS T he ten principles recapped in the introduction continue to provide a basic frame- work for thinking about appropriate public/private partnerships. Many specific tools and techniques have been used and refined to help implement the principles in the often challenging realm of real estate development and redevelopment. Each section of this chapter provides additional detail on techniques and methods that have been found to help apply the principles to successful development programs. >>> FROM PRINCIPLES TO PRACTICES 15 Creating the Vision The process of developing a shared vision is far more extensive, expensive, and time-consuming than either private developers or many public officials would like. The vision can be the product of a community planning or visioning process; a developer-generated vision; or a combination of both: that is, a government vision or master plan, shaped and refined with com- munity input, and implemented by a developer. Understanding the difference between a vision plan and a master plan is important. A master plan is a more detailed plan, which is prescriptive about uses, urban design, and development regulations, such as height, density, and the like. A vision plan speaks more broadly to uses, character, and scale of an area. Vision plans are typically more helpful than prescriptive master plans. The former afford the developer the flexibility to shape the project based on the reality of the market. Informed Vision An informed vision is one that is based on solid market analysis, planning, and business principles and relates to historical trends and a realistic projection of future possibilities. It is not based on the whim or unrealistic expectations of a political leader or constituent group. The vision may be created by a small group of business or civic leaders or enlightened government officials, working with professional planners, architects, and economists. That vision is then ready to be explained, shared, and shaped with constituent groups and stakeholders. Alternatively, an increasing number of examples of stakeholder-engaging processes, properly informed by the work of a team of experts, result in “fact-based” visions with strong community support. As an example, in Miami Beach’s South Beach in the 1980s, the vision that guided its remarkable transformation was first created and refined by a small group of preservationists, planners, architects, entrepreneurial new investors, and cultural innovators. That vision was subscribed to by new residents and investors and ultimately by longtime residents and businesses. Though never formally adopted by the city government, that vision guided investments in public infrastructure, the arts, and catalytic PPP projects such as the Loews Miami Beach Hotel. In practice, although we may talk about “PPP” or “P3,” public/private projects have more key participants, as shown in the sidebar “Why P5s Matter.” Public Participation An integral part of creating a shared vision is public participation and engagement. Community outreach, public presentations, and workshops with neighbors and constituent groups are often required before government considers and approves PPP projects. Public participation can be used both to help shape a shared vision and to educate stakeholders and interested parties, to dispel myths and present facts supporting the proposed project. This early spadework Creating a Shared Vision and Public Purpose NEISEN KASDIN All successful projects start with a vision. Without a vision, the project will most likely fail. The vision is the framework for project goals and serves as the benchmark to ensure the realization of joint objectives. Ten Principles, 8. THE VISION GUIDING A PPP must be subscribed to by key stakeholders, including elected officials, the developer, and neighbors, as well as civic, philanthropic, and business leadership. The developer, “commu- nity,” and government must have a common vision and compatible goals. It must be an informed vision, and appropriate public participation is crucial in shaping, validating, and supporting that shared vision. Successful public/private projects fuse market potential, physical reality, and community goals. 16 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS A vision plan that resulted in Miami’s largest PPP project is Midtown Miami, located about two miles north of downtown. The site was an abandoned 55-acre rail yard owned by the Florida East Coast Railroad, along what was known as the FEC Corridor. The corridor was a little-used freight line leading into Downtown Mi- ami, surrounded by derelict former warehouses and manufacturing facilities. In 2002, the Metropolitan Center of Florida International University (FIU) created a redevelopment strategy for the corridor. The cen- terpiece was the redevelopment of the rail yard as a mixed-use development integrated into the surrounding urban grid. Shortly after the plan was completed, private investors purchased the rail yard and implemented a successful development plan that followed the vision, but adapted it to accommodate major retail that became the foundation for the de- velopment of the neighborhood. The rail yard, the FIU plan, and the Midtown Miami Master Plan that was ultimately developed are shown at right. DEVELOPER AND GOVERNMENT: SHARING THE VISION Critical to the success of a PPP is that the sponsoring government and developer both share, and be- lieve in, the vision. In the Midtown Miami project, the developers for the retail and infrastructure, Developers Diversified Realty (DDR), and Midtown Equities, the residential developer, bought into the vision of the FIU plan. The district city commissioner, Johnny Winton, and Miami mayor Manny Diaz supported the FIU plan and became champions of the develop- ment plan proposed by DDR and Midtown Equities. Implementing the plan required replatting, rezoning, and amend- ing the land use and creating a Regional Activity Center to allow greater development, creation of a site-specific Community Redevel- opment Area (CRA), and creation of a Community Development District (CDD) to help finance infrastructure improvements. All of this was accomplished within one year. Without government leadership and the developers sharing and strongly believing in that vision, this could not have been accomplished. IMPLEMENTATION OF THE VISION The Midtown Miami project required the creation of a site- specific CRA and pledging of the CRA TIF to pay for public parking garages for the retail center. It also required creation of a CDD to pay for project infrastructure through tax-exempt bonds. Both of these financing vehicles required specific findings that a public purpose was being served as a predicate to the issuance of bonds. The TIF money could be used only for a public garage and the CDD assessments for publicly owned infrastructure. MIAMI, FlORIDA CREATING THE VISION FOR MIDTOWN MIAMI FROM TOP: Aerial of abandoned rail yard; Florida International University’s pro- posed mixed-use district; the Midtown Miami master plan that ultimately was developed.Zyscovich ArchitectsZyscovich ArchitectsZyscovich Architects PRINCIPLE IN PRACTICE FROM PRINCIPLES TO PRACTICES 17 prevents opposition down the road. A delicate balance also exists between accommodating public concerns and ideas and being too accommodating. Often, local knowledge received from the public outreach process helps project design, function, and implementation. However, some ideas offered by constituent groups, neighbors, and government are impractical, unreason- able, and contrary to the project’s vision. Those ideas must be politely, but firmly, rejected. A number of techniques have been developed and are widely used to help create a shared vision and build support for ideas gestated from business, developer, or govern- mental initiatives, such as the following: ■■Stakeholder steering committees; ■■Focus groups; ■■Community planning processes with multiple workshops; ■■Planning charrettes; ■■Joint committees and task forces; and ■■Joint commission reviews. Official Support The shared vision should ultimately have official support from the governmental entities with authority to facilitate its execution, whether through entitle- ments, infrastructure investment, financial assistance, or public financing. As a practical matter, the broad official support for a project and the vision behind it will help it proceed through the often extended period of implementation and multiple governmental admin- istrations (and sometimes successive or multiple devel- opers). In addition, formal approval helps establish the public purpose being served. Public Purpose Public purpose is both a legal requirement and the raison d’être for a PPP project. Most public actions in support of a PPP project, especially where government is making a direct financial contribution or providing use of public lands or facilities, require meeting a legal test that the public investment serve a public purpose. Public purpose does not mean that the local government providing the incentives must be the sole beneficiary of those incentives. The private party receiving the incentives can also directly benefit. Public purpose—as opposed to public use—can include economic development, job creation, preservation or creation of open space, and many other acts broadly contributing to the “health, safety, and general wel- fare” of the community. These acts are often outlined in specifically required tests and provided for in state law. WHY P5s MATTER CALVIN GLADNEY, MOSAIC URBAN PARTNERS The public/private partnership—often called a PPP or P3, is a beloved tool in the United States and abroad. However, as I work with cities and nonprofits on urban regeneration projects around the country, I see a more complex tool emerging—one I call the P5. BEHOLD . . . THE P5 The five Ps: Not just an evolved version of P3s As you can see from the diagram, the P5 adds three critical players to the equation: 1. The philanthropic sector; 2. The nonprofit sector; and 3. The people. So . . . why should you care about the emergence of the P5? If you are fighting in the war to regenerate our neighborhoods, towns, and cities, you care because: (1) The players in a P5 world speak a different language (Do you speak Philanthropic?); (2) they use different financing tools and structures (e.g., Program- Related Investments (PRIs) or New Market Tax Credits Equity); and (3) these part- ners’ goals are different (longer term and more specifically mission-driven than even the public sector). All of these factors not only make working in a P5 partnership more challenging, but also make P5s an incredibly powerful resource to create more equitable real estate and economic development outcomes in our neighborhoods. Nonprofit Sector Philanthropic Sector The People Private Sector Public Sector THE DEVELOPMENT 18 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS Continuum of Public Sector Support The extent and nature of public support can vary greatly from project to project. At one end of the continuum is heavy financial participation, which can include direct investment of public funds, favorable lease or conveyance of public lands, and investment in infrastructure. At the other end of the continuum, di- rect public investment can be minimal, but the project could be facilitated through more liberal and flexible development standards, expedited processes, and con- veyance at market rate of public property. These issues are discussed in more detail in the next section. In sum, engagement among the public sector, private developers, and civic, community, philanthropic, and business interests will help form a compelling and enduring shared vision that integrates community goals, physical capacity, and economic feasibility, as illustrated in figure 3-1. This shared vision may be used to build support and champions for visions emerging from any one of those sectors. Obtaining official sanc- tion and establishing the legal public purpose pave the way for an enduring vision for an area or a project that can then receive the support of various public powers and funds as well as survive the vicissitudes of both economic cycles and political change. A shared vision that is created and embraced by key stakeholders will stand the test of time and will persevere through implementation. Ten Principles, 9. FIGURE 3-1 Elements of a Successful Project Economic Feasibility Community Goals Site Capacity SUCCESSFUL PROJECT Source: SB Friedman Development Advisors. FROM PRINCIPLES TO PRACTICES 19 Assembling the Development Team MARK BURKLAND AND DAVID SCHEUER Assembling the Municipal Team As PPPs have become more creative and complicated over the years, assembling experienced advisers for each component of the project has become increas- ingly important for a jurisdiction contemplating a part- nership. The assembly can become surprisingly large, composed of some persons who will be thoroughly engaged in the project and others who will be called on only for particular components. Following is a description of the typical members of a municipal team. MUNICIPAL STAFF MANAGER. The city or village manager, or equivalent, should normally assume administrative responsibility for the team. The manager’s first task is to choose, with advice from staff, the members of the team. What other responsibilities the manager assumes de- pends on his or her abilities and experience. At a mini- mum, the manager should remain the central reposito- ry for all information and general communications. In addition, the manager should retain certain respon- sibilities, such as communications with the mayor or president of the municipality and the other corporate authorities. Most of the project’s day-to-day tasks likely will be assigned to the other team members. FINANCE DIRECTOR AND DEPARTMENTAL STAFF. The finance director certainly must be engaged in the proj- ect along with his or her departmental staff. The staff will very likely be supplemented by an outside consul- tant to deal with what is perhaps the most complex components of the project. In many municipalities, the finance director has valuable experience and the confidence of the corporate authorities and thus is an important member of the team. DEVELOPMENT DIRECTOR AND PLANNER. The importance of the municipality’s economic develop- ment/development staff would be difficult to over- state. They are instrumental in setting the stage for a project through their planning efforts and zoning ordinance maintenance over the years. In addition, they are likely the most familiar with the municipality’s planning commission, zoning board of appeals, and other advisory bodies, some of which are likely to be engaged in project review. As deal structures are negotiated and project details are proposed, debated, and revised, keeping the in-house experts close by may be important. MUNICIPAL ATTORNEY. Good legal services are re- quired for a successful project. The municipality’s attor- ney not only must know the law, but also must be able to draft an approval ordinance, a development agree- ment (or equivalent), and perhaps related documents such as covenants, easements, and property transfer documents. Those documents can become complicat- ed quickly. Many of them will differ significantly from those of a typical development project with which the municipality’s regular counsel may be familiar. It is also helpful if the attorney is an experienced, skilled nego- tiator. These days, a municipality’s attorney likely has experience with land use, zoning, and development matters and at least some knowledge of the basic laws and structures related to redevelopment and PPPs. When the limits of that knowledge and experience are reached, especially in small communities that use their general counsel only sparingly, then retaining outside special counsel to help with some components of the project may be necessary. IN PUBLIC/PRIVATE DEVELOPMENT PROJECTS, a wide range of issues unique to the particular project generally are presented and need to be effectively addressed. Such issues might include creating a shared vision, understanding benefits, understanding the economics of the project, structuring the transaction, and protecting all parties in its execution and ongoing operation. Thus, both developers and governmental bodies should carefully consider their typical processes for undertaking development projects and, particu- larly, ensure they form teams that possess the required expertise to achieve a successful conclusion. 20 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS CODE REVIEW AND ENFORCEMENT STAFF. The municipality’s staff responsible for code reviews must be involved from time to time to ensure that building, fire, drainage, and the host of other code standards are met. This may include persons from the fire, police, and development departments, among others. An- swering questions regarding code compliance quickly, as they arise, is preferable to altering course at a later time when the project is further along. ENGINEER AND PUBLIC WORKS DIRECTOR. Because municipal infrastructure (existing and proposed) often is a key consideration in a project, both the municipal engineer and public works director should be engaged at the outset, so they have the full background. CONSULTANTS FINANCIAL ADVISER/MUNICIPAL ADVISER. Perhaps the key outside consultant is the financial adviser. The more the municipal team knows about the develop- er’s positions, the municipality’s own resources, the potential structures for an agreement, and myriad other elements—and the sooner the team knows it—the better. This role has multiple aspects, and the municipality typically needs (a) an adviser on the real estate economics of the project and the actual need for financial assistance; (b) an analyst who understands the local revenue sources and can prepare and review projections of revenue as well as evaluate benefits; and (c) a registered municipal adviser under the new requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act who can legally and practically advise on debt instruments, such as notes, reimbursement agreements, or bonds that may be used in the financial structure. ARCHITECT. For a project that includes significant buildings and streetscapes, an architect may be essen- tial. The municipality should expect the architectural features of a project to be subject to close scrutiny and to generate a variety of opinions. A municipal staff rarely includes someone with the experience and expertise to guide discussion of these features. For that reason alone, an architect can be a valuable team member. The architect can also be valuable as a resource, or a gateway to a resource, for cost esti- mates, landscaping design, and other related project elements. In addition, many architects know how to conduct a charrette, the value of which should not be forgotten. OUTSIDE SPECIAL COUNSEL. As noted previously, when a project is complex, retaining an attorney with specific experience may be necessary. When in doubt, do so. Never be underrepresented. BOND COUNSEL. Engaging bond counsel may be necessary. Although the municipal attorney may act as issuer’s counsel, an outside attorney more commonly serves as bond counsel. COMMUNICATIONS AGENCY. Municipalities can lag far behind private sector companies and agencies in working to communicate with the public and stake- holders regarding complex redevelopment projects. When public assets or public funding is involved, maintaining both the actuality and the appearance of upholding fiduciary duty is important to the project’s success. Public outreach and transparency in the pro- cess should be considered from the outset. COMMUNITY MEMBERS In discussing the shared vision, we emphasized the importance of using inclusive processes involving the public as well as agencies to arrive at a common vision as a project begins. As a project progresses, it will again come before the public and community as developers are selected, projects reviewed, and formal approvals occur. Among those who need to be includ- ed throughout the process are the following: STAKEHOLDERS. For most development projects, the municipality can identify residents, businesses, and organizations that will be affected to a degree greater than the general population. Figuring out who those people and entities are and engaging them early is useful. The chamber of commerce, other business associations, and homeowners association leaders may be good choices. These groups likely won’t be involved regularly in the project, but the municipality will benefit from knowing who they are and what they think—and from having engaged them early on. COMMUNITY LEADERS. In addition to the direct stake- holders are community leaders. Every municipality has them—they may be former elected officials, business leaders, clergy, social services providers, or others. If el- ements of the proposed PPP will be controversial, then the municipality will benefit from having engaged with the people around town who likely will be approached for opinions on those elements. FOCUS GROUPS. At some point, the municipality may want to vet an element of the project with residents who compose a cross section of the municipality— whether in a charrette setting or through an open house or meet-the-developer event. Stakeholders and community leaders can be part of a focus group, but inclusion of average residents may be wise. FROM PRINCIPLES TO PRACTICES 21 APPROVAL BODIES. Although formal approval bodies will still have to manage specific processes and pro- cedures, to the extent allowed by law, their inclusion throughout the process will facilitate review and help ensure that issues and problems are identified early. These entities may include appearance commissions, historic preservation boards, and planning commis- sions, among others, all of whom have official duties in addition to those of the ultimate governing body. Assembling the Developer Team Few tasks require more attention and care for the developer or provider of a public facility or service than selecting the appropriate project team. This is especial- ly true when the development team is competing for a project through a competitive process. The successful developer’s tasks are the following: ■■Putting the right team on the field; ■■Coaching each member so that team goals and individual roles are clear; and ■■Managing the team effectively. Some team members have more visibility and ap- parent importance than others. Not uncommonly, one team consultant compromises the success of an entire team. In the end, poor performance by any team mem- ber can derail a development proposal. In a competitive process, just the appearance of uncertainty, misreading the community goals, or miscommunication can have a compromising effect. Empathy, listening, and the ability to engage with public officials and the community are crucial skills. The following guidelines have proved useful in selecting consultants to join the developer team: ■■Does the consultant have specific experience and a strong track record in the field? What is the firm’s breadth of experience? What is the depth of experience in the area needed for the project? For example, if the project involves multifamily housing, does the architect have a substantial portfolio in this product type? ■■Does the consultant have a clear understanding of the developer’s goals? The developer is responsible to communicate and confirm this. ■■Does the consultant have a clear understanding of the public and community goals? Is the consultant capable of listening actively to municipal team mem- bers to develop and refine the required understand- ing of the public and community goals, challenges, and perogatives? ■■Does the consultant have adequate communication skills in a public forum? Is he or she able to produce clear, understandable presentation materials? Can he or she respond well to questions and comments? Consultants who come across as arrogant, egotisti- cal, or all-knowing can do irreparable harm. ■■Does the consultant have sufficient staff and ca- pacity? Can he or she meet deadlines for producing deliverables? Does he or she understand the full task or scope? ■■How effectively can the consultant budget and man- age his or her portion of the project? ■■How flexible is the consultant? On programmatic changes? On design changes? On schedule and budgetary issues? ■■Do the team members work effectively together? Are they collaborative or proprietary? Are they team players or individualists? ■■Is the team, or a significant component, local to the jurisdiction? Vet each team member about his or her experience in the locality. Are they respected? Do they have past issues with decision makers? With stakeholders? Having some local representation can be helpful, both substantively for local knowledge and politically, conveying the message that the team understands and respects the community. It strengthens and adds credibility to the team. ■■Are the team members objective enough to conduct due diligence about the potential risks of the project and answer these questions: Is this city or public entity capable of delivering what is required of it in a timely manner? Is this project appropriate for a PPP or will the city subsequently discover that it can undertake the project under traditional procurement methods? The development team for a PPP will be larger and different from the team for a private development project. It must include experts in redevelopment law, public finance, community engagement—and members of the community. The experts and design professionals must be comfortable engaging in a public process, as well as in practicing their profession. 