ORDINANCE _________________

AN ORDINANCE relating to Shoreline Street End permits; amending the current Seattle Department of Transportation Street Use Fee Schedule by revising the Shoreline Street End permit fee methodology, and repealing Section 1 and Attachment A of Ordinance 119673, Shoreline Street End Permit Fee Methodology; and ratifying and confirming certain prior acts.

WHEREAS, by Resolution 29370, the City Council adopted policies guiding the development of public access improvements to Shoreline Street Ends, requiring their preservation as public right-of-way, establishing criteria to evaluate the suitability of a shoreline street end for public use improvements, and providing that new private use permits will be granted only when there is not a proposal for a shoreline street end improvement; and

WHEREAS, by Ordinance 119673, the City clarified the policy for the Shoreline Street End program and designated a Shoreline Street End permit type, and a fee methodology in the Street Use Permit Fee Schedule; and

WHEREAS, Section 15.04.074 of the Seattle Municipal Code authorizes and directs the Seattle Department of Transportation (SDOT) Director to prepare and recommend to the City Council, for passage by ordinance, a schedule of fees applicable to all street and sidewalk use permits (referred to as the Street Use Permit Fee Schedule), commensurate with the cost of administration, review, inspection, and policing involved in the issuance and continuance of such permits and the use thereby granted; and

WHEREAS, Section 15.04.074 of the Seattle Municipal Code specifies that fees for use of the public right-of-way may take into consideration the City's policy of discouraging encroachments inconsistent with the public's right of access to the shorelines or right-of-way; and

WHEREAS, the City of Seattle's Comprehensive Plan establishes goals for industrial areas that include preserving industrial land for industrial uses and supporting growth in the industrial and manufacturing employment base; and

WHEREAS, Attachment A to Ordinance 119673 authorized the City Appraiser to establish the Street Use permit land values based on multiple properties surrounding a shoreline street end; and

WHEREAS, the SDOT Director has prepared and recommended the repeal of Section 1 and Attachment A of the Shoreline Street End Fee Methodology Ordinance 119673 and proposed an amendment to the Street Use Fee Schedule for a new Shoreline Street End to provide transparency and to simplify program administration; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. Street Use Permit Fee Schedule, Attachment A to Ordinance 123477, as amended by Ordinance 123485 and Ordinance 123600 (introduced as Council Bill 117159) is amended as follows:

Attachment A: Street Use Permit Fee Schedule

* * *

The Department of Transportation is directed to use the shoreline street end permit fees credited to the Transportation Operating Fund for the following purposes:

(a) Notifying property owners that abut shoreline street ends of the need for permits for private use of the street end and of the fee schedule;

(b) Administering and inspecting shoreline street end use;

(c) Verifying property boundaries and area of use;

(d) Matching funds for neighborhood improvements of shoreline street ends for public use;

(e) Signing, demarcating, and maintaining shoreline street ends;

(f) Funding street and sidewalk improvements within a half-block radius of any of the shoreline street ends identified in Exhibit A to Resolution 29370 that directly contribute to public access to the shoreline street end.

* * *

Section 2. Attachment A and Section 1 of the Shoreline Street Ends Permit Fee Methodology Ordinance 119673, which is shown in Attachment B of this ordinance, is repealed.

Section 3. Shoreline Street End permit fee implementation schedule. Shoreline Street End permits existing on the effective date of this ordinance shall have new annual fees applied starting on January 1, 2011 as authorized in Section 4 of this ordinance. All new Shoreline Street End permits that may be approved by the Director of Transportation after the effective date of this ordinance shall have the annual fees applied using the new methodology adopted in Section 1 of this ordinance.

Section 4. Shoreline Street End permit fee phase-in schedule. Annual Shoreline Street End permit fees for existing Shoreline Street End permits shall be phased in over a four year period from 2011 through 2014. Starting in January 2011, the annual permit fee will increase by 25 percent of the difference between the 2010 annual Shoreline Street End permit fee and the new Shoreline Street End permit fee based on the Shoreline Street End permit fee methodology. In 2012, the annual Shoreline Street End permit fee will increase to 50 percent of the difference between the 2010 annual Shoreline Street End permit fee and the 2012 permit fee based on the Shoreline Street End permit fee methodology. In 2013, the annual Shoreline Street End permit fee will increase to 75 percent of the difference between the 2010 annual Shoreline Street End permit fee and the 2013 permit fee based on the Shoreline Street End permit fee methodology. Starting in January 2014, the annual Shoreline Street End permit fee will increase to the full new annual Shoreline Street End permit fee based on the Shoreline Street End permit fee methodology. By the end of 2014, the phase-in period will be complete and all existing Shoreline Street End permits will be determined using the Shoreline Street End permit fee methodology on an annual cycle.

