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HomeMy WebLinkAboutInformational Item - Cost Sharing for Improvements area of Desert Gateway ProjectCITY OF PALM DESERT PUBLIC WORKS DEPARTMENT STAFF REPORT REQUEST: Cost Sharing of Improvements in the Area of the Desert Gateway Project SUBMITTED BY: Mark Greenwood, P.E., City Engineer DATE: October 13, 2005 CONTENTS: Vicinity Map Recommendation: Receive and file. Discussion: The following information is provided at the request of Council and addresses the cost of the improvements in the Desert Gateway Project area, and Wal-Mart/Sam's Club's participation: 1. Concrete lining of the Mid -Valley Channel/Retention Basin: At the time that building permits were issued, the need for lining of the channel/retention basin had not been determined; therefore, channel lining was not a condition of approval of the Wal-Mart/Sam's Club project. The Wal-Mart/Sam's Club property's share (on a per -acre basis) of lining the retention basin is estimated at $400,000. Wal- Mart/Sam's Club is providing no reimbursement for lining the channel. The builder of the project has indicated he will not voluntarily participate in the cost for this improvement. 2. Traffic signal at Monterey Avenue and Avenue 35: Per the development agreement for PM 24255, which has existed since 1993, the project was not required to contribute to the construction of this traffic signal. The cost of construction of the signal and associated improvements is estimated at $350,000. However, engineers for the project did perform the design of this traffic signal at the time they were designing other improvements in the area. City Council approved offsetting fees due the City by the estimated cost of the traffic signal ($350,000) at the September 22, 2005 meeting. 3. Third eastbound lane on Dinah Shore Drive: There is currently no plan to widen this portion of Dinah Shore Drive; therefore, the project has no financial participation. Should a third eastbound lane be desired on the project's frontage, the cost is estimated at $500,000. Since the WaI-Mart/Sam's Club project has proceeded it is unlikely that additional conditions of approval or mitigation measures can be added at this time. Therefore, this cost would have to be borne by the City or distributed among other development projects. Informational Report — Cost Sharing of Improvements in Desert Gateway Area Page 2of3 October 13, 2005 4. Monterey Avenue — 1-10 Interchange Loop Ramp Retrofit: Although not a condition of approval and no formal requirement for this improvement was made, the City Council secured a $500,000 payment from WaI-Mart/Sam's Club at the time of project approval toward these improvements. This represented approximately 25% of the total estimated cost of the improvements at that time. As planning and design have progressed the estimate has increased to approximately $8 million. If Wal-Mart/Sam's Club were to bear 25% of the ultimate cost of the interchange, this would be a cost to the project of a minimum of $2 million. 5. Free right -turn lane from Dinah Shore Drive to Monterey Avenue: Although not a condition of approval and no formal requirement for this improvement was made, the City Council secured a $100,000 payment from Wal-Mart/Sam's Club at the time of project approval toward installation of a free right -turn lane from Dinah Shore Drive to Monterey Avenue. This represented 100% of the cost of this improvement at that time. As planning and design have progressed the estimate has increased to as much as $500,000. Revenue projections for the Desert Gateway project were provided by Ruth Ann Moore, Business Support Manager: According to The Natelson Company, Inc., economic and financial consultants who completed the fiscal and market impact analysis for the Environmental Impact Report (EIR), revenues generated by Desert Gateway are projected to range from $1.3 million in the first year of operation to $2.0 million by the third year. The third year is projected to include Phase II tenants and would be considered the first year of stabilized operations. The revenue projections provided include only annually -recurring income sources; one-time revenues such as building permit fees are not included as they are generally assumed to represent and off -set of a corresponding City cost and thus do not represent net income to the City. Stabilized sales tax revenues at $1.2 million for the first year of operation are conservatively based on square footages of retail commercial space planned for the project and standard sales per square foot ratios for each category. The following factors have been assumed to project total taxable sales: • General merchandise space: annual sales volumes of $300 per square foot; • Food store space: annual taxable sales volumes of $120 per square foot; • Other retail space: annual sales volumes of $200 per square foot; G:\PubWorks\Staff Reports\2005\October 13\7 Cost sharing of improvements Desert Gateway\Informational Report Cost sharing of improvements Desert Gateway Area.doc Informational Report — Cost Sharing of Improvements in Desert Gateway Area Page 3 of 3 October 13, 2005 • Sit -Down restaurants: annual sales volumes of $400 per square foot; and • Fast Food restaurants: annual sales volume of $400 per square foot. Sales tax revenues are projected to increase at an annual rate of 3.0% to account for inflation. This can also be interpreted as conservative given the past history of retail sales increases for Palm Desert. Other revenue sources for the project that make up the difference in total revenues for the first year include property tax, fire tax and utility franchise fees and are considered minimal. The development/approval process requires the City to establish specific improvements to be built and fees to be paid at the time of approval. It would be unusual to seek additional improvements after approvals are made, unless just cause can be demonstrated. If additional mitigation measures are desired, it is recommended that they be conditions of approval on future precise plans if a nexus can be demonstrated. Submitted by: Department Head: Mark Grdenwood, P.E. City Engineer Approval: ,Foy- Homer Croy ACM for Development Services /dhl Michael Errante, P.E. Director of Public Works Carlos Orteg City Manager G:\PubWorks\Staff Reports\2005\October 13\7 Cost sharing of improvements Desert Gateway\Informational Report Cost sharing of improvements Desert Gateway Area.doc