22 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS A few key words of advice: ■■Go where the numbers are! For example, the archi- tect’s experience should match up with the products in the program and the context of the project. The same is true of other consultants. ■■Make sure you have assembled the full team neces- sary, and be prepared! If you anticipate a contro- versial issue (environmental, traffic, community op- position), choose consultants who can competently address those issues and get them on board early. ■■When thinking about selecting any team member, consider how they will be perceived in a public fo- rum as well as how they work behind the scene: • Will they appear knowledgeable and candid? • Will they instill trust and complement the entire team? • Will they reflect well on the project and the developer? How Might This Team Be Different? As noted, the team should encompass the range of issues expected in a particular project. Both the public and private sides need to be represented in most areas of expertise. In many situations, the developer should expect to have the following, often additional, experts (and studies) available: ■■Design professionals skilled in public participation and interaction, able to engage creatively with the public in workshops, charrettes, and presentations to public bodies. Depending on the scope of the project, this may require urban planners, urban designers, and landscape architects or site planners, as well as architects. ■■Financial consultants knowledgeable in private sector real estate economics and public sector tools, able to prepare and defend pro formas with and without public assistance and help structure a trans- action to address public side concerns. ■■Fiscal and economic impact analysts able to realisti- cally and accurately address the fiscal benefits and possible secondary economic benefits of a project. ■■Traffic and parking experts able to both estimate traffic, including time-of-day matters, and construc- tively address solutions to real traffic issues. ■■Engineering specialists able to address specific site-related issues, such as flooding, wetlands, soil conditions, and other environmental issues that may be raised. ■■Attorneys knowledgeable in redevelopment law and process, not just land use, entitlements, and real estate transactions. Sometimes these will be the same professionals with whom a developer would work on all projects, but other times they will be different. The greater the number of participants and stakeholders representing the community and funders, the larger the overall team, because each player is likely to bring its own ad- visers and experts. The developer must expect to field this larger, diverse team. Selection and involvement of these team members may be key to success. All parties must be prepared to work with a complex team repre- senting the diverse interests in the project. FROM PRINCIPLES TO PRACTICES 23 Although this section emphasizes what government can do to set the proper stage for public/private proj- ects, it can also serve as a guide to what the private sector might expect and encourage. These predevel- opment activities may result in a more publicly driven process for selecting developers, particularly where public land becomes involved. Although developers may be tempted to jump in ahead of competitors and seek to undertake many of these activities under pri- vate control, the pitfalls are substantial; encouraging public sector preparation is recommended. Naturally, communities have used proactive pre- development to further their public/private develop- ment objectives in many different ways, including the following nonexhaustive list: ■■Undertake market-based planning to facilitate development. Proactive planning is an effective way for communities to get things done without having to provide financial subsidy. Good planning can help drive an outcome; for example, if down- town revitalization is the goal, smart planning can ensure that the necessary ingredients (e.g., a rational, market-based mix of residential, office, Proactive Predevelopment for Successful PPPs CLAYTON GANTZ MUNICIPALITIES CAN DO MUCH TO LAY THE GROUNDWORK for successful public/private partner- ships in their communities. Through effective predevelopment activities, municipalities can both attract private development to their communities and help ensure that the community’s development vision is realized in a timely and efficient manner. The governmental efforts for predevelopment can help reduce risk to levels manageable by the private sector and thereby facilitate projects. Effective predevelopment activities can do much to ensure maximum value for public assets used in redevelopment. In contrast, the failure to take basic steps such as those enumerated below increases the odds of poor or even failed exe- cution and failure to meet redevelopment objectives. and retail uses, available public transit, suitable parking, and inviting public spaces) will be in place. Good planning can also lessen the risk of project challenges and delays. For example, where a well- thought-out precise zoning plan is coupled with thorough environmental review, developers who are prepared to build within the “box” created by the precise plan can often proceed without the necessity of further environmental review. The municipalities can recover the cost of these planning and environ- mental review activities through the imposition of development fees or assessments. ■■Build community support. Local government leaders, trusted and respected in their communities, are often more effective than private developers in building community support for a project. Through an inclusive planning process, community concerns can be identified and addressed, thus mitigating a major development risk. As suggested in figure 3-2, building support can be a multistage process and may take some time. Many helpful techniques and processes can be built into a planning and development review process, including community workshops, stakeholder focus groups, design char- [P]artnerships must create and use mechanisms to allow continuous assessment of the effectiveness of decisions and implementation procedures. To resolve constraints, . . . partners must have the opportunity to modify the process. [T]o incorporate new information and reassessed goals into the process, parties must allow for incremental . . . decision making. . . . [T]he process must . . . be flexible. Ten Principles, 17. 24 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS rettes, web-based tools, and management of public hearings and review. ■■Assist with site assembly. Traditionally, municipal- ities have assisted with site assembly by using their powers of eminent domain to take private property, which in turn was conveyed to a developer for proj- ect development. The constitutionality of such tak- ings by eminent domain for the purpose of facilitat- ing private development was considered by the U.S. Supreme Court in the case of Kelo v. New London. Although the Kelo court upheld the constitutionality of the city of New London’s takings, ironically the court’s holding has had the effect of creating a wide- spread public and political backlash against the use of eminent domain to facilitate private development. This reaction resulted in the passage of many new state laws that at least purported to limit eminent domain rights in this setting. While legal scholars de- bate whether such efforts at reform were substantive or merely “window dressing,” the fact is that many municipalities are extremely reluctant to exercise their eminent domain powers. Sellers reap federal tax ben- efits where eminent domain is used or threatened, which can be a tactical tool in site assembly. Although the traditional tool of eminent domain has fallen into disfavor, a municipality can still do a lot to facilitate site acquisition. For example, through the planning process, the municipality can concentrate development in areas with fewer or larger landholdings, thereby easing the developer’s land acquisition task. The municipality can also sell or lease its property to facilitate site assembly, a tactic particularly practical in facilitating redevelop- ment of parking lots, municipal service facilities, and obsolete municipal buildings ripe for replacement. ■■Develop community infrastructure to support development. The community can provide transit, parking, utility, and other infrastructure to serve community objectives and facilitate private develop- ment. For example, public transit might be provided to mitigate increased traffic caused by increased downtown density. Similarly, structured parking might be provided to attract dense retail develop- ment. The costs of these infrastructure activities are typically recovered through user fees but may also be recovered through development impact fees or assessments, or simply the overall increased value of the redeveloped area. This strategy often requires FIGURE 3-2 Vision to Action Larimer/East Liberty Choice Neighborhood Plan Source: City of Pittsburgh; Pittsburgh Urban Redevelopment Authority; Housing Authority of the City of Pittsburgh; McCormack Baron Salazar; Jackson Clark Partners. FROM PRINCIPLES TO PRACTICES 25 The Crossings/900 project, a development by Hunter Storm and Kilroy Realty, is a cen- terpiece of Redwood City’s efforts to revitalize its downtown by facilitating the development of housing, office, and retail. To fa- cilitate this and other downtown development, the city adopted a thoughtful and detailed plan focused on driving the desired outcome of a vibrant pedestrian downtown, and it supported the plan by exhaustive environmental review, resulting in an area-wide Environmental Impact Report. By designing its project to fit the constraints of the precise plan zoning, the developer was able to leverage the environmental work undertaken by the city and was required to undertake only limited additional environmental review, thus limiting the environ- mental review process and its po- tential for challenge, uncertainty, and delay. In contrast, other Bay Area jurisdictions, which have not invested the time and effort re- quired to do thorough planning and environmental review, have seen their community revital- ization efforts become mired in litigation. The city contributed to the site ac- quisition by selling at fair market value the principal development site, a 200-space city parking lot a short walk to the Caltrain station, to the developer. The developer was able to enhance its project by acquiring two smaller contiguous parcels from private landowners. In the end, the developer needed to deal with only three landown- ers, making the site acquisition process relatively manageable. Increased stress on limited park- ing resources was a concern with respect to the development activi- ty engendered by the city’s pre- cise plan. The city addressed this effect in several creative ways. First, the city provided private developers with an incentive to provide shared parking for public uses by allowing lower parking ratios where the developers’ parking was made available for shared public parking after 5 p.m. and on weekends. Second, the city contributed valuable parking infrastructure by making spaces available in a nearby city parking garage and providing a shuttle service from that garage to the new downtown area. The city also mitigated developer risk by agreeing to relocate an underground culvert before development began. Although the developer could have under- taken that responsibility, it would have needed to discount its land acquisition price to reflect the risk associated with that unknown underground condition. The city correctly determined that under- taking the work itself would be cheaper and allow the city to re- ceive full value for its land. Other steps taken included making city land available to the developer for construction period staging and expediting processing time for nondiscretionary approvals, such as building permits. REDWOOD CITY, CALIFORNIA CROSSINGS/900 Source: Clayton Gantz, Manatt, Phelps & Phillips LLP law firm, on behalf of Hunter/Storm and Kilroy Realty.Chad Ziemendorf PRINCIPLE IN PRACTICE 26 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS difficult decisions to focus public investment rather than spread it throughout the community. It can often be best accomplished when linked directly to project development and recaptured through the revenues of the project itself via tax increment financing, payments in lieu of taxes, and other boot- strap techniques. ■■Undertake selective site preparation. Particularly with respect to land owned or controlled by the municipality and slated for private development, the municipality can undertake selective site preparation and remediation activities, such as moving under- ground utilities that affect development and allow- ing predevelopment entry to undertake excavation and environmental due diligence. These activities can be particularly important with contaminated sites. In some cases, public sector leadership can facilitate obtaining brownfield grants, recognizing that in many cases, the actual remediation is best undertaken as part of the redevelopment. ■■Streamline development approval processes. Streamlining entitlement and other approvals can in itself be a form of predevelopment. In many locales, the recent trend to update zoning with form-based code—or other forms of improvements—has been effective by establishing clearer parameters of acceptable development. Coordinating review and approval processes can also help facilitate both com- munity input and moving projects forward. By undertaking these sorts of activities, municipalities effectively reduce the risk of challenges, unforeseen conditions, and delay, thus greatly decreasing the project risk for private developers. By doing so, they effectively create an environment in which private developers can compete effectively and aggressively to pursue projects, and thus increase the returns to the community, both in terms of dollars paid for commu- nity assets and in quick and efficient realization of the desired community benefits. A Chicago suburb of 41,000 undertook substantial pre- development to support creation of a town center that would build on its traditional downtown, train station, and village hall. Its work included the following: • Acquistion of nine acres of industrial land; • Remediation; • Market and financial feasibility studies; • Predevelopment planning to establish development goals for the site; and • Developer recruitment, result- ing in selection of New England Builders as redeveloper of the site as Bartlett Town Center. Tax increment financing was used to support the work. BARTLETT, ILLINOIS HEAVY LIFTING PREDEVELOPMENT EFFORT Source: SB Friedman Development Advisors.SB Friedman Development AdvisorsSB Friedman Development Advisors PRINCIPLE IN PRACTICE FROM PRINCIPLES TO PRACTICES 27 The difference in perspective was reflected in the survey presented in chapter 1: the private sector finds the public sector’s limited understanding of private-capital underwriting criteria to be among the greatest challenges while the public sector needs to protect itself from giving away the store. The private sector does not understand that municipalities are not profit motivated, and the public sector does not understand that private developers expect to be paid to take risk. Bridging the divide is critical to success, and estab- lishing relationships is one of the first steps. When Developers Approach a Public Body Developers often approach public bodies to propose projects they feel will fulfill a community need but that require some type of public assistance. These may be business incentive requests, tax abatements, tax increment, sales tax sharing, or any of the many other variants on tools. They may be seeking public land that completes a parcel where they have some ownership or responding to a general call for development in a community in which the public body owns little or no land but is trying to encourage development. In eval- uating developers’ initiatives, both public and private sector participants should consider several key actions: ■■Get to know each other. Knowing with whom you are dealing and their capabilities is number one in any transaction. It has been said that “you can’t make a bad deal with a good person and you can’t make a good deal with a bad person.” Disclosure and background checks should occur early in the re- lationship. As a result of the Great Recession, many firms have restructured or been newly created. The track records and reputations of the individual prin- cipals will be more critical in such cases as the public side considers the capabilities of the private partner. Conversely, the developer needs to understand how the government entity is structured; what the election cycle is; who can champion the project; and what time frames, such as term limits, may affect approval. In addition, the need for transparency in government and limitations on participation of pub- lic officials in private and trade events and organiza- Creating Relationships between Developers and Public Bodies STEPHEN B. FRIEDMAN AND CLAYTON GANTZ PUBLIC/PRIVATE PARTNERSHIPS INVOLVE A RELATIONSHIP between public bodies and private enti- ties different from typical civic, regulatory, or procurement activities. The public entity has goals and ob- jectives beyond highest price, lowest cost, or minimal compliance. It is seeking other benefits at the same time that the private parties are often dealing with projects with complex problems (see figure 3-3). As a result, development project deals are typically negotiated, and many states provide different authorities for deal making in redevelopment districts or other special zones that would not be allowed elsewhere. For public facility and privatization projects, the public entity bears a unique responsibility to fully define what is being sought and to seek proposals that fully address complex public issues. Partners can communicate more effectively by building personal relationships with each other. Formal and informal forms of communication between entities create opportunities to build a more open and trusting relationship. Ten Principles, 31. 28 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS tions can make the kind of informal communication that helps to build trust difficult to achieve. ■■Establish a shared vision. How does the project fit with public goals and values? Even in the case of a developer-initiated project, the municipality and the developer must plan to engage stakeholders and adjacent property owners to reach a shared vision with support for the project. ■■Determine who has authority. For the private sec- tor, making sure you are dealing with officials with the authority to carry out the process and move the project forward is important. Local and specialized counsel are often required to ensure this. ■■Determine If the developer controls any land. In cases where the developer owns relevant land, rather than simply proposing an idea about a development, the landscape is different. Where the developer owns or controls land, it may be entitled to different processes in obtaining adjacent public land and certainly in seeking entitlements and finan- cial assistance. ■■Assess whether the public body has land to complete a site. What resources and tools are available to assist this project? ■■Identify the legal processes that allow negoti- ation. The regulations vary from state to state. Can land be sold without public bidding? Can terms of deals be negotiated in closed session? Must analysis and numbers be revealed or are they legally propri- etary? The private sector must expect more public disclosure of “sensitive” information than it would like, and the public must expect less. ■■Establish fair value—appraisals. Where public land is involved, achieving a fair price is critical both legally and politically. But what is a fair price? It is typically not what the public entity paid for the land, but often less. Appraisals based on the use of the land as part of the project should be the basis for determining a fair price. ■■Review capabilities for structuring, document- ing, and monitoring. These issues are dealt with in later sections. Developers need to recognize that public involvement may include upside sharing of profits over a threshold as well as ongoing commit- ments to provide the public benefits promised. The documentation will be extensive, and the public bodies need to have appropriate capabilities to com- plete their responsibilities in these matters. Soliciting Developers: RFQ/RFP Process for Publicly Owned Land Developers and public bodies approach the process of selecting a developer for a project on publicly owned land with almost diametrically opposed points of view. The public sector must have an open, transparent process: it is the law and a way to manage locally “in- volved” developers as well as other public policy issues. Developers want to avoid expensive, public processes and protect proprietary information. Most developers tie up land in private, then they work to complete the deal. They do not announce their intentions to the world first. To manage these opposing cultures and require- ments, a two-step process can be used: obtaining true qualifications first (via a request for qualifications, or RFQ)—including experience and capacity, organiza- FIGURE 3-3 Private Sector versus Public Sector Private Sector Sees the “Hair” on the Deal • Profit maximizing; time kills deals; • Entitlement time/risk; • Community opposition/benefits agreements; • Business cycle time risks; • Landowner holdouts/excessive site assembly costs; • Road, traffic, other off-site needs; • Deal with the unknown, e.g., underground, remediation, environ- mental risk; • Excess costs of demolition, site preparation; • Construction risks, costs, fees that are a mismatch with market pricing; • Product market mismatch/market risks; • Financial guarantees; • Financing gap; • Risk of city performance; • Dealing with bureaucracy; • Problems caused by excessive transparency; and • Risk of failure. Public Sector Focuses on Public Values, Goals, and Issues • Benefit maximizing; controversy minimizing; • Density, height, design, and parking requirements; • Open spaces, parks, and recreation; • Community programming and events to activate areas; • Historic preservation; • Preference for homeownership; • Inclusionary zoning, affordable housing requirement; • Fiscal impact and fees for other districts; • Public funding/fiduciary (and legal) responsibilities; • Minority-owned business certification, women-owned business certification, and prevailing wage; • Community and taxpayer opposition; • Political and career risk; and • Risk of failure—financial loss and impact on providing basic services. Source: SB Friedman Development Advisors. FROM PRINCIPLES TO PRACTICES 29 tional and financial—and requesting specific proposals second (via a request for proposals, or RFP). Assuming the community has done the predevelopment work discussed previously, these are the key steps to recruit- ing the most qualified developer: ■■The development prospectus. A substantive prospectus should include details on the market, site