The new annual Shoreline Street End permit fee authorized by this ordinance will be applied starting in January 2011 and will not be phased in if the fee is less than the 2010 annual Shoreline Street End permit fee for an existing Shoreline Street End permit, or a new permit for an existing Shoreline Street End use is issued after the effective date of this ordinance.

Section 5. Sections 3 and 4 of this ordinance shall apply retroactively to the extent necessary to ensure their application to periods of time occurring before the effective date of this ordinance. In no event shall a Shoreline Street End permit be subject to an annual fee or fees for 2011 in a total amount that exceeds the fee authorized by Sections 3 and 4 of this ordinance.

Section 6. Severability. The provisions of this ordinance are declared to be separate and severable. The invalidity of any portion of this ordinance, or the invalidity of its application to any person or circumstance, shall not affect the validity of the remainder of this ordinance, or the validity of its application to other persons or circumstances.

Section 7. Ratify and Confirm. Any act consistent with the authority of this ordinance taken prior to its effective date is ratified and confirmed.

Section 8. This ordinance shall take effect and be in force 30 days from and after its approval by the Mayor, but if not approved and returned by the Mayor within ten days after presentation, it shall take effect as provided by Seattle Municipal Code Section 1.04.020.

Passed by the City Council the ____ day of ________________________, 2011, and signed by me in open session in authentication of its passage this ____ day of ____ 2011.

_________________________________

President __________of the City Council

Approved by me this ____ day of _____________________, 2011.

_________________________________

Michael McGinn, Mayor

Filed by me this ____ day of __________________________, 2011.

____________________________________

Monica Martinez Simmons, City Clerk

(Seal)

Attachment A: Demand Probability Factor

Attachment B: Section 1 and Attachment A of Ordinance 119673

Brian de Place/Michael Jenkins SDOT Shoreline Street End Fee Schedule ORD May 23, 2011 Version #9

Attachment A: Demand Probability Factor

Attachment B: Section 1 and Attachment A of Ordinance 119673

Attachment B: Section 1 and Attachment A of Ordinance 119673

(( Section 1. The Street Use Fee Permit Schedule attached to Ordinance 119260 and made a part thereof is hereby amended to clarify the description of Category 7, to add a new category 11 for use of shoreline street ends, to prescribe a fee for such use based on appropriate appraisal methodology, and to add public street end uses to Category 54, as follows:

No Fee ))

(( Attachment A

Shoreline Street Ends Permit Fee Methodology

Purpose

Title 15 of the Seattle Municipal Code requires permits for the use of public places and empowers the Director of Seattle Transportation to prepare and recommend a schedule of fees. The Shoreline Street Ends Policies guide the preservation of the shoreline street ends, a valuable and limited resource within the City of Seattle. This document describes the methodology for creating a fee schedule for private use of shoreline street ends as requested by the Director of Seattle Transportation.

There are 149 shoreline street ends, 72 of which contain one or more encroachments. The shoreline street ends differ greatly in their location, zoning, access, topography, size, view and uses. The purpose for creating a new methodology for calculating private use fees is to create an equitable and fair system for assessing fees given this wide variety of locations and uses.

Assumptions

The Seattle Transportation (SEATRAN) Street Use Division of the City of Seattle provided all information regarding the names and addresses of those responsible for private use of shoreline street ends, size and explanation of the street encroachments, current fees, and the status of permits. SEATRAN assigned a number to each shoreline street end, and these numbers were retained for this project. SEATRAN provided a copy of their Shoreline Street Ends 1997 Review, along with an exhibit of GIS Orthophotos showing locations of parcels, building outlines and encroachments that can be readily seen in the overhead photographs. It was assumed that the information contained in the Shoreline Street Ends 1997 Review was accurate.

It is assumed that permits are approved or renewed on an annual basis; and that any change or update of the base land values (per square foot), demand factor or rate categories would be performed or approved by the Appraisers or their assigns.

The premise behind this model is that shoreline street ends are a valuable resource and should be maintained for public use. However, it was also recognized that many of the adjacent (to the street end) property owners have structures that have encroached for many years with implied acquiescence from the City (based on non-action, until recently). The permit fee should not be so high as to encourage abutting property owners to cease maintenance of enhancing landscaping. On the other hand, owners with fence encroachments should be encouraged to open the street end to the public.

It is assumed that the Appraisers are involved only with the creation of the methodology of the Permit Fees; and that implementation, maintenance and enforcement of the permit fees is, and will be, the responsibility of SEATRAN.

