AGENDA #2
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Public Hearing: Land Use Management Ordinance Text Amendment–Modifications to Payment-in-Lieu of Recreation Area
DATE: March 20, 2006
PURPOSE
This Public Hearing has been called to consider a text amendment to the Land Use Management Ordinance related to Payment-in-Lieu of Recreation Area. The proposed modification would change the method used in calculating payments-in-lieu of recreation area. The modification would remove from the calculations all references to buildings and structures. If enacted, payments-in-lieu would be calculated based on only land value and not on the value of land and structures as currently determined.
BACKGROUND AND DISCUSSION
The Land Use Management Ordinance requires a recreation component for most residential developments. There are two recreation component types: Recreation Space and Recreation Area.
Recreation Space is the amount of land that must be improved for active recreation in multi-family developments such as apartments and condominiums. Examples of Recreation Space include provision of tennis courts, play areas, swimming pools, and basketball courts.
Recreation Area is the amount of land that must be set aside for the future use of the residents of subdivisions. Recreation Area is not generally improved for active recreation. The Town currently allows payments-in-lieu of providing both Recreation Space and Recreation Area.
Current Method of Calculating Payments-in-lieu of Recreation Space: With the enactment of the Land Use Management Ordinance on January 27, 2003, we changed the method of calculating payments-in-lieu of providing Recreation Space. Prior to enactment of the Land Use Management Ordinance, we used an appraisal-based methodology to set fees for payments-in-lieu of providing recreation space. The Land Use Management Ordinance simplified the process by establishing a set fee that a developer may use to calculate payments-in-lieu. The fee is established each year during the budget process in the Parks and Recreation Department’s User Fee Policy. Currently developers proposing to use the payment-in-lieu option for Recreation Space must pay $12 per square foot.
Current Method of Calculating Payments-in-Lieu of Recreation Area: Section 5.5.2 of the Land Use Management Ordinance sets minimum amounts of Recreation Area that must be dedicated with any major subdivision of land. Section 5.5.2 (d) (1) allows a developer to propose a full or partial payment-in-lieu of providing recreation area on the site.
On October 10, 2005, the Council amended the Land Use Management Ordinance to change the method used in calculating payments-in-lieu of recreation area required as part of major subdivision applications. The modification required a shift away from private appraisals to values assessed by Orange County and/or Durham County for property tax purposes, and a multiplier established by the Council annually as part of the budget. On January 9, 2006, the Council established a multiplier of 1.55. The multiplier is now part of the Parks & Recreation User Fee Policy and is subject to annual review as part of the Town budget process.
Proposed Change to the Method of Calculating Payments-in-Lieu of Recreation Area: Provisions for payments-in-lieu of recreation area under the old Development Ordinance and the original version of the Land Use Management Ordinance were intended to reflect the value of the land after it is developed, including all streets, utilities and infrastructure, and ready for construction of homes. The intent of the changes that were adopted in 2005 was to provide a fairer and more consistent method of calculating payments-in-lieu then the private appraisal method that had been previously used.
However, the language in the Land Use Management Ordinance Text Amendment that was adopted in October 2005 included the following provision:
A per square foot value of the property shall be determined, as established by Orange County and/or Durham County for real estate tax purposes, including land value and the value of all existing structures and improvements. (emphasis added)
In the past, developers were not asked to include the cost of existing buildings and structures in their calculations for payments-in-lieu. For example, under the current ordinance, if a lot with an existing home is to be subdivided into a number of lots, we would have to apply the value of the house to the formula. We believe that this would increase the payment-in-lieu costs significantly beyond the levels required in the past. We believe that the addition of the language requiring the valuation of structure was an oversight.
The proposed modification would remove from the calculations for payments-in-lieu all references to buildings and structures. If enacted, payments-in-lieu would be calculated based on only land value and not on the value of land and structures as currently determined.
We recommend consideration of the following adjustment to Section 5.5.2 shown by strikethroughs and underscoring:
(1) In lieu of providing or dedicating parks and open space area required pursuant to this Section, a developer of a subdivision may, with the approval of the Town Council, make a payment to the Town whereby the Town may acquire or develop recreation land to serve the subdivision. A developer may make a partial payment in combination with the partial provision of recreation area if the Town Council determines that the combination is in the best interests of the citizens of the area to be served.
(2) The Town Council may require a payment to the Town in lieu of providing or dedicating recreation area required pursuant to this Section where the minimum recreation area required by this Section equals two (2) acres or less.
(3) The Town shall use such payment only for the acquisition or development of recreation, park, or open space sites, as allowed by law.
(4) Payments-in-Lieu of Recreation Area shall be determined by the following formula:
A per square
foot value of the property shall be determined, as established by Orange County
and/or Durham County for real estate tax purposes, including land value and
the value of all existing structures and improvements. The value
established by Orange County and/or Durham County shall include only the value
of the land and shall not include the value of existing structures and
improvements. The square foot value shall be multiplied by the number of
square feet of Recreation Area required for the development to arrive at a Base
Value. The Base Value shall be multiplied by a Recreation Area Payment-in-Lieu Multiplier
to determine the required amount of payment-in-lieu of Recreation.
The Payment-in-Lieu Multiplier for Recreation Area shall be established by the Town Council annually as part of the budget process.
(5) The developer shall make the payment before approval of a final plat for the subdivision, provided, however, that the Town Manager may allow phasing of payments consistent with the approved phasing of the subdivision.”
(6) In the event that a property owner successfully appeals the County valuation of the property after the Payment-in-Lieu for Recreation Area is made to the Town, and the resulting change in valuation would have reduced the amount of the Payment-in-Lieu for Recreation Area, the Town shall reimburse the developer the difference between what was paid and what would have been paid had the revised valuation been used.”
RECOMMENDATIONS
Parks and Recreation Commission Recommendation: On January 18, 2006, the Commission voted unanimously (10-0) to recommend enactment of the proposed change. Please refer to the attached Parks and Recreation Commission Memo.
Planning Board Recommendation: On February 7, 2006, the Planning Board voted unanimously (9-0) to recommend enactment of the proposed change. Please refer to the attached Summary of Planning Board Action.
Manager’s Preliminary Recommendation: We recommend that the Council enact the attached ordinance to amend the Land Use Management Ordinance provisions regarding modification to payment-in-lieu of recreation area language.
ATTACHMENTS