conditions, status of control, a “believable fiction” of the desired development outcome, indication of what types of tools may be available, and indication of community and official buy-in. Considerable debate exists about how much “flash” is needed in documents. One way or the other, substance is preferred to flash. The document should be realistic and balance economic feasibility, site capacity, and community goals. It should be clear about what is expected of respondents at both the qualifications and proposal stages. ■■Outreach and advertising. Individual outreach to identify and encourage developers with the type of experience needed is necessary to get a good response to an RFQ/RFP. Public bodies will be required to advertise broadly, however, which often discourages the most appropriate developers who believe they are entering a “beauty contest” rigged for the locally connected. Outreach can overcome that misapprehension. ■■Timing. The process should allow ample time to attract developers and for developers to prepare re- sponses. For RFQs, a minimum of 90 days is recom- mended: 30 to reach the developers; 30 for them to decide to respond; 30 to prepare their response. For RFPs, a similar amount of time should be allowed. Developers do not know if they will be asked for a proposal and need time to mobilize to prepare a thorough response. ■■Qualifications. The RFQ stage should require infor- mation to establish the respondents’ understanding of the project (but not a specific, detailed proposal), the experience of the team with similar projects, the current organizational capacity of the team, and financial capacity of the organization—not just its access to financing for the project. The organization will need staying power from its own resources to complete the predevelopment because it typically will not have land it can mortgage until the deal closes. ■■Proposals. An appropriate number of teams—typi- cally three to six—can be invited to submit detailed development proposals. Developers should expect to be provided with additional information on site conditions, such as environmental and soils studies, infrastructure conditions, and the like. Public bodies should expect to meet with candidates to share information as well as goals regarding the project. ■■Review. Proposals should be reviewed both quan- titatively and qualitatively. Public bodies should be certain that all proper review bodies are included and that the process passes procedural muster. De- velopers should be prepared to present their plans to multiple community and public body meetings. The financial proposal, design, goal achievement, and community benefits will all be part of the re- view. In the end, the selection should be of the best plan with the best overall benefits. PARK RIDGE, ILLINOIS SHOPS AND RESIDENCES OF UPTOWN PARK RIDGE After purchasing two car deal- ership sites, relocating them within the city, and determining it must replace a leaking reservoir, the city of Park Ridge, Illinois, fol- lowed the process outlined here. The city received 19 qualifications submittals and elicited six full proposals. The ultimate project re- inforced the downtown and com- muter-rail station, adding 90,000 square feet of commercial space, 190 condominiums, and more than 700 parking spaces. The development met its $100 million–plus pro forma, but chang- es in assessment practices have challenged some of the public financing commitments in the TIF district. Still, the project—devel- oped by PRC Partners (Edward R. James Companies, Valenti Builders, and Mid-America Real Estate Group)—was catalytic in anchoring and transforming the downtown to become a lifestyle center with a Walk Score of 85.OKW Architects; photographer: Charlie MayerSB Friedman Development Advisors PRINCIPLE IN PRACTICE 30 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS ■■Negotiate term sheet before final selection. Es- tablishing term sheets with finalist developers before final selection can be useful in ensuring the selected developer will not try to negotiate away from terms that led to its selection. Other developers will be in line to step in if the selected developer does not negotiate in good faith according to the term sheet. ■■Documenting and monitoring. These matters are detailed in a later section. Important, however, is to ensure that the redevelopment agreement and other documents follow the term sheet and are legally binding to ensure that the desired development is what will be delivered. In many cases this may lead to simultaneous approval of a redevelopment agreement and entitlements necessary to undertake the project. Figure 3-4 summarizes this process. Additional Considerations in RFQ/RFP Process for Delivering Public Facilities A successful PPP solicitation process for infrastructure projects has all the same considerations previously noted. As with all competitive solicitations, the public agencies’ reputation to run an open and fair compet- itive process is key; however, with infrastructure proj- ects, the magnitude of investment by private sector consortiums in successful bids is often several million dollars. A reputable agency and a desirable asset can attract private firms to make significant investments in developing innovative designs and technical concepts as well as creative financing and legal structures, all of which benefit the public sector partners. ■■Have clear goals. To encourage competition, public agencies considering a PPP should be clear on their goals in the RFQ. Clearly articulating what problem the agency is trying to solve will encourage private sector teams to organize and respond appropriately. A clear statement of goals and scoring criteria in the document also send a signal to the market that the process is professional and well thought out. ■■Have clear rules of engagement. Outlining a transparent and fair process attracts private sector partners with the same values. Items to consider are anti-lobbying regulations, communication proto- cols, definitive timelines, and conflicts of interest. In addition, an agency should be clear about its legal authority to enter into a PPP. Care should be taken to define technical requirements broadly enough to allow a range of innovative solutions. ■■Develop a short list. A typical RFQ/RFP process for public infrastructure will shortlist no more than three or four qualified teams. Typically, this number is enough to encourage competition and innovation but gives the private competitors reasonable odds for their significant investment in preparing the RFP response. ■■Offer a stipend for short-listed teams. By offer- ing a stipend, the agency encourages a higher level of investment in the responses and, as a result, will typically receive a higher-quality product. A stipend also demonstrates an investment in the procurement beyond staff and consultant time by the agency, showing the market the agency is a serious about the procurement and reducing the perceived risk the project might be canceled. FIGURE 3-4 Elements of a Successful Project 1>>DEFINE DEVELOPMENT GOALS 2>>ESTABLISH DEVELOPER RELATIONSHIP 3>>FINALIZE AND IMPLEMENT PROJECT SUCCESSFUL DEVELOPMENTSOLICIT DEVELOPER FOR PUBLIC LAND RESPOND TO DEVELOPER SEEKING LAND/ASSISTANCE • Develop a community- supported vision with all stakeholders • Prepare site development program • Address development readiness of site • Understand resources • Create a “believable fiction” • Prepare request for qualifications • Review qualifications and determine short list • Solicit proposals from short list • Evaluate proposals • Conduct interviews/community reviews • Select developer • Identify land sales processes • Negotiated sales • Modified bidding • Alternative bids • Identify entitlements • Review assistance application • Project plan and costs • Market analysis • Financial benefits/tax increment • Pro forma/gap • Community benefits • Eligible costs • Basic structure/capital stack • Negotiate term sheet/ redevelopment agreement • Obtain zoning/planned development approval • Identify financing structure/sources • Identify public structure • Pay-as-you-go • Notes • Bonds • Obtain simultaneous approvals • Coordinate and oversee project Source: SB Friedman Development Advisors. OR FROM PRINCIPLES TO PRACTICES 31 In general, this “but for” problem arises in two circumstances: ■■Financing Gap: A project has a funding gap where its market value is insufficient to create financial viability to fund its costs. This gap may arise because of market weakness, special public requests and requirements (e.g., reduced height and density), or extraordinary costs associated with land assembly, environmental remediation, or site conditions (e.g., soils, wetlands, stormwater). ■■Competitive Necessity: Competition among mul- tiple jurisdictions for private investment generates use of a variety of tools as inducements to locate in one location over another. This competition can be for job creation, tax base, or catalytic uses that en- hance overall community viability. It can be among different regions (interregional) and within regions (intraregional). The dynamics of these two situations differ significantly. A project should be considered for public invest- ment to address these situations when all four of the following conditions are met: 1. The project contributes to important public policy goals, such as employment, serving as a develop- ment catalyst, providing affordable housing, creat- ing a needed service or facility, cleaning up a dirty or hazardous site, substantially enhancing tax base, creating public amenities, or other agreed goals. 2. The project will be economically feasible and has a reasonable chance of success if the assistance is provided. 3. But for the assistance to be provided, the project will not be able to proceed as desired to achieve its public and private sector goals. 4. The project will pay for itself through revenues it generates or is of such importance that tapping other funds is justified by its broader benefits. The two following sections describe how jurisdic- tions can evaluate the appropriateness of assistance to meet a financing gap or competitive situation. Financing Gap A developer approaches a municipality and says: “Mayor, I believe we have a project that can provide the kinds of public benefits you would like to see, and I just need a little help closing a funding gap.” The mayor’s reaction is: “Tell me why this project is a great deal for the community and then I’ll decide whether it serves the public’s interests to partner with you.” To address the public sector question, the project will need to be fully reviewed and evaluated against the four criteria noted: public goal attainment, project viability, financing gap, and fiscal benefit. This section focuses on project viability and financing gap. Fiscal benefits are discussed in the section “Assessing Fiscal Impacts and Community Benefits of Public/Private Partnerships.” A financing gap is a shortfall between a project’s cost and its market value under current financing conditions. In certain circumstances, it can also mean that financing is not available for other reasons—a problem that occurred during the Great Recession of 2008 to 2012. The gap can be the result of market weakness, limitations on height and density beyond those imposed by the market, additional public The “But for” Problem and the Need to Make a Fair Deal STEPHEN B. FRIEDMAN AND CHARLES A. LONG WE HAVE ADDRESSED SOME WAYS in which municipalities can facilitate PPPs through predevelopment activities earlier in this chapter, but sometimes that is not enough. In many cases, private real estate invest- ment still requires a PPP to address its economics: that is, an economic shortfall or need exists that “but for” its existence is preventing the project from moving ahead. Solving this problem must occur within the context of the real estate project’s economics, and the solution must be fair to the public. Demonstrating the fairness of the deal ranked high in both the public and private sectors in the survey reported in chap- ter 1 of this report. 32 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS requirements for amenities, site acquisition and prepa- ration costs, environmental remediation, soil condi- tions, stormwater management, or other extraordinary costs that take a project out of the market. A project can be evaluated carefully to validate and measure the problem as a basis for assistance. REAL ESTATE ECONOMICS AND RETURNS The need for the public sector to understand real estate finance was the highest-ranked challenge in the survey reported in chapter 1. Real estate development is a capital-intensive business where a significant portion of a project’s costs can be the cost of the capital necessary to fund the development. Real estate projects compete in a global market for both debt and equity and must provide an appropriate risk-adjusted rate of return over the life of the project to be funded. The key tool for evaluating both the viability of a project and its need for assistance is the pro forma financial analysis—a projec- tion of the expected financial performance of a project. USE OF A PRO FORMA. A pro forma is a projection based on current and foreseeable market assumptions at the time it is prepared to justify entering into a PPP. For a single building project to be started or completed in a relatively short time, say three to five years, the pro forma may reasonably approximate the actual economic performance of the project. However, for longer or more complex projects, the parties should assume that the pro forma will change over time for better or for worse, depending on real estate and eco- nomic cycles, regulatory changes, or unforeseen events resulting in project changes, delays, reduced revenues, or increased costs—or occasionally improved market and financing conditions and reduced costs. Both parties should negotiate business terms in a way that ultimately reflects the actual economic performance of the project. For example, the public entity may want to negotiate a base level of infrastructure or public amentities or a minimum economic return depending on the project’s performance. The developer may want provisions to protect it from adverse market, economic, or unforeseen events. The pro forma is a tool on which to evaluate the viability of the project and need for financial assistance and to build a deal structure that is clear on the allocation of risks between the parties and provide a framework to deal with unforeseen adverse events while still leading to project success. REVIEWING THE PRO FORMA. The pro forma for a development project contains both development costs and ongoing revenues. For a for-sale project, such as a condominium, residential subdivision, or industrial land sales program, the revenues are typically sell- out proceeds. Costs during sell-out are part of the development costs. For investment projects, such as office buildings, retail, or rental residential, the oper- ating period is important as well as the development costs. Each element of the pro forma can be validated against current market conditions. DEVELOPMENT COST PRO FORMA. The cost structure shown in figure 3-5 generally applies to both for-sale and investment projects. Each of these costs can be validated through research of industry sources or through interviews and expert consultation, or both. (See the Resources section of this report.) Many are specific to the project, labor and construction markets, and site conditions and need to be validated carefully. Evaluating site and hard construction costs, as well as FIGURE 3-5 Development Cost Pro Forma = Total, all-in costs Site costs • Land acquisition • Demolition • Remediation • Site improvements (including land- scaping) Building construction • Core and shell • Tenant improvements • Furniture, fixtures, and equipment • Options Soft costs • General and administrative (G&A) • Permits and fees • Financing during construction • Marketing • Commissions • Legal and professional • Architecture, engineering, and planning Source: SB Friedman Development Advisors. FIGURE 3-6 Revenue/Operating Pro Forma Investment projects • Preleasing/lease-up schedule • Base rental income • Accessory income • Percentage rent (retail usually) • Expense and property tax recoveries • General operations • Utilities • Maintenance • Property taxes • Insurance • Legal/accounting • Management • Tenant improvements • Reserves • Debt service For-sale projects • Total revenue • Base unit price • Additional parking cost • Upgrades • Extra cost options Source: SB Friedman Development Advisors. FROM PRINCIPLES TO PRACTICES 33 fees, is very important. A small, say 5 percent, over- statement of costs can quickly open a seeming gap. REVENUE/OPERATING PRO FORMA. Each revenue and expense assumption can be validated using a combi- nation of industry sources (see Resources), comparable projects, interviews with market players, and expert consultation. The elements of the pro forma will vary. For example, if the project is a net leased one, then operating costs may be less important. To the extent relevant to a specific situation, the pro forma should include the elements shown in figure 3-6. EVALUATING REVENUE: THE IMPORTANCE OF MARKET ANALYSIS Revenue estimates for a project, whether for sale or for lease, are critical and are derived from an under- standing of the real market for the project. A small understatement of revenue coupled with a small over- statement of costs can open up a 10 percent or great- er seeming financing gap. Conversely, overestimating revenue sets a project on a path toward market failure. Real estate market analysis should carefully review both existing supply and, independently, demand. Supply analysis can tell you a great deal about current rents or prices, and vacancy and historical absorption. However, looking at demographic and economic drivers of demand, related to past absorption, helps forecast future need. Household formation, age and income preferences, retail sales potential, employment growth, and projected growth in output all drive the amount and types of real estate for which demand ex- ists. As shown in figures 3-7 and 3-9, age and income shifts can be analyzed, and retail sales potential can be reconciled using tools such as gravity modeling. These market studies can be complex, but they avoid major “topline” mistakes that cannot be overcome. The Re- sources section contains references for techniques of market analysis, including gravity modeling and other more advanced tools. INVESTMENT ANALYSIS AND RETURN MEASURES Projects should be evaluated based on risk-adjusted rates of return appropriate to the project type and market conditions, taking into account the appro- priate financing structure and rates and terms. Rates vary widely with market conditions, type of financing, and access different types of developers may have to capital. Rates and terms for each capital source are determined in the context of a particular transaction and market conditions at the time a specific project is being reviewed. Figure 3-8 shows the types of capital that make up what is called the capital stack. The application of each layer of the stack differs, depending on the risk profile of the project component. Debt, which has the lowest cost, typically does not enter a project until the entitlement risk has been passed and construction starts. A real estate development project will also have two forms of debt: construction debt to finance the actual construction and long-term “permanent” debt, a mortgage that is serviced from project revenues. As one moves up the capital stack, the cost of the capital becomes more expensive because its appli- FIGURE 3-7 Five-Year Change in Market-Area Households by Age and Income FIGURE 3-8 The Capital Stack Equity Debt Mezzanine or performing debt • Return from project performance • Paid in tiers (the waterfall) • Much higher return than debt • Funds before debt • The value-add play • Return from interest rate and from performance • Pays an interest rate • Costs less than equity • Secured by a lien on the property • Amount based on LTV, LTC, or DCR • Lender can foreclose if not paid • Construction and permanent loans –4,000 –3,000 –2,000 –1,000 0 1,000 2,000 3,000 Age of householderNumber of householdsUnder $25,000 $25,000–$49,000 $50,000–$74,999 $75,000–$99,999 $100,000–$149,999 $150,000+ Under 35 35–54 55–74 75+ Source: ESRI; SB Friedman Development Advisors. Source: Charles A. Long Properties LLC. 34 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS cation is committed to a riskier component of the project. The overall rate of return required for a project is the result of the blended cost of capital over time. Equity investors drive the underwriting criteria because they are the ones taking the risk and obtain- ing the bank loan. Equity returns, which are often viewed by the public sector as quite high, are what is necessary for real estate to compete for capital with other investment options. These returns also reflect the risks associated with construction and lease-up, and the duration of development—often two years of predevelopment and two years to full lease-up or sell- out once construction begins. The financial structure typically gives preference to the lowest costs of capital—usually debt—and then the other sources. Debt, however, is secured by a lien, and many investors limit debt to mitigate the risk of losing the project to foreclosure if market conditions change. The amount of debt is driven by bank under- writing criteria, risk, loan to value or cost (LTV or LTC), and debt coverage ratios upon completion. Construc- tion debt is replaced by permanent debt upon project completion and lease-up. The rates of return change with market conditions and should be researched through market analysis and inter- views of market participants. The investment analysis can then review a number of key return measures, as follows: For-sale projects: ■■Margin on sales (combined overhead, G&A, and profit) Investment projects: ■■Capitalization rate ■■Annual cash on total cost at stabilization ■■Annual cash on equity at stabilization ■■Internal rate of return on total cost ■■Internal rate of return on equity Details on how these factors are analyzed can be found in the Resources section. The specific benchmarks are again determined, based on research, interviews, and adjustment to re- flect the appropriate levels of risk. The amount of assis- tance that will in some form be required to achieve the necessary rate of return for the project to be financially feasible can then be calculated and the gap validated. FIGURE 3-9 Retail Gravity Model Source: ESRI; SB Friedman Development Advisors. FROM PRINCIPLES TO PRACTICES 35 After a gap has been confirmed, then the public and private sectors can address how to overcome it. Tools for closing a financing gap are described in the section “Structuring Development Partnership Deals” in this chapter. Competitive Necessity The second type of “but for” condition involves single or multiple jurisdictions competing to attract the same development. Such competition may be for job creation, tax base enhancement, or a specific use, such as a research park, that will catalyze more economic activity within the jurisdiction. The dynamics of com- petition among regions (intraregional) differ from that within regions (interregional). Private investors choosing among regions consider a broad range of issues, such as quality of life, infrastructure, education system, cost of living, and regional demographics, as well as an economic package. This type of competition requires that jurisdictions within a region collaborate and bring regional resources to the table to enhance their compet- itive position and, perhaps, to overcome shortcomings in base conditions. In contrast, competition within re- gions, primarily for tax base, frequently approaches the dynamics of a zero-sum game where jurisdictions may offer resources that are close to the economic value of the resources created by the investment. Here are some parameters of these two competitive situations. INTERREGIONAL COMPETITION Companies frequently seek a new location for their headquarters office, industrial plant, or new product center by choosing among different regions based on both their underlying circumstances and the value of the economic package offered by the region. This sets up a competition among regions. If jurisdictions within a region can understand this dynamic, they can pool resources to make their region more competitive. As an example, jobs within one jurisdiction in a region provide economic value to the entire region, not just to that jurisdiction. Regional cooperation and collabo- ration benefit all jurisdictions in the region. Effective action in this environment starts with an assessment of the region’s competitive position. Here is a checklist of dimensions to assess: ■■Statewide regional and sector-based development policies; ■■Business climate rankings; ■■Land and building costs; ■■Labor costs/union status; ■■Labor availability and skills; ■■Local taxation; ■■Utilities: water, sewer, power; ■■Transportation for goods, workforce, and executives and sales personnel; ■■Industry links; ■■Community quality and cost of living; and ■■Incentives, both state and local. The economic package then needs to address the region’s shortcomings. Will the school district be part of the discussion? What about job training programs? Can tax and utility costs be reduced? In some cases, tools such as tax incentives, development assistance, housing assistance, and others can address cost differ- entials. In other cases, an individual jurisdiction would be hard pressed to overcome lack of diverse housing, mixed-use walkable neighborhoods, or transit access in the short run. In many regions, the calculus has been made more complex by the need to attract the millennial cohort labor force with its special skills and the mismatch of housing and jobs for both this and other labor cohorts. The millennial cohort has a documented preference for mixed-use urban living, placing many suburban loca- tions at a disadvantage. Decades of suburban mono- culture development have separated administrative, managerial, and executive labor in distinct sections of the region, requiring long employee commutes if the project is not located in a transit-rich location. But a region’s competitive strength is frequently its strongest asset. In Chicago, Mayor Emanuel’s “elevator speech” during his first term was simply: “I guaran- tee you your labor force (10 points higher college graduates than nationally and a restructured com- munity college system), and I guarantee you global access (O’Hare International Airport).” He succeeded in attracting 32 corporate headquarters to downtown, including several from other regions with almost no incentives! Trust is tangible and can be earned through work and commitment to the project. Building trust incrementally through small efforts within the partnership creates a record of small successes that support bigger strides. In other words, success breeds confidence, and confidence breeds trust. Ten Principles, 30. 36 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS INTRAREGIONAL COMPETITION Within a market area, the iconic example of inter- regional competition is competition for retail sales. This is ultimately a zero-sum game because demand crosses jurisdictional boundaries and is ultimately limited. However, this fact does not stop localities from seeking to attract retail for its contribution to both property tax and sales tax. Furthermore, in some states (Illinois among them), sharing sales tax with retailers and retail developers is legal. (In California, as a contrast, this practice was outlawed in 1994.) The stakes can be high and the competition fierce, with the seemingly rational idea of tax-base sharing limited to a few areas. Evaluating the need to provide assistance to a retail project (excluding real estate extraordinary cost issues discussed in the prior section) requires careful analysis of the following: ■■Demographic pitch of area to retailer; ■■Traffic and site access characteristics; ■■Market area/competition and overlaps; ■■Land and site costs; ■■Property tax and sales tax differentials; ■■Local factors; ■■Tax-sharing deals and incentives offered by competitors; ■■Projections of revenue generation; and ■■Abatement/development cost shares. In the final analysis, such projects involving competi- tion within the region can involve sales-tax sharing, real estate tax abatement, or TIF-type assistance with development costs. Frequently, however, such packag- es simply relocate economic activity from one part of the region to another with no net gain in value. Making a Fair Deal That Connects the Public Investment to the Public Benefits Simultaneous with identifying the means of closing the gap is the work of crafting business terms of the PPP. Three principles apply in crafting business terms: ■■Connect the public investment to the benefits created. ■■The private sector must have its own capital (“skin in the game”) before public investment goes into the project. ■■Create terms that provide the public sector a return if the project performance exceeds expectations— that is, ensure that the public investment does not create a windfall for the developer. As noted in the survey in chapter 1, a major impedi- ment to making effective PPPs can be a “winner-take- all” or “hardball” bargaining dynamic. Such bargain- ing often fails in the PPP context because it inhibits problem solving and trust building. The negotiation process, instead, should focus on identifying and addressing each party’s legitimate issues in an open and transparent way that allows for accommodation wherever possible, recognizing that, at times, each party will be asked to leave something on the table to make the deal work. The private sector must recognize that the public sector must ultimately be in a position to defend its deal to all stakeholders. Conversely, the public sector must recognize that the private sector must realize a fair return to justify the risk that it may incur in a development deal. Summary With this analysis in hand, and assuming the project meets the four criteria—goals, need, viability, fiscal benefit—six principles should be followed in negotiat- ing these PPPs: 1. MAKE DEALS BASED ON THE REAL NEEDS, NOT WISHFUL THINKING. Validate the deal based on the real estate economics and on what the markets will actually support or on the carefully analyzed competitive position. 2. BUILD TRUST AND OWNERSHIP. Who is involved in the partnership is as critical as what the project is. Developers and communities need to take the time to use the “open book” and to develop relation- ships of consistency and trust. 3. DO THE HARD WORK COMPETENTLY. PPPs are complicated and require resilience and persistence to accomplish. They require a competent team on both sides of the table who take the time and effort to craft complex deals. 4. USE NEGOTIATION AS PROBLEM SOLVING. Re- specting public needs for transparency and private need to protect proprietary information, expect the negotiation process to be used to resolve the differ- ing perspectives, needs, and risks of the parties. 5. VALIDATE A FAIR DEAL FOR BOTH. The public must achieve key goals and benefits, and the private sector must receive a reasonable return for the level of risk. 6. UNDERSTAND THE REAL RISKS AND FINANCING CHALLENGES. Both the public and private partners must explain to the public the risks and financing issues that deals worthy of public/private partner- ship entail. FROM PRINCIPLES TO PRACTICES 37 From the public sector perspective, PPPs help address a number of governmental social objectives, including the following: ■■Job creation; ■■Affordable housing; ■■Expansion or restoration of government infrastructure; ■■Health education; and ■■Quality of life. Those objectives help drive the fiscal responsibilities of and benefits for the public sector. Those responsibili- ties and benefits include: ■■Increasing the tax base through property taxes; ■■Increasing sales tax revenue through an increase in jobs; ■■Introducing private sector technology and inno- vation in providing better public services through improved operational efficiency; ■■Incentivizing the private sector to deliver projects on time and within budget; ■■Imposing budgetary certainty by setting present and future costs of infrastructure projects over time; ■■Creating diversification in the economy; ■■Supplementing limited public sector capacities to meet the growing demand for infrastructure and community service development; ■■Integrating local workforce development; and ■■Developing the capacities of minorities, women, and disadvantaged businesses. From the private sector perspective, many objectives and benefits are obtained by engaging in a PPP, includ- ing the following: ■■Making a profit; ■■Repaying equity; ■■Creating leverage; ■■Increasing business; ■■Increasing the value of property in a sustainable and prosperous environment; ■■Allocating risk; ■■Building trust and long-term relationships with the public sector; and ■■Deploying assets, both financial and human resources, during economic downturns. Measuring the Fiscal and Economic Benefits of PPPs Measuring the fiscal and economic benefits of PPPs can take many forms and take place at various points during the PPP project. Particularly during the forma- tion time frame, both the public and private sectors seek to determine the fiscal and economic impacts of the project. Both parties have different measurements to determine if the project is feasible enough to pro- ceed with the partnership. The public sector will want to know the fiscal impact, in terms of revenues and costs, the project will have on its budget. Those revenues and costs target both operating budgets and capital budgets. The public sector will also want to determine the local economic effect the project will have on job creation; direct, indirect, and induced effects; plus the dynamic effects. The private sector will seek to determine the direct profitability of the project on its finances in addition to the political and public goodwill and future growth that could potentially occur because of the public involvement in the project. Assessing Fiscal Impacts and Community Benefits of PPPs RUSS WEYER PUBLIC/PRIVATE PARTNERSHIPS have immediate and lasting impacts and benefits to both the public sector and the private sector. These impacts and benefits are the very reason that PPPs are formed. Fiscal and economic advantages of PPPs include reduced public capital investment, improved efficiencies and quicker completion, improved cost-effectiveness, shared resources, and a guaranteed revenue stream. 38 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS WHEN TO MEASURE Various schools of thought exist about the timing of fiscal measuring. Each situation is unique and requires collaboration between the public and private entities involved in the partnership. Fiscal measurement of a PPP project during its ne- gotiation process is imperative. This measurement sets the benchmark fiscal targets that are used to measure the project’s positive or negative fiscal results. Once the benchmark measurement is established, both the public and private partners need to agree upon the future time frame in which to measure the fiscal results. Depending on the tax and fiscal struc- tures of a public entity, measuring the project upon its completion is prudent, thus allowing the project time to get up and running in terms of its fiscal impact on the public sector. An interm measurement may be required if the proj- ect appears to be missing its timing of a plan element delivery or if the project’s plan elements change during the course of its evolution. PUBLIC SECTOR FISCAL AND ECONOMIC MEASUREMENTS Generally, public sector entities use two types of mea- surements to determine the viability of a PPP—fiscal im- pact analysis models (FIAMs) and economic impact mod- els. FIAMs are used to determine the net fiscal impact of a PPP on public sector budgets, and they determine both the operating and capital impacts of a project. Operating revenues and costs are ongoing charges. Operating revenues are a combination of ad valorem taxes and per capita charges, such as gas taxes, sales taxes, franchise fees, utility taxes, occupational licenses, building permits, and grants. Costs are gener- ally measured on a per capita basis and include finan- cial and administrative, legal, law enforcement, fire, corrections, solid waste, U.S. Departent of Housing and Urban Development (HUD), economic develop- ment, and health. Capital revenues and expenses are one-time charges imposed on projects to cover such community capital costs as roads, schools, law enforcement, emergency medical services, libraries, and parks. Capital revenues are generated from impact fees. Costs are driven by a num- ber of analysis techniques, such as trip generation and capacity for roads, and per capita for other capital needs. TYPES OF FIAMS. In his book The Fiscal Impact Handbook,4 Robert Burchell identifies six types of fiscal modeling methods. The per capita multiplier method is the most widely used model due to its focus on resi- dential development. However, all the models apply to PPPs. Following is a description of each model type: ■■Per Capita Multiplier Method: This technique— primarily used for the impact of residential develop- ment—uses average government cost per person and school costs per pupil multiplied by a projec- tion of the expected number of new people and students to estimate the costs of a new develop- ment. The recommended multipliers for population and enrollment changes can be derived using U.S. Census data. ■■Case Study Method: The case study method can be used for residential and nonresidential fiscal impact analyses. This method involves interviewing local officials and experts (e.g., school administra- tors, people involved in local budget process, etc.) to obtain an estimate of how different government bodies will be affected by a given development. The expert estimates are then combined to account for the impacts in different areas and create an overall estimate of the fiscal impact of a development. ■■Service Standard Method: The service standard method uses U.S. Census of Governments data to calculate the average manpower per 1,000 people and capital-to-operating expenditure ratios for eight municipal functions. The fiscal expenses are then calculated based on expected population changes, [I]t is widely acceptable that the private side, in exchange for taking significant financial risk, will accrue proportionate future financial returns. The public side, in return for providing the infrastructure, entitlements, or other public resources that allow the private activity to advance, will receive sufficient tangible and intangible public benefits—such as improved public infrastructure; increased property, employment, or sales tax base; provision of needed services; clearing of blight; and nontax income and tax revenue generated by the project—that justify the required investment. Ten Principles, 26. FROM PRINCIPLES TO PRACTICES 39 service manpower requirements, local salaries, statu- tory obligations, and expenses per employee. ■■Comparable City Method: As the name indicates, this method is based on finding a municipality that has a similar population and growth rate as the city in question is projected to have. The underlying assumption of this method is that cities of compara- ble size and growth rates spend similar amounts on municipal and educational expenditures. ■■Proportional Evaluation Method: This method is used for a fiscal impact analysis of nonresidential development, whereby the development is assigned a portion of the municipality’s costs based on the proportion of local property it comprises. However, because municipal expenditures for a single devel- opment are not always linear with regard to the development’s size, this method can overstate the cost of large developments and understate the cost of small developments. ■■Employment Anticipation Method: Another meth- od for estimating the fiscal impact of nonresidential developments is the employment anticipation method. This method hinges on an estimate of the number of employees a development would add to the munic- ipality. In effect, estimates of the additional cost for each new employee across various municipal sectors are multiplied by the anticipated increase in employees to create the total cost estimate for the city. Selecting an appropriate method or methods to use is primarily determined by the type of PPP being proposed. The models may be implemented at any stage of the PPP—from the beginning, to determine potential impacts, through completion, to determine if the PPP met its goals. TYPES OF ECONOMIC IMPACT MODELS. Economic impact analyses usually use one of two methods for determining impacts. The first is an input-output model (I/O model) for analyzing the local and regional economy. These models rely on interindustry data to determine how effects in one industry (PPP project) will affect other sectors. In addition, I/O models estimate the share of each industry’s purchases that are sup- plied by local firms (compared with those outside the study area). Using these data, multipliers are calculated and used to estimate economic impacts. Examples of I/O models used for economic impact analyses are IMPLAN, RIMS-II, and EMSI. Input/output models measure direct, indirect, induced, and dynamic effects of a PPP project on the local and regional economy. The direct effects from the initial spending create additional activity in the local economy. Indirect effects are the results of business-to-business transactions indirectly caused by the direct effects. Businesses initially benefiting from the direct effects will subsequently increase spending at other local businesses. The indirect effect is a measure of this increase in business-to-business activity (not including the initial round of spending, which is included in the direct effects). Induced effects are the results of increased personal income caused by the direct and indirect effects. Busi- nesses experiencing increased revenue from the direct and indirect effects will subsequently increase payroll expenditures (by hiring more employees, increasing payroll hours, raising salaries, and so on). Households will, in turn, increase spending at local businesses. The induced effect is a measure of this increase in house- hold-to-business activity. Finally, dynamic effects are caused by geographic shifts over time in populations and businesses. Another method used for economic impact anal- yses is economic simulation models. These are more complex econometric and general equilibrium models. They account for everything the I/O model does, plus they forecast the impacts caused by future economic and demographic changes. One such model is is the REMI Model. COMPARISON TO OTHER ANALYSES Economic impact analyses are related to but differ from other similar studies. An economic impact analysis cov- ers only specific types of economic activity. Some social impacts that affect a region’s quality of life, such as safety and pollution, may be analyzed as part of a social impact analysis but not an economic impact analysis, even if the economic value of those factors could be quantified. An economic impact analysis may be per- formed as one part of a broader environmental impact assessment, which is often used to examine impacts of proposed development projects. An economic impact analysis may also be performed to help calculate the benefits of a project as part of a cost-benefit analysis. Public and Private Sector Tools Brought to a PPP Both parties not only inherently receive monetary ben- efits from the partnership but also bring tools that are unique to each partner to the partnership. Completing the circle in assessing fiscal and community benefits is reviewing the various tools that each party brings. Understanding these tools is important because they form the basis for assessing the fiscal impacts and community benefits. Tolls and fees, TIF or another form of tax district, impact fees, development taxes, capital contributions, special assessments, grants, and development approvals are just a few of the public sector tools that would benefit a PPP. Development efficiency, private financing, labor skills, technology transfer, and an experienced workforce are tools the private sector brings to the PPP. 40 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS COMMUNITY BENEFIT AGREEMENTS A community benefits agreement (CBA) is a contract signed by community groups and the private sector that requires the private sector to provide specific amenities or mitigations to the local community or neighborhood. In exchange, the community groups agree to publicly support the project, or at least not to oppose it. Often, negotiating a CBA relies heavily upon the formation of a multi-issue, broad-based commu- nity coalition, including community, environmental, faith-based, and labor organizations. Negotiating with community representatives in creating a CBA can be an effective way to gain com- munity support for the private sector and help move the PPP forward. Participating in CBA negotiations also allows the private sector to work with a unified public coalition rather than having to engage community organizations one by one. Effective CBAs are inclusive because they allow many public organizations to participate. They are also enforceable and provide accountability from both the public and private sectors to perform the obligations of the agreement. Typically, CBAs include job quality standards, local hiring programs, and affordable housing requirements that are all at the top of community activists’ lists. Oth- er potential benefits that could be included in a CBA are living wage and prevailing wage requirements; lo- cal hiring goals; job training programs; minority, wom- en, and/or local business contracting goals; and space setasides for neighborhood organizations, community centers, child care centers, and other nonprofits. Because a CBA is a legally binding contract, it can be enforced only by the parties that signed it. CBAs that are incorporated into development agreements can be enforced by the government as well as by community groups. DEVELOPER CONTRIBUTION AGREEMENTS Many times during the rezoning or other development processes, a local government will require the develop- er to make certain types of contributions, either mon- etary or in kind. The developer contribution agreement (DCA) sets forth the requirements for these contribu- tions for both the local government and the developer. DCAs are most often mutual and are negotiated and agreed upon during the formation of the PPP. Mutual developer contribution agreements benefit both the public sector and the private sector in that the private sector contributes something of value in return for a benefit from the public sector. An example would be for the private sector to financially contribute to the construction or addition to a wastewater treatment plant in exchange for reserving future capacity. WASHINGTON, D.C. McMILLAN DEVELOPMENT CBA The government of Washington, D.C., owned a 25-acre parcel of the McMillan Sand Filtration Site, which is bounded by North Capitol Street NW, Channing Street NW, First Street NW, and Michigan Avenue NW in the District of Columbia. In 1986, the property was declared as surplus by the federal government. In 1987, the District purchased the site for mixed-use development and historic preservation. In 2007, Vision McMil- lan Partners LLC (VMP), consisting of Trammell Crow Company, EYA, and Jair Lynch Development Partners, was identified as land development partners of the property and later as its vertical developers. The project plan consists of 146 townhomes, 531 apartments, a grocery store anchor and other ground-floor retail, over 1 mil- lion square feet of health care facilities, an eight-acre central park with other open space, and a 17,000-square-foot community center. In 2014, a community benefits agreement (CBA) was created to represent neighboring residents’ concerns and involved input and negotiations among the developer, the affected communities, the D.C. Office of Planning, and the D.C. Zon- ing Commission. It was determined from the beginning that the project would significantly and negatively impact the abutting Bloomingdale and Stronghold neighborhoods as well as nonabutting neighborhoods in close proximity to the property; thus, these neighborhoods were considered deserving of receipt of targeted CBA benefits and amenities. In addition, because the project would most directly affect the abutting commu- nities, those communities were to be given special consideration with regard to proposed changes to the development plan for those items that are of