Methodology

The Appraisers physically inspected all shoreline street ends with private use encroachments. High quality digital photos were taken and will be kept along with brief descriptions.

Assessed land values were obtained for the areas surrounding the shoreline street ends, as well as recent land sales. In the final analysis, most reliance was placed on assessed values for several reasons: 1) Assessed values are easily accessible for all properties. 2) There are very few waterfront land sales; and it would be difficult to account for differences in location, access, view and all the different aspects particular to a site, and make adjustments to all the shoreline street end sites based on so few sales. 3) After interviewing several appraisers from the assessor's office regarding their methodology, the use of their data on a large scale was appropriate. A great amount of weight should not be placed on the assessed value of any one particular site. However, as a whole, the confirmation, analysis and utilization of recent sales to estimate and smooth values over specific areas is reliable.

By performing statistical analysis on assessor data, such as looking at average land values, the average of the middle third values, which excludes the extreme highs and lows, the middle values, the most common values, and the standard deviation, the data was smoothed even further and resulted in estimated values that could be applied equitably across relatively large but distinct areas.

Between property inspections and data analysis, continual consideration went into the different ways to address the very distinct types of encroachments and locations, given that some street ends would be more inviting to the general public than others. Additionally, some properties located on Lake Washington could have incredibly high assessed land values on a per square foot basis, even though their overall values may be low compared with other waterfront values, all depending on their size and location. All of the assessed land values for encroaching properties on Lake Washington, which are not income producing, were significantly higher than commercial sites on Lake Union. There are two categories for adjustments to the land value that help to equalize the valuation problem.

Demand/Probability Factor

The Demand/Probability Factor (DPF category on the permit fee calculation sheets) is an estimate of the demand, or the probability of public use for a particular shoreline street end site based on location, access, view, size and topography. This is an adjustment to the estimated value, requiring an experienced appraiser judgement. The DPF should not be construed to imply that a statistical or probability analysis of potential use was performed. The adjustment is based on the current condition of the specific shoreline street end.

A high demand area will carry a factor of 1.0. An example of a location with this factor would be a commercial and high-density residential neighborhood with easy access, such as the east side of Lake Union. A very low demand site would have a factor of .25 or .10. A very good example of this is found on Magnolia, where the slope is steep, the right of way is not improved or accessible, and the probability of public use, or the demand for public use, is very low.

The factors are estimated in rounded increments as 1.0, .75, .50, .25, and .10. Typically, single family residential area street ends carry a maximum demand factor of .50 due to lower density and the availability of existing waterfront parks with facilities. Industrial street ends also typically carry a low demand factor due to less desirable views and locations, in terms of the probability for general public use.

This demand factor category is set by the Appraisers, and should not be adjusted without consulting the Appraisers.

Barrier to Entry

This rating involves the effect of the type of use and encroachment on potential public use. If the message by the encroachment to the general public is "private, keep out', such as a fence or thick hedge, or the barrier is simply impassable, as in the case of a building, shed, dock, or other structure, then the barrier is rated 100%. Most of the encroachments are rated 100%. Open driveways or landscaping that do not physically block entry, but still give the impression of private property are judged to be a 50% barrier. If the shoreline street end is partially cut off by a hedge or fence, then an 80% factor is used. This factor is available for changes by SEATRAN, and is controlled to a large extent by the encroaching property owner. Some encroaching fences create a very large encroachment area. Removing the fence may not only have the effect of decreasing the barrier rating; it may also decrease the encroachment area, lowering the permit fee significantly.

Area

One of the most important factors involved in setting the fee is the area of encroachment. This is a measurement that is determined by a field representative within SEATRAN. The appraisers did not make any changes to this category. The area is determined by measuring the square footage of shoreline street end land actually used or occupied for non-street purposes or that is subject to a barrier to public use or enjoyment.

Rate

For purposes of calculating the permit fee, an annualized rate will be applied to the adjusted value. The annualized rate is subject to change. This rate should be similar to typical land rates of return, although some commercial rates may be higher, and some residential rates may be lower, depending on location, use and rates of return on other investments (theory of substitution, opportunity cost). One rate will most likely be used for all of the shoreline street end permit fee calculations at this time.

Final Permit Fee Calculation

The final permit fee takes all five categories into consideration, and is a simple calculation. The five columns are multiplied together, resulting in a permit fee that is easy to apply, and is equitable for all the different locations and uses of the shoreline street ends. The calculation is as follows:

Area (SF) x DPF x Barrier x Land Value/SF x Rate = Permit Fee. ))