Atascadero looks at fees and development

ATASCADERO — For a gathering that was comparatively light on the scheduled hearing agenda, the regular May 28 meeting of the Atascadero City Council offered much to unpack.

Starting with a moment of silence held for former Atascadero Mayor Bob Kelly, who passed away recently after retiring to Oregon state, and who current Mayor Heather Moreno eulogized as, “a dear man, a dear friend, and a servant to Atascadero.”

She noted his watchful stewardship of the City’s finances as well before the Council was set to examine a new fee schedule for public facing services.

Before going to that hearing item, however, developer Max Zappas, representing his family’s firm and their interest in the La Plaza mixed-use development on El Camino Real asked the Council to pull the scheduled annexation of that project into the City’s Community Facilities District (CFD).

Primarily concerned with the rate of special tax levies the CFD imposes to serve large residential development, Zappas appeared ill-at-ease presenting the last-minute case to Council for a reduction in rates applied to pay for City Police and Fire Department's coverage of the 42 condominium units slated for construction.

The CFD annexation was one of the original terms of the project’s approval and required for the developers to complete building permits ahead of construction.

Zappas noted it wasn’t the first time he’s brought up a concern about the specific rates but did add that the math had only been done over the last two months in working with lenders.

The image brought to mind was of a youthful citizen representing themselves in traffic court asking for a reduction in fines for a school zone speeding ticket. Both because such arguments are usually made by a lawyer without their client present, and because the objection was based on geography and rules they didn’t feel should apply. The judges, in this case, the City Council, were sympathetic, but not much interested in the rationale being used, noting that CFD taxes were enacted in a blanket fashion across the whole City for a reason.

Atascadero’s Mayor Pro Tem Charles Bourbeau, himself a former finance director for the City of San Luis Obispo expressed his own surprise that the development could have gotten so far into the process for the levy to become a last minute issue, “this was one of the original conditions of the’re very smart people and that it’s coming up now…[he paused] we’re all desirous of this going ahead, but [that it’s a] surprise is something I have a hard time visualizing.”

Zappas responded that the numbers came back recently 50 percent higher than originally expected, that it would be an extra $32,000 per year than they were aware of when purchasing the property for the project, and that the Consumer Price Index (CPI) increases the City used in the original 2005 ordinance establishing the CFD were, “whacky.”

The knock on effects of those charges, he said, were that lenders were now valuing the project at $500,000 less than expected, on top of which, “downtown is not a new growth area it goes back to the founding of the City,” he added that by his reading he CFD taxes were intended to apply for sprawling development in new areas bordering the rest of town, not to the mixed-use in the downtown corridor.

If an exemption from inclusion in the CFD was not possible, a discounted rate would at least ease their path, Zappas said.

With budget meetings on their minds for June, the Council discussed and contextualized the real cost of services and residential development, with Councilwoman Susan Funk noting that just providing basic services as exist, is projected to run the City’s coffer’s at a loss until about the time PG&E’s Diablo Canyon ends its run as a major countywide employer. After that point, she said, “it’s a scary situation.”

City Manager Rachelle Rickard drew on some institutional knowledge to add that before the establishment of a CFD the City at one point gained 8,000 residents with only one police officer added, the “proper” ratio is 1 to 1,000. The CFD taxes paid by neighborhoods developed since now pay for, “several police bodies and half a park’s worker,” she said.

Basic fairness and good policy were the subjects the Council attempted to navigate the request for a discount as the idea of one time exceptions for an individual project, even one they deem critical for “jumpstarting” downtown redevelopment, would set a bad precedent.

With the clock ticking on available hearing dates for any revised policy to be implemented before the project’s construction schedule, a third option, besides a one-time exception or entirely new district was sought from staff.

Asked to bring language to Council with a report due in under a week from this publication date, a CFD moratorium or temporary waivers to encourage downtown development is to be explored, with an ad hoc Council committee appointed to keep tabs.

Zappas said that was acceptable, adding that he wasn’t seeking special treatment for La Plaza on its own, “for us it’s the percentage. This is not just for us but for all downtown projects going forward.”


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