greatest negative impact. The CBA established that in addition to affordable housing commitments, VMP would provide the following community benefits: • $1,000,000 as a workforce develop- ment fund; • $125,000 to parent-teacher associ- ations serving science, technology, engineering, and mathematics programs at three nearby schools; • $500,000 over a ten-year period to provide guided tours of the McMil- lan site highlighting the preserved historic resources; • $750,000 over a ten-year period to create a community market, outdoor cage, and space for art installations; • $225,000 to facilitate business start- up in the project; • $500,000 for neighborhood beau- tification projects in surrounding neighborhoods; • $150,000 for a storefront improve- ment program; • VMP’s best efforts to provide free wi-fi for public use in the communi- ty center and park; and • A total of approximately 97,770 square feet of gross floor area devoted to retail and service uses, including a neighborhood-serving grocery store. Capping off a series of recent approv- als by the Zoning Commission and D.C. Council’s Government Operations and Economic Development Commit- tees, the four resolutions granting the surplus and disposition of McMillan received unanimous passage during the December 2, 2014, legislative meeting. The council unanimously passed resolutions PR20-1082, PR20- 1083, and PR20-1084, granting the sale at fair market value to VMP. The property is now in the planning and permitting process. Source: Vision McMillan Partners Team: Trammell Crow Company, EYA LLC, Jair Lynch Development Partners. PRINCIPLE IN PRACTICE FROM PRINCIPLES TO PRACTICES 41 ■■Difficulties with site assembly; ■■Extraordinary cleanup, demolition, or structural costs; ■■Poor surrounding conditions that undermine market and marketability for a project; ■■Needed infrastructure; ■■Regulatory processes and standards out of synch with the project; ■■Public goals in a desired project that are “above market”; ■■Community-imposed design or density limits that reduce returns below acceptable level; ■■Capital market fluctuations and investment priorities creating financing difficulties; ■■Multiple problems creating returns lower than required to attract capital; and ■■Competitive site and location costs (taxation, labor, development, etc.). The public sector has tools with which to help the private sector overcome these problems with actions that, among others, ■■Lower the cost of capital through financing tools; ■■Reduce effective project costs through government grants, cost sharing, or philanthropy; ■■Overcome regulatory and other institutional barriers; ■■Enhance project value through public investment or increased density; ■■Anchor the development with a public facility lease or facility; and ■■Moderate operating cost differences (e.g., taxes, labor costs, training, etc.). In many states and locales, public tools have been essentially incentive payments to induce a production facility or employer and were about helping the com- munity compete with other communities. Although this use of public tools continues, and in fact in some states has increased in recent years, their use raises much concern. For example, in August 2010, the New Jersey State Comptroller issued a report reviewing tax abatements, which found that [tax] abatement practices go largely unmonitored . . . and . . . municipal governments have little incentive to comprehensively assess whether an abatement is necessary to attract development, whether the type of development is needed in the first place, or whether the abatement ultimately achieves its desired economic development goals.5 The recommended practices today focus assistance on the real problems of a project, taking into account the risks experienced by both the public and private sectors and the benefits to be attained by each (as discussed in the two prior sections). Managing Risk Structuring PPP transactions presents a dilemma and a conflict between the perspectives of private and public bodies and their risks and needs. Generally, assistance to projects is constrained by need on one hand and fiscal benefits on the other. From a pri- vate sector standpoint, the risks are greatest in the predevelopment and development phases, particularly with projects that seek to address the often complex goals of publicly desired redevelopment. The private sector would like as much assistance at the front end as possible. Even predevelopment soft costs can reach seven figures. From the public sector standpoint, the risks that the project will not be completed or produce the benefits expected lead to a preference to link assistance to performance of the project. In the case of projects to be funded by or with reference to incremental revenues or other benefits that flow from the project, a timing problem exists, as illustrated by figure 3-10. Structuring Development Partnership Deals STEPHEN B. FRIEDMAN AND CHARLES A. LONG AS DISCUSSED IN THE SECTION “The ‘But for’ Problem and the Need to Make a Fair Deal,” public/ private partnerships address the fundamental economic viability of a project or the competitive environment for attracting a particular investment. Some of the problems faced by development projects today include: 42 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS The public sector’s risk is mitigated by limiting its pledge of support to revenues linked to the project’s benefits and provided when the project delivers the promised gains for the jurisdiction. Structuring requires achieving a balance between the private sector’s need for early capital and the public sector’s need to limit risk. Structuring should be thought of not only as direct financial assistance, but also as other actions that may assist a project (see sidebar at right). These may include the following: ■■Process Assistance: Streamlining development ap- provals and providing appropriate entitlements more quickly at less cost to the project; ■■Site Assembly Assistance (Nonfinancial): Using public powers of eminent domain for redevelop- ment to help complete a site or provide public land or parking facilities that can become part of a development; ■■Site Assembly (Land Writedown) Assistance: Acquiring land and reselling at its redevelopment value or providing financial assistance to a devel- oper where land costs are greater than supportable residual land value for the desired use; ■■Infrastructure and Public Facility Coinvest- ment: Prioritizing street, water, sewer, park, school, transportation, and government building projects to support a development; ■■Facilitation of Improvement Districts and Special Assessment Districts: Where economically competitive, providing the legal and administrative mechanisms for a development to pay for its own infrastructure through additional taxes; ■■Assumption of Extraordinary Costs: Having a public agency use its own funds, create and use some form of incremental taxing district, and/or seek grants or low-cost loans from higher levels of government to absorb demolition, remediation, and structural issues linked to site conditions such as soil bearing, engineered caps, flood protection, and wetlands; ■■Using Financing Tools to Reduce Cost of Capital: Facilitating tax-exempt bonds where allowable (e.g., industrial revenue bonds, periodic disaster bonds, housing bonds, 501(c)(3)) and finding government loan funds that may be available for public or in some cases private costs; ■■Using Tax Credits to Reduce Other Capital Re- quirements: Assisting developers in obtaining tax credits for projects, including housing (coordinating with allocating body), new markets, and historic as well as state variants on the same; ■■Tax Abatements and Sharing: As allowed in one form or another in many states, allowing private developers to retain or receive back a portion of taxes generated for use to assist the economics of the project; and ■■Local Tools/Local Funds for Project Costs: Whether public or private as allowed by law in FIGURE 3-10 Fundamental Timing Problem Source: SB Friedman Development Advisors. Mismatch: Public gap financing is most needed HERE . . . . . . but revenue becomes available HERE Project agreement finalized/ construction start YEAR 1 Substantial completion Substantial occupancy YEAR 2 Project generates new revenue YEAR 3 Taxes collected Funds paid over to developer MIAMI, FLORIDA BRICKELL CITY CENTRE Brickell City Centre is a 6.5 million-square-foot mixed- use project by Swire Properties of Hong Kong under construction in downtown Miami. The government participation was not in the form of direct subsidy but in the nature of favorable regulatory and proprietary actions, which included adoption of a Special Area Plan, the first under Miami’s new zoning code, that allowed certain deviations from the code because of the size, scale, and complexity of this project. In their proprietary capacities, the County Transit Agency, the Florida Department of Transportation, and the city of Miami conveyed easements and small parcels to the developer at market rates, which helped facilitate the development. Source: Neisen Kasdin. PRINCIPLE IN PRACTICE FROM PRINCIPLES TO PRACTICES 43 each locale, using locally generated funds from TIF, payments in lieu of taxes, and similar tools to defray development costs. These may be also used in con- junction with various bonding and other borrowing mechanisms. The Financial Assistance Toolkit The tools available for financial assistance vary over time and from place to place. Figure 3-11 summarizes typically available tools for development and redevel- opment projects in 2015. However, each state and locale has its own set of laws and policies that will shape how projects may be assisted, and the tools will change over time. Fresh research at the start of a project is often warranted. Using the Tools The application of the tools can be understood within a four-part framework as follows: 1. THE PUBLIC SECTOR CAN ASSIST IN OVERCOM- ING BARRIERS AND RISKS, such as site assembly, cleanup, entitlement, and market risk, that make private investment in a project risky. In many states, redevelopment agencies still have the legal authority to exercise eminent domain for site assembly for re- development projects. Some states authorize either cities or redevelopment agencies to mandate site cleanup and bill the site owners. A process that en- gages the community to create a community vision can streamline the entitlement process and lower the risk of loss during predevelopment. A public facility lease for a portion of a project may provide the anchor tenant necessary to complete financing. Special taxes such as hotel, visitor, and entertain- ment taxes may be used to bolster the cash flow of related facilities to reach sufficient net operating income to support financing. A public agency can address market risk with contingent business terms, which postpone debt repayments or provide project subsidies if market performance fails to meet market projections, for example by providing aid with a second or third mortgage position. Public agencies can also enhance project value by permitting higher density and height in return for public benefits. The city of Vancouver, British Columbia, has a term called “the land lift” under which the city’s grant of density and height results in a community benefit package of affordable housing, parks, and plazas. California law allows jurisdictions to require a setaside of units for affordable housing in return for increased height and density. Similar bonus or tradeoff provisions are common elsewhere as well. 2. THE PUBLIC SECTOR CAN INCREASE PROJECT VALUE through coinvesting in adjacent facilities that synergize higher value or by granting additional development entitlements that increase the develop- ment yield and, therefore, project value. Coinvest- ment in parks, parking, transit infrastructure, bike trails, theaters, and even golf courses are examples of facilities that often increase the value of adjacent development. Allowing increased height and density (the so-called land lift) is commonly used as a means to increase project value to fund the cost of afford- able housing or other community benefits. Coinvestment can have major impacts on project value. Examples of areas in which to invest include public plazas, parks, theaters, bike trails and golf courses. One example of coinvestment is shown in figure 3-12. This project in Charlotte, North Carolina, converted an old Rouse shopping center that had paved over a creek into a mixed-use project that daylighted the creek. The city invested $16.9 million in bike trail and stream restoration, connect- ing the project to the downtown, and provided the development with tax rebates based on its rating on a Sustainable Development Index. The result is a $240 million mixed-use project with residential, office, and retail. FIGURE 3-11 Typical Tools, 2015 Municipally Controlled Tools • Tax increment financing (TIF) • Payment in lieu of taxes (PILOT) • Improvement districts (BID/CID/SA) • Sales tax sharing (selected states) • Tax abatements • Land banks Other Tools for Local Projects • New Markets Tax Credits (NMTCs) (selected locations) • Renewed for 2012 and 2013 • Commercial, industrial, community facilities, mixed use • EB-5 (Immigrant Investor Program) • Foreign investment in exchange for green card • Debt or equity source in layered deals • Low-income housing tax credits • HOME • Section 108 loans • Transportation Infrastructure Finance and Innovation Act (TIFIA)/ Railroad Rehabilitation & Improvement Financing (RRIF) • Transportation Investment Generating Economic Recovery (TIGER) • U.S. Economic Development Administration programs • Privatization and facility provision • Foundations/civic ventures Source: SB Friedman Development Advisors; Real Estate Strategies Inc. 44 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS 3. THE PUBLIC AND PHILANTHROPIC SECTORS CAN LOWER THE COST OF CAPITAL by either financing some components of the project using low-cost municipal debt or providing a source of capital that has a low or no return requirement. Ordinary mu- nicipal tax-exempt debt financing is limited to public facilities, such as land, roads, utilities, parking, or affordable housing, but it can create significant cost savings because the cost of municipal debt is lower than private debt. Other municipal debt instruments may not be tax-exempt but can still result in lower capital costs than private debt or equity. Low- or no-cost capital can take such forms as tax credits, grants, or philanthropic contributions. These capital sources may have a position for distribution of return subordinated to that of the primary equity investors, may be donations, or may be forgiven at a later time. 4. THE PUBLIC SECTOR CAN REDUCE THE NET PROJ- ECT COSTS by directly funding some portions of the project, contributing land to a project, or waiving some project costs, such as development impact fees. The reduction in cost allows a lower project value to meet the project hurdle on return necessary to show economic viability and attract the remaining capital. Financing and Grant Tools Following the “less-to-more” principle, strategies to overcome barriers and risks and use public investment to help a project would come first. However, these are often insufficient, and various financing and grant tools may be needed to achieve a desired project. Key tools are described below. LOWERING THE COST OF CAPITAL Figure 3-13 diagrams the basic financing structure of a real estate project. Capital comes in two basic categories: debt and equity. Similar to financing for a single-family home, the debt is secured by a lien, which allows the lender to foreclose for nonpayment, and the equity is “at risk” for loss if the property value declines. The total capital for a project is sometimes called the capital stack (see figure 3-8). Although the stack can have many different layers, including first loans, second loans, mezzanine debt, and different priorities of equity, figure 3-8 shows three basic categories: debt, mezza- nine debt, and equity. Because debt is secured by a lien and has lower risk, it has an interest rate that is much lower than the rate of return needed to attract equity. Mezzanine debt is typically junior to primary debt and carries a higher rate of interest commensurate with risk. Interest may also be contingent, within limits of Internal Revenue Service (IRS) definitions of interest versus equity return. Mezzanine debt often substitutes for equity, carrying lower return obligations. Today mezzanine debt is part of almost every large financing simply as a pricing tool to attract capital in- vestment. In fact, most modern senior secured financing allows for the tranching of the facility to provide higher- yielding subordinate tranches to facilitate syndication. Equity receives a return based on project perfor- mance, often in a tiered distribution, which distributes initial profits to the investors and increasing distribu- tions to the developer for higher profits. Other tiers may be related to returns to early investors versus later investors, as well. Most projects will also have a temporary financing structure during construction followed by a permanent structure upon completion or some later point. There may be “bridge” loans to cover later contributions— Mixed-Use Redevelopment by Pappas Properties Public participation • $8.9 million in infrastructure • $8.0 million in greenway/land acquisition • $17 million from property tax rebates Cost • $240 million, private Size • 163,000 square feet of office space • 231,000 square feet of retail space • 205 residential units • 2,000 parking spaces FIGURE 3-12 Metropolitan, Charlotte, North Carolina Source: Charles A. Long Properties LLC.Pappas PropertiesFROM PRINCIPLES TO PRACTICES 45 sometimes developer equity but sometimes the public participation. Not uncommonly, construction loans convert to “mini-perms” with a five- to seven-year term and then are “taken out” by permanent financ- ing. Some tiers of equity investors may remain for the long haul; others may be replaced at different points or the project may be sold. From the public sector point of view, the capital structure should first provide for a reasonable equity contribution (“skin in the game”) and maximize the lowest-cost debt financing before determining the level of public involvement. The public sector has numerous capital sources that can lower the cost of capital for public/private projects. BONDS. The first major category is municipal bonds, which typically have a lower interest rate than private debt because their interest is exempt from federal in- come tax (they are also exempt from taxation to taxpay- ers in many of the states of issuance). They also usually have a longer amortization period than private debt. However, in recent years, concerns about municipal credit have resulted in some periods in which interest rates on municipals have exceeded private debt. As an indicator of this market anomaly, since 2009, the Bond Buyer Index for general obligation bonds has ranged from about 3.25 percent to 5.4 percent. Bonds have the additional advantage that in many cases they can be used for construction as well as permanent financing. Under the Dodd-Frank Financial Reform Act of 2010, municipal finance has come under additional regulation. A new category of registered professional was created called a “municipal advisor.” Profession- als providing advice on the use of bonds for economic development and redevelopment projects must be registered with the Securities Exchange Commission (SEC) and the Municipal Securities Regulatory Board (MSRB), or their advice must be reviewed by some- one who is registered and designated by the issuing jurisdiction as their “independent registered municipal advisor.” These bonds fall into numerous categories, depend- ing on their repayment source, and they are a major funding source for PPPs. The most significant types of bonds for public/private partnerships are as follows: ■■Land-Secured Bonds (also may be called Special Assessment and Community Improvement Dis- trict Bonds): These bonds are repaid in installments by property owners within a development project. The payments are subject to enforcement through tax foreclosure. The annual payments can be derived from a tax formula, based on the property charac- teristics, or on a fixed lien assessment that allocates FIGURE 3-13 Basic Financing Structure Involving Debt and Equity THE REAL ESTATE Political/physical/economic opportunities and constraints Funds DEBT SOURCE Lenders EQUITY SOURCE Owners and investors Funds PUBLIC SECTOR AGENCIES DEVELOPER/ OPERATOR Debt service Return CAPITAL CONSTRUCTION & DEBT FINANCING PREDEVELOPMENT & EQUITY FINANCING Entitlements, public participation Vision, skills, predevelopment, required coinvestment ReturnTaxes and fees THE MARKET/ USERS Commodity and/or value Sale, lease, or occupancy $ Source: Charles A. Long Properties LLC. 46 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS the original costs that were financed. These types of bonds can be used for infrastructure and site cleanup, as shown in the example in figure 3-14 describing the Mission Bay project in San Francisco, which used $400 million of land-secured bonds. ■■Tax Increment Bonds: Most states have statutes permitting operation of tax increment financing, based on forming a redevelopment project area or TIF district. Increased property taxes from these designated areas can be invested in projects that revitalize the area and increase property values. Figure 3-15 illustrates the distribution of property taxes from these areas. These types of bonds are sometimes called special revenue bonds, and re- payment is limited to defined sources within the TIF district or other supporting sources. In one city, all sales tax revenue is pledged as a support. Depend- ing on state law on allowable use of TIF funds, these bonds may be limited to public infrastructure or may be available for other project costs, such as site preparation within the private project, rehabilitation of buildings, or new construction. The use of the proceeds and the repayment sources will determine which elements of such bonds may be tax exempt and which may be taxable. Even when taxable, they may be a lower-cost source of funds than additional private debt, which, in any case, may not be avail- able because of the economic characteristics of the project and its financing gap. ■■Other Municipal Bond Types: Although federal regulations limit use of municipal bonds to public purposes and require compliance with IRS regula- tions for use of funds, numerous types of municipal bonds can still be used for PPPs. Housing revenue bonds can provide the debt component of afford- able housing or low-cost mortgages for single-family homeowners. Revenue bonds can finance capacity for large employers in water and sewer plants. Gen- eral obligation bonds can finance public infrastruc- ture components of private projects or site assembly. Importantly, not-for-profit organizations can be the beneficiary of tax-exempt bonds (sometimes called 501(c)(3) bonds) for their facilities. The example in figure 3-16 is from the city of Berkeley, California, which, through a lease, financed a new theater for the Berkeley Repertory Theatre company and issued lease revenue bonds paid for by lease payments from the not-for-profit theater company. ■■Developer Notes/Pay-as-You-Go. Sometimes taxable and sometimes tax exempt, depending on uses and repayment sources, these are less formal debt FIGURE 3-14 Mission Bay, San Francisco • 303-acre old rail yard • Site cleanup • 11,000 new residents • 31,000 new jobs • University of California, San Francisco, campus • Biotech research labs • $400 million of infrastructure (financed with “land secured” bonds) • Public transit links and open space FIGURE 3-15 Tax Increment Bonds Redevelopment finances investment from increased value INCREMENTAL ASSESSED VALUE Value created from new investment BASE ASSESSED VALUE Value of project area when formed Tax increment $Redevelopment agency City/county PROVIDE SERVICES INVEST IN PROJECT AREA Property tax $ Source: Charles A. Long Properties LLC. Source: Charles A. Long Properties LLC.Hawkeye PhotographyFROM PRINCIPLES TO PRACTICES 47 instruments used when the level of support is insuf- ficient to tap public finance markets. The developer holds the note; in some cases, it may be sold to a third party. It may be supported by a general revenue source or limited