Traffic moves west on Colorado Avenue. (File photo)

CITY HALL — The City Council approved a new fee on development Tuesday night meant to raise $50 million over the next 20 years to fund transportation infrastructure improvements meant to cut down on traffic and improve circulation in Santa Monica.

The fee amount applies mainly to new development and varies in amount based on how much traffic the business or development is expected to generate and proximity to other forms of transit like the incoming Exposition Light Rail Line.

As proposed, it will cover $50 million, or roughly 37 percent of the expected $134 million worth of transportation projects that will be needed over the next two decades, said Francie Stefan, community and strategic planning manager with City Hall.

The list includes $33.7 million for bicycle improvements, another $25 million for pedestrian improvements and $10 million for transit. Changes to infrastructure for automobiles will get $11.6 million, while trip reduction plans — called traffic demand management plans — will get $6.1 million in funding under the plan.

While the $134 million does include engineering, project management and administration costs, the total leaves out operating and maintenance costs.

Proponents of the fee suggest that such funding is critical at a time when City Hall’s old methods of funding transportation improvements — 17 percent of which came from the now-defunct Redevelopment Agency and another 43 percent from ever-dwindling grants — have been dealt a blow.

“This is a chance for all of us to pull together. I didn’t hear anyone say we like the impacts of traffic. We’ve identified citywide mitigations that might help and we’ve paid for them with slices of the pie on the wall,” said Councilmember Kevin McKeown, referring to a pie chart displaying the percentages of funding by source. “It’s a pie that’s not being baked anymore.”

While nobody expressed outright disapproval of the fee, public comment took on a “Goldilocks” tinge, with community members asking that the business community take on more of the burden for the car trips it brings to town and representatives of the Santa Monica Chamber of Commerce and Downtown Santa Monica, Inc. saying that the fee puts Santa Monica at a competitive disadvantage compared to neighboring cities.

The fee is higher in Santa Monica than some other neighboring cities, although how high, exactly, depends on where in the city a developer chooses to build.

The first section, called Area 1, encompasses Downtown Santa Monica, the special office district and Bergamot Transit Village on the east end of town.

Area 2 encompasses all other remaining areas of the city.

Fees for different kinds of developments are lower near transit. A developer trying to build a single-family home on a vacant lot in Area 1 would be charged $7,600 while the same project in Area 2 would have to pay a $7,800 fee.

It’s unlikely that piece of the fee will ever be used as there are very few lots open to build a single family home, noted Councilmember Bob Holbrook.

Retail, office, medical office, hospital, lodging and industrial all come with differing amounts, with the greatest variation between the two fees coming from retail development at $21 per square foot in Area 1 compared to $30.10 in Area 2.

Medical office uses will pay the most under the new system, at $28.10 per square foot in the first area, and $29.80 in the second.

The proposal did have some changes from the draft brought forward last April for the City Council’s review. Gone was a provision that would have required the traffic impact fee be paid if the building had been idle for a year in the last five years.

Planning officials also included a significant number of exclusions to the fee, including additions or changes of use for areas under 1,000 square feet, outdoor dining, private K-12 schools, daycare and the conversion of a ground floor space that doesn’t match existing rules to a “pedestrian-oriented” use.

That didn’t keep the business community for pushing for additional changes.

Attorney Dave Rand, from Armbruster Goldsmith and Delvac, argued that the fee was inappropriate because it painted all retail with the same brush.

“There are a number of studies that show neighborhood retail uses produce fewer (evening) trips than other uses,” Rand said. “You should exempt neighborhood-oriented retail or reduce the fee for that type of retail; $21 to $31 per square foot is prohibitively expensive for smaller tenants.”

The high fee will “dramatically alter the kinds of business that choose to move here,” said Susan Gabriel Potter, of Bob Gabriel Insurance, and others contended that the high nature of the fees would discourage development.

Paul Silvern, of HR&A Advisors, cast doubt on that claim. He presented five “prototype” developments based on projects similar to those approved and in the pipeline, and showed that in four out of five cases, the transportation impact fee would have a negligible impact on the project’s financial feasibility.

The one exception: office space constructed over retail in the Downtown, which had a slightly higher impact, but still small.

“Your decision to impose this fee on projects similar to the prototypes we analyzed would not deter projects from going forward,” Stefan said.

The City Council approved the ordinance unanimously.

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