to project revenues or other structures. TAX CREDITS. Tax credits create equity for projects by selling a right to take an income tax credit to corpo- rations or high-wealth individuals. They come in three basic categories: low-income housing, new markets tax credits, and historic preservation. Although largely federal tax credits, a number of states have parallel programs. Each category has different amortization FIGURE 3-16 Lease Revenue Bonds Berkeley Repertory Theatre • City signs lease with theater and places the lease with a trustee. • The trustee issues certificates of participation (COPs) in the lease in $5,000 denominations. • The proceeds from the sale of the COPs build the theater. • The theater pays rent to the city. • The city’s general fund backs up payments on the bonds. FIGURE 3-17 Types of Tax Credits Available Low-Income Tax Credits • Affordable rent-restricted housing • $9 billion annual market, awarded at the state level to specific projects • Rigorous compliance requirements New Markets Tax Credits • Low-income communities • $3 billion to $4 billion annually awarded by Treasury Department • Rigorous compliance requirements Historic Tax Credits • Historic preservation • Administered by U.S. Park Service and state preservation offices • Rigorous compliance requirements periods for taking the tax benefits and different compliance provisions and is administered by a distinct federal or state agency. Figure 3-17 summarizes the three types of tax credits. Using tax credits requires a substantial amount of time and expertise from specialists in the field and involves a number of intermediaries to obtain credits and investors to buy them. Somewhat organized and established sources of investors are now available for each type of credits, often conventional corporations with tax liability and large banks with community reinvestment act motivation. All the tax credits are used as but one layer in multi- source capital stacks. Low-income housing tax credits are often paired with “soft money” from the HUD HOME program or state and local sources. Allocations of 9 percent credits may be obtained from state hous- ing agencies (roughly 9 percent of eligible costs for ten years). Tax-exempt housing bonds may be used for first mortgage financing for such projects and automatical- ly trigger so-called 4 percent credits. Credits sell in a competitive market and may garner 70 to 90 percent, depending on conditions. New markets tax credits are obtained from a com- munity development entity (CDE) that has competitively obtained an allocation of credits from the Community Development Financial Institutions Fund (CDFI Fund) of the U.S. Department of the Treasury. These credits are for commercial, industrial, community facility, and mixed-use projects and are layered with many other sources (except low income housing tax credits). Key is a layer of “senior debt,” which may be philanthropic for community facilities or bank debt for other types of Source: Charles A. Long Properties LLC. Source: Charles A. Long Properties LLC.kevinberne.com48 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS projects. Figure 3-18 illustrates a basic structure. The tax credit funds remain in the project for seven years, after which they may be refinanced or forgiven depending on the circumstances and CDE involved. New markets tax credits typically can account for 18 to 20 percent of a project’s costs, net of the fees and closing costs. Historic tax credits are based on 20 percent of eligible rehabilitation costs of a commercial property, including rental housing, listed on the National Regis- ter of Historic Places. Credits remain in place, amortiz- ing over five years. Because they confer ownership and other tax benefits of depreciation over the five years, they may sell for 100 percent of their value, typically to conventional corporations or bodies representing such investors. Compliance is complex and rigorous, requir- ing review and approval by the State Historic Preserva- tion Officer and the U.S. Department of the Interior. OTHER TOOLS. The following should also be consid- ered when capitalizing a project: ■■EB-5: EB-5 awards visas to immigrants who invest $500,000 to $1 million in a U.S. business. Appli- cants who can prove their investment has created at least ten jobs get permanent green cards. This capi- tal source is brokered through specialists who recruit investors and work within allotments set by statute. The Los Angeles Times reported in August 2014 that the program used up its entire annual allotment in 2014 and that 85 percent of funds for the program have come from China. ■■Land Value: A commonly used means of providing capital to a PPP is by conveying land for the project with a portion of the land sale price categorized as either debt or equity in the project. Payment on that portion of the land value can either be structured as a fixed interest rate or be based on project performance. ■■Direct Investment: Provided that the funding source is not municipal bonds, public agencies and philanthropic organizations can make direct investments in projects. Just as with land value, the investment can be made as debt or equity. ■■Credit Enhancements: Regional infrastructure banks and other financial institutions are often able to offer contingent guarantees and conduit financ- ing vehicles to allow developers, groups of landown- ers, and other unrated issuers to effectively organize and access lower costs of capital for projects that serve a public good. REDUCING NET PROJECT COSTS Public agencies have numerous sources of funding for lowering project costs to make the project viable: ■■Federal and State Grants: Numerous programs administered by the U.S. Department of Transpor- tation (Federal Highway Administration and Federal Transit Administration) are available to reduce project costs. HUD also administers categorical grant programs for affordable housing and sustainable development. The U.S. Environmental Protection Agency has funding available for site cleanup. ■■Regional Grant Programs: Many federal and state grants are funneled through regional councils of governments or metropolitan planning organiza- tions. In California, regional transportation metro- politan planning organizations are required to adopt sustainable community strategies and channel trans- portation funding to projects that enhance higher- density projects that reduce vehicle miles traveled. ■■Local Funding: Tax increment financing can serve as a source of funding to reduce project costs. Other funding sources include local sales tax and federal or state sources, such as Community Development Block Grants. FIGURE 3-18 Basic Structure of Senior Debt CDE FUND INVESTOR LEVERAGE LENDER(S) QUALIFYING PROJECT/ BUSINESS (QALICB) Passed through to investor Mirrors leverage loan Gross subsidy created by tax credit $7 MILLION LEVERAGE LOAN $3.9 MILLION TAX CREDIT $3 MILLION EQUITY $10 MILLION QUALIFIED EQUITY INVESTMENT LOAN A: $7 MILLION LOAN B: $3 MILLION SPONSOR/SPONSOR-AFFILIATED ENTITIES COMMUNITY DEVELOPMENT ENTITIES (CDEs)INVESTOR ENTITIES KEY: Source: SB Friedman Development Advisors. Note: CDE fees, closing costs, and required reserves reduce the net subsidy to about $2 million. FROM PRINCIPLES TO PRACTICES 49 How Much Assistance? Previously, we discussed the need to measure the financing gap through analysis of the project’s pro forma or to analyze the project’s competitive position and what is needed to attract the use to a site or community. This needs analysis drives the maximum financial assistance within the limit of the financial benefits of the project. Often the private sector ap- proaches the project’s request for assistance based on other factors: the incremental benefits (“it’s my TIF”) or maximum legally eligible costs (for example, all land and infrastructure costs). The appropriate level of assis- tance is the lesser of eligible costs, financing capacity, or demonstrated need as illustrated hypothetically in figure 3-19. In contrast, some jurisdictions may impose more ar- bitrary limits, such as 20 percent of project costs, so as to achieve a 1:5 “leverage” or number of jobs created. Important policy goals may or may not be embedded in these limitations, but often they are inappropriate and restrict assistance to a level insufficient to allow the project to proceed. In addition, projects with broader and secondary benefits may justify public funding (above grants) that exceeds the measurable direct fiscal benefits. Major job creators, such as convention centers and other tourism attractors, are demonstrated to have second- ary economic impacts that may justify broader fund- ing. Catalytic projects that change the environment or major remediation projects may have positive spillovers that justify deeper and broader assistance. Monetizing Assistance The tools that address risk and return do so by low- ering capital costs, lowering project costs, reducing risk, or increasing project value. Their use requires that the public agency understand enough of real estate finance to ensure that the resulting partnerships are fair to the public. The partnerships should clearly connect to the public benefits that are being achieved; the process for arriving at these partnerships must be open and transparent; and the partnerships’ need for public actions must be explainable and understandable by the public. From the public sector perspective, a number of ways exist to integrate public support with private real estate economics. Public entities can approach mon- etizing from the perspective of risk (see figure 3-20) and public benefit, as summarized below. Accordingly, a number of techniques may be used to fund the local public share of assistance to a project. PAYMENTS IN LIEU OF TAXES (PILOT) In some states, this is a key form of assistance to abate taxes in part or in full, with some payment for certain governmental costs in lieu of taxes. In such a situation, the developer actually retains the funds and can apply them to costs within the project. Payments in lieu may be for general services or for off-site improvements, depending on state and local law and practice. Assistance to a PPP should be measured according to what is needed to fill a gap and within the levels of public benefit expected. Assistance can range from improved processes to deep financial involvement, but risks need to be shared fairly. FIGURE 3-19 Determination of Appropriate Level of Public Assistance MillionsEligible cost Demonstrated need to become feasible Financing capacity of proposed district $0 $2 $4 $6 $8 $10 $12 $14 $16 APPROPRIATE LEVEL OF PUBLIC ASSISTANCE Source: SB Friedman Development Advisors. 50 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS PAY-AS-YOU-GO In pay-as-you-go financing, the payments to the de- veloper are made when and if funds become available, typically only from the project. The mechanisms may vary from state to state. For example, if the mech- anism available is a tax rebate, payment would be made as the funds were received. If incremental taxes are pledged on such a basis, those would be paid as received. Similarly, in some states sales tax may be shared with a developer as it is received. MONETIZING FUTURE REVENUES FROM THE PROJECT ITSELF In some states, interest-bearing notes may be issued to a developer as reimbursement for costs allowed under state law. The developer then borrows additional funds or provides its funds to complete project financing. This method is low risk to the municipality but often difficult for the developer in a challenging project. Notes may be left outstanding or may be taken out by more formal public financing when the project achieves stabilization. This financing may take the form of special revenue bonds supported only by the revenue from the project or some other defined, limited source, for example incremental taxes from throughout a district. General revenues are not pledged to this type of instrument. Bonds may also be issued that are supported by special taxes levied on a development. These may arise under special assessment legislation (typically based on benefit) or community improvement district legislation (often based on value or interests in real estate). These are additional taxes beyond the general taxes applica- ble to the jurisdiction. BACKING BONDS WITH OTHER REVENUE PLEDGES Bonds may also be used with broader backing, such as general sales taxes or the full faith and credit of the municipality (general obligation). In redevelopment this method can create greater risk than other mechanisms and is usually undertaken only after careful analysis and for specific purposes that provide a lasting public asset such as land or infrastructure. LOANS Some municipalities may have sources of funds for loans. These may come from previous repayments, sharing in success on projects, or other statutory and grant provisions. In these cases, the funds may be ad- vanced as a loan and a junior mortgage position taken on the project, usually at a submarket interest rate. The eventual repayment of these loans may create additional economic development resources. TRIGGER AND TAKE-OUT BONDS Various provisions may also trigger changes from one type of funding to another. The lowest rates will be paid by a municipality on general obligation bonds, and in some cases providing such support may be appropriate after the project has achieved stabilization to take out more expensive notes. In other cases, pro- viding such support in parallel to private commitments and private funding may be prudent. Although these mechanisms are more complicated for the private developer than a direct grant, they have all been used in various jurisdictions to successfully fund public/private development projects. FIGURE 3-20 Municipal Risk Spectrum: Funding Sources Revenues from project itself; only to the extent they materialize Lesser Risk >>>> Greater Risk Other special revenue pledges (e.g., special assess- ment; area-wide pledge) Other municipal revenue sources affecting general fund (e.g., sales tax, hotel tax) Municipal full faith and credit Source: SB Friedman Development Advisors. FROM PRINCIPLES TO PRACTICES 51 Evaluating and Structuring Infrastructure and Facility PPPs JEFFREY FULLERTON AND RYAN JOHNSON PUBLIC PROCUREMENT STRATEGIES traditionally follow a design/bid/build procurement methodology. This method isolates the various aspects of asset delivery; each aspect is usually completed by independent teams as each activity is completed in a linear fashion. This structure is represented in figure 3-21. In contrast, an integrated PPP model can be used by the public agency to contract for a more holistic result. By combining the aspects of real estate delivery, financing, and long-term operation and maintenance, public agencies can encourage more collaboration and high-quality delivery. This structure is represented in figure 3-22. A number of factors are considered in determining whether or not to pursue an alternative path to provid- ing infrastructure or a public facility. These may include administrative capacity, construction and operating or- ganizational skills, financing legalities, length of lease allowed under governing statutes, and considerations of equity and ongoing efficiency. A body considering an infrastructure or facility PPP will want to evaluate all of these more qualitative and management issues, but it will also want to take a hard look at the economics involved, as discussed below. 70% 60% 50% 40% 30% 20% 10% –10% 0% Up to $50 $50 to $100 $100 to $300 Over $300COST OVERRUNSPROJEC T COST (MILLIONS) Average cost savings Average cost overruns Caltrans Historical Performance On projects over $300 million (like Presidio Parkway), Caltrans has historically had cost overruns in excess of 50 percent. MAXIMIZING BENEFITS OF PPPS: SOME POLICY CONSIDERATIONS In its analysis of the Presidio Parkway, the California Department of Trans- portation reviewed its experience of delivering projects on time. As illustrated in the graph, larger, more complex projects had a history of being over budget with the agency. This illustrates an expected value of the construction risks that would have been retained in the public sector comparator, defined as the estimated equivalent cost if the agency devel- oped the infrastructure under a traditional design/bid/build approach and retained the relevant risks of cost overruns, maintenance, etc. An agency needs to have an agreed-upon set of standards by which a VfM analysis is to be performed. The California Legislative Analyst’s Office reviewed the Presidio Park- way, along with the Long Beach Courthouse, and recommended that an independent review board be established to standardize VfM calculation methodologies before the state of California proceeded with further public/ private partnership projects. Such agencies exist in Canada and other coun- tries where infrastructure PPPs are more common. Source: Legislative Analyst’s Office, Maximizing State Benefits from Public- Private Partnerships (Sacramento, CA: Legislative Analyst’s Office, 2012). Source: Edgemoor Infrastructure and Real Estate; based on data derived from the Presidio Parkway Business Case Analysis by Arup & Parsons Brinckerhoff, February 2010. 52 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS Value for Money Analysis The VfM analysis provides a useful prism through which the public sector can evaluate procurement options for new infrastructure assets. It is probably the most important of the factors in a decision over procurement methods because it can be used to justify the most cost-effective method rather than only tradi- tional approaches. A properly executed VfM allows the public sector to make an informed decision, based on comparing the costs and risks of a traditional delivery method with the costs and risks of a PPP delivery. The VfM analysis is typically performed by an independent third-party consultant on behalf of the public sector before procuring private sector partners. The results of the analysis can serve as a benchmark throughout the procurement, delivery, and operations phase and should be revisited routinely over time to confirm the assumptions used and the conclusions drawn from the analysis. PUBLIC SECTOR COMPARATOR The first step is to develop a public sector comparator (PSC), which is the term given to the public sector’s cost to deliver and operate the asset through a traditional procurement method. Typically, a standard design/bid/ build procurement process is used as the basis for the PSC. The PSC must include the estimated capital costs to design and construct the facility as well as all costs associated with financing the asset. In addition to the cost of financing and delivering the asset, the PSC in- cludes the cost of routine operations and maintenance of the facility as well as life-cycle costs, such as system upgrades and replacements that will affect the building or infrastructure over the course of its useful life. The PSC must also include the risks that the public sector takes on in the traditional process. Risks such as construction cost overruns and deferred maintenance can, and often do, have significant financial impacts to the public sector. A detailed analysis must be FIGURE 3-21 Traditional Design/Bid/Build Structure AGENCY/ INSTITUTION END USERSLEGAL REAL ESTATE DESIGN (A&E) BUILD (GENERAL CONTRACTOR) FINANCE O&M (FACILITY MANAGER) • End-user coordination site entitlement • Permits • Utilities • Inspections • Quality control • FF&E • Risk management • Community relations • Leasing • Accounting • Designer • Engineers • Code compliance • Tenant work • Schedule • LEED requirements • Geotech/ environmental • Builder/general contractor • Tenant work • Schedule • Insurance • Commissioning • Build per plans and specifications Source: © Edgemoor Infrastructure & Real Estate LLC. Note: A&E = architecture and engineering; O&M = operation and maintenance; FF&E = fixtures, furnishings, and equipment; LEED = Leadership in Energy and Environmental Design. AGENCY RISK RISK TRANSFERRED TO PRIVATE SECTORKEY: FROM PRINCIPLES TO PRACTICES 53 performed to arrive at the cost of each of these risks and the likelihood of their occurrence. The expected cost of each of those risks borne by the public sector must be included in the PSC. Once all cash inflows and outflows have been vetted and determined, then the cash flow is discounted back to the present day’s dollars to arrive at a net present value (NPV) that will be compared to the PPP alternative. COST OF THE PPP ALTERNATIVE The next step in the VfM analysis is to estimate the cost of the PPP alternative, often referred to as the shadow bid. The shadow bid has two basic compo- nents. The first is the annual payment the private sec- tor will charge the public sector to deliver and operate the project. This amount includes the cost to finance the design and construction of the asset, private sector FIGURE 3-22 PPP Design/Build/Finance/Operate/Maintain Source: © Edgemoor Infrastructure & Real Estate LLC. Note: O&M = operation and maintenance; FF&E = fixtures, furnishings, and equipment; LEED = Leadership in Energy and Environmental Design. TURNKEY DESIGNBUILDER AGENCY/ INSTITUTION END USERSLEGAL CONCESSIONAIRELEGAL FINANCE O&M (FACILITY MANAGER) • Real estate activities • Owner-rep delivery • End-user coordination • Site entitlement • Permits • Utilities • Inspections • Quality control • FF&E • Leasing • Accounting • Risk management • Community relations • Design/build activities • Builder • Designer • Engineers • Lump sum fixed price • Code compliance • Tenant work • Guaranteed schedule • LEED requirements • Insurance • Geotech/ environmental • Move-in coordination • Life-cycle cost studies • Commissioning • Feasibility studies • Capitalization plan • Debt (banks/bonds) • Equity • Investors • Transaction structuring • Bond/lender counsel • Loan documentation • Collateral agreements • Builder/lender • Facility manager/ lender • Financial close • Ongoing financial reporting • Owner-rep operations • Life-cycle cost analysis • Building management • Operating cost management • Licensing/permits • Lease management • Tenant service • LEED requirements • Risk management • Insurance • Move-in coordination • Repairs and maintenance • Equipment/ component replacements AGENCY RISK RISK TRANSFERRED TO PRIVATE SECTORKEY: 54 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS profit, routine operations and maintenance, and re- serves for life-cycle replacement. The cost of financing for the PPP alternative will typically be higher than in the PSC. The private financing mechanisms used in a PPP often require private equity investments that will garner higher rates of return than the low-cost, tax-exempt debt financing solutions that are typical in the public sector’s standard project finance approach. Although the PPP alternative typically has a higher cost of financing, a key benefit of the VfM analysis is that it allows the public sector to weigh that relative cost differential against all the other costs and benefits of a PPP to arrive at a true, holistic comparison of the traditional procurement method versus a PPP. The second component of the shadow bid is the ex- pected cost of all risks the public sector retains in a PPP scenario. Although a PPP transfers most risks to the private sector, a few notable exceptions include force majeure, unforeseen site conditions, and changes in law that must be factored into the shadow bid. Similar to the PSC, once all cash flows of the shadow bid are known, they are discounted back to present day value to arrive at the shadow bid’s NPV. For the VfM analysis to be accurate and a fair com- parison of the two alternative procurement methods, a few key parameters must be set. First, the project scope, operational standards, and life-cycle replace- ment assumptions must be the same for both the PSC and shadow bid. In addition, the discount rate used for both alternatives must be the same and be pegged at the public sector’s borrowing rate. Any inconsisten- cies in these parameters can yield dramatically differ- ent results in the NPVs being used for comparison. COMPARATIVE NPV The final step in the VfM analysis is to compare the NPVs of the PSC and the shadow bid. The difference between the value of the PSC and the value of the shadow bid the “value for money” created by select- ing the PPP alternative. Assuming that difference is positive, the public sector would receive more value for its money by opting to use a PPP to deliver the asset. Of course, quantitative factors are not the only selection criteria. The public sector must consider numerous other factors in making the final decision to pursue a PPP. Often, PPPs can deliver assets much more quickly than a standard procurement. In addition, many municipalities can benefit from the certainty that comes with transferring many risks to the private sector as well as the consistency of equal, anticipated © ICC Constructors, a joint ventureThe Intercounty Connector (ICC) in Maryland. FROM PRINCIPLES TO PRACTICES 55 annual payments. In some cases, the jurisdiction may not have access to capital, even if less costly. However, PPPs can be political lightning rods, especially in juris- dictions that have not used the innovative approach successfully in the past. The VfM analysis, when com- bined with the full gamut of factors to be considered, is a wonderful tool to help the public sector determine if a PPP is the right solution to deliver new infrastruc- ture assets. Deal Types and Structures for Infrastructure and Public Facility Projects Several common structures are currently being pursued for infrastructure and public facility projects, depend- ing on their characteristics and the type of service being provided. REVENUE-GENERATING ASSETS For infrastructure such as toll roads and parking facilities that generate revenue from user-based fees, PPPs can be structured to capture that revenue stream and use it to secure financing for delivery of the asset. The public sector has the option to collect the tolls or user fees and set rates as a matter of social policy or to transfer the risk of generating revenue to the private sector. One recent PPP project that exemplifies this type of public/private partnership in the United States is the I-495 express lanes in Virginia. The Capital Beltway Express LLC consortium developed this $2 billion toll road under a design/build/finance/operate/ maintain (DBFOM) public/private service contract that allows it to collect tolls to help support the capital cost of the project. AVAILABILITY PAYMENTS For assets that do not typically generate revenue or for which the private sector is unwilling to take demand risk, such as courthouses, prisons, or research labs, for example, many PPPs use an availability payment structure. This structure is based on the public entity making regular payments to the private entity in exchange for the private entity operating the facility at predetermined levels of building performance. Any deficiency in the asset’s operation reduces the amount of the availability payment; thus, the private entity has a significant incentive to ensure that the asset is always functional. One recently successful example of this type of project was the Governor George Deuk- mejian Courthouse in Long Beach, California. When state bond funding was not available to complete this critical justice sector project, the state turned to a © Robb Williamson/AECOMGovernor George Deukmejian Court- house, Long Beach, California. 56 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS European-style DBFOM to expedite the project. Under the performance-based contract, the state has an absolute right of offset to deduct from its service pay- ment to the private sector consortium, if components of the building are not available. The building was delivered ahead of schedule and under budget using an innovative off-balance-sheet financing structure to preserve debt capacity for the state of California. SAVINGS CAPTURE It is no secret that many public assets are operationally inefficient and functionally obsolete and are often far more expensive to operate and maintain than a newly built, efficient asset. A well-crafted PPP can take advantage of this situation by using the “savings captured” by constructing a new, more efficient facility to pay for the cost of constructing and operating that new facility. For example, if a municipality is paying $50 million a year to operate an inefficient building, a savings capture infrastructure PPP could be created to build a new building that requires only $20 million a year to operate. Then, the remaining $30 million of the current annual expenditure of $50 million can be used for debt service on the new facility. The net result for the public sector is a new facility delivered and operated for the same cost as it currently pays for the outdated existing facility. This strategy was recently used successfully by the city of Long Beach, Califor- nia, to procure a new civic center. By redirecting the funding otherwise going to off-site leases and ongoing maintenance of its existing civic center campus to a PPP development and allowing the private developer the right to develop excess land created in the master plan, the city will not only get a new city hall, library, and redeveloped 4.8-acre park, but also vibrant new development in the heart of the city that will provide incremental tax revenue and economic improvement. FROM PRINCIPLES TO PRACTICES 57 and expeditiously through the entitlement process. Sec- ond, they address the market risk for developing newer, unproven product types by investing along with the developer and participating in that risk. Both of these Managing Risk and Sharing Success JOSEPH E. COOMES JR. AND CHARLES A. LONG A PRINCIPAL CHALLENGE for contemporary development today is its higher risk profile. Part of this risk comes from it being more urban, and more physically and economically complicated with new product types, such as mixed use. In addition, the public is increasingly involved in the entitlement process and demands more public benefits; consequently, the entitlement process takes longer, and its outcomes are more uncer- tain. Time also increases the risk that markets will change before the project can be built and closed out. Therefore, communities that want to achieve high-quality development engage in PPPs that address this higher risk profile by mitigating to the extent feasible the entitlement and market risks for the developer. These communities use basic strategies. First, they work with the community itself to create a vision with high-quality development standards that permit develop- ers who meet these standards to move straightforwardly FIGURE 3-23 Walnut Creek, California Downtown Redevelopment • Retail and office center for the East Bay • Incorporates a community vision into • Comprehensive plan • Zoning • Development conditions • Environmental review • Eliminates the project-by-project gauntlet—projects that meet the standards proceed to design and permit • Bases the plan on the market City of Walnut Creek, CaliforniaSource: Charles A. Long Properties LLC. 58 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS strategies enable the community to share the success that comes from higher-quality development that is con- figured to respond to a contemporary demand profile. A High-Quality Community Vision High-quality developers prefer to compete on value, not on price. A jurisdiction that engages the commu- nity in creating a high-quality vision creates this oppor- tunity by setting its development standards high and, thus, making the community a more valuable location to live and work. The community vision also stream- lines the entitlement process for projects that meet the high standards and thus lowers the entitlement risk. An interesting consensus is emerging about the strategy of setting high standards and streamlining the entitlement process. Greenbelt Alliance in the San Francisco Bay area in its publication entitled Smart Infill says: “Simplify the process for developers. By stream- lining permitting and construction processes, getting departments to work together to promote infill, and ensuring requirements are consistent, cities can smooth the way for good development.”6 Communities that set high standards operate on the principal that the standards may cost more, but they make the community more valuable. Numerous exam- ples of this paradigm exist. The city of Walnut Creek in the San Francisco Bay area has strong planning pro- cesses and streamlined entitlement that have resulted in high-quality development (see figure 3-23). FIGURE 3-24 Silver Spring, Maryland Silver Spring Town Center Silver Spring, Maryland, in Montgomery County, part of the Washington, D.C. metro area, is currently a vibrant mixed-use com- munity that is headquarters to the American Film Institute and Discovery Channel as a result of county-financed parking and renovation of an art deco movie theater. Sharing Market Risk Communities share the market risk in numerous ways. One is to invest alongside the private sector and catalyze value. Figure 3-24 shows an example in Silver Spring, Maryland. The investments by the county in parking and in renovation of an art deco movie theater catalyzed conversion of the downtown area from a tired and obsolete suburban retail center into a vibrant mixed-use transit-oriented development. Another risk-sharing method is for a community to convey property for development at a reduced price through a ground lease, basing lease payments on the performance of the project. In the city of Pinole, California, the redevelopment agency conveyed land to a shopping center developer through a ground lease, where rent was 80 percent of the operating cash flow of the center. As a result of the redevelop- ment agency not requiring an upfront payment for the land, the developer was able to use the land value as the equity contribution to the project. Communities that recognize and manage the higher risk profile of today’s contemporary development can reap substantial benefits from helping the developer manage that risk. Starting with high development standards, streamlining and mitigating the entitlement risk, and extending into possible sharing of market risk through coinvestment or performance-based business terms are two major strategies to achieve this goal. Source: Charles A. Long Properties LLC.Bryce Turner of Brown Craig TurnerFROM PRINCIPLES TO PRACTICES 59 Documenting and Monitoring Deals MARK BURKLAND SOME ADMINISTRATIVE PROCEDURES are always critical to completing a development transaction and carrying out a project. Faithfully memorializing the terms of the agreement reached by the developer and the municipality and incorporating the responsibilities of all parties are important to ensuring successful execution. The sensitivity of a municipality devoting public funds and other resources to a project, and assuming some level of risk of loss, demands greater documentation than would occur in a purely private project. When public land is involved, a purchase and sale agreement is often proposed by the private sector but rarely sufficient. Public/private transactions of all types require detailed agreements. Documentation of the Process The surest way to minimize last-minute misunder- standing or disagreements when a development deal is nearly at hand is to have properly memorialized the process. Following are common means of documenta- tion that always should be undertaken. JOINT EFFORTS Some recordkeeping may be shared by the parties as a matter of efficiency. ■■The parties should decide which party will be responsible for what recordkeeping. That decision itself should be in writing so no confusion exists about who is responsible for what recordkeeping. ■■Minutes should be prepared of each face-to-face meeting or significant telephone conference, includ- ing the date, the participants, and a brief summary of topics discussed. For items requiring follow-up, the nature of the item and follow-up required, who is responsible for the follow-up, and when the follow-up is due should be noted. ■■As negotiations progress, agreements on significant terms, even if still interim and subject to change, should be put in writing and distributed. INDIVIDUAL EFFORTS Each party should establish an internal protocol for memorializing communications and activities, includ- ing the following: ■■Logs of everyday communications. Each party should keep a record of each communication be- tween the developer and the municipality. • E-mail messages should be retained at least in electronic form. For municipalities, this almost certainly is required by state law. • Telephone calls made and received should be re- corded in a log—just the date and time of the call and the names of participants are enough. Voice- mail messages should be saved or transcribed unless they plainly are (or become) irrelevant. ■■Diaries of significant activities. Developers and mu- nicipalities have their own responsibilities and time- tables and have commitments to each other. Each party should keep a diary of those responsibilities and commitments so that none escapes attention and milestones and commitments are achieved. Documentation of the Deal When an agreement is reached, it must be written thoroughly and clearly. The importance of detailed, unambiguous writing is impossible to overstate. TERM SHEET/LETTER OF INTENT: Arriving at an agreement regarding key business terms sets the stage for the other agreements. This process allows the expectations of all parties to be reconciled. For the private side, the various requirements of working on a public transaction will become clear: disclosure of ownership; adherence to prevailing wage; minority- and women-owned business requirements; public goal attainment, such as job creation, should be summa- rized. For the public side, such matters as the basic fi- nancial structure, financing sources and commitments, performance guarantees, and tenant commitments are among the matters to be clarified and agreed. Although the subsequent agreements will memorialize much detail—and negotiation around it—basic deal parameters should not be a surprise going forward. 60 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS DEVELOPMENT (OR REDEVELOPMENT) AGREEMENT: The development agreement is the working document that must be truly comprehensive. It should include all the substantive terms of the deal. A deal has far too many potential terms to list all of the categories here, but following are some basics: ■■All elements of the project affected by zoning or code limitations, variations, or modifications; ■■All requirements related to completion and submis- sion of final plans and specifications; ■■All procedures and documents required for all real property acquisitions, easements, transfers of title, and other land-related matters, including forms of deeds, easement agreements, and other transfer documents; ■■All responsibilities related to who builds what and when, and how that construction is accomplished and paid for; ■■Responsibilities for compliance with state and local labor, employment, environmental, LEED standards and other laws, including as applicable minority- and women-owned businesses, Historically Underutilized Business Zone (HUB Zone), disadvan- taged business enterprises, and prevailing wage; ■■TIF and other financing mechanisms, including fund- ing triggers and requirements; ■■All standards for documenting and reporting on project matters, such as • Spending; • Costs and reimbursement matters (and terms for making payments); • Prevailing wage law compliance (including such things as certified payroll records if, and as re- quired, by state or local laws); and • A statement of minority- and women-owned business requirements (which should be in the approval ordinance too) and proof of satisfaction of those requirements; ■■Timetables, critical path matters, inspections, ap- provals, public infrastructure standards, and other construction-related items; ■■Performance guarantees and warranties, including forms of performance security such as forms of letters of credit and performance and labor and materials payment bonds; ■■Commitments to provide declarations of covenants and forms of covenants, conditions, and restrictions; ■■Standards for, and limitations on, transferability of ownership, rights, and responsibilities; ■■Specific terms for declarations of breach, opportuni- ties to cure, and termination; ■■“Clawback” triggers and consequences; ■■Terms for final inspection and approvals of public infrastructure improvements and other elements of the project; ■■Profit-sharing provisions, lookbacks, and settling point; ■■Definitive development plans, specifications, and budgets in an enforceable form, such as approved planned development documents and building plans; and ■■Forms of condominium/homeowners association by- laws and property maintenance standards. ORDINANCE (OR EQUIVALENT): Deal terms may not commonly be stated in both the approval ordinance and in the development agreement, but it can be beneficial for both parties for that to be the case. The municipality must have, and the developer certainly must be satisfied with, an ordinance that covers every element of the deal. Some elements are exclusive to the ordinance, such as zoning approvals, among others. Other elements are appropriate in other doc- uments but should be stated in, or incorporated into, the ordinance. Still other elements are appropriate to be regulated both in the ordinance and in another document (such as a declaration of covenants or an easement agreement). Execution and Monitoring As the project proceeds, the private side should expect, and the public side should plan to conduct, oversight of execution and monitoring of performance throughout the life of the agreement. This may include the following: CONSTRUCTION OVERSIGHT: The private sector can expect the public sector to provide additional review of construction where public funds are involved. This oversight is typically in addition to lender inspections and may be a condition of release of public funds or reimbursements. PROJECT COMPLETION/COST CERTIFICATION: Formal procedures may be required to prove final costs and true-up elements of the agreement. ANNUAL FINANCIAL REPORTING/AUDITS: Some projects, particularly affordable housing, carry require- ments for annual audits and other financial reporting that may be beyond that usually required by lenders or equity partners in purely private transactions. COMPLIANCE REPORTING: Certified payrolls to demonstrate prevailing wage compliance and docu- mentation of minority- and women-owned business involvement are typically required on a monthly or quarterly basis. In some cities, residency targets for construction workers may also exist. FROM PRINCIPLES TO PRACTICES 61 EMPLOYMENT AND OTHER PUBLIC GOAL ACHIEVE- MENT: Annual certification and documentation of achieving promised goals is typical. “Creating” and maintaining, or retaining, some number of jobs is a common requirement in city commercial and industrial projects. Maintaining affordability is a requirement of affordable housing projects. ONGOING REIMBURSEMENT OR PAY-AS-YOU-GO: Where assistance is provided over time, as reimburse- ment for eligible costs, subsidy of interest, or note payments, procedures for periodic submission and review of requests for payment will apply. PPP transactions share many elements with ordinary private transactions in terms of documentation and reporting. However, additional documentation, com- pliance, and reporting will be required for a number of project aspects, thereby adding to the ongoing respon- sibilities of both public and private parties to the project. Facing page: South Campus, University of Illinois at Chicago, Chicago, Illinois. 62 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS SB Friedman Development AdvisorsCONCLUSION STEPHEN B. FRIEDMAN, JOSEPH E. COOMES JR., AND CLAYTON GANTZ 4 P ublic/private partnerships are a critical vehicle for accomplishing key community development objectives with regard to real estate development and redevelopment, infra- structure and public facilities, and monetization of existing public assets for public benefit. These partnerships tap the expertise, tolerance for risk, and financial resources of the private sector to help achieve public goals. However, they are complex, and the public and private sectors approach such transactions with different skills, concerns, and perspectives. >>> CONCLUSION 63 The private sector finds the public sector’s limited understanding of private capital underwriting vexing while the public sector’s worry about “giving away the store” can get in the way of successful deal making. The private sector does not understand that municipali- ties are not profit motivated, and the public sector does not understand that developers justifiably expect to be paid to take risk. The public sector’s goals transcend profit, whereas the private sector may share the com- munity goals and broader objectives but must achieve an economically viable result more narrowly construed. These different perspectives were outlined in the introduction and further in the section “Creating Relationships between Developers and Public Bod- ies” in chapter 3 of this book. Building shared vision, knowledge, and trust are essential. Best practices have evolved, and the following tools to bridge the divide are better understood: ■■Create a shared vision and public purpose with both the partners and the community, stakeholders, and civic leadership. ■■Assemble the right development team with participation by all parties to the project to bring the breadth and depth of expertise required for more complex projects. ■■Engage proactively in the necessary predevel- opment activities, often exceeding those things that either a public entity or a private party will do on their own, to lay the groundwork for a successful partnership. ■■Establish appropriate relationships, with each party knowing the capabilities and history of the other and respecting and reflecting the public requirements for transparency and accountability while managing the private sensitivity to public process and disclosure requirements. ■■Make the economics and financing of the proj- ect clear so that public support can focus on clear extraordinary costs, public benefits, financing gap, or competitive necessity. ■■Know the benefits and how they will be secured through understanding the fiscal and economic impacts of project, seeing the other community benefits, and ensuring that the requisite commitments can be afforded by the private sector and will be received by the community. ■■For infrastructure and facilities, understand cost-effectiveness over a life cycle, and structure partnerships to ensure savings to the public sector when private sector efficiencies and skills bring benefits. ■■Structure transactions to meet the needs of the deal while mitigating risk to the public sector, a process that requires not only understanding the many resources available but also addressing the timing and risk preferences of both parties. Financ- ing market knowledge is critical—the developer needs to be sophisticated in such matters, and the public sector needs to be able to understand the reality faced by the developer. ■■Share in upside potential, particularly when public support is equity-like or involves risk that may justify profit sharing, waterfall participation, or con- tingent land prices, while protecting the developer’s need to achieve competitive returns. ■■Document and monitor the transaction to en- sure that the public receives the benefits it is seeking and the project is proceeding appropriately, allowing early opportunity to make changes and adjustments if problems occur. Through these tools and methods, the public and pri- vate sector concerns and perspectives can be bridged to use public/private partnerships to the benefit of the community with appropriate profit and returns to the private sector. 64 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS Information Sources American Council of Life Insurers. Commercial Mort- gage Commitments. Washington, DC: American Council of Life Insurers. Building Owners and Managers Association Interna- tional. www.boma.org Council of Development Finance Agencies (CDFA). www.cdfa.net. ICSC. www.icsc.org. Principal source for retail data Institute of Real Estate Management. www.irem.org and www.irem.org/resources/income-expense- analysis-reports National Association of Home Builders (NAHB). The Cost of Doing Business Study. Washington, DC: NAHB, Updated regularly. www.nahb.org Real Estate Research Corporation. Situs RERC Real Estate Report. www.rerc.com RealtyRates.com. Developer Survey. (Online subscription) RSMeans Square Foot Costs. Available in hard copy and electronically. www.rsmeans.com Urban Land Institute, National Apartment Association, and Multifamily Housing Institute. Dollar & Cents of Multi-family Housing: A Survey of Income and Expenses in Rental Apartment Communities. Wash- ington, DC: Urban Land Institute, 1997–. Books, Articles, and Other Resources Bidne, Dawn, Amber Kirby, Lucombo J. Luvela, Benja- min Shattuck, Sean Standley, and Stephen Welker. The Value for Money Analysis: A Guide to More Effective PSC and PPP Evaluation. Arlington, VA: Na- tional Council on Public-Private Partnerships, 2012. Burchell, Robert W. The Fiscal Impact Handbook. New Brunswick, NJ: Center for Urban Policy Research, 1978. Burchell, Robert W., David Listokin, and W.R. Dolphin. Development Impact: Assessment Handbook, Wash- ington, DC: Urban Land Institute, 1994. DeCorla-Souza, Patrick. “Value for Money Analysis: Constructing the Public Sector Comparator and the Shadow Bid.” Webinar, Federal Highway Administra- tion, July 11, 2013. https://www.fhwa.dot.gov/ipd/ p3/toolkit/p3_value_webinars/p3_vfm_constructing_ psc_and_shadowbid.aspx Friedman, S.B. “Real Estate Development.” In Planning and Urban Design Standards, ed. American Planning Association, 659–670. Hoboken, NJ: John Wiley & Sons, 2006. International Council of Shopping Centers (ICSC). Market Research for Shopping Centers, 2nd Edition. New York: ICSC, 2015. Legislative Analyst’s Office (LAO). Maximizing State Benefits from Public-Private Partnerships. Sacramen- to, CA: LAO, 2012. Linneman, Peter. Real Estate Finance & Investments: Risks and Opportunities. 4th ed. Philadelphia: Linneman Associates, 2016. Long, Charles A. Finance for Real Estate Development. Washington, DC: Urban Land Institute, 2011. McCoy, Bowen H. The Dynamics of Real Estate Capital Markets: A Practitioner’s Perspective. Washington, DC: Urban Land Institute, 2006. Miles, Mike E., Laurence M. Netherton, and Adrienne Schmitz. Real Estate Development: Principles and Process. 5th ed. Washington, DC: Urban Land Insti- tute, 2015. PricewaterhouseCoopers. Real Estate Investor Survey. Updated quarterly. www.pwc.com/us/en/asset- management/real-estate/publications.html PricewaterhouseCoopers. Emerging Trends in Real Estate. Updated annually. www.pwc.com/us/en/ asset-management/real-estate/emerging-trends-in- real-estate-2016.html Rafson, Harold J., and Robert N. Rafson. Brownfields: Redeveloping Environmentally Distressed Properties. New York: McGraw-Hill, 1999. Schmitz, Adrienne. Real Estate Market Analysis: A Case Study Approach. 1st ed. Washington, DC: Urban Land Institute, 2001. Smith, Tony Q., ed. Advanced Tax Increment Finance Reference Guide. Cleveland, OH: Council of Devel- opment Finance Agencies, 2009. Stainback, John. Public/Private Finance and Develop- ment. New York: John Wiley & Sons, 2000. RESOURCES RESOURCES 65 Notes 1 Mary Beth Corrigan, Ten Principles for Successful Public/Private Partnerships (Washington, DC: ULI, 2005). 2 Ibid., vi. 3 Bruce Katz and Jennifer Bradley, The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy (Washington, DC: Brookings Institution, 2013), 5. 4 Robert W. Burchell, The Fiscal Impact Handbook (New Brunswick, NJ: Center for Urban Policy Re- search, 1978). 5 State of New Jersey, Office of the State Comptroller, “State Comptroller report highlights flaws in NJ’s municipal tax abatement program” (press release, August 18, 2010, Trenton, NJ), 1. 6 Greenbelt Alliance, Smart Infill (San Francisco, CA: Greenbelt Alliance, 2008), 4. 66 SUCCESSFUL PUBLIC/PRIVATE PARTNERSHIPS ISBN 978-0-87420-378-3 9 780874 203783 51995 2001 L Street, NW Suite 200 Washington, DC 20036-4948 www.uli.org PARKING MANAGEMENT STUDY City of Hermosa Beach 10.02.19 Hello. Thank you for joining us as we evaluate opportunities to improve the availability of parking resources in the Coastal Zone in a manner that balances coastal access requirements with efficient use of the City’s limited land resources and achievement of the City’s economic development and mobility goals. Agenda. Study Purpose, Goals, & Process Inventory & Zone Characteristics Occupancy & Demand Analysis Recommendations & Best Practices Stakeholder Feedback Study Next Steps & Discussion 01 02 03 04 05 06 STUDY PURPOSE, GOALS & PROCESS 01 STUDY GOALS 3. Expand mobility options and optimize parking availability. 2. Modify parking standards to encourage revitalization and investment in a pedestrian-oriented district. 1. Create a parking system that meets the parking needs and demands of residents, visitors, and employees in an efficient and cost-effective manner. RELEVANT PLANS PLAN Hermosa (2017) •Comprehensive community vision for land uses and mobility •Recognizes diverse and changing mobility trends Beach Access and Parking Study (2015) •Inventory of public parking in the Coastal Zone •Recognizes efficient management can support more convenient access to parking for residents, businesses, customers and beach visitors Downtown Core Revitalization Strategy (2015) •Identified opportunities for revitalization and reinvestment in the City core and includes parking and land use strategies to support reinvestment PROJECT PROCESS WE ARE HERE PARKING INVENTORY & ZONE CHARACTERISTICS 02 STUDY AREA •Extent of Coastal Zone •43% of the City’s land area •Residential Parking Permit Area Parking Type Total Inventoried Spaces On-Street Preferential Yellow Metered 1,155 Preferential Silver Metered 327 Preferential Non-Metered 1,662 Non-Preferential Yellow Metered 20 Non-Preferential Non-Metered 673 Total 3,837 Public Off-Street (City-Owned) Lot A 130 Lot B 37 Lot C 354 Total 521 Private Off-Street Total 348 Overall Total 4,706 ZONE DEVELOPMENT Zone Total Inventoried Spaces On- Street Off-Street TotalPublicPrivate Zone 1 Walk Street –North End 281 0 0 281 Zone 2 North End East 518 0 0 518 Zone 3 Walk Street –Sand Section North 493 0 0 493 Zone 4 Sand Section –Valley 738 0 0 738 Zone 5 Walk Street –Downtown 513 521 119 1,153 Zone 6 Sand Section –Civic Center 533 0 135 668 Zone 7 Walk Street –Sand Section –Herondo 543 0 0 543 Zone 8 Sand Section -Cypress 218 0 94 312 Total 3,837 521 348 4,706 ZONE CHARACTERISTICS EXISTING PARKING PROGRAMS •Parking Fees + Time Limits •Residential Parking Permit Program •Daily Parking Permit Program •Employee Parking Permit Program •Off-Street Parking Requirements PARKING OCCUPANCY & DEMAND ANALYSIS 03 OCCUPANCY SUMMARY •Optimal capacity is typically set at an 85% occupancy level. •For on-street parking this equates to roughly one vacant space per blockface. Zone On-Street Parking Types Off-Street Parking Types Observed On-Street Occupancy Observed Off-Street Occupancy Metered Non-metered: Preferential Zone Non-metered: Non- Preferential Zone Public Private Weekday Afternoon Weekday Evening Weekend Afternoon Weekday Afternoon Weekday Evening Weekend Afternoon Zone 1 ✔61%66%91%N/A N/A N/A Zone 2 ✔✔53%62%82%N/A N/A N/A Zone 3 ✔69%73%88%N/A N/A N/A Zone 4 ✔✔47%62%83%N/A N/A N/A Zone 5 ✔✔✔77%84%94%Public: 89% Private: 10% Public: 78% Private: 3% Public: 86% Private: 16% Zone 6 ✔✔✔✔75%68%77%Private: 64%Private: 30%Private: 21% Zone 7 ✔63%79%97%N/A N/A N/A Zone 8 ✔✔✔✔66%86%100%Private: 46%Private: 45%Private: 95% Weekday Afternoon: Tuesday 2-3 PM Weekday Evening: Tuesday 7-8 PM Weekend Afternoon:Saturday 2-3 PM ON-STREET OCCUPANCY SUMMARY Weekend afternoon occupancy rates exceeded optimal capacity in the following zones: •Zone 1: Walk Street –North End (average occupancy of 91%) •Zone 3: Walk Street –Sand Section North (average occupancy of 88%) •Zone 5: Walk Street –Downtown (average occupancy of 94%) •Zone 7: Walk Street –Sand Section –Herondo (average occupancy of 97%) •Zone 8: Sand Section –Cypress (average occupancy of 100%) Weekday evening occupancy only exceeded optimal capacity in Zone 8 (Sand Section –Cypress, occupancy of 86%) All zones, except Zone 6 (Sand Section –Civic Center), experienced the lowest levels of occupancy during the weekday afternoon (average occupancy of 62%). OFF-STREET OCCUPANCY SUMMARY Lots A, B, and C: •For these three public lots, average occupancy among the three observation times are fairly consistent ranging, between 78% and 89%. The lowest occupancy observed was 78% during the weekday evening, suggesting that the public lots have availability while being generally well-utilized. Private off-street parking •Zone 5 (Walk Street –Downtown) registered relatively low (less than 16% at peak) occupancy for the two sites counted. •Zone 6 (Sand Section –Civic Center) exhibited a peak of 64% occupied of off-street private parking during the weekday afternoon •Zone 8 (Sand Section –Cypress) showed a peak of 95% occupied during the weekend afternoon. •Assessment of Required Off- Street Parking Ratios for different land uses. •Use of Overlay District which reduces parking requirements for certain uses in downtown core. •Generally expressed in a ratio of parking space required per square feet of floor area (1/350 sq ft). Commercial / Retail Office / Professional Restaurant Assembly Fast Food Service / Repair Medical Office Light Manufacturing Warehouse / Storage PARKING DEMAND ANALYSIS Land Uses Evaluated OFF-STREET PARKING RATE REQUIREMENTS Urban Land Institute Shared Parking Manual: 2nd Edition (ULI) Institute of Transportation Engineers Parking Generation: 4th Edition (ITE) Peer City Codes: 1.Santa Monica 2.Manhattan Beach 3.Redondo Beach 4.Long Beach 5.Huntington Beach 6.Newport Beach 7.Laguna Beach 8.Carlsbad OFF-STREET PARKING RATE REQUIREMENTS Land Use Comparative Demand Rates Anticipated Peak Parking Demand Rate Hermosa Beach Rates Average City Required Rate ITE Demand Rate ULI Shared Parking Demand Rate Hermosa Beach Required Rate Hermosa Beach Observed Demand Commercial / Retail 250 sf 214.1 sf 277.8 sf 247 sf 250 sf 609.7 sf Commercial / Retail (Overlay District)329.2 sf 329.4 sf 427.4 sf 362 sf 333 sf 642.4 sf Office / Professional 287.5 sf 352.1 sf 263.2 sf 301 sf 250 sf N/A Office / Professional (Overlay District) 307.8 sf 541.7 sf 404.9 sf 439 sf 333 sf 413.3 sf Medical Office (Overlay District)181.3 sf 480.8 sf 341.8 sf 335 sf 333 sf 500 sf Restaurant 119.3 sf 181.8 sf 95.2 sf 132 sf 100 sf N/A Restaurant (Overlay District)135 sf 279.7 sf 146.4 sf 187 sf 100 sf 201.4 sf Fast Food 159.4 sf 121.9 sf 66.7 sf 116 sf 50 sf N/A Service / Repair 362.5 sf 444.4 sf No rate 404 sf 1,000 sf N/A Assembly 3.8 seats 2.6 seats 2.5 seats 3 seats 50 sf 378.3 sf Light Manufacturing 537.5 sf 980.4 sf No rate 759 sf 300 sf 785.8 sf Warehousing / Storage 1,187.5 sf 1,960.8 sf No rate 1,574 sf 1,000 sf 1,051.8 sf Expressed as one parking space per ____ sf STUDY RECOMMENDATIONS & BEST PRACTICES 04 1.Which of the strategies interest you most? 2.Do you have feedback or concerns about any of the recommendations? 3.Do you think we’ve missed any general areas of recommendations? 4.Do you agree with the relative priorities identified for near and long term solutions? 5.Do you have recommendations on best practices we should be looking at that you’ve seen in other communities that you think work well? DISCUSSION QUESTIONS Recommendat ion Number Recommendation Strategically Invest in Information and Technology 1 Implement an App-Based Mobile Pay System 2 Design and Implement a Demand-Based Parking Management Program 3 Invest and Implement a Comprehensive Parking Signage and Wayfinding System Maximize Use of Existing Parking Supply 4 Pilot a Shared Parking Program and Facilitate Shared Parking 5 Maximize Flexibility of Curb Space to Accommodate Rideshare, Other Modes, and/or Valet Service Improve Mobility Options to Reduce Parking Demand 6 Reinvest Parking Revenues into Multimodal Improvements Simplify and Leverage the Zoning Code 7 Revise the Zoning Code to Better Support Walkable, Mixed-Use Development in the Coastal Zone Enhance Parking Administration and Operations 8 Enhance Event Management Practices to Maximize Parking System Flexibility and Predictability 9 Improve the Residential Parking Permit Program 10 Improve Employee Parking Permit Program 11 Establish an Ongoing Collection, Monitoring, and Evaluation Process Provide Additional Public Parking as Needed 12 Strategically Invest in New Public and Shared Parking Supply in Key Locations STUDY RECOMMENDATIONS Cost •Level of cost is relatively based against all other recommendations (i.e. constructing a parking structure would have a high cost respective to an employee parking permit program). Level of Difficulty •Level of difficulty is relatively factored against all other recommendations based upon the amount of coordination or space available needed to implement the recommendation. Priority •Priority level is factored against all other recommendations based upon the greatest impact that is in line with the City of Hermosa Beach’s goals. Implementation Timeline •Cost, level of difficulty, and priority were all factors weighted to inform the short-, mid-, or long-term implementation goals for each recommendation. Recommended Zones for Implementation •Recommended zones indicate where the recommendation would be most beneficial for implementation based on the zone’s unique character and observed demand. Relation to Study Goals •Relation to Study Goals details how a recommendation aligns with the goals for the Coastal Zone stated in the Introduction. IMPLEMENT AN APP-BASED MOBILE PAY SYSTEM Cost: Average Level of Difficulty:Average Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#2, #3 1 DESIGN AND IMPLEMENT A DEMAND-BASED PARKING MANAGEMENT PROGRAM Cost: High Level of Difficulty:High Priority: Average Implementation Timeline: Long-Term Zones for Implementation: 1, 3, 5, 6, 7 Related Study Goals:#2, #3 2 INVEST AND IMPLEMENT IN A COMPREHENSIVE PARKING SIGNAGE & WAYFINDING SYSTEM Cost: Average Level of Difficulty:Average Priority: High Implementation Timeline: Mid-Term Zones for Implementation: All Related Study Goals:#2, #3 3 PILOT A SHARED PARKING PROGRAM AND FACILITATE SHARED PARKING4 Cost: Average Level of Difficulty:Average Priority: High Implementation Timeline: Long-Term Zones for Implementation: 5, 6, 8 Related Study Goals:#2, #3 MAXIMIZE FLEXIBILITY OF CURB SPACE TO ACCOMMODATE RIDESHARE AND OTHER MODES5 Cost: Low Level of Difficulty:Average Priority: High Implementation Timeline: Short-Term Zones for Implementation: 5, 6 Related Study Goals:#2, #3 REINVEST PARKING REVENUES INTO MULTIMODAL IMPROVEMENTS6 Cost: Low Level of Difficulty:Low Priority: Average Implementation Timeline: Mid-Term Zones for Implementation: 5, 6 Related Study Goals:#2, #3 REVISE THE ZONING CODE TO BETTER REFLECT URBAN USES AND WALKABLE COMMERCIAL USES 7 Cost: Average Level of Difficulty:Average Priority: Average Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#1, #3 ENHANCE EVENT MANAGEMENT PRACTICES TO MAXIMIZE PARKING SYSTEM FLEXIBILITY & PREDICTABILITY8 Cost: Low Level of Difficulty:Low Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#2, #3 IMPROVE THE RESIDENTIAL PARKING PERMIT PROGRAM9 Cost: Low Level of Difficulty:High Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#2, #3 IMPROVE THE EMPLOYEE PARKING PERMIT PROGRAM10 Cost: Low Level of Difficulty:Low Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#2, #3 ESTABLISH AN ONGOING COLLECTION, MONITORING, AND EVALUATION PROCESS11 Cost: Low Level of Difficulty:Low Priority: High Implementation Timeline: Short-Term Zones for Implementation: All Related Study Goals:#2, #3 STRATEGICALLY INVEST IN THE PUBLIC AND SHARED PARKING SUPPLY IN KEY LOCATIONS12 Cost: High Level of Difficulty:High Priority: Low Implementation Timeline: Long-Term Zones for Implementation:5, 6, 8 Related Study Goals:#2 STAKEHOLDER FEEDBACK 05 STAKEHOLDER ENGAGEMENT •Parking + Enforcement Staff •Residents + Businesses In and Outside of theCoastalZone •Parking + Mobility Professionals •Commercial Real Estate Brokers •Architects/Land Planners •Commercial Property Owners/Developers •Renters Association •School District 1.Which of the strategies interest you most? 2.Do you have feedback or concerns about any of the recommendations? 3.Do you think we’ve missed any general areas of recommendations? 4.Do you agree with the relative priorities identified for near and long term solutions? 5.Do you have recommendations on best practices we should be looking at that you’ve seen in other communities that you think work well? DISCUSSION QUESTIONS 1 WHICH OF THE STRATEGIES INTEREST YOU MOST? 1 –Mobile Pay Option 2 –Demand-Based Pricing 3 –Signage and Wayfinding 4 –Shared Parking Opportunities 7 –Revisions to Zoning Code 8 –Event Parking Practices 9/10 –Revisions to Residential/Employee Parking Programs 2 DO YOU HAVE FEEDBACK OR CONCERNS ON THE RECOMMENDATIONS? o Like the idea of mobile pay as an option for businesses to provide coupons or validation or parking for customers o Bump up the daily rates for commercial use of parking (events, production) based on level of event impact –then put funds back into a parking benefit district o Shared parking opportunities would be great for both business and event uses (has not been previously allowed) o With demand-based pricing options, be sure to consider seasonality in addition to day of week, location, time of day o Opportunity to purchase the employee permit online or by app rather than requiring in-person would be helpful o Some concern about potential of shared parking agreements and logistics of implementing for public parking purposes o Stop using parking standards as a tool to stifle development and renovations. In-lieu fee is too high. 3 DO THINK WE’VE MISSED ANY GENERAL AREAS OF RECOMMENDATIONS? o Time Limits –consider adjusting time restrictions for evening hours or off-season hours so that customers can dine without worrying about a ticket at a 2 hr meter o Parking Benefit District -Creation of a district to focus revenue on improvements to downtown area on improvements like an electric shuttle/pedestrian amenities, parklets o Parking Code -Enforcement of existing code requirements which stipulate garages are to be used for parking of vehicles and not storage –leverage can be providing proof in advance of issuing annual parking permits. o Scooter Parking -Find areas for additional scooter/vespa parking 4 DO YOU AGREE WITH THE RELATIVE PRIORITIES? General Agreement on Priorities with the following exceptions: o 7 as a high priority o 8 to be considered with updates to special events policy guide o 12 to consider as part of civic center upgrades in long-term 5 DO YOU HAVE RECOMMENDATIONS ON BEST PRACTICES FROM OTHER COMMUNITIES? o Manhattan Beach –Extended time limits for evening/dinner hours allow through mobile app for overnight hours o Redondo Beach and West Hollywood –No parking minimums for smaller changes in use or redevelopment of property under certain square footage o Carmel –Central parking at top of district that encourages people to walk through downtown to get to beach o Manhattan Beach –Downtown Shuttle –maybe re-visit/look at a shuttle between the three beach cities o Mammoth Lakes –Downtown Shuttle o Paso Robles –just implemented mobile pay option and uptake and feedback is good from the businesses o Newport Beach –hourly rate escalates the longer you stay during peak periods, also includes no parking minimums o Tustin –Requires proof of garage being available prior to issuing parking permits for districts OTHER TOPICS OF DISCUSSION o Request for more focused stakeholder meetings related to the zoning standards recommendation specifically o More envisioning and planning needed for the future downtown area (decide what it wants to be/look like, etc) o Lack of outdoor dining along Upper Pier creates a “freeway” like atmosphere that funnels everyone down Pier Ave o Would like to see momentum behind these efforts to get some changes implemented o Interest expressed in understanding how the number of employee permits has changed in the last few years as more Uber/Lyft available and as more employees may be living further from Hermosa because they can no longer afford to live nearby o More envisioning and planning needed for the future downtown area (decide what it wants to be/look like, etc) STUDY NEXT STEPS 06 •Review/Approval ofStudybyPlanningCommission and Council •Updates to Local Coastal Program Reviewed by Planning Commission and Council •Review by Coastal Commission •Implementation of Strategies NEXT STEPS Questions & Discussion PUBLIC-PRIVATE PARTNERSHIPS STUDYSESSION 10.02.19 Overview ▪Purpose of this Study Session ▪Background Past Studies/Assessments General Condition of Civic Facilities ▪Public-Private Partnerships, Examined ▪Policy Considerations ▪Vision Forward Attachments to Session Agenda ▪Staff Report and General Background ▪P3 Overview (Katherine Aguilar Perez –LA Cities Leader) ▪Successful Public/Private Partnerships –from Principles to Practices (Urban Land Institute) ▪Long Beach Civic Center Presentation (City of Long Beach) ▪Oct. 4, 2017 Civic Facilities Study Session –Report and Related Materials (City of Hermosa Beach) Past (Most Recent) Assessments ▪Civil Source Study (2015) –Structural/Seismic Study ▪Mary McGrath Architects (2016) –Space/Operational Needs Assessment ▪Library Needs Assessment (2016) –Phase 1: Space and Community Needs Assessment with Supporting Community Outreach (Completed in 2017) –Phase 2: Development of Conceptual Plans and Related Budgets (On hold) CONDITION OF FACILITIES •City Hall •Fire Station Remodel •Public Works (Corporate) Yard •Police Station •Library •Community Center •Clark Building Funding Scenarios ▪Public Financing/General Obligation Bond ▪County Partnership ▪P3 Model Alternative Delivery of Public FacilitiesPublic Private Partnerships (P3’s) October 2, 2019 Katherine Aguilar Perez Associate Principal, LA Cities Leader What are Public Private Partnerships (P3s)? Classic Real Estate P3s 3 P3s for Public Facilities 4 Thinking inception through the end of useful life. Traditional Design-Bid-Build (DBB) Structure 5 6 Risk Continuum Design-Bid-Build DBB DB Design-Build DBF DBFOM Design-Build-Finance Design-Build-Finance- Operate-Maintain USHSR Conference –Los Angeles. March 2017 Overview of Project Finance Structure Equity LendersProject Company Design Build Contractor DB Contract O&M Contract Facilities Management Coordination Agreement Lending Agreements Project Sponsor DBFOM Agreement USHSR Conference –Los Angeles. March 2017 Project Cashflow Comparison 1 2 3 4 5 6 7 8 30 DBB 1 2 3 4 5 6 7 8 30 DBFOM Design and Construction Operations Years YearsPaymentsPayments USHSR Conference –Los Angeles. March 2017 9 Procurement Considerations Partner Selection Market Engagement Clear Value Proposition Strong Project Rationale USHSR Conference –Los Angeles. March 2017 Key Ingredients of Successful P3s 10 The Long Beach Civic Center Project Overview Why a P3? ▪No new general fund obligation (no need for a voter-approved bond) ▪The lowest risk and shortest delivery model ▪Project Team assumes all risks of design, development, entitlement, change orders, cost overruns, construction delays and long-term operations and maintenance ▪City to occupy existing facilities until new facilities are available ▪Strategic forethought in the design of future O/M costs ▪After 40 years, the facility is transferred to the City in 85% “like new” condition ▪Monetize excess land on site with private development ▪Annual availability payment, adjusted by CPI for 40 years 12 13 14 Long Beach Civic Center Site Plan Long Beach Civic Center August 2019 15 Key Takeaways ▪Learn from others: Long Beach Courthouse was our example ▪Identify a Revenue Source: P3 needs a stable revenue stream ▪Analyst-Up: Get some professional help! ▪Identify Full Life Cycle Costs: compare apples to apples ▪Meet and Confer with employee associations/unions is key ▪Look at all your options ▪Know and understand the benefits and the risks, and what risks are worth transferring ▪Consider DBFOM for eligible projects, but not appropriate for all projects 16 17 Thank you Katherine Aguilar Perez Associate Principal | Los Angeles Cities Leader Arup 900 Wilshire Blvd., 19th Floor Los Angeles CA 90017 USA t:+1 310 578 4400 d:+1 310 578 2856 m:+1 310 633 4071 e: katherine.perez@arup.com www.arup.com USHSR Conference –Los Angeles. March 2017 Policy Considerations 1.Is Council interested in pursuing public-private partnership (P3) options for comprehensive civic center improvements? 2.Shall the City prioritize key civic facility improvements beyond those already listed in the Capital Improvement Program? If so, would Council be more comfortable with renovations or rebuilding of specific facilities? 3.Following today’s discussion, City Council may decide to bring this item back as a formal agendized Council matter in order to provide specific direction for staff regarding next steps. 4.